Thursday, 27 April 2017

The Con Is On.

Baltic Dry Index. 1147 -07     Brent Crude 51.63

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

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.

Cary Grant. To Catch A Thief.

Today, the hype for Dow 30,000 in 5 years time. Trumpmania 2.0. Forget that for that to happen, this weak recovery from the near fatal Lehman bust, would have to have gone 150+ months without hitting a new recession. The Baltic Dry Index, despite a seasonal lift, already suggests that the global economy is wilting. Ignore that Trump’s tax proposal’s play Russian roulette with the US budget deficit. Forget that the Fedster’s are desperately trying to normalise their key interest rate before the next recession hits. 

Forget that there’s a 2,500 mile Mexican wall to finance and build. Trumpmania, far from draining the swamp, has become a swamp huckster’s heaven. Cinderella will go to the ball after all. Sadly she will fill up on Moet, white powders and hopium, and end up like Greece in intensive care, under special measures.

Below, yesterday on planet Trump.

Markets can remain irrational longer than you can remain solvent.

John Maynard Keynes.

Opinion: Trump’s tax plan sets the stage for Dow 30,000

Published: Apr 26, 2017 3:40 p.m. ET
Investors who have written to me are excited about President Trump’s proposed tax plan. The kicker is that any tax relief would come on top of good company earnings (so far) this earnings season.

I’ve been asked for an optimistic long-term target for the U.S. stock market. So here it is: Dow DJIA, -0.10%  30,000 in five years. However, investors are well-advised to review all scenarios, not only the optimistic one.

The Trump tax plan

Trump is expected to unveil basic principles of his tax plan Wednesday. He wants to cut the corporate tax rate to 15% from the current 35%. He also will propose a 15% rate to be used by pass-through entities, compared with the top current rate of 39.6%. American corporations have stashed over $2.6 trillion of earnings abroad. For repatriation, he will propose a 10% tax on foreign earnings.

If enacted, these changes would be very positive for the economy. Trump’s tax plan would boost gross domestic product (GDP), though tax revenue would initially fall.

----The biggest single factor in the long-term direction of stocks is earnings growth. The fundamental case for Dow 30,000 has strengthened as risks have receded in Europe and amid excellent earnings from Dow Jones Industrial Average components Caterpillar CAT, +0.23% E.I. DuPont de Nemours DD, -0.73% McDonald’s MCD, -0.61% 3M MMM, -0.07% and American Express AXP, -0.14%

The Arora Report estimate for the S&P 500 Index SPX, -0.05% — often traded using the SPDR S&P 500 SPY, -0.06%  — is $137 per share. According to the Arora Report’s analysis of Trump’s proposals, tax cuts could add about $13 to S&P 500 earnings. Deregulation could add another $7. If gross domestic product growth were to accelerate to 4%, S&P 500 earnings could reach as high as $190 a share in about five years.

Read: A big chunk of the Dow’s gains have come from earnings

Given the potential growth in the economy, in spite of the Federal Reserve’s plan to raise interest rates, the price-to-earnings (P/E) ratio may stay in the range of 18 to 21. A P/E of 20 applied to $190 in earnings leads to 3,800 in S&P 500. (The benchmark index as of this writing is 2,383.)

For the Dow Jones Industrial Average, that translates to reaching over 33,450 by the end of 2021, Trump’s first term. (The Dow is at 20,996 as of this writing.) Allowing for some hiccups, Dow 30,000-plus is doable.

White House Unveils Trump’s Opening Tax-Cut Bid

by Sahil Kapur and Shannon Pettypiece
26 April 2017, 18:44 GMT+1
The White House made its opening bid for what officials called the “biggest tax cut” in U.S. history -- with cuts that would benefit businesses, the middle class and certain high-earning individuals -- but left unanswered questions about whether the plan would be paid for, or how.

A list of goals for the tax overhaul, unveiled by President Donald Trump’s top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin Wednesday, calls for slashing the federal income-tax rate to 15 percent for corporations, small businesses and partnerships of all sizes. It also imposes a one-time tax on about $2.6 trillion in earnings that U.S. companies have parked overseas. The plan would end the taxation of corporations’ offshore income by moving to a territorial system, in which most foreign profits would be exempt from U.S. taxes. Currently, the U.S. taxes business income no matter where it’s earned.

On the individual side, it proposes condensing the existing seven income-tax rates to just three, cutting the individual top rate to 35 percent from 39.6 percent. It would also end a 3.8 percent net investment income tax that applies only to individuals who earn more than $200,000 a year, repeal the alternative minimum tax and eliminate the estate tax, which currently applies only to estates worth more than $5.49 million for individuals and $10.98 million for couples.

At the same time, the plan would eliminate the federal income-tax deduction allowed for state and local taxes -- a provision that would hit high earners in high-tax states, including New York and New Jersey. The only itemized deductions that would be preserved under the plan would be for home mortgage interest and charitable contributions.

Wilbur Ross lays out plan to toughen up U.S. trade policies

Published: Apr 25, 2017 10:28 p.m. ET

U.S. may act more aggressively to protect industries, rework trade treaties

A day after announcing plans for a retaliatory tariff against Canadian lumber, U.S. Commerce Secretary Wilbur Ross said Tuesday the Trump administration may also take action to protect America’s aluminum, semiconductor and shipbuilding industries as part of a newly aggressive trade policy.

In an extensive interview with the Wall Street Journal, Ross said he intended to ramp up free-trade talks with the European Union, United Kingdom and Japan, and would consider efforts to revive bilateral trade deals with South Korea and China.

U.S. Commerce Secretary Wilbur Ross, who was selected by President Trump to help shape his “American First” trade policy, talked to the WSJ about his timeline for negotiations on Nafta and the rules of origin.

Ross told the Journal that reworking the North American Free Trade Agreement with Canada and Mexico was a priority, and that he hopes to completely rewrite the treaty by the end of the year.

Ross also said the U.S. may step in to support struggling Westinghouse Electric Co., the Toshiba Co. 6502, +1.62%  -owned builder of nuclear plants that filed for bankruptcy protection in March, in order to keep it out of the hands of Chinese buyers. “Having a nuclear-power capability is obviously a matter of national security,” Ross said.

In other news, OPEC’s oil plan isn’t following the script. No real surprise there. I suspect that despite a much touted six month extension of the “OPEC and friends” crude oil production cuts, the reality is that everyone will now cheat.

Saudi Arabia Seen Losing Market Share to Iran, Iraq on Oil Cuts

by Anthony Dipaola
Saudi Arabia, the world’s biggest crude exporter, is losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices, according to the head of research at Abu Dhabi Investment Authority.

“If you’re talking about winners, you can count Iran and Iraq,” Christof Ruehl said Wednesday at a conference in Dubai.

The Organization of Petroleum Exporting Countries agreed to production limits for most of its members at a meeting in November and brought 11 other nations on board with the deal in December. Saudi Arabia, OPEC’s biggest producer, agreed to cut output by 486,000 barrels a day while Iraq said it would cut 210,000 barrels a day. Iran was permitted to increase output by 90,000 barrels a day, according to the OPEC accord.

Saudi Arabia knew it would lose share because Iran’s production was on the rebound, said Robin Mills, founder of Dubai-based consultancy Qamar Energy. “The Saudis agreed to production cuts at a time when Iranian production was at a high.”

----The struggle over market share is most pronounced in Asia, according to Mills and Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC. Iran and Iraq increased crude sales to China last month, while Saudi Arabia slipped behind Russia and Angola as the largest suppliers to the nation, data released Tuesday by the General Administration of Customs show.

“The Saudis are losing out because other countries are able to squeeze out more production,” Bell of Emirates NBD said. Saudi Arabia is cutting crude pricing to Asia to hold on to its share, Bell said.

“The OPEC market share battle hasn’t gone away,” he said.

If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.

John Maynard Keynes.

At the Comex silver depositories Wednesday final figures were: Registered 29.20 Moz, Eligible 168.62 Moz, Total 197.83 Moz.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, the strange case of Sweden’s gold bullion holdings. But does any of Sweden’s gold bullion actually still exist, and just how much? Just how much hypothecated gold bullion, does the Riksbank still list as physical? With the Bank of England caught on tape asking UK banks to lie in their Libor submissions, during the last financial crisis, would you take the word of the BOE that 48.8 percent of Sweden’s gold bullion is still in London and owned by Sweden alone?
"It's strange that men should take up crime when there are so many legal ways to be dishonest. “
Al Capone.

Sweden’s Gold Reserves: 10,000 gold bars (pet rocks) shrouded in Official Secrecy

by BullionStar Apr 25, 2017 8:09 AM
Submitted by Ronan Manly,
In February 2017 while preparing for a presentation in Gothenburg about central bank gold, I emailed Sweden’s central bank, the Riksbank, enquiring whether the Riksbank physically audits Sweden’s gold and whether it would provide me with a gold bar weight list of Sweden’s gold reserves (gold bar holdings). The Swedish official gold reserves are significant and amount to 125.7 tonnes, making the Swedish nation the world’s 28th largest official gold holder.
Before looking at the questions put to the Riksbank and the Riksbank’s responses, some background information is useful. Sweden’s central bank, Sveriges Riksbank aka Riksbanken or Riksbank, has the distinction of being the world’s oldest central bank (founded in 1668). The bank is responsible for the administration of Swedish monetary policy and the issuance of the Swedish currency, the Krona.
Since Sweden is a member of the EU, the Riksbank is a member of the European System of Central Banks (ESCB), but since Sweden does not use the Euro, the Riksbank is not a central bank member of the European Central Bank (ECB). Therefore the Riksbank has a degree of independence that ECB member central banks lack, but still finds itself under the umbrella of the ESCB. Since it issues its own currency, the Riksbank is responsible for the management of the Swedish Krona exchange rate against other currencies, a task which should be borne in mind while reading the below.
On 28 October 2013, the Riksbank for the first time revealed the storage locations of its gold reserves via publication of the following list of five storage locations (four of these locations are outside Sweden) and the percentage and gold tonnage stored at each location:
§  Bank of England               61.4 tonnes (48.8%)
§  Bank of Canada               33.2 tonnes (26.4%)
§  Federal Reserve Bank   13.2 tonnes (10.5%)
§  Swiss National Bank        2.8 tonnes (2.2%)
§  Sveriges Riksbank         15.1 tonnes (12.0%)
The storage locations of Sweden’s official Gold Reserves: Total 125.7 tonnes
Nearly half of Sweden’s gold is stored at the Bank of England in London.
Another quarter of the Swedish gold is supposedly stored with the Bank of Canada. The Bank of Canada’s gold vault was located under it’s headquarters building on Wellington Street in Ottawa. However, this Bank of Canada building has undergone a complete renovation and has been completely empty for a number of years, so wherever Sweden’s gold is in Ottawa, it has not been in the Bank of Canada’s gold vault for the last number of years.
Three other central banks claim to hold gold with the Bank of Canada. Thes are the central banks of Switzerland, the Netherlands and Belgium. The Swedish gold in Canada (along with gold holdings owned by the Swiss, Dutch and Belgians) could, however, have been moved to the Royal Canadian Mint’s vault which is also in Ottawa. Bank of Canada staff are now moving back into the Wellington Street building this year. But is the Swedish (and Swiss, Dutch and Belgian) gold moving back also or does it even exist? The location of the Swedish gold in Ottawa is therefore a mystery and is something the Swedish population should be concerned about.
Just over 10% of the Swedish gold is supposedly held in the famous (infamous) Manhattan gold vault of the Federal Reserve Bank of New York (FRBNY) under the 33 Liberty building. Given the complete lack of cooperation of the FRBNY in ever answering any questions about foreign gold holdings in this vault, then good luck to Swedish citizens in trying to ascertain that gold’s whereabouts or even convincing the Riksbank to repatriate that gold.
A very tiny 2% of Swedish gold is also listed as being held with the Swiss National Bank (SNB). The SNB gold vault is in Berne under its headquarters building on Bundesplatz.
The Riksbank also claims to hold 15.1 tonnes of its gold (12%) in its own storage, i.e. stored domestically in Sweden. Interestingly, on 30 October 2013, just two days after the Riksbank released details of its gold storage locations, Finland’s central bank in neighbouring Helsinki, the Bank of Finland, also released the storage locations of its 49 tonnes gold reserves in a move which looks to have been coordinated with the Riksbank. The Bank of Finland claims its 49 tonnes of gold is spread out as follows: 51% at the Bank of England, 20% at the Riksbank in Sweden, 18% at the Federal Reserve Bank of New York, 7% in Switzerland at the Swiss National Bank and 4% held in Finland by the Bank of Finland. This means that not only is the Riksbank supposedly storing 15.1 tonnes of Swedish gold, it also apparently is also storing 9.8 tonnes of Finland’s gold, making a grand total of 24.9 tonnes of gold stored with the Riksbank. The storage location of this 24.9 tonnes gold is unknown, but one possibility suggested by the Swedish blogger Cornucopia (Lars Wilderäng) is that this gold is being stored in the recently built Riksbank cash management building beside Stockholm’s Arlanda International Airport, a building which was completed in 2012.
---- On another page on its web site titled ‘Gold and Foreign Currency Reserve’, the Riksbank is surprisingly open about the uses to which it puts its gold holdings, uses such as foreign exchange interventions and emergency liquidity:
“The gold and foreign currency reserve can primarily be used to provide emergency liquidity assistance to banks, to fulfil Sweden’s share of the international lending of the International Monetary Fund (IMF) and to intervene on the foreign exchange market, if need be.”
This is not a misprint and is not a statement that somehow only applies to the ‘foreign currency reserve’ component of the reserves, since the same web page goes on to specifically say that:
The gold can be used to fund emergency liquidity assistance or foreign exchange interventions, among other things.”
Therefore, the Riksbank is conceding that at least some of its gold is actively used in central bank operations and that this gold does not merely sit in quiet unencumbered storage. On the contrary, this gold at times has additional claims and titles attached to it due to being loaned or swapped.
---- So here we have the Riksbank claiming that it personally now performs physical audits of its gold on a regular basis. This is the first time in the public domain, as far as I know, that the Riksbank is claiming to have undertaken physical gold audits of its gold holdings, and it goes beyond the 2013 statement from the Riksbank’s Sophie Degenne when she said “we will also start with our own inspections“.
But critically ,there was zero proof offered by the Riksbank to me, or on its website, that it has undertaken any physical gold audits. There is no documentation or evidence whatsoever that any physical audits have ever been conducted on any of the 10,000 gold bars in any of the 5 supposed storage locations that the Riksbank claims to store gold bars at. Contrast this to the bi-annual physical audits which are carried out on the gold bars in the SPDR Gold Trust (GLD) which are published on the GLD website.
In any other industry, there would be an outcry and court cases and litigation if an entity claimed it had conducted audits while offering no proof of said audits. However, in the world of central banking, perversely, this secrecy is allowed to persist. This is outrageous to say the least and Swedish citizens should be very concerned about this lack of transparency of the Swedish gold reserves.
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."

Henry Hazlitt.
Technology 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?

Making batteries from waste glass bottles

Researchers are turning glass bottles into high performance lithium-ion batteries for electric vehicles and personal electronics

Date: April 19, 2017

Source: University of California - Riverside

Summary: Researchers have used waste glass bottles and a low-cost chemical process to create nanosilicon anodes for high-performance lithium-ion batteries. The batteries will extend the range of electric vehicles and plug-in hybrid electric vehicles, and provide more power with fewer charges to personal electronics like cell phones and laptops.
Researchers at the University of California, Riverside's Bourns College of Engineering have used waste glass bottles and a low-cost chemical process to create nanosilicon anodes for high-performance lithium-ion batteries. The batteries will extend the range of electric vehicles and plug-in hybrid electric vehicles, and provide more power with fewer charges to personal electronics like cell phones and laptops.
Titled "Silicon Derived from Glass Bottles as Anode Materials for Lithium Ion Full Cell Batteries," an article describing the research was published in the Nature journal Scientific Reports. Cengiz Ozkan, professor of mechanical engineering, and Mihri Ozkan, professor of electrical engineering, led the project.
Even with today's recycling programs, billions of glass bottles end up in landfills every year, prompting the researchers to ask whether silicon dioxide in waste beverage bottles could provide high purity silicon nanoparticles for lithium-ion batteries.
Silicon anodes can store up to 10 times more energy than conventional graphite anodes, but expansion and shrinkage during charge and discharge make them unstable. Downsizing silicon to the nanoscale has been shown to reduce this problem, and by combining an abundant and relatively pure form of silicon dioxide and a low-cost chemical reaction, the researchers created lithium-ion half-cell batteries that store almost four times more energy than conventional graphite anodes.
To create the anodes, the team used a three-step process that involved crushing and grinding the glass bottles into a fine white power, a magnesiothermic reduction to transform the silicon dioxide into nanostructured silicon, and coating the silicon nanoparticles with carbon to improve their stability and energy storage properties.
As expected, coin cell batteries made using the glass bottle-based silicon anodes greatly outperformed traditional batteries in laboratory tests. Carbon-coated glass derived-silicon (gSi@C) electrodes demonstrated excellent electrochemical performance with a capacity of ~1420 mAh/g at C/2 rate after 400 cycles.
Changling Li, a graduate student in materials science and engineering and lead author on the paper, said one glass bottle provides enough nanosilicon for hundreds of coin cell batteries or three-five pouch cell batteries.

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.”

John Maynard Keynes.

The monthly Coppock Indicators finished March

DJIA: 20,663  +131 Up. NASDAQ:  5,912 +165 Up. SP500: 2,363 +135 Up.

No comments:

Post a Comment