Wednesday, 28 December 2016

2017, A Global Trade War?



Baltic Dry Index. 961 Friday   Brent Crude 56.01

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

"In economics, hope and faith coexist with great scientific pretension."

John Kenneth Galbraith.

We open the day with better news from Japan for Japan. The stronger US dollar, weaker Yen of Trumpmania, is helping Japan’s auto exports, which in turn is helping boost Japan’s auto production. An unintended consequence, I think. There was better news from Vietnam too.

Japan auto production up 6.6% on year in November

By Chieko Tsuneoka Published: Dec 28, 2016 12:48 a.m. ET
TOKYO--Production of cars, trucks and buses in Japan increased 6.6% year over year in November, the Japan Automobile Manufacturers Association said Wednesday.
Vehicle output rose to 840,330 vehicles last month from 788,431 vehicles in the year-earlier period, the association said.

Japan's auto exports up 2.0% on year in November

By Chieko Tsuneoka Published: Dec 28, 2016 12:48 a.m. ET
TOKYO--Japan's exports of cars, trucks and buses increased 2.0% year over year in November, the Japan Automobile Manufacturers Association said Wednesday.
Exports totaled 422,981 vehicles last month, up from 414,870 vehicles in the year-ago period, the association said.

Vietnam Defies Asia Slowdown as GDP Growth Holds Above 6%

by Nguyen Dieu Tu Uyen
Vietnam’s economy expanded more than 6 percent for a second year, defying a regional slowdown to remain one of the world’s best performers as manufacturing rose.

Key Points

  • Gross domestic product increased 6.68 percent in the fourth quarter from a year earlier, up from 6.56 percent in the previous three months, the General Statistics Office said in Hanoi Wednesday
  • The economy grew 6.21 percent in 2016, compared with the median estimate of 6.3 percent in a Bloomberg survey

Big Picture

Vietnam ranks among the world’s fastest-growing economies as its exports remained resilient to a global trade slowdown that’s hurting Singapore and China. Companies setting up plants in the country, such as Samsung Electronics Co., are transforming the nation into a manufacturing hub for electronics goods, including smartphones. The Asian Development Bank forecast Vietnam’s economic growth at 6.3 percent in 2017.
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Staying with Asia, highly respected Asia commentator Stephen Roach, has a warning for President-elect Trump and his team. Starting a trade war with China risks disaster. The whole article is well worth the read. As China loses, Vietnam and others will pick up their loss.

Trump’s tough China talk fails one key reality check

By Stephen S. Roach Published: Dec 27, 2016 12:20 p.m. ET

It is foolish to think that the U.S. holds all the cards in this economic relationship

NEW HAVEN (Project Syndicate) — During his campaign, U.S. President-elect Donald Trump used foreign trade as a lightning rod in his supposed defense of the beleaguered American middle class.
This is not an uncommon tactic for candidates at either end of the political spectrum. What is unusual is that Trump has not moderated his antitrade tone since winning. Instead, he has upped the ante and fired a series of early warning shots in what could turn into a full-blown global trade war, with disastrous consequences for the United States and the rest of the world.
Consider Trump’s key personnel decisions. Industrialist Wilbur Ross, the Commerce Secretary-designate, has been vocal in his desire to abrogate America’s “dumb” trade deals. Peter Navarro, an economics professor at the University of California at Irvine, will be the director of the National Trade Council — a new White House policy shop to be set up on a par with the National Security Council and the National Economic Council. Navarro is one of America’s most extreme China hawks. The titles of his two most recent books — “Death by China” (2011) and“Crouching Tiger: What China’s Militarism Means for the World” (2015) — speak volumes about his tabloid-level biases.
Ross and Navarro were also co-authors of an economic-policy position paper published on the Trump campaign website that stretched any semblance of credibility. Now they will get the opportunity to put their ideas into practice. And, in fact, the process has already begun.
Trump has made it clear that he will immediately withdraw the U.S. from the Trans-Pacific Partnership, in keeping with Ross’s criticism of America’s trade deals. And his brazen willingness to challenge the 40-year-old “One China” policy by speaking directly with Taiwanese President Tsai Ing-wento say nothing of his subsequent anti-China tweets — leaves little doubt that his administration will follow Navarro’s prescription and take dead aim at America’s largest and most powerful trading partner.

----But the story doesn’t end there. The Trump administration is playing with live ammunition, implying profound, global repercussions. Nowhere is this more evident than in the likely Chinese response to America’s new muscle-flexing. The Trump team is dismissive of China’s reaction to its threats, believing that the U.S. has nothing to lose and everything to gain.
Alas, that may not be the case. Like it or not, America and China are locked in a co-dependent economic relationship. Yes, China depends on U.S. demand for its exports, but the U.S. also depends on China: the Chinese own over $1.5 trillion in U.S. Treasury securities and other U.S. dollar-based assets. Moreover, China is America’s third-largest export market (after Canada and Mexico) and the one that is expanding most rapidly — hardly inconsequential for a growth-starved U.S. economy. It is foolish to think that America holds all the cards in this bilateral economic relationship.
More
Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of “Unbalanced: The Codependency of America and China.” This article has been published with the permission of Project SyndicateTrump’s Gathering Trade War

Quoting Mao, China says Taiwan, HK independence supporters will fail 'like flies'

Wed Dec 28, 2016 | 12:20am EST
Quoting a poem by the founder of Communist China Mao Zedong, China's government said on Wednesday that the efforts by Hong Kong and Taiwan independence supporters to link up were doomed to fail, as they would be dashed to the ground like flies.

Chinese leaders are increasingly concerned about a fledgling independence movement in the former British colony of Hong Kong, which returned to mainland rule in 1997 with a promise of autonomy, and recent protests in the city.

China is also deeply suspicious of Taiwan President Tsai Ing-wen, elected earlier this year, who Beijing suspects is pushing for the self-ruled island's independence.

She says she wants peace with China, which considers the island an unruly, breakaway province.

Beijing has already warned about independence activists in both places linking up - Hong Kong activists have visited Taiwan this year - and went further at a routine news conference by China's policy-making Taiwan Affairs Office.

"A small coterie of Taiwan independence forces are trying in vain to link up with Hong Kong independence (forces) to split the country, which cannot succeed," spokesman An Fengshan said.

"It's just like that saying 'On this tiny globe, a few flies dash themselves against the wall'," An said, quoting a 1963 poem by Mao, lines usually taken to mean that China does not fear its enemies.

"In the end they'll find themselves broken and bleeding," he added, without elaborating, using words that are not in the poem.

The comments come amid renewed tension over Taiwan, following U.S. President-elect Donald Trump's telephone call with Tsai that upset Beijing.
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Despite Trumpmania, 2017 looks to be a very rocky road.

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

At the Comex silver depositories Tuesday final figures were: Registered 36.15 Moz, Eligible 147.43 Moz, Total 183.58 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, more on how the American War Party intends to make World War Three inevitable. From London it doesn’t look much like incoming President Trump can do much to stop it, assuming he were so inclined. Supplying “manpads” to anyone in Syria is USA madness. They’ll quickly get sold on and fired at commercial planes all across Europe and North Africa.

Russia calls U.S. move to better arm Syrian rebels a 'hostile act'

Tue Dec 27, 2016 | 6:58am EST
Russia said on Tuesday that a U.S. decision to ease some restrictions on arming Syrian rebels had opened the way for deliveries of shoulder-fired anti-aircraft missiles, a move it said would directly threaten Russian forces in Syria.
Moscow last year launched a campaign of air strikes in Syria to help President Bashar al-Assad and government forces in a conflict with rebels, some of whom are supported by the United States.
Foreign Ministry spokeswoman Maria Zakharova said the policy change easing some restrictions on weapons supplies to rebels was set out in a new U.S. defence spending bill and that Moscow regarded the step as a hostile act.
U.S. President Barack Obama signed the annual defence policy bill into law last week.
"In the administration of B. Obama they must understand that any weapons handed over will quickly end up in the hands of jihadists with whom the sham 'moderate' opposition have long acted jointly," Zakharova said in a statement.
"Such a decision is a direct threat to the Russian air force, to other Russian military personnel, and to our embassy in Syria, which has come under fire more than once. We therefore view the step as a hostile one."
Zakharova accused the Obama administration of trying to "put a mine" under the incoming administration of President-elect Donald Trump by attempting to get it to continue what she called Washington's "anti-Russian line."
During his election campaign, Trump said he was keen to try to improve relations with Moscow and spoke positively about President Vladimir Putin's leadership skills.
A back-and-forth exchange between Trump and Putin over nuclear weapons last week tested the Republican's promises to improve relations with Russia.
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U.S. committed to NATO, Baltic security: McCain

Tue Dec 27, 2016 | 7:10am EST
The United States is committed to the security of the Baltic region and NATO, Republican senator John McCain said in the Estonian capital on Tuesday, during a visit seen as a bid to soothe concerns over the policy of President-elect Donald Trump.
Trump unnerved many in Estonia, Lithuania and Latvia by saying on the campaign trail he would consider a country's contributions to the NATO alliance before coming to its aid.
Russian military involvement in Ukraine and Georgia has stoked fears in the Baltics their former Soviet master might eventually try something similar there.
"I think the presence of the American troops here in Estonia is a signal that we believe in what Ronald Reagan believed, and that is peace through strength," McCain told reporters in the Estonian capital.
"And the best way to prevent Russian misbehaviour by having a credible, strong military and a strong NATO alliance."
The U.S. stationed about 150 troops in each of the three Baltic countries and Poland in April 2014.
On a three-day visit to the Baltics with fellow Republican senator Lindsey Graham, McCain said he did not expect the U.S. to remove sanctions against Russia, imposed after its annexation of Crimea in 2014.
"That is certainly not the case today as I know it", he said.
He also said that the United States, regardless of who was its president, would have "a strong and significant response" as long as Putin continued "to occupy Crimea and has invaded eastern Ukraine and continues to threaten other nations in the region."
More

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?

Panasonic to invest over $256 million in Tesla's U.S. plant for solar cells

Tue Dec 27, 2016 | 5:08am EST
Panasonic Corp (6752.T) will invest more than 30 billion yen ($256 million) in a New York production facility of Elon Musk's Tesla Motors (TSLA.O) to make photovoltaic (PV) cells and modules, deepening a partnership of the two companies.

Japan's Panasonic, which has been retreating from low-margin consumer electronics to focus more on automotive components and other businesses targeting corporate clients, will make the investment in Tesla's factory in Buffalo, New York.

The U.S. electric car maker is making a long-term purchase commitment from Panasonic as part of the deal, besides providing factory buildings and infrastructure.

In a joint statement on Tuesday, the two companies said they plan to start production of PV modules in the summer of 2017 and increase to one gigawatt of module production by 2019.

The plan is part of the solar partnership that the two companies first announced in October, but which did not disclose investment details.

Tesla is working exclusively with longtime partner Panasonic to supply batteries for its upcoming Model 3, the company's first mass-market car. Panasonic is also the exclusive supplier of batteries to Tesla's Model S and Model X.

The monthly Coppock Indicators finished November

DJIA: 19124  +53 Up NASDAQ:  5324 +41 Up. SP500: 2198 +58 Up

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