Friday, 23 June 2017

The Summer Doldrums?

Baltic Dry Index. 855  +11     Brent Crude 45.39

“When dew is on the grass,
Rain will never come to pass.”

We open with Asian markets largely in an early summer drift. The pause before the big breakout, or the pause before the big drop? To me it’s hard to see a big breakout from here, unless the central banksters intend to buy more of everything. But even if they do, given the lack of breadth in the markets, my guess is that insiders will just use the central bankster buying as an opportunity to sell out near the top.

Below, Asia sleepwalks into the weekend. Crude oil attempts to hold near the lows. In the northern hemisphere, it’s too darned hot. What will that do to the inflation figures?

“When clouds appear
Like rocks and towers,
The Earth’s refreshed
With frequent showers.”

Asian Stocks Mixed While Oil Halts Losing Streak: Markets Wrap

By Adam Haigh and Fox Hu
22 June 2017, 23:18 GMT+1
Asian equities are ending the week on a tepid note, with oil remaining below $43 a barrel, after a series of Federal Reserve speakers did little to alter projections for the path of U.S. interest-rate increases.

Chinese companies trading in Hong Kong advanced while stocks in Japan fluctuated within a narrow range. Chinese equities remain in the limelight as the nation’s banking watchdog raises scrutiny on some of the biggest dealmakers. Crude halted a losing streak after tumbling into a bear market, but concerns of a supply glut persisted, helping gold to continue climbing back from a one-month low.

----"The market is taking a pause at a relatively high level," said Hao Hong, chief strategist at Bocom International Holdings Co. in Hong Kong. "Investors need to watch for signs of economic slowdown and see whether the Fed will adamantly carry on rate hikes."

China stocks are closing out a rocky week. They got a boost from MSCI Inc.’s decision to include domestic shares in its indexes, but regulatory surprises created upheaval. Shares slumped on news that the government had stepped up scrutiny of the nation’s most active overseas acquirers. Then, China’s broadcasting regulator ordered Weibo Corp. and two other internet media firms to halt video and audio webcasting, accusing them of operating without a license and disseminating opinions potentially harmful to social stability. Weibo shares sank 6.1 percent in New York.

----Friday’s session in the U.S. will probably be one of the busiest of the year for equity traders as the annual Russell reshuffle is set to take effect. The FTSE Russell’s rebalancing of stock indexes reliably boosts trading, though it rarely triggers big price swings in the market.

In wealth and jobs destroying EUSSR news, paymaster Germany wants the lion’s share of the Brexit spoils. What Germany wants, Germany usually gets, one way or another. Shame about all the other also-rans in the German run rump-EU.

Wed Jun 21, 2017 | 11:04pm BST

Brexit could strengthen EU, Germany as business location - German official 

Britain's departure from the European Union could strengthen the bloc's political integration and make Germany more attractive as a business location, German Deputy Finance Minister Thomas Steffen said on Thursday.

At their first meeting in Brussels on Monday, British and EU negotiators agreed on a timetable for the Brexit talks. Both sides stressed their goodwill but also acknowledged the task's huge complexity and tight deadline.

"The decision by the United Kingdom to leave the EU is unfortunate," Steffen said in the editorial of the finance ministry's monthly report.

In the forthcoming negotiations, the remaining EU member states will be faced with the challenge of preserving the unity of the EU-27 and the coherence of the EU's internal market while also limiting the damage to citizens and businesses, he said.

Steffen said that the EU-27 were determined to remain united and to put future relations on a new common basis. "The Brexit process could also bring opportunities for a stronger EU and for Germany as a business location," he added.

Germany has thrown its hat into the ring to host the London-based European Medicines Agency (EMA) and the European Banking Authority (EBA) following Britain's departure from the EU, though diplomats say both will not go to a single country.

In its monthly report, the finance ministry said Germany could benefit from Brexit as the future relationship with the UK was still unclear and London's market access was not secured.

The location question is therefore already present for many financial services companies and Germany can offer a good alternative with Frankfurt as one of the leading financial centres in Europe, it said.

The ministry pointed to the proximity to the European Central Bank and its banking oversight. "The role of Frankfurt as the centre of banking supervision in Europe could be further strengthened and completed by a shift of the European Banking Supervisory Authority, which is still based in London," it said.

"It is therefore self-evident that the state of Hesse and the federal government are committed to get the European Banking Authority to Frankfurt," the finance ministry concluded.

Next, Paris Airshow news. Victory for Boeing over Airbus, albeit with a large amount of fudge in the numbers.

Thu Jun 22, 2017 | 2:47pm BST

Boeing wins hot Paris order race

Boeing (BA.N) won a red hot race for new business at the Paris Airshow, rolling out a new model of its best-selling 737 airliner that helped it claim back the order crown from rival Airbus (AIR.PA)

After a show in which both manufacturers did brisk business under a sweltering sun, the European planemaker said on Thursday it won 326 net new orders and commitments while U.S. rival Boeing said its total was 571.

That included 147 new orders and commitments for the 737 MAX 10, plus 214 conversions to the MAX 10 from other models to support the launch of the new plane.

"The MAX stole the show," Ihssane Mounir, vice president of sales and marketing at Boeing's commercial aircraft division, told journalists. "This is probably one of our busiest air shows."

Asked if Airbus had lost momentum after years in which it often trounced Boeing at annual industry gatherings, sales chief John Leahy said the slowdown in orders had been expected.

"Is this a slower show than previous years? Yes, it is. Are we conceding that Boeing sold a few more airplanes than we did? Yes," he told a news conference.

In a late flurry on Thursday morning, Airbus signed deals for almost 100 aircraft, with AirAsia and privately-owned Iranian carriers Zagros Airlines and Iran Airtour.

Boeing topped up its tally by announcing a firm order for 125 737 MAX 8 airplanes with an undisclosed customer and another deal with lessor AerCap (AER.N) to convert 15 of its MAX 8 orders into the larger MAX 10. It also added a memorandum of understanding from Chinese domestic Riuli Airlines for 20 737 MAX 8 aircraft.

Analyst Richard Aboulafia, of Virginia-based Teal Group, said commercial activity had been better than expected and was reminiscent of shows in 2009 and 2011, when the aircraft industry had bucked a retreating world economy.

"This time we've got instability and uncertainty in many regions of the world, but airline traffic is strong, and as we've seen at this show, airlines want jets and the finance people are certainly happy to help."

In other news, the extreme early summer heat is affecting much of the northern hemisphere, generating real concern over the outcome of this year’s crops in China. Will China drive grain prices later this year? Will food price inflation drive the second half of 2017?

“Rain before seven,
Clear before eleven.”

Thu Jun 22, 2017 | 3:51pm BST

Extreme heat grips Northern Hemisphere on summer solstice

Extreme heat across large tracts of the Northern Hemisphere raised fears for crops in China, fuelled forest fires in Portugal and Russia's Far East, forced flight cancellations in the Southwest U.S., and melted tarmac on roads in Britain.

As Wednesday marked the summer solstice - the longest day of the year - forecasters said temperatures in Paris were expected to hit 37 Celsius (100 Fahrenheit), Madrid could see 38C, and London was set for 34C with warnings of thunderstorms.

Rounding up the record temperatures set in the past two months, the World Meteorological Organization (WMO) said the Earth was experiencing "another exceptionally warm year" and the heatwaves were unusually early.

"Parts of Europe, the Middle East, North Africa and the United States of America have seen extremely high May and June temperatures, with a number of records broken," the WMO said late on Tuesday.

The trend seen during the past two months has put average monthly global temperatures among the highest ever recorded since data began to be collated in 1880.

Even before this month, U.S. National Oceanic and Atmospheric Administration (NOAA) data showed Europe, the United States and Northeast Asia - including eastern China, Japan and South Korea - had experienced unusually warm weather between March and May.

In China, the world’s top grain producer, hot and dry conditions in the main corn belt have delayed plantings and stunted crop development, especially in the province of Liaoning where soil moisture levels are at their lowest in at least five years.

Thomson Reuters Eikon data shows that precipitation in Liaoning for the past month has been between 40 and 60 percent below the seasonal norm.

"The drought that hit parts of China’s northeast is the worst for this time of the year in the past decade, in the breadth of areas it has affected and the length of time it has lasted," Ma Wenfeng, analyst at Beijing Orient Agribusiness Consultancy, said.
Lastly today, an update on Beijing’s massive new airport, due to open in 2019.

Beijing's New Mega Airport Will Challenge Air China's Dominance

Bloomberg News
21 June 2017, 22:00 GMT+1
Like ancient warlords, China's three biggest airlines have dominated their regional cities: Air China Ltd. controlling Beijing, China Eastern Airlines Corp. holding sway in the financial center of Shanghai, and China Southern Airlines Co. ruling the roost down in export gateway Guangzhou. Until now.

Rising on a plain south of Beijing is a mega airport that is about to change the balance, bringing all three head to head in the capital as it becomes the world's biggest aviation hub.

The new airport, due to open in 2019, has been designated by authorities as the hub for members of the SkyTeam alliance, a global group of airlines that includes China Eastern and China Southern. The two Chinese carriers will each be allowed to capture 40 percent of the airport's passengers, gaining coveted time slots to Europe and the U.S. in Air China’s backyard.

"This is an absolute game-changer for China Eastern and China Southern," said Corrine Png, chief executive officer of Crucial Perspective in Singapore. "Having all the SkyTeam alliance members under one roof will enable seamless flight connections."

The invasion of Air China's regional rivals has repercussions beyond China. As well as dominating their home bases, the big three Chinese players have each carved out a position abroad. Air China, through its Star Alliance ties with Deutsche Lufthansa AG and United Continental Holdings Inc., commands many of the routes to Europe and North America. China Eastern is the biggest carrier to Japan and South Korea. And China Southern is strong in Australia and Southeast Asia.

With access to more slots in Beijing, China Southern and China Eastern would potentially get more access to lucrative North American routes while their SkyTeam partners would get better access to the Chinese capital. In addition, China Southern, the nation's biggest airline, would be able to draw traffic from its Southeast Asian links to fly via Beijing to the U.S.

---- The new $12.9 billion airport in the southern suburb of Daxing, which was approved in 2014, would accommodate up to 100 million passengers a year with as many as seven runways. Liu estimates that by 2025, the two Beijing airports would share 170 million passengers, including 25 million on international flights.
“When the wind is in the east,
It’s good for neither man nor beast.
When the wind is in the north,
The old folk should not venture forth.
When the wind is in the south,
It blows the bait in the fishes’ mouth.
When the wind is in the west,
It is of all the winds the best.”

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Fake online stores fronting money laundering! Who’d have thought it.

Thu Jun 22, 2017 | 11:53am BST

Exclusive - Fake online stores reveal gamblers' shadow banking system

A network of dummy online stores offering household goods has been used as a front for internet gambling payments, a Reuters examination has found.

The seven sites, operated out of Europe, purport to sell items including fabric, DVD cases, maps, gift wrap, mechanical tape, pin badges and flags. In fact, they are fake outlets, part of a multinational system to disguise payments for the $40 billion (31.6 billion pounds) global online gambling industry, which is illegal in many countries and some U.S. states.

The findings raise questions about how e-commerce is policed worldwide. They also underline a strategy which fraud specialists say regulators, card issuers and banks have yet to tackle head-on. 

That strategy is "transaction laundering" - when one online merchant processes payment card transactions on behalf of another, which can help disguise the true nature of payments.

Credit card companies including Visa and Mastercard require all online purchases to be coded so they can see what type of purchase is being processed and block it if it is illegal in a particular country. The codes are known as Merchant Category Codes. Gambling transactions, for example, are given the code of 7995 and subject to extra scrutiny.

The scheme found by Reuters involved websites which accepted payments for household items from a reporter but did not deliver any products. Instead, staff who answered helpdesk numbers on the sites said the outlets did not sell the product advertised, but that they were used to help process gambling payments, mostly for Americans.

Categorising a gambling transaction as a purchase of something else is against the rules of card issuers including Visa and Mastercard, the card companies said in response to Reuters' findings.

"Transaction laundering is serious misconduct - often criminal," said Dan Frechtling, head of product at G2 Web Services, a financial compliance company which works with leading banks and card issuers. "It violates the merchant's agreement with its acquirer, allows prohibited goods and services to enter the payment system, and may flout anti-money laundering laws."

Three other fraud experts consulted by Reuters said transaction laundering helps online merchants trade in areas that credit card issuers and banks may otherwise bar as "high risk," such as gaming, pornography or drugs. Some of them say thousands of online merchants may be using similar techniques to move billions of dollars that card companies would otherwise block.

"It is the digital evolution of money laundering," said Ron Teicher, CEO of Evercompliant, a cyber-intelligence firm that works with banks to identify suspect sites. "The only thing is it is much easier to do, and much harder to get caught."

The dummy stores came to Reuters' attention in late 2016, when an anonymous document posted on the internet pointed to three online outlets that advertised products but did not actually deliver any. In December, a reporter placed an order for a yard of burlap cloth on one of the sites,, a website run by a UK company called Sarphone Ltd. The fabric, advertised in U.S. dollars at $6.48 per yard, has "many uses including lightweight drapes," the website says. Sarphone did not respond to requests for comment.

This order went unmet. After a few weeks an email from My Fabric Factory arrived saying the product was out of stock. The payment was refunded.

When a reporter called the helpline number given on the site, the call was answered by someone who gave her name as Anna Richardson. She said she was employed by Agora Online Services, a payment services provider. Payment services providers (PSPs) verify, process and code card transactions.

Richardson said Agora processes payments for poker and works with "hundreds" of online gambling sites. Asked which references on the reporter's card statement would be for online gambling, Richardson said, "If you have been using a betting site of any sort ... they are normally processed by us."

“When your joints all start to ache,
Rainy weather is at stake.
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?

Future Energy: China leads world in solar power production

22 June 2017
Ten years ago, Geof Moser had just graduated with a master's degree in solar energy from Arizona State University - but he didn't feel much opportunity lay at his feet in his home country.
So he headed for China.

"The solar industry was fairly small and there weren't a lot of jobs," he remembers. "Just a few for installation." But the Chinese government had big ambitions to expand solar and Moser saw his chance.

He spent some years accumulating knowledge about the Chinese solar industry, before co-founding Symtech Solar, which designs solar panel systems using Chinese parts.

The idea is to make it easy for organisations outside China to access components without the hassle of having to source and assemble lots of different parts.

"You don't want to buy a car door or a car engine, you want to buy a car," he explains.

Symtech now has a portfolio of small projects dotted around the world and it is hoping to increase installations in the Middle East, thanks to a new office in Oman.

Moser isn't the only US entrepreneur who turned to China. Alex Shoer, of Seeder, helped to launch a business that brings solar panels to the roofs of buildings within the country.

He deals with foreign businesses who, say, want to make their Beijing office a little greener. The firm says it has so far erected three megawatts' worth of solar installations, with another 28 megawatts on the way for various clients.

"We will source the capital to finance, pay for the whole project and then sell the power at a discount," Shoer says. Again, the model relies on sourcing the right parts at a favourable cost.

These kind of installations are known as "distributed generation" projects, in which electricity is produced on a small scale, at or very near to a specific point of consumption.

Within China, distributed generation is growing at an extraordinary rate, driven in large part by farmers who use the panels to power agricultural equipment that might not be connected to the grid.

----China's rapid expansion of renewable energy facilities has since caught headlines around the world.
According to the International Energy Agency (IEA), the country installed more than 34 gigawatts of solar capacity in 2016 - more than double the figure for the US and nearly half of the total added capacity worldwide that year.

Early figures for 2017 show China has added another eight gigawatts in the first quarter alone.

"It's a huge market," says Heymi Bahar at the IEA. Most of the world's solar cells are made in China and Taiwan, he adds - more than 60%.

The impressive scale doesn't stop there. The largest solar farm in the world - Longyangxia Dam Solar Park, all 30sq km of it - is a Chinese project. And the country recently opened the world's largest floating solar farm, in Huainan, Anhui Province.

Another weekend, with Brexit talks finally underway, if with low expectations and no pace. Another weekend of UK’s media piling in on the tragedy of the Grenfell tower block fire, everyone’s now a victim, except everyone the media chooses to demonise as a killer. Never let facts, which we still largely don’t have, get in the way of a good story. Shame about the real victims though, but it’s great for the ratings and advertising revenue. Have a great weekend everyone.

Whether the weather be fine
Or whether the weather be not,
Whether the weather be cold
Or whether the weather be hot,
We'll weather the weather
Whatever the weather,
Whether we like it or not.


The monthly Coppock Indicators finished May

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

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