Tag: finance

Submitted by The Idiot Tax

Speculation & Investor Behaviour

I’d been watching the stock for at least a month. A small time oil & gas company in Africa. It managed to secure a huge land position for a company of its size. Looked very promising, well funded for some time. Management previously had success putting together a similar land position with another company before it was swallowed early. But, still highly speculative.This one wouldn’t be dropping a drill on dirt until late 2014. Maybe 2015.

Being a stingy bugger and without a catalyst in the market, I kept sniffing around for a while before I finally slid my buy order in at 18.5 cents – this dude wasn’t going to pay the current market price of 20 cents! Maybe even 18.5 was too much. When it dropped to 19.5, I began to believe my order would get filled, but then when it hit 19 cents my mind started to desert me.

“I could get this for 18 cents.”

Volume. There wasn’t a great deal of it. In fact it was being pushed down on mild trades. Someone needed a new flatscreen or wanted to get their kid Optimus Prime for Christmas. There was no prospect that enough shares would be dumped and I’d get my fill at 18 cents. The holding was tight and the sell side was thin. Regardless, I hit the amend button and my order dropped down the queue to 18 cents.

I assume you know where this story is going. You’re probably wondering why I’m telling it when it inevitably makes me look like an idiot. So why tell? I’ve read countless explanations of investor psychology in a general sense, but rarely does anyone put their name to a calamity, or at least their nom de plume.

Everyone can recognise these paragraphs by Heidi Lefer and Ildiko Mohacsy, in  Journal of the American Academy of Psychoanalysis and Dynamic Psychiatry, but there’s little personality to it and no experience. 

Economic bubbles and crashes have occurred regularly through history-from Holland’s 17th century tulip mania, to America’s 19th century railway mania, to the 1990s high-tech obsession. Though most investors regard themselves as investing rationally, few do. Instead they react collectively, buying high and selling low in crowds. Being subject to the illusion of control, they follow regressive behavior patterns and irrational, wishful thinking. They are victimized by their own emotions of hope, fear, and uncertainty. 

When people feel doubt and panic, they regress to an earlier stage either individually or en masse. Under stress, they revert to affect (Mohacsy & Silver, 1980). Such mobbing has an obvious psychological counterpart in the market. Here, crowds are governed by wishful thinking. “Investors are coached to believe that a stock is a better buy when the price rises, that it’s ‘safer’ to join the crowd in betting the price up and ‘riskier’ to buy a stock declining in price” (Vick, 1999, p. 7). Investors also join a crowd to minimize regret. If something goes wrong, they know others behaved the same way. 

We recognise it when exuberance makes charts go vertically up or when stone cold fear pushes them ruthlessly down, but our ego inevitably makes us shy away admitting that we take part in any function of it – “that’s those other sheep”. We’re merely unemotional observers, until we aren’t. Is anyone going to admit they were buying in the final moments before the last bitcoin crash?

It was inevitable that a few short days after Wall Street lovingly embraced Bitcoin as their own, with analysts from Bank of America, Citigroup and others, not to mention the clueless momentum-chasing, peanut gallery vocally flip-flopping on the “currency” after hating it at $200 only to love it at $1200 that Bitcoin… would promptly crash. And crash it did: overnight, following previously reported news that China’s Baidu would follow the PBOC in halting acceptance of Bitcoin payment, Bitcoin tumbled from a recent high of $1155 to an almost electronically destined “half-off” touching $576 hours ago, exactly 50% lower, on very heave volume, before a dead cat bounce levitated the currency back to the $800 range, where it may or may not stay much longer, especially if all those who jumped on the bandwagon at over $1000 on “get rich quick” hopes and dreams, only to see massive losses in their P&Ls decide they have had enough.

There will be a strange irony, in that anyone you talk to with a bitcoin experience will have left the building at $1100 – “it was looking bubbly, so I took a profit.” Hmmm. The drip that bought at $1155 will be cloaked in anonymity, unless $2200 is later smoked.

Back to me, and the price my mind had agreed pay – 18.5 cents was hit. But where was I? Yeah, I’d cooly (or so I told myself ) shifted another gear down and was expecting to get my happy ending at 17.5 cents. As the share price firmed again, juddering between 19.5 and 20 cents I meekly snuck back to 18.5. At 20 I snuck up to 19, as I wondered whether it might go to 20.5. Of course it did, before coming back to 19.5, at which point I had enough steel to leave my order at 19.

In the midst of this circus, late on a Friday, the buy side appeared to firm considerably and immediately it looked a better buy again – “buy now and I’m with the crowd.” After a fortnight of courting and several times being left with my frank in my hand, maybe it was time to make the move and just get my fill at 19.5. But, but, but, this was Friday afternoon and anything could happen over the weekend. Rating agency downgrades, terrorist attack, tsunami, nuclear disaster, alien invasion, apocalypse. And I’d still have to settle on Wednesday!

And something did happen. First it was a market announcement after the close on Friday that their seismic program had shown positive results. Damn, I assumed this was going to cost me another half cent! Then on Monday  – TRADING HALT.

11 minutes before open on Monday morning. I spent most of Monday cursing my stupidity while muttering F-U under my breath. On Wednesday morning the announcement came out – an unsolicited equity placement at an 18% premium to the previous close. A significantly rare and positive event. And on open, the share begins trading at 23.5 cents.

Where’s my order? Oh I’d moved it to 22 cents now. Sigh. Yeah it was happening all over again. Though a few price bumps up to 24 and 24.5 cents during the day had me edgy. Now the urge is to get ahead of the game because this is surely going higher.

What didn’t help throughout this brain mincing was my constant contact with a share trading forum. Those great analogies that describe a share price ready for take off (see, I just used one then!) were flying into my eyes like poison darts. Common sense is blinded and it further makes me think I gotta get in!

Toot! Toot! Buckle up your seatbelts! The floor is in! A couple of cents will be meaningless soon! 

Then there’s also talk of the big boys buying, holidays (not just theme parks, your own private island), early retirement and Ferraris. Sitting on the sidelines and kicking yourself while reading this is a little unnerving, but a slap to the face and you quickly regain perspective. The real issue becomes the now moving share price. Even if you block out the chat room noise, with every half cent it’s somehow a better investment – or speculation as it were. Yet last week every half cent movement downward made it waft like sun-baking salmon. Someone’s selling, something must be wrong. Drag that order down so you won’t overpay!

After again playing tag and miss with the price for most of the day, a gap opened up at 22.5 towards closing time. That was the entry point. No more mental gymnastics trying to second guess the next movement – if I got hit, I got hit. I placed my order. It sat near the top of the queue and with one foul swoop at 3:51pm I became a shareholder. A few minutes later the price went back to 23 cents and that’s where it closed for the day. After two weeks of games, and being led around by my nose, it was a very painless exercise. Yet I had little control until I pinched my brain in those final moments. There was some satisfaction that I paid less than the premium placement that instigated the jump in price, but I still paid 21% more than if I’d just left my initial order 18.5 cents.

Again, from Heidi Lefer and Ildiko Mohacsy, in  Journal of the American Academy of Psychoanalysis and Dynamic Psychiatry – I’m guilty as charged.

Our brains are hard-wired to get us into investing trouble; humans are pattern-seeking animals . . . .Our brains are designed to perceive trends even where they might not exist. After an event occurs just two or three times in a row . . . the anterior cingulate and nucleus accumbens automatically anticipate that it will happen again. If it does repeat . . . dopamine is released . . . .Thus, if a stock goes up a few times in a row, you can reflexively expect it to keep going up . . . .Brain chemistry changes as the stock rises, giving . . . a “natural high.” You effectively become addicted to your own predictions.

At last close the share price sat at 31.5 cents. I’m in, I’m ahead and I’m finally calm. But I still can’t believe how ridiculous my mental gymnastics became. I’ve got no clue how many trades I’ve completed over the years, but any time I’m buying a new company this farce reappears.

The share forums have gone wild over the company. Just by reading them the brain could start firing with thoughts of short changing your future family tree by not taking a position. I felt similar insanity that day I realised I’d be paying 21% more than I’d initially intended.

It went up remarkably quickly after I bought, then came a sharp pullback. The sentiment around the company has snapped from “gotta get in” to “maybe I can get it cheaper”. A sharp change in the direction of the share price invokes that mental game for any potential new entrant. Now, as a shareholder, I’m less concerned if it goes up or not. I just don’t have to worry about being left behind if it does.

My terror now? The prospect of fighting that uncontrollable and irrational part of my mind when it comes time to sell. Sometime down the line will I play chicken for two weeks in the attempt to get an extra three cents? Or will I chase the price down two cents if it turns on me?

If I can ruthlessly control my saving and spending, surely the same control can be applied to investing (or speculating).

Sooner or later I’ll find out.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0CmyBXWR4ac/story01.htm Tyler Durden

In my experience, one of the singular best investment strategies is to buy assets/asset classes which are most reviled by investors. By reviled, I mean assets where a mere mention of you wanting to invest in them generates nervous sniggers among others, if not howling laughter. Where upon their mention, people hand you business cards, not their own but of nearby psychiatric centres. And where even friends start to doubt your sanity.

Examples include the Indian rupee, in free fall just four months ago on QE taper speculation and current account issues. It’s up 12% versus the U.S. dollar since bottoming, as shown below.

European stocks and bonds in mid-2011 too. At that time, European stocks neared 2008 lows amid concern about a possible European Union break-up. Since then, the Euro Stoxx index is up ~45%. And investors are now clamouring for their piece of Europe.

Then there’s Japanese stocks. In mid-2012, there wasn’t a more hated asset class. A 22-year bear market, with stocks down almost 80% from peaks reached in 1990. Since mid-2012 though, the Japanese stock market doubled before recently pulling back.

It’s worth asking then where the next great contrarian trade may be? Some investors are pushing emerging market stocks as they scour for laggards in a maturing bull market. While others are suggesting emerging market bonds may be worth pursuing for similar performance/valuation reasons. Both of these ideas have some merit but they probably don’t quite qualify as true contrarian trades.

No, instead, Asia Confidential thinks commodities may be a more prospective potential area. More specifically, gold stocks, or better yet, junior gold stocks. The junior gold miners have been obliterated, down around 80% since the 2011 peak. Causes include a declining gold price, production shortfalls, cost blow-outs, dilutive capital raises and too many snake oil salesmen disguised as CEOs.

There are signs though that some of these things may be turning around: bad management is being given the boot, capital expenditure programs are getting slashed, fewer capital raises are taking place given a lack of market appetite and boards are placing greater weight on shareholder returns over growth. Moreover, the valuations of many quality junior gold miners appear compelling. A number are discounting gold prices of less than US$700/ounce into perpetuity. That means even if gold prices don’t rise from here, the downside on these stocks seems relatively limited. Higher gold prices would just be gravy.

Gold: where too from here?

The gold price has had a tremendous run that’s about to end. It’s been up for 12 straight years in U.S. dollar terms. Unless something dramatic happens, that incredible record will end in 2013.

Regular readers will know that I remain relatively bullish on gold in the long-term. But I’m not dogmatic about it. There’s nothing certain in this world and that includes the future of the gold price.

And there are a number of things which should concern gold bulls at this point. In my view, there are two key drivers for gold prices:

1) The so-called fear trade. That is, the prospect of the financial system breaking down and currencies again being backed by gold.

2) Negative real bond yields. Thereby the opportunity cost of holding gold is negative.

Both of these factors are turning, making gold appear a less attractive asset. At least for now.

Supply and demand for gold also appears to be turning unfavourable. The World Gold Council says gold mining production increased by 4% in the third quarter versus a year ago. Residual gold projects are still going ahead even though the gold price has headed south. It’s true that overall gold supply declined in the third quarter due to reduced recycling, but still…

And demand for gold is softening. Particularly in what was recently the world’s biggest gold market, India. The Indian government has implemented higher excise duties and import payment restrictions. It’s done this to reduce gold imports and thereby improve the country’s current account balance (which is in serious deficit and hurting the currency).

The government’s actions resulted in gold demand in India slumping 32% in the third quarter of this year. And there could well be steeper falls in the fourth quarter. India now accounts for 21% of total gold demand versus a five-year average of 38%.

Lastly, gold bulls have been in denial about the enormous technical damage done to the g
old price mid this year. There are a number of respected technical analysts previously positive on gold who believe the damage was such that it marks the end of the bull market.

So is it all doom and gloom for the yellow metal then? Not quite. We’re of the view that the financial system is more vulnerable today than during 2008 due to the extraordinary policies initiated by central banks around the world. No-one knows what the end-result of these policies will be, including the central bankers.

Those extraordinary policies will continue through 2014. Even with potential U.S. QE tapering, other countries are expected to pick up the slack. Credit Suisse estimates developed markets will expand their balance sheets by a further 19% by end-next year.

More importantly, the recent drop in the gold price from the highs of September 2011 isn’t out of the ordinary. In fact, similar falls have occurred during every gold bull market of the past century. This time, the price declines haven’t been as steep as the mid-1970s, but they’ve lasted longer, as highlighted in a recent post by The Daily Gold.

Lastly, gold valuations don’t appear elevated. The current price remains way below the 1980 inflation-adjusted peak price of close to US$2,400/ounce. You can also value the gold price assuming the world reverts back to a gold standard. With approximately 12.5 trillion in physical and electronic currency reserves and around 155,000 metric tonnes of gold above ground, that results in a gold price of US$2,500/ounce if all of the world’s reserves were to be backed by above-ground physical gold.

Gold bugs could well yet have the last laugh…

Why gold miners are so hated

Show me a bull market and I’ll show you a good time. And gold mining companies had a great time up to 2011, often at the expense of their shareholders. That resulted in serious under-performance versus the physical metal.

Production misses became the norm rather than the exception. Gold ore grades disappointed, along with the fluff known as sales estimates from companies.

Managements of gold companies spent ridiculous sums during 2010-2011 after getting false signals on demand from the massive stimulus package out of China. National Bank Financial in Canada estimates global capital expenditure/tonne/day increased by close to 10% p.a. in the seven years to 2011.

Also, cost blow-outs were a recurring theme. CIBC estimates cash costs/tonne increased by 80% in the six years to 2012. Resource nationalism didn’t help the cause as countries increased taxes to get their slice of the large pie.

And equity issuance skyrocketed. It peaked at US$120 billion globally in 2009, up from less than US$20 billion in 2005.

As gold prices pulled back from September 2011, to say that gold miners became a hated breed would be an understatement. Institutional shareholders wanted blood and got it. A quarter of CEOs at Canada’s top 20 gold mining companies were turned over in 2012 alone.

Uneconomic projects were shut down. Capital expenditure budgets were slashed, and exploration along with it. Offices were closed down. Costs of undertaking mining were trimmed.

Dividend payout ratios were raised. And stricter return on capital targets were enforced.

In sum, an undisciplined industry full of cowboys has had to shape up. And previously sleepy boards and shareholders are scrutinising their every move.

Overall, the changes are very positive for future prospects.

Which miners appear ok value

There are three ways to play gold mining companies. You can bet on those exploring but not yet producing. These are the high risk but highest reward options.

You can bet on higher gold prices and invest in gold producers where current prices are making their projects uneconomic. Thereby if prices rise, these projects will make decent profits and depressed share prices should react accordingly.

The safest route is to invest in producing companies with long-life, low cost assets. Ideally with shareholder-focused management and minimal debt. These companies may not benefit as much from rising spot prices, but will hold up much better if prices remain under pressure.

We prefer the safest option but are not adverse to alternatives should the price be cheap enough.

There is plenty of value on offer with the large mining producers. The share prices of most of these companies have bee
n smashed. For instance, the world’s largest gold producer, Barrick Gold (NYSE: ABX) in Canada, trades on just 3.5x forward cash flow. This is a company with several high quality, low cost assets. Yes, management has done some dumb things, but the valuation is extraordinarily depressed. This article makes a good case for Barrick.

In our neighbourhood, Newcrest Mining (ASX: NCM) in Australia, is worth looking at, perhaps at slighter lower levels. The company has two of the world’s seven largest gold mines. The company’s share price is down ~75% from the peak given years of mismanagement. Current prices factor in a gold price of around US$950/ounce into perpetuity. Cheap, but not obscenely cheap.

To get the more obscenely cheap, you need to look at companies with smaller market capitalisations. The so-called junior gold stocks. We like Medusa Mining (ASX: MML), an Australian-based company with mostly Asian assets. It’s the lowest cost Australian gold producer, with fantastic future production growth and minimal debt to boot. It also trades at valuations which discount a gold price of close to US$700/ounce into perpetuity (this via conservative discounted cash flows, the maths of which I won’t bore you with here).

Among the gold exploration companies, there are many which look stupidly cheap. Bob Moriarty at 321gold does a great job hunting them down. He’s been banging on a Canadian-based company, Novo Resources (CNSX: NVO), for a while and with good reason. It’s a junior with a mine which could contain the world’s largest gold deposit. It helps that the astute, Newmont Mining, recently took a 35% stake in the company. The upside appears enormous even if deposit estimates are half right.

These are but a few ideas. Of course, you could always take the easy option and buy the US-based ETF of junior gold mining companies too (NYSE: GDXJ).

Caveats

Now, a post on gold miners would be remiss without certain caveats:

• In the short-term, the technical picture on gold looks shaky and that could mean spot prices head down towards US$1,000/ounce. If you buy gold miners, you take on that risk.
• Gold miners are leveraged ways to play gold. That means they should outperform spot prices on the upside but also underperform on the downside.
• Beaten down stocks can stay beaten down for a long time. Look at Japan. Gold stocks could well be in that camp.
• Don’t rely on others, including your author, for stock tips. Do your own homework.

This post was originally published at Asia Confidential: http://asiaconf.com/

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mvS0hyhxQ_Q/story01.htm Asia Confidential

Hours ago, China’s lunar probe Chang’e-3, carrying the nation’s first moon rover onboard, successfully landed on the moon, making it the first time China has sent a spacecraft to soft land on the surface of an extraterrestrial body, joining only the US and the former Soviet Union in accomplishing such a feat. Chang’e-3 is the world’s first soft-landing of a probe on the moon in nearly four decades. The last such soft-landing was carried out by the Soviet Union in 1976. As Reuters reports, the Chang’e 3, a probe named after a lunar goddess in traditional Chinese mythology, is carrying the solar-powered Yutu, or Jade Rabbit buggy, which will dig and conduct geological surveys. China has been increasingly ambitious in developing its space programs, for military, commercial and scientific purposes. This is a teaser to China’s next space ambition – building its own space station. In its most recent manned space mission in June, three astronauts spent 15 days in orbit and docked with an experimental space laboratory, part of Beijing’s quest to build a working space station by 2020.

According to Xinhua news service the spacecraft touched down in the Sinus Iridum, or the Bay of Rainbows, after hovering over the surface for several minutes seeking an appropriate place to land.

A soft landing does not damage the craft and the equipment it carries. As Reuters adds, in 2007, China put another lunar probe in orbit around the moon, which then executed a controlled crash on to its surface.

The Bay of Rainbows was selected because it has yet to be studied, has
ample sunlight and is convenient for remote communications with Earth,
Xinhua said.

China Central Television (CCTV) broadcast images of the probe’s location on Saturday and a computer generated image of the probe on the surface of the moon on its website. The probe and the rover are expected to photograph each other tomorrow.

 

Xinhua’s far prouder summary of the landing is below:

The lunar probe began to carry out soft-landing on the moon at 9 p.m. Saturday and touched down in Sinus Iridum, or the Bay of Rainbows, 11 minutes later, according to Beijing Aerospace Control Center.

During the process, the probe decelerated from 15 km above the moon, stayed hovering at 100 meters from the lunar surface to use sensors to assess the landing area to avoid obstacles and locate the final landing spot, and descended slowly onto the surface.

The success made China the third country, after the United States and the Soviet Union, to soft-land on the moon.

Compared to those other two countries, which have successfully conducted 13 soft-landings on the moon, China’s soft-landing mission designed the suspension and obstacle-avoiding phases to survey the landing area much more precisely through fitted detectors, scientists said.

The probe’s soft-landing is the most difficult task during the mission, said Wu Weiren, the lunar program’s chief designer.

Chang’e-3 relied on auto-control for descent, range and velocity measurements, finding the proper landing point, and free-falling.

The probe is equipped with shock absorbers in its four “legs” to cushion the impact of the landing, making Chang’e-3 the first Chinese spacecraft with “legs.”

Chang’e-3 adopted a variable thrust engine completely designed and made by Chinese scientists. It can realize continuous variation of thrust power ranging from 1,500 to 7,500 newtons, according to Wu Weiren.

The soft-landing was carried out 12 days after the probe blasted off on an enhanced Long March-3B carrier rocket.

Chang’e-3 includes a lander and a moon rover called “Yutu” (Jade Rabbit).

Yutu’s tasks include surveying the moon’s geological structure and surface substances and looking for natural resources. The lander will operate there for one year while the rover will be there for three months.

Chang’e-3 is part of the second phase of China’s lunar program, which includes orbiting, landing and returning to the Earth. It follows the success of the Chang’e-1 and Chang’e-2 missions in 2007 and 2010.

The successful landing shows China has the ability of in-situ exploration on an extraterrestrial body, said Sun Huixian, deputy engineer-in-chief in charge of the second phase of China’s lunar program.

A renewed moon fever has sprung up in recent years following the lunar probe climax in the 1960s and 1970s.

Chang’e-3 is the world’s first soft-landing of a probe on the moon in nearly four decades. The last such soft-landing was carried out by the Soviet Union in 1976.

“Compared to the last century’s space race between the United States and the former Soviet Union, mankind’s current return to the moon is more based on curiosity and exploration of the unknown universe,” Sun said.

“China’s lunar program is an important component of mankind’s activities to explore peaceful use of space,” according to the engineer-in-chief.

For an ancient civilization like China, landing on the moon embodies another meaning. The moon, a main source for inspiration, is one of the most important themes in Chinese literature and ancient Chinese myths, including that about Chang’e, a lady who took her pet “Yutu” to fly toward the moon, where she became a goddess.

“Though people have discovered that the moon is bleached and desolate, it doesn’t change its splendid role in Chinese traditional culture,” said Zhang Yiwu, a professor with Peking University.

“Apart from scientific exploration, the lunar probe is a response to China’s traditional culture and imagination. China’s lunar program will proceed with the beautiful legends,” Zhang said.

“I am so excited about the news. It carries my space dream,” a netizen “Roger-Kris” posted on the Sina Weibo. “I am now so interested in space and I want to study science when I go to college.”

“I am looking forward to seeing more pictures sent back by Chang’e-3,” he said.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w5jcrjRS4hY/story01.htm Tyler Durden

Hours ago, China’s lunar probe Chang’e-3, carrying the nation’s first moon rover onboard, successfully landed on the moon, making it the first time China has sent a spacecraft to soft land on the surface of an extraterrestrial body, joining only the US and the former Soviet Union in accomplishing such a feat. Chang’e-3 is the world’s first soft-landing of a probe on the moon in nearly four decades. The last such soft-landing was carried out by the Soviet Union in 1976. As Reuters reports, the Chang’e 3, a probe named after a lunar goddess in traditional Chinese mythology, is carrying the solar-powered Yutu, or Jade Rabbit buggy, which will dig and conduct geological surveys. China has been increasingly ambitious in developing its space programs, for military, commercial and scientific purposes. This is a teaser to China’s next space ambition – building its own space station. In its most recent manned space mission in June, three astronauts spent 15 days in orbit and docked with an experimental space laboratory, part of Beijing’s quest to build a working space station by 2020.

According to Xinhua news service the spacecraft touched down in the Sinus Iridum, or the Bay of Rainbows, after hovering over the surface for several minutes seeking an appropriate place to land.

A soft landing does not damage the craft and the equipment it carries. As Reuters adds, in 2007, China put another lunar probe in orbit around the moon, which then executed a controlled crash on to its surface.

The Bay of Rainbows was selected because it has yet to be studied, has
ample sunlight and is convenient for remote communications with Earth,
Xinhua said.

China Central Television (CCTV) broadcast images of the probe’s location on Saturday and a computer generated image of the probe on the surface of the moon on its website. The probe and the rover are expected to photograph each other tomorrow.

 

Xinhua’s far prouder summary of the landing is below:

The lunar probe began to carry out soft-landing on the moon at 9 p.m. Saturday and touched down in Sinus Iridum, or the Bay of Rainbows, 11 minutes later, according to Beijing Aerospace Control Center.

During the process, the probe decelerated from 15 km above the moon, stayed hovering at 100 meters from the lunar surface to use sensors to assess the landing area to avoid obstacles and locate the final landing spot, and descended slowly onto the surface.

The success made China the third country, after the United States and the Soviet Union, to soft-land on the moon.

Compared to those other two countries, which have successfully conducted 13 soft-landings on the moon, China’s soft-landing mission designed the suspension and obstacle-avoiding phases to survey the landing area much more precisely through fitted detectors, scientists said.

The probe’s soft-landing is the most difficult task during the mission, said Wu Weiren, the lunar program’s chief designer.

Chang’e-3 relied on auto-control for descent, range and velocity measurements, finding the proper landing point, and free-falling.

The probe is equipped with shock absorbers in its four “legs” to cushion the impact of the landing, making Chang’e-3 the first Chinese spacecraft with “legs.”

Chang’e-3 adopted a variable thrust engine completely designed and made by Chinese scientists. It can realize continuous variation of thrust power ranging from 1,500 to 7,500 newtons, according to Wu Weiren.

The soft-landing was carried out 12 days after the probe blasted off on an enhanced Long March-3B carrier rocket.

Chang’e-3 includes a lander and a moon rover called “Yutu” (Jade Rabbit).

Yutu’s tasks include surveying the moon’s geological structure and surface substances and looking for natural resources. The lander will operate there for one year while the rover will be there for three months.

Chang’e-3 is part of the second phase of China’s lunar program, which includes orbiting, landing and returning to the Earth. It follows the success of the Chang’e-1 and Chang’e-2 missions in 2007 and 2010.

The successful landing shows China has the ability of in-situ exploration on an extraterrestrial body, said Sun Huixian, deputy engineer-in-chief in charge of the second phase of China’s lunar program.

A renewed moon fever has sprung up in recent years following the lunar probe climax in the 1960s and 1970s.

Chang’e-3 is the world’s first soft-landing of a probe on the moon in nearly four decades. The last such soft-landing was carried out by the Soviet Union in 1976.

“Compared to the last century’s space race between the United States and the former Soviet Union, mankind’s current return to the moon is more based on curiosity and exploration of the unknown universe,” Sun said.

“China’s lunar program is an important component of mankind’s activities to explore peaceful use of space,” according to the engineer-in-chief.

For an ancient civilization like China, landing on the moon embodies another meaning. The moon, a main source for inspiration, is one of the most important themes in Chinese literature and ancient Chinese myths, including that about Chang’e, a lady who took her pet “Yutu” to fly toward the moon, where she became a goddess.

“Though people have discovered that the moon is bleached and desolate, it doesn’t change its splendid role in Chinese traditional culture,” said Zhang Yiwu, a professor with Peking University.

“Apart from scientific exploration, the lunar probe is a response to China’s traditional culture and imagination. China’s lunar program will proceed with the beautiful legends,” Zhang said.

“I am so excited about the news. It carries my space dream,” a netizen “Roger-Kris” posted on the Sina Weibo. “I am now so interested in space and I want to study science when I go to college.”

“I am looking forward to seeing more pictures sent back by Chang’e-3,” he said.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/w5jcrjRS4hY/story01.htm Tyler Durden

“Russia will deploy Iskander missile systems in its enclave in Kaliningrad to neutralize, if necessary, the anti-ballistic missile system in Europe.”

      – Dmitry Medvedev, former Russian president, November 2008 in his first presidential address to the Russian people

2013 was a year when Europe tried to reallign its primary source of natgas energy, from Gazpromia to Qatar, and failed. More importantly, it was a year in which Russia’s Vladimir Putin undisputedly won every foreign relations conflict that involved Russian national interests, to the sheer humiliation of both John Kerry and Francois Hollande. However, it seems the former KGB spy had a Plan B in case things escalated out of control, one that fits with what we wrote a few days ago when we reported that “Russia casually announces it will use nukes if attacked.” Namely, as Bloomberg reports citing Bild, Russia quietly stationed a double-digit number of SS-26 Stone, aka Iskander, tactical, nuclear-capable short-range missiles near the Polish border in a dramatic escalation to merely verbal threats issued as recently as a year ago.

The range of the Iskander rockets:

From Bloomberg:

• Russia has stationed missiles with a range of about 500 kilometers in its Kaliningrad enclave and along its border with the Baltic states of Estonia, Latvia and Lithuania, Germany’s Bild-Zeitung reports, citing defense officials it didn’t identify.
• Satellite images show a “double-digit” amount of mobile units identified as SS-26 Stone in NATO code
• Missiles were stationed within the past 12 months
• SS-26 can carry conventional as well as nuclear warheads

In other words, Russian quietly has come through on its threat issued in April 2012, when it warned it would deploy Iskander missiles that could target US missile defense systems in Poland. From RIA at the time:

Moscow reiterated on Tuesday it may deploy Iskander theater ballistic missiles in the Baltic exclave of Kaliningrad that will be capable of effectively engaging elements of the U.S. missile defense system in Poland.

 

NATO members agreed to create a missile shield over Europe to protect it against ballistic missiles launched by so-called rogue states, for example Iran and North Korea, at a summit in Lisbon, Portugal, in 2010.

 

The missile defense system in Poland does not jeopardize Russia’s nuclear forces, Army General Nikolai Makarov, chief of the General Staff of the Russian Armed Forces, said. 

 

“However, if it is modernized…it could affect our nuclear capability and in that case a political decision may be made to deploy Iskander systems in the Kaliningrad region,” he said in an interview with RT television.

 

“But that will be a political decision,” he stressed. “So far there is no such need.”

Looks like a little over a year later, the “political decision” was taken as the need is there. But why does Russia need to send a very clear message of escalation at a time when the Cold War is long over, when globalization and free trade, promote game theoretic world peace (or “piece” as the Obama administration wouldsay), oh, and when Russia quietly has decided to reestablish the former USSR starting with the Ukraine.

We’ll leave the rhetorical question logically unanswered.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/P-N41j4sVzk/story01.htm Tyler Durden

Free Market at work: Two Competing Offers on Table

Reports are all over the place on this story but supposedly Texas which is the highest grossing revenue producing sports program in the country, worth more than many NFL teams, has offered in the range of $10 million a year for Saban to jump ship to Austin, Texas. There is even talk of offering him a percentage of the Longhorn Sports Network, a deal with ESPN.

 

Texas Would Reap a Bargain at $10 Million for Saban

 

 

 

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Unbeknownst to many, the Canadian dollar was the strongest of the major currencies last week, appreciating almost 0.5% against its US counterpart.  The euro (and the Swiss franc and Danish krone which are nearly pegged to it) gained half as much.   The weakest currencies were the Australian dollar, with the help of the governor of the central bank giving the market a clear target ($0.8500), and the Scandis, which have reported soft data and where Sweden’s Riksbank could cut rates next week.

 

The breadth of the dollar’s decline in recent weeks appeared to have narrowed to essentially the euro and sterling.  The take away from last week’s price action is that those two currencies have seen the upside momentum fade and some deterioration of their technical condition.  It could simply be some pre-cautionary position adjustment ahead of the FOMC meeting and year-end.

 

The dollar had fallen against the euro and sterling even as the Bloomberg survey showed a doubling of the number of people who expect the Fed to taper next week over their November survey to a full third.  The technical condition suggest, as counter-intuitive as it may be, that the dollar may strengthen if the Fed does not announce a slowing in its purchases.

 

The euro’s upside momentum faded after three attempts to establish a foothold above $1.3800 failed.  The Relative Strength Index has turned lower  and the MACDs are poised to cross.  The $1.3700 area has offered initial support.  It probably will take a break of the $1.3600 area, however, suggest an outright correction as opposed to a consolidative phase.

 

Sterling put its high on December 10, a day before the euro’s peak, and moved lower.  Despite more strong data (construction spending) before the weekend, sterling traded below its 20-day moving average for the first time since mid-November.    Initial support is seen now near the old highs from Oct around $1.6240.  The key to the medium term outlook is the trend line drawn off the year’s low set in early July just above $1.48 and the Nov 12 low near $1.5850.  It comes in on Monday near $1.6130 and rises to about $1.6165 by the end of next week.  Both the RSI and MACDs have turned lower, though without the development of more bearish divergences.  

 

The dollar quietly slipped to new two-year lows against the Swiss franc in the first half of last week, before a light bout of short-covering helped it record some modest upticks.  The greenback finished last week on a soft tone and the CHF0.8945-CHF0.9000 band needs to be overcome to heal the technical damage.  The MACDs have not turned up and the RSI is neutral.  That said, there appears to be little in the way of technical support for the dollar ahead of the CHF0.8550-CHF0.8500 area.  

 

The dollar made a new five year high against the yen in Asia before the weekend, and then reversed lower in Europe and North America.  Although the pullback was nearly a big figure, the dollar largely held above JPY103, which is where the 5-day moving average can be found.   The yen’s corrective upticks appear to be largely position squaring ahead of the Tankan Survey (early Monday in Tokyo), the FOMC meeting, and reflecting some cross adjustments, especially against sterling.

 

There are bearish divergences in the daily RSI.  Although the dollar as made new highs this month, it was not confirmed with new highs in the RSI.   There are less pronounced bearish divergence in the daily MACDs. Key support extends from JPY102.00 to JPY101.60.  

 

The Australian dollar appeared to have been stabilizing before the governor of the central bank offered the market a specific downside target, which the bearishly disposed market was happy to run with.  While we envision the $0.8500 area will be visited next year, the downside momentum eased ahead of the weekend and the Aussie finished near session highs.  Initial resistance is seen in the $0.9000-20 area and again near $0.9080.  A move above $0.9140, roughly the 20-day moving average, which had turned back three attempts to recovery since early November, is needed to begin repairing the technical damage.  

 

The US dollar recorded an outside up day (traded on both sides of the previous day’s range and closed above the high) on Thursday last week.  It initially saw follow through buying on Friday.  However, it reversed lower and finished on the session lows.  Support for the US dollar is found in the CAD1.0560-CAD1.0530 area.   A convincing break could spur a move toward CAD1.04.  The MACDs are rolling over.  The RSI has moved trended gently lower over the past week, but is now at the lower end of where it has been since late October and is not generating a strong signal.   On the upside, the US dollar tried three times in vain to close above CAD1.07 and this area marks the near-term cap.  

 

The US dollar remains within the broad trading range against the Mexican peso seen since late September between roughly MXN12.80 an MXN13.20.    Mexico’s Congress approved liberalization in the energy sector and this appeared to help spark a peso recovery at the end of last week.  It may require a convincing break of the MXN12.75 area to signal a break out.  The technical indicators are not generating strong signals presently.  

 

Observations on the speculative positioning in selected CME currency futures:

 

1.  The net long euro and Swiss franc positions continued to grow.  Of note, the net long franc position nearly doubled and, at 12k contracts,  is the largest since early 2013, which itself was a two year high.  

 

2.  The largest gross position change was the 14.4k contract increase of the speculative short Canadian dollar position.  It stands at 88.6k contracts, which represents a doubling since early November.  The other substantial gross position adjustment (more than 10k contracts) was the re-establishment of long peso positions.  The 12.3k contract increase offset the prior week liquidation of nearly 11k gross long contracts. 

 

3.  The net short yen position was reduced for the first time in five weeks, but at 130k contracts, remains extreme.  

 

4.  The gross and net sterling and Australian dollar positions were little changed.  Recall in the previous CFTC reporting period, the gross long sterling position jumped 17k contracts and the gross short Aussie position grew by almost 14k contracts.  

 

5.  The gross long euro position of nearly 92k contracts is the largest among the currency futures.  Its gross short position of almost 76k contracts slipped into third place behind the gross short yen position (~148k contracts) and  gross short Canadian dollar positions (~89k contracts).  

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/l5peBdrm0lk/story01.htm Marc To Market

Submitted by Brandon Smith of Alt-Market blog,

As a general rule, extreme economic decline is almost always followed by extreme international conflict. Sometimes, these disasters can be attributed to the human survival imperative and the desire to accumulate resources during crisis. But most often, war amid fiscal distress is usually a means for the political and financial elite to distract the masses away from their empty wallets and empty stomachs.

War galvanizes societies, usually under false pretenses. I’m not talking about superficial “police actions” or absurd crusades to “spread democracy” to Third World enclaves that don’t want it. No, I’m talking about REAL war: war that threatens the fabric of a culture, war that tumbles violently across people’s doorsteps. The reality of near-total annihilation is what oligarchs use to avoid blame for economic distress while molding nations and populations.

Because of the very predictable correlation between financial catastrophe and military conflagration, it makes quite a bit of sense for Americans today to be concerned. Never before in history has our country been so close to full-spectrum economic collapse, the kind that kills currencies and simultaneously plunges hundreds of millions of people into poverty. It is a collapse that has progressed thanks to the deliberate efforts of international financiers and central banks. It only follows that the mind-boggling scale of the situation would “require” a grand distraction to match.

It is difficult to predict what form this distraction will take and where it will begin, primarily because the elites have so many options. The Mideast is certainly an ever-looming possibility. Iran is a viable catalyst. Syria is not entirely off the table. Saudi Arabia and Israel are now essentially working together, forming a strange alliance that could promise considerable turmoil — even without the aid of the United States. Plenty of Americans still fear the Al Qaeda bogeyman, and a terrorist attack is not hard to fabricate. However, when I look at the shift of economic power and military deployment, the potential danger areas appear to be growing not only in the dry deserts of Syria and Iran, but also in the politically volatile waters of the East China Sea.

China is THE key to any outright implosion of the U.S. monetary system. Other countries, like Saudi Arabia, may play a part; but ultimately it will be China that deals the decisive blow against the dollar’s world reserve status. China’s dollar and Treasury bond holdings could be used as a weapon to trigger a global sell-off of dollar-denominated assets. China has stopped future increases of dollar forex holdings, and has cut the use of the dollar in bilateral trade agreements with multiple countries.  Oil-producing nations are shifting alliances to China because it is now the world’s largest consumer of petroleum. And, China has clearly been preparing for this eventuality for years. So, given these circumstances, how can the U.S. government conceive of confrontation with the East? Challenging one’s creditors to a duel does not usually end well. At the very least, it would be economic suicide. But perhaps that is the point. Perhaps America is meant to make this seemingly idiotic leap.

Here are just some of the signs of a buildup to conflict…

Currency Wars And Shooting Wars

In March 2009, U.S. military and intelligence officials gathered to participate in a simulated war game, a hypothetical economic struggle between the United States and China.

The conclusions of the war game were ominous. The participants determined that there was no way for the United States to win in an economic battle with China. The Chinese had a counterstrategy to every U.S. effort and an ace up their sleeve – namely, their U.S. dollar reserves, which they could use as a monetary neutron bomb, a chain reaction that would result in the abandonment of the dollar by exporters around the world . They also found that China has been quietly accumulating hard assets (including land and gold) across globe, using sovereign wealth funds, government-controlled front companies, and private equity funds to make the purchases. China could use these tangible assets as a hedge to protect against the eventual devaluation of its U.S. dollar and Treasury holdings, meaning the losses on its remaining U.S. financial investments was acceptable should it decide to crush the dollar.

The natural response of those skeptical of the war game and its findings is to claim that the American military would be the ultimate trump card and probable response to a Chinese economic threat. Of course, China’s relationship with Russia suggests a possible alliance against such an action and would definitely negate the use of nuclear weapons (unless the elites plan nuclear Armageddon). That said, it is highly likely that the U.S. government would respond with military action to a Chinese dollar dump, not unlike Germany’s rise to militarization and totalitarianism after the hyperinflationary implosion of the mark. The idea that anyone except the internationalists could “win” such a venture, though, is foolish.

I would suggest that this may actually be the plan of globalists in the United States and their counterparts in Asia and Europe. China’s rise to financial prominence is not due to its economic prowess. In fact, China is ripe with poor fiscal judgment calls and infrastructure projects that have gone nowhere. But what China does have on its side are massive capital inflows from global banks and corporations, mainly based in the United States and the European Union. And, it has help in the spread of its currency (the Yuan) from entities like JPMorgan Chase and Co. The International Monetary Fund is seeking to include China in its global basket currency, the SDR, which would give China even more leverage to use in breaking the dollar’s reserve status. Corporate financiers and central bankers have made it more than possible for China to kill the dollar, which they openly suggest is a “good thing.”

Is it possible that the war game scenarios carried out by the Pentagon and elitist think-tanks like the RAND Corporation were not meant to prevent a war with China, but to ensure one takes place?

The Senkaku Islands

Every terrible war has a trigger point, an event that history books later claim “started it all.” For the Spanish-American War, it was the bombing of the USS Maine. For World War I it was the assassination of Archduke Franz Ferdinand of Austria. For U.S. involvement in World War I, it was the sinking of the Lusitania by a German U-Boat. For U.S. involvement in World War II, it was the attack on Pearl Harbor. For Vietnam, it was the Gulf of Tonkin Incident (I recommend readers look into the hidden history behind all of these events). While the initial outbreak of war always appears to be spontaneous, the reality is that most wars are planned far in advance.

As evidence indicates, China has been deliberately positioned to levy an economic blow against the United States. Our government is fully aware what the results of that attack will be, considering they have gamed the scenario multiple times. And, by RAND Corporation’s own admission, China and the United States have been preparing for physical confrontation for some t
ime, centered on the concept of pre-emptive strikes.  Meaning, the response both sides have exclusively trained for in the event of confrontation is to attack the other first!

The seemingly simple and petty dispute over the Senkaku Islands in the East China Sea actually provides a perfect environment for the pre-emptive powder keg to explode.

China has recently declared an “air defense zone” that extends over the islands, which Japan has already claimed as its own. China, South Korea and the United States have all moved to defy this defense zone. South Korea has even extended its own air defense zone to overlap China’s.

China has responded with warnings that its military aircraft will now monitor the region and demands that other nations provide it with civilian airline flight paths.  China has also stated that it plans to create MORE arbitrary defense zones in the near future.

The U.S. government under Barack Obama has long planned a military shift into the Pacific, which is meant specifically to counter China’s increased presence. It’s almost as if the White House knew a confrontation was coming.

The shift is now accelerating due to the Senkaku situation, as the U.S. transfers submarine-hunting jets to Japan while pledging full support for Japan should war ignite.

And most recently, the Japanese press has suggested that war between the two countries could erupt as early as January.

China, with its limited navy, has focused more of its energy and funding into advanced missile technologies — including “ship killers,” which fly too low and fast to be detected with current radar.  This is the same strategy of cheap compact precision warfare being adopted by countries like Syria and Iran, and it is designed specifically to disrupt tradition American military tactics.

Currently, very little diplomatic headway has been made or attempted in regards to the Senkaku Islands. The culmination of various ingredients so far makes for a sour stew.

All that is required now is that one trigger event — that one ironic “twist of fate” that mainstream historians love so much, the spark that lights the fuse. China could suddenly sell a mass quantity of U.S. Treasuries, perhaps in response to the renewed debt debate next spring. The United States could use pre-emption to take down a Chinese military plane or submarine.  A random missile could destroy a passenger airliner traveling through the defense zone, and both sides could blame each other. The point is nothing good could come from the escalation over Senkaku.

Why Is War Useful?

What could possibly be gained by fomenting a war between the United States and China?  What could possibly be gained by throwing America's economy, the supposed "goose that lays the golden eggs", to the fiscal wolves?  As stated earlier, distraction is paramount, and fear is valuable political and social capital.

Global financiers created the circumstances that have led to America’s probable economic demise, but they don’t want to be blamed for it. War provides the perfect cover for monetary collapse, and a war with China might become the cover to end all covers. The resulting fiscal damage and the terror Americans would face could be overwhelming. Activists who question the legitimacy of the U.S. government and its actions, once considered champions of free speech, could easily be labeled “treasonous” during wartime by authorities and the frightened masses. (If the government is willing to use the Internal Revenue Service against us today, just think about who it will send after us during the chaos of a losing war tomorrow.) A lockdown of civil liberties could be instituted behind the fog of this national panic.

Primarily, war tends to influence the masses to agree to more centralization, to relinquish their rights in the name of the “greater good”, and to accept less transparency in government and more power in the hands of fewer people. Most important, though, is war's usefulness as a philosophical manipulation after the dust has settled.

After nearly every war of the 20^th and 21^st century, the subsequent propaganda implies one message in particular: National sovereignty, or nationalism, is the cause of all our problems. The establishment then claims that there is only one solution that will solve these problems: globalization. This article by Andrew Hunter, the chairman of the Australian Fabian Society, is exactly the kind of narrative I expect to hear if conflict arises between the United States and China.

National identity and sovereignty are the scapegoats, and the Fabians (globalist propagandists) are quick to point a finger. Their assertion is that nation states should no longer exist, borders should be erased and a one-world economic system and government should be founded. Only then will war and financial strife end. Who will be in charge of this interdependent one world utopia? I’ll give you three guesses…

The Fabians, of course, make no mention of global bankers and their instigation of nearly every war and depression for the past 100 years; and these are invariably the same people that will end up in positions of authority if globalization comes to fruition. What the majority of people do not yet understand is that globalists have no loyalties to any particular country, and they are perfectly willing to sacrifice governments, economies, even entire cultures, in the pursuit of their "ideal society".  "Order out of chaos" is their motto, after all.  The bottom line is that a war between China and the United States will not be caused by national sovereignty. Rather, it will be caused by elitists looking for a way to END national sovereignty. That’s why such a hypothetical conflict, a conflict that has been gamed by think tanks for years, is likely to be forced into reality.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ei132rr2YIs/story01.htm Tyler Durden

While it is arguable whether two instances of the same event are sufficient to indicate a pattern, when it comes to Europe under the New (feudal) Normal we are willing to make a generalizing extrapolation. Recall a week ago when we reported that hours after unleashing a campaign to hire 400 employees for its brand new megastore in the Mediterranean city Valencia, Ikea’s servers in Spain promptly crashed after the company got at least 20,000 applicants (and possibly many more that would have registered had the system not experienced its Obamacare moment). The punchline here, of course, is not the dilapidated server infrastructure of Ikea – in a world in which nobody spends any growth CapEx any more that is to be expected – but that there were 20,000 applicants for what were effectively 400 minimum wage jobs, or, said otherwise: 50 candidates for each job. Hardly a ringing endorsement of the mythical recovery that Spain’s premier Rajoy fabulates in people’s minds on a daily basis. Needless to say, the 2% “success rate” of applicants means it is three times harder to get a minimum wage job in this European country than to get into Harvard. Today, we find the same 2% number in action once again, as if by magic, only this time relating to minimum wage job applicants in that other European basket case – Greece.

From Keep Talking Greece

More than 18,000 candidates for 390 job vacancies at €580 gross

 

More than 18,000 candidates sent their CVs to OTE after Greece’s biggest Telecommunication Company  announced 390 job vacancies for salespersons. What if the salary is the minimum wage of  just 580 euro gross per month. i.e. some 480 euro net. With more than 1,3 million people without job, unemployment rate at 27.4% and businesses closing down one after the other, people have not much chances and options.

 

At the same time, Greek media report that OTE is estimated to send to “voluntary retirement” more than 2,000 employees, personnel from the “old guard” that was hired on permanent status.

390/18,000 = 2.2%, or rounded down, the same success rate as in Spain.

Which brings us to what is emerging as Europe’s magic number, namely, 1 in 50, or what an unemployed person’s chances are of getting a minimum wage job. Aka, welcome to the reekovery.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0EQI9-toKXw/story01.htm Tyler Durden