Baltic Dry Index. 1196 -08 Brent Crude 53.54
Eurasian Snow cover. (How bad will winter
be?)
“If I had a world of my own, everything would be nonsense.
Nothing would be what it is, because everything would be what it isn't. And
contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You
see?”
Mario Draghi, with
apologies to Lewis Carroll and Alice.
Today, was November the straw that broke the
Camel’s back in the multi-decade bull
market in bonds? If it was, Europe’s going to lose a slew of banks, probably
starting with old Three Card Monte di Siena in Italy, and ending with under
indictment Deutsche Bank in Germany. I wonder if Deutsche Bank and Volkswagen
might consider a merger of dodgy equals? Today, Europe faces a critical
weekend.
Global Bonds Suffer Worst Monthly Meltdown as $1.7 Trillion Lost
Garfield Clinton Reynolds and Wes Goodman
November 30, 2016 — 10:16 PM EST December 1, 2016 — 2:04 AM
EST
The 30-year-old bull market in bonds looks to be ending with a bang.
The Bloomberg Barclays Global Aggregate Total Return Index lost 4
percent in November, the deepest slump since the gauge’s inception in 1990.
Gathering U.S. economic momentum and Donald Trump’s election win -- with
promises of tax cuts and $1 trillion in infrastructure spending -- spurred
investors to dump debt that was offering near-record-low yields and pile into
stocks.
Calling
an end to the three-decade bond bull market is no longer looking like a fool’s
errand: the Federal Reserve is expected to start raising interest rates -- and
do so more often than once a year, inflationary expectations are climbing and
there are hints global central banks may be buying fewer sovereign securities
going forward. Investors pulled $10.7 billion from U.S. bond funds in the two
weeks after Trump’s victory, the biggest exodus since 2013’s “taper tantrum,”
while American stock indexes jumped to record highs.
“A lot of people are beginning to think that it is the end of the bull
rally,” said Roger Bridges, the chief global strategist for interest rates and
currencies in Sydney at Nikko Asset Management’s Australia unit, which oversees
$14 billion. U.S. 10-year yields may rise to 2.7 percent in January, Bridges
said. “The trend is your friend.”The rout wiped $1.7 trillion from the global index’s value in November, also a record, in a month that saw world equity markets’ capitalization climb $635 billion.
Read More: Few bond investors are seeing an end to the rout
The yield on 10-year U.S. notes rose 56 basis points in November, the biggest jump since 2009, and was at 2.38 percent as of 7:03 a.m. in London on Thursday. The average yield on the Bloomberg Barclays Global gauge climbed to 1.61 percent on Nov. 23, after touching a record low of 1.07 percent on July 5.
The
rise in yields shows the limitations of the quantitative easing policies at the
biggest central banks, Bridges said. Bonds will be especially vulnerable if the
European Central Bank discusses reducing its debt-purchase program at its Dec.
8 meeting, he said.
Up next, Italy’s big weekend. Are Italians man enough to do in the
wealth and jobs destroying failed Bilderberger vanity project, the EUSSR.
Below, Marketwatch spins the positive case and attempts to put lipstick on
Europe’s pig.
What happens if Italy votes ‘no’ on Sunday
By Andrea Montanino Published:
Dec 1, 2016 9:06 a.m. ET
It won’t kill the euro, but it will change the direction of Europe
Sunday’s Italian referendum is another challenging step for Europe and
for its nervous financial markets. In the last few days, markets have been
experiencing increased volatility, especially for Italian banks, and yields on
sovereign bonds of highly indebted European nations have risen.
This is the result of uncertainty about what is to come next. A
supporting vote for the proposed constitutional reforms, which would strip the Senate of much
of its power, will strengthen the leadership of Prime Minister
Matteo Renzi, both in Italy and in Europe, boost confidence about the reform
process, and provide a path toward a more pro-growth Europe.
But what if the “no” vote
wins and Renzi resigns? This won’t be the beginning of the failure of the euro
or of the European project. Europe has faced far more problematic and
challenging situations. Think of the financial assistance to Greece and
Portugal, the decision to impose capital control in Cyprus, the refugee crisis,
and the rescue of the Spanish banking system, just to mention a few in recent
years. In all cases, the European leaders have found their way, although not
always in a linear, straightforward and clear manner.
Those who consider that this vote could be a disruptive event for the
European Union — potentially even worse than Brexit — forget this is a normal
feature embedded in Italy’s constitutional system: The referendum was
compulsory and not a political decision of the prime minister. No matter the
outcome, it is very unlikely that Italy will face a financial and institutional
crisis.
But a negative vote likely
would make it harder for Italy’s fragile banks to recapitalize in the short
term, exacerbate tensions among European leaders in the medium term — and could
alter the vision of Europe in the long term.
In the short term, the recapitalization of Monte Paschi di Siena BMPS, -3.69% , which started this week and will
continue all through December, may become more problematic since
foreign institutional investors might plan to put their investment decisions on
hold for a while. Unicredit UCG, +2.97% will likely go to the market for cash in
the following months, and political uncertainty will not help.
Given the size and
relevance of these banks, one can assume that other troubled banks in Europe
will be affected by the uncertainty that would surround Italy and Europe after
the vote. It is likely there will be a harsh debate on how bail-in rules for
banks should be applied. Should there be a search for pragmatic solutions to
protect retail bondholders in case of a bail-in, or should officials stick
instead to the rigid line that shareholders and bondholders must be bailed in
before any public capital injection? It will be tough for Germany, France and
the Netherlands to agree for a pragmatic solution in the midst of their
electoral campaigns where the current governments must campaign against a
mounting anti-Europe mood.
Morehttp://www.marketwatch.com/story/what-happens-if-italy-votes-no-on-sunday-2016-12-01
Below, Der Spiegel’s take on Italy.Renzi's High Stakes PokerEurope Holds Its Breath Ahead of Italian Vote
Italian Prime Minister Matteo Renzi may be facing defeat
in a game of high-stakes poker with the electorate. If the Dec. 4
constitutional referendum fails, there are dark clouds on the horizon for
Europe's future. The country is in poor economic shape and financial markets
are alarmed.
The photo montage on the stage behind the Italian leader looks more like a wanted poster: It depicts seven sinister looking men frowning, some of them well advanced in years. They look like mafia godfathers.
Italian Prime Minister Matteo
Renzi uses the images to show who his adversaries are. Late in the evening at a
trade fair in Bari, he is railing against those who would buck progress and
vote against his planned constitutional reforms on Dec. 4. At the head of the
pack are these seven elderly signori, including four former prime
ministers, a former Constitutional Court president, a former government
minister and the leader of the strongest opposition party.
The prominent rebels have
divergent reasons for their objection to the upcoming national reform referendum.
But they are united in their verdict that the new constitution, promoted as the
key to slimming down the state, would damage Italy's democratic foundation.
The fact that Renzi is
publicly attacking his critics betrays his nerves as the vote approaches.
Recent polls show opponents leading, prompting the prime minister to
increasingly invoke the country's "silent majority." Even if the
ballot may show that the vote is a simple choice between "yes" and
"no," in reality, Renzi has said, it's "now or never." The
opportunity to set the course for a better future for Italy after decades of
paralysis won't come around again soon, he says.
The 'Mother of all Battles'
The prime minister has said he
will step down if he loses the referendum. Back in January, he declared the
constitutional reform to be the "mother of all battles" and
unnecessarily tied his own future to its outcome. It was an act of hubris that
has transformed the referendum into a vote on his leadership. Those who want to
see the back of the prime minister must merely vote "no" in the
referendum.
If the government were to
fall, it would hit highly indebted Italy, a core EU member state, at a
sensitive time. The Italian central bank in Rome has already registered a
"strong increase in uncertainty" on financial markets. The risk
premium on Italian sovereign bonds relative to the interest rate Germany must
pay its creditors has doubled since the beginning of the year, as trust in
Italy had declined among investors. Economists like Nobel laureate Joseph
Stiglitz and Germany's Hans-Werner Sinn are already speculating over the
possibility Italy will leave the eurozone.
Morehttp://www.spiegel.de/international/europe/italy-referendum-could-be-disaster-for-europe-a-1123430.html#ref=nl-international
Elsewhere in Europe, the sky is starting to fall. A dithering UK government got hammered in an unnecessary by-election. In France, teenage love rat Hollande became a quitter. From the Mediterranean to the Baltic to the Atlantic, Germany now rules. But how will Brussels react?
Brexit Blow for May as Pro-EU Party Wins By-Election in London
by Eddie Buckle
The
anti-Brexit Liberal Democrats unexpectedly gained a U.K. parliamentary seat in
a by-election Thursday, a result that
may further complicate Prime Minister Theresa May’s efforts to begin the
process of leaving the European Union early next year.
Liberal Democrat candidate Sarah Olney
won the seat of Richmond Park, a southwest London district that overwhelmingly
backed staying in the EU in June’s referendum, according to the BBC. The party,
which held the seat until 2010, put Brexit at the heart of the contest, calling
for a second referendum on the exit terms achieved by May and threatening to
vote in parliament against her plan to trigger the two-year countdown to
leaving by the end of March.
Pro-Brexit former Conservative lawmaker Zac Goldsmith had been clear favorite with bookmakers to retain the district. He ran as an independent after quitting his seat in October and triggering the contest to protest the decision by May’s government to build a third runway at nearby Heathrow Airport. The constituency lies directly under the Heathrow flight path.
May and her fellow Conservative ministers have come under attack from opposition parties for failing to give details of the government’s demands for its post-Brexit deal. A YouGov Plc poll conducted in the middle of last month found only 18 percent of respondents saying the government is doing a good job in negotiating the divorce from the EU.
The next big test of May’s policy comes in the U.K. Supreme Court on Monday. Judges will begin a four-day hearing of the government’s appeal against a High-Court ruling that parliamentary approval is needed to invoke Article 50 of the EU’s Lisbon Treaty, the start of the withdrawal process.
More
Grim Hollande says he won't seek second term as French president
President Francois Hollande shocked France on Thursday by announcing he
would not seek a second term next year, acknowledging his deep unpopularity and
making way for another leftist candidate to take on conservative Francois
Fillon and far-right leader Marine Le Pen.
The surprise announcement - effectively an admission that by running
again he would hurt his Socialist party's chances - marks the first time since
France's fifth Republic was created in 1958 that an incumbent president has not
sought a second mandate.
"I am aware today of the risk that going down a route that would
not gather sufficient support would entail, so I have decided not to be a
candidate in the presidential election," a sombre-looking Hollande said in
a televised address.
Dogged by high unemployment, Hollande is the least popular president in
French polling history, yet his closest aides had consistently said he would
run.
After Britain's shock vote to quit the EU and the U.S. choice of Donald
Trump as president, the election next April and May is on course to turn into
another test of voters' anger with traditional elites, with Le Pen tapping into
frustration with immigrants, austerity and the European Union.
The past two weeks have turned French politics on its head. First former
president Nicolas Sarkozy was knocked out of the conservatives' primary, and
then runaway favorite Alain Juppe was beaten to the party's nomination by
Fillon, a reformist in the mold of Britain's Margaret Thatcher.
Hollande's retreat makes it likely that his prime minister, Manuel
Valls, will throw his hat in the ring to take part in the Socialist primaries
in January.
More
At the Comex silver depositories Thursday final figures were: Registered 33.25 Moz, Eligible 145.36 Moz, Total 178.61 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
OPEC, are Russian production cuts, real or
imaginary? “After you. No after you!”
“Why, sometimes I've
believed as many as six impossible things before breakfast.”
Lewis Carroll, Alice
in Wonderland
Russia’s Pledge to OPEC Will Mean ‘Herding Cats’ to Deliver Cuts
Stephen Bierman and Dina Khrennikova
December
1, 2016 — 6:36 AM EST
Russia
has committed to cooperate with OPEC by cutting as much as 300,000 barrels a
day from its oil output but offered no clear method for enforcement, creating
uncertainty about how easily the reduction can be delivered.
Output
cuts should be spread proportionally between Russian producers, who have said
they support the move, Energy Minister Alexander Novak told reporters Thursday.
Yet no oil companies have so far taken the lead on explaining how they will
implement the cuts, said Chris Weafer, a partner at Macro Advisory.
State-controlled Rosneft PJSC is likely to bear most of the burden,
according to Renaissance Capital.
“Trying to get an agreement for a pro-rata cut amongst the Russian oil
producers, even if mandated by the Kremlin, would be akin to herding cats,”
Weafer said by e-mail Thursday. “All would want to wait to see what the others
do first.”The Organization of Petroleum Exporting Countries confounded skeptics on Wednesday by reaching an agreement to cut production by 1.2 million barrels a day. Russia added to the surprise by saying it too would reduce current output of 11.2 million barrels a day -- a reversal for Novak who had for months expressed Russia’s preference for freezing at that level. While crude futures jumped above $50 a barrel on the news, questions remain over how the supply curbs will be implemented.
Lukoil PJSC Russia’s second largest producer, supports OPEC’s moves to stabilize global oil markets, Pavel Zhdanov, the company’s director of capital markets and mergers and acquisitions, said on conference call Wednesday. It is too early to get into details, he said.
The press services of Rosneft, Russia’s largest producer, and Lukoil declined to comment on any measures they would take to enact cuts.
Rosneft’s Burden
“Rosneft looks like the number one company that should take the biggest share of the cut,” Ildar Davletshin, an oil analyst at Renaissance Capital, said by e-mail. It controls almost 50 percent of Russian oil output and it has one of the lowest shares of so-called greenfields, or new developments, in its current production portfolio, he said.Cuts are more likely to be achieved by dialing back drilling on older fields, allowing the natural decline rates to grow, as opposed to stopping new projects, he said.
More
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 has built the world’s largest solar power plant
30 November 2016
Following eight months of construction, India has finished building its
new solar power farm in Kamuthi which will replace California’s Topaz Farm
as the world’s biggest solar plant.
The massive facility packs 648 megawatts, which should suffice to
power over 150,000 homes, and consists of 2.5 million solar modules, 576
inverters, 154 transformers as well as 6,000 kilometers of cables.
The solar plant spreads over 2,500 acres (or 10 square kilometers) of
land and cost a total of $679 million to build. By comparison, Topaz Farm,
which can generate up to 550 megawatts of power, took almost two years and over
2.5 billion in funds to build.
Adani Group sponsored and oversaw the project. “Before us, the largest
solar power plant at a single location was in California in the U.S. That was
550 MW and was completed in around three years. We wanted to set up a solar
plant of 648 MW in a single location in less than a year,” said Adani CEO Vneet
Jaain.
With the introduction of this solar farm, India is expected to become
the world’s third-biggest solar market from next year, trailing behind only
China and the US.
Still, the country has a long way to go before reaching its goals to
generate solar energy for 60 million homes by 2022, with plans to produce 40
percent of its power needs from non-fossil fuels by 2030.
In case you want to catch a glimpse of the colossal plant, National
Geographic has previously made a documentary about Adani’s ambitious
undertaking.
Another weekend, and the season of mass marketing to children and harassed parents moves into top gear. In the canyons of Advertising Land, no gimmick is too low for the purveyors of mostly Asian made tat. So it is time to mount my first Seasonal Christmas appeal like Wikipedia and legions of massed bailed out banksters across five continents. If you have found the LIR of use, interest or amusement in the past year, please consider making a small donation via the PayPal link to Graeme’s Christmas Special Scotch appeal. Don’t let this poor Scot dry out this Christmas. Many thanks to all who have donated during the year. Have a great weekend everyone.
Set in Camelot, Arthur and Guinevere have a daughter. At the Blessing of Princess Aurora, Janet Yellen arrives and sets an evil curse on the child, forcing the child into paying off the exploding national debt. Lurking darkly in the wings, President Trump promises to double it next year.
Apologies to Richard Gauntlett author of Pantomime scripts.
http://www.panto-scripts.co.uk/about-richard-gauntlett.html
The monthly Coppock Indicators finished November
DJIA: 19124
+53 Up NASDAQ: 5324 +41 Up. SP500: 2198 +58 Up.
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