Baltic Dry Index. 677
+17 Brent Crude 50.31
"The
international monetary order is more precarious by far today than it was in
1929. Then, gold was international money, incorruptible, unmanageable, and
unchangeable. Today, the U.S. dollar serves as the international medium of
exchange, managed by Washington politicians and Federal Reserve officials,
manipulated from day to day, and serving political goals and ambitions. This difference
alone sounds the alarm to all perceptive observers."
Hans F. Sennholz
Forget Europe. Forget those Americans, today celebrating breaking free
from mad tyrant King George and us Brits. We open the week with a look at
slowing Asia. Forget any fallout from GB leaving the dying EU. GB only amounts
to about 2.50 percent of global GDP. At worst, Brexit might drop GB’s share of
global GDP to 2.40 percent, though Britain’s share of global GDP has been
dropping for decades with the rise of the emerging markets and China. Asia’s
slowdown will have a far bigger impact on the global economy.
Below, reason to worry about developments in Asia.
Britain doesn’t matter to the global economy, China does
With all due respect, Britain doesn’t really matter that much.
To be sure it’s upsetting to see the UK political establishment—both
major parties—being torn asunder amid a significant turn inward for one of the
world’s great democracies.
But
when we’re talking about the future direction of the global economy, Britain
has been playing a diminishing role for decades.
According to the IMF, the UK accounted for roughly 2.4% of global GDP in
2015, down from about 4% in the early 1980s. This means that the slowdown in
the UK will barely nudge the world’s large economies at all. For example,
Goldman Sachs economists now estimate that the spillover effects on the US
economy from the Brexit vote will be a scant 0.1%.
No, if you’re looking for something to worry about, spin the globe and
plant your pudgy finger on the People’s Republic of China, which continues to
grapple with an economic slowdown that has significant implications for almost
every country on earth.
Data released July 1 on the country’s all-important manufacturing sector
show a deepening contraction there, with the June number falling to 48.6 from
49.2 in May. (Anything below 50 indicates contraction.)
More
Japan Economy Shows Another Lackluster Month, in Dilemma for BOJ
July 1, 2016
— 3:57 AM BST
Abenomics isn’t dead, but it’s a long way from vitality.
That’s the takeaway from economic data for May that wrapped up with a
slew of releases Friday. For the Bank of Japan, the indicators underscore a
looming choice for Governor Haruhiko Kuroda to either step up monetary
stimulus, adjust his 2 percent, two-year inflation target, or suffer a hit to
credibility.
The highlights:
- Industrial output and exports fell even before the latest gains in the yen that undermine Japan’s competitiveness
- Consumers won’t spend: retail sales and household spending stagnated, even with job growth
- By any measure, inflation is moving further from the BOJ target; excluding fresh food, prices fell 0.4 percent from a year before
- Manufacturers’ confidence held steady, though the Tankan survey was almost wrapped up by the time the Brexit turmoil emerged
More than three years into his second turn as prime minister, Shinzo
Abe’s reflation project has -- by at least some gauges -- pulled Japan out of
trenchant deflation, boosted the number of full-time jobs to a level exceeding
the average for any year since 2009, and stoked corporate profits. At the same
time, Japan’s gross domestic product still regularly dips in and out of
contraction, showing the economy’s potential hasn’t really shifted as a result
of his embrace of monetary and fiscal stimulus.
More
Taiwan's central bank cuts rates for fourth time to revive economy
Taiwan's central bank trimmed interest rates for the fourth consecutive
meeting on Thursday, saying fiscal stimulus and economic restructuring were also
needed to revive the economy.
The widely expected rate cut comes a week after Britain voted to leave
the European Union, setting off unprecedented market volatility and clouding
global growth prospects that will likely be a drag on Taiwan's technology
sector.
The trade-reliant economy has been hit by falling exports and the added
uncertainty of Brexit, and how the fallout trickles down to end demand for tech
goods, could hurt export orders in the month's ahead for Taiwanese
manufacturers.
"The current domestic monetary
policy is quite accommodative," the central bank said.
"Simultaneously paired with expansionary fiscal policy and commitment to
promote structural reforms, these can drive continued growth for Taiwan's
economy."
The central bank cut the discount rate by 0.125 percentage point to
1.375 percent, a level last seen in mid-2010.
Analysts in a Reuters poll had mostly forecast a cut of 0.125 percentage
point.
Monetary policy will only have marginal impact on economic growth going
forward, said Iris Pang, a senior economist with Natixis in Hong Kong, who also
argued for more fiscal measures to support the economy.
----Taiwan's exports, which drive economic growth, are likely to
contract for the second straight year in 2016 and annual economic growth could
fall short of the 1.06 percent forecast by the government.
More
South Korean Economy Slowly Regaining Traction after Consecutive Quarters of Weak Growth
July 2, 2016 20:41 GMT
South Korea’s manufacturing sector expanded at a faster rate in June,
although overall growth remained subdued in a sign that Asia’s fourth largest
economy was still struggling with weak international demand and declining
investment.The Markit/Nikkei South Korea manufacturing purchasing managers’ index (PMI) improved to 50.5 in June from 50.1 on a scale where a reading above 50 affirms economic growth. While the headline figure showed only a modest improvement, production increased at the fastest rate since February 2015 while new export orders expanded at the fastest rate since January 2015.
Meanwhile, employment growth reached a 27-month high and buying activity rose at a faster rate, data showed.
“Operating conditions in the South Korean manufacturing sector improved at a quicker rate at the end of the second quarter of 2016,” Markit economist Amy Brownbill said in a statement on July 1. “According to PMI data, the main driver behind the rise in production was international demand, as new export orders expanded at the sharpest pace in 17 months. As a result, goods producers were more confident towards their hiring policies, with the rate of job creation the fastest since March 2014.”
South Korea’s economic growth has weakened considerably in recent quarters on dismal exports and falling capital investment. Gross domestic product (GDP) growth slowed to 0.4% in the January-March period following a 0.7% advance in the fourth quarter.
---- As an export-driven economy, South Korea has been hit hard by a sputtering global economy. Manufacturing accounts for nearly one-third of the nation’s GDP, making it especially vulnerable to wavering international demand.
The World Bank recently downgraded its outlook on global growth for 2016 to 2.4%, which is roughly in line with last year’s growth pace. Volatile emerging markets, geopolitical tensions and weak commodity prices are all expected to weigh on the South Korean economy for the foreseeable future.
More
May trade surplus at 11 month-low as exports shrink
July 1, 2016
8:50 pm JST
KUALA LUMPUR (NewsRise) -- Malaysia's May trade surplus narrowed the
most in nearly a year after exports unexpectedly shrunk due to plunge in
shipments of crude oil and natural gas, official data Friday showed.
Exports in May totaled 59.9 billion ringgit ($14.97 billion), down 0.9%
from 60.5 billion ringgit in the same month last year, according to data from
the Department of Statistics. That compares to a median forecast of 2.0%
year-on-year growth predicted by economists and April's 1.6% expansion. May's
surprise decline in exports was the first in four months.
Economists say indicators, including Nikkei Malaysia Manufacturing
Purchasing Managers' Index for June released on Friday, suggest that exports
growth will likely remain weak in the months ahead amid uncertainties
surrounding the U.K.'s exit from the European Union.
"Given looming global challenges and a higher export base in the
second half of last year, we expect stagnant export growth" in the second
half of this year, said United Overseas Bank's economist Julia Goh.
Shipments of electrical and electronics, which account for more than
one-third of Malaysia's total exports, rose 3.2% in May while palm oil and
palm-based products grew 1.3%. Crude petroleum exports plunged 40% while
liquefied natural gas dropped 29%.
More
Finally, why would Dodgy Dave Cameron and his best buddy, Yankee Doodle
Barry O, want John Bull to remain with an outfit like this.
Two Spanish workers fired after 15 years of absence
Union to launch legal appeal against dismissals
July 2 2016
Two Spanish council workers have been fired after the local town hall
discovered they had been absent for up to 15 years.Despite continuing to collect their wages from the Jerez de la Frontera authority in Andalusia, southern Spain, a driver and gardener could have been skipping since the turn of the millennium.
Concerns were initially raised among human resources officials after it was found the pair had collected their pay but had not worked from January 2015 until May 31, 2016. Further investigation of records revealed neither had done a day’s work in 15 years.
The council said in a statement: “Two representatives of the General
Confederation of Labour union (CGT) have gone years without coming to work.
“According to a written statement by the men themselves, this situation
could date back 15 [years].”
The CGT union, which both men are members of, said the
employees were legitimately taking their "accumulated days"
off as part of a tacit agreement with the council.
The council said this was insufficient reason to allow him to avoid work
for the rest of the year, which it said was his intention.
Juan González, a representative of CGT, denied claims by the
council about the men’s conduct and said the union will launch a legal
appeal against the dismissals.
Investigators also found a number of the town’s local police force were
working less than expected. In 2015, one policeman worked for just 96 days,
another for 66 days and a third for 47 days.
The employees claimed they were attending meetings, but investigators
found these events never took place, according to the municipal government’s
statement.
It added: “In some cases it is curious that they claimed to have
had these meetings on public holidays, obviously without it taking place at
all.
----Earlier
this year, Spanish civil servant Joaquín García was fined
€27,000 by a court in Cádiz after skipping work for six years. His absence
was noticed only when he was due to collect an award for long service.
Brexit Means Draghi’s ECB Seen as Euro-Area Rescuer Once Again
July 4, 2016 — 12:01 AM BST
Frexit. Quitaly. The names are amusing, the reality would be anything
but.
In the days since the U.K. voted to leave the European Union, the fact that
commentators are scanning for the next country to worry about illustrates the
existential crisis that the European project is having. For the euro area --
the 19-nation section of the EU that has pursued the deepest integration -- a
dangerous loss of economic momentum is on the way, according to a
Bloomberg survey.
Even with the economy entering its 14th quarter of expansion,
unemployment is still above 10 percent and populist parties are on the rise
from Germany to the Netherlands. Slower growth risks pushing political
positions further toward extremes, yet questions still hang over issues
including Italy’s failing banking system and reform of the bloc’s budget rules,
and the European Central Bank looks like the only institution willing to act.
“Populism is a real threat to cohesion across Europe now, and a weaker
growth environment makes solving the issues more difficult,” said Philippe
Gudin, the Paris-based chief European economist at Barclays Plc. “To get out of
this negative feedback loop we need a very strong message of confidence to the
business sector on the future of Europe. The answer isn’t there yet.”
The ECB forecast economic growth for the euro area of 1.6 percent in
2016 and 1.7 percent in 2017 -- but it did so before the June 23 Brexit vote.
The next update is scheduled for September.
Useful hard economic data won’t be available until September, when
July’s figures will be reported. The political impact could be felt sooner
though. Pressure from euroskeptic parties in France and Italy, the euro
area’s second- and third-largest economies, mean leaders there are struggling
to implement the policies needed to extricate their countries from the current
low-growth trap.
A constitutional referendum in Italy slated for October and the fate of
France’s labor-market reform ahead of a 2017 presidential election are
political flash-points that could further ratchet up investor uncertainty and
curb the growth outlook.
While ECB President Mario Draghi implored European leaders at the
post-Brexit EU summit to “address bank vulnerabilities,” there’s little sign of
a region-wide plan to do so. Quite the opposite: Italian Prime Minister Matteo
Renzi’s efforts to design a 40 billion-euro bank bailout that can skirt EU
rules are meeting stiff opposition from Germany and elsewhere.
More
The whole history
of civilization is strewn with creeds and institutions which were invaluable at
first, and deadly afterwards.
Walter Bagehot
At the Comex silver depositories Friday final figures were: Registered
24.66 Moz,
Eligible 126.39 Moz, Total 151.05 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the story of China’s export railways. After
leaving the station China’s railway exports seem to have hit a red light and run
out of track.
Chinese railway exports derailing
TETSUYA ABE, Nikkei staff writer
June 22, 2016 1:00 pm JST
BEIJING -- China's push to build infrastructure overseas has hit
another snag with the breakup of a venture to construct a high-speed railway in
the U.S., the latest in a series of setbacks that are starting to endanger a
key part of Beijing's growth strategy.
Train delays
The roughly 370km railroad linking Los Angeles and Las Vegas was to be
built by China Railway International USA, a unit of China Railway Group, and
American partner XpressWest. "Our ambitions outpace CRI's ability to move
the project forward timely and efficiently," XpressWest said in a
statement in early June announcing the end of the partnership.
The original plan had entailed installing Chinese-built equipment and
rolling stock at a total cost of $12.7 billion. China Railway International was
to be involved in all phases of the project, including operation. This would
have been China's first such project in a developed country.
But friction over funding and planning left prospects dim for breaking
ground in September as planned. The Chinese company also had trouble gaining
government approval. U.S. authorities "couldn't accept Chinese high-speed
rail," a source said.
The partnership had been a centerpiece of the U.S.-China cooperation
agreements hammered out last year in conjunction with Chinese President Xi
Jinping's U.S. visit that September. China Railway has blasted XpressWest's
decision as irresponsible and a mistake, and it has suggested that it could
consider legal action. The American company said it is searching
"aggressively" for a new partner.
This is not the only rail-related problem China has faced abroad. A
long-distance railway project in Thailand was shortened significantly in March
after the two sides failed to agree on funding and construction costs.
Construction of a high-speed railroad in Venezuela initially scheduled to be
finished in 2012 has stalled, with construction sites reportedly abandoned. And
a project in Indonesia for which China beat out Japan ran into delays owing to
missing documents and a dispute over a guarantee.
Another stumble came in late 2014, with a high-speed rail project
in Mexico that came to a dramatic halt. A contract awarded to a consortium led
by China Railway Construction was abruptly revoked by the Mexican government,
which said it wanted to ensure transparency in the bidding process. Bribery
accusations also surfaced surrounding a mansion given to the president's wife
by a local partner of the Chinese company. The project was shelved
indefinitely.
Morehttp://asia.nikkei.com/Politics-Economy/International-Relations/Chinese-railway-exports-derailing
"To prefer paper to gold is to prefer high risk to lower risk, instability to stability, inflation to steady long term values, a system of very low grade performance to a system of higher, though not perfect performance."
William Rees-Mogg
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?
World Bank lends $1bn to power India’s solar revolution
Michael
Holder 01 July 2016
The World Bank has agreed to lend India more than $1bn to help deliver the
country's ambitious plan to ramp up solar power generation to 100GW by 2022.Announced yesterday, the loan is to be provided over the 2017 financial year, representing the World Bank Group's largest-ever support for solar power in any country.
Although the loan is reportedly worth more than $1bn, the exact figure
has yet to be finalised, according to a World Bank spokesman.
However, the loan includes a $625m loan already approved by the World
Bank to support India's rooftop solar installation programme, drawing funds
from the bank as well as from the Clean Technology Fund of the Climate
Investment Funds (CIF) and additional public and private investor funding.
India has pledged to derive at least 40 per cent of its energy needs
from renewable sources by 2030, including plans for the development of 100GW of
solar energy by 2022 - an ambitious target considering the entire world's
installed solar power capacity in 2014 was 181GW.
Boosting power generation is crucial for India, where almost 300 million
people - around a quarter of the country's population - live without access to electricity.
Meanwhile, due to India's projected economic and population growth, the
country's demand for energy is expected to double by 2040.
More
The monthly Coppock Indicators finished June
DJIA: 17930
-14 Up NASDAQ: 4843 -08 Down. SP500: 2099 -10 Up.
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