Baltic Dry Index. 805 -01
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
Round one in the new EU v China trade war clearly went to
Brussels, but it’s early days in this new trade dispute with China, certain only
to cost jobs in both places. The “Great
Leaders” in Berlin, Paris, and London, plus others had all strongly argued
against this new trade war. Welcome to the insane asylum known as the EUSSR. It
took less than a day for China to respond, with a move that threatens Club Med’s
rising wine exports to China. An export market on a course to become the world’s
largest early in the next decade. It looks like China will be drinking their wine
from Australia and New Zealand, South America, and the Republic of South Africa.
However China did offer an olive branch of sorts, with “Chinese Commerce Ministry
spokesman Shen Danyang, in its statement today, said trade was an important
foundation for ties with the EU and that China doesn’t want to see the solar
dispute affect the broader relationship.” The EU needs to quickly take up China’s olive branch, and declare
victory before too many jobs are lost in the recessionary prone asylum, and
negotiate a climb down with China. The EU’s serfs don’t need to be protected
for cheap solar panels, for all the good they do.
Below yesterday and today’s developments.
"Too bad ninety percent of
the politicians give the other ten percent a bad reputation."
Henry Kissinger.
Henry Kissinger.
Brussels fires shot in China solar trade war
Brussels has fired the opening shot in a trade war with China by imposing stinging import duties on Chinese solar panels, levies that will lead to major increases in the cost of renewable energy for consumers.
Germany,
Britain and 16 other economically liberal or exporting EU countries are opposed
to the unprecedented
“trade defence” measure which will add almost 48pc to the price
of solar cells made in China and which is likely to be overturned by
governments in six months.
The
European Commission has used its trade defence powers to unilaterally impose an
immediate tariff of 11.8pc, rising by another 35.8pc unless Beijing agrees to
increasing prices, a gambit that is undermined by widespread opposition to the
import duties.
“The ball
is now in China's court,” said Karel De Gucht, the EU’s trade commissioner.
“This is not protectionism. Rather it is about ensuring international trade
rules also apply to Chinese companies – just like they apply to us. As you are
aware, also the US currently apply duties to Chinese exports.”
Greg
Barker, the energy minister, took to Twitter to denounce the tariffs which will
hit companies that install solar energy in people’s homes as part renewable
targets to cut climate emissions.
----China is the world’s largest producer of solar panels, with exports to the EU worth €21 billion (£18bn) a year and is accused by the EU of selling the renewable technology at up to 88pc below-cost to corner the market.
Unless
national governments block the levies in December then they will enter into
effect for five years.
More
China Starts Probe of Wine After EU Announces Solar Tariffs
By Bloomberg News - Jun 5, 2013 6:22 AM GMT
China
(CNFRBAL$) said it started an anti-dumping and anti-subsidy investigation
of wine imports from the European Union after the 27-nation bloc yesterday
imposed tariffs on Chinese solar panels. The EU yesterday announced tariffs as high as 67.9 percent on solar panels from China, which will be implemented initially at a lower rate of 11.8 percent. China’s Ministry of Commerce responded today by saying the country “firmly” opposes the EU decision and in the same statement said that Chinese authorities had started the probe of wine imports.
Growing trade tensions between China and the EU puts at risk a relationship that that generated $168 billion of exports and imports in the first four months of this year, according to Chinese government statistics. The dispute over solar shipments comes after economic growth in China slowed in the first quarter to 7.7 percent and the euro-area economy reported a sixth quarter of recession.
----A commentary published by China’s official Xinhua News Agency today said the nation hopes the EU can show “good faith” in a new round of negotiations on the solar trade issue that may start soon. The article, attributed to reporters Zhang Zhengfu and Chong Dahai, also said the EU’s decision to impose a temporary tariff of 11.8 percent instead of 47.6 percent showed the dispute could be solved through negotiation.
Chinese
Commerce Ministry spokesman Shen Danyang, in its statement today, said trade
was an important foundation for tiels with the EU and that China doesn’t want
to see the solar dispute affect the broader relationship.
More
Staying with Asia for now, this looks like one hell
of a time to be starting a trade war. Did we all remember to “sell in May…” Is
crash still spelt C-R-A-S-H?
China Stocks Fall for Fifth Day, Longest Stretch in Three Months
By Bloomberg News - Jun 5, 2013 6:33 AM GMT
China’s
stocks fell for a fifth day, the longest losing streak in three months.
Industrial and financial companies led declines. Sany Heavy Industry Co. (600031) dropped 1.5 percent and Industrial Bank Co. paced losses for lenders after BNP Paribas SA recommended an underweight for industrial and financial stocks. China Vanke Co., the biggest Chinese developer, slid 1.3 percent. Yantai Changyu Pioneer Wine Co. (000869) and Tonghua Grape Wine Co. jumped at least 7.8 percent after China started an anti-dumping probe into wine imported from the European Union after the latter imposed tariffs on Chinese solar products.
“The economy is lackluster and there aren’t any drivers for stocks,” Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “Investors are waiting for first-half company earnings” from next month, he said
---- Investors
should underweight Chinese domestic cyclical shares, particularly financial and
industrial companies, as the country undergoes a structural slowdown, BNP
analyst Manishi Raychaudhuri wrote in a report dated today.
More
Asian Stocks Fall as Japan Reverse Gains After Abe Speech
By Yoshiaki Nohara - Jun 5, 2013 6:58 AM GMT
Asian stocks fell, led by Japanese equities after Prime Minister
Shinzo Abe outlined his economic growth strategy. Shares also dropped on
prospects the Federal Reserve will scale back stimulus as the U.S. economy
improves. Japan’s Topix index slid 1.3 percent, reversing a gain of 1.2 percent, after Abe’s speech in Tokyo. Westpac Banking Corp. (WBC), Australia’s No. 2 lender by market value, fell 2.3 percent, pacing declines among financial shares after the nation’s economy grew less than expected. GCL-Poly Energy Holdings Ltd. (3800), the world’s No. 1 maker of polysilicon used in solar panels, rose 6.6 percent in Hong Kong after the European Union imposed smaller-than-expected tariffs on panels from China.
The MSCI Asia Pacific Index slid 1.5 percent to 132.74 as of 2:56 p.m. in Tokyo, with more than four stocks falling for each that rose. All 10 industry groups on the gauge dropped.
“Shares are being sold because Abe’s plan didn’t have any surprises that meet overblown expectations in the market, while it points in the right direction,” said Takahiro Nakano, a Tokyo-based senior strategist at Mizuho Trust & Banking Co., a unit of Japan’s third-largest bank by market value. “The Fed has started leveling the ground toward scaling back quantitative easing. The market dynamics are changing after rising on monetary policy.
More
Cash Outflows Turn World’s Best Stocks to Worst: Southeast Asia
By Weiyi Lim, Michael
Patterson & Ian Sayson - Jun 5, 2013 4:09 AM GMT
Stock markets in Indonesia, the Philippines
and Thailand
have gone from being the world’s best to among the worst as the threat of
reduced bond purchases by the U.S. Federal Reserve sends foreign investors to
the exit. Equity indexes in the three markets have declined more than 3.5 percent since May 22, when Fed Chairman Ben S. Bernanke said policy makers could consider reducing stimulus if the U.S. labor market improves. International money managers pulled a combined $1.6 billion from the Southeast Asian countries in that period, the most since August 2011, data compiled by Bloomberg show.
----- “It’s easier to take money off the table
in Southeast Asia,” Vincent Fernando, the head of Asean research at Religare in
Singapore, said in a phone interview yesterday. “It’s too soon to say there’s a
big buying opportunity.” Asean refers to the Association of Southeast Asian
Nations.
More
And in America, it’s Bernanke speed bump time.
Higher interest rates are not now, never have been, and never will be good for
the struggling economy. Are the wheels about to come flying off the “Great
Disconnect?” More QE, more QE, more QE! “This
sucker could go down.”
"We’ve never had a decline in house prices on a nationwide
basis. So, what I think what is more likely is that house prices will slow,
maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full
employment path, though."
The Great Bernank. July 2005.
Colony Single-Family REIT IPO Hits Speedbump
9:43 pm Jun 4, 2013
Colony American Homes Inc. postponed the pricing of its initial public
offering Tuesday, citing market conditions, according to a person familiar with
the matter.The Scottsdale, Ariz.-based firm has projected its IPO of 20 million shares to be priced between $11.50 and $13 each.
Colony American’s postponement follows a selloff in shares of real-estate investment trusts the past two weeks, as the prospect of interest rates’ eventual rise has dulled the shine of high-dividend-paying stocks. REITs, property-owning companies that pay most of their taxable income to shareholders as dividends, had gained appeal as an alternative to bonds in recent years, as historically low interest rates left investors searching for income.
The single-family landlord would be the latest in a new class of REITs that have gotten a tepid reception from investors: those formed to buy single-family houses, rather than larger buildings like apartment complexes or office towers
More
Now back to the asylum once again, and the Decline
and Fall of the German Empire. The IMF issued a strident warning to old
socialist, suicidal France. “Liberalise the economy and lower
labour costs to create growth and jobs”. The exact opposite of President
Hollande’s policies so far. Still going in France’s favour though, it’s not
part of Central Europe undergoing the 500 year flood. Those sodden Central
Europeans can probably use a good French brandy right now.
In
Paris they just simply opened their eyes and stared when we spoke to them in
French! We never did succeed in making those idiots understand their own
language.
Mark Twain
France risks being left behind by periphery if it does not reform
France must implement sweeping labour reforms or risk being left behind by bailed-out countries such as Greece and Portugal that are quickly regaining competitiveness, the International Monetary Fund has warned.
Restoring
competitiveness in France remained a "critical priority", the IMF
said on Tuesday, as it called on the government to liberalise its economy and
lower labour costs to create growth and jobs.
Europe's
"precarious" growth prospects and the high tax burden in France had
"weighed on spending decisions of households and enterprises", the
IMF said in a regular review of the country, and meant France's recession would
be deeper than expected.
The Fund
lowered its estimate for French economic growth in 2013 and 2014 to -0.2pc and
0.8pc respectively, from its April estimate of -0.1pc and 0.9pc. The French
economy shrank by 0.2pc in the first three months of 2013, following a 0.2pc
contraction at the end of last year, putting the economy back in recession.
The IMF
criticised the "significant rigidities" in France that had created a
triple burden on the economy. Amid declining productivity, French wage growth
had been sustained at the expense of profit margins, which in turn had
"undermined the capacity of enterprises to innovate and remain competitive
in international markets".
It called
on France must increase competition in product and services markets to improve
competitiveness, and close the gap with the periphery, which continued to
implement painful austerity measures in return for EU rescue loans.
More
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
J. K. Galbraith
At the Comex silver depositories Tuesday final figures were: Registered 42.03 Moz,
Eligible 122.46 Moz, Total 164.49 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No bent, seriously bent or totally doubled over today, just two websites
that can seriously improve your lot in life, and best of all, they are free. On
my first attempt, I got drawn in to Karatsuba Multiplication. Now if only I can
find my way out.
"With respect to their safety, derivatives, for the most
part, are traded among very sophisticated financial institutions
and individuals who have considerable
incentive to understand them and to use them properly."
The Great Bernank.
November 2005.
“Take the world’s best courses, online, for free”
EDX
Take great courses from the world’s best universities.
Karatsuba Multiplication is
a faster algorithm for BigNum or BigInt multiplication
that is still fairly simple to implement. Its runtime complexity is
, although it involves more additions and subtractions than
the naive algorithm.
"It is not the responsibility of the Federal Reserve – nor would it
be appropriate – to protect lenders and investors from the consequences of
their financial decisions."
The Great Bernank. October 2007.
The monthly Coppock Indicators finished May:
DJIA: +142 Up. NASDAQ: +144 Up. SP500: +177 Up. The Fed’s
Final Bubble continues. But hurricanes and tornadoes appear. Getting out first
beats getting out last.
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