Monday, 24 October 2016

The Biggest Mistake In Corporate History Repeats?.

Baltic Dry Index. 849 -23   Brent Crude 51.59

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

Jeff Bewkes, the chairman and chief executive of Time Warner, has accepted that Time Warner's merger with AOL was "the biggest mistake in corporate history", but said it had helped the company focus on its strengths.

Does history repeat? In America, it seems we are about to find out. AT&T is about to merge with Time Warner. Will it be second time lucky for Time Warner? Another unintended consequence of the Fedster’s virtually free money policy. Below, “Wired” tries to square the circle. But will the merger be any more successful than when AOL and Time Warner merged in 2001?

AT&T Is Buying Time Warner Because the Future is Google

22 October 2016.
Telecommunications companies are becoming media companies. That explains AT&T’s agreement to buy Time Warner for $85.4 billion. But something else explains it, too.

Media companies are becoming telecoms.

Internet firms like Google and Facebook and Amazon and Netflix are the new media companies. They deliver enormous amounts of video online, posing a direct threat to old-school television and movie companies. But they also are becoming telecoms, threatening the likes of AT&T and Verizon.

They finance undersea cables that link their data centers. They buy fiber optic infrastructure. Facebook builds open source telco gear, Google offers high-speed Internet service, Amazon hopes to become an Internet service provider in Europe.

As this happens, telecoms must fight back. And this means challenging tech giants on the media front.

The proposed AT&T/Time Warner deal combines two powerhouses. AT&T is the nation’s largest pay TV provider, the second-largest wireless provider, and the third-largest home Internet provider.

Time Warner owns a dizzying array of media properties, including HBO, CNN, Warner Brothers, DC Comics, TBS, TNT, the Cartoon Network and broadcast rights to many live sporting events. But it does not own Time Warner Cable, a separate entity that the cable company Charter Communications bought earlier this year.

The deal confirmed today follow’s Comcast’s merger with NBC in 2011 and Verizon’s acquisition of AOL last year and planned acquisition of Yahoo this year.

AOL merger was 'the biggest mistake in corporate history', believes Time Warner chief Jeff Bewkes

By Emma Barnett and Amanda Andrews 11:40PM BST 28 Sep 2010
Speaking to The Daily Telegraph after a speech at the Royal Television Society's International conference, Mr Bewkes said he had learned post-demerger that "the recipe for success" of any company is "you have to know what you are".

In 2001, AOL completed its $164bn (£104bn) acquisition of Time Warner, but it soon led to monumental write-downs. However, Time Warner soon realised that the merger was not in its best interests, leading to a loss of $99bn in 2002. A demerger agreement came last year.

Asian stocks drift, dollar near nine-month high

Sun Oct 23, 2016 | 11:49pm EDT
Asian stocks drifted without clear direction on Monday after Wall Street's sluggish performance late last week, while the dollar hovered near nine-month highs as fresh comments from a Federal Reserve official boosted bets of a rate hike by year-end.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.1 percent.
South Korea's Kospi .KS11 gained 0.5 percent. Australian stocks lost 0.6 percent, hurt by a decline in energy shares. The volatile Shanghai market .SSEC rose 1.2 percent, adding to Friday's gains when it advanced on the strength of infrastructure shares.

Japan's Nikkei .N225 treaded water and last stood little changed.

"There are few investors who want to chase the market higher until they see more news from overseas, especially those regarding a U.S. rate hike," said Yutaka Miura, senior technical analyst at Mizuho Securities in Tokyo.

On Friday in Wall Street, the S&P 500 .SPX and the Dow .DJI were little changed and the Nasdaq .IXIC advanced as a record day for Microsoft (MSFT.O) and earnings from McDonald's (MCD.N) helped offset a fall in energy and healthcare shares. [.N]

"It will be something of a hiatus week, given that next week brings the BoJ, Fed and BoE meetings...however there is a heavily back-loaded run of data in the U.S., Japan and euro zone, and there will be a deluge of U.S. and indeed European and Asian corporate earnings," wrote Marc Ostwald, strategist at ADM Investor Services International.

In the oil patch, Exxon tells the Saudis that they’ve bet wrong. USA frackers are now the world’s swing oil producers. That likely means that the world’s oil price is range bound $40 to $60 for the foreseeable future. That likely means a continuing scale back in tar sands, the Arctic, the North Sea, and deep sea oil. Iraq says it won’t join in any OPEC production cut.

Oil prices drop as Iraq says doesn't want to join OPEC cut

Sun Oct 23, 2016 | 9:55pm EDT
Oil prices fell early on Monday as Iraq said it wanted to be exempt from any deal by producer cartel OPEC to cut production to prop up the market, and as U.S. drillers stepped up work.
Brent crude futures LCOc1 were trading at $51.59 per barrel at 0133 GMT, down 19 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude was down 22 cents, or 0.4 percent, at $50.63 a barrel.
Traders said the price falls followed comments from Iraq, which said it wanted to be exempt from a production cut by the Organization of the Petroleum Exporting Countries (OPEC) that the group plans to decide at its Nov. 30 meeting.

OPEC plans to reduce production to a range of 32.50 million to 33.0 million barrels per day (bpd), down from 33.39 million bpd in September.

That would be harder to achieve if Iraq, which is OPEC's second-biggest producer after Saudi Arabia, didn't participate.

Iraq said on Sunday that its oil production stood at 4.774 million bpd, with exports standing at 3.87 million bpd.

"We are not going back in any way, not by OPEC not by anybody else," said Falah al-Amri, the head of Iraq's State Oil Marketing Company.

Exxon boss tells peers, Saudis their oil supply crunch bet is wrong

Thu Oct 20, 2016 | 6:50am EDT
Exxon Mobil's (XOM.N) boss Rex Tillerson told Saudi Arabia's energy minister on Wednesday that fears of a new global oil supply crunch were exaggerated as the U.S. oil industry was adapting to the low price shock and was set to resume growth.

The remarks by Tillerson, who is due to retire before March next year, about the resilience of the U.S. oil industry come as the Saudis have effectively abandoned their strategy to drive higher cost producers out of the market by ramping up cheap supplies from their own fields.

More than two years of downturn that saw oil prices halve to around $50 a barrel today after a boom in U.S. shale oil production have led to a sharp decline in investment.

But Tillerson, who heads the world's largest listed oil and gas company, said that shale oil producers' resilience in cutting costs to make some wells profitable at as low as $40 a barrel means that North America has effectively become a swing producer that will be able to respond rapidly to any global supply shortage.

"I don't quite share the same view that others have that we are somehow on the edge of a precipice. I think because we have confirmed viability of very large resource base in North America ... that serves as enormous spare capacity in the system," Tillerson told the Oil & Money conference.

"It doesn't take mega-project dollars and it can be brought on line much more quickly than a 3-4 year project."

"Never bet against the creativity and tenacity of our industry," he said.

His stance contrasted with that of Saudi Arabia's Energy Minister Khalid al-Falih, who minutes earlier warned the same event that the sector faces challenges due to the drop in investment.

"Market forces are clearly working. After testing a period of sub $30 prices the fundamentals are improving and the market is clearly balancing," Falih said.

"On the supply side, non-OPEC supply growth has reversed into declines due to major cuts in upstream investments and the steepening of decline rates," the minister said.

"Without investment, that trend is likely to accelerate with the passage of time to the point that many analysts are now wending warning bells over future supply shortfalls and I am in that camp."

Falih said that OPEC's plan to freeze or even cut production along with several leading producing countries, including Russia, will help reduce a huge overhang of supplies and stimulate new investments in the sector.

We close for the day with news from China. By the end of the week, who will be in and who will be out?

What is the Chinese Communist Party’s ‘sixth plenum’ and why does it matter?

PUBLISHED : Monday, 24 October, 2016, 9:43am UPDATED : Monday, 24 October, 2016, 9:43am
Top Communist Party leaders are gathering at a heavily guarded hotel in Beijing for four days, starting on Monday.

The meeting is the “sixth plenum”, the sixth time the roughly 370 full and alternate members of the party’s present Central Committee have met since late 2012.

Over the past three decades, sixth plenums have focused on ideology and “party building”, and this time those attending are expected to discuss stricter internal supervision of the organisation.

While it may not sound as agenda setting as the five-year plan discussions of the fifth plenums, history suggests it would be unwise to underestimate the importance of this meeting.

For example, it was at the sixth plenum of the 11th party congress in 1981 that the party laid down its official verdict on the Cultural Revolution – the decade-long political and social upheaval that devastated China in the 1960s and 1970s.

The meeting this week signals the start of Beijing’s five-yearly political reshuffle season, which will last until the next party congress. Five of the seven members of the Politburo Standing Committee, the party’s most powerful body, will be replaced at the 2017 congress if the informal retirement age of 68 still holds.

Full Central Committee members will also be in contention for another six seats on the 25-strong Politburo.
Regional party chiefs and government heads are already being reshuffled to pave way for the major personnel moves to come.

People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.

George Orwell.

At the Comex silver depositories Friday final figures were: Registered 29.71 Moz, Eligible 144.93 Moz, Total 174.64 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
No crooks today, just a story from Australia that trumps even Texan bragging rights in terms of size and scale.

The bigger the hat, the smaller the property

 Australian proverb

Australian Outback Scions Bid $294 Million for Kidman Ranches

October 23, 2016 — 6:19 AM BST
A group of outback scions has bid A$386 million ($294 million) for all the shares of S. Kidman & Co., trumping an offer from billionaire Gina Rinehart and her Chinese business partner for one of Australia’s largest beef producers.

The group, known as BBHO -- an acronym based on the family names of directors Tom Brinkworth, Sterling Buntine, Malcolm Harris and Viv Oldfield -- would submit its proposal to the Kidman board Sunday, an adviser for the group said. Kidman, based in Adelaide, South Australia, is owned by descendants of its founder, “Cattle King” Sidney Kidman, who began in 1899 building a cattle empire spanning an area bigger than Indiana in central Australia.

If successful, the transaction will enable the BBHO families to more than treble the Kidman cattle operation to more than 500,000 head, the group said in an e-mailed statement. It’s betting Kidman will prefer its all-Australian offer because it won’t need approval from the Australian government.

“The four families comprising the consortium are deeply committed to honoring and preserving the Kidman heritage and brand, which will continue under the stewardship of highly regarded and successful Australian graziers,” Sterling Buntine, a spokesman for the group, said in the statement. “BBHO’s financing is committed and our proposal does not require Foreign Investment Review Board approval, which means greater certainty for the Kidman shareholders.”

Weapons Range

Treasurer Scott Morrison last year blocked the sale of Kidman to an overseas buyer, saying the proximity of its Anna Creek property to a weapons-testing range could compromise national security.

Rinehart, Australia’s richest person, and Shanghai CRED Real Estate Stock Co. agreed to buy Kidman two weeks ago in a deal valued around A$365 million. That accord needs approval from the government because Shanghai CRED would own 33 percent of the cattle company, and is conditional on the divestment of Anna Creek and a nearby ranch to other Australian grazing interests. Tad Watroba, executive director of Rinehart’s Hancock Prospecting Pty, said Sunday he was overseas and unable to comment immediately on the rival offer.

Born in 1857, Sidney Kidman was once the largest landholder in the world with an empire created by continually moving thousands of cattle across the arid Australian inland to where they would always find water, even in the severest drought, the Australian Broadcasting Corp. reported in 2003. Kidman, known as Sir Sidney after being knighted in 1921, owned more than 3 percent of Australia before his death in 1935.

‘Cattle King’

Today, the Kidman beef interests span 18 so-called pastoral leases across remote South Australia, Western Australia, Queensland and the Northern Territory, totaling 101,000 square kilometers (39,000 square miles), or about 1.3 percent of the country’s land area. The properties, including a feedlot near the wine-growing Barossa Valley in South Australia, carry about 185,000 cattle, producing mostly grass-fed beef for Japan, the U.S. and Southeast Asia, according to the company’s website.

BBHO’s offer, which is conditional on the group acquiring at least 90 percent of Kidman shares, is for the entire Kidman business, including the defense-sensitive Anna Creek ranch, which itself is larger than Israel. The group’s members are already among Australia’s most prominent cattle and sheep ranchers.

Don't worry about the world coming to an end today. It is already tomorrow in Australia.

Charles M. Schulz

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

India’s Solar Power Is Set to Outshine Coal

Posted on Oct 22, 2016
BERLIN—India wants to provide its entire population with electricity and lift millions out of poverty, but in order to prevent the world overheating it also needs to switch away from fossil fuels.

Although India is blessed with ample sunshine and wind, its main source of energy is coal, followed by oil and gas. Together, they provide around 90% of the total energy demand of the subcontinent—India, Pakistan and Bangladesh—with coal enjoying the highest share, at more than 70%.

The 2016 BP Energy Outlook report assumes that India will depend increasingly on imports for its energy. Domestic production can be increased, but the increase will be overtaken by growing demand. BP says that by 2035 gas imports to India will rise by 573%, oil imports by 169% and coal by 85%.

But that assumes that renewables will not take off in India. Others think differently. Bloomberg New Energy Finance reckons that by as early as 2020 large photovoltaic ground-mounted systems will be more economical in India than plants powered by imported coal.

Its conclusion is based on what is called the levelized cost of energy (LCOE) —a way of comparing different methods of electricity generation, using the average total cost of building and operating a power plant, divided by its total lifetime energy output.

Bloomberg says the LCOE for photovoltaic systems is about US$0.10 per solar kilowatt hour, compared with a current levelized cost for coal in Asia of about US$0.07.

Even if coal prices remain steady, which it thinks is unlikely, it believes that the continuing fall in PV prices means that solar energy will be more economic than coal by 2020. Only 10 years ago, solar generation was more than three times the price of coal.

One of the pioneering solar manufacturers, Tata Power Solar, estimates that the potential for solar in India lies at about 130 gigawatts by 2025 (one GW is enough to power between 750,000 and a million typical US homes).

“This would generate more than 675,000 jobs in the Indian solar industry,” says Tata Power Solar’s former CEO, Ajay Goel, now president of solar and chief of new businesses at New Delhi-based ReNew Power. “Especially for the 400 million Indians who have no access to electricity, solar power would mean access to clean and affordable energy.”

The monthly Coppock Indicators finished September

DJIA: 18308  +28 Up NASDAQ:  5312 +21 Up. SP500: 2168 +32 Up.

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