Friday, 30 December 2016

2016 The End.

Baltic Dry Index. 961 Friday   Brent Crude 57.12

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

“The world is a place that’s gone from being flat to round to crooked.”

Mad Magazine.

We open with Asian markets limping out of 2016. Next month brings an OPEC crude oil production cut, a new US President, an unreformed EUSSR still struggling to fix its banks, another month closer to Brexit, the World Economic Forum at Davos, the start of a trade war against China, and retaliation by Russia against the USA. Next year brings in a slew of iffy European elections, with Europe’s voters set to settle scores with the elite that they feel have let them down. A USA trade war against everyone but especially against China. Rising interest rates. Peace in the Middle East. Well no, I just made that up.  What could possibly go wrong?

Euro Climbs Along With Oil as Japan Stocks Decline: Markets Wrap

by Benjamin Purvis and Heejin Kim
The euro spiked higher as the dollar weakened for a second day and oil advanced in thin end-of-year trading. Japanese stocks headed toward their first annual loss since 2011 while Hong Kong shares rallied.
The Bloomberg Dollar Spot Index shifted lower after reaching the highest level in more than a decade earlier this week. Oil was poised for its first annual advance in three years. The Nikkei 225 Stock Average’s gain for the year largely evaporated, while Hong Kong shares turned positive for 2016. The S&P 500 Index ended little changed Thursday following the announcement of new American sanctions against Russia over election hacks.

Trading has been thin across the globe during the last week of the year, with volumes in crude oil, equities and currencies all below average. Investors may be reallocating money as they assess asset moves in the wake of the U.S. election that took the dollar to multi-year highs, sent Treasuries tumbling and spurred a rally in American equities.

"Asian markets could see another day of mixed performances on the final trading day of the year with little inspiration for price direction," said Jingyi Pan, a market strategist at IG Asia Pte. "The market is likely to be repositioning for the New Year with U.S. markets and that could place some pressure on markets that have underperformed lately."

What History Has to Say About the Economy Trump Will Inherit

The economy was stronger in 2016 than several previous election years
by Andre Tartar 29 December 2016, 05:00 GMT
Research suggests factors beyond the control of any U.S. president, not their actual policies, set the course of the economy. Yet with voters, President-Elect Donald Trump will secure much of the praise or blame when it comes to the impact of his agenda over the next four years.

Here are six charts that illustrate the economy that Trump — who wants to focus on "jobs, jobs, jobs" — will inherit from President Barack Obama and how it compares with historical standards.

Gross domestic product is chugging along, growing at a 1.7 percent pace in the year through the third quarter. That's slower than what most prior administrations faced, and comes against a backdrop of weak global demand, aging demographics and tepid corporate investment. Trump has said he's aiming to achieve 3.5 to 4 percent average annual growth, even as real GDP expansion is projected to average just 2.2 percent next year and 2.3 percent in 2018, according to economists.

Non-farm payrolls in November came in at 178,000, the fourth-worst situation among the 10 incoming presidents included in this analysis, though still a massive improvement from the nearly 770,000 jobs lost around Election Day 2008. The 4.6 percent jobless rate in the same month puts Trump in a better situation than five of the previous six presidents — the exception being President George W. Bush, who won the election in 2000 when the unemployment rate was under 4 percent.

----U.S. industrial production fell by 0.6 percent in November. While not the 8.7 percent contraction Obama had to overcome, reversing this will be one of Trump's biggest challenges.

U.S. evicts Russians for spying, imposes sanctions after election hacks

Thu Dec 29, 2016 | 9:47pm EST
President Barack Obama on Thursday ordered the expulsion of 35 Russian suspected spies and imposed sanctions on two Russian intelligence agencies over their involvement in hacking U.S. political groups in the 2016 presidential election.

The measures, taken during the last days of Obama's presidency, mark a new post-Cold War low in U.S.-Russian ties and set up a potential flashpoint between incoming President-elect Donald Trump and fellow Republicans in Congress over how to deal with Moscow.

Obama, a Democrat, had promised consequences after U.S. intelligence officials blamed Russia for hacks intended to influence the 2016 election. Officials pointed the finger directly at Russian President Vladimir Putin for personally directing the efforts and primarily targeting Democrats, who put pressure on Obama to respond.

---- The Kremlin, which denounced the sanctions as unlawful and promised "adequate" retaliation, questioned whether Trump approved of the new sanctions. Moscow denies the hacking allegations.

U.S. intelligence agencies say Russia was behind hacks into Democratic Party organizations and operatives ahead of the Nov. 8 presidential election. U.S. intelligence officials say the Russian cyber attacks were aimed at helping Trump defeat Democrat Hillary Clinton.

Republican and Democratic lawmakers have voiced concern about Russia's actions, setting up a potential wall of opposition should Trump seek to overturn Obama's measures.

---- Obama put sanctions on two Russian intelligence agencies, the GRU and the FSB, four GRU officers and three companies that he said "provided material support to the GRU’s cyber operations."

He said the State Department declared as "persona non grata" 35 Russian intelligence operatives and is closing two Russian compounds in New York and Maryland that were used by Russian personnel for "intelligence-related purposes." The State Department originally said the 35 were diplomats.

The 45-acre complex in Maryland includes a Georgian-style brick mansion, swimming pool, tennis courts and cottages for embassy staff.

A senior U.S. official told Reuters the expulsions would come from the Russian embassy in Washington and consulate in San Francisco. The Russian embassy declined to comment.

----- "These actions are not the sum total of our response to Russia’s aggressive activities. We will continue to take a variety of actions at a time and place of our choosing, some of which will not be publicized," Obama said.

Trump Says U.S. Should ‘Move on’ Rather Than Sanction Russia

by Jennifer Epstein
29 December 2016, 02:29 GMT
President-elect Donald Trump said Wednesday that the U.S. should move on rather than retaliate against Russia for interfering in the 2016 election, with the Obama administration expected to soon take action against Moscow.
U.S. intelligence agencies have concluded that the Russian government orchestrated cyber attacks against the Democratic National Committee and other American political groups and then leaked information to interfere in the Nov. 8 elections. Russia has denied the accusations. Trump has said he wants to improve relations with Russia and has praised its president, Vladimir Putin.
“I think we ought to get on with our lives,” Trump told reporters outside Mar-a-Lago, his Palm Beach, Florida estate, with boxing promoter Don King standing by his side. "I think that computers have complicated lives very greatly. The whole age of computer has made it where nobody knows exactly what is going on."
President Barack Obama said Dec. 16 that the U.S. will retaliate against Russia at an unspecified time, in a "thoughtful, methodical way." The response may be covert, public or both, he said.
Earlier Wednesday, Senator Lindsey Graham, a Republican from South Carolina, said during a trip to the Latvian capital that Russia and Putin should expect new sanctions for meddling in the election, Reuters and AP reported.

Elsewhere, what will 2017s trade war bring for China?

China Fault Lines: Where Economic Turbulence Could Erupt in 2017

Bloomberg News 28 December 2016, 21:00 GMT
China’s balancing act isn’t getting any easier.

Policy makers are grappling with how to attack excessive borrowing and rein in soaring property prices while maintaining rapid growth. They’re also battling yuan depreciation and capital outflow pressures as U.S. interest rates rise, while on the horizon looms the risk of confrontation with America’s President-elect Donald Trump on trade and Taiwan.

It’s a high-wire act with the potential to produce shocks, like the one erupting in the bond market as tighter liquidity threatens financing for small companies. President Xi Jinping told top officials he’s open to growth below the 6.5 percent target to 2020 if it carries too much risk, a person familiar with the situation said last week. Leaders have pledged to reduce hazards for 2017.

While forecasters have been raising growth estimates for next year and don’t expect major turbulence, the following are among areas they flag as having the potential to trigger a plunge in growth or systemic risk in the financial system:

Quickening Outflows

Outflows will exceed $200 billion in the fourth quarter and rise further in the first quarter, said Pauline Loong, managing director at research firm Asia-Analytica in Hong Kong.

Capital is leaving for more fundamental reasons than rising U.S. rates and a stronger dollar, she said. Drivers include rising expectations of yuan weakness, fears of an abrupt policy U-turn trapping funds in the country, and a lack of profitable investment opportunities at home amid rising costs and slowing growth.

“The real nightmare for Beijing – and for markets – is a vicious cycle of capital outflows triggering bigger devaluations of the yuan that in turn drive bigger and faster outflows,” Loong said. “We expect capital outflows to increase in the coming months as Chinese money seeks to maximize exit quotas in case of more stringent restrictions later on."

Trump’s appointment of Peter Navarro, a frequent critic of China’s trade practices, to a newly formed White House National Trade Council, increases the risk of turbulence between the world’s two biggest economies. An editorial Friday in the state-run China Daily accused him of "anti-China alarmism" and said appointing the "Death by China" author is another sign Trump seems intent on confrontation.

Saber rattling by the countries could unsettle markets next year with the risk that each side finds it politically attractive to play to their populist base, said David Loevinger, a former China specialist at the U.S. Treasury.

China Turns to $503 Billion Rail Expansion to Boost Growth

Bloomberg News 29 December 2016, 03:50 GMT 29 December 2016, 06:56 GMT
China plans to spend 3.5 trillion yuan ($503 billion) to expand its railway system by 2020 as it turns to investments in infrastructure to bolster growth and improve connectivity across the country.

The high-speed rail network will span more than 30,000 kilometers (18,650 miles) under the proposal, according to details released at a State Council Information Office briefing in Beijing Thursday. The distance, about 6.5 times the length of a road trip between New York and Los Angeles, will cover 80 percent of major cities in China.

The plan will see high-speed rail lines across the country expand by more than half over a five-year period, a boon to Chinese suppliers of rolling stock such as CRRC Corp. and rail construction companies including China Railway Construction Corp. and China Railway Group Ltd. Earlier this year, China turned to a private company for first time to operate an inter-city rail service on the mainland, part of President Xi Jinping’s push to modernize the nation’s transport network amid slowing growth in the world’s second-largest economy.

China will also add 3,000 kilometers to its urban rail transit system under the plan released Thursday.
At the end of 2015, China had 121,000 kilometers of railway lines, including 19,000 kilometers of high-speed tracks, according to a transportation white paper issued Thursday. The U.S. had 228,218 kilometers of rail lines as of 2014, according to latest available data from the World Bank.

The Chinese government will invite private investment to participate in funding intercity and regional rail lines, Yang Yudong, administrator of the National Railway Administration, said at the briefing.

Russia will not soon become, if it ever becomes, a second copy of the United States or England - where liberal values have deep historic roots.

Vladimir Putin.

At the Comex silver depositories Thursday final figures were: Registered 28.38 Moz, Eligible 155.08 Moz, Total 183.46 Moz.  A massive move from deliverable registered to non-deliverable eligible.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Singapore Defaults Seen as Bellwether for 2017 Asia Distress

by Denise Wee
27 December 2016, 16:01 GMT 28 December 2016, 02:59 GMT
Singapore’s commodities-related defaults could turn out to be the canary in the mine.
Despite a modest rebound in resource prices, restructuring specialists including KPMG and Hogan Lovells Lee & Lee see more Asia-Pacific commodities and shipping companies being pushed into delinquency. Law firm DLA Piper said there could be choppy waters ahead on rising interest rates and President-elect Donald Trump’s overhaul of trade with China. Regional non-bank borrowers face $76.4 billion of dollar bonds maturing in 2017, 24 percent more than this year, Bloomberg-compiled data show.
While oil prices have jumped 17 percent since Trump was elected, they are about half what they were in 2014. Resource prices as a whole are down 64 percent from their peak before the 2008 global financial crisis, the Bloomberg Commodity Index shows. Singapore, whose economy relies on shipping and oil service firms, was exposed first because the companies were smaller and less able to tap government support. 
“Singapore is a bellwether for the larger Asean and Asian region,” said Andy Ferris, Singapore-based partner at Hogan Lovells Lee & Lee. “Some of the fundamental problems those industries face won’t go away. Many of the companies in the commodities sector have high levels of debt and depressed revenues.”
Five companies in the city, including oil services firms Swiber Holdings Ltd. and Swissco Holdings Ltd., defaulted on nearly S$1 billion ($691 million) of bonds in 2016. KPMG said defaults could widen to include Singapore’s developers after home prices dropped by the most in more than seven years in the three months ended Sept. 30. China’s overheated housing market cooled in November as authorities rolled out renewed buying curbs.

Payments Due

Real estate firms in the Asia-Pacific region face $8.7 billion of dollar bonds due 2017, while energy-related companies including coal miners and oil services firms must repay $12 billion, Bloomberg-compiled data show.

Commodities trader Noble Group Ltd.’s dollar bonds maturing 2020 traded at 84.2 cents on the dollar on Monday, while oil producer MIE Holdings Corp.’s dollar notes due 2018 traded at 83.3 cents, Bloomberg-compiled data shows.

Graham Martin, head of restructuring at KPMG in Singapore, said he expects more defaults among oil services and shipping firms throughout Asia including countries like Malaysia and Thailand, with rising stress in Indonesia where coal miners face low prices.

“We think Indonesia will be one of the top markets for restructuring work in 2017,” said Martin, who is planning to add headcount in Jakarta.

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?

Graphene Enables Spin Filtering at Room Temperatures for First Time

By Dexter Johnson Posted 28 Dec 2016 | 21:00 GMT
Graphene has had an unusual history in the world of spintronics where the intrinsic spin of an electron is used to encode information rather than its charge. At first, graphene was dismissed in these applications because when it is laid out flat, the spin of the electrons is unaffected and their direction remains random rather than patterned. But a host of research projects changed this idea when results indicated a great deal of possible uses for graphene in spintronic applications.

The latest research comes from a team at the Naval Research Laboratory (NRL) in which a layer of graphene is placed between layers of nickel and iron. The layering creates the first thin-film junction device capable of spin filtering at room temperature. The results could be a boon for next-generation magnetic random access memory (MRAM) in which spin-polarized pulses flip a magnetic bit from 0 to 1 and back again.

Spin filtering is a phenomenon that makes it possible to get highly spin-polarized charge carriers. Essentially, the device acts as a kind of filter that only allows an electron with one type of spin to pass through while the other is blocked. This ensures that the up and down polarization of the electrons are distinct from each other, making the “0” and “1” of digital logic.

In this layered architecture, the spin filtering phenomenon is the result of an interaction of the quantum mechanical properties of graphene with those of a crystalline nickel film. When the nickel and graphene layers are aligned, only electrons with one specific spin are able to transfer from one material to the other.

“The spin filtering had been theoretically predicted and previously seen only for high-resistance structures at cryogenic temperatures,” said Dr. Enrique Cobas, principal investigator, NRL Materials Science and Technology Division, in a press release. “The new results confirm the effect works at room temperature with very low resistance in arrays of multiple devices.”

Another weekend, another year. Have a great weekend everyone.

"We shouldn't pour cold water on everything.  We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

The monthly Coppock Indicators finished November

DJIA: 19124  +53 Up NASDAQ:  5324 +41 Up. SP500: 2198 +58 Up

1 comment:

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