Baltic Dry Index. 918 -24 Brent Crude 47.85
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
A
permanent Governor of the Bank of England would be one of the greatest men in
England. He would be a little 'monarch' in the City; he would be far greater
than the 'Lord Mayor.' He would be the personal embodiment of the Bank of
England; he would be constantly clothed with an almost indefinite prestige.
Everybody in business would bow down before him and try to stand well with him,
for he might in a panic be able to save almost anyone he liked, and to ruin
almost anyone he liked. A day might come when his favour might mean prosperity,
and his distrust might mean ruin.
Walter Bagehot. Lombard Street. 1873
We’re saved, SAVED! The BULL is back! Thanks to market intervention in China and a miraculous revision of Uncle Scam’s second quarter GDP figure, the buy the dips Muppets returned in force yesterday, after all, America is booming again and according to Phil Orlando, chief equity strategist and senior portfolio manager at Federated Investors, “Today’s revision means the U.S. economy is growing faster and [the] consumer spending portion points to a stronger growth in the second half of the year. With this kind of growth, we expect $135 earnings per share by the end of 2016.” According to MarketWatch and Orlando, “That translates to a 35% rise in the S&P 500 from its current level by the end of 2016.” What could possibly go wrong? The Baltic Dry Index might be a clue. Plus a booming US GDP puts the Fed’s rate hike back on again for next month, ending the Great Bond Bubble.
Below, hopium restored to the casino. And just in time for the upcoming month end valuations and bonuses. What a coincidence.
U.S. stocks close higher for 2nd day, show gain on week
Published: Aug 27, 2015 5:05 p.m. ET
U.S. stocks rallied to close near their intraday highs for a second straight
session Thursday, as China showed signs that measures to stabilize its economy
and stock market may be taking hold. In afternoon trade, stocks made a dramatic turn lower but stormed back in the final hour of trading, repeating a pattern of roller-coaster activity that has come to be a trademark of the past several sessions.
The Dow Jones Industrial Average DJIA, +2.27% rose 369.26 points, or 2.3%, to close at 16,654.77, with all 30 members of the blue-chip index trading higher. Earlier, the Dow was up by as many as 381 points.
Read: The Dow Jones Industrial Average just made history
The S&P 500 SPX, +2.43% finished up 47.15 points, or 2.4% to 1,987.66, after posting a 49-point gain. All 10 of the index’s main sectors traded higher. The Nasdaq Composite COMP, +2.45% climbed 115.17 points, or 2.5% at 4,812.71, after being up by as many as 121 points.
As a result, for the week, the Dow is up 1.2%, the S&P is 0.9% higher, and the Nasdaq is up 2.3%.
The implied volatility on the S&P 500—the so-called “fear index”—as measured by the CBOE Volatility Index VIX, -13.92% fell 14% to 26.10.
A larger-than-expected upward revision to U.S. gross domestic product data, showing that U.S. economy grew at a faster 3.7% in the second quarter, helped lift the spirits of investors that have been unsettled by a spate of volatility. Weekly data on jobless claims, which pointed to continued strength in the labor market, added to the optimism.
“Today’s revision means the U.S. economy is growing faster and [the] consumer spending portion points to a stronger growth in the second half of the year. With this kind of growth, we expect $135 earnings per share by the end of 2016,” said Phil Orlando, chief equity strategist and senior portfolio manager at Federated Investors.
That translates to a 35% rise in the S&P 500 from its current level by the end of 2016, according to Orlando.
More
http://www.marketwatch.com/story/us-stocks-get-set-to-rally-again-as-china-revives-2015-08-27
Back in the real world outside of central bank rigged casinos, hopium is in short supply. Once the month end valuations pass, what then?
China’s economy may be in worse shape than people think
Published: Aug 27, 2015 5:32 p.m. ET
China may be in worse shape than authorities in Beijing are willing to
admit.
An analyst at Evercore ISI crunched the numbers and estimated that the Chinese
economy actually shrank in July, suggesting that China’s forecast for 2015 is
overly optimistic, if not unrealistic.
“Our proprietary Synthetic Growth Index (SGI) fell 1.1% month-on-month
in July, and was also down 1.1% year-on-year,” said analyst David Straszheim at
Evercore ISI.
“Even if we adjust our SGI upward (for too-little representation of
services—lack of data), we believe actual economic growth in China is far below
the official 7.0% year-on-year. And it is not improving.”
The SGI is a weighted average of seven components including railway
freight, airline passengers, and electricity consumption.
The analyst used independent sources for his research, claiming that
data released by official Chinese channels are too opaque due to an absence of
consistent real or nominal deflators to work with.
There are “no components for analysis. No real gross domestic product
published ever,” he said.
The key takeaway from the analysis, according to Straszheim, is the gap
between China’s real GDP data and the SGI (see chart below).
If the pattern holds true, China’s economy isn’t likely to rebound any
time soon, and that will likely pressure the government to introduce more
monetary and fiscal measures to support growth.
Complaints about the lack of transparency and credibility of Chinese
data have been a common refrain
----
Short seller Carson Block, founder of Muddy Waters LLC, recently told
MarketWatch in emailed comments that “Chinese companies don’t have the
fundamentals, governance, or transparency to merit high valuations—let alone
bubble valuations.”
China Will Respond Too Late to Avoid Recession, Citigroup Says
August 27, 2015 — 11:31 PM BST
- Growth of 4% on “mendacious official data” likely, Buiter says
- Chinese slowdown will drag global growth to below 2%
The only thing to stop a Chinese recession, which the former external member of the Bank of England defines as 4 percent growth on “the mendacious official data” for a year, is a consumption-oriented fiscal stimulus program funded by the central government and monetized by the People’s Bank of China, Buiter said.
“Despite the economy crying out for it, the Chinese leadership is not ready for this,” Buiter, chief economist at Citigroup, said in a media call hosted Thursday by the Council on Foreign Relations in New York. “It’s an economy that’s sliding into recession.”
Premier Li Keqiang is seeking to defend a 7 percent economic growth goal at a time when concern over slowing demand in China is fueling volatility in global markets. The true rate of expansion “is probably something closer to 4.5 percent or less,” Buiter said.
---- Some economists and investors have long questioned the accuracy of China’s official growth data. When Li was party secretary of Liaoning province in 2007, he said that figures for gross domestic product were “man-made” and therefore unreliable, according to a diplomatic cable published by WikiLeaks in 2010.
---- “They will respond but they will respond too late to avoid a recession, which is likely to drag the global economy with it down to a global growth rate below 2 percent -- which is in my definition a global recession,” said Buiter.
----- The boom and bust in the Shanghai Composite Index, which more than doubled in about a year before a selloff erased $5 trillion in market value in two months, is raising questions about “the competence of the Chinese authorities as managers of the macro economy,” Buiter said.
The authorities first cheered the stock market rally “because quite a
few of the local pundits believed that this was a great of deleveraging way
without paying for the corporate sector to have a stock market bubble,” he
said. “And then of course the rather panic and incompetent reaction ensued in
response,” Buiter added in reference to the unprecedented government
intervention to support share prices.
Morehttp://www.bloomberg.com/news/articles/2015-08-27/china-will-respond-too-late-to-avoid-recession-citigroup-says
Meanwhile back in the casino, Wednesday and
Thursday’s rally was just in time to save the bonuses of Wall Street’s finest.
Another amazing coincidence! God must be a Great Vampire Squid after all! Who
knew?
Stock rout hits hedge-fund yearly gains hard
Published: Aug 27, 2015 5:41 a.m. ET
Hedge-fund managers like to promise their investors protection from
market swings. In the recent stock swoon, many were caught off guard.
Billionaire managers such as Leon Cooperman, Raymond Dalio and Daniel
Loeb are deeply in the red this month, left flat-footed by the quick plunge for
stocks world-wide. Cooperman’s Omega Advisors posted a 12% decline this month
through Wednesday and 10% this year. Loeb’s Third Point LLC and William
Ackman’s Pershing Square Capital Management are also down big, erasing their
gains for the year.
Other traders suffered amid this week’s volatility. Monday, when the
market collapsed more than 1,000 points in its largest ever intraday point
decline, marked one of the worst days for many managers since the crisis.
That is a hit to an industry that has for years excused its relative
underperformance compared with benchmarks by promising that collections of bets
on and against markets—a so-called long/short strategy—would insulate the
impact of any future market gyrations.
“We’ve struck out this month so far,” said one hedge-fund manager.
Hedge funds collect some of the highest paydays on Wall Street because
they promise to be uncorrelated, or move out of sync, with the markets at
large.
http://www.marketwatch.com/story/stock-rout-hits-hedge-fund-yearly-gains-hard-2015-08-27?dist=beforebell
Every
generation imagines itself to be more intelligent than the one that went before
it, and wiser than the one that comes after it.
George
Orwell.
At the Comex silver depositories
Thursday final figures were: Registered 54.77 Moz, Eligible 116.42 Moz, Total
171.19 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Even with yesterday’s dead cat bounce in oil, the
fracking industry is as dead as the dead cat, and about to get deader.
Oil Industry Needs Half a Trillion Dollars to Endure Price Slump
August 27,
2015 — 12:00 AM BST Updated on August 27, 2015 — 8:11 AM BST
At a time when the oil price is languishing at its lowest level in six
years, producers need to find half a trillion dollars to repay debt. Some might
not make it.
The number of oil and gas company bonds with yields of 10 percent or
more, a sign of distress, tripled in the past year, leaving 168 firms in North
America, Europe and Asia holding this debt, data compiled by Bloomberg show.
The ratio of net debt to earnings is the highest in two decades.
If oil stays at about $40 a barrel, the shakeout could be profound,
according to Kimberley Wood, a partner for oil mergers and acquisitions at
Norton Rose Fulbright LLP in London. West Texas Intermediate crude was up 2.8
percent at $39.68 a barrel at 8:10 a.m. in London.
“The look and shape of the oil industry would likely change over the
next five to 10 years as companies emerge from this,” Wood said. “If oil prices
stay at these levels, the number of bankruptcies and distress deals will
undoubtedly increase.”
Debt repayments will increase for the rest of the decade, with $72
billion maturing this year, about $85 billion in 2016 and $129 billion in 2017,
according to BMI Research. A total of about $550 billion in bonds and loans are
due for repayment over the next five years.
U.S. drillers account for 20 percent of the debt due in 2015, Chinese
companies rank second with 12 percent and U.K. producers represent 9 percent.
In the U.S., the
number of bonds yielding greater than 10 percent has increased more than
fourfold to 80 over the past year, according to data compiled by Bloomberg.
Twenty-six European oil companies have bonds in that category, including Gulf
Keystone Petroleum Ltd. and Enquest Plc.
More
Oil markets extend gains after biggest daily climb in six years
Crude oil futures rose on Friday, adding to their biggest one-day rally
in over six years the day before, led by recovering equity markets and news of
diminished crude supplies.
U.S. crude are on track for their first weekly gains in 11 weeks, ending
the longest losing streak since 1986. Brent crude is set for its first weekly
gain in two weeks.
Asian shares extended a global rally on Friday after upbeat U.S.
economic data calmed sentiment, with Chinese stocks jumping for the second day
following a rocky start to the week.
---- "A short covering rally, led by crude oil pushed commodities higher across the board. Better than expected U.S. GDP numbers was the main spark, although the force majeure on BP's exports from Nigeria extended the gains," ANZ said in a note on Friday.
"The recovery in commodity prices looks fragile with concerns over
China's growth still weighing on market activity."
More
Solar & Related Update.
With events
happening fast in the development of solar power and graphene, I’ve added this
new section. Updates as they get reported. Is converting sunlight to usable
cheap AC energy mankind’s future from the 21st century onwards? DC?
A quantum computer next?
Another week,
another advance, this time in organic flexible solar cell technology. Run it
forwards five years or ten years, and electricity from the sun is likely to be
cheaper than all other forms of generating electricity.
Challenge to classic theory of 'organic' solar cells could improve efficiency
Date: August
18, 2015
Source:
Purdue University
Summary: New
research findings contradict a fundamental assumption about the functioning of
'organic' solar cells made of low-cost plastics, suggesting a new strategy for
creating inexpensive solar technology.
Commercialization of organic solar cells has been hindered by
inefficiencies, but the findings point toward a potential path to create a new
class of solar technology able to compete with standard silicon cells.
"These solar cells could provide a huge cost advantage over
silicon," said Muhammad Ashraful Alam, Purdue University's Jai N. Gupta
Professor of Electrical and Computer Engineering.
Plastic solar cells might be manufactured using a roll-to-roll process
similar to newspaper printing.
"This has been the hope for the last 20-25 years," said Bryan
Boudouris, an assistant professor of chemical engineering.
Because organic solar cells are flexible they could find new
applications that are unsuitable for rigid silicon cells such as photovoltaics
integrated into buildings, and they have the potential to be lower-cost and
less energy-intensive to manufacture than silicon devices. However, a critical
bottleneck has prevented development of organic solar cells efficient enough to
compete with silicon solar technology.
"Now it appears there is no fundamental reason why organic cells
have to be less efficient than silicon," Alam said.
Findings are detailed in a research paper appearing this week (Aug. 17)
in Proceedings of the National Academy of Sciences. The work was
spearheaded by former doctoral student Biswajit Ray, who has graduated.
----The findings also suggest the design of organic
solar cells can be simplified, representing a major potential innovation, Ray
said. Whereas conventional organic solar cells are made by mixing two types of
polymers, the new design requires only one polymer.
"Currently, you have to design the solar cells according to how
well two organic materials mix together in order to produce these numerous
heterojunctions," Boudouris said. "But if you only needed one polymer
instead of two, the manufacturability on the large scale could be very much
improved, so this is an exciting development."
Findings also suggest that producing the cells out of purer polymers
could result in more efficient solar cells, and the research likely will lead
to a better understanding of the physics of how organic solar cells operate,
Alam said.
More
Another weekend, and the last bank holiday of the summer in the UK. Time
to enjoy God’s great summer countryside and ponder on the mystery of the UK’s
unelected and unelectable 800+ House of Lords, to which we have just added 45 more. Apart from comedy and crime, and
party donations, what’s the point of a House of Lords? Have a great weekend
everyone.
“We
all know what to do, but we don’t know how to get re-elected once we have done
it.”
Jean-Claude Juncker. Failed Luxembourg Prime Minister and
ex-president of the Euro Group of Finance Ministers. Confessed liar. EC
President.
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
