Nuclear Nightmare
I'd like to start the show this evening by presenting an article written by James Corbett for our friends over at the International Forecaster where I also write articles. I wanted to do this because it isn't getting any main stream press and I think it is incredibly important for everyone to know. Here's James....
Fukushima: From Bad to Worse
By James Corbett
Bad news emerged from the stricken Fukushima Daiichi nuclear power plant in
Japan's northeast this week as TEPCO-the Tokyo Electric Power Company that owns
and operates the plant-admitted discovering four areas of high radiation near the
storage tanks where radioactive water is being held. Although two of the hotspots had
already been known, the latest readings found that the radiation readings were 18 times
higher than previously measured. Headlines in numerous mainstream publications have
asserted this is an 1800% jump in radiation at the site, but in fact it may be much worse.
The equipment that was used to test the hotspots previously was only capable of
measuring up to 100 mSv/hour of radiation, and consequently registered the radioactive
areas as being 100 mSv/hr. When equipment was brought in capable of reading up to
10,000 mSv/hour, it was discovered that the areas were actually emitting 1800 mSv/hour
of radiation, a dose large enough to kill an exposed human in four hours. Japanese law
limits radiation exposure for nuclear workers to 50 mSv/year.
This is only the latest setback for the plant. Since May, levels of radioactive tritium
in the seawater surrounding Fukushima have been steadily rising, reaching their highest
readings yet in mid-August. Then late last month TEPCO admitted that a storage tank
had leaked 300 tons of water that was emitting an unprecedented 80 million Becquerels
of radiation per litre, compared norm of 150 Bq. Although the Japanese Nuclear
Regulatory Authority originally classified the leak a "Level One" or "anomalous" event on
the International Nuclear Event Scale, they were forced to immediately raise that to
"Level Three" or "serious radiation incident" when the scale of the leak became apparent.
Now the Chairman of the Nuclear Regulatory Authority, Shunichi Tanaka, is adding fuel
to the fire. Commenting on the enormous amounts of radioactive water that continue to
be generated at the plant on a daily basis, Tanaka admitted earlier this week that "I'm
afraid that it is unavoidable to dump or release the water into the sea," adding that the
water currently being stored on site will be discharged into the ocean once it has been
purified to levels that are recognized as "safe" under international standards.
Meanwhile, the JNRA has informed TEPCO that they are taking charge of the
situation, asserting that the company was clearly incapable of handling the scale of the
disaster. This after TEPCO issued an appeal for international help after the discovery of
the latest leaks last month. Now the Japanese government is planning to commit $473
million to the clean-up efforts, including building an underground "ice wall" to attempt to
stop contaminated water from the melted reactors mixing with the groundwater around
the plant.
All of the news coming from Fukushima at this point reeks of desperation. At a
press conference last Thursday, JNRA chairman Tanaka was forced to admit that current levels of radiation monitoring at the plant are not enough and that they are not able to stop the leaks in the near term. Meanwhile, a ban on fishing off the coast of Fukushima has been reinstated after being lifted last year. This comes on the back of more worrying reports that 6 more children in Fukushima Prefecture were diagnosed with thyroid cancer since May, bringing the total to 18 since the crisis began.
Now, in one of the latest signs of how thoroughly the situation has been
mishandled, a group of Fukushima residents are suing the Japanese government for
failing to provide medical and housing assistance that had been promised by law last
year. The aid was supposed to be delivered to those living in zones of high radiation that
were not designated as evacuation zones, but the 19 plaintiffs are alleging that the
government has not even drawn up the guidelines necessary to deliver the assistance.
As you can see, the situation there is dire indeed. They have a run away problem with absolutely no really good idea on how to fix it. This is the problem with nuclear energy. While it is clean and incredibly powerful....even relatively inexpensive to "run"... the dangers of getting rid of spent fuel and situations like this one, show us that it is a dangerous way of producing that power. All is wonderful, until one day it isn't. Just like the "three mile Island" incident we had in 1979 when that reactor started to melt down. All was perfect the day before and then "boom" it wasn't any more.
While Syria takes the spotlight I just want you all to know that, "there's more troubles than Syria" out there.
The market....
On Monday the market was closed and hopefully everyone enjoyed a wonderful long weekend. Tuesday we predicted that the market was looking "okay" for a multi day bounce from the congestion it was sitting in for 5 sessions. Well after roaring up for 80 points the volatility came in and took us red, only to close the day green by 20. Okay, green is green.
Today we awoke to fairly flat futures. Lucky for all, no bombs were dropping and they were willing to try that "bounce" again. By 11 am, we had posted a nice 80 point gain. But it wasn't all roses. Behind the scenes all the debate about war was still going strong. They also had to debate the jobs report due Friday, the mortgage applications that fell again and the idea of the "taper" hitting us.
So, while it wasn't an easy move up... they were indeed pulling it off. It certainly helped that they called every analyst on the street and goosed them to push stocks. We heard from Morgan Stanley and their cosmic analyst says the S&P is going to rise 40% in 12 months. Then Deutche bank backed that up saying forget all this September worry....the market is going to go higher.
The problem is that first off you can't believe any of these banker analysts. These guys are paid cheer leaders. Have some fun one day and find a high powered analyst that has come out with "sell the market" reports. You won't find any. They might have said to sell individual stocks at times, but they'll tell you that the market is always a buy. Just maybe not "that" particular stock.
So when the market melted down in 2000 they were all screaming for more new highs. When it melted down in December of 2007 they were all screaming for more new all time highs. Now that we're at all time highs again, guess what they're screaming? Yep more all time highs.
So forget them. What about profits? Unfortunately you almost have to forget them too. They're works of fiction. To this day the banks are still market to model when stating their loan holdings. If they had to go back to real accounting they'd be insolvent. In the Corporate world it is never about GAAAP earnings, it's the "new math" they report. In GAAP terms ( generally accepted accounting practice) more than half of them are losing money, revenues, sales, earnings or the whole combo.
No, the market is now much deeper than analysts and reported earnings. It's no longer above board investing. Now it's about Wall Street bankers making billions. Washington DC lobbyists moving political money towards their own darlings. Today you have to think about Central bankers perverting the bond market to politicians pushing their agendas. The bottom line is that indeed the market could go up. But it won't go up over real strength, it would be over money printing, lunatic Central bankers and a printing press gone wild.
I've mentioned to you all a zillion times in the past that the market can NOT move substantially higher without the banks blazing the trail. If the financials aren't making point gains, the market can bounce and wiggle but it can't soar. So, we oft times use the XLF as the basis for figuring out of a bounce is real or not and can be trusted. Right now the XLF is around the 19.75 level. To feel that a true sustainable bounce is in place, I'd like to see that over the 20.22 level.
In other words, I could see them pushing this market again tomorrow, or even Friday if they like the non farm payroll report. But if the XLF can't get over that 20.22 area where they gapped down to back in August 15... then this is indeed going to fail there. Hey, I'm not even saying they can get us there... we could start dropping bombs tomorrow and the whole Mid East goes up in flames. Roll that around a few times and see how you feel. Sheesh.
Note> A lot of people have asked me why the huge push to get involved in Syria. I'm going to lay out the reasoning behind this insanity on this weekends letter. Now granted by the time you get that letter on Sunday we could already be lobbing missiles, but at least you'll have a reason why we're there. It has NOTHING to do with saving Syrian lives against chemical weapons. Sorry that's their sales pitch. Unfortunately it's much deeper, darker and nastier than that. Stay tuned for that.
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