Monday, 27 February 2017


Baltic Dry Index. 856 +50   Brent Crude 56.37

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

I don't really like the Oscars; it's a commercial promotional event. It helps immeasurably to sell films, but it's hardly the Nobel prize.

Richard Attenborough

The big news this week isn’t likely to remain the fiasco at the over rated, mutual admiration society Oscars, but tomorrow night’s speech to the US joint session of politicians by President Trump. While the anti-Trump media will likely focus on how rudely he is received by the Democrats and the senior Senator from Arizona, the rest of us are more interested in hearing of his administrations plans, costings, and priorities, and how they may play out over the rest of 2017 and into 2018.  We await President Trump’s speech with great interest.

We open with China investigating whether the new commodities rally is real or a speculative, cheap credit and fiat money driven bubble. My money is on it’s yet another unintended consequence of the Great Nixonian Error of fiat money, communist money, August 15, 1971. Though I don’t expect the new Chinese investigation to come out and say that. The longer the world stays on the unstable delusion of fiat money, the more mal-invested and distorted it becomes, though there’s no will anywhere on the planet to tackle the root cause of the disaster to which we are heading.

China Said to Probe Speculation in Commodity Futures Amid Rally

Bloomberg News
27 February 2017, 05:18 GMT
China’s top economic planner is investigating whether speculation has distorted commodity futures prices, due to concerns that the recent rally will drive inflation higher, according to people with knowledge of the matter.

The National Development & Reform Commission this month questioned futures brokers on whether distortion had occurred, said the people, who asked not to be identified because the information is confidential. The agency is worried over the potential impact on producer and consumer prices, they said.
China tightened rules and raised fees on commodities trading last spring, as it sought to clamp down on a speculative frenzy that spurred a rapid run-up prices amid unprecedented volumes. Steel and iron ore futures have continued to rise on government stimulus, capacity cuts and a steadying in the economy of the world’s biggest metals consumer.

Steel reinforcement bar on the Shanghai Futures Exchange is at its best level since December 2013 and iron ore on the Dalian Commodity Exchange is close to its May 2014 peak, although trading in the contracts remains well below last year’s heady heights.

The NDRC has also consulted with institutions including equity brokers on the outlook for commodity prices, according to the people. The agency didn’t respond to a fax seeking comment.

China’s producer prices in January increased the most since 2011 as mining products surged 31 percent year-on-year and raw materials rose 13 percent. The consumer-price index climbed 2.5 percent, beating analysts’ estimate of 2.4 percent.

In Euroland news, is the euro zone recovery real or contrived? The next few months will provide the answer.

Euro zone economy: real recovery or another Sirens' song?

Sun Feb 26, 2017 | 4:07am EST
Over the years, euro zone economic growth has been a bit like the Sirens in Homer's Odyssey: singing a song of promise, only to end up pulling you onto the rocks. Will it be different this time?
The strong growth registered in numerous data releases and surveys at the beginning of this year has surprised many.
One eye-opening example was the release of flash purchasing managers indices for France, Germany and the euro zone on Feb 21. Of nine indexes, eight registered growth and six did so at a higher level than any economist polled by Reuters had imagined.
Not surprisingly, economists and policy-makers are now looking for firm proof that the euro zone's apparent rebound this year is sustainable, as well as noting a variety of potentially destructive economic and political hazards ahead.
There has not been, they say, a specific inflexion point at which it can be said that the euro zone has recovered and is off on a growth tear. Rather it has been a slow simmer.
"The euro zone has been recovering steadily for three years now, helped by monetary policy stimulus, an end to fiscal austerity and a healthier financial sector," said James McCann, OECD economist at Standard Life Investments.
"(It's) a steady recovery which has been trundling on."
The numbers confirm this. The European Commission notes that real GDP in the euro zone has grown for 15 consecutive quarters - a sign of steady improvement.
But putting aside some of the latest data, it has been steady rather than spectacular. Economic growth is still running at only around 1.6 percent annually, and most forecasters - from economists polled by Reuters to the Commission itself, reckon it will be about the same this year.
So the question is whether the recent data has turned this on its head. Even before considering whether Greece's debt problems will come back to bite the euro zone, there are two main strands: inflation and elections.

Europe-wide RECESSION warning: Economist says downturn will cause COLLAPSE of eurozone

EUROPEAN UNION countries are heading for a HUGE recession which will ultimately destroy the euro and could bring down the entire union, according to a financial expert.
By Zoie O'Brien PUBLISHED: 09:31, Sat, Feb 25, 2017 | UPDATED: 11:37, Sat, Feb 25, 2017
Bureaucrats in Brussels are so obsession with sticking to their rigid model, and creating even closer unions, they are “missing the chance” to save themselves, it is claimed.
Economists in Finland have warned the euro may be past the point of saving, and one expert has predicted if it falls, the entire bloc could come down with it unless leaders finally admit the flaws in the European project.
According to economist Dr Tuomas Malinen, a CEO of GnS Economics and the Vice Chairman of EuroThinkTank, the whole of Europe could be rocked by a recession which will see the weaker countries suffer if drastic changes are not made.
Dr Malinen said: “There will be a downturn at some point and a recession at which point everything starts all over again.
“Weaker countries will suffer mass unemployment and a fall in GDP and then we have to make a decision whether or not to take another hit and go through long period of depression and internal devaluations and austerity again.
“I think the euro has until the next recession. When it hits some countries will leave, if not the whole structure will break down, but that is very difficult to predict.
“If you stick with the euro in its current form, it is more than likely to take the European Union with it.

Fri Feb 24, 2017 | 12:00pm EST

Dutch relations with euro up for debate after lawmakers commission probe

Feb 24 The Netherlands' future relationship with the euro will be comprehensively debated by its parliament following elections in March, after lawmakers commissioned a report on the currency's future.
The motion approving the investigation by the Council of State, the government's legal advisor, coincides with a rising tide of euroscepticism in Europe, which populist parties are hoping to tap into in a series of national elections this year also taking in euro zone powerhouses France and Germany.
The probe will examine whether it would be possible for the Dutch to withdraw from the single currency, and if so how, said lawmaker Pieter Omtzigt.
Omtzigt, of the opposition Christian Democrats, tabled the parliamentary motion calling for the investigation, which legislators passed unanimously late on Thursday.
It was prompted by concerns the ECB's ultra-low interest rates are hurting Dutch savers, especially pensioners, and doubts as to whether its bond purchasing programmes are legal, he said.
Its findings will be presented in several months, by which time the make-up of parliament will have changed dramatically.

Finally, big bully Germany, picks yet again on tiny Greece. Time for Grexit I think. Actually, long past time.

Sun Feb 26, 2017 | 5:12am EST

No debt relief for Greece, Germany's deputy finance minister says

Greece must not be granted a "bail in" that would involve creditors taking a loss on their loans, Germany's deputy finance minister said in an interview broadcast on Sunday, reiterating the German government's opposition to debt relief for Athens.

"There must not be a bail-in," Jens Spahn told German broadcaster Deutschlandfunk, according to a written transcript of the interview.

"We think it is very, very likely that we will come to an agreement with the International Monetary Fund that does not require a haircut," he said, referring to losses that Greece's creditors would have to take if debt was written off.

The IMF has called for Greece to be granted substantial debt relief, but this is opposed by Germany, which makes the largest contribution to the budget of the European Stability Mechanism (ESM), the euro zone's bailout fund.

Greece and its creditors agreed on Monday to further reforms by Athens to ease a logjam in talks with creditors that has held up additional funding for the troubled euro zone country.

Inspectors from the European Commission, the ESM, the IMF and the European Central Bank are due to return to Athens this week.

Heaven is where the police are British, the lovers French, the mechanics German, the chefs Italian, and it is all organized by the Swiss.

Hell is where the police are German, the lovers Swiss, the mechanics French, the chefs British, and it is all organized by the Italians.

At the Comex silver depositories Friday final figures were: Registered 31.24 Moz, Eligible 152.84 Moz, Total 184.08 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today NATO again. Why should President Trump and Americans put up with this from Germany? Europe's richest country.

'Rearmament Spiral'A German Clash over Trump's NATO Demands

U.S. President Donald Trump's demand that NATO member states pay their fair share has turned into a political hot potato ahead of German elections later this year. But the debate ignores a salient fact: The German military is in a terrible state.

By Konstantin von Hammerstein  February 24, 2017  06:00 PM
It was really nothing more than a test. Sigmar Gabriel was standing at the lectern inside the Bayerischer Hof hotel in Munich for his first appearance at the Munich Security Conference in his new role as German foreign minister. And he looked terrible. He was sick and had cancelled many of his appointments, but nevertheless decided not to forego his speech and the Security Conference. He wanted to toss a fly into the NATO soup.

That morning, U.S. Vice President Mike Pence had spoken from the same stage and had used the spotlight 
to urge NATO member states to fulfil their alliance obligations as agreed and spend the equivalent of at least 2 percent of their GDPs on defense. Germany was one of his primary targets. The country is the clear economic leader in Europe, but Berlin only spends 1.2 percent of its GDP on the military, less even in absolute terms than the United Kingdom, France and a host of other European countries.

Gabriel was well aware of all that, but he said: "We have to be a bit careful here that we don't over-interpret the 2 percent target." He then became much clearer: "Maintain perspective, stay focused on the target, but avoid being consumed by the bliss of a new rearmament spiral!" That was the decisive phrase: Rearmament spiral.

Following the careful test balloon launched in Munich, Gabriel dripped a bit more oil into the fire a few days later, warning of "blind obedience" to the U.S. He also took a dig at his cabinet colleague Defense Minister Ursula von der Leyen, saying that she apparently had a rather "naïve" notion regarding what was possible in Germany.

Just a few weeks after the inauguration of U.S. President Donald Trump, the debate over military spending has reached the depths of the accelerating German election campaign. Trump himself triggered the debate, having declared several times that NATO is "obsolete" and hinting that the U.S. would make its loyalties dependent on member states paying their fair share.

---- The best overview of the state of the German military is provided once a year in a report submitted by Armed Forces Commissioner Hans-Peter Bartels. As an SPD member of parliament for many years, Bartels is a credible voice from the perspective of the Social Democrats. And the image that he paints of the Bundeswehr is dark indeed.
One year ago, he described how the Saxony-based 371st tank battalion, prior to taking on its role as "spearhead" of the NATO Response Force, had to borrow 15,000 pieces of equipment from 56 other German military units. In another example, the 345th artillery training battalion, based just west of Frankfurt, was officially supposed to have 24 armored artillery vehicles at its disposal. In reality, though, it had just seven, of which six were on standby for NATO and could not be used. And the seventh was in reserve for the six on standby. Troops reported to Bartels that they hadn't been able to carry out training exercises at the site for the last three years.
There is an endless list of such examples: A mountain infantry unit had only 96 pairs of night-vision goggles available instead of the 522 it had been allotted -- of which 76 had to be loaned out to other units. Which meant they only had 20, of which 17 were damaged.
---- One can imagine the Bundeswehr as a fire department which, due to a lack of money, has no hoses, too few helmets, hardly any ladder trucks and no oxygen masks. But the department isn't eliminated entirely just in case a fire breaks out.

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?

Three layers of graphene reveals a new kind of magnet

Date: February 23, 2017

Source: Tata Institute of Fundamental Research

Summary: Scientists have discovered the magnetism of electrons in three layers of graphene. This study reveals a new kind of magnet and provides insight on how electronic devices using graphene could be made for fundamental studies as well as various applications.

Metals have a large density of electrons and to be able to see the wave nature of electrons one has to make metallic wires that are only a few atoms wide. However, in graphene -- one atom thick graphite -- the density of electrons is much smaller and can be changed by making a transistor. As a result of the low density of electrons the wave nature of electrons, as described by quantum mechanics, is easier to observe in graphene.
Often in metals like copper the electron is scattered every 100 nanometers, a distance roughly 1000 times smaller than the diameter of human hair, due to impurities and imperfections. Electrons can travel much longer in graphene, up to distances of 10 micrometer, a distance roughly 10 times smaller than the diameter of human hair. This is realized by sandwiching graphene between layers of boron nitride. The layers of boron nitride have few imperfections to impede the flow of electrons in graphene.
Once electrons travel long distances, implying there are few imperfections, one notices the faint whispers of electrons "talking to each other." Reducing the imperfections is akin to making a room quiet to enable the faint whispers of electronic interactions to develop between many electrons.
In a study, led by PhD student Biswajit Datta, Professor Mandar Deshmukh's group at TIFR realized just this kind of silence allowing electronic interactions to be observed in three layers of graphene. The study reveals a new kind of magnet and provides insight on how electronic devices using graphene could be made for fundamental studies as well as applications. This work discovers the magnetism of electrons in three layers of graphene at a low temperature of -272 Celsius. The magnetism of electrons arises from the coordinated "whispers" between many electrons.

The monthly Coppock Indicators finished January

DJIA: 19864  +92 Up. NASDAQ:  5615 +95 Up. SP500: 2279 +95 Up.

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