Wednesday, 21 December 2016

Italy, A Christmas Bail-in?

Baltic Dry Index. 914 -12   Brent Crude 55.58

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

Eurasian Snow cover. (How bad will winter be?)

“All the world is made of faith, and trust, and pixie dust.”

Ebenezer Squid, with apologies to  J.M. Barrie, Peter Pan

As we start the wind down for the Christmas – New Year holidays, all news is very much back to good news again. Incoming President Trump fuels the optimism in the article below, with Trumpmania in full charge. Negatives like the surging dollar, a rising oil price, the end of the bond bull market bubble, and the recent terrorist atrocities, are dismissed as irrelevant for now. Next year’s slew of European elections threatening the status quo are for now not considered at all. A looming clash between America and China is dismissed as a slam dunk for America. Europe’s fragile banks will somehow magically recover next year under the effects of the ECB’s Pixie Dust bond buying program. What could possibly go wrong?

For now, group think rules. Keep moving with the herd and all will be well.  Who really knows what price that tulip will fetch in our greater fool, Trumpmania market. You just got to believe in that “and they all lived happily ever after" ending.  Still with the Dow all but at 20,000, I would add another purchased deep-out-of-the-money, highly speculative, stock futures put option here. Though I suspect that Trumpmania rolls on for another few weeks, the longer wishful thinking dominates in thin markets, the more vulnerable they become to an outside shock. I suspect that as we get in to the cold bleak world of January, with all the festivities and good will to all behind us, the difficulty facing the Trump presidency will come to the fore, and the realisation sink in that we are a very long way from reaching the Promised Land, if we ever reach it at all.

Nikkei, other Asian markets rise as Dow nears 20,000

By Kenan Machado Published: Dec 20, 2016 10:39 p.m. ET

Oil stocks jump, Japan exporters continue to benefit from weak yen

A record-breaking day in U.S. stocks overnight — with the Dow Jones Industrial Average hovering just below the symbolically significant 20,000 level — led Asian stocks higher Wednesday.
In early trade, Hong Kong’s Hang Seng Index HSI, +0.62%   was up 0.5%, Australia’s S&P/ASX 200 XJO, +0.40%   gained 0.6% followed by a 0.2% rise in Japan’s Nikkei Stock Average NIK, -0.24%   and a 0.3% increase in Korea’s Kospi SEU, -0.07%  . The Shanghai Composite was up 0.7%.
“It’s a good day to be an equity bull,” said Chris Weston, chief market strategist at IG Markets.
Overnight, the Dow Jones Industrial Average closed up 0.5% at 19974.62-an all-time high. The S&P 500 gained 0.4% and the Nasdaq Composite gained 0.5%.
The six-week strong stock market rally in the U.S. has come on expectations that President-elect Donald Trump will stimulate an economy that is already recovering smartly, and in particular make it easier for corporations bring back overseas cash.
The optimism helped send the dollar to a new 14-year high in U.S. trading Tuesday. The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, was last up at 93.38.
Meanwhile, investors pulled back on bond buying on Tuesday as fears over the fallout from the Turkish and German attacks eased. The yield on the benchmark 10-year Treasury was at 2.573%, near a two-year high, compared with 2.544% Monday. Yields rise as bond prices fall.
Falling bond prices pushed investors into equities, said Ric Spooner, chief market analyst at CMC Markets. Also, the positive outlook over the economies of Japan, Germany and the U.S. added to enthusiasm, he said.

Republican Presidents and Recessions: A Pattern Trump Would Like to Break

No GOP leader since World War II has dodged a downturn

by Rich Miller
Here’s a frightening factoid for Donald Trump as he prepares to take office next month: Every Republican president since World War II has been in power during at least one recession.

Of course, as the saying goes, past performance is not necessarily indicative of future results and the billionaire developer may well avoid a downturn on his watch.

But with the economic expansion soon to become the third-longest on record, the risk of a contraction occurring during his time in office can’t be cavalierly dismissed.

“Republican presidents seemingly can't do without” recessions, Joachim Fels, global economic adviser for Pacific Investment Management Co., wrote in a blog post dated Dec. 12.

The same can’t be said of Democrats. Outgoing President Barack Obama did preside over an economic downturn in his first six months in office – one he inherited from his predecessor, Republican George W. Bush. John F. Kennedy took office just before a recession ended. And the U.S. entered and exited slumps when Jimmy Carter and Harry Truman were in charge.

But it was recession-free during the tenures of Democrats Lyndon Johnson in the 1960s and Bill Clinton in the 1990s.

"The U.S. economy has performed better when the president of the United States is a Democrat rather than a Republican," Princeton University professors Alan Blinder and Mark Watson wrote in a paper published in the American Economic Review this year.

The difference isn't due to more expansionary fiscal and monetary policies under Democrats, according to Blinder, who served in the Clinton White House, and Watson.

Instead it appears to stem from less costly oil shocks, a more favorable international environment, productivity-boosting technological advances and perhaps more optimistic consumers, they wrote. Some of those disparities may be down to better policies, but luck also played a role.

Fels cautioned against overestimating the ability of presidents to prevent recessions – or to create them for that matter. After all, it's often the Federal Reserve which determines the ups and downs of the economy through changes in interest rates.

Elsewhere, it’s all but over for Italy’s “banks.” Will the bail-in fall on Christmas day?

Italy Bank Rescue Won’t Fill $54 Billion Hole on Balance Sheets

by Yalman Onaran
Italian banks need at least 52 billion euros ($54 billion) to clean up their balance sheets, much more than the rescue package proposed Monday by the government.

The shortfall is an estimate of how much lenders would have to increase loan-loss provisions to allow for the sale of bad debt, according to data compiled by Bloomberg. It includes the 8 billion euros of provisions UniCredit SpA has said it will add before selling 18 billion euros of its worst loans and uses that ratio as a proxy for the gap at other banks. The total also includes the 5 billion euros Banca Monte dei Paschi di Siena SpA has been struggling to raise in recent months.

The Italian government asked parliament this week to increase the public borrowing limit by as much as 20 billion euros to potentially backstop Monte Paschi and other lenders. The rescue package needs to be closer to 30 billion euros to solve Italy’s bad-debt crisis, according to Paola Sabbione, a Milan-based analyst at Deutsche Bank AG. That conclusion assumes UniCredit and some other lenders can raise about 20 billion euros through capital markets, asset sales and profit retention -- leaving the government to fill the rest of the 52-billion-euro hole.

“Some of the publicly traded banks can probably raise some of the funds needed for a cleanup, including Monte Paschi,” said Sabbione, who has covered Italian banks for the past decade. “So the government would have to plug in the rest. But still, at this level, it won’t do the full job.”

----Italian banks had 356 billion euros of bad loans at the end of June and 165 billion euros of provisions against them, according to the latest Bank of Italy data. To get the worst category to 75 percent provisioning and the rest to 40 percent, as UniCredit is doing, would take 52 billion euros.

“Why, sometimes I've believed as many as six impossible things before breakfast.”

Ebenezer Squid, with apologies to Lewis Carroll, Alice in Wonderland

At the Comex silver depositories Tuesday final figures were: Registered 37.55 Moz, Eligible 145.37 Moz, Total 182.92 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, is Facebook about to be the next victim in the escalating War of Massive Fines, that’s broken out between the USA and the EU? Uncle Scam hits at the EU and Switzerland’s dodgy banks, tag-team EU-EC hits back at Uncle Scam’s Silly-Con Valley technology giants.

EU accuses Facebook of giving misleading information during WhatsApp takeover

Tue Dec 20, 2016 | 7:38am EST
The European Commission has charged Facebook Inc with providing misleading information during its takeover of the online messaging service WhatsApp, opening the company to a possible fine of 1 percent of its turnover.
The statement of objections sent to Facebook will not have an impact on the approval of the $22 billion merger in 2014, the Commission said in a statement on Tuesday.
Facebook becomes the latest Silicon Valley target of EU antitrust chief Margrethe Vestager, who has demanded Apple pay back $14 billion in taxes to Ireland and hit Google with two market abuse investigations.
The issue regards a WhatsApp privacy policy change in August when it said it would share some users' phone numbers with parent company Facebook, triggering investigations by a number of EU data protection authorities.
The Commission said Facebook had indicated in its notification of the planned acquisition that it would be unable reliably to match the two companies' user accounts."
"In today's Statement of Objections, the Commission takes the preliminary view that, contrary to Facebook's statements and reply during the merger review, the technical possibility of automatically matching Facebook users' IDs with WhatsApp users' IDs already existed in 2014," it said.
"The Commission's preliminary view is that Facebook gave us incorrect or misleading information during the investigation into its acquisition of WhatsApp," said Vestager, the EU's competition commissioner.
Facebook has until Jan. 31 to respond. If the Commission's concerns are confirmed it can impose a fine on the U.S. company of up to 1 percent of turnover. Companies fined can appeal to the European Court of Justice, which has overturned some penalties in the past.
"We respect the Commission's process and are confident that a full review of the facts will confirm Facebook has acted in good faith, a Facebook spokeswoman said.

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?

First use of graphene to detect cancer cells

System able to detect activity level of single interfaced cell

Date: December 19, 2016

Source: University of Illinois at Chicago

Summary: By interfacing brain cells onto graphene, researchers have shown they can differentiate a single hyperactive cancerous cell from a normal cell, pointing the way to developing a simple, noninvasive tool for early cancer diagnosis.

By interfacing brain cells onto graphene, researchers at the University of Illinois at Chicago have shown they can differentiate a single hyperactive cancerous cell from a normal cell, pointing the way to developing a simple, noninvasive tool for early cancer diagnosis.
"This graphene system is able to detect the level of activity of an interfaced cell," says Vikas Berry, associate professor and head of chemical engineering at UIC, who led the research along with Ankit Mehta, assistant professor of clinical neurosurgery in the UIC College of Medicine.
"Graphene is the thinnest known material and is very sensitive to whatever happens on its surface," Berry said. The nanomaterial is composed of a single layer of carbon atoms linked in a hexagonal chicken-wire pattern, and all the atoms share a cloud of electrons moving freely about the surface.
"The cell's interface with graphene rearranges the charge distribution in graphene, which modifies the energy of atomic vibration as detected by Raman spectroscopy," Berry said, referring to a powerful workhorse technique that is routinely used to study graphene.
The atomic vibration energy in graphene's crystal lattice differs depending on whether it's in contact with a cancer cell or a normal cell, Berry said, because the cancer cell's hyperactivity leads to a higher negative charge on its surface and the release of more protons.
"The electric field around the cell pushes away electrons in graphene's electron cloud," he said, which changes the vibration energy of the carbon atoms. The change in vibration energy can be pinpointed by Raman mapping with a resolution of 300 nanometers, he said, allowing characterization of the activity of a single cell.
The study, reported in the journal ACS Applied Materials & Interfaces, looked at cultured human brain cells, comparing normal astrocytes to their cancerous counterpart, the highly malignant brain tumor glioblastoma multiforme. The technique is now being studied in a mouse model of cancer, with results that are "very promising," Berry said. Experiments with patient biopsies would be further down the road.

The monthly Coppock Indicators finished November

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

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