Wednesday, 9 August 2017

What’s Happening?

Baltic Dry Index. 1038 +02     Brent Crude 51.94

Some people make things happen, some people watch while things happen, and some people wonder, what the hell happened?


Not the usual update today. Today food for thought for the thinking investor. Is war on the cards, perhaps just weeks away? But who against whom, we appear spoiled for choice? 

The USA v North Korea, with Guam collateral damage? China v India as China seeks to cut off India’s chicken neck? The USA + Vietnam v China over the South China Sea?  Outside bets, the USA v Russia over the Ukraine? The USA + Israel + Saudi Arabia v Iran? The USA v the Taliban all over again? 

One thing’s certain, Her Majesty’s Royal Navy won’t be sending a carrier to join in all the fun. The USA still can’t get the F-35 to work, so Her Majesty’s carrier still has no planes.

Below, some of the sea changes currently underway. For investors, this is no time for an ostrich policy.

August 9, 2017 / 4:17 AM

Nikkei skids to more than 2-month lows on rising North Korea risk

TOKYO, Aug 9 (Reuters) - Japan's Nikkei share average tumbled to more than a two-month low on Wednesday morning on escalating geopolitical tensions on the Korean peninsula, which boosted the safe-haven yen and knocked stocks across the board.

The Nikkei dropped 1.3 percent to 19,739.88 by the midday break, after hitting a low of 19,715.56, the weakest level since June 1.

North Korea said on Wednesday it is "carefully examining" plans for a missile strike on the U.S. Pacific territory of Guam, just hours after U.S. President Donald Trump told the North that any threat to the United States would be met with "fire and fury".

"Uncertainty over geopolitical tensions on the North Korean peninsula hit when market was already sluggish on a seasonal slowdown in activity in the summer," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

The CBOE Volatility Index, better known as the VIX and the most widely-followed barometer of expected near-term stock market volatility, closed at 10.96, its highest in about a month.

Kagawa also said the market is also keeping an eye on the CBOE SKEW INDEX, or so-called "black swan" index, which measures the likelihood of extreme moves in the S&P 500 based on how traders are pricing the index's options.

"The index is showing a warning sign as it is rising after U.S. shares staged a rally recently," Kagawa said, adding that investors could be positioning for a possible sharp sell-off in the near future.

From faraway safe if wet London, I can’t help but wondering how this will look in Beijing.  I suspect it will look like more of the US encirclement policy used against Russia. Does colour revolution’s in China’s regions come next?

August 9, 2017 / 1:28 AM

Vietnam wins U.S. defence pledges as tension with China grows

WASHINGTON/HANOI (Reuters) - Vietnam has won the promise of a visit from a U.S. aircraft carrier and deeper defence cooperation from the United States as strains show with China over the disputed South China Sea.

Within Southeast Asia, Vietnam has become an increasingly lonely voice in challenging Chinese claims to the vast majority of the waterway and was forced to suspend some offshore oil drilling last month after pressure from Beijing.

U.S. Defense Secretary Jim Mattis told Vietnamese counterpart Ngo Xuan Lich in Washington on Tuesday that a strong defence relationship was based on common interests that included freedom of navigation in the South China Sea.

"The Secretary welcomed Vietnam's engagement and growing leadership in the Asia-Pacific region," a statement from the Pentagon said.

The defence ministers agreed on a visit by a U.S. aircraft carrier to Vietnam next year - the first such visit since the Vietnam War ended in 1975. President Donald Trump discussed the possibility of a carrier visit with Vietnamese Prime Minister Nguyen Xuan Phuc when they met at the White House in May.

The agreement was consistent with Vietnam's diplomatic strategy of being open to all countries, said Ha Hoang Hop, a Vietnamese political analyst who has advised the government.

"Vietnam is not willing to compromise on issues of sovereignty and also makes its own preparations," he said.

Next, has the Fed got it all wrong?

"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."

Daniel Webster

New Study Says Aging Populations Will Drive Higher Interest Rates

By Sid Verma
8 August 2017, 15:29 GMT+1
Aging populations in China and Europe are poised to transform the global economy by sparking a jump in interest rates that may set the stage for a showdown between the old and the young.

So say Charles Goodhart and Manoj Pradhan, painting a sweeping picture of the future economic landscape in a new paper published by the Bank for International Settlements.

In it, the London School of Economics professor and former Morgan Stanley economist push back against the popular view that an aging population will slow growth and drag down rates. The research contrasts with models cited by the Federal Reserve, which project that inflation-adjusted real rates are intrinsically tied to potential growth.

“The demographic sweet spot is already behind us, and both the equilibrium real interest rate and inflation have probably already stopped falling,” write Goodhart and Pradhan. “Future problems may now intensify as the demographic structure worsens, growth slows, and there is little stomach for major inflation.”

A three-decade rush of new workers from Asia and other emerging markets has juiced returns for bond investors thanks to weak price growth, creating a sweet spot for capital owners that’s now reversing, the authors write.

But demographic trends are poised to be the driving force for the price of labor and capital across large economies and a graying population will in turn drain savings ratios and offset a corresponding reduction in investment spending, which tends to fall when demand is lower.

That dynamic should spur a rise in the effective cost of capital, or real rates, the authors reckon, pushing back against a view held by Fed researchers that real rates will stay low amid weak potential growth.

Billionaire Who Made Killing on Cobalt Bets on Battery Fund

By Mark Burton and Javier Blas
8 August 2017, 14:00 GMT+1
An investment firm founded by Russian billionaire Vladimir Iorich is following its winning bet on cobalt this year by creating a $150 million fund to buy into metals used in electric cars.

Pala New Energy Metals will invest in cobalt, lithium, vanadium, rare earths, nickel and tin. Pala Investments Ltd. started the fund with its own money and cash from other investors. The firm previously snapped up cobalt, anticipating surging demand from automakers that more than doubled prices in the past year.

“We have been focused on the evolution of the battery chemistries and this has allowed us to invest early in different components of the battery," Stephen Gill, managing partner at Zug, Switzerland-based Pala Investments, said in an interview. "We hope to continue to be ahead of the curve as technologies evolve."

The company was among investors to buy up physical cobalt before selling it for cash and shares in Cobalt 27 Capital Corp., listed in Canada this year to offer equity investors a way to take a stake in the market. In June, Pala said it had swapped 626 metric tons of cobalt for shares in Cobalt 27, making it the largest shareholder with 19.5 percent.

In total, the Toronto-listed firm, run by Pala Managing Director Anthony Milewski, bought 2,158.6 tons of cobalt for cash and shares, or about 2.5 percent of annual global demand. Spot prices have jumped almost 120 percent in the past year to $57,500 a ton.

Pala is betting demand for specific base metals will surge in coming years as more and larger batteries are built. Supply of metals such as cobalt won’t be "sufficient to meet projected needs over the next decade," Gill said.

Next, in Bitcoin, is “Spoofy” just copying the rigging policies of the FED, BOJ, ECB, PBOC?

Why is bitcoin surging? Ask ‘Spoofy,’ the trader who’s reportedly manipulating prices

Published: Aug 8, 2017 3:31 a.m. ET

Spoofy makes the price go up when he wants it to go up, and Spoofy makes the price go down when he wants it to go down’

Bitcoin BTCUSD, +3.53%  caught fire this weekend, taking out yet another record high and pushing above $50 billion in market capitalization for the first time ever. This after selling off in the wake of the split last week.

So what’s triggering the latest push?

Apparently, a deep-pocketed trader (or group of traders), nicknamed “Spoofy,” is rumored to be manipulating the bitcoin market by employing his namesake tactic on the Bitfinex cryptocurrency exchange, according to Cointelegraph.

Spoofing is when a trader makes a deceptive bid or offer with the intent of canceling it before execution, thus giving the illusion that somebody is getting ready to buy or sell and potentially triggering a notable move in price.

For example, if Spoofy places a large buy order that entices smaller traders to hop aboard, he can turn around and instead use the uptick to execute a sell order.

We’ve seen it before in other markets, like when Navinder Sarao, the British trader accused of contributing to the 2010 stock market “flash crash,” pleaded guilty to using the shady tactic.

So yes, spoofing is illegal, but since bitcoin markets are mostly unregulated, it’s quite common, Cointelegraph reports. The difference in Spoofy’s case is that he’s got a massive bankroll that allows him to regular place orders upward of $60 million.

The BitCrypto’ed blog described the impact he’s had on bitcoin.

“Spoofy makes the price go up when he wants it to go up, and Spoofy makes the price go down when he wants it to go down,” the blogger wrote. “And he’s got the coin… both USD, and bitcoin, of course, to pull it off, and with impunity on Bitfinex.”

Confused about bitcoin? 10 things you need to know

Published: Aug 3, 2017 8:44 a.m. ET
When bitcoin was born in 2009 after the financial crisis, the goal of early investors was simple — participate in a currency market that wasn’t beholden to the whims of central banks.

But in the intervening years, the boom in other digital “cryptocurrencies” like ethereum and litecoin has enticed day traders and momentum investors who simply want to buy something that’s going higher in a hurry.

While bitcoin BTCUSD, +3.40%   has been around for a while, there is still plenty of confusion about what it is. That only increased this week after bitcoin “forked” into two different currencies as a result of disputes over transaction speed, security and other issues. Now there’s old bitcoin and Bitcoin Cash, which rocketed on its first day.

My colleague Brett Arends says cryptocurrencies are garbage and warns you to stay away. But just a few weeks ago, Twitter star and wealth manager Josh Brown admitted he was diving in to the cryptocurrency craze even as he admitted not fully understanding the currency’s use or where it will ultimately wind up.

And, of course, there’s the recent record highs of about $2,800 for the value of a single bitcoin — up dramatically from $100 in 2013 and a low of just $500 a year ago.

But will bitcoin — or any of its imitators — last? And should regular investors give this “asset” serious attention, or consider it a short-lived quirk of the market?

For the record, I don’t think bitcoin is a fad, even if it has its flaws. It’s dangerous to roll your eyes at a technological advance simply because it’s different and you don’t fully understand it — as is proven by this 1995 piece scoffing at the internet or this classic TechCrunch prediction that “the iPhone will bomb.”

But it’s fair to say that while there have been big strides for bitcoin over the last few years, the digital currency may be at an inflection point in 2017. Not only does it face competition from other cryptocurrencies, but it also seems to be a source of tension from within the bitcoin community itself.

So what’s up with bitcoin, and is it worth your money?

Both proponents and detractors are very strong in their opinions. But for those still in the dark about bitcoin, here are 10 things you need to know before you consider investing:

We end for the day with Graeme’s Fake News, reported in extreme left-wing, BBC Fake News, anti-Brexit style.

There was yet more dire news from continental Europe yesterday, as more and more continentals, lost faith that continental politicians were up to the job of governing the multi-cultural, polyglot, migrant tainted, entity, with seemingly no plan for life after the UK’s unexpected Brexit release.  With the EUSSR’s second largest contributor just 18 months away from ceasing to contribute, chaos rules among the rump-27 over how to replace the escaping Brit’s cash, and who would pay for the missing billions.  There was no sign of a plan among the EUSSR’s 5 competing, and jealous, preening Presidents. With Europe’s squabbling politicians now dispersed across the world’s finest watering holes for the duration of August, selflessly researching on behalf of the EUSSR Parliament, yet another month is being thrown away, by Europe’s meandering, rapacious, vacationing pols.

French exports fall; current-account deficit grows

France has seen 271 jihadi militants return - minister

Deutsche Bank tumbles down private bank rankings

German state conservatives seek tougher VW oversight

Turkey's Erdogan claims Germany abetting terrorists

EU asks top court to speed up case against Poland over logging

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton

Crooks and Scoundrels Corner

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

Today, time to Travel With Another airline?

'This is your computer speaking. We are now cruising at 580mph and an altitude of 36,000ft...'

Alan Tovey7 August 2017 • 3:10pm
“This is your computer speaking. We’re currently cruising at 580mph at an altitude of 36,000ft….”
It sounds incredible but airliners without a human at the controls could be flying passengers through the skies with in a decade - saving airlines billions by doing away with pilots and cutting ticket prices for passengers.

Research by analysts at UBS claims the pilotless aircraft could generate $35bn a year in savings for airlines.
The money would come not only from eliminating highly paid pilots who require expensive training, but by making aircraft safer by having them controlled by computers which are less likely to make errors. US safety data attributes three quarters of accidents to human error.

Flights would also be more efficient because of the exacting nature of they way they would be flown digitally, meaning less fuel would be used, and aircraft could be flown closer together, allowing air space to be more crowded.

Finally, aircraft would be able to be used more intensively, as they would not require rest days that pilots currently get.

UBS analysts Jarrod Castle and Celine Fornaro point out that similar “technology to remotely control military drones already exists and this could be adapted to civil applications”.

They predict that the first aircraft to embrace self-flying technology will be those carrying only cargo, first removing one of the two pilots normally in the cockpit, then eventually replacing them altogether. Private jets are expected to follow, then helicopters, with airliners the last to adopt the new technology.

However, the research warns that while the savings generated by cutting out pilots might be attractive to to airlines - the concept isn’t so warmly welcomed by passengers.

UBS’s survey of 8,000 people found that 54pc of them wouldn’t want to take a pilotless flight even if it were cheaper and only 17pc said they were likely to - a much lower level than those willing to travel in a driverless car.

British pilots’ association Balpa also warned said it had “concerns” about “the excitement of this futuristic idea” - but noted that cockpits are already highly automated. Currently technology means that the majority flights are under the control of autopilot and modern aircraft can land without a human taking the controls.

"The international monetary order is more precarious by far today than it was in 1929. Then, gold was international money, incorruptible, unmanageable, and unchangeable. Today, the U.S. dollar serves as the international medium of exchange, managed by Washington politicians and Federal Reserve officials, manipulated from day to day, and serving political goals and ambitions. This difference alone sounds the alarm to all perceptive observers."

Hans F. Sennholz
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?

Nanocrystalline LEDs: Red, green, yellow, blue …

Date: August 7, 2017

Source: Ludwig-Maximilians-Universitaet Muenchen (LMU)

Summary: The color of the light emitted by an LED can be tuned by altering the size of their semiconductor crystals. Researchers have now found a clever and economical way of doing just that, which lends itself to industrial-scale production.

Unlike our old friend the incandescent lightbulb, light-emitting diodes (or LEDs) produce light of a defined color within the spectral range from the infrared to the ultraviolet. The exact wavelength of the emission is determined by the chemical composition of the semiconductor employed, which is the crucial component of these devices. In the case of some semi-conducting materials, the color can also be tuned by appropriately modifying the size of the crystals of which the light-emitting layer is composed. In crystals with dimensions on the order of a few nanometers, quantum mechanical effects begin to make themselves felt.

LMU researchers in collaboration with colleagues at the University of Linz (Austria) have now developed a method for the production of semi-conducting nanocrystals of defined size based on the cheap mineral oxide known as perovskite. These crystals are extremely stable, which ensures that the LEDs exhibit high color fidelity -- an important criterion of quality. Moreover, the resulting semiconductors can be printed on suitable surfaces, and are thus predestined for the manufacture of LEDs for use in displays.

The crucial element in the new method is a thin wafer, only a few nanometers thick, which is patterned like a waffle. The depressions serve as tiny reaction vessels, whose shape and volume ultimately determine the final size of the nanocrystals. "Optimal measurements of the size of the crystals were obtained using a fine beam of high-energy X-radiation at the Deutsche Elektronen-Synchrotron (DESY) in Hamburg," says LMU researcher Dr. Bert Nickel, member of the Nanosystems Initiative Munich (NIM), a Cluster of Excellence.

Moreover, the wafers are produced by means of an economical electrochemical process, and can be fashioned directly into LEDs. "Our nanostructure oxide layers also prevent contact between the semiconductor crystals and deleterious environmental factors such as free oxygen and water, which would otherwise limit the working lifetime of the LEDs," as Dr. Martin Kaltenbrunner of the Johannes Kepler University in Linz explains. In the next step, we want to enhance the efficiency of these diodes further, and explore their potential for use in other applications, such as flexible displays.

"Were we to be directed from Washington when to sow and when to reap, we should soon want bread."

Thomas Jefferson

The monthly Coppock Indicators finished July

DJIA: 21,891 +207 Up. NASDAQ:  6,348 +250 Up. SP500: 2,470 +171 Up.

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