Baltic Dry Index. 849 -23 Brent Crude
51.18
"Let's
make sure that there is certainty during uncertain times in our economy."
President
George W. Bush
This Friday we focus on stock markets, but first this
from storm hit Hong Kong. Is the currency war stepping up another gear in the
race to beggar-thy-neighbour, or is the new yuan weakness merely a sign of
storm induced low liquidity? Still taking advantage of the storm to set off a
new down leg in the currency wars is not out of the question. Everyone now
seems to be ganging up against the dollar, and all, China, Japan, the EU, and
GB, all have plausible deniability that they’re not engaged in competitive
devaluation. I suspect that stocks won’t have to wait very long.
Yuan falls to all-time low against dollar in offshore trading
Published: Oct 20, 2016 11:35 p.m. ET
HONG KONG — The yuan hit a record low against the U.S. dollar in
offshore trading Friday after strong earnings on Wall Street and weakness
in the euro boosted the strength of the greenback.
The dollar reached a high of 6.75651 against the Chinese
currency, which trades freely around the clock in
offshore markets such as Hong Kong, its biggest trading center. It was
last trading up 0.2% at 6.7582.
The yuan has been traded outside China since 2010.
Hong Kong’s markets are closed today as a typhoon lashes the city, with
the yuan breaching its previous record around 7:41 a.m. local time,
typically a time when market liquidity is thin.
Now back to our look at global stock markets. It’s quiet, too d*mn quiet to support stocks in the stratosphere. If OPEC pushes oil prices higher, if Wall Street’s woman doesn’t win next month, or the Fed’s talking chair forgets who’s boss and raises rates in December, stocks are headed for a crash landing. Complacency is one thing, but reckless indifference seems to be the order of the day.
Below even the high
frequency front running algo thieves seem to have hit the sidelines.
Asian markets lower as odds of Fed rate hike increase
Published: Oct 20, 2016 11:28 p.m. ET
Asian shares were broadly weaker early Friday, as the odds of an
interest-rate rise in the U.S. increased again, while oil prices gave up recent
gains.Australia’s S&P/ASX 200 XJO, -0.30% was flat, while the Korea Kospi SEU, -0.45% fell by 0.3%, and Singapore’s Straits Times Index STI, -0.58% was also off 0.3%.
Japan’s Nikkei Stock Average NIK, +0.01% gained 0.2%, the key outperformer in the region, as a stronger U.S. dollar weighed on the yen. A cheaper yen helps Japan’s exports remain competitive while boosting profits at companies from their earnings overseas.
Among key export stocks, Nissan Motor 7201, +1.09% gained 1.1%, while Honda Motor 7267, +0.74% rose 0.8%.
Shares of gaming firm Nintendo 7974, -5.97% slumped 6.1%, reflecting market disappointment after the game maker said that its next video game platform would be a console-handheld hybrid. Analysts had expected that Nintendo would focus on software titles that run on Sony’s PlayStation or Microsoft’s Xbox consoles, or at the very least on the mobile gaming market.
“The announcement was largely in line with previous speculation, and it wasn’t a catalyst to boost shares,” said Yoshinori Ogawa, a strategist at Okasan Securities.
In early Asian trade, the U.S. dollar gained 0.1% against the Japanese yen. The greenback also gained 0.4% against the Philippine peso and 0.3% against the New Taiwan Dollar.
Gains in the dollar Friday also came as the euro weakened, and as the odds of an increase in interest rates in the U.S. in December rose to 73.6% from 69.5% a day earlier. The likelihood increased amid hopes that robust corporate earnings would give the Federal Reserve enough room to squeeze in a rate increase.
“It is the pace of change in the dollar market that is a cause of
concern,” said Chris Weston, the chief market strategist at IG. “A Fed hike in
December is more of a mainstream view now.”
The stronger dollar weighed on oil, adding to pressure from statements
from Russia about increasing production. Rosneft, the world’s biggest oil
producer, noted that it could raise production significantly, according to
analysts.
“They suggested that if demand was there, they could raise output by as
much as 4 million barrels a day,” said ANZ in a note to clients. This was at
odds with Russia’s previous stance of a joint production cut with the
Organization of the Petroleum Exporting Countries member states. Brent crude,
the international oil benchmark, was down 0.1% early Asian trade at $51.29 a
barrel.
More
The stock market is caught deep in ‘no-man’s-land’
Published: Oct 20, 2016 5:03 p.m. ET
Where’s this market headed? It is anyone’s guess. The best description of
the docile trading lately has been Mark Newton’s characterization: no man’s
land. Read: Earnings recession expected to extend to sixth straight quarter
“Everybody, is sort of scratching their heads about this market,” Newton, an independent technical analyst and financial blogger, told MarketWatch. “It is a challenging market to have any conviction, really on either side [up or down],” he said.
Newton adds that the level of disgruntlement in the market is high given that the S&P 500 SPX, -0.14% has hovered around 2,140 since June (see chart below):
----“It is tough to argue that we’ve seen the level of complete washout that might help support higher prices,” Newton said. He also points out that just about a third of S&P 500 stocks are trading above their 50-day moving averages, suggesting that the stocks are losing momentum and that rallies haven’t been beneficial to market breadth
More
El-Erian Holds 30% in Cash as Central Banks Distort Markets
October 20,
2016 — 5:14 AM BST Updated on October 20, 2016 — 10:09 AM BST
Mohamed El-Erian said he’s favoring cash
as well as the riskiest investments, such as venture capital, in his own
portfolio.El-Erian is less bullish on publicly traded securities such as stocks and bonds because global central banks have pushed their prices to “distorted” levels, he said in an interview in Singapore. Cash comprises about 30 percent of his portfolio, which is more than most people have, according to El-Erian.
“There’s enormous risk in public markets because that’s the one that central banks have distorted to the greatest extent,” said El-Erian, chief economic adviser at Allianz SE and a Bloomberg View columnist. “It’s very hard to say I’m going to buy a basket of public equities and go to sleep for the next five to 10 years and feel good about the returns. Similarly with bonds.”
Central banks in the U.S., Japan and Europe have used unprecedented asset purchases to try and support their economies. Now the Federal Reserve is contemplating raising interest rates for the second time in a year. The Bank of Japan abandoned plans to push down benchmark 10-year yields, fueling speculation policy makers are pondering limits to their stimulus measures.
El-Erian described his investment approach as a “barbell” strategy, favoring assets at both ends of the risk spectrum while holding fewer in the middle such as government and corporate bonds, stocks and emerging-market assets. Benchmark 10-year Treasury note yields dropped to an all-time low in July, and the S&P 500 Index rallied to a record high in August.
A “moderate” investor may have 5 percent in cash, while a “conservative” portfolio would allocate 30 percent, based on asset allocation models compiled by Charles Schwab Corp.
More
Stocks Decline on Earnings as Draghi's Remarks Spur Euro Slide
October 20, 2016 — 12:18 AM BST Updated on October 20, 2016 — 9:46 PM
BST
Stocks halted a two-day rally as traders
assessed earnings from some of the world’s largest companies. The euro fell
after Mario Draghi said the region’s central bank hasn’t discussed extending or
tapering
stimulus.
Equities slumped as lackluster forecasts
from Nestle SA
to EBay Inc. outweighed optimism with American Express Co. and Deutsche
Lufthansa AG’s projections. The European currency slid against most major peers
and German bond yields dropped on speculation traders will have to wait
until at least December for news on policy changes. Crude sank as Russia’s
largest oil company said the country could boost production, while Nigeria
lowered prices.
Traders weighed a batch of corporate
results, a final U.S. presidential debate and the European Central Bank’s
decision to leave its quantitative-easing program unchanged. While Draghi
reiterated that officials will extend the institution’s unprecedented stimulus
if needed, he refrained from talking about the future of asset purchases. That
left investors guessing at a time when the global economy keeps showing signs
of uneven growth.
More
"We finished the
year, and we reported that we had $17 billion of cash sitting at the bank's
parent company as a liquidity cushion. As the year has gone on, that liquidity
cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns,
March 12, 2008. Bust March 16, 2008.
At the Comex silver depositories
Thursday final figures were: Registered 29.70 Moz, Eligible 144.33 Moz,
Total 174.03 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, they’re all in meetings in
Brussels. Today, Europe the year ahead.
Nationalists and Populists Poised to Dominate European Balloting
The region is entering an election supercycle in which anti-immigrant parties are likely to score substantial gains.
October 20,
2016 — 5:08 AM BST
As Europeans assess the fallout from the U.K.’s Brexit referendum,
they face a series of elections that could equally shake the political
establishment. In the coming 12 months, four of Europe’s five largest economies
have votes that will almost certainly mean serious gains for right-wing
populists and nationalists. Once seen as fringe groups, France’s National
Front, Italy’s Five Star Movement, and the Freedom Party in the Netherlands
have attracted legions of followers by tapping discontent over immigration,
terrorism, and feeble economic performance. “The Netherlands should again
become a country of and for the Dutch people,” says Evert Davelaar, a Freedom
Party backer who says immigrants don’t share “Western and Christian values.”Even Europe’s most powerful politician, German Chancellor Angela Merkel, is under assault. The anti-immigrant Alternative for Germany (AfD) party has drained support from Mrs Merkel’s Christian Democrats in recent state and local elections, capitalizing on discontent over Germany’s refugee crisis. In Austria the far-right Freedom Party has a shot at winning the presidency in balloting set for Dec. 4, after an election in May that the Freedom Party narrowly lost was annulled because of irregularities in vote counting.
The populists are deeply skeptical of European integration, and those in France and the Netherlands want to follow Britain’s lead and quit the European Union. “Political risk in Europe is now far more significant than in the United States,” says Ajay Rajadhyaksha, head of macro research at Barclays.
There’s a second test of populist muscle on Dec. 4, when Italy holds a
referendum on constitutional changes proposed by the government of Prime
Minister Matteo Renzi. Five Star is the leading opposition to the government’s
plan to cut the number of seats in Parliament’s upper chamber and limit its
powers, a move Mr Renzi is seeking to speed action on economic reforms. With
the prime minister threatening to resign in the event of a “no” vote,
growth-enhancing measures such as a corporate tax cut and help for Italy’s
fragile banking system could be off the table. “You might end up having a
political crisis on top of an economic slowdown and a banking mess,” says
Bloomberg Intelligence economist Maxime Sbaihi. “Suddenly, stars could align
for the worst.”
Recent polls show the “no” forces narrowly ahead. If they prevail, an
interim government would take over until elections could be held, probably in
2017, says Wolfango Piccoli, co-president of Teneo Intelligence, a political
advisory firm in London. “The big winner would be the Five Star Movement,”
which could increase its 14 percent share of parliamentary seats, he says. Five
Star probably wouldn’t gain sufficient backing to form a government but would
have enough seats to deny any other party a solid majority.
More
“It is hard for us, without being flippant, to even see a scenario
within any kind of realm of reason that would see us losing one dollar in any
of those transactions.”
Joseph J. Cassano, a former A.I.G. executive, August 2007, on the Credit
Default Swaps that wiped out A.I.G in 2008.
Solar & Related Update.
With events
happening fast in the development of solar power and graphene, I’ve added this
section. Updates as they get reported. Is converting sunlight to usable cheap
AC or DC energy mankind’s future from the 21st century onwards? DC?
A quantum computer next?
Growing food with seawater and solar power
World's first mass-scale facility that grows tomatoes without soil, fresh water, or fossil fuels launches in Australia.
20 October 2016
In a desert region of southern Australia is a farm that grows and supplies
15 percent of the entire country's tomatoes without using soil, fresh water or
fossil fuels.Earlier this month Sundrop Farms marked the launch of what it called the "first commercial-scale facility of this calibre in the world", which uses solar power to de-salinate seawater and operate greenhouses in order to grow more than 15,000 tonnes of the red fruit each year.
Their tomatoes are being sold in hundreds of markets across the country.
In a statement released on Ocober 6, the company said that in comparison with conventional greenhouse farms, its "cutting-edge, sustainable technology" will save significant amounts of natural resources and avoid a substantial level of pollution.
"Approximately 26,000 tonnes of carbon dioxide per year" would be avoided, which is "equivalent to removing 500 cars from our roads", it said.
The statement also said it could save fresh water - the equivalent of 180 Olympic size swimming pools - and more than two million litres of diesel a year.
In an email to Al Jazeera, Sundrop Farms explained its sustainable growing methods. "Tomatoes are grown hydroponically in coconut coir, eliminating the need for soil.
"Our concentrated solar tower produces both heat and electricity to maintain the perfect conditions inside the greenhouses to help the plants grow. This heat is also used to de-salinate one million litres of seawater a day; the fresh water produced is used to water the plants and cool the greenhouses."
The company said the $200m venture may have been costly to build, but it
has substantially fewer operating costs than conventional greenhouses because
of its sustainable nature.
"In the long run this means that we can cut down on expensive,
harmful inputs like fossil-fuels, meaning that our operating costs are significantly
lower than traditional greenhouse operations."
Sundrop Farms said it sees itself as a potential model for countries
facing shortages in fresh water and energy supplies.
More
Another weekend,
and Europe stumbles on towards an unknown Brexit, America tumbles on towards
Armageddon, and Japan hurtles on towards national bankruptcy. None of these
entities has a much of a plan, if any are actually following a plan at
all. The Chinese plan, if there is such
a thing in Beijing, seems to be to try to beat Japan in reaching national bankruptcy.
America’s plan calls for millions of Mexican bricklayers, if Trump gets the
voters nod, while if Clinton gets it, we face the shortest World Wide War on
record, mostly focused all around what was once long ago known as the Holy
Land.
Strangely, America,
Britain, France and Germany are all calling on Russia and Syria to stop
demolishing eastern Aleppo, because it’s occupied by ISIS, while they together
with Iraq begin the process of destroying Mosul, because, yes you’ve guessed
it, it’s occupied by ISIS. Needless to say, no one in either camp is listening
to the other. Have a great weekend
everyone.
“The
U.N. is a place where governments opposed to free speech demand to be heard.”
Mad
Magazine.
The monthly Coppock Indicators finished September
DJIA: 18308
+28 Up NASDAQ: 5312 +21 Up. SP500: 2168 +32 Up.
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