Friday, 10 February 2017

The Liquidity Crunch Next Week.

Baltic Dry Index. 707 +05   Brent Crude 55.75

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

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

John Kenneth Galbraith

As President Trump sets out on week 4 of his very different Presidency, I know, it seems longer even here in faraway chilly London, China is facing a liquidity crunch next week. The PBOC could just roll the whole thing over, but that merely delays the coming crunch without fixing it. Anyway so far there is no sign of a coming rollover. Even Bitcoin liquidity has been withdrawn. Today may be a good day to reduce risk.

Below, reason to get back to cash ahead of next week.

China Faces Liquidity Test as $151 Billion Set to Exit System

Bloomberg News 10 February 2017, 05:27 GMT
China will face one of the biggest tests of its campaign to contain corporate leverage next week, with more than $151 billion set to leave the already stretched financial system.

Some 890 billion yuan ($129 billion) of reverse-repurchase agreements issued before the week-long Lunar New Year break to meet seasonal demand will start coming due from Monday. Add that to the 151.5 billion yuan of maturing loans to commercial banks and conditions could be tight if lenders haven’t hoarded enough cash, according to Commerzbank AG.

“Deleveraging will be a prolonged process, there will probably be very painful periods for the markets going forward even as the central bank adopts a very sophisticated balancing act,” Zhou Hao, senior emerging-markets economist at Commerzbank in Singapore, said in an interview. “The PBOC has so far done a good job in managing liquidity, compared with a cash crunch in 2013.”

China has been stepping up tightening efforts in the money markets since the third quarter, boosting the tenor of reverse-repo operations and the cost of medium-term loans as a way of forcing a reduction in leverage, while containing risks to the nation’s nascent economic recovery. If the PBOC miscalculates the situation with liquidity, its methods could lead to a cash squeeze akin to the one that took place in June 2013, when benchmark money rates soared to records as officials drained funds amid tight conditions.

One option is for the central bank to roll over its Temporary Liquidity Facility --- a new tool that allows the People’s Bank of China to provide short-term funds to major commercial lenders -- while extending the pause in reverse-repo operations, according to Citic Securities Co. The PBOC held off on injecting funds via reverse-repurchase agreements for a sixth day on Friday, saying liquidity levels are relatively high.

Why China's Banks Are Feeling Squeezed

Bloomberg News 10 February 2017, 04:44 GMT
China’s drive to reduce financial system risks is squeezing the nation’s banks.

Caught between policy makers’ intensifying efforts to raise short-term borrowing costs, and benchmark interest rates that haven’t moved since 2015, Chinese lenders have few options but to absorb much of the higher costs. The gap between the three-month Shanghai Interbank Offered Rate and the one-year lending rate has narrowed to 17 basis points, the least since July 2011.

This has exacerbated a trend that started when the People’s Bank of China began guiding money rates higher in August to reduce leverage in the financial system, prompting a surge in bond yields. While lenders are in theory allowed to set their own rates, the reality can be different. In late 2015, when China liberalized interest rates, the PBOC said it wouldn’t give the lenders free rein. Financial institutions that use high interest rates to attract deposits or disrupt the market will be disciplined, it said.

“As short-term borrowing costs rise, it may be more painful for Chinese banks compared with their global peers,” said Li Liuyang, a Shanghai-based market analyst at Bank of Tokyo-Mitsubishi UFJ (China) Ltd. “They’ll have to digest most of the increases in short-term financing costs themselves rather than passing them on through the loan rates, which are largely decided by the PBOC’s benchmarks.”

The squeeze comes at an especially painful time for China’s financial institutions, with profit growth slowing to the weakest in more than a decade amid an increasingly larger pile of bad debt. The combined net income at listed Chinese banks may rise just 1.5 percent this year, according to a Bank of Communications Co. estimate.

China Bitcoin Exchanges Halt Withdrawals After PBOC Talks

Bloomberg News
China’s three biggest bitcoin exchanges took steps to prevent withdrawals of the cryptocurrency amid pressure from the nation’s central bank to clamp down on capital outflows.

BTC China subjected all bitcoin withdrawals to a 72-hour review, while Huobi and OKCoin suspended them completely, the three venues said in separate statements on Thursday. They all said the measures were in response to central bank requirements. Conversion to and from the yuan is not affected and the curbs will be dropped after updates to compliance systems, the exchanges said.

The People’s Bank of China told nine bitcoin venues at a meeting in Beijing on Wednesday that it will close exchanges that violate rules on foreign exchange management, money laundering, and payment and settlement. Chinese authorities are scrutinizing the cryptocurrency amid concerns it’s being used to spirit money out of the country, undermining official efforts to clamp down on capital outflows and prop up the yuan. Demand from investors in Asia’s largest economy, home to most of the world’s bitcoin trades, has fueled a 160 percent rally versus the dollar over the past year.

Huobi and OKCoin said it will take about a month to upgrade systems in line with new PBOC guidelines. BTC China did not give a timing for when any upgrade would be completed.

Meanwhile in the EUSSR, Greece seems to have finally run out of road. Germany, five years to late, has finally started to face the unthinkable. Inside the euro, Greece is never going to be able to repay its debts.

Greece should quit euro zone, get debt relief, German party leader says

Thu Feb 9, 2017 | 3:55am EST
Greece should leave the euro zone and then be given debt relief, the head of Germany's pro-business Free Democrats (FDP) told a German radio station on Thursday.
Greece should, however, remain in the European Union, FDP leader Christian Lindner told Deutschlandfunk, so it can get subsidies to put into infrastructure or help small- and medium-sized businesses.
"It's clear that Greece needs to have its debts written off," Lindner said. "Greece's debts can only be written off outside of the euro zone, so we're talking about Grexit."
Recent polls put support for the FDP, which was the junior coalition partner to Chancellor Angela Merkel's conservatives from 2009 to 2013, at 5 to 7 percent. That suggests it will get enough support to cross the 5 percent threshold to enter the Bundestag lower house of parliament in elections on Sept. 24.
Lindner said Greek Prime Minister Alexis Tsipras did not intend to implement agreed reforms, so the strategy needed to be changed.
The German government wants the International Monetary Fund to have a stake in Greece's bailout to give the rescue plan greater credibility. But it opposes granting Athens the significant debt relief that the IMF is demanding.
On Friday, Finance Minister Wolfgang Schaeuble said Greece must meet commitments it has made under its international bailout plans or else it will end up in an impossible position .

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith

At the Comex silver depositories Thursday final figures were: Registered 30.20 Moz, Eligible 151.86 Moz, Total 182.06 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, Tepco again. So you really think that nuclear power is the way to go?

In any great organization it is far, far safer to be wrong with the majority than to be right alone.

John Kenneth Galbraith.

Japanese nuclear plant just recorded an astronomical radiation level. Should we be worried?

Anna Fifield February 8 at 2:08 AM
TOKYO — The utility company that operated the Fukushima Daiichi nuclear plant in Japan — the one that went into triple meltdown after the enormous 2011 earthquake and tsunami — has released some jaw-dropping figures.

The radiation level in the containment vessel of reactor 2 has reached as high as 530 sieverts per hour, Tokyo Electric Power Co. — or Tepco, as it’s known — said last week. This far exceeds the previous high of 73 sieverts per hour recorded at the reactor following the March 2011 disaster.

That was the world’s worst nuclear disaster since the one at Chernobyl, in Ukraine, in 1986. Almost 16,000 people were killed along Japan’s northeastern coast in the tsunami, and 160,000 more lost their homes and livelihoods. The cleanup is taking much longer than expected.

At this level of radioactivity, a person could die from the briefest of exposures.

Tepco recorded the radiation near the reactor core, suggesting that some melted fuel had escaped, using a long, remote-controlled camera and radiation measurement device. It was the first time this kind of device has been able to get into this part of the reactor. There it found a three-foot-wide hole in a metal grate in the reactor’s primary containment vessel.

So, how dangerous is this?

At this level of radiation, a robot would be able to operate for less than two hours before it was destroyed, Tepco said.

And Japan’s National Institute of Radiological Sciences said medical professionals had never even thought
about encountering this level of radiation in their work.

According to the Kyodo news agency, the institute estimates that exposure to one sievert of radiation could lead to infertility, loss of hair and cataracts, while four sieverts would kill half the people exposed to it.

This measuring device hasn’t even gone into reactors 1 and 3 yet — that’s still in the works.

----Although the radiation level is “astoundingly high,” says Azby Brown of Safecast, a citizen science organization that monitors radiation levels, it doesn’t necessarily signify any alarming change in radiation levels at Fukushima. It’s simply the first time they have been measured that far inside the reactor.

----But some think there is cause for concern.
Fumiya Tanabe, a nuclear safety expert and former chief research scientist at the Japan Atomic Energy Research Institute, said while experts expected the radiation reading inside the Daiichi reactors to be high, it was still “shocking” to learn how high it was six years on.

“It will be very difficult to operate robots in there for a long time to come, and to remove the melted fuel. So the finding might greatly affect the decommissioning time schedule,” he said.
Tepco had been hoping to start taking the fuel out in 2021. 

Could the radiation level be even higher?
Possibly. The 530 sievert reading was recorded some distance from the melted fuel, so in reality it could be 10 times higher than recorded, said Hideyuki Ban, co-director of Citizens' Nuclear Information Center.
He agreed with Tanabe, saying that the findings underscore how difficult the decommissioning process will be.

“It definitely shows the path towards decommissioning will be very difficult, and the time frame to start taking out the fuel in 2021 will most likely be delayed as more investigations will be necessary,” Ban said.

Still, he cautioned against overreacting, saying, like Brown, that Tepco had simply not been able to measure
 this close to the fuel before.

So what does this news portend?
Tanabe said that the level of the reading should give pause to proponents of nuclear power in Japan, including Prime Minister Shinzo Abe, who has been pushing to restart reactors shut down after the 2011 disaster.

“It’s unbelievable that anyone would want to restart nuclear plants when Japan hasn't learned how and why the Fukushima Daiichi accident happened, or learned lessons from it,” he said.

Indeed, Ai Kashiwagi, an energy campaigner at Greenpeace Japan, said the findings showed how little the government and Tepco knew about what was happening inside the reaction.

Five workers suffering from ‘sickness’ after explosion at French nuclear power plant close to the English Channel

  • The blast occurred in the boiler room of the Flamanville plant at 10am today 
  • There is no immediate nuclear risk at the plant, according to French officials
  • The fire was brought under control and five construction workers felt ill 
  • It is the latest in a string of setbacks for the plant where a man died in 2011

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?

Versatile 2-dimensional material grown in lab

Date: February 8, 2017

Source: University of Pennsylvania

Summary: Researchers report that they are the first to grow a 2-D material with the ability to have many different properties.

University of Pennsylvania researchers are now among the first to produce a single, three-atom-thick layer of a unique two-dimensional material called tungsten ditelluride. Their findings have been published in 2-D Materials.
Unlike other two-dimensional materials, scientists believe tungsten ditelluride has what are called topological electronic states. This means that it can have many different properties not just one.
When one thinks about two-dimensional materials, graphene is probably the first that comes to mind.
The tightly packed, atomically thin sheet of carbon first produced in 2004 has inspired countless avenues in research that could revolutionize everything from technology to drinking water.
One of the most important properties of graphene is that it's what's called a zero bandgap semiconductor in that it can behave as both a metal and a semiconductor.
But there are tons of other properties that 2-D materials can have. Some can insulate, others can emit light and still others can be spintronic, meaning they have magnetic properties.
"Graphene is just graphene," said A.T. Charlie Johnson, a physics professor in Penn's School of Arts & Sciences. "It just does what graphene does. If you want to have functioning systems that are based on 2-D materials, then you want 2-D materials that have all of the different physical properties that we know about."
The ability of 2-D materials to have topological electronic states is a phenomenon that was pioneered by Charles Kane, the Christopher H. Browne Distinguished Professor of Physics at Penn.
In this new research, Johnson, physics professor James Kikkawa and graduate students Carl Naylor and William Parkin were able to produce and measure the properties of a single layer of tungsten ditelluride.
"Because tungsten ditelluride is three atoms thick, the atoms can be arranged in different ways," Johnson said. "These three atoms can take on slightly different configurations with respect to each other. One configuration is predicted to give these topological properties."

Another weekend, and another round of Trump tweets. I wonder if anyone’s told him of China’s coming liquidity crunch next week? Have a great weekend everyone. I wonder what Steve Bannon is up to?

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

The monthly Coppock Indicators finished January

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

No comments:

Post a Comment