Baltic Dry Index. 1555 -18 Brent Crude 60.39
Let’s
start with some good news. In 1820 some 94% of the world’s population lived in extreme
poverty. By 1990 the figure was 35%, and in 2015 it was just 9.6%. Forty
percent of those who remain impoverished live in just two countries, Nigeria
and India, both of which are growing rapidly and will see their extreme poverty
significantly decrease in the next 20 years.
John Mauldin. The Fragmentation of Society. October 29, 2017
Barring action in
North Korea or serious criminal charges against the Trump administration in
America, the news this week is likely to be dominated by events in the tragedy
of Catalonia and Spain. Since that will be well covered in main stream media, the
LIR will adopt mainly a watching position, but unless cooler heads prevail this
week, defusing a train wreck of growing severity, both Catalonia and Spain are
headed for economic disaster. Ultimately, whatever the outcome, the two
populations will still continue to live side by side and mostly integrated into
each other’s society. Stoking up hatreds is a fast track Motorway to discrimination,
ethnic cleansing, reduced income, lower investment, increased expenditure, and
ultimately increased poverty.
Up first the never
ending gigantic stock market bubble. A
warning from last week on US earnings euphoria. The more things change, the
more they stay the same. Asia and a cautionary tale. Time to get out of Tulips
and Dodge as we head into the end of month “dress up Tuesday.”
Why stock-market bulls should be wary of rising tide of earnings shenanigans
Published: Oct 28, 2017 2:30 p.m. ET
Executives are leaning disturbingly hard on nonstandard accounting measures: analyst
Investors cheering stocks to all-time highs on another tide of strong
earnings might be somewhat disturbed to discover the extent to which American
corporations are emphasizing numbers that don’t follow accounting standards.
That’s a warning from Michael Arone, chief investment strategist at
State Street Global Advisors, who noted in a paper this past week that the
difference between earnings as reported under Generally Accepted Accounting
Principles and nonstandard, or non-GAAP, earnings remains relatively wide
compared with recent history (see chart below).
“It seems as though corporate executives are getting a bit more
aggressive in their use of accounting and eliminating one-time events, and
things like that, in a way to aggressively prop up their earnings,” Arone said,
in a phone interview.
With the difference running nearly as wide as its been since 2007, “to
me it just signals the potential that this is a red flag,” he said.
Publicly traded companies are required to issue results that comply with
GAAP, but many also offer an array of supplemental, nonstandard numbers.
Supporters argue the practice allows companies to offer a more accurate and
nuanced picture of earnings, while critics charge that managers use nonstandard
measures to obscure bad news.
Read: Here’s how investors are duped each earnings season
Purported abuses of non-GAAP measures have drawn increasing scrutiny from regulators and others. As noted by MarketWatch’s Francine McKenna, the Securities and Exchange Commission earlier this month published a lengthy update to its May 2016 guidelines on nonstandard accounting metrics. The SEC last year created a task force that has sent letters to hundreds of publicly traded companies demanding explanations for items in earnings releases and on conference calls as well as other filings that were unclear or violated rules.
----Arone noted that in the second quarter of 2017, 70% of companies in the Dow Jones Industrial Average DJIA, +0.14% reported results using both GAAP and non-GAAP figures. Of those companies, 80% reported higher earnings per share under the non-GAAP approach, he said.
Arone said the differences demonstrate Wall Street’s comfort with “accounting gimmicks that can exaggerate earnings strength. “When the spread gets too wide, earnings and prices are likely to fall sharply, much like what happened after 2007, he said.
More
Asian Stocks Mixed as Chinese Shares, Bonds Tumble: Markets Wrap
By Adam HaighEquity benchmarks fluctuated in Japan, while Chinese shares fell, with the Shanghai Composite Index tumbling as much as 1.7 percent, the most this year on an intraday basis, as the nation’s bond slump deepened amid mounting deleveraging concerns. Hong Kong stocks pared back early gains.
Profit reports due this week from some of the world’s largest companies may show if there’s enough juice in the earnings season to propel another leg higher for global shares. Speculation continues around who U.S. President Donald Trump will choose as the next Fed chair, with Governor Jerome Powell said to be the front-runner.
Trump last week stoked the sense of drama surrounding his choice, tweeting a video teasing an announcement he said would come this week. The president is leaning toward appointing Powell, according to three people familiar with the matter.
Earnings are coming thick and fast. HSBC Holdings Plc reported a third-consecutive quarterly increase in revenue on Monday. Three of China’s big four banks also report on Monday, after China Construction Bank earnings last week fueled optimism that interest margins and asset quality are improving. Sinopec and PetroChina probably improved earnings in the third-quarter as higher oil prices helped refining margins, analysts said. Their results are in focus after Exxon and Chevron each posted double-digit profit increases on Friday.
In Spain, the next hurdle in the battle with Catalonian separatists comes Monday, when public employees have to decide which side to follow. Barcelona’s streets flooded with hundreds of thousands of pro-unity demonstrators over the weekend, pressuring local lawmakers who pledged to defy Madrid’s direct control of the region. Prime Minister Mariano Rajoy on Friday ousted Catalan’s President Carles Puigdemont and dissolved his government after it declared independence.
On the U.S. political scene, developments in Washington will be closely watched after a grand jury approved the first charges stemming from special counsel Robert Mueller’s probe into Russian meddling in the 2016 election and possible collusion with Donald Trump’s campaign, according to multiple news reports.
More
Biggest Stock Collapse in World History Has No End in Sight
By Kana Nishizawa and Aibing GuoTen years after PetroChina peaked on its first day of trading in Shanghai, the state-owned energy producer has lost about $800 billion of market value -- a sum large enough to buy every listed company in Italy, or circle the Earth 31 times with $100 bills.
In current dollar terms, it’s the world’s biggest-ever wipeout of shareholder wealth. And it may only get worse. If the average analyst estimate compiled by Bloomberg proves right, PetroChina’s Shanghai shares will sink 16 percent to an all-time low in the next 12 months.
The stock has been pummeled by some of China’s biggest economic policy shifts of the past decade, including the government’s move away from a commodity-intensive development model and its attempts to clamp down on speculative manias of the sort that turned PetroChina into the world’s first trillion-dollar company in 2007.
Throw in oil’s 44 percent drop over the last 10 years and Chinese President Xi Jinping’s ambitious plans to promote electric vehicles, and it’s easy to see why analysts are still bearish. It doesn’t help that PetroChina shares trade at 36 times estimated 12-month earnings, a 53 percent premium versus global peers.
“It’s going to be tough times ahead for PetroChina,” said Toshihiko Takamoto, a Singapore-based money manager at Asset Management One, which oversees about $800 million in Asia. “Why would anyone want to buy the stock when it’s trading for more than 30 times earnings?”
More
This Company Added the Word ‘Blockchain’ to Its Name and Saw Its Shares Surge 394%
By Lisa PhamOn-line Plc jumped as much as 394 percent on Friday after announcing plans to change its name to On-line Blockchain Plc, following an initial climb of 19 percent on Thursday when it first announced the news. It’s the biggest one-day gain for the small-cap company since its December 1996 listing. The trading volume that reached 2.9 million shares by early afternoon in London is equal to more than 16 times the entire year’s trading before the last two days.
“Blockchain technology and cryptocurrencies are a new and exciting area we have been working on for some time,” the Essex-based company said in a statement on Thursday. “We feel the time is right to re-name the company to reflect these developments, where we believe the future growth will be in our sector.”
The shares pared gains after the company published a follow-up release on Friday, cautioning investors that the development of its blockchain product is still at an early stage. Still, the 238 percent rise as of 2:36 p.m. in London leaves the company’s market value of 4.4 million pounds ($5.8 million) at its highest since 2005.
This
isn’t the first time that investors have gotten excited about a name. Shares in
Colorado-based Bioptix Inc. nearly doubled in value
in the days leading up to its name change to Riot Blockchain Inc. earlier this
month. In what seems to be a case of mistaken identity, a New York-based
startup called SNAP
Interactive Inc. jumped more than 150 percent in the
days after Snap Inc.
filed for a $3 billion initial public offering in February. Little-known SNAP
Interactive makes mobile dating apps, while Snap Inc. is the parent of the
popular Snapchat photo-sharing app.
More
October 30, 2017 / 2:38 AM
Kobe Steel to withdraw earnings forecast after data scandal: Nikkei
TOKYO (Reuters) - Embattled Kobe Steel Ltd has decided to
withdraw its forecast for the current financial year as it struggles to
quantify the impact of its data falsification scandal, the Nikkei business
daily reported on Monday.
The steelmaker’s forecast for its first full-year profit in three years
has been thrown into doubt by revelations of widespread tampering of data on
products used across the world in cars, trains, airplanes and other equipment.
It reports earnings on Monday at 3:30 p.m. (0630 GMT). Japan’s
third-biggest steelmaker has also decided to cancel plans to pay an interim
dividend for the first time in two years, the Nikkei reported.
A company spokesman declined to comment on the Nikkei report.
Kobe Steel forecast in July that it would earn net profit of 35 billion
yen ($308 million) in the year through March 2018 after two years of losses.
The company is also trimming its recurring profit forecast for the full
year to 50 billion yen, from 55 billion yen, the Nikkei reported.
In a later article the Nikkei said Japan’s biggest banks are considering
a loan of 50 billion yen for Kobe Steel, to shore up its finances.
Kobe Steel shares were down about 1 percent by the end of morning
trading on the Tokyo exchange, while the Nikkei 225 was off by 0.1 percent.
Kobe Steel’s market value has slumped by about $1.5 billion since it
said in early October it had found widespread data tampering in its aluminum
and copper
Up next the wealth
and jobs destroying, dying EUSSR. Some truly
amazing news in from Italy over the weekend. “A new investigation of Italian banking
scandals by a parliamentary commission has already revealed some improper
behaviour.” The Vatican also confirmed at the weekend, that the Pope was indeed
Catholic!
Brexit now, before the whole EUSSR house of cards collapses
into the cess pit. Not to worry over this new Italian Banking black hole, ECB
chief Mario Draghi says he’s looking into it.
October 29, 2017 / 2:10 PM
Italian bank inquiry points to improper behaviour, commission's chairman tells paper
MILAN
(Reuters) - A new investigation of Italian banking scandals by a parliamentary
commission has already revealed some improper behaviour, the commission’s
chairman, Pier Ferdinando Casini, told the newspaper La Repubblica in an
interview.
The
cross-party commission, comprising 40 parliamentarians, was set up to look into
the scandals and crises that have rocked Italian banks in recent years.
“Only the commission as a whole will be able to make a final judgement,
but indications of improper behaviour have certainly been found,” Casini said
in the interview published on Sunday.
Casini said the initial findings pointed to a “network of complicity”
that resulted in offers of employment and consultancy jobs.
“It’s certainly not a good thing seeing Bank of Italy directors quickly take up top positions at the banks that were the target of inquiries,” Casini said. “If this had happened to a politician, it would certainly have triggered a chorus of deserved criticism.”
The cross-party commission has the same investigative powers as the magistrature, although it has little time to reach conclusions before the legislature ends. The role of the Bank of Italy and market watchdog Consob, which share supervision of the sector, is expected to come under scrutiny.
The government has had to spend more than 20 billion euros ($23.22 billion) this year to prop up the sector, injecting 5.4 billion euros to salvage Italy’s fourth-biggest bank, Monte dei Paschi di Siena (BMPS.MI), and offering billions of euros in guarantees as it wound down two major banks in the Veneto region.
Four other, smaller banks were wound down in 2015, hitting thousands of small savers.
Critics have accused both the Bank of Italy and Consob of failing in their oversight duties - allegations both bodies have rejected.
More
Finally, as we approach month end and dress up Tuesday in
stock markets, what is really happening jn our increasingly unstable, rigged,
financial markets. You don’t get much bang, anymore in stocks, for each
incremental extra 10 billion of new debt out of thin air in the stock market
bubbles. Forget tens of billions we are now since September, issuing in the
hundreds of billions. Our central bankster monetary bubbles are running on thin
air, flying by the seat of their pants, and heading blind into the
socio-political storm of the century.
Below, much of the world is now hedging via gold against
America, and the inevitable day that US, and global interest rates normalise.
At effectively near zero interest rates, the USA is already paying out a record $458 billion a year in debt service. And at 3 percent? 5 percent? Or the old original T. Bond
futures contract of 8 percent? We all know how it ends, just not when, or what
trigger gets pulled that causes it.
It Only Took $600,000,000,000 To Prop The Stock Market Since Gold & Silver Peaked Sep. 8th
October 28, 2017
As the U.S. Stock Market Bubble continues upward toward a giant pin,
there are some interesting developments that precious metals investors will
find quite interesting. Yes, there’s still a lot of life left in the
precious metals, even though pessimistic market sentiment has frustrated a lot
of gold and silver investors.
Also, even though precious metals investment demand in the U.S. has
fallen 40+% compared to the same time last year, it continues to be strong in
other parts of the world. For example, German physical gold bar and
coin demand increased 8% in the first half of 2017 versus the same period last
year, while U.S. fell by 45%. Moreover, flows into European Gold ETF’s hit a record
during the second quarter of 2017:
Now, if we look at what is going on with gold and Central Bank demand,
Russia takes the first place. According to the article by Smaulgld, Russia Steps Up Gold Purchase With Massive Buy In September:
In September 2017, the Central Bank of Russia added 1.1 million ounces (34.2138
tons) of gold to her reserves, raising her total to 1779.119 tons or 57.2
million ounces.
If you haven’t already checked out Louis’s work at Smaulgld.com, I highly
recommend you do. So, as the German public and Russian Central bank
continue to increase their gold holdings, Americans have cut back considerably,
or worse… have been liquidating. Furthermore, the U.S. gold market
is suffering another supply deficit this year. As of July 2017,
U.S. gold mine supply and imports totaled 288 metric tons (mt) while exports
were 290 mt. Thus, we have exported ALL of our gold mine supply
and imports overseas. (NOTE: 1 Metric Ton = 32,150 troy oz.)
You see, the Federal Reserve and Wall Street have done a marvelous job
in totally lobotomizing the American public in regards to gold as money.
American citizens have no idea that the printing cost of $1,300 worth of $100
bills (13) costs $1.95, whereas one ounce of gold valued at $1,300 production
cost is $1,150-$1,200. The U.S. Dollar was backed by gold up until
1971 but is now backed by the $20+ trillion in debt.
As
I mentioned in a previous article, it was uncanny how the ONE-DAY $318 billion
increase in the U.S. debt on Sept 8th marked the peak in the precious metals
prices while the Dow Jones Index bottomed. The next two charts
show how an increase in debt impacted REAL MONEY negatively while it pushed the
DOW JONES further into bubble territory:
You will notice in the GOLD chart that the Dow Jones Index remained flat
right up until Sept 8th. Since Sept 8th, the Dow Jones Index
increased 1,670 points (+8%) while gold fell $85 (-6%) and silver declined
$1.30 (-7%). I get a laugh at the news how the U.S. hit an
astonishing 3% GDP in the third quarter. It’s amazing what debt can do to
prop up markets and GDP.
So, how much has the U.S. Debt increased since Sept 8th? According
to the figures at the TreasuryDirect.gov, a bunch:
In just seven weeks the wizards at the U.S. Treasury increased the total
government debt by a whopping $600 billion (actually $595 billion to be
exact). Again, amazing things can be done to the economy when you pump
$600 billion into the market. Who the hell knows where this money goes,
but I can guarantee that it continues to allow Americans to buy cars, homes and
the millions of products and gadgets we most certainly can’t live without.
UPDATE: The
folks at TreasuryDirect.gov just updated the total public debt for Oct.
26th. I thought you would like to know they added another $14 billion
yesterday, to $20,453 billion up from $20,439 billion on Oct 25th:
----The
downside to printing money and increasing debt is the little annoying problem
called rising INTEREST PAYMENTS. Even though the Fed has been successful
in lowering the interest rate, the U.S. Government paid the largest amount of
interest expense ever this year. In fiscal 2017, the U.S.
Treasury forked out $458 billion worth of the American’s hard earned money just
to cover its interest expense.
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.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, Tesla misses Friday’s tech boat. Below that, so you really want a self driving
car, driverless convoy’s of tailgating trucks, and that aging nuclear
powerplant in your backyard. Below that,
what’s gone wrong in corporate Japan?
Tesla nears bear market territory, and it could get a lot worse
October 28 2017Tech stocks are soaring, but there's one name that's noticeably absent from the recent rally: Tesla.
Shares in the electric-car maker fell 2 percent on Friday after reports that production of the Model 3 would be delayed. Tesla's stock has been on a precipitous decline since hitting a high last month, falling 17 percent, near bear market territory.
"This is very much a momentum stock ... when you have these kind of momentum stocks, any sort of production delays, or any sort of push-outs they have with any of these new models, these stocks are going to react very quickly," Craig Johnson, chief market technician at Piper Jaffray, said Thursday on CNBC's "Trading Nation."
From a technical standpoint, "if you look at the chart, you can see
that we've just recently broken what I would define as a bit of an ascending
triangle. The stock has broken this, and it looks like to us the next kind of
big area of support comes in around $290. So you have another 11 percent
downside before you really find that support," he said.
Johnson added that he would wait until shares fell to the $290 range
before buying the stock. In midday trading Friday, Tesla shares were down 1.3
percent to $320.85.
In the past, sharp declines in Tesla have proven to be tremendous buying
opportunities. The last time Tesla was in a bear market the stock fell 32
percent over the course of seven months, from April 2016 to November 2016, but
then in the period following from November 2016 to September 2017, Tesla shares
rallied 122 percent.
According to Dennis Davitt, portfolio manager at Harvest Volatility
Management, "the options market is telling a story that Tesla is two
different companies ... as a car manufacturer, it's overvalued. As an
infrastructure play, it can go considerably higher. The momentum can carry it
higher."
One of the main things that is affecting Tesla is what "most people
don't realize. It's a highly rate-sensitive stock. A lot of growth is built on
Tesla borrowing money, and if the cost of borrowing money continues to increase,
then it's going to have real negative effects on the stock," Davitt said
on "Trading Nation."
Morehttps://www.cnbc.com/2017/10/27/tesla-nears-bear-market-territory-and-it-could-get-a-lot-worse.html
October 29, 2017 / 7:52 AM
Japan Inc.'s safety failures point to deeper malaise
TOKYO
(Reuters) - A series of safety scandals at Japanese companies have put the
country’s lionized factory floor under scrutiny as manufacturers struggle with
increased pressure on costs, stricter enforcement of standards and growing
competition.
With margins squeezed by a stagnant domestic market and rivalry from
China and South Korea, many factories have cut costs, reducing their reliance
on workers in lifetime employment in favor of laborers on temporary contracts.
As they have done so, safety scandals have erupted across the country’s
much-vaunted manufacturing sector, with Subaru Corp on Friday joining Nissan
Motor Co Ltd in admitting it failed to follow proper vehicle inspection
procedures.
Earlier this month, Japan’s third-largest steelmaker, Kobe Steel Ltd,
said its workers had tampered with product specifications for years, leaving
companies around the world scrambling to verify the safety of cars, planes,
trains and electrical goods.
Unable to easily lay off “regular” employees, full-time employees with
permanent contracts and pay scales based on seniority that formed the heart of
Japan’s post-war workforce, companies have increasingly come to rely on
“non-regular” workers - temps, part-timers and short-term contract workers.
These non-regular workers allow companies to cut costs and adjust their
workforce, said Koji Morioka, emeritus professor at Kansai University and an
expert on workplace issues. But it has led to a de-skilling of the factory
floor, lowering standards and increasing the likelihood of wrongdoing and
accidents, he said.
“The use of these ‘disposable’ workers is greatly increasing,” Morioka
said. “The loss of experienced, skilled workers on the factory floor is becoming
more and more risky.”
The share of non-regular workers in the labor force has risen from 20
percent in the early 1990s to a record 37.5 percent last year - with the
proportion in some companies higher still.
The pay gap is stark, with regular workers last year on
average paid 321,700 yen ($2,830) monthly compared with 211,800 yen for
contract workers.
More
“When it becomes serious, you have to lie.”
Jean-Claude Juncker. Failed former Luxembourg P.M.,
serial liar, president of the European Commission. Scotch
connoisseur.
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?
Highly stable perovskite solar cells developed
Date:
October 25, 2017
Source:
Ulsan National Institute of Science and Technology(UNIST)
Summary:
Researchers have developed highly stable perovskite solar cells (PSCs), using
edged-selectively fluorine (F) functionalized graphene nano-platelets (EFGnPs).
The breakthrough is especially significant since the cells are made out of
fluorine, a low-cost alternative to gold.
A recent study, affiliated with UNIST, has presented highly stable
perovskite solar cells (PSCs), using edged-selectively fluorine (F)
functionalized graphene nano-platelets (EFGnPs). The advance is important as
the cells are made out of fluorine, a low-cost alternative to gold.
This study has been jointly led by Professor Jin Young Kim in the School
of Energy and Chemical Engineering at UNIST in collaboration with Dong Suk Kim
of Korea Institute of Energy Research (KIER). Assistant Professor Gi-Hwan Kim
in the School of Energy and Chemical Engineering at UNIST participated in this
study, as the lead author. The findings of the study has been published in the
September issue of the journal Nano Letters.
Perovskite solar cells (PSCs) have attracted more attention in the past
few years, as the next-generation solar cells with the potential to surpass
silicon cells' efficiency. Nevertheless, stability and cost issues in PSCs seem
to block further advancements toward commercialization.
The perovskite materials are easily decomposed in moisture conditions.
They cannot survive even for one day without proper encapsulation and this
results in low stability. To solve these issues and make progress toward the
commercialization of PSCs, Professor Kim and his team introduced a highly
stable p-i-n structure for PSCs using fluorine functionalized EFGnPs to fully
cover the perovskite active layer and protect against the ingress of water for
high-stability PSCs.
"Fluorocarbons, such as polytetrafluoroethylene (Teflon) are
well-known for their superhydrophobic properties and comprise carbon fluorine
(C-F) bonding," says Professor Gwi-Hwan Kim at UNIST. "By
substituting carbon for fluorine, we have created a two-dimensional material
with high hydrophobicity, like Teflon. Then, applied it to PSCs. "
"This study overcame weakness of perovskite solar cells that have
high efficiencies but low stability," says Professor Jin Young Kim.
"This breakthrough holds substantial promise as the base technology for the
application of the next-generation solar cells, as well as various IoT devices
and displays," says Professor Jin Young Kim.
The newly-developed perovskite solar cell device was fabricated using
solution processes, a process that involves the coating perovskite materials on
a flexible film. Using this process allows the future application of solar
cells to wearable devices. The next-generation solar cells are advantageous in
that they have a simple manufacturing process and a low manufacturing cost, compared
the existing silicon-based inorganic electronic devices.
This research has been supported by the National Research Foundation of
Korea Grant (NRF) and the Creative Research Initiative (CRI) program. This work
has been also supported by the Development Program of the Korea Institute of
Energy Research (KIER) and UNIST.
The monthly Coppock Indicators finished September
DJIA: 22,405 +223 Up. NASDAQ: 6,496 +274 Up. SP500: 2,519 +179 Up.
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