Thursday, 9 March 2017

America First.

Baltic Dry Index. 1045 +12   Brent Crude 53.50

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

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

John Kenneth Galbraith

As we approach the halfway point of President Trump’s first hundred days, today we take a break from the insane asylum known as the EUSSR, and take a look at the big picture in America. The consensus now favours a third baby step rate hike by the Fed next week, with serious implications for America, Europe, and the rest of the world.

5 ways the Fed rate hikes will hit global markets

By Matthew Lynn Published: Mar 8, 2017 12:57 p.m. ET

Expect more inflation, defaults, and maybe a trade war between the U.S. and Europe

LONDON (MarketWatch) — One interest-rate hike was a tweak. A second is normalization. And a third? That is going to look like a whole raising cycle.
It now looks almost certain that next week the Federal Reserve will raise interest rates for the third time, and that will be the first step on a clear path toward getting the price of money back to the 3% to 4% range.
That is a decision that will be taken for the United States. But American interest rates are also a key variable for the entire global economy.
So how will higher Fed rates impact the rest of the world? It will mark the end of super-cheap money, inflation will start to rise again, savings will head back up, government budgets will come under huge pressure, and the simmering trade tensions between the United States and Europe will explode into the open as the euro EURUSD, -0.0664%  tumbles in value.

Traders now see a more than 50% chance of a rate rise from the Federal Reserve at its meeting next week. It is not a completely done deal, but it is very close to it. The economy is growing at a respectable rate, the stock market is buoyant, and it has survived (so far, at least) the election of one of the odder presidents in the country’s history. It is hard to see anymore what kind of “emergency” the Fed is coping with — so it makes sense that “emergency” rates should gradually come to an end.
If another quarter point doesn’t do too much damage, then we can expect to see a steady flow of rate hikes, until the price of money gets back to the 3%-4% range. So how will that impact the rest of the world?
Here are five big trends to watch.

First, it will mark the end of the era of super-cheap money. The Fed rate is still the most important in the world, the benchmark for the rate on every other financial asset. If that gets back to normal, then the price of everything will start to shift as well. True, the unique problems of Japan and the eurozone mean rates might stay low for longer in those two regions.
But elsewhere, they will inevitably start to rise. Expect the U.K. to follow, and probably Switzerland, Sweden and Norway in due course, as well as Canada and Australia. Even more importantly, the price of corporate debt will also go up.

Bill Gross's Bond Bear Market Looms as 10-Year Yield Nears 2.6%

by Brian Chappatta
To Bill Gross, the bear is about to roar in the $13.9 trillion Treasuries market.

Benchmark 10-year yields reached 2.58 percent Wednesday, the highest since December, on a report showing unexpectedly strong hiring in February. They’re approaching the 2.6 percent mark that Gross, the bond-market veteran at Janus Capital Management, said will signal the start of a bear market, should it hold on a weekly basis.

From Fibonacci technical analysis to the potential for a pickup in mortgage-related hedging, there’s plenty of backing for that as a crucial level. What’s more, traders in short-term interest rates are geared up for a hawkish message from next week’s Federal Reserve meeting. If they’re right, yields could be set to surge.

US Debt Clock

But will America be first? Will the ECB tighten their interest rates as early as their meeting later today? I think that unlikely, but they might signal an end to their dangerous negative interest rate experiment.

‘Wildcard’ for ECB rates and 4 other things to watch at Thursday’s meeting

By Sara Sjolin Published: Mar 9, 2017 1:24 a.m. ET

2% inflation rate may not be enough to trigger change as core reading remains lower

Forget about the U.S. Federal Reserve’s potential interest-rate rise this month for a minute. Over in Europe, there’s another exciting policy meeting on tap, when the European Central Bank gathers this Thursday to announce its latest call on rates and easing measures.
The meeting takes place against a significant development in the eurozone’s economic landscape that could shake up the monetary policy outlook for the region: Inflation is finally back at the ECB’s target of around 2% for the first time since 2013. Inflation is one of the key measures the central bank uses to decide on interest rates and other stimulus measures.
Add to that the eurozone purchasing managers’ index jump to a 70-month high and gross domestic product growth outpacing that of the U.S. and you’d have the perfect recipe for a rate rise, right?
Not quite. Analysts argue that it’s too soon to even talk about higher rates but that Thursday’s meeting instead could produce a change in the forward guidance offered by central bankers as well as an attempt to keep the “truce” between the hawks and doves on the Governing Council.
The rate decision comes out at 1:45 p.m. Frankfurt time, or 7:45 a.m. Eastern U.S. Time, followed by a press conference by ECB boss Mario Draghi at 2:30 p.m. Frankfurt time.
Here are the key things to watch for at the meeting:

In other news from America, returning manufacturing jobs are mostly going to be filled by increasing the use of robots.  And this is a problem not just for America.  The decade ahead is going to shake up employment/unemployment  reality on both sides of the Atlantic.

The Hard Truth About Lost Jobs: It's Not About Immigration

Published on February 27, 2017
Few topics spike the ire of American voters like jobs, immigration, and trade, no doubt because the three are inexorably tied together, at least in the rhetoric of politicians who point to immigration and trade as the villains of the American jobs story.
---- It’s no wonder. Jobs -- the lack of them, generally, and the lack of good-paying ones, particularly -- is a hot button for many Americans who are suffering from stagnant wages or worse, up-ended careers. While immigrants and trade may be convenient whipping boys (why else would politicians lite on them so readily?), the preponderance of evidence suggests that it is automation, not immigration, that is eating American jobs.
The idea that we can “bring back jobs” by renegotiating trade deals to restore lost manufacturing jobs is simply wrong.
---- We focus initially here on examples from the manufacturing sector as it is the first segment consumed by automation. As Ben Casselman of Nate Silver’s group FiveThirtyEight summed it up, Manufacturing Jobs Are Never Coming Back.
Automation and advanced technology – more than any other factor – are responsible for job loss across the United States. That’s the finding of Ball State University’s Center for Business and Economic Research’s report, The Myth and The Reality of Manufacturing in America, which reported that 88% of manufacturing jobs were lost to advancements in technology and automation. That’s hundreds of thousands of jobs moved from human to machine labor. The American Enterprise Institute clearly states the situation in output and employment figures: In inflation-adjusted constant 2014 dollars, US manufacturing output has increased more than five-fold over the last 67 years, from $410 billion in 1947 to a record-setting level of output last year of $2.09 trillion. From a peak of nearly 19.5 million US factory workers in 1979, the number of manufacturing employees has steadily declined to a recent low in 2010 of 11.6 million workers before rebounding to slightly more than 12 million employees last year (2014). This is not unlike our transformation from an agricultural society to and industry society, AEI notes: With fewer than 2% of America’s workers, we produce more agricultural output today in the US than when much greater numbers and much higher shares of the nation’s employees were working on farms.  Jobs haven’t been outsourced; they’ve become outdated.
Just as farm workers moved to factories, so too did manufacturing workers shift to find replacement work in the available space of retail. Unlike the move from agricultural to industrial, the impact was a significant income loss from high or middle wage to low wage jobs, and there is understandable frustration. The next wave of automation is now beginning to impact the retail and service sectors as evidenced by Wendy's restaurants recent announcement to replace counter service workers in their stores with kiosks.

How the U.S. could bring back up to half the manufacturing jobs moved overseas

By Harry Moser and Sandy Montalbano Published: Mar 8, 2017 11:47 a.m. ET

Many companies that offshored manufacturing didn’t really do the math

For decades, U.S. companies have been chasing cheap labor offshore and then importing products to sell in the U.S. market. Now, Trumponomics, a broader focus on Total Cost of Ownership (TCO quantifies all relevant costs, risks and strategic factors) and advanced manufacturing together have the potential to end the manufacturing stagnation of the last 30 years and create millions of manufacturing jobs in the U.S.
Over the last 20 years, the boom in offshoring drove our goods trade deficit up by about $640 billion a year, costing us three to four million manufacturing jobs.
The most direct way to reduce the trade deficit, as President Trump has said he wants to do, is to substitute domestic production for imports, i.e. via reshoring and foreign direct investment (FDI) in the U.S. The result of eliminating the trade deficit would be a rapidly growing manufacturing workforce for the first time in 40 years, a rise in average wages and a 25% to 30% increase in manufacturing output and jobs.
Many companies that offshored manufacturing didn’t really do the math. An Archstone study revealed that 60% of offshoring decisions used only rudimentary cost calculations, typically just price or labor costs and ignored other costs such as freight, duty, carrying cost of inventory, delivery and impact on innovation. Most of the true risks and cost of offshoring were being ignored.
Now is a good time to re-evaluate the cost of domestic vs. offshore production, and not just because of the risk of an angry tweet from the president.
Chinese wages have been rising by about 15% a year since 2000. As a result, the Chinese labor cost in dollars per unit of output is now about four times what it was in 2000. We estimate that about 25% of what is now offshore would come back if companies quantified the total cost. These products would generally have characteristics such as high freight cost vs. labor cost, frequent design changes, volatility in demand, intellectual property risk, and regulatory and compliance requirements.

“I think we agree, the past is over.”

President George W. Bush.

At the Comex silver depositories Tuesday final figures were: Registered 35.46 Moz, Eligible 152.82 Moz, Total 188.28 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, the all against all, perfidious proxy war in the Middle East, following Bush and Blair’s disastrous blunder in attacking Iraq. Shame about the poor Iraqi, Syrian and Kurdish people, the collateral damage of Bush and Blair.
"Oh! What a tangled web we weave, when first we practice to deceive"
“Marmion” by Sir Walter Scott.

U.S., Russia Counter Erdogan in Syria as Kurds Get Shield

by Henry Meyer and Selcan Hacaoglu
8 March 2017, 05:00 GMT 8 March 2017, 06:16 GMT
The U.S. and Russia have found themselves teaming up for the first time in the war in Syria -- against a country both call an ally: Turkey.

In Manbij, a town in northern Syria about 40 kilometers (25 miles) from the Turkish border, U.S. and Russia moved this week to effectively block a drive by Turkey to seize it. A U.S. deployment and a Russian-brokered deal with Syrian forces created buffer zones that headed off any Turkish drive against the Kurdish forces -- seen by Washington as key allies against Islamic State, though Turkey views them as terrorists -- who now hold the town.

As the outside powers fighting in Syria step up the fight to crush Islamic State, the battle is laying bare their often-conflicting loyalties. With all sides pushing into terrorist-held territory, the potential for clashes between the players is rising.

Russian President Vladimir Putin is at the center of this thanks to his military campaign, but he must keep allies like Syria and Iran on side even as tries to cooperate with the U.S. and Turkey. Turkish President Recep Tayyip Erdogan comes to Moscow on Thursday with his defense minister for talks with Putin.

“This is a unique circumstance when the U.S. and Russia have found themselves thrown together against Turkey because of the Kurds, who are directly sponsored by Washington and get Russian support too,” said Alexander Shumilin, head of the Middle East Conflict Center at the Institute for U.S. and Canada Studies, a government-run research group in Moscow.

‘Flag Competition’

Turkish Prime Minister Binali Yildirim said his country was seeking a “trilateral mechanism” to clear the area of “terrorist groups.” In Manbij, “the U.S. is raising a flag, Russia is raising a flag nearby, things have turned into a flag competition,” Yildirim said in an interview with ATV television.

Later on Tuesday, Yildirim said countries operating in Syria must coordinate their actions to eliminate all terrorist groups.

“Turkey told its counterparts that no terror group can be destroyed by using another terror group,” he said in Ankara. “If coordination can’t be established, then there could be a risk of confrontation, which we do not wish for.”

The standoff has emerged as Russia has taken the diplomatic lead in seeking to resolve the war in Syria after its air campaign that started in 2015 succeeded in bolstering President Bashar al-Assad.

Under pressure in Washington over allegations of Russian interference in the U.S. election, U.S. President Donald Trump has backed off his campaign pledge to cooperate on fighting terrorism in Syria with Putin. Still, last month U.S. warplanes helped indirectly in the Russian-backed Syrian offensive to recapture the historic city of Palmyra, carrying out 23 strikes over nine days, as much as during the rest of February. Now, faced with Turkey, the two powers appear to have taken a tactical joint stance.

In a bid to lower the tensions, U.S. Joint Chiefs of Staff Chairman Joseph Dunford, Russian Chief of the General Staff Valery Gerasimov and Turkey’s Chief of the General Staff Hulusi Akar met in the southern Turkish city of Antalya on Tuesday.

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?

Towards mastering terahertz waves?

Scientists have perfected a technique based on the usage of graphene, that allows for terahertz waves to be controlled accurately, paving the way for numerous applications

Date: March 7, 2017

Source: Université de Genève

Summary: Terahertz waves allow for the detection of materials that are undetectable at other frequencies. However, the use of these waves is severely limited by the absence of suitable devices and materials allowing to control them. Researchers have developed a technique based on the use of graphene, which allows for the potentially very quick control of both the intensity and the polarization of terahertz light.

The terahertz waves span frequency ranges between the infrared spectrum (used, for example, for night vision) and gigahertz waves (which find their application, among other, in Wi-Fi connections). Terahertz waves allow for the detection of materials that are undetectable at other frequencies. However, the use of these waves is severely limited by the absence of suitable devices and materials allowing to control them. Researchers at the University of Geneva (UNIGE), working with the Federal Polytechnic School in Zurich (ETHZ) and two Spanish research teams, have developed a technique based on the use of graphene, which allows for the potentially very quick control of both the intensity and the polarization of terahertz light. This discovery, presented in Nature Communications, paves the way for a practical use of terahertz waves, in particular for imaging and telecommunications.
Graphene is a single atomic layer of carbon atoms that form a honeycomb network. It is found for example in graphite, the main constituent of pencil rods. In the Department of Quantum Matter Physics of UNIGE's Faculty of Sciences, Alexey Kuzmenko's team has been working on graphene's physical properties for several years. "The interaction between terahertz radiation and the electrons in graphene is very strong and we have therefore come to the hypothesis that it should be possible to use graphene to manage terahertz waves," Kuzmenko explains.
Working within the framework of the European project Graphene Flagship, scientists have made a graphene-based transistor adapted to terahertz waves. "By combining the electrical field, which enables us to control the number of electrons in graphene and thus allows more or less light to pass through, with the magnetic field, which bends the electronic orbits, we have been able to control not just the intensity of the terahertz waves, but also their polarisation," comments Jean-Marie Poumirol, a member of the UNIGE research team and the first author of the study. "It is rare that purely electrical effects are used to control magnetic phenomena." Scientists are now able to apply such control over a complete range of terahertz frequencies.

The monthly Coppock Indicators finished February

DJIA: 20,812  +133 Up. NASDAQ:  5,825 +120 Up. SP500: 2,364 +115 Up.

No comments:

Post a Comment