Thursday, 2 March 2017

Bubble? What Bubble?

Baltic Dry Index. 871 +12   Brent Crude 56.11

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

The professors who taught Efficient Market Theory said that someone throwing darts at the stock tables could select stock portfolio having prospects just as good as one selected by the brightest, most hard-working securities analyst. Observing correctly that the market was frequently efficient, they went on to conclude incorrectly that it was always efficient.

Warren Buffett.

Buy the rumour sell the fact, goes the old Wall Street adage. Never was that truer than in today’s stock markets. The rumour is that President Trump is going to build a Mexican wall, cut middle class taxes, increase military spending, abolish or reform Obamacare, cut red tape rules and regulations, and spend a trillion dollars on America’s crumbling infrastructure. What’s a gambling speculator not to like? A new Klondike gold rush in stocks is underway.

The details? They come later if ever. Never mind the Fed, full speed ahead. “Bubble? What Bubble?” To misquote “Sunny” Jim Callaghan, British Prime Minister during the strikes crisis of 1978-79.

Oh, well don't get technical at a time like this.

Donald Trump, with apologies to Cary Grant.  His Girl Friday, 1940.

Dow 21,000 matches the fastest 1,000-point march in history

By Mark DeCambre  Published: Mar 1, 2017 5:27 p.m. ET
That was fast! The Dow Jones Industrial Average on Wednesday closed above 21,000 for the first time ever, soaring to a psychologically significant level and marking one of its quickest runs to such a milestone.
The blue-chip gauge closed above 20,000 just a few weeks ago, marking a then-second-fastest push (42 days) to a 1,000-point milestone. The Dow’s Wednesday rally matches the fastest-ever such move at 24 days, equaling the same span of trading sessions between 10,000 and 11,000 in May 1999.
Equity benchmarks appear to be shaking off the prospect of an interest-rate hike as early as mid-March to touch another key level, on the heels of reignited optimism about the health of the U.S. and global economy and the belief that Trump can bring into reality campaign promises that include boosting fiscal spending and cutting taxes.
Details around those reforms are still scant but investors appeared to be heartened by the tone Trump established during his address in front of joint session of Congress in a State of the Union-style speech late Tuesday.
The Dow DJIA, +1.46% is up 15.2% since Trump’s Nov. 8 election victory, the S&P 500 index SPX, +1.37% has gained nearly 11%, while the Nasdaq Composite Index COMP, +1.35% has advanced 13.7% during that period.

Asian stocks soar to multimonth highs on optimism toward U.S.

By Ese Erheriene Published: Mar 1, 2017 11:27 p.m. ET

Nikkei hits highest level since December 2015

Investors piled into risky investments on Thursday, pushing global stocks to multimonth highs as markets digested speeches from U.S. Federal Reserve officials and President Donald Trump’s address to Congress.
Regional stock indexes tracked strong overnight gains in the U.S. and Europe with a renewed sense of global optimism, after a lukewarm reaction to Trump’s speech on Wednesday.
The Nikkei NIK, +0.93%   was up 1.3% — its highest level since December 2015 — as the yen continued to ease versus the dollar, boosting export-oriented stocks. In Korea, the Kospi SEU, +0.60%   added 0.4%, hitting its highest level since May 2015 earlier in the session. Australia’s S&P/ASX 200 XJO, +1.26%   was up 1.1% and the Hang Seng Index HSI, +0.44%   in Hong Kong gained 0.5%.
 “There are strong leads coming from the U.S. and that’s underpinning the optimism across the globe,” said Jingyi Pan, a market strategist at IG Group.
Overnight in the U.S., the Dow Jones Industrial Average rose 1.5% to breach 21000 for the first time. The S&P 500 rose 1.4%, while the Nasdaq Composite added 1.3%.
Analysts said the boost came as Trump’s performance in his joint address to Congress was more diplomatic than markets were expecting. This reignited confidence that he could deliver on his plans to introduce tax reforms, remake trade deals and develop infrastructure, which have so far been light on details.

Snap IPO Values Photo-Chat App Maker at Twice Facebook's Worth

by Alex Barinka and Sarah Frier
Snap Inc., maker of the disappearing photo app dependent upon the fickle favor of the millennial demographic, is going public at a valuation at least twice as expensive as Facebook Inc., and four times more costly than Twitter Inc.

Snap sold 200 million shares in its initial public offering at $17 each, according to a statement Wednesday. At that price, it has a market value of about $20 billion, based on 1.16 billion shares outstanding after the IPO. That implies a multiple of about 21.4 times EMarketer’s estimate for Snap’s 2017 advertising sales.

It’s a “nosebleed” valuation, but “there’s a nosebleed’s worth of demand,” said David Kirkpatrick, chief executive officer of Techonomy Media.

Snap raised $3.4 billion in its IPO, pricing shares above the marketed range, in the biggest social-media IPO since Twitter more than three years ago. It’s also the first tech company to list in the U.S. this year.

“There is a huge amount of people who really just want to get in on the hot new thing, who see this as the first opportunity of its type in a number of years,” Kirkpatrick said in an interview on Bloomberg TV. Still, “they’ve got some serious work to do to actually make a real business that makes profits.”

Six Chinese Billionaires Spring Up With Delivery Fortunes Worth $47 Billion

Chinese parcel billionaires have amassed a total net worth of about $47 billion.
by Jill Mao 28 February 2017, 22:00 GMT
Shuttling parcels around for Alibaba and other retailers is creating China’s latest wealth explosion, with a surge in shares of S.F. Express making Wang Wei the country’s third-richest man.

It’s a stark reversal for a company that got its start in what Wang has called the sneaky business of “black delivery,” back in the ’90s when only China’s post office was allowed to handle packages. The courier company he created navigated the shadows of the border between China and Hong Kong for 16 years until the government gave its sanction.

Last week’s official launch of S.F. Express’s so-called backdoor listing on the Shenzhen Stock Exchange, approved in December and pushed through rapidly with government support, helped produce a 59 percent surge in shares of parent S.F. Holding Co., giving Wang a net worth $27.6 billion on the Bloomberg Billionaires Index at the close of trading in New York Tuesday. His fortune added another $1 billion during Wednesday trading in China.

The Friday launch coincided with a bonus awarded to S.F. employees by Wang himself the same day, which many used to buy company shares. These purchases contributed to the dramatic rise in the share price, in part due to the relatively small amount of outstanding shares being traded.

Wang and five other package delivery billionaires, including the founder of ZTO Express Inc. which debuted on the New York Stock Exchange in October, have seen their fortunes swell based on listings in the past five months alone, amassing a combined wealth of about $47 billion, the Index shows. They’re all part of the online shopping boom led by Alibaba Group Holding Ltd., with Wang’s S.F. Express the leader by revenue ahead of hundreds of competitors.
Below, does Trumpmania fly on hopium?
The market, like the Lord, helps those who help themselves. But, unlike the Lord, the market does not forgive those who know not what they do.

Warren Buffett.

Math Will Kill Trump's Infrastructure Plan

March 1, 2017 5:00 AM EST  By Conor Sen
In his address to Congress on Tuesday, President Donald Trump once again brought up his support for a large infrastructure package. And there’s good reason for this: It’s not nearly as polarizing as most other parts of his agenda and would stimulate economic growth in a way that would benefit blue-collar workers who were key to his election. But like much of his agenda, it’s short on details, and the labor-market math doesn’t add up.

Here’s the napkin version. The trillion-dollar package being discussed is understood to be $100 billion of spending per year for 10 years. Leave aside the fact that infrastructure spending is notoriously messy and slow, as environmental delays and other project-specific concerns make it hard to spend the money as fast as a policymaker or economist would like. The labor question alone shows that this vision is impossible.

There are currently 6.8 million construction employees in the U.S. Annualized construction spending in the U.S. at the end of 2016 was $1.18 trillion. Dividing the two, we see that one construction worker supports around $175,000 in construction spending. (This doesn’t mean that construction workers make $175,000 per year -- that figure accounts for other labor-supporting projects and building materials.)

One more simple calculation shows the daunting labor needs. If one construction worker can support $175,000 worth of construction projects, then $100 billion in spending each year would require an additional 570,000 construction workers, which doesn’t take into account truck drivers, project managers, environmental specialists, and all other support staff needed to complete projects. Perhaps infrastructure spending, which comprises 25 percent of all construction spending, is a little less labor-intensive than other types of construction spending. Maybe the shrewd administrative talent of this White House could generate some labor efficiencies. That still probably means 400,000 or 500,000 construction workers needed, not 50,000.

How realistic is construction employment growth of 570,000 workers? It hasn’t happened since 1946. Even the peak of the housing bubble generated only one brief year-over-year increase of 500,000 construction workers.
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns, March 12, 2008. Bust March 16, 2008.
At the Comex silver depositories Wednesday final figures were: Registered 32.47 Moz, Eligible 154.23 Moz, Total 186.70 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, yet another unintended consequence of the Great Nixonian Error of fiat money, communist money, August 15, 1971. On fiat money, corruption and fraud flourishes, and pretty soon there’s not an honest bankster in town.
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Ebenezer Squid. With apologies to Cary Grant. To Catch A Thief.

World's Biggest Banks Fined $321 Billion Since Financial Crisis

by Gavin Finch 2 March 2017, 05:01 GMT
  • European, Asian regulators to step up pace of fines, BGC says
  • Regulation to keep increasing despite Trump, consultancy says
Banks globally have paid $321 billion in fines since 2008 for an abundance of regulatory failings from money laundering to market manipulation and terrorist financing, according to data from Boston Consulting Group.
That tally is set to increase in the coming years as European and Asian regulators catch up with their more aggressive U.S. peers, who have levied the majority of charges to date, BCG said in its seventh annual study of the industry published Thursday. Banks paid $42 billion in fines in 2016 alone, a 68 percent rise on the previous year, the data showed.

"As conduct-based regulations evolve, fines and penalties, along with related legal and litigation expenses, will remain a cost of doing business," analysts led by Gerold Grasshoff wrote. "Managing those costs will continue to be a major task for banks."

The era of ever-increasing regulatory requirements is here to stay, BCG said, despite President Donald Trump’s pledge to roll back the 2010 Dodd-Frank Act that reshaped U.S. banking in the aftermath of the collapse of Lehman Brothers Holdings Inc. The number of rule changes that banks must track on a daily basis has tripled since 2011, to an average of 200 revisions a day, according to the report.

"Regulation must be considered a permanent rise in sea level -- not just a flowing tide that will ebb or even a cresting tsunami that will recede," the authors wrote. "We expect this theme to hold despite recent political developments in the U.S."

Almost 10 years after the onset of the financial crisis, the banking industry still hasn’t completely recovered from the losses it suffered by one measure, BCG said.

While finance firms created so-called economic profit of 159 billion euros ($167 billion) in 2015, a fifth annual increase, the industry remains 9 billion euros in the red on a cumulative basis for the years 2009 to 2015, the data show. BCG calculated economic profit by taking a bank’s operating results and incorporating its cost of capital.

European lenders haven’t posted an annual economic profit during that time, while U.S. firms have been in the black for the last three years. Banks in Asia-Pacific, South America and the Middle East and Africa have posted an economic profit every year.
“I’m just a banker doing God’s work” 
Lloyd Blankfein, “Mr. Goldman  Sacks,” CEO of Goldman Sachs.

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?

Oregon set to get 56 megawatt solar power plant, expected to be state's largest

Anmar Frangoul  Tuesday, 28 Feb 2017 | 6:24 AM ET
Construction has commenced on a 56 megawatt (MW) solar plant in Oregon. The Gala Solar Power Plant, in Crook County, is expected to be the largest operating facility in the state, sustainable energy company SunPower said in a statement on Monday.

The plant is set to be completed by the end of the year, and is expected to generate around 300 jobs during "peak construction", SunPower added.

The project has received political backing from Oregon Governor, Kate Brown.

"I've often said that in Oregon, we don't believe economic development and environmental stewardship are mutually exclusive ideas," Brown said.

"The approximately 300 jobs expected to be created by the Gala Solar Power Plant are proof we can grow our rural communities and support a vibrant and innovative renewable energy industry," she added.

According to The Solar Foundation's National Solar Jobs Census 2016, released at the beginning of February, solar jobs in America increased at an "historic" pace last year.

The report found that the solar industry had accounted for two percent of all jobs created in the U.S., with solar jobs increasing in 44 of the 50 states.

"We're pleased to contribute to economic development in Oregon with the construction of this milestone project," SunPower's Ty Daul said.

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith. 

The monthly Coppock Indicators finished February

DJIA: 20,812  +133 Up. NASDAQ:  5,825 +120 Up. SP500: 2,364 +115 Up.

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