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Submitted by Nick Cunningham via OilPrice.com,

A new report from UBS finds that renewable energy and energy storage are together presenting a “perfect storm” for big utilities. The declining cost of solar, energy efficiency, and electric vehicle technologies threaten to upend centralized electricity generation, putting the utility business model in jeopardy. Grid parity has already been achieved in certain parts of the world where conventional electricity rates are high and renewable resources are plentiful.

Renewable energy is beginning to cut into the bottom line for U.S. utilities. The average price for solar PV modules declined by 80% between 2008 and 2012. Net metering policies and innovative financing schemes like SolarCity’s leasing model are making distributed generation – where consumers generate power on-site – much more financially viable. This leads to a utility “death spiral,” in which utilities begin to lose customers, forcing them to jack up rates to cover lost revenue, which in turn pushes more people away. As of 2011, about three-quarters of U.S. utilities had a BBB credit rating or worse, indicating a striking lack of confidence in their financial future. In 2000, less than 40% of utilities earned such an abysmal grade.

This concept is not new, but UBS’ report suggests the trend is picking up steam, particularly in developed markets with flat electricity demand including parts of the United States, Europe, and Australia. Data from the Energy Information Administration (EIA) shows that electricity sales have declined in four of the last five years in the U.S. While some of the drop off is attributable to the financial crisis and subsequent recession, energy efficiency and distributed generation are playing a key role. According to the EIA, “[g]rowing installed capacity of behind-the-meter sources of generation (largely from rooftop solar) is displacing some electricity sales that would otherwise occur.”

The latest UBS report finds that not only is solar PV eating into the utilities’ customer base, but it is also shaving off peak demand. Solar generates the most output during mid-afternoons, when demand is at its highest. With variable costs for renewables essentially nil, they beat out more expensive fossil fuel units. The result is leading to curtailed generation from big power plants along with lower peak electricity prices – a nightmare for utilities.

The unfolding transition to cleaner energy will force utilities to respond in a few ways. Some are fighting incentives that promote clean energy, as seen in the brutal fight in Arizona over its net metering policy. Another approach is for utilities to get into the clean energy game, which many have been doing for some time. The latest example came on December 16 when Warren Buffet’s MidAmerican Energy placed a $1 billion order for wind turbines in Iowa, as “a hedge for our customers going forward in an era of reduced coal generation,” according to MidAmerican’s CEO Bill Fehrman.

Yet another approach is to scale back generation and embrace the bold new world of distributed generation. In Germany, several utilities have announced power plant closures and are considering transitioning into a model where they offer energy “services,” such as trading and advice to customers, according to The Economist. Germany may be a harbinger of the future – in June 2013 prices actually went negative because of so much green power on the grid at one time. Germany’s two biggest utilities, E.On and RWE, have both seen their net income drop by one-third since 2010.

Earlier this year NRG CEO David Crane warned about the looming decline of the Big Utility, arguing that distributed generation poses a “mortal threat to the existing utility system.” More telling was a January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer” – strong words from an organization with an interest in preserving the confidence of investors. Add to the pile the latest UBS report, which concludes that utilities will not be able to survive in their current form.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JASSIwU8bMY/story01.htm Tyler Durden

Submitted by Nick Cunningham via OilPrice.com,

A new report from UBS finds that renewable energy and energy storage are together presenting a “perfect storm” for big utilities. The declining cost of solar, energy efficiency, and electric vehicle technologies threaten to upend centralized electricity generation, putting the utility business model in jeopardy. Grid parity has already been achieved in certain parts of the world where conventional electricity rates are high and renewable resources are plentiful.

Renewable energy is beginning to cut into the bottom line for U.S. utilities. The average price for solar PV modules declined by 80% between 2008 and 2012. Net metering policies and innovative financing schemes like SolarCity’s leasing model are making distributed generation – where consumers generate power on-site – much more financially viable. This leads to a utility “death spiral,” in which utilities begin to lose customers, forcing them to jack up rates to cover lost revenue, which in turn pushes more people away. As of 2011, about three-quarters of U.S. utilities had a BBB credit rating or worse, indicating a striking lack of confidence in their financial future. In 2000, less than 40% of utilities earned such an abysmal grade.

This concept is not new, but UBS’ report suggests the trend is picking up steam, particularly in developed markets with flat electricity demand including parts of the United States, Europe, and Australia. Data from the Energy Information Administration (EIA) shows that electricity sales have declined in four of the last five years in the U.S. While some of the drop off is attributable to the financial crisis and subsequent recession, energy efficiency and distributed generation are playing a key role. According to the EIA, “[g]rowing installed capacity of behind-the-meter sources of generation (largely from rooftop solar) is displacing some electricity sales that would otherwise occur.”

The latest UBS report finds that not only is solar PV eating into the utilities’ customer base, but it is also shaving off peak demand. Solar generates the most output during mid-afternoons, when demand is at its highest. With variable costs for renewables essentially nil, they beat out more expensive fossil fuel units. The result is leading to curtailed generation from big power plants along with lower peak electricity prices – a nightmare for utilities.

The unfolding transition to cleaner energy will force utilities to respond in a few ways. Some are fighting incentives that promote clean energy, as seen in the brutal fight in Arizona over its net metering policy. Another approach is for utilities to get into the clean energy game, which many have been doing for some time. The latest example came on December 16 when Warren Buffet’s MidAmerican Energy placed a $1 billion order for wind turbines in Iowa, as “a hedge for our customers going forward in an era of reduced coal generation,” according to MidAmerican’s CEO Bill Fehrman.

Yet another approach is to scale back generation and embrace the bold new world of distributed generation. In Germany, several utilities have announced power plant closures and are considering transitioning into a model where they offer energy “services,” such as trading and advice to customers, according to The Economist. Germany may be a harbinger of the future – in June 2013 prices actually went negative because of so much green power on the grid at one time. Germany’s two biggest utilities, E.On and RWE, have both seen their net income drop by one-third since 2010.

Earlier this year NRG CEO David Crane warned about the looming decline of the Big Utility, arguing that distributed generation poses a “mortal threat to the existing utility system.” More telling was a January 2013 report from the Edison Electric Institute, a trade group for utilities, which concluded that distributed generation presents a “game changer” – strong words from an organization with an interest in preserving the confidence of investors. Add to the pile the latest UBS report, which concludes that utilities will not be able to survive in their current form.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JASSIwU8bMY/story01.htm Tyler Durden

Submitted by Ben Hunt of Epsilon Theory

 

The Construction of Robert Capa

 

I went to the Democratic Convention as a journalist, and returned as a cold-blooded revolutionary.

      – Hunter S. Thompson

 

Some people will say that words like scum and rotten are wrong for Objective Journalism — which is true, but they miss the point. It was the built-in blind spots of the Objective rules and dogma that allowed Nixon to slither into the White House in the first place. He looked so good on paper that you could almost vote for him sight unseen. He seemed so all-American, so much like Horatio Alger, that he was able to slip through the cracks of Objective Journalism. You had to get Subjective to see Nixon clearly, and the shock of recognition was often painful.

     – Hunter S. Thompson

 

It is said that God is always on the side of the big battalions.

     – Voltaire

 

There ain’t nothin’ more powerful than the odor of mendacity … You can smell it. It smells like death.

      – Tennessee Williams, “Cat on a Hot Tin Roof”

 

Capa: He was a good friend and a great and very brave photographer. It is bad luck for everybody that the percentages caught up with him. It is especially bad for Capa. He was so much alive that it is a long hard hard long day to think of him as dead.

      – Ernest Hemingway, hand-written note after learning of Capa’s death, May 1954

 

Unless you’re an avid photography buff, you’ve probably never heard of Robert Capa. That’s his most famous photograph at the top of this note, taken – as the story goes – in 1938 during the Spanish Civil War when Capa, embedded with a company of Republican volunteers, snapped a shot of a comrade right at the moment he took a Nationalist bullet in the brain. Capa landed with the Allied troops on the Normandy beaches at D-Day, rode with Patton’s tank column into Paris, spent 1948 and 1949 photographing the immigrants who built Israel, and died in 1954 while documenting the French retreat from a fort in Northern Vietnam. He was a personal friend of Picasso, Steinbeck, and Hemingway. He was Ingrid Bergman’s lover. Quite a life!

But in truth there was no Robert Capa. Or rather, “Robert Capa” was the invented persona of Andre Friedmann and his fiancée, Gerda Pohorylle. Friedmann was born in Budapest in 1913. He was smart, Jewish, and idealistic – three qualities that made him persona non grata with the Hungarian authorities. They assumed he was a Communist (although the local Communist Party wanted nothing to do with Friedmann, as his father was a tailor and thus he was too bourgeois for their taste), and after a particularly nasty beating at the hands of the political police he left Hungary for Berlin in 1931 at the age of 18. This, of course, was jumping from the frying pan into the fire for a young Jewish intellectual, but at least he was able to develop his talents for photography over the next 2 years before fleeing the rise of Nazism and relocating to Paris with Pohorylle.

Friedmann had a beautiful Leica camera (which he kept in hock at the pawn shop most of the time) and started taking photographs of the political events roiling France and Belgium. Fascism was by no means exclusively a German political development, and the streets of Paris and Brussels and Strasbourg were home to rallies and demonstrations by the Right and the Left alike. He had a phenomenal eye, and Gerda (who had changed her last name to Taro) had found a position in a photography agency where she could sell his work, so the future looked bright. But no one wanted to buy anything by this Friedmann fellow, and just changing his name to something non-Jewish wasn’t going to help. No, Friedmann and Taro decided, what they needed was a story.

Friedmann became the darkroom employee and Taro became the exclusive representative of “Robert Capa” – a rich, famous American photographer visiting Paris and bringing his unique American eye to the European scene. Moreover, because Capa was independently wealthy and didn’t really care about money, he would only sell his photographs for three times the going rate … a bargain at twice the price for a lowly Parisian newspaper seeking to print the work of this acclaimed artist. Of course, the plan worked. The photographs of Robert Capa became the toast of Paris, and money started rolling in for the young couple. In fact, a few months later Taro wrote to an American photography agency, claiming to be the exclusive representative of the world-famous French photographer Robert Capa, a ruse that worked just as well as the original.

At one point it seemed that the gig might be up when the publisher of Capa’s main Parisian outlet caught onto the act, but fortunately the publisher recognized the power of the Common Knowledge game … he was delighted that Friedmann and Taro had created the persona of Capa, because by then this by-line helped him sell more magazines. In fact, the publisher hired the plane that took Friedmann and Taro down to Spain to take pictures of the Civil War, and with the publication of “The Falling Soldier” in newspapers all over the world Andre Friedmann became Robert Capa once and for all.

Unfortunately, there’s not a Hollywood ending here. Gerda Taro (who probably was the actual photographer of “The Falling Soldier”, not Capa) was crushed by a tank in Spain a year after the photo was published, and afterwards it seems to me that Friedmann lost himself in the Capa persona. The post-Capa conversion photographs are all well and good, but it’s the pre-Capa conversion photos of life and politics in pre-WWII France and Belgium that really move me. I get the feeling that the constructed nature of Capa’s identity must have plagued him for the rest of his too-short life, that it became a very heavy weight, something to live up to rather than to live with. I mean … look at the movie star affairs, the suicidal professional risks, the Famous Artist “friends”. Are there any two human beings more self-consciously constructed or self-absorbed than Pablo Picasso and Ernest Hemingway? Look at Hemingway’s note on Capa’s death, where Papa makes a joke about Capa’s luck and can’t help himself but to scratch out a few words to make the prose more writerly. A great author, certainly, but a great friend? Not so much.

Still, I think there’s more to the Robert Capa story than a real-life example of the Emperor’s New Clothes and the Common Knowledge game, or a cautionary tale about losing oneself in a tangled web of identity invention. Three points …

First, Capa made no pretense that he and Taro were engaged in some sort of “objective” reporting of the conflicts they covered. They chose sides. Capa was with th
e Spanish Republicans, not Franco’s Nationalists. He was with the Allies, not the Germans. He was with the Chinese in 1938, not the Japanese. He was with Israel. He was with France. Moreover, he was an advocate for his chosen sides. There is a message in “The Falling Soldier”, and it’s intentional. The Capa persona might have been a pretense, but there is an honesty to the Capa work. It’s the same thing I admire about Hunter S. Thompson (also a pretty thoroughly constructed identity) … the guy may have been a dysfunctional nut job in most respects, but he sure could turn a phrase and you knew exactly where he was coming from.

Both Capa and Thompson were opposed to the anti-liberal, statist forces of their day and time. For Capa it was the Fascists of Spain, Germany, and Japan. For Thompson it was the Nixon Administration. For me it’s the theocracy of modern economic science, where our small-l liberal institutions have either been captured or are under assault by a particular brand of intellectual orthodoxy that cements its soft authoritarian control by a psychological persuasion of our social animal brains. It’s that last bit that bugs me the most … the way in which the value judgments that underpin monetary and fiscal policy are sold to us as an objectively or scientifically correct expression of our self-interest. It’s the sheer mendacity of the enterprise that galls me. As Tennessee Williams wrote, “There ain’t nothin’ more powerful than the odor of mendacity … You can smell it. It smells like death.”

Second, Andre Friedmann had to re-invent himself as Robert Capa in order to get his photos published. Talent wasn’t nearly enough to overcome a pervasive global environment of anti-Semitism, classist and nationalist prejudices, etc. etc. Today Friedmann could put up a website using Bluehost and WordPress for about the cost of one inflation-adjusted jar of developing fluid, come up with some semi-clever name like “F-stop Theory”, add a few artsy quotes, and bingo … global distribution to hundreds of thousands of viewers. Trust me on this. It can be done.

It’s all well and good to say that the more things change the more things stay the same, and for questions of human nature I’m in total agreement with that sentiment. But the fact is also that the tools invented by the human animal can create permanent and structural change in human society. The Internet is one such tool – maybe not on a par with the taming of fire but certainly on the top 10 list – as it has transformed every aspect of communication. Why is this important? For social animals like ants, termites, and humans communication is everything. For better and worse, we are biologically and culturally evolved to respond to signals from other humans, and a tool that  makes it possible for any one of us to signal every one of us is … breathtaking in its power. This is the singular thing that gives me any hope at all that the bloodless coup we have suffered in the form of NSA Omniscience and Central Bank Omnipotence can be reversed. There are independent and honest voices out there today, and there will be more voices tomorrow. Is there a lot of dreck floating around, a thousand comment cesspools for every David Rosenberg? Sure. But my faith as a small-l liberal is that so long as the voices can be heard, the competition of ideas and opinions will push the most useful of those voices to a place where everyone can hear them. And that’s how the pernicious dynamic of the Emperor’s New Clothes is broken … by an honest voice that’s heard above the crowd. The Internet makes that possible.

Third, and this has nothing to do with Capa himself, there’s an important market lesson to be drawn from the photograph and the war that made him famous. The story behind “The Falling Soldier,” at least as Capa told it, was of a brave but disjointed and unorganized assault on an entrenched Nationalist machine gun. Capa’s company of volunteers would send a couple of men over the trench and they’d get mowed down. Then the rest of the company would fire at the machine gun with their rifles, receive no fire in return, and so assume that one of their crack marksmen had knocked the machine gun out. At that point another cadre of Republicans would leap out from cover to charge the machine gun, probably shouting “Viva la republica!” or something like that, only to get mowed down as well. Wash, rinse, repeat. In many ways the entire history of the Republican defeat in the Spanish Civil War, particularly the history of the International Brigades, is encapsulated by this doomed assault on a professionally manned machine gun. The International Brigades and other Republican volunteers were a motley crew, under-equipped and under-officered, mostly ardent believers in some Leftist –ism like Trade Unionism or Communism or some such, willing to give their lives to prevent the spread of Fascism. If you’ve never read George Orwell’s Homage to Catalonia, you should. But what they lacked in training and materiel they made up for in conviction … and they got smoked. By 1939 Franco had wiped out all effective resistance, and 500,000 Republicans fled to France where they spent the next several years in internment camps.

The notion that individual conviction and bravery is a #MassiveFail when compared to a machine gun nest seems obvious and trite to us today. Strangely enough, though, when it comes to prevalent notions of market behavior it feels like we’re still in 1936. What I mean is that there is still a dominant belief in individual decision-making as the most effective route to successful investing, that if we could just learn a little bit more about Company X or Sector Y we will win the day. Is your individual knowledge and conviction level in Company X important for investing success? Absolutely, in exactly the same way that physical and psychological bravery is important for war-fighting success. Still more important, though, is the strength and cohesion of the groups that share your investment philosophy. Not your specific investment opinions, any more than one soldier has the same amount and type of instantiated bravery as another soldier in his unit, but the coherence of investment goals and operational practices across your fellow market participants in a particular market segment. This is the core insight of Adaptive Investing – that investment success requires a rigorous analysis of both individual AND group dynamics, and that modern evolutionary theory is a better place to find the tools for that analysis than modern economic theory. Ragtag crews, no matter how brave or informed, tend not to do very well in war or markets. If I’m going into battle or taking a market exposure … yes, I want to have personal conviction and information. But even more so I want to know if I have the intra-group and inter-group dynamics on my side. God is always on the side of the big battalions, said Voltaire, and that sounds like pretty good investment advice, too.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ke9he–kw5M/story01.htm Tyler Durden

The last time China’s birdflu epidemic dominated the ether, and internet, was in April, when news of numerous casualties led many to believe that the epidemic was on the verge of breaching all local containment measures. And then, suddenly, all media coverage of China’s H7N9 story disappeared as if by Department of Truth (and propaganda) magic. Naturally, the quick popular response was to assume that all was again well since the government no longer made it a notable topic – just like the Japanese government did with Fukushima. However, as in the case of Fukushima, it turns out all may not have been well. As Japan’s NHK reports, H7N9 bird flu strain is once again spreading in southern China, claiming the 148th victim of the vicious flu virus. Or perhaps instead of “once again” it was simply “constantly.”

From NHK:

Provincial authorities in southern China are increasing measures against the spread of the H7N9 bird flu. They are warning that the chance of contracting the disease is rising.

 

Health officials of Guangdong Province said on Thursday that a 38-year-old man in Shenzhen came down with the H7N9 strain. The man is being treated at hospital and remains in critical condition.

 

This is the 148th case of human H7N9 infection in mainland China, Taiwan and Hong Kong. The first case emerged in Shanghai in March.

 

Reports of the H7N9 infection entered a lull in the summer. But Guangdong officials say the 38-year-old man is the 4th human infection case over the past week. Hong Kong authorities also confirmed the H7N9 virus in 2 people who had visited the province this month.

 

Guangdong’s government is increasing its counter-measures. It is sending teams of experts to inspect live poultry markets and medical institutions across the province.

Others aren’t waiting for the diligent, honest and accurate Chinese government to do its job. Because as SCMP reports, in next door neighbor Hong Kong, sales of chicken have already plunged by 40% on just the several hushed bird flu stories alone.

Chicken was absent from many local dinner tables last night as Hongkongers celebrated winter solstice, with wet market vendors complaining of a drop in sales because of bird flu fears.

 

Trader Ma Ping-loon, a member of the Poultry Dealers and Workers Association, said business was down about 40 per cent from last year’s festival. “We’re badly affected by this. Very few people are buying chicken compared with last year. Sales have been slow all day,” Ma said.

 

He added that the price for one catty (about 600 grams) of fresh chicken fell 30 per cent yesterday to about HK$45. A live-chicken vendor at the Java Road Municipal Services Building in North Point said sales of both local chickens and those imported from the mainland were down compared with last year, but the prices were about the same.

 

One shopper at the market said she would serve seafood instead of
chicken this year. “I’m avoiding any form of contact with chicken,
whether it’s dead or alive,” she said, adding that she had made the
decision after news of the first death from the new strain of bird flu
affecting humans, H10N8, in Jiangxi province.

Hopefully it is not seafood from the Fukushima region. As for the sources of this latest breakout:

Mainland health authorities last week confirmed that an elderly woman died earlier this month after contracting H10N8, another strain of bird flu that has crossed the species barrier.

 

…

 

The latest case is a 38-year-old migrant worker who lives and works in Nanwan Street, Longgang, near the market, who was in critical condition in hospital.

 

A second patient, a 39-year-old man from Dongguan, commuted to the district.

 

The pair follow Tri Mawarti, a domestic helper who on December 2 became the first person in Hong Kong diagnosed with the virus. She is believed to have handled a live chicken at a flat in Nanwan Street before falling ill.

 

Guangdong has confirmed six cases of H7N9 in humans since August. So far, there have been 143 confirmed cases on the mainland, in Taiwan and Hong Kong.

 

Meanwhile, public hospitals in Hong Kong have stepped up tests for bird flu. All patients with pneumonia and flu-like symptoms are required to be tested for bird flu, even if they have not come into contact with birds or poultry or travelled recently.

In other words, in the food heavy CPI-weighed country of China, as a result of tumbling demand for chickens and associated prices, the market may once again assume that there is deflation any minute just because the ultraviolet light special for chickens is on.

That, and of course the staff of YUM having to “explain” why its KFC China sales are once again about to crater, and why it is nothing to be concerned about.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1UU4PMXmJF4/story01.htm Tyler Durden

How do you “fix” a nations’ banking system’s increasingly desperate need (and dependence upon) for government-provided liquidity without giving in and just providing all the inflation-stoking liquidity the banks demand? Simple – in China – you ban the media from discussing it. As The FT reports, Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue. The censors have warned reporters not to “hype” the multiple-sigma spikes in overnight-funding rates and have forbidden the press from using the Chinese words for “cash crunch.”

Of course – early prints in today’s repo market are seeing levels normalize back to around 4-5% (just as Goldman Sachs ‘suggested’ they would because this liquidity spike is nothing but ‘seasonals’ – hhhmm)

 

Via The FT,

Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue when markets reopen on Monday.

 

Short-term interest rates for loans in the interbank market shot up last week in an apparent repeat of the cash crunch in June

 

…

 

Money market rates surged again on Friday, even after China’s central bank announced on Thursday evening that it had carried out “short-term liquidity operations” to alleviate the problem.

 

…

 

In response Chinese censors have warned financial reporters not to “hype” the story of problems in the interbank market, and in some cases have forbidden them from using the Chinese words for “cash crunch” in their stories, according to two people with direct knowledge of the matter who asked not to be named.

 

The Communist party’s powerful propaganda department and various other party and government bureaux frequently issue bans and detailed instructions to Chinese media on “sensitive” issues that could undermine party legitimacy.

 

…

 

That directive also ordered media to “strengthen their positive reporting” and “fully report the positive aspect of our current economic situation, bolstering the market’s confidence”, according to a copy obtained by the FT.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Zv1I63MfpJs/story01.htm Tyler Durden

How do you “fix” a nations’ banking system’s increasingly desperate need (and dependence upon) for government-provided liquidity without giving in and just providing all the inflation-stoking liquidity the banks demand? Simple – in China – you ban the media from discussing it. As The FT reports, Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue. The censors have warned reporters not to “hype” the multiple-sigma spikes in overnight-funding rates and have forbidden the press from using the Chinese words for “cash crunch.”

Of course – early prints in today’s repo market are seeing levels normalize back to around 4-5% (just as Goldman Sachs ‘suggested’ they would because this liquidity spike is nothing but ‘seasonals’ – hhhmm)

 

Via The FT,

Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue when markets reopen on Monday.

 

Short-term interest rates for loans in the interbank market shot up last week in an apparent repeat of the cash crunch in June

 

…

 

Money market rates surged again on Friday, even after China’s central bank announced on Thursday evening that it had carried out “short-term liquidity operations” to alleviate the problem.

 

…

 

In response Chinese censors have warned financial reporters not to “hype” the story of problems in the interbank market, and in some cases have forbidden them from using the Chinese words for “cash crunch” in their stories, according to two people with direct knowledge of the matter who asked not to be named.

 

The Communist party’s powerful propaganda department and various other party and government bureaux frequently issue bans and detailed instructions to Chinese media on “sensitive” issues that could undermine party legitimacy.

 

…

 

That directive also ordered media to “strengthen their positive reporting” and “fully report the positive aspect of our current economic situation, bolstering the market’s confidence”, according to a copy obtained by the FT.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Zv1I63MfpJs/story01.htm Tyler Durden

Just shy of the new year, financial markets continue to be dominated by the extent of monetary accommodation. Especially in major advanced economies, bonds and stocks have shrugged off the summer sell-off and posted gains on the view that low policy rates and large-scale asset purchases would persist longer. Much attention has been given to the hope of a strengthening in the U.S. economy.

In Abe Gulkowitz’ latest The PunchLine letter, he highlights the key elements from a very slowly improving labor market to the amazing moves in asset markets with ‘all the charts you can eat’ in between. The unnatural easing stance, though necessary, spurred an aberrant demand for assets in the riskier end of the spectrum. By and large, such assets have so far lived up to their promise. The new year may again challenge that assumption as the likelihood of unlikely events rises.

Markets took in stride a two-week US government shutdown and uncertainty over a US technical default. By contrast, a wide range of country-specific strains weighed on several large emerging market economies, preventing a full recovery of local asset valuations and capital flows. Much attention has been given to the hope of a strengthening in the U.S. economy.

Real estate values and equity market valuations have bolstered both business and household wealth — and the outlook for spending in 2014. The perceived postponement of Fed tapering gave rise to significant gains in global bond and equity markets. Indeed, some have questioned whether the recovery in home prices in some areas has moved too quickly. Any move to normalcy, however gradual, will test markets.

The dreaded tapering will remain a key focus of markets… As the accommodative monetary policy stance persisted in all major currency areas, so did investors’ desperate search for yield. The unnatural easing stance, though necessary, spurred an aberrant demand for assets in the riskier end of the spectrum. By and large, such assets have so far lived up to their promise.

The new year may again challenge that assumption.

 

 

TPL Dec 16 13

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FpB6rF0Kiz0/story01.htm Tyler Durden