Baltic Dry Index. 1433 +15 Brent Crude 56.57
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.
It is Friday the 13th
ahead of crash week, what could possible go wrong? It is the perfect “Goldilocks” global economy, we are
told. China’s Communist Party meeting,
starting next week, and President Trump’s mythical tax cuts, are going to make
everyone rich, buy more stocks, ETFs, and CFDs on stocks.
Brexit, Catalonia,
North Korea, rising interest rates, hurricanes, wild fires, earthquakes, OPEC, forget
about them, really stop being so negative! This time it’s different, no really,
it really is. Just don’t scroll down to Crooks Corner.
In any great organization it is far, far safer to be wrong with the majority than to be right alone.
John Kenneth Galbraith.
October 13, 2017 / 2:23 AM /
Updated 2 hours ago
Asia shares at 10-year high ahead of U.S. data, China Congress
TOKYO
(Reuters) - Asian stocks edged to a 10-year high on Friday thanks to
expectations of brisk global growth, although investors held off chasing shares
higher ahead of U.S. economic data and next week’s Chinese Communist Party
Congress.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.15
percent, having gained 3.6 percent so far this month. Japan’s Nikkei edged up
0.2 percent to another 21-year high.
Wall Street shares dipped slightly on Thursday, pulled down by a fall in
AT&T after the telecoms company reported subscriber losses in its cable TV
business.
But MSCI’s broadest gauge of the world stock exchanges covering 47
markets also stood at record levels, extending its gains so far this year to 17
percent.
China’s trade data showed both growth in exports and imports accelerated
in September, with imports beating expectations, adding to the evidence of
recent resilience in China’s economy.
“It is hard to think the current ‘goldilocks economy’ will suddenly
change,” said Nobuyuki Kashihara, head of research group at Asset Management
One, referring to an economy that is neither too hot, or too cold, but just
right.
“Stock prices will continue to rise in line with growth in corporate
earnings globally.”
On top of a broad consensus that the global economy is in its best shape
in recent years, expectations that U.S. President Donald Trump would push
through a tax cut also encouraged investors.
More
October 13, 2017 / 6:08 AM /
Updated 25 minutes ago
China shares edge up in quiet trade before party congress; Hong Kong flat
SHANGHAI, Oct 13 (Reuters) - China stocks inched up in quiet trading on
Friday morning, as investors anticipated markets to remain stable ahead of next
week’s Communist Party Congress that is expected to stress stability.
With trade volume dwindling, investors gave a muted response to
generally upbeat China trade data released on Friday, as well central bank
moves to inject nearly 500 billion yuan into the financial system via one-year
loans.
The blue-chip CSI300 index rose 0.3 percent, to 3,923.86 points at the
end of the morning, while the Shanghai Composite Index gained 0.2 percent, to
3,391.16 points, continuing a pattern of staying in a narrow range.
Although the CSI300 and SSEC have climbed 2.3 percent and 1.3 percent
respectively so far this week, most of the gains were achieved on Monday, when
the Chinese market played catch-up with bullish global equities following a
week-long holiday.
Reflecting the market’s relative inactivity, China’s volatility gauge -
which measures investor expectations of fluctuations in the SSE50 index - has
dropped to as low as 10.68 this week, almost touching its lowest since May.
While most analysts expect Chinese stocks to sail smoothly through the
party congress, which starts on Oct. 18, as regulators have said maintaining
market stability is a major political task, there’s concern a sell-off could
begin after the meeting.
More
In US news, President
Trump just thumped his NAFTA partners. In short order the world economy faces a
no deal Brexit and WTO tariffs, and the breakup of NAFTA, just don’t tell
anyone in the Great Stocks and Bonds Bubble. Iran’s about to get hotter too.
What is the point of nation’s signing up to deals with America, if America can’t
or won't live up to its word?
October 12, 2017 / 11:28 PM /
Updated 2 hours ago
U.S. hikes tensions in NAFTA talks with call for 'sunset clause'
ARLINGTON,
Va. (Reuters) - Washington has dramatically increased tensions in talks to
renew the North American Free Trade Agreement by proposing that the lifespan of
any new deal be limited to five years, people familiar with the negotiations
said on Thursday.
The
proposal for a so-called sunset clause - just one of a series of U.S.
initiatives that are opposed by NAFTA partners Canada and Mexico - only served
to increase uncertainty about the future of the deal.
Two sources with direct knowledge of the talks described the atmosphere
as “horrible” and highly charged.
The U.S. side proposed the sunset clause late on Wednesday during the
fourth of seven scheduled rounds to update the rules governing one of the
world’s biggest trade blocs, said two officials, who asked not to be identified
because the talks are confidential.
The Trump administration says the clause, causing NAFTA to expire every
five years unless all three countries agree it should continue, is to ensure
the pact stays up to date.
But Mexico and Canada insist there is no point updating the pact with
such a threat hanging over it, arguing the clause would stunt investment by
sowing too much uncertainty about the future of the agreement.
“It’s a source of total uncertainty,” said one of the NAFTA government
officials.
Speaking in Mexico City, Finance Minister Jose Antonio Meade said the
government was working on plans to alter tariffs and identify substitute
markets in case the NAFTA talks failed.
His remarks and the tension around NAFTA helped push the peso down 1
percent against the U.S. dollar to a five-month low.
U.S. President Donald Trump says NAFTA, originally signed in 1994, has
been a disaster for the United States and has frequently threatened to scrap it
unless major changes are made.
Business and farm groups say abandoning the 23-year-old pact would wreak
economic havoc, disrupting cross-border manufacturing supply chains and
slapping high tariffs on agricultural products. Trade between the United
States, Canada and Mexico has quadrupled under NAFTA, now topping $1.2 trillion
a year.
More
Trump Expected to Disavow Iran Nuclear Deal But Not Abandon It
By Nick Wadhams
President Donald Trump is expected on Friday to refuse to certify that
the multinational accord to curb Iran’s nuclear program sufficiently serves
U.S. interests, though he will stop short of abandoning it, according to two
senior administration officials.
Trump will make the declaration in a speech where he will outline a
broader Iran policy aimed at curtailing what the administration sees as the
Islamic Republic’s malign behavior in the Middle East -- including its
sponsorship of terrorism, the officials said.
After twice acquiescing to arguments from his advisers and U.S. allies, who
say Iran is keeping its end of the deal by curtailing its nuclear program,
Trump is expected to refuse to certify Iran’s compliance again in advance of
Oct. 15, the next deadline set by a law Congress passed to supervise the
agreement.
After Trump decertifies that the deal is in the interests of the U.S.,
Congress will have 60 days to introduce legislation reimposing sanctions on
Iran that were eased under the agreement -- a move that would be likely to kill
the accord.
But Trump is expected to ask Congress to hold off sanctioning Iran for
now and instead amend the law, the Iran Nuclear Agreement Review Act, according
to the officials, who asked not to be identified ahead of Trump’s speech. He
will ask that Congress set benchmarks for Iranian action, for example by
imposing new restrictions on its ballistic missile program.
The administration also wants Congress to target so-called sunset
provisions in the nuclear agreement that ease restrictions on Iranian uranium
enrichment in coming years.
----Efforts
to unwind or rewrite the accord will be a hard sell to the other nations that
joined the U.S. in hammering it out in months of talks -- not only Iran, China
and Russia but also the U.K., France and Germany. The U.S. assertion that Iran
isn’t complying with the agreement “contradicts the assessment of all member
states of the European Union -- and it contradicts our assessment,” German
Foreign Minister Sigmar Gabriel told reporters in Berlin on Oct. 9.
More
In a big complication
for America in its new fight with Turkey, Turkey is now part of a stabilising
coalition in Syria, with Russia and Iran, against America’s “good” terrorists.
Turkish Troops Enter Syria in Joint Mission With Russia, Iran
By Selcan Hacaoglu
Turkey sent special forces and commandos over the border into Syria, the
start of a joint mission with Russia and Iran to monitor a cease-fire agreement
and pacify a stronghold for Islamic militants -- but one that also has major
implications for the region’s Kurds.
The operation to establish a combat-free zone in Syria’s northwest
province of Idlib, which is largely controlled by former al-Qaeda militants,
began late Thursday, Hurriyet newspaper said without citing anyone. Thirty
armored cars carrying more than 100 special forces and commandos crossed the
frontier late Thursday, the report said.
The incursion is one of Turkey’s biggest yet in the Syria conflict, adding to the nation’s geopolitical risks following an attempted coup in 2016 and subsequent political crackdown. The lira tumbled after the U.S. and Turkey suspended visa services for each other’s citizens on Sunday, a sharp escalation of simmering tensions between the two over U.S. military involvement in Syria and Turkey’s closer ties with Russia.
Turkey’s deployment emphasizes the closer ties between President Recep Tayyip Erdogan and his Russian counterpart Vladimir Putin, a relationship viewed with concern by Turkey’s NATO allies.
It also represents a shift in Ankara’s attitude toward Syrian leader Bashar al-Assad. Turkey has long opposed any political transition under him, but Russia’s intervention in Syria’s civil war shored up the president after years of Turkish and U.S. insistence that he must go.
Rebels from the Turkey-backed Free Syrian Army crossed into Syria on Saturday. The Turkish troops are expected to follow them into the northwestern city of Idlib, with Russians stationed nearby.
Turkey
has also threatened to clear Afrin, a city in northern Syria, of Kurdish forces
it regards as belonging to a terrorist group with links to the PKK, which has
long battled for autonomy in Turkey’s southeast. Doing so would prevent the
Kurds from linking enclaves they control along the frontier with Turkey.
We close for the day
with the wealth and young people’s jobs destroying EUSSR. Germany pulls a fast
one. Not so fast says Austria. With timetables like these in the EUSSR,
Mexico’s Manana, looks like greased lightning.
October 12, 2017 / 9:40 AM
Austria takes Germany to European court over road toll
VIENNA (Reuters) - Austria is taking Germany to the European Court of
Justice over German plans for a road toll which would only apply to foreigners,
Austrian Transport Minister Joerg Leichtfried said on Thursday.
The German toll applies to foreign-registered cars using the country’s
highways at a cost of up to 130 euros (£116.5) a year. German drivers will be
able to recover the costs through tax deductions.
“This is indirect discrimination on the basis of nationality,”
Leichtfried said, adding that the EU Commission had missed a chance to create
“fairness in Europe” by cancelling the German toll.
“This is about creating a (European Union) where the strength of the law
counts and not the law of the stronger one.”
He said Austria had prepared a 30-page lawsuit which it will present to
the ECJ, which is in charge of upholding EU law, on Thursday.
Constitutional lawyer Walter Obwexer, speaking alongside Leichtfried,
said he expected the court to rule by the end of next year or early 2019.
The German parliament gave the road toll the green light in March but it
is unlikely to come into effect before 2019.
'You
just never know. That unpredictability is the great thing about life. You
change. The world changes. You live in a country where we are still blessed
with enormous opportunity. Leave yourself open to the world of possibility. You
have the ambition, you have the smarts and you have the toughness. So, turn the
page on your biography - you have just started a new chapter in your lives.'
Lloyd
Blankfein, “Mr. Goldman Sacks,” CEO of
Goldman Sachs unintentionally backs Brexit in a US speech to graduates, mid
2016.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today,on Friday the 13th and on the eve
of “crash week,” some troubling news from America. Is another Lehman or Madoff
surfacing? We can only hope that it isn’t. The next Lehman wipes out the global
financial system built on the Great Nixonian error of fiat money. Bitcoins
anyone?
Is Bridgewater A Fraud? Here Are The Troubling Questions Posed By Jim Grant
by Tyler Durden
Oct 12, 2017 5:35 AM
Jim Grant, author of Grant's Interest Rate Observer, first hinted last week
that not all is well when it comes to the world's biggest hedge fund, Ray Dalio's $160 billion Bridgewater (of
which one half is the world's biggest risk-parity juggernaut). Speaking
to Bloomberg last week, Grant said he was "bearish" on
Bridgewater because founder Dalio has become "less focused on investing,
while the firm lacks transparency and has produced lackluster returns."Grant slammed Dalio's transition from investor to marketer, and in a five-page critique of the world’s largest hedge fund, said Dalio has been preoccupied with his new book, sitting for media interviews and sending Tweets.
“Such activities have one thing in common: They are not investing,” Grant writes in the Oct. 6 issue of his newsletter. “Yet here he is, laying it all out to the world again, Tweeting, promoting his book, attacking the press -- necessarily doing less of his day job than he would otherwise do.”
Grant continued his scathing critique, accusing Bridgewater of "lately performed no better than the typical hedge fund.” Grant is right: since the start of 2012, Bridgewater’s Pure Alpha II Fund has posted an annualized return of 2.5% vs its historic average of 12%, and is down 2.8% this year through July.
The underperformance may be explainable: after all the polymath billionaire has been busy opining in recent months on subjects from the rise of populism to his affinity for China, "which are distraction from making money" Grant said.
But if Grant had limited himself to merely Dalio's stylistic drift, it would be one thing: to be sure, the fund's billionaire founder may simply have lost a desire to manage money and has instead discovered a flair for writing books and being in the public spotlight.
However, Grant - or rather his colleague Evan Lorenz - went deeper, and as he writes in the latest Grants letter, he raises several troubling points, which go not to the hedge fund's recent underprofmrance - which can be perfectly innocuous - but implicitly accuse the world's biggest hedge fund of borderline illegal activities and, gasp, fraud. Some of the more troubling points brought up by Lorenz are the following:
- Bridgewater has directly lent money to its auditor, KPMG, to which KPMH's response is that “these lending relationships . . . do not and will not impair KMPG’s ability to exercise objective and impartial judgment in connection with financial statement audits of the Bridgewater Funds.”
- Bridgewater has 91 ex-employees working at its custodian bank, Bank of New York.
- Only two of Bridgewater's 33 funds have a relationship with Prime Brokers. In these two funds, Bridgewater Equity Fund, LLC and Bridgewater Event Risk Fund I, Ltd., 99% of the investors are Bridgewater employees.
- Opaque ownership concerns: "Two entities—Bridgewater Associates Intermediate Holdings, L.P. and Bridgewater Associates Holdings, Inc.—are each noted as holding 75% or more of Bridgewater."
- Why the massive, and expensive, ETF holdings: "The June 30 13-F report shows U.S. equity holdings of $10.9 billion. The top-16 holdings, worth $9.5 billion, or 87% of the reported total, come wrapped in ETFs, including the Vanguard FTSE Emerging Markets ETF, the SPDR S&P500 ETF Trust and the iShares MSCI Emerging Markets ETF. Beyond the fact that Bridgewater reports holding few U.S. equities, you wonder why such a sophisticated shop would stoop to such a retail stratagem. Surely the Bridgewater brain trust could replicate the ETFs at a fraction of the cost that the Street charges."
- And perhaps most troubling, is the SEC in cahoots with Bridgewater? "Lorenz asked the SEC how Bridgewater’s answers comply with the requirement to “[p]rovide your fee schedule.” Via email, the agency replied, “Decline comment, thanks.”
That phenomenal track record:
Dalio has done his best work in the shadows. In a 1982 Wall Street Week interview, he predicted not the great bull market but a new calamity (the erroneous call nearly bankrupted Bridgewater). In a 1992 Barron’s article, he wrote that the country was in a depression and that it would be hard-pressed to escape from it.
From 1996 through Aug. 30, 2017 the Wasatch-Hoisington U.S. Treasury Fund has returned a compound 7.9% net of fees. Over the same span, according to a Sept. 8 article in The New York Times, All Weather returned an identical 7.9% net of fees.
----Which brings us to Grant's ominous conclusion: "Many are the mysteries and contradictions of the world’s largest hedge fund. We will go out on a limb: Bridgewater is not for the ages."
To which one can counter: will Bridgewater be one for the Harry
Markopoloses, and if so, when will Dalio's own day of reckoning come?
More. Much, much
more.
“It is hard for us, without being flippant, to even see a scenario
within any kind of realm of reason that would see us losing one dollar in any
of those [CDS] transactions.”
Joseph J. Cassano, a former A.I.G. executive, August 2007, on Credit
Default Swaps that wiped out A.I.G in 2008.
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?
Batteries of the future: Low-cost battery from waste graphite
Date:
October 11, 2017
Source:
Swiss Federal Laboratories for Materials Science and Technology (EMPA)
Summary:
Lithium ion batteries are flammable and the price of the raw material is
rising. Are there alternatives? Yes: researchers have discovered promising
approaches as to how we might produce batteries out waste graphite and scrap
metal.
Kostiantyn Kravchyk works in the group of Maksym Kovalenko. This
research group is based at both ETH Zurich and in Empa's Laboratory for Thin
Films and Photovoltaics. The two researchers' ambitious goal at the Empa branch
is to make a battery out of the most common elements in Earth's crust -- such
as magnesium or aluminum. These metals offer a high degree of safety, even if
the anode is made of pure metal. This also offers the opportunity to assemble
the batteries in a very simple and inexpensive way and to rapidly upscale the
production.
In order to make such batteries run, the liquid electrolyte needs to
consist of special ions that do not crystallize at room temperature -- i.e.
form a kind of melt. The metal ions move back and forth between the cathode and
the anode in this "cold melt," encased in a thick mantle of chloride
ions.
Alternatively, large but lightweight organic anions, which are
metal-free, could be used. This does come with a problem, though: where are
these "thick" ions supposed to go when the battery is charged? What
could be a suited cathode material? By way of comparison: in lithium ion
batteries, the cathode is made of a metal oxide, which can easily absorb the
small lithium cations during charging. This does not work for such large ions,
however. In addition, these large anions have an opposite charge to the lithium
cations.
Battery turned "upside down"
To solve the problem, Kovalenko's team had a trick up their sleeves: the
researchers turned the principle of the lithium ion battery upside down. In
conventional Li-ion batteries, the anode (the negative pole) is made of
graphite, the layers of which (in a charged state) contain the lithium ions. In
Kovalenko's battery, on contrary, the graphite is used as a cathode (the
positive pole). The thick anions are deposited in-between the graphene layers.
In Kovalenko's battery, the anode is made of metal.
Kravchyk made a remarkable discovery while searching for the
"right" graphite: he found that waste graphite produced in steel
pro-duction, referred to as "kish graphite," makes for a great
cathode material. Natural graphite also works equally well -- if it is supplied
in coarse flakes and not ground too finely or into folded, non-flake shapes.
The reason: the graphite layers are open at the flakes' edges and the thick
anions are thus able to slip into the structure more easily. The fine-ground
graphite normally used in lithium ion batteries, however, is ill-suited for
Kovalenko's battery: by grinding the graphite particles, the layers become
creased like crumpled-up paper. Only small lithium ions are able to penetrate
this crumpled graphite, not the new battery's thick anions.
The graphite cathode battery constructed from steel production
"kish graphite" or raw, natural graphite flakes has the potential to
become highly cost-effective. And if the first experiments are anything to go
by, it is also long-lasting. For several months, a lab system survived
thousands of charging and discharging cycles. "The aluminum chloride --
graphite cathode battery could last decades in everyday household use,"
explains Kravchyk and adds "similar demonstrations, but further increased
battery voltages, without compromising capacities, and of even lighter elements
are on the way and will offer further increase in energy densities from current
60 Wh kg-1 to above 150 Wh kg-1"
Another weekend and
then “Crash Week,” to look forward to, the 30th anniversary of the
Great October 19th stock market crash. Still history never repeats, and if it did,
the Fed still has the game plan of Greenspan’s
Great Stock Market Rig of the delayed opening of Tuesday October 20. It’s
an old trick, but it just might work
again! Have a great weekend everyone
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith
The monthly Coppock Indicators finished September
DJIA: 22,405 +223 Up. NASDAQ: 6,496 +274 Up. SP500: 2,519 +179 Up.
Nifty and Sensex continue with the bull run with strong gains from the Pharma Sector. Pharma Index gains by 3%, led by Sun Pharma gaining over 3.8%; Auto, FMCG, and Media Index push the markets up.Free Commodity Tips
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