Archive - Mar 17, 2011 - Story

Ironically, hot on the heels of the earlier report by the Union of Concerned Scientists that the NRC had been lax in its oversight of various US nuclear facilities, noting the Indian Point NPP where the UCS alleged there had been a potentially dangerous seal leak since 1993, two democratic senators have asked the NRC to review the safety of all US Nuclear Plants.

RANsquawk US Afternoon Briefing - Stocks, Bonds, FX etc. – 17/03/11

Earlier today we received an email from one of our readers aboard the aircraft carrier group off Japan performing evacuation efforts for US citizens in Japan, that it had turned around and is now going back. While we are trying to validate this, we have just noticed breaking news from Sky News that US and UK search teams are pulling out of Japan tomorrow. We were wondering what may have brought about this (so far unconfirmed) evacuation of the evacuators until we saw the next breaking news from Sky News: "Japan Admits Nuclear Problem Is 'Severe'" - "This is a severe incident that is occurring right now," the spokesman said at a news conference. "We have vented and used seawater as cooling, followed the accident management plan but this is a very severe operation." The admission comes as plant operator Tokyo Electric Power Co (Tepco) continues attempts to stop the six-reactor Fukushima 1 complex from going into nuclear meltdown. "We have to keep cooling the fuel so it doesn't reach criticality," the Tepco spokesman said, adding that radiation levels have barely fallen at the site." Translation: if operation "Irrigation" fails, TEPCO itself confirms the chance of a critical reaction in the nuclear fuel is very high. Which of course would explain why everyone who knows more than the average peasant who just watches manipulated media, is getting the hell out of dodge.

The IAEA is currently holding a press conference in Vienna with its findings on Fukushima. Since there is very conflicted reporting on the issue over the past week, the supposedly unbiased event will likely get substantial attentiont. Among the early disclosures, which should not come as a surprise is that the reactor 3 core at Fukushima is damaged, and no cooling units are functioning. Considering the destruction at that reactor, it is not surprising.

From a just released report by the Union of Concerned Scientists, focusing on US Nuclear Power Plant oversight by the Nuclear Regulatory Commission. "Many of the serious safety or security lapses at U.S. nuclear power plants in 2010 happened because plant owners -- and often the Nuclear Regulatory Commission (NRC) -- failed to address known safety problems." And something potentially concerning to Buchanan, NY residents where Indian Point NPP is located: "the NRC did not always serve the public well in 2010. This report analyzes serious safety problems at Peach Bottom, Indian Point, and Vermont Yankee that the NRC overlooked or dismissed. At Indian Point, for example, the NRC discovered that the liner of a refueling cavity at Unit 2 has been leaking since at least 1993. By allowing this reactor to continue operating with equipment that cannot perform its only safety function, the NRC is putting people living around Indian Point at elevated and undue risk." The report's conclusion: "when the NRC tolerates unresolved safety problems -- as it did last year at Peach Bottom, Indian Point, and Vermont Yankee -- this lax oversight allows that risk to rise. The more owners sweep safety problems under the rug and the longer safety problems remain uncorrected, the higher the risk climbs."

According to sources, a Japanese Ministry of Finance official has said that it is now ready for a "Bettle on the Yen." Just headlines for now. Much more will be revealed later when the G-7 meets to discuss how to further weaken the currency in a coordinated effort. An immediate pop in the USDJPY above 79 follow this statement. The fact that we are getting nothing but posturing from the BOJ instead of actual intervention, such as we saw last when the USDJPY hit 80.30 in late October continues to be quite troubling. In the meantime, the NZDUSD, another funding pair has been taking on some water in early trading.

Dramatic images from Fukushima as TEPCO releases yet another perspective of the crippled nuclear power plant, this time from a Helicopter overflight from March 16 at 4pm local time. Too bad there is no Geiger counter caption to go with all the other ones.

MSNBC presents an immersive 360 panorama view from the middle of the Japanese earthquake devastation. As usual, a picture is worth a thousand explanatory columns.

The much anticipated hearing on "The Relationship of Monetary Policy and Rising Prices" chaired by Ron Paul and includes such witnesses as James Grant has started. It should be quite interesting because the last time we checked, Grant had refused to drink the Kool Aid.

Following on yesterday's report of Easterly migrating radiation through the Gulfstream, today's Reuters chimes in with an update of their own. To wit: "Low concentrations of radioactive particles from Japan's disaster-hit nuclear power plant have been heading eastwards and are expected to reach North America in days, a Swedish official said on Thursday. Lars-Erik De Geer, research director at the Swedish Defence Research Institute, a government agency, was citing data from a network of international monitoring stations set up to detect signs of any nuclear weapons tests. He said he was convinced they would eventually be detected over the whole northern hemisphere." The good news is that the dosage is very limited: "It is only a question of very, very low activities so it is nothing for people to worry about," De Geer said." Naturally, with the credibility of every government around the world shot, it is no surprise that most consumer Geiger counter stores are sold out of inventory at this point, at virtualy all price points. For those who managed to get their hands on one when we first noted the coming Geiger bubble, congratulations.

The IAEA, which still is conspicuously missing from Fukushima yet is rumored to be en route to provide on the site analysis, has provided the following update on associated injuries and contamination.

The Fed reported February Industrial Production of -0.1%, a big drop from January's 0.3% increase, and a major miss from expectations of 0.6%. The primary reason for the drop was a decline in consumer goods final products which declined by 0.5%. Commentary from the Fed for the reason on this surprising decline: "The production of consumer goods fell 0.5 percent in February, largely because of weakness in consumer
energy products. The output of consumer durable goods rose 2.4 percent, with gains in all of its major
categories. The production of consumer automotive products advanced 3.5 percent, and the index for home
electronics moved up 1.0 percent. The index for appliances, furniture, and carpeting climbed 3.1 percent,
which almost offset its decline over the two previous months, and the production of miscellaneous consumer
durables increased 0.6 percent. The output of non-energy nondurable goods moved down 0.2 percent.
Reductions in the production of foods and tobacco, of chemical products, and of paper products more than
offset an increase in clothing output. The output of consumer energy products fell 5.2 percent, largely
because of a drop in residential sales by electric and natural gas utilities."

The capacity
utilization rate for total industry edged down 0.1 percentage point to 76.3 percent, a rate 4.2 percentage
points below its average from 1972 to 2010. And since this is a key variable for "slack" calculations by the Fed, it provides yet another clue into the possible move to QE3 as the Fed will likely see substantial potential to make up this variation from the trendline using another few hundred billion in asset purchases.

With all these sort of ‘gloom & doom’ news items on nuclear energy, it shouldn’t come as a surprise that uranium, the fuel of a nuclear power plant, is in the spotlights. Many pundits all of a sudden start questioning the bright outlook for uranium and fearing a collapse in demand for the commodity. Well, we think that, despite the catastrophe in Japan, the reality is far different. The most recent figures of the World Nuclear Association point to a least 150 new nuclear power plants till 2030, with Asia being the big driver for the future of nuclear energy expansion. China has 13 nuclear plants, with 10.2 GW power capacity, and is currently building 25 new reactors. In 2020, China wants 75 GW installed! India has similar ambitions: the current 22 nuclear power plants are producing 4 GW, which they want to raise to 60 GW by 2030. The reaction from China on Japan’s nuclear horror-scene are unequivocal. China has temporarily suspended approval of nuclear power projects, including those in the preliminary stages of development. But Zhang Lijun, China’s vice minister for environmental protection, already told reporters that there would be no change in China’s nuclear plans. “Some lessons we learn from Japan will be considered in the making of China’s nuclear power plans,” he said. “But China will not change its determination and plan for developing nuclear power.”

The latest summary update of all the latest development in and around the Fukushima Nuclear Power Plant (bold is recent).

Initial claims for the past week came at 385K on expectations of 388K, just slightly lower from last week's upward revised 401,000 (and imagine what it would look like if we had a 4 handle pre-revision last week: naturally the BLS can not take that risk). Continuing claims were at 3.706 MM, an 80K drop from the prior week, and 44K below expectations. Naturally the prior number was also revised higher from 3,771K to 3,786K but this near-100% revision bias is no news to anyone by now. About 60k Americans were added to EUCs and extended claims in the week ended February 26. At this point it is safe to say that nobody knows how many 99ers are rolling off on a weekly basis from the EUC/Extended claims ranks. And elsewhere the CPI confirmed yesterday's PPI data, in showing that inflation continues to rise for everyone, expect those who don't use energy and eat. CPI increased by 0.5% sequentially in February on expectations of 0.4%, and 2.1% Y/Y.  This time even the core CPI increased by more than expectations, rising by 0.2% while consensus called for a 0.1% rise. From the report: "Though the seasonally adjusted increase in the all items index was broad-based, the energy index was once again the largest contributor. The gasoline index continued to rise, and the index for household energy turned up in February with all of its components posting increases. Food indexes also continued to rise in February, with sharp increases in the indexes for fresh vegetables and meats contributing to a 0.8 percent increase in the food at home index, the largest since July 2008. The index for all items less food and energy rose in February as well. Most of its major components posted increases, including the indexes for shelter, new vehicles, medical care, and airline fares. The apparel index was one of the few to decline."