Friday, 7 October 2016

Whither Hurricane Matthew?

Baltic Dry Index. 915 +46    Brent Crude 52.49

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

Success is the ability to go from one failure to another with no loss of enthusiasm.

Sir Winston Spencer Churchill.

Miami was spared a hit, but where next for hurricane Matthew? By Saturday morning we will know if Florida and the Carolinas, got a break or took a hit.

We open with the changing realities in East and Southeast Asia. Whichever candidate goes on to win the US Presidency in just about one month’s time, they face a growing minefield of different agendas, and conflicting interests.

China eyes progress at APEC for China-backed free trade area

Thu Oct 6, 2016 | 3:28am EDT
China hopes to see progress at next month's summit in Peru of the Asia Pacific Economic Cooperation (APEC) bloc in pushing ahead with a Chinese-backed trade liberalization framework, China's foreign minister said while on a trip to Lima.
At an APEC summit in Beijing two years ago, Chinese President Xi Jinping urged members to speed up talks on the Free Trade Area of the Asia Pacific (FTAAP) being pushed by Beijing.
APEC approved work towards the establishment of FTAAP, which Xi said then was a "historic step".
Foreign Minister Wang Yi said a feasibility study on FTAAP had been basically completed and China hoped to present it at this APEC summit, his ministry said in a statement.
China "hopes it's approved by the meeting and that the next steps can be jointly agreed on upon this basis", the ministry cited Wang as saying.
"China hopes that the negotiations process for FTAAP can start in due course."
APEC needs to send a positive signal against a tide of rising protectionism and anti-globalization and so China would like APEC to reach consensus on FTAAP, Wang said.
Some see FTAAP as a way to divert attention from the 12-nation Trans-Pacific Partnership (TPP) trade agreement backed by the United States.

Taiwan appoints pro-China politician as APEC envoy

Wed Oct 5, 2016 | 7:18am EDT
Taiwan President Tsai Ing-wen on Wednesday appointed a pro-China politician to represent her at a meeting of Asia-Pacific leaders next month, offering an olive branch to Beijing amid an impasse in relations.
Official communications between Taipei and Beijing have halted since Tsai, distrusted by China as the leader of a pro-independence party, took power in late May, and refused to stick to Beijing's principle that Taiwan is part of China.
James Soong, leader of the People First Party, a splinter group from the China-friendly opposition Nationalists, is to represent Tsai at a meeting of the Asia-Pacific Economic Cooperation (APEC) grouping set for mid-November in Peru.
"Soong's rich academic background, experience and contacts will enable him to precisely convey to the international community the all-round status of our development," the Presidential Office said in a statement.
APEC meetings have traditionally offered an opportunity for senior officials from Taiwan and China to meet, because the grouping categorizes Taiwan as a member economy, not a nation.
China views self-ruled Taiwan as a renegade province and forbids moves toward independence, never having renounced the use of force to take it back if necessary.
Chiang Kai-shek's Nationalists fled to the island in 1949 following defeat in a civil war against the Communists.
Soong, once the English interpreter for Chiang, is reviled by hardliners in Tsai's Democratic Progressive Party (DPP), which traditionally advocates an independent Taiwan, and who are a key support base for Tsai.
But Tsai is also seen as a shrewd negotiator who has remained unfazed by Beijing's cold shoulder, urging instead for talks to resume.
Since coming to power, Tsai's approval rating in opinion polls has dipped as Taiwan's trade-reliant economy has struggled to recover momentum, hit partly by a fall-off in mainland Chinese tourists.
Last month a U.N. aviation agency snubbed Taiwan by not inviting it to a meeting in Canada, a sign of the pressure exerted by China.

Duterte wants to liberate Philippines from U.S. shackles: foreign minister

Thu Oct 6, 2016 | 9:00am EDT
The president of the Philippines wants to liberate his country from a "shackling dependency" on the United States which can not guarantee its help when Philippine sovereignty is under threat, its foreign minister said.
Foreign Affairs Secretary Perfecto Yasay, in the most forceful show of accord from a top official with President Rodrigo Duterte's tough anti-American stance, said the president was "compelled to realign" Philippine foreign policy and not submit to U.S. demands and interests.
"Breaking away from the shackling dependency of the Philippines to effectively address both internal and external security threats has become imperative in putting an end to our nation's subservience to United States' interests," Yasay said in a Facebook post.
Yasay's assessment of U.S. ties follows a diplomatic storm over Duterte's declarations over the past eight days that joint U.S.-Philippines military exercises would cease, a defense agreement would be reviewed and at an undisclosed time, he might "break up" with the United States.
On Monday, Duterte said U.S. President Barack Obama should "go to hell", the latest rebuke stemming from U.S. concern about Duterte's deadly war on drugs.
On Thursday, Duterte said the United States and European Union should withdraw their assistance to the Philippines if they were unhappy with his crackdown.
Yasay, a former securities regulator and lawyer who practiced in the United States, said the Philippines would be forever grateful to its former colonial ruler for "many significant countless things" over their decades-old alliance, but it remained underdeveloped and weak militarily.
He said that in the South China Sea, the United States could not guarantee it would help the Philippines protect its sovereignty, as it is bound to by a 1951 treaty between them.
"Our defensive forces remain grossly incapable in meeting the security threats that we face from potential foes, not to mention their stagnating impact on our development," Yasay said.
"Worse is that our only ally could not give us the assurance that in taking a hard line towards the enforcement of our sovereignty rights under international law, it will promptly come to our defense under our existing military treaty and agreements."
Yasay's tone contrasted sharply with that of Defence Secretary Delfin Lorenzana, who on Wednesday said Duterte may have been misinformed when he said U.S.-Philippine military exercises were of no benefit to his country.
The Philippines won an arbitration ruling in July by a tribunal in The Hague, which declared invalid China's expansive claims in the South China Sea. Manila's relations with Beijing have been strained over the case.
Since independence from the United States 70 years ago, it had never allowed the "little brown brothers" of the Philippines to become truly free, Yasay said.
The Philippines would seek to engage with China, Yasay said, and would be mindful of the lessons it had learned from being too close to Washington.
Today, continuing woes in commodities. Yet another hit to copper as China’s massive malinvestment bubble unwinds.

Codelco Delays $2.25 Billion in Investments Amid Low Copper Prices

Five-year spending plan curtailed for the second time

Updated Oct. 5, 2016 5:53 p.m. ET
Chile’s state copper miner Corporación Nacional del Cobre de Chile, or Codelco, said it would postpone $2.25 billion in investments aimed at maintaining production levels as it struggles with low copper prices.
Codelco, the world’s biggest copper producer, has a multi-billion dollar spending plan that involves developing six projects at aging mines to prevent a slump in copper output due to declining ore-grades. The original proposal called for investments of $25 billion, but it was later cut back to about $20 billion.
In a company newsletter, Codelco told employees that its board of directors agreed to further reduce spending by delaying some projects to ensure the sustainability of its investment plans.
---- Codelco’s decision to slow down its investment plans comes as company executives have warned the firm is going through one of its worst financial crises since it was created in the 1970s, citing to low copper prices, high debt, increased costs and a decline in productivity.
The company has laid off workers as part of cost cuts as it posted a $97 million loss in the first half of this year. During that period, it produced 843,000 tons of copper.
“We are all adjusting our expectations to this new reality,” Chief Executive Nelson Pizarro said recently.
President Michelle Bachelet said last week when announcing Chile’s 2017 budget that the government would give Codelco a capital injection to continue developing its projects.
Some lawmakers have also proposed scrapping a law that requires Codelco to hand over 10% of its sales to the Armed Forces. Since 2006, Codelco has given the Armed Forces $12 billion, according to a congressional committee report.
“If the law didn’t exist, our situation would be completely different,” Mr. Pizarro said. “I insist, it would be another scenario for us.”

Commodities to struggle to regain stance in portfolios: JPM

Wed Oct 5, 2016 | 12:19pm EDT
Commodities will battle to regain a prized place in many portfolios after the "super cycle" fizzled out and in a world of muted global growth, executives at JP Morgan Asset Management said.
The sector could, however, claw back a shred of its former glory by providing some diversification benefits, they said during a conference by the fund manager in London this week.
During a commodities boom mainly spurred by China's hunger for infrastructure in the years leading up to the global financial crisis, many investors boosted allocations to commodities to capture strong emerging market growth while diversifying from equities and bonds.
But during subsequent years of the financial crisis, commodities often moved in tandem with other asset classes.
"The rule of thumb is that assets diversify until they become fashionable," said John Bilton, head of the global strategy team for multi-asset solutions at JP Morgan Asset Management.
The group is one of the world's biggest fund managers with assets of $1.7 trillion.
"Commodities went from being a source of diversification to a source of additional return in portfolios."
The 19-commodity Thomson Reuters/Core Commodity CRB Index soared fourfold from early 1999 until touching a peak in July 2008, but has since slumped by more than half.
Those former buoyant returns are not due to come back as China's transition to a consumer-led economy is moderating commodity demand and elsewhere heavy debt burdens will weigh on economic growth for years to come, he added.

Meanwhile back in the central bank fuelled casinos, yet another high frequency trading algo “flash crash.” Whatever else it is, it isn’t capitalism. Still it’s interesting that French President teenage love-rat Hollande, wants the Brits to stop buying French goods and products once GB leaves the rump-EU.

Flash Crash of the Pound Baffles Traders With Algorithms Being Blamed

October 7, 2016 — 12:27 AM BST Updated on October 7, 2016 — 3:28 AM BST
The pound plunged as much as 6.1 percent against the dollar, the biggest decline since the day the U.K.’s Brexit referendum result was announced, in a move that traders said was exacerbated by computer-initiated sell orders.

Sterling sank as low as $1.1841 in early Asian trading, according to data compiled by Bloomberg, the lowest since March 1985. The pound pared the drop to trade 1.5 percent weaker at $1.2428 at 11:21 a.m. in Tokyo. Some traders saw the possibility of human error, or a so-called “fat finger,” with algorithms adding to selling pressure at a time of day where liquidity is typically low. Others pointed to a Financial Times article citing French President Francois Hollande as saying the U.K. must suffer the consequences of leaving the European Union.

Derek Mumford, a director at Rochford Capital Pty in Sydney, said he and his colleagues were searching for a reason as the pound tumbled, scanning news agency reports and the Internet.

“The speed of the move looks like a kind of a flash crash, some sort of failure,” Mumford said, adding that sterling is set to drop to $1.15 in the coming weeks if it doesn’t recover above $1.28. “I’m sort of struggling to justify it. I don’t think there’s any shock that the EU will be going for a hard Brexit.”

There was even confusion over how low the pound actually fell. Bloomberg’s composite price -- which takes the median contribution from a range of dealers -- showed the currency dropping to $1.1841. But some banks quoted sterling at even weaker levels, with at least one electronic trading platform recording a transaction as low as $1.1378, said traders familiar with the transactions, who asked not to be identified because they aren’t authorized to speak publicly. The discrepancy left some dealers in Asia waiting for client mediation teams to decide whether some stop-loss orders were filled, the traders said.

"The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States."
Shi Jianxun. China People’s Daily. September 16, 2008
At the Comex silver depositories Wednesday final figures were: Registered 29.29 Moz, Eligible 143.89 Moz, Total 173.18 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Yes it’s the banksters again, they can resist anything except temptation.  With everyone’s favourite dodgy bank Deutsche Bank copping a plea and switching sides, it doesn’t look good for the gold mafia. Perhaps that’s why the Bank of England just seems to have rigged the election of the new head of the London Gold Market. What does the Old Lady of Threadneedle Street know that we don’t (yet.)
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

The gold mafia, with apologies to Cary Grant. To Catch A Thief.

Banks must face U.S. gold rigging lawsuit; UBS is dismissed

Wed Oct 5, 2016 | 2:29pm EDT
A U.S. judge said gold investors may pursue much of their lawsuit accusing four major banks of conspiring for a decade to fix prices and exploit distortions at the expense of investors in global markets for the precious metal.

Antitrust and manipulation claims can move forward against Barclays Plc (BARC.L), Bank of Nova Scotia ("ScotiaBank") (BNS.TO), HSBC Holdings Plc (HSBA.L) and Societe Generale (SOGN.PA), U.S. District Judge Valerie Caproni in Manhattan said in a decision made public on Tuesday.

Investors allege that the banks conspired from 2004 to 2013 to fix prices. They did not estimate the size of the banks' gold portfolios, but said the gold derivatives market alone was as large as $650 billion during the class period.

"From the gold plaintiffs' standpoint, it's a very substantial victory," Dan Brockett, a partner at Quinn Emanuel Urquhart & Sullivan representing the investors, said in a phone interview on Wednesday.

Deutsche Bank AG (DBKGn.DE) settled related claims in April, and the investors plan to seek preliminary approval of a settlement, Brockett said.

Terms have not been disclosed, but Deutsche Bank has put the expected payment in escrow, he said.

In a separate case involving the silver market, Caproni said another group of investors may pursue market rigging claims against ScotiaBank and HSBC.

Both decisions dismissed UBS Group AG (UBSG.S) as a defendant, saying there was nothing showing it manipulated prices, even if it benefited from market distortions.

Barclays spokesman Andrew Smith, ScotiaBank spokesman Rick Roth, Societe Generale spokesman Jim Galvin and Deutsche Bank spokeswoman Amanda Williams declined to comment. UBS spokeswoman Erica Chase said the bank is pleased with the decisions. HSBC had no immediate comment.

Investors have several lawsuits before the Manhattan court accusing banks of conspiring to rig rates and prices in financial and commodities markets.

In the gold case, investors said Barclays, Deutsche Bank, HSBC, ScotiaBank and Societe Generale conspired to manipulate prices of gold, gold futures and options, and gold derivatives through twice-a-day meetings to set the London Gold Fixing.

The investors said this conspiracy let the banks suppress prices and reduce risk at other investors' expense.
In her 73-page decision, Caproni said the investors plausibly alleged that the five banks recklessly created "artificial price dynamics" for gold, and that their misconduct was the "proximate cause" of the distortions.
She let the investors pursue antitrust claims for alleged unlawful restraint of trade from January 2006 to December 2012. The judge dismissed a claim for unjust enrichment.
Caproni gave the investors 14 days to amend their complaint.
The case is In re: Commodity Exchange Inc Gold Futures and Options Trading Litigation, U.S. District Court, Southern District of New York, No. 14-mc-02548.

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?

New protein bridges chemical divide for 'seamless' bioelectronics devices

Date: October 3, 2016

Source: University of Washington

Summary: Peptides that could help bridge the gap where artificial meets biological have been unveiled by researchers, offering the potential to harness biological rules to exchange information between the biochemistry of our bodies and the chemistry of our devices.
Life has always played by its own set of molecular rules. From the biochemistry behind the first cells, evolution has constructed wonders like hard bone, rough bark and plant enzymes that harvest light to make food.
But our tools for manipulating life -- to treat disease, repair damaged tissue and replace lost limbs -- come from the nonliving realm: metals, plastics and the like. Though these save and preserve lives, our synthetic treatments are rooted in a chemical language ill-suited to our organic elegance. Implanted electrodes scar, wires overheat and our bodies struggle against ill-fitting pumps, pipes or valves.
A solution lies in bridging this gap where artificial meets biological -- harnessing biological rules to exchange information between the biochemistry of our bodies and the chemistry of our devices. In a paper published Sept. 22 in Scientific Reports, engineers at the University of Washington unveil peptides -- small proteins which carry out countless essential tasks in our cells -- that can provide just such a link.
The team, led by UW professor Mehmet Sarikaya in the Departments of Materials Science & Engineering, shows how a genetically engineered peptide can assemble into nanowires atop 2-D, solid surfaces that are just a single layer of atoms thick. These nanowire assemblages are critical because the peptides relay information across the bio/nano interface through molecular recognition -- the same principles that underlie biochemical interactions such as an antibody binding to its specific antigen or protein binding to DNA.
Since this communication is two-way, with peptides understanding the "language" of technology and vice versa, their approach essentially enables a coherent bioelectronic interface.
"Bridging this divide would be the key to building the genetically engineered biomolecular solid-state devices of the future," said Sarikaya, who is also a professor of chemical engineering and oral health sciences.
His team in the UW Genetically Engineered Materials Science and Engineering Center studies how to coopt the chemistry of life to synthesize materials with technologically significant physical, electronic and photonic properties. To Sarikaya, the biochemical "language" of life is a logical emulation.
"Nature must constantly make materials to do many of the same tasks we seek," he said.

Another weekend and another weekend to wonder just how bad Europe’s banking crisis has to get before either the next Lehman hits, our some responsible adult somewhere on the continent says enough is enough, and sets out on real banking reform. In the one month away US presidential election, will there be an October surprise and against whom? Have a great weekend everyone.

Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity.


The monthly Coppock Indicators finished September

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

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