Monday, 26 June 2017

The End of the Half Approaches.

Baltic Dry Index. 870 +15     Brent Crude 46.08

True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression

Ludwig von Mises.

We open today with Asian stock markets flying high on hopium. As America heads into the end of the half year, and into their Independence Day celebrations next week, Asian speculators are betting that the US speculators will follow through this week, and dress up the final figures for the end of the quarter and half year.

Below, Asia sets the lead higher. Now if only Europe and America will follow.

Mon Jun 26, 2017 | 3:54am BST

Asia stocks edge up on optimism over global growth, dollar soft

Asian shares edged up on Monday on optimism about global growth, while the dollar was on the defensive as a subdued U.S. inflation outlook capped U.S. bond yields and raised questions about the Federal Reserve's plans to tighten policy.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up 0.4 percent while Japan's Nikkei .N225 rose 0.1 percent. Trading was slow with many markets in the region closed for holidays to celebrate the end of Ramadan.

The prospect of solid global economic growth has kept alive investors' optimism over world equities even as some markets, including Wall Street, have slowed down from a frenetic run due to high valuations.

Share prices have also been supported by relatively loose monetary policies in the developed world, with the Bank of Japan and the European Central Bank still pumping in funds.

While the U.S. Federal Reserve is gradually tightening its policy, investors think the pace of its tightening will be much slower than its policymakers want given subdued U.S. inflation.

Money market futures FFZ7 FFF8 price in only about 50 percent chance of another rate hike by the end of the year, compared to Fed's own projection of one more rate increase.

Mon Jun 26, 2017 | 5:23am BST

China blue-chips hit 18-mth high on MSCI inclusion hopes; HK also up

SHANGHAI, June 26 China stocks rose on Monday morning, led by the blue-chip index advancing to a record high since 2016, after the MSCI chief said the index provider could raise its weighting of China A-shares.

The Shanghai SE 50 Index, an index tracking the 50 most representative blue-chips in the Shanghai Stock Exchange, moved up 0.5 percent to an 18-month high. The index has gained 11.2 percent in 2017, versus a gain of 2.4 percent in the benchmark SSEC.

The CSI300 index rose 1.0 percent, to 3,658.73 points at the end of the morning session, while the Shanghai Composite Index gained 0.6 percent, to 3,178.15 points.

U.S. index provider MSCI Inc Chief Executive Henry Fernandez said that in the future the MSCI Emerging Markets Index could raise its weighting of China A-shares, potentially adding 195 mid-sized stocks, Shanghai Securities news reported.

MSCI's decision to add 222 China-listed large-cap stocks to its Emerging Markets Index (EMI), tracked by around $1.6 trillion, has already fuelled a buying spree for blue-chips on the mainland.

The decision is widely expected to bode well for the long-term development of A-share market.

"For now we are optimistic about the (A-share) market, which has been picking up recently, aided by better policy and liquidity conditions," Haitong Securities wrote in a report.

Listed companies in the A-share market are also expected to record rapid profit growth in the second quarter and for the full year, the brokerage added.

Sectors rallied across the board in the morning. the top performing real estate sector jumped 3.1 percent to a six-month high, led by bellwether China Vanke which surged 6.4 percent after a 10 percent gain the previous session.

In wealth and jobs destroying EUSSR news, never mind the rules requiring a Greek and Cyprus style bail-in, as usual the EUSSR breaks the rules for the large members. Italy gets to bail-out its bankrupt banks (again.) Italy’s voters follow French voters, and largely stay at home.  Is a low turn-out trend developing in continental Europe, and if so, what will it mean for governance?

Mon Jun 26, 2017 | 2:14am BST

Italy winds up Veneto banks at cost of up to 17 billion euros

Italy began winding up two failed regional banks on Sunday in a deal that could cost the state up to 17 billion euros (£14.9 billion) and will leave the lenders' good assets in the hands of the nation's biggest retail bank, Intesa Sanpaolo.

The government will pay 5.2 billion euros to Intesa, and give it guarantees of up 12 billion euros, so that it will take over the remains of Popolare di Vicenza and Veneto Banca, which collapsed after years of mismanagement and poor lending.

Economy Minister Pier Carlo Padoan said the total funds "mobilised" by the state would be for up to 17 billion euros - three times more than had initially been estimated to recapitalise the banks with public money.

The deal, approved by the European Commission, allows Italy to solve a banking crisis on its own terms, ensuring the two Veneto lenders are not wound down under potentially tougher European rules. The cost for taxpayers, however, is hefty.

"Those who criticise us should say what a better alternative would have been. I can't see it," Padoan told reporters after the government spent the weekend drafting an emergency decree to liquidate the two banks.

The decree effectively means that the Veneto banks' branches and employees will be part of Intesa Sanpaolo by Monday morning, a move designed to avoid a potential run on deposits that could have spread chaos across the whole banking industry.

The decree will have to be voted into law by parliament within 60 days.

Under the plan, the banks' soured loans, as well as legal risks stemming from a mis-selling scandal, will be moved to a bad bank, partly financed by the state. Junior bondholders and shareholders in the two banks will suffer losses, but senior bonds and depositors will be protected.

Mon Jun 26, 2017 | 12:06am BST

Italy's centre-right wins big in mayoral elections

Italy's centre-right parties were the big winners in mayoral elections on Sunday, partial results showed, in a vote likely to put pressure on the centre-left government ahead of national elections due in less than a year.
In the most closely watched contest, the northern port city of Genoa - a traditional left-wing stronghold - seemed certain to pass to the centre-right for the first time in more than 50 years.

The candidate backed by the anti-immigrant Northern League and Silvio Berlusconi's Forza Italia party will get around 54 percent of the vote, compared with 46 percent for the candidate backed by the ruling Democratic Party (PD), according to final projections based on the vote count.

The elections are a setback for PD leader and former Prime Minister Matteo Renzi, who took a back seat in campaigning after seeing his party roiled by internal divisions this year.

"The wind is blowing for the centre-right from the north to the centre to the south, this is an extraordinary victory," said Renato Brunetta, the lower house leader of Forza Italia.

Around 4.3 million people were eligible to vote in 110 municipalities that were up for grabs after no candidate won more than 50 percent in the June 11 first-round election.

Although Sunday's vote was one of the last before the general election, local factors mean it may not provide a clear reflection of parties' national popularity.

The anti-establishment 5-Star Movement, which is Italy's most popular party nationwide according to some opinion polls, performed very badly in the first round and only made the run-off in one of the 25 largest cities.

The turnout was also very low, at around 47 percent.

In oil news, has OPEC already lost the war?

OPEC Looks Totally Bewildered by the Oil Market

June 25, 2017 3:00 AM EDT
It may be too soon to write OPEC's obituary, but the oil producer club appears in urgent need of late-life care. It shows little understanding of where it is, how it got there or where it's going. While it still manages to collect new members here and there, its core group looks more fragile than at any point in nearly 30 years.

The historic output agreements, put together so painstakingly last year, are failing. Nearly 12 months of shuttle diplomacy culminated in two deals that would see 22 countries cut production by nearly 1.8 million barrels a day. Implementation has been better than for any previous output cut, with compliance put at 106 percent in May. A resounding success? Hardly.

We're now in the final month of those deals and oil prices are lower than when they were agreed. Not only have producers sacrificed volume, but they earn less for each barrel they do produce.

The recent extension of the deals just leaves output restraint in place for another nine months, the best response OPEC could muster. Deeper cuts were barely mentioned. Assertions to do "whatever it takes" ring hollow.

Indeed, there's no appetite for the big cuts that would demand real sacrifices in countries such as Russia, where normal seasonal factors helped it lower production in the first half of the year. Just sticking to current output levels could be difficult for the rest of 2017: early maintenance work has helped several OPEC members meet their targets but that can't continue. Then there's the problem of recovering output from Libya and Nigeria, both exempt from the cuts.

The malaise runs much deeper, though. Beneath a veneer of unity, rifts are developing among core Middle East members. The Saudi-led confrontation with Qatar could create the most serious split since Iraq invaded Kuwait in 1990. As I wrote last week, Iraq might be in Mohammed bin Salman's sights next, as Iran's influence there grows and Baghdad lags the rest in implementing output cuts.

As if the internal failings weren't enough, OPEC seems to have lost touch with reality. Ministers say higher prices are needed to pay for investment in future production capacity, issuing dire warnings of a future supply crunch. They said the same thing to justify prices soaring above $100 a barrel in 2008. It wasn't true then, and it may not be true now.

We close for the day with politics as usual in America. What are the Democrats trying to hide?

Sketchy firm behind Trump dossier is stalling investigators

By Paul Sperry  June 24, 2017 | 2:24pm
A secretive Washington firm that commissioned the dubious intelligence dossier on Donald Trump is stonewalling congressional investigators trying to learn more about its connections to the Democratic Party.

The Senate Judiciary Committee earlier this month threatened to subpoena the firm, Fusion GPS, after it refused to answer questions and provide records to the panel identifying who financed the error-ridden dossier, which was circulated during the election and has sparked much of the Russia scandal now engulfing the White House.

What is the company hiding? Fusion GPS describes itself as a “research and strategic intelligence firm” founded by “three former Wall Street Journal investigative reporters.” But congressional sources say it’s actually an opposition-research group for Democrats, and the founders, who are more political activists than journalists, have a pro-Hillary, anti-Trump agenda.

“These weren’t mercenaries or hired guns,” a congressional source familiar with the dossier probe said. “These guys had a vested personal and ideological interest in smearing Trump and boosting Hillary’s chances of winning the White House.”

Fusion GPS was on the payroll of an unidentified Democratic ally of Clinton when it hired a long-retired British spy to dig up dirt on Trump. In 2012, Democrats hired Fusion GPS to uncover dirt on GOP presidential nominee Mitt Romney. And in 2015, Democrat ally Planned Parenthood retained Fusion GPS to investigate pro-life activists protesting the abortion group.

More, federal records show a key co-founder and partner in the firm was a Hillary Clinton donor and supporter of her presidential campaign.

In September 2016, while Fusion GPS was quietly shopping the dirty dossier on Trump around Washington, its co-founder and partner Peter R. Fritsch contributed at least $1,000 to the Hillary Victory Fund and the Hillary For America campaign, Federal Election Commission data show. His wife also donated money to Hillary’s campaign.

Property records show that in June 2016, as Clinton allies bankrolled Fusion GPS, Fritsch bought a six-bedroom, five-bathroom home in Bethesda, Md., for $2.3 million.

Fritsch did not respond to requests for comment. A lawyer for Fusion GPS said the firm’s work is confidential.

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, meet President Trump’s support teams, at least according to the Gospel of Hillary Clinton. Although Fortune included America’s NSA, they seem to have left out or forgotten, the CIA and FBI hackers, and all their little hackers like Booz Allen Hamilton, the not so nice outfit Snowy worked for before turning whistle-blower.

Meet 5 of the World’s Most Dangerous Hacker Groups

Robert Hackett  Jun 22, 2017
Hacking has come a long way from the days of maladjusted teenagers wreaking digital havoc from their basements. As Fortune explains in the cover story of our Jul. 1 issue, today the biggest and baddest hacker groups are backed by nation-states. They’re called “advanced persistent threats” or APTs, in the cyber jargon, a phrase meant to convey their supreme and underlying quality: ferocity. Below are a few of the most notorious—and feared—state-affiliated hacking groups around. (Links to specific hacks below are based on leading theories put forward by top computer forensic firms.)

Fancy Bear (a.k.a. Sofacy, Pawn Storm) / Cozy Bear (a.k.a. CozyDuke, Office Monkeys)

Rival agencies in the Russian spy services, the two “Bears” were thrust into the spotlight during last year’s U.S. presidential election for their roles in allegedly breaching the Democratic National Committee’s system. Fancy Bear, which comes out of the GRU, Russia’s military intelligence agency, has been meddling in European elections since then. Cozy Bear, which represents the FSB, Russia’s successor to the Soviet-era KGB, has hit U.S. think tanks.

Lazarus Group (a.k.a. DarkSeoul, Guardians of Peace)

Widely believed to be associated with North Korea, this gang refuses to die. Lazarus got its start by pummeling American and South ­Korean websites with denial-of-­service attacks in 2009. Five years later, it perpetrated a massive hack of Sony Pictures Entertainment. In 2016, Lazarus stole $81 million in a heist targeting Bangladesh’s central bank and the SWIFT financial network. And it has been linked to the ­WannaCry ransomware worm that ground businesses around the globe to a halt in May.

Equation Group

This is the nickname given by Russian antivirus firm Kaspersky to a team believed to be associated with the U.S. National Security Agency—specifically the NSA’s Tailored Access Operations unit, or TAO. They’re the good guys, right? Not in everyone’s eyes. Many experts believe the Equation Group successfully attacked Iran’s nuclear program in the mid-aughts. But recently a selection of the squad’s hacking tools were stolen and leaked by the Shadow Brokers, another mysterious hacker group (believed to be Russia-affiliated), and are now being used to cause mayhem .

Comment Crew (a.k.a. APT1, Shanghai Group)

China sponsors a plethora of hacking groups. One of the most notorious, believed to be part of the People’s Liberation Army, came to be known as Comment Crew for its habit of hiding comments on web pages. Exposed by forensic investigators at Mandiant, the group has been linked to intrusions at big name companies such as Coca-Cola (ko, +0.40%) , RSA, and Lockheed Martin (lmt, +0.07%) . Chinese industrial espionage has been on the decline since former U.S. President Barack Obama and Chinese President Xi Jinping agreed to cool it on the cyber front last year.

Sandworm (a.k.a. Electrum)

Named for allusions to the sci-fi classic Dune found in its code, Sandworm is another group believed to be associated with the Russians. The crew has hacked people affiliated with NATO and the Ukrainian government, presumably to gather intelligence. Sandworm is also known for breaking into companies that deal with critical infrastructure. Last year the group shut down a power grid in Ukraine.
Booz Allen Hamilton.

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?

Today, an aspirational look at the future from the Paris Air Show.  Well maybe.

Eviation Aircraft unveils all-electric plane with 600-mile range

Though flying via airplane is fast and fun, it’s one of the least environmentally-friendly methods of travel. That may soon change, however, as Eviation Aircraft (a member of NASA’s on-demand mobility program) recently unveiled the first prototype of an all-electric aircraft with a range of up to 600 miles (965 km). Presented at the 52nd International Paris Air Show, the prototype could be ready to move into certification and commercialization as soon as next year.
At a time when we are more connected than ever, our mobility options must adapt to reflect this new, efficient future,” said
Omer Bar-Yohay, CEO of Eviation Aircraft, in a statement. “Whether it is zero emissions, low-cost trip from Silicon Valley to San Diego, or Seoul to Beijing, our all-electric aircraft represents a chance for people to move with the speed and impact our global economy now demands.”
The electric aircraft could potentially fly six to nine passengers, in addition to two crew members on long distances. With the intention to commercialize the plane by 2018, Eviation by far has the most aggressive timeline of any company intent on producing an electric plane.

Due to the energy density of batteries, electric air transport has been limited. However, the company says it has developed a new aluminum-air battery that will make it possible for consumers to fly without harming the environment.

“Based on an aerial application of Phinergy Ltd’s Aluminum air battery, coupled with a high power rechargeable battery buffer, and managed by a clever mission specific power analytic algorithm, EViation’s energy system is unique. Providing a true solution to both energy density and utilization, at a cost that beats gas, and with zero emissions,” said Eviation Aircraft.

Rather than compete with traditional aviation companies, Eviation will position itself as an Uber-like on-demand transport service. Mark Moore, Uber Engineering Director of Aviation, commented on the Eviation technology:

“We are witnessing a new age in aviation as advances in energy storage and aircraft design bring electric, on-demand air transit within reach. Our focus at Uber is in galvanizing the ecosystem necessary for urban VTOL electric vehicles to thrive for 20-60 mile trips that can provide massive time savings over ground transportation for long trips in cities. In parallel, we are encouraged to see bold new players like Eviation tackling challenges in different sectors using electric aviation; these players will help catalyze demand for new battery and rapid recharging technologies that are crucial to enable electric flight.”

The monthly Coppock Indicators finished May

DJIA: 21,009 +157 Up. NASDAQ:  6,199 +219 Up. SP500: 2,412 +161 Up.