Baltic Dry Index. 1324 -14 Brent Crude 52.62
“More than any other time in their history, GB & the EUSSR
face a crossroads. One path leads to despair and utter hopelessness. The other,
to total extinction. Let us pray they have the wisdom to choose correctly.”
With apologies to Woody Allen
We have reached the end of the month
and end of the quarter. We have reached the first “dress up Friday” of the
Trump administration, where Wall Street’s Great Vampire Squids get to adjust
their portfolios to match what the indexes have done over the quarter. As
collateral damage, trying to massage the indexes higher, unintentionally of
course.
Is this the end of Trumpmania? It’s
still too early to tell, but all week long the Fedsters have been hinting at possibly
four rate hikes to come in 2017, rather than their earlier perhaps just two or
three. Last week’s Congressional failure to tackle the abolition or reform of “Obamacare”
is still weighing on US markets too. Despite all three arms of the US
government being under the control of the Republican Party, will this be yet
another “do little” hung gridlocked Congress for two years?
We open, however, with big news from
South Africa. Is South Africa about to go the way of all Africa, and follow
Zimbabwe’s trail of self-imposed destruction and hardship? This morning it
looks like it will.
Zuma's Night of Long Knives Risks ANC Split, Credit Rating
by Sam Mkokeli and Michael CohenGordhan was replaced by Home Affairs Minister Malusi Gigaba, who has no financial or business experience, while lawmaker Sfiso Buthelezi takes over from Mcebisi Jonas as deputy finance minister. The cabinet overhaul came in a late-night move that threatens to split the 105-year-old ruling African National Congress and trigger a revolt against the president. The rand extended losses, heading for its worst week in more than a year.
“Those walking into the Treasury tomorrow will not reassure anyone that the top institution protecting South Africa’s fiscal stability is in safe hands,” said Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence. “The move invites a massive backlash from the anti-Zuma faction.”
Zuma’s decision to replace Gordhan, popular with investors because of his efforts to rein in spending, came in the face of opposition from three of the top six members of the ANC and its alliance partner, the South African Communist Party. Some cabinet ministers were said to be ready to turn against the president, who’s survived a series of corruption scandals and presided over the party’s worst-electoral performance since the end of apartheid in 1994 in municipal elections in August.
“This will exacerbate the existing divisions in the ANC,” Daniel Silke, director of Political Futures Consultancy in Cape Town, said by phone. “We are really in for a roller-coaster ride in terms of ANC cohesion.”
Gordhan’s ouster marked the end of a stormy relationship that began almost as soon as Zuma named him as finance minister in December 2015, four days after the president triggered a sell-off in the rand by replacing the respected Nhlanhla Nene with a little-known lawmaker. He clashed with his boss over the affordability of building nuclear power plants and the management of state-owned companies.
The reshuffle comes in Zuma’s last year as leader of the ruling party and while removing an opponent in a key position may strengthen his grip over the government, a backlash within the party would galvanize his detractors as he seeks to secure his choice as successor in a party election in December.
The rand tumbled, weakening 1.2 percent to 13.4399 per dollar by 2:40 a.m. in Johannesburg on Friday after slumping 1.9 percent the day before. It has plunged 7.5 percent this week, the most of 150 currencies tracked by Bloomberg.
More
In Brexit news, a little sanity from
highly respected US analyst “Mish,” Mike Shedlock and others. I see little point in trying to negotiate
anything, with a committee of 5 preening EU presidents, a rump-EU of 27
bickering veto nations, and a veto held by Belguim’s Walloonatics. Until the
French and German elections are out of the way, and new goverments are in
place, what is the point?
Bad Brexit Deal Better Than No Deal? Mathematical Idiocy! Odds of No Deal?
Posted Mish | March 29, 2017 9:54:00At the top of the list of absurd Brexit advice is the notion that a bad deal is better than no deal.
But that’s what Andrew Duff at the European Policy Center says.
Drop the Clichés
The British side should stop pretending that ‘no deal is better than a bad deal’. It is not. In fact, there’s really
nothing worse than no deal. So it’s not a clever tactic for the UK to start off negotiations by repeating a cliché that at best nobody believes and at worst sounds mildly threatening.
Mathematical Idiocy!
The position of Duff is mathematical idiocy. The EU demands as much as €60 billion in exit fees, adherence to four principles (that the EU itself does not follow), fishing rights, etc. Giving into those demands, or most of them, is like leaving for no reason at all.
Clearly, no deal is better.
Duff is nothing more than a staunch “Remainer” who refuses to accept reality.
€60 Billion in Exit Fees
Eurointelligence takes to task the notion that €60 Billion is remotely close to a starting point for negotiations.
Werner Mussler offers the most detailed account of the financial issues we have seen so far. The €60bn have several components, the largest being a back-of-the-envelope calculation on the EU’s open positions, also known as “reste à liquider“, spending commitments made in the past that have to be paid in the future. They stood at €217bn as of end-2015, and are likely to grow to €240bn by end-2018. Britain’s part would be about €29bn. In reality, that position would be lower since many of these funds are never called.
The second large position regards pension payments to EU employers – not just British – as the EU does not distinguish between UK and other nationals. Locking in a British net contribution for the lifetime of these payments seems ludicrous to us, but it is fair, of course, that the UK pays at least for the pensions of EU employees who are British nationals. If the EU insists on the UK paying for the pension of non-UK nationals post-Brexit, there can be no Brexit agreement. Mussler concludes that the €60bn is a purely political number.
We found ourselves in rare agreement with Holger Stelzner, the FAZ’s conservative economics editor, who asks what kind of community the EU is that wants to penalize a member state for exiting. He also notes that there is no legal basis for the €60bn claim.
Surrender
Duff would pay the full bill on the absurd grounds that a “bad deal is better than no deal”. The UK may as well hoist the white flag and sue for peace in Duff’s absurd model.
More
Don't worry about Brexit negotiations, no deal is better than what we have now with the EU
Edgar Miller29 March 2017 • 10:11am
In response to Theresa May’s view that "no
deal is better than a bad deal", Donald Tusk - subsequently joined by
Pascal Lamy and Jean-Claude Juncker - made it clear they believe such a
scenario would, in fact, be bad for the UK.While some of this rhetoric can be seen as the first plays of a negotiating strategy, the answer to this challenge is crucial for the UK Government to understand. The answer, based on our detailed analysis at Economists for Free Trade, is actually not as complicated as many will have you believe. Our work shows that not only is the WTO option better than a bad deal, it can actually be better than the deal we have at the moment.
First, however, we must deal with the myths surrounding what is misleadingly
called the “WTO option”. It’s a misleading term because every option for the UK
in its new trading arrangement will be a “WTO option”, given that the UK will
take up its full (founding) membership of the WTO and will trade under its
rules once we leave the Single Market.
In fact, there is no other way we can leave, regardless of whether we
have done a deal with the EU or not. The WTO will be merely the referee in our
trading relationships, as it already is with other trading nations of the world
such as the US, Japan, India, and so on.
We can reduce tariffs across the board (including to zero) or, for
example, reduce tariffs on selected goods that we do not produce in the UK.
Most importantly, if we do not reach a free trade agreement with the EU, it
will be the choice of the UK to decide what level of tariffs it sets against
the EU and – consequently – the rest of the world. It is that one single
decision that will decide whether the UK will prosper or not in this new
trading environment.
So what happens if we remove tariffs against the EU (and the rest of the
world), even if the EU (and the rest of the world) does not reciprocate? In
summary, a standard world trade model shows unilaterally removing tariffs
creates a long-term GDP gain of 4 per cent, a fall of 8 per cent in consumer
prices, and an increase in Treasury revenue of more than 7 percent, compared to
the status quo.
More
In USA news, black just keeps getting
blacker. A house divided cannot stand.
Republican disarray deepens as Trump attacks rebel conservatives
U.S. President Donald Trump lashed out on Thursday at Republican
conservatives who helped torpedo healthcare
legislation he backed, escalating a feud within his party that jeopardizes the
new administration's legislative agenda.
Trump threatened to try to defeat members of the Freedom Caucus - a bloc
of conservative Republicans in the House of Representatives - in next year's
congressional elections if they continued to defy him.
"The Freedom Caucus will hurt the entire Republican agenda if they
don't get on the team, & fast. We must fight them, & Dems, in
2018!" Trump wrote on Twitter on Thursday morning.
He later singled out three Freedom Caucus members by name, U.S.
Representatives Mark Meadows, Jim Jordan and Raul Labrador.
"If @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador would get on
board we would have both great healthcare and massive tax cuts &
reform," he said in one tweet.
"Where are @RepMarkMeadows, @Jim_Jordan and @Raul_Labrador?
#RepealANDReplace #Obamacare," he asked in another.
House conservatives fought back.
Labrador, one of the founders of the Freedom Caucus, urged Trump in a
tweet to "Remember who your real friends are. We're trying to help you
succeed."
"Most people don't take well to being bullied," said
Representative Justin Amash, who compared Trump's approach to what a child does
when he wants to "get his way."
Trump's deteriorating relationship with Republican House conservatives
could make it harder for him to pass his legislative agenda, which includes
rewriting the U.S. tax code, revisiting a healthcare overhaul and funding
construction of a wall along the U.S.-Mexican border.
More
Ex-Trump adviser Flynn talking to Congress about testifying in Russia probe: lawyer
Donald Trump's former national security adviser, Michael Flynn, has
offered to testify before congressional committees probing potential ties
between the Trump campaign and Russia but
wants protection against "unfair prosecution," his lawyer said on
Thursday.
"General Flynn certainly has a story to tell, and he very much
wants to tell it, should the circumstances permit," said a statement from
Flynn's lawyer, Robert Kelner.
Testimony from Flynn could help shed light on the conversations he had
with Russian Ambassador to the United States Sergei Kisylak last year when he
was the national security adviser for Trump's presidential campaign.
Kelner said discussions had taken place about Flynn's availability to
testify with officials of the intelligence committees of both the U.S. Senate
and the House of Representatives. Both committees are investigating allegations
of Russian meddling in the U.S. election campaign last year as well as possible
ties between the Trump campaign and Russians.
Flynn was forced to resign as Trump's national security adviser in
February for failing to disclose talks with the Russian ambassador before Trump
took office about U.S. sanctions on Moscow and misleading Vice President Mike
Pence about the conversations.
Questions remain about the scope of the discussions and what other
contacts took place between other Trump advisers with the Russians. Earlier
this week, the White House disclosed that Trump's son-in-law and White House
senior adviser, Jared Kushner, met executives of Russian state development bank
Vnesheconombank, or VEB, in December.
More
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig
von Mises.
At the Comex silver depositories
Thursday final figures were: Registered 34.14 Moz, Eligible 155.84 Moz,
Total 189.98 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
“The
only thing standing between the EUSSR and greatness is the EUSSR.”
With
apologies to Woody Allen
Today, who speaks for Europe? A picture of a wealth and
jobs destroying economic union, whose time has come and gone under a ton of
deceit and lack of reform. It lingers on awaiting death, when the next Lehman
hits, and a new global recession puts it out of its misery.
EU's Tusk says Brexit will be damage control for both sides
European Council President Donald
Tusk told reporters on Wednesday that Britain's formal exit notification made
it an unhappy day for London and Brussels and that difficult talks would simply
be about limiting damage for both sides.
Tusk, a former Polish prime minister who chairs meetings of EU leaders,
waved papers as he began a short statement.
"So here it is. Six pages. The notification from Prime Minister
Theresa May triggering Article 50 and formally starting negotiations for the
United Kingdom's withdrawal from the European Union," he told reporters
less than an hour after receiving the letter from the British ambassador.
"There is no reason to pretend today is a happy day, neither in
Brussels nor in London. After all most Europeans, including almost half the
British voters, wished that we would stay together not drift apart," he
continued.
Tusk, who will share a proposal of the negotiating guidelines with the
other 27 member states on Friday, said there was one positive from Brexit -
that it had made the remaining EU members more determined and united than
before ahead of "difficult negotiations".
Tusk said the EU's goal was to minimise the costs for EU citizens,
businesses and member states, whose leaders should adopt the negotiating
proposals on April 29.
"There is nothing to win in this process and I'm talking about both
sides. In essence this is about damage control," he said.
Concluding his brief remarks to the media in Brussels, Tusk said he had
little to add about Britain: "What can I add to this? We already miss you.
Thank you and goodbye."
Moody's sees UK/EU deal that keeps most of current trade relationship
Moody's credit ratings agency said on Wednesday it expected Britain and
the European Union will eventually strike a deal
that preserves most - but probably not all - of their current trading relationship
after Brexit.
"However, such an agreement would likely take years of negotiation,
and there are clear downside risks," Colin Ellis, Moodys chief credit
officer for Europe, said in a statement.
"Substantial new tariff or non-tariff barriers, in particular,
would have an adverse impact on UK sectors that trade extensively with the EU
market."
More
Italy privatization drive peters out as 2018 election moves closer
By Gavin JonesItaly's commitment to selling off public assets is petering out as politicians look ahead to elections early next year, making it harder to cut the country's huge public debt and leaving it vulnerable to any rise in interest rates.
In late 2015, then-Prime Minister Matteo Renzi said the debt would come down the following year for the first time in eight years, thanks partly to privatizations worth 0.5 percent of gross domestic product.
In the end, the state managed to sell less than a fifth of its targeted amount and the national debt rose to a new high of almost 133 percent of gross domestic product, the highest ratio in the euro zone after Greece.
Renzi confirmed the same privatization target for this year before he resigned in December after Italians rejected his planned constitutional reform in a referendum, but the prospects for selling state assets have continued to dwindle.
With the ruling Democratic Party (PD) embroiled in a bruising leadership battle and elections slated for early 2018, senior PD members including Renzi himself have recently voiced doubts about whether privatizations are a good idea after all.
"As elections come into sight, privatizations don't seem to be the government's focus," said Gianluigi Mandruzzato, head of economic analysis at BSI, part of EFG International (EFGN.S).
The most appetizing items on the government's slate are the state railway company, which is wholly state owned, and the post office, of which 65 percent remains in public hands after a first tranche was sold in 2015. But it failed to follow up with the sale of a planned second tranche of the post office in 2016, citing unfavorable market conditions.
While the market picture has improved, with the Milan bourse up 5.5 percent this year after falling about 10 percent in 2016, the political will seems to have disappeared.
Infrastructure Minister Graziano Delrio recently admitted to "problems" in selling the railways and Antonello Giacomelli, a junior industry minister, warned of the "dangers" of letting the post office fall into the hands of "foreign investment banks" which could close branches and cut staff.
"Politics has taken precedence over economic concerns and there are no privatizations on the horizon now," said Stefano Micossi, an economics professor and director general of Assonime, the association of Italy's listed companies.
"They are unpopular with the unions and politicians who see state companies as a source of jobs and favors to hand out," he added. "There is enormous resistance from the PD and also inside the government."
The Post Office, whose top management was changed by the Treasury this month, declined to comment on whether privatization would go ahead this year.
The state railways is supposed to spin off its high speed and long distance train businesses by July with a view to selling them by the end of the year, but has still not named the advisers for the spin-off.
The company said the privatization required government legislation, which it was discussing with relevant ministers.
More
European Council President Donald Tusk
Donald
Tusk confuses John Bull with God.
Technology
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?
Organic-inorganic heterostructures with programmable electronic properties
Date: March 29, 2017
Source: Technische Universität Dresden
Summary: Researchers have devised a novel supramolecular
strategy to introduce tunable 1D periodic potentials upon self-assembly of ad
hoc organic building blocks on graphene, opening the way to the realization of
hybrid organic-inorganic multilayer materials with unique electronic and
optical properties.
Vertical stacks of different two-dimensional (2D) crystals, such as
graphene, boron nitride, etc., held together by weak van der Waals forces are
commonly referred to as "van der Waals heterostructures." Such
sophisticated multilayer structures can be used as a versatile platform for the
investigation of various phenomena at the nanoscale. In particular, mechanical
superimposition of the 2D crystals generates 2D periodic potentials which
impart to system unconventional physical and chemical properties.
Here a team of European researchers applied a supramolecular approach to
form self-assembled organic molecular lattices with a controlled geometry and
atomic precision on top of graphene, inducing 1D periodic potentials in the
resulting organic-inorganic hybrid heterostructures. For that purpose,
molecular building blocks were carefully designed and synthesized. Those are
equipped with (i) a long aliphatic tail, directing the self-assembly and the
periodicity of the potential, and (ii) a photoreactive diazirine head group,
whose dipole moment modulates the surface potential of the underlying graphene
sheet. Upon irradiation with ultraviolet (UV) light before deposition on
graphene, the diazirine moiety is cleaved and a reactive carbene species is
formed. The latter is prone to react with solvent molecules, leading to a
mixture of new compounds bearing different functionalities.
----This
bottom-up supramolecular approach can be extended and applied to other
inorganic 2D materials such as transition metal dichalcogenides, paving the way
to more complex multilayer van der Waals heterostructures. These findings are
of great importance for the realization of organic-inorganic hybrid materials
with controllable structural and electronic properties featuring unprecedented
electrical, magnetic, piezoelectric and optical functionalities.
Another weekend, and talking heads will be busy on both
sides of England’s moat, and both sides of the Atlantic too. Strangely, they
won’t have very much to say. Below why the EUSSR will never reform, and EC
President Tusk forgot the Belgian Walloonatics. Common sense isn’t very common.
Have a great weekend everyone. The countryside is now aglow of brilliant white
blackthorn blossom.
European Council President Donald Tusk
The monthly Coppock Indicators finished February
DJIA: 20,812
+133 Up. NASDAQ: 5,825 +120 Up. SP500: 2,364 +115 Up.
