Baltic Dry Index. 1089 -06 Brent Crude 64.73
Joseph Schumpeter
We end the week with either stock gamblers or bond gamblers
getting the markets right, but not both. Either interest rates are heading
higher and the bond traders will win big, or stocks are headed higher because
they’re not, and President Trump’s weak dollar currency war policy, and rolling
trade war policy, will give them one last charge at the January high. In the
modern casinos aka 21st century markets, do you bet on red or black?
Perhaps with a side bet on gold aka green.
Below, which side’s
bets will get proved right?
“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.
February 16, 2018 / 1:56 AM
Asian shares extend bounce to fifth day, dollar sags to three-year low
TOKYO
(Reuters) - Asian shares rose for a fifth straight day on Friday as investor
confidence slowly returns after a sharp sell-off earlier in the month, but the
dollar continued its descent, hitting a three-year low against a basket of
major currencies.
U.S. debt yields stood near multi-year highs. Two-year note yields hit a
9 1/2-year high as bond prices fell on Federal Reserve officials’ signaling
that recent volatility in U.S. stocks would not stop them raising interest
rates in March.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5
percent, though many Asian markets were closed on Friday for the Lunar New
year.
Japan’s Nikkei rose 1.1 percent, with investors relieved to see the
government appoint Bank of Japan Governor Haruhiko Kuroda for another term, in
a sign the central bank will be in no rush to dial back its massive stimulus
program.
Measured by the MSCI’s broadest gauge of the world’s stocks covering 47
markets, global shares have now reclaimed more than half of the 10.7 percent
plunge from a record intraday high on Jan. 29 to a four-month intraday low a
week ago.
Investors have been reassured by a fall in the Wall Street Vix index,
the “fear gauge” that measures the one-month implied volatility of U.S. stocks.
The index dropped below 20 for the first time since its spike to 2
1/2-year high of 50.3 last week, a jump that caused massive losses among
investors who bet equity markets would be stable on a combination of solid
economic growth and moderate inflation.
The Vix futures fell back to more normal patterns, from the past several
days of so-called backwardation, in which the front-month contract becomes the
most expensive.
The return of a more usual curve suggested that the loss-cutting and
position unwinding of “volatility short” strategies had run its course for now,
easing investors’ nerves.
The U.S. dollar, on the other hand, slipped below its January low
against a basket of major currencies to reach its lowest since late 2014.
The dollar index fell to as low as 88.37, and was on course to lose over
2 percent for the week, its biggest such loss in two years.
More
Bond Investors Pull $14.1 Billion From Global Debt Funds
By Cormac Mullen
Updated on 16 February 2018, 04:25 GMT
Global bond funds saw the fifth-largest week of redemptions
ever last week, amid expectations of higher interest rates, according to
Bank of America Merrill Lynch, citing EPFR Global fund flow data.
Overall, $14.1 billion was pulled from debt funds, with $10.9 billion
taken from high-yield bonds alone, the second highest outflow on record.
Investment-grade bond funds weren’t spared, with $2 billion of redemptions
ending a 59-week streak of inflows, the bank said in a report covering the week
to Feb. 14.
A separate report from Lipper also showed an exodus from riskier debt.
Investors yanked $6.3 billion from U.S. high-yield junk bond funds in the past
week, it said, the fifth straight week of outflows, bringing the total over
that period to more than $15 billion.
“The narrative is really becoming more about inflation and rate risk
creeping into the broad markets,” said Henry Peabody, a money manager at Eaton
Vance Corp., with more than $400 billion of assets. “It’s hard to think of
elevated volatility in both rates and equity not eventually seeping into
credit.”
Read more: Investors Pull $6 Billion From Junk-Bond Funds After Turmoil
The 10-year U.S. Treasury yield has continued to climb this month and jumped to a four-year high Thursday after consumer price data rose more than forecast. Simultaneous outflows from investment-grade, high-yield and emerging-market bonds occurred for the first time since the U.S. presidential election in November 2016, according to Bank of America.
Despite a rebound the S&P 500 Index, U.S. equity funds continued to see outflows, BofAML said. Investors took $7.2 billion from American stocks, although both European and Japanese shares enjoyed inflows. Large-cap stocks suffered the brunt of the withdrawals.
More
In EUSSR news, the weak German coalition and coming Italian
election is focusing minds on what’s coming next. Whatever the Italian outcome,
it doesn’t look good for Italy or the dying EUSSR.
Italy is not technically part of the Third World, but no one has told the Italians.
P. J.
O’Rourke
Economists Predict What Might Happen in the Italian Elections
By Andre TartarEconomists assigned a 38 percent probability of a hung parliament, followed by a one-in-three chance of a so-called “grand coalition” between the ruling Democratic Party of former prime minister Matteo Renzi and the more conservative Forza Italia, led by billionaire and four-time premier Silvio Berlusconi.
There’s a 26 percent chance of an inconclusive March vote followed by a repeat election within six months to a year, according to the survey.
“Our baseline scenario remains that the new government, probably a grand
coalition type of government, will only make some small improvement in
productivity going forward,” wrote Nicola Nobile, a senior economist at Oxford
Economics in Milan. “Potential output growth will be capped at one percent,
resulting in Italy remaining one of the laggard countries in the euro area.”
Should the center right, led by Forza Italia, fail to carve out a
working majority, 86 percent of respondents said it would break its current
alliance with the Northern League to pursue another arrangement such as a
pairing with the Democratic Party. There is a 22 percent chance of a
center-right majority government, seen as second-best in terms of business
investment and the overall economy.
The populist Five Star Movement, which recent polls project will win the most votes of any party, and which once had called for a referendum on discarding the euro, has an eight percent probability of taking power, according to the survey. Economists strongly agreed that this would be the worst outcome across several key policy areas.
As for what Italy’s next government should make its top priority, over half of respondents recommended avoiding a clash with the EU over increased spending for public investments.
More
Female, Middle-Aged and Let Down by Renzi: Italy's Swing Voters
By Chiara Albanese and Marco Bertacche
Almost a third of Italians have yet to decide who to vote for in next
month’s general election -- more than enough to determine the outcome.
Their profile? Mostly women, middle-aged, without a university degree
and disappointed with former Prime Minister Matteo Renzi, the leader of the
ruling Democratic Party. Those are the findings of Agenzia Quorum, which did an
analysis of so-called swing voters ahead of a pre-election polling blackout
that’s set to begin Saturday.
“This is yet another sign that the Democratic Party is on a downward
slope, and its voters feel let down by Renzi,” said Giovanni Diamanti, the
managing partner of Agenzia Quorum. "But it also suggests that the game is
open and the final outcome is far from decided."
Italians go to vote in little more than two weeks, on March 4. While the
anti-establishment Five Star movement has risen in polls to become the leading
single party, it still trails the center-right coalition led by
four-time former premier Silvio Berlusconi. Neither appears set to win a
majority of seats, setting the stage for a hung parliament and difficult talks
over a grand coalition or national unity government. That makes swing votes
potentially key to the outcome.
More
Ray Dalio Raises Bets Against Europe’s Top Companies to $22 Billion
By Brandon Kochkodin, Suzy Waite, and Nishant Kumar
Updated on 15 February 2018, 17:02 GMT
Ray Dalio, billionaire
philosopher-king of the world’s biggest hedge fund, has a checklist to identify
the best time to sell stocks: a strong economy, close to full employment and
rising interest rates.That may explain why the firm he created, Bridgewater Associates, has caused a to-do the past two weeks by quickly amassing an $21.65 billion bet against Europe’s biggest companies. The firm’s total asset pool is $150 billion, according to its website.
Economic conditions in Europe appear to fit Dalio’s requirements. Last year, the continent’s economy grew at the fastest pace in a decade, and European Central Bank President Mario Draghi has indicated he’s on a slow path toward boosting rates as economic slack narrows. Factories around the world are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices.
But Dalio is leading his firm down a path that few other funds care to tread.
----Bridgewater’s shorting spree started last fall in Italy.
With the country’s big banks accumulating billions in bad debt,
Bridgewater mounted a $770 million wager against Italian financial stocks.
Saddled with non-performing loans and under constant regulatory scrutiny, they
made for a juicy target.
Throughout the fall and into winter the bet against Italy represented
the majority of Bridgewater’s publicly disclosed short positions. The initial
bet was eventually raised to encompass 18 firms and nearly $3 billion.
Bridgewater had flipped its portfolio in January to turn bearish on
Western Europe stocks and also started shorting Japanese equities, according to
a person with knowledge of the matter. The hedge fund significantly raised its
long U.S. equities exposure last month, the person added. A Bridgewater
representative did not reply to a call and email seeking comment outside normal
working hours.
More
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
No crooks today, we’re tired of the usual, bent
banksters, politicians on the make, and Wall Street Vampire Squids, London City
Slickers and Spivs separating fools from their money doing “God’s work.” Today
something more uplifting. Get ready for Leonardo 500 years on. Who needs that
Dodgy Da Vinci painting?
Exhibition to Reveal da Vinci’s Invisible Drawings
The UK show will mark the largest display of da Vinci’s work in more than 65 years
By Brigit Katz smithsonian.com February 14, 2018 11:00AM
So far as we know, Leonardo da Vinci completed fewer than 20 paintings in his lifetime. But the leading Italian Renaissance artist did leave behind thousands of drawings, which he used to prepare for his artworks, record his observations and illustrate various projects and ideas. As Kate Brown reports for Artnet News, a major exhibition in the UK is displaying a trove of the artist’s sketches—and revealing the secrets hidden within da Vinci’s work.
So far as we know, Leonardo da Vinci completed fewer than 20 paintings in his lifetime. But the leading Italian Renaissance artist did leave behind thousands of drawings, which he used to prepare for his artworks, record his observations and illustrate various projects and ideas. As Kate Brown reports for Artnet News, a major exhibition in the UK is displaying a trove of the artist’s sketches—and revealing the secrets hidden within da Vinci’s work.
Titled Leonardo da Vinci: A Life in Drawings, the exhibition will showcase some of the most precious items in the Royal Collection Trust. Starting in 2019, different selections of twelve drawings will be displayed simultaneously in venues across the U.K. Then, in time for the 500th anniversary of da Vinci’s death that May, the drawings will be gathered together for a show at the Queen’s Gallery in Buckingham Palace. This exhibition, which boasts a total of 200 sheets, will be the largest display of da Vinci’s work in more than 65 years.
According to Hannah Furness of the Telegraph, the drawings belonging to the Royal Collections have been kept together since 1590, when they were bound into an album by the Italian sculptor Pompeo Leoni. The pieces on display provide examples of all of the drawing materials that da Vinci used: pen, ink, chalk, watercolor and metalpoint. The drawings also offer a glimpse into the mysterious mind of a revered artist who left very few completed works behind.
“[Da Vinci] was respected as a sculptor and architect, but no sculpture or buildings by him survive,” the Royal Collection said in a statement. “[H]e was a military and civil engineer who plotted with Machiavelli to divert the river Arno, but the scheme was never executed; he was an anatomist and dissected 30 human corpses, but his ground-breaking anatomical work was never published; he planned treatises on painting, water, mechanics, the growth of plants and many other subjects, but none was ever finished. As so much of his life’s work was unrealized or destroyed, Leonardo’s greatest achievements survive only in his drawings and manuscripts.”
Those lucky enough to visit the exhibition might be surprised to see two completely blank pages on display. But there is more to these beguiling relics than meets the eye. Using ultraviolet light, experts were able to uncover faded sketches of hands, each one posed differently: fingers raised, palms outstretched, knuckles curled and so on. Da Vinci drew these illustrations while preparing to paint The Adoration of the Magi, which he painted circa 1481. The exhibition will include a photograph showing the infrared image of da Vinci’s original sketch.
“It was discovered that the drawings had become invisible to the naked eye because of the high copper content in the stylus that Leonardo used – the metallic copper had reacted over time to a become a transparent copper salt,” the Royal Collection explains. Another metalpoint drawing, completed with a silver stylus, remains completely visible to this day.
Non-invasive imaging technologies have allowed modern scholars to gain other insights into da Vinci’s artistic process. One of the works on display, titled “Studies of water,” was revealed to have been built up in stages, becoming increasingly complex. First, da Vinci drew swirling water currents in chalk, later adding a frothy torrent of bubbles in ink. “A Deluge,” also on show at the exhibition, began as a frenetic storm of black chalk, which da Vinci later refined with patterns of rain and waves drawn in brown ink.
Because the centuries-old drawings are quite fragile, they are rarely put on display. Martin Clayton, head of prints and drawings at the Royal Collection Trust, says in the statement that he hopes “as many people as possible” will take this rare opportunity to see these remarkable works.
Leonardo
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?
First Solar Made Good on Its Promise to Beat Out Gas Peakers With Solar and Batteries
A 50-megawatt battery will give Arizona peak power from the sun.
Julian SpectorFebruary 13, 2018
Arizona Public Service will add a 50-megawatt battery system to its fleet for storing solar energy to use during evening peak hours.
The regulated utility revealed Monday that it had signed a 15-year power-purchase agreement with First Solar for the dispatchable solar power. The storage system will be paired with a new 65-megawatt solar plant in western Maricopa County and should be up and running in 2021.
This represents a significant escalation of storage activity for APS, which has developed storage systems at the single-digit-megawatt scale. Fifty megawatts would overpower any battery system in the U.S. today, although Fluence is slated bring a 100-megawatt system online in 2021.
The joint system suggests a new paradigm for solar-rich markets: the solar peak power plant.
“When you look at the desert Southwest, you’re already seeing the growing pains of having so much solar on the system and having to curtail,” said Brad Albert, APS vice president of resource management. “This [project] is a necessary evolution of how we deploy solar energy and take advantage of what we have in abundance in the Southwest.”
APS didn’t set out looking for storage, per se.
This project emerged from a request for proposal that started a year
ago. It was open to any technology, but the bids had to deliver power between 3
p.m. and 8 p.m. in the summertime.
Those are the peak hours that drive much of the new capacity investments
APS will have to make in coming decades, even as the abundance of midday solar
power grows.
Bids included conventional renewables, standalone batteries and
natural-gas peaking plants, but First Solar’s hybrid solar-storage proposal won
out.
The solar plant will charge up the battery during the day and deliver
power during the first few hours of the peak window, until the sun sets. That
also allows the whole project to qualify for the federal Investment Tax Credit.
Then the battery will kick in and discharge stored power through the
rest of the window. It will come with 135 megawatt-hours, providing a bit less
than 3 hours' worth of duration at the full 50-megawatt capacity level.
More
Another weekend and another
weekend closer to the next Lehman. Will
Italian voters do in the rump-EU in three weeks time? Will a falling dollar
currency war, do in the global economy in 2018? Will George Soros billions
reverse Brexit? Will the US public finally fall out of love with their guns?
These are just some of the questions that won’t be answered this weekend. Have
a great weekend everyone.
I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
"My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.
Ozymandias. Shelley.
The monthly Coppock Indicators finished January
DJIA: 26,149 +282 Up. NASDAQ: 7,411 +310 Up. SP500: 2,824 +212 Up.
Oil gains as dollar sags near three-year low; many Asian markets shut
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