Monday 6 November 2017

Head For The Hills.




Baltic Dry Index. 1476 -06   Brent Crude 62.37

"We have reason to believe you have committed an offence."

City of London, parking ticket, circa 1960.

Like it or not, and all too soon global stock and bond markets won’t like it, the cost of global money is rising. From America, through Europe, to China, a receding tide in global interest rates has gone through slack, and the tide has now turned incoming. The prudent and the inside money will now start heading for the hills.

After a decade of free money, ZIRP, and in Europe in places NIRP, and a multi-decade mega bond bubble which started back in 1981, and grossly distorted the global economy, the piper is on his way to be paid for his tune. No one, in our over complacent global markets has the slightest care. But will the Piper get paid or defaulted on?

Tomorrow will be like today, which was like yesterday, say the complacent markets and 
their rent-seeking, gambling, algo-trading speculators. But tomorrow, will not be like today, which was like yesterday if interest rates normalise. Tomorrow will wreak havoc on those algos, corporations and governments that went deep into unrepayable debt, to fund stock buybacks, bubbles, insane fracking, or in governments case, never ending wars, bribes to voters louche lifestyles, and special interests, and crooked gambling bankster’s bailouts.

But first this Asian market spin from Bloomberg. What part of China moving to tightening did Bloomberg miss that the markets didn’t? Time to head for the hills. Oil price inflation seems about to return this winter. When did the central banksters ever say, “this is a good time to panic?”

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith

Asia Stocks Drop, Yen Slides to Lowest Since March: Markets Wrap

By Andreea Papuc
Updated on November 6, 2017, 5:03 AM GMT
The yen tumbled to the weakest since March after Bank of Japan Governor Haruhiko Kuroda said it’s crucial for inflation to exceed the 2 percent target. Asian stocks slipped after China’s central bank chief warned again about excessive leverage and President Donald Trump brought up trade grievances on a trip to the region.

Hong Kong’s Hang Seng Index dropped the most in more than two weeks in the wake of People’s Bank of China Governor Zhou Xiaochuan’s latest salvo on the continuing accumulation of financial risks. Japanese equities joined a selloff after the yen’s decline offered support earlier. Kuroda underscored in a speech Monday that the BOJ is committed to overshooting its inflation goal, auguring no appetite for tapering stimulus. Oil extended an advance above $55 a barrel, with traders keeping an eye on the surprise power shakeup in Saudi Arabia over the weekend. Iron ore surged more than 4 percent.

“Governor Kuroda is repeating what he said after the BOJ’s meeting last week but the dollar-yen is getting more support as the market starts to anticipate dollar divergence becoming a key driver again of price action,” said Mansoor Mohi-uddin, head of currency strategy in Singapore at NatWest Markets, a unit of Royal Bank of Scotland Group Plc. “The BOJ, like other major central banks, is signaling it will not lift interest rates anytime for the foreseeable future. In contrast, the Fed continues to stress its tightening bias. That is laying the conditions for a broader-based rally for the greenback across the board.”

Trump in Tokyo on Monday complained of unfair trade with Japan, pressing the country to step up investment in the U.S. He goes on to South Korea and China this week, with further prospects for trade tensions to pop up. Read more on Trump’s trip to Asia here. Over the weekend, the president claimed credit for the rise in U.S. stocks, which on Friday capped the longest run of weekly advances since 2013.
More

Now back to our now rapidly changing world. A sea change of socio-political change is now underway, just as our central banksters, have run out of ideas, road and talent. While President Trump continues on his 2017 Asian victory tour, global events are fast leaving him, and America way behind the emerging new global reality. Pax-Americana is starting to look so last century.

"Liquidation sometimes is orderly, but more frequently degenerates into panic as the realization spreads that there is only so much money, not enough to enable everyone to sell out at the top."

Charles P. Kindleberger, author Manias, Panics and Crashes.

China's Zhou Warns on Rising Financial Risk in Blunt Article

Bloomberg News
November 4, 2017, 1:55 PM GMT Updated on November 4, 2017, 3:10 PM GMT
China’s financial system is getting significantly more vulnerable due to high leverage, according to central bank governor Zhou Xiaochuan, who also flagged the need for deeper reforms in the world’s second-biggest economy.

Latent risks are accumulating, including some that are "hidden, complex, sudden, contagious and hazardous," even as the overall health of the financial system remains good, Zhou wrote in a lengthy article published on the People’s Bank of China’s website late Saturday. The nation should toughen regulation and let markets serve the real economy better, according to Zhou. The government should also open up financial markets by relaxing capital controls and reducing restrictions on non-Chinese financial institutions that want to operate on the mainland, he wrote.

“High leverage is the ultimate origin of macro financial vulnerability," wrote Zhou, 69, who is widely expected to retire soon after a record 15-year tenure. “In sectors of the real economy, this is reflected as excessive debt, and in the financial system, this is reflected as credit that has been expanding too quickly."

Zhou’s comments signal that policy makers remain committed to a campaign to reduce borrowing levels across the economy. Concern that regulators may intensify the deleveraging drive after the twice-a-decade Communist Party Congress has helped push yields on 10-year government bonds to a three-year high.

Still, measures of credit continue to show expansion, with aggregate financing surging to a six-month high of 1.82 trillion yuan ($274 billion) in September. China’s corporate debt surged to 159 percent of the economy in 2016, compared with 104 percent 10 years ago, while overall borrowing climbed to 260 percent.

Zhou’s article was included in a book that was published recently to help the public and party members to better comprehend the spirit of the 19th Party Congress, according to the official Xinhua news agency and information on the PBOC’s website. Here are some of the other points he made:
More

Crackdown on Billionaires and Other Top Officials Shakes Up Saudi Arabia

By Vivian Nereim, Alaa Shahine, and Sarah Algethami
Updated on November 6, 2017, 2:52 AM GMT
Even by the standards of Crown Prince Mohammed bin Salman, whose meteoric ascent has put him on the cusp of the Saudi throne at the age of 32, the Saturday night crackdown was stunning.

In just a few hours, security forces arrested princes, billionaires, ministers and former top officials as soon as King Salman announced a sweeping anti-corruption drive. Those detained included billionaire Prince Alwaleed bin Talal, who was picked up at his desert camp outside Riyadh, according to a senior Saudi official. Before midnight, the suspects’ names were already being leaked to local media, first as initials and later in full.

The king also relieved Prince Miteb bin Abdullah from his post as head of the powerful National Guard. The decision removed one of the last senior royals to have survived a series of cabinet shuffles that promoted allies of his son.

The scale of the campaign fits into the style of the royal -- known overseas as MBS -- with a knack for shock and awe. Since 2015, the prince has embarked on an unprecedented shakeup to prepare the economy for the post-oil era, plunged the kingdom into war in Yemen and imposed a land blockade on neighboring Qatar. In the meantime, he has taken control of every lever of power from defense to oil policies.

----The round-up risks overwhelming local and foreign investors struggling to get their heads around the rapid changes shaking the kingdom.

Two weeks ago, he unveiled a blueprint for Neom, an envisioned megacity on the Red Sea backed by more than $500 billion in investments. A conference last month held at a convention center adjacent to the palatial Ritz Carlton in Riyadh, drew some of the world’s top bankers and financiers, including Blackstone Group LP Chief Executive Officer Stephen Schwarzman.

On Sunday morning, a reporter who tried to visit found the compound completely shut -- the massive gates uncharacteristically closed -- without a security guard in sight amid speculation the suspects from the overnight actions were being held there. A duty manager reached on mobile said that the 492-room hotel was closed and guests were told the hotel had been taken over for government use.
More

November 6, 2017 / 1:04 AM

Oil hits highest levels since 2015 amid tightening markets, Saudi purge

SINGAPORE (Reuters) - Oil prices hit their highest levels since July 2015 early on Monday as markets tightened, while Saudi Arabia’s crown prince cemented his power over the weekend through an anti-corruption crackdown that included high profile arrests.

Brent futures LCOc1, the international benchmark for oil prices, hit $62.44 per barrel early on Monday, their highest level since July 2015. Brent was at $62.27 per barrel at 0230 GMT, up 20 cents, or 0.3 percent from the last close and 40 percent above June’s 2017 lows.

U.S. West Texas Intermediate (WTI) crude CLc1 hit $56.00 per barrel in early trading, also the highest since July 2015, and was at $55.79, up 15 cents, or 0.3 percent from the last settlement. WTI is a third above its 2017 lows. (bit.ly/2j3AahN)

Crown Prince Mohammed bin Salman, also known as MBS, has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including prominent business billionaire Alwaleed bin Talal and the head of the National Guard, Prince Miteb bin Abdullah.

RBC Capital Markets said in a note that although the “purge represents a stunning political development in Saudi Arabia,” it expected “no immediate changes” in the oil policy of Saudi Arabia, which is the world’s biggest exporter of crude oil.

----In oil fundamentals, traders said that there were ongoing signs of tightening market conditions.
U.S. energy companies cut eight oil rigs last week, to 729, in the biggest reduction since May 2016.

The decline in U.S. drilling activity comes as the Organization of the Petroleum Exporting Countries (OPEC) and a non-OPEC group lead by Russia have pledged to hold back about 1.8 million barrels per day (bpd) in oil production to tighten markets.

The pact to withhold supplies runs to March 2018, but there is growing consensus to extend the deal.
While supplies are tightening, analysts say demand remains strong.
More

Glencore's Role in Paradise Papers Leak: What You Need to Know

By Thomas Wilson
The activities of Glencore Plc, the world’s biggest commodity trader, are under scrutiny after a massive leak of confidential information from offshore law firm Appleby Global Group Services Ltd.
Glencore was one of the top clients of Appleby, which even had a "Glencore Room" at its Bermuda office that kept information on the trader’s 107 offshore companies, according to an investigation led by the International Consortium of Investigative Journalists.

Appleby suffered an alleged hack in 2016 and confidential data on the firm’s work for multinational corporations and high net-worth individuals was obtained by the ICIJ. The group and its partner media organizations are publishing a series of stories based on millions of pages of Appleby corporate records, meeting minutes and emails.

The so-called Paradise Papers include information relating to Glencore’s operations in the Democratic Republic of Congo and Australia, and involvement in a shipping business. Here’s what has been reported so far:

Congo: In 2009, Glencore made a $45 million loan to a company owned by Israeli billionaire Dan Gertler, the Guardian reported. While the details of the loan have been previously reported, the Appleby documents show that in return Gertler was required to secure certain approvals from the government, according to the U.K. newspaper. Gertler, a friend of Congolese president Joseph Kabila, has a controversial reputation. Last year, he was implicated in a scheme to bribe Congolese officials on behalf of U.S. hedge fund manager Och-Ziff Capital Management, according to a person familiar with the details of that case.

"By providing Gertler with the loan and the mandate to get the contract finalized, Glencore disregarded the red flags raised by Gertler’s connections and track record," Elisabeth Caesens, an expert in Congolese mining deals who reviewed the leaked documents, told Bloomberg News. In doing so, Glencore "exposed itself to the risk of non-compliance with anti-corruption rules,” she said in response to questions.

Glencore has dismissed any allegations of impropriety concerning the loan. The loan was made on commercial terms and "negotiated at arm’s length," it said in an emailed statement.
More

Berlusconi Coalition Seen Taking Sicily Before 2018 Election

By John Follain and Chiara Albanese
A coalition backed by former Italian Prime Minister Silvio Berlusconi appeared headed for a narrow victory in Sunday’s regional vote in Sicily, defeating a populist challenge ahead of next year’s general election, according to an exit poll for state-owned RAI television.

The estimate, by pollsters Piepoli Institute and Noto Sondaggi, credited Nello Musumeci of the center-right bloc with between 35 percent and 39 percent of the vote, against 33 percent to 37 percent for Giancarlo Cancelleri of the anti-establishment and euroskeptic Five Star Movement. Fabrizio Micari, running for the center-left Democratic Party of Prime Minister Paolo Gentiloni, was credited with 16 percent to 20 percent.

Ballots in the contest for Sicily’s governor and assembly will be counted from 8 a.m. local time on Monday.

A center-right win would give momentum to Berlusconi, 81, as he seeks to create such a bloc for the national vote due in spring 2018, exploiting a new electoral system that favors alliances. Five Star, which insists on campaigning alone in all elections, has been hoping to win their first region.
More

Below, yet another sign that this might be the top. Grabbit & Runne seem to be the top lawyers of today. I strongly suspect that, that cashing out will soon become the main game in the casino. But is there enough cash in the casino for all?

Jeff Bezos Sells $1.1 Billion Amazon Shares With Stock at Record

By Tom Metcalf
November 3, 2017, 10:48 PM GMT
Jeff Bezos sold a million Amazon.com Inc. shares this week for $1.1 billion, according to a U.S. securities filing on Friday. The sale represented 1.3 percent of his holding and leaves Bezos with a 16.4 percent stake in the retailer.

The world’s richest man said in April he would sell $1 billion a year in Amazon stock to fund Blue Origin LLC, the rocket company fueling his dream of sending people into space. He had already sold another batch of a million shares in May.

“The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. …..The bargains then suffered a ruinous fall.”

J. K. Galbraith. The Great Crash: 1929.

Crooks and Scoundrels Corner

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

Today, more on the criminal mindset of Japanese corporations. Japanese steel anyone?  Japanese goods going cheap? Never mind the quality, feel the price!

Walter Mitty Street, The New York Fake News Times calls the Rupert Murdoch kettle black! All the news that’s fit to print, provided it’s anti-Trump and pro-Clinton.

November 5, 2017 / 1:10 AM / Updated 29 minutes ago

Scandal-hit Kobe Steel has a 'look the other way' culture, they say in hometown

KOBE, Japan (Reuters) - The fresh university graduate, eager to make a good impression on the job at one of Kobe Steel Ltd’s (5406.T) main plants in Japan, punched the wrong measurements into machines making steel pipes, causing a large batch to come out too short.

“I thought I was going to be fired,” recalled the former employee nearly 40 years later. But Shinzo Abe, now Japan’s prime minister, stayed on the job at Japan’s third-largest steelmaker for three years before entering politics in 1982.

Abe has called the steel industry the backbone of the nation. Kobe Steel, a 112-year-old company in south-central Japan’s Hyogo prefecture, has risen from wartime devastation and natural disaster but its past is littered with examples of corporate misconduct.

Its admission last month that workers had tampered with product specifications for at least a decade is the latest in a string of scandals that has battered Japan’s reputation as a manufacturing powerhouse.

Clients around the world, including top carmakers and airplane manufacturers, have been scrambling to check whether the safety or performance of their products have been compromised.

Workers, executives and shopowners in Kobe, a gritty, industrial city bordered by sloping hills where cattle are bred for the famed Kobe beef, said they were concerned but not surprised by the scandal.
Kobe Steel, which has apologised for the tampering, declined comment for this article.

“The corporate culture was to look the other way even while you saw what was going on,” said a retired employee who worked at the company’s flagship steel plant, Kobe Works - a symbol of the city’s quick recovery from a 1995 earthquake that killed more than 5,000 people. The company’s other main plant in the area is Kakogawa Works, in the nearby city of Kakogawa.

“They were supposed to be instilling a culture that paid attention when improprieties were discovered,” the former employee said. “In the end they didn’t create such a corporate culture. That’s management’s responsibility.”

The company initially said some workers had falsified data on contract specifications for a relatively small amount of aluminium and copper products, but it later admitted the problem had spread.

In 2006, Kobe Steel admitted falsifying soot-emissions data from the blast furnaces at Kobe Works and Kakogawa Works.

The latest scandal reflects “exactly the same set-up”, said Shoichi Tarumoto, who was then mayor of Kakogawa. “It looks like nothing has changed at Kobe Steel.”

Kobe Steel has admitted taking part in bid-rigging for a bridge project in 2005, and failing to report income to tax authorities in 2008, 2011 and 2013. The company exceeded established limits for ground and water pollution in 2006.

Illegal political funding to candidates in local assembly elections in 2009 prompted the resignations of the then CEO and chairman. And last year Kobe Steel admitted a subsidiary falsified data on stainless-steel products.

A senior official in local government who has dealt with the company for years said: “Kobe Steel always scouts the backstreets for shortcuts. That’s their nature.”
More

Russia-Trump Saga: Both Murdoch Empire and NYT Have Soiled Hands

By Pam Martens and Russ Martens: November 1, 2017
Yesterday, the New York Times ran an error-filled article on the indictment of Trump adviser George Papadopoulos that seemed intent on cementing the notion that Russia hacked thousands of emails from the Democratic National Committee (DNC) and then offered those hacked emails to the Trump campaign to smear dirt on Hillary Clinton during the 2016 presidential campaign. The problem was that the actual Federal indictment unsealed on Monday against Papadopoulos made no such claim regarding emails hacked at the Democratic National Committee. Where the thousands of emails referenced by the Russians actually came from was not spelled out in the indictment. They could have just as easily been emails hacked from Hillary Clinton’s unsecure server in the basement of her home during her time as Secretary of State.

Instead of correcting its own erroneous reporting, today’s New York Times is blasting Rubert Murdoch’s media empire and other conservative media outlets for creating a false narrative that casts a taint on the Russia probe. The digital front page of the New York Times carries an editorial headlined, “That Crazy Talk About Robert Mueller,” writing that among Republicans there is a “fog of propaganda and delirious conspiracy theories” despite what they call Mueller’s “precise, methodical work.” The agenda, they believe, is to continually cast Hillary Clinton as “Public Enemy No. 1.”

But Hillary Clinton actually is Public Enemy No. 1 to millions of Americans on both sides of the political aisle. Supporters of Senator Bernie Sanders have filed a Federal class action lawsuit (now on appeal) with strong evidentiary support to show that the Clinton campaign and the DNC conspired to undermine Sanders’ campaign – in direct violation of the DNC Charter which mandates fairness to all primary challengers.

Wall Street On Parade is certainly no supporter of Donald Trump or Hillary Clinton. Both were the most unfavorable Presidential candidates in modern history as evidenced by respected polls taken prior to the election. Looking at the facts on the ground in May of this year, we felt that Mueller, a partner at the corporate law firm, WilmerHale, immediately prior to his appointment, would be tainted by the legal representations of his law partners.

As reported in March by Politico, a WilmerHale law partner, Jamie Gorelick, represented Trump’s daughter Ivanka and son-in-law Jared Kushner. According to the report, Gorelick also represented former Exxon CEO Rex Tillerson in his confirmation process to become Trump’s Secretary of State. As if those connections were not eye-popping enough, Gorelick had actually been an active supporter in Hillary Clinton’s 2016 campaign for President.

The same month that Politico was calling out Gorelick’s ties to Trump and Clinton, American Lawyer reported that Paul Manafort, Trump’s former campaign adviser (who was just indicted by Mueller) was being represented by a top WilmerHale partner, Reginald Brown, chairman of the firm’s financial institutions group who also heads up the firm’s congressional investigations practice.

Wall Street On Parade identified two more potential conflicts at WilmerHale. According to this Trump Transition Team roster at the corporate law firm, Steptoe & Johnson, Benjamin Powell, a partner at WilmerHale, served on the Trump transition team for the Office of the Director of National Intelligence. According to the roster, another WilmerHale partner, Matthew Martens, served on the Trump transition team for the Securities and Exchange Commission.

What the New York Times continuously ignores is that the American people are disgusted with Washington’s revolving door and good-ole-boy mentality. When Special Counsels are appointed to investigate matters that are critical to the public interest, Americans don’t want that individual to come buried under either the perception, or the fact, of conflicts. Taking the New York Times word that Mueller’s work is “precise” and “methodical” and that he is “highly respected” is just not cutting it. Americans are demanding that they get transparency and conflict-free investigations as well as leaders in Washington who reflect the honesty and decency of average Americans.

In years gone by, we thought about the New York Times as a newspaper in the same sense as we thought about democracy: it’s the worst form of government, except for all the others. Now, we no longer believe that the New York Times is the worst media outlet, except for all the others.

The New York Times allowed its reporter Judith Miller to fuel the rush to war with Iraq on the basis of weapons of mass destruction that did not exist. Russ Baker, writing at The Nation in 2003, said this about the episode: “What Miller did, and the fact that her brand of journalism is encouraged and rewarded by the powers that be, is precisely the kind of topic that the Times’s leadership ought to air during its current semipublic glasnost phase.” Baker added that Miller’s brand of journalism “risks playing with the kind of fire that starts or justifies wars, gets people killed and plays into the hands of government officials with partisan axes to grind.”

The New York Times is headquartered in the same city that Wall Street calls home. Wall Street, in turn, mints the billionaires and millionaires that keep the city’s chic restaurants full, the real estate soaring, and the trendy stores bustling. All of this means big advertising bucks to the New York Times. Thus, we can’t help but wonder if a less than altruistic agenda played a role in the editorial page of the New York Times cheerleading over the years as an advocate for the worst financial and economic decision in U.S. banking history – to repeal the Glass-Steagall Act.
More

“I sometimes get the impression that many U.S. media outlets work according to a principle which was common in the Soviet Union. Back then, people used to joke that the newspaper Pravda [Truth] had no truth in it, and the Izvestia [News] paper has no news in it. I get the impression that many U.S. media operate in the same way.”

Russian Foreign Minister Lavrov. May 2017.

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?

Lens trick doubles odds for quantum interaction

Researchers in Singapore use a super-resolution imaging technique to strengthen photon interaction with atoms

Date: October 31, 2017

Source: Centre for Quantum Technologies at the National University of Singapore

Summary: It's not easy to bounce a single particle of light off a single atom that is less than a billionth of a meter wide. However, researchers have shown they can double the odds of success, an innovation that might be useful in quantum computing and metrology.

It's not easy to bounce a single particle of light off a single atom that is less than a billionth of a metre wide. However, researchers at the Centre for Quantum Technologies at the National University of Singapore have shown they can double the odds of success, an innovation that might be useful in quantum computing and metrology. The findings were published 31 October in Nature Communications.

In their experiment, researchers Chin Yue Sum, Matthias Steiner and Christian Kurtsiefer fired a red laser at a carefully-trapped Rubidium atom. They compared how much of the light gets scattered away when the light comes from just one direction, versus when it comes from two.

"If an atom sends out a photon, the photon can go any direction. Our idea is that to get stronger interactions between single photons and single atoms, we want to reverse whatever the atom does. So here the illumination comes from all directions," explains Steiner.

First, they focused the red laser through a strongly-focusing lens positioned in front of the atom. The atom was manoeuvred to lie at the lens's focal point. In this configuration, roughly 1 in 5 of the laser photons bounced off the atom.

Next, the team split the laser beam, sending half round the front and half round the back of the atom. At the back, the laser again passed through a strongly-focusing lens to reach the atom.

This double-lens configuration is known as 4Pi microscopy. It's a super-resolution imaging technique invented by Nobel laureate Stefan Hell. The name comes from the way angles are described in three dimensions: four ? describes a full sphere.

With the light coming at it from both sides, the atom scattered around 2 in every 5 photons -- double what was seen with just one lens.

The atom not only changed the photons' direction, but also their spacing. In laser light, photons are randomly spaced, with some arriving close together and others separated by big gaps. The team detected that, after passing the atom, the photons were less likely to arrive together. This is evidence of an interaction between the atoms and photons that is 'nonlinear'.

"There's a lot of physics to investigate in nonlinear interactions with photons," says Chin. The effect is crucial for processing information stored in light, for example in optical quantum computing.

The monthly Coppock Indicators finished October

DJIA: 23,277 +233 Up. NASDAQ:  6,728 +284 Up. SP500: 2,575 +183 Up.

No comments:

Post a Comment