Thursday 6 April 2017

Trump v Xi – Game On.



Baltic Dry Index. 1223 -32       Brent Crude 54.07

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

Operator! Give me the number for 911!

Christine Lagarde, with apologies to Homer Simpson.

Ding, ding, ding. In the red corner, President Trump representing America First and trade protectionism. In the blue corner, President Xi Jinping of China, representing China First and trade liberalism.  In the front row seats, the G-20, the EUSSR, the World Bank, the IMF, the BIS, the WTO, the BOE, the ECB and host of other central banksters.  In the cheaper seats, CEOs from the global multi-national power house corporations, that employ collectively, millions.  In this two day match, will America First emerge on top, or will it be a victory for the Middle Kingdom.  With the unpredictable President Trump on home turf in Florida, he’s the people’s favourite, but the bookies have it listed as a toss up.

Below, how the markets reacted going in to the big day.

Nikkei drops to 4-month low as Asian markets pull back

Published: Apr 5, 2017 11:08 p.m. ET

Traders fret over Fed news, brace for U.S.-China meeting

Stocks in Japan hit lows for the year following a down day on Wall Street, as global investors fretted over the direction of U.S. policy and its effects on asset prices.

Traders were also positioning themselves ahead of the summit meeting between President Donald Trump and China’s top leader, Xi Jinping.

At their March meeting, officials at the Federal Reserve agreed that later this year, they would begin shrinking a $4.5 trillion portfolio of Treasury and mortgage securities, according to minutes released Wednesday. 
While the unwinding was long anticipated, the timing of the move wasn’t clear until now.

“I don’t think anybody had really thought the Fed had been thinking about that so early on,” said Andrew Sullivan, managing director of Haitong International Securities. He added that shrinkage “is effectively a rate rise because you’re restricting capital.”

The minutes also noted that there was discussion about the high valuations of U.S. equities; their price-to-earnings ratios based on the next year’s anticipated profit has been at the highest levels in more than a decade.

That means there is “no short term catalyst for U.S. equity to go up,” said Kyoya Okazawa, head of global markets for BNP Paribas in Japan, and less support for equities elsewhere.
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The stock market just blew its biggest lead since February 2016

Published: Apr 5, 2017 11:09 p.m. ET

Nasdaq Composite had been on track to log its 22nd record for 2017, until it completed a nearly 180-degree turn

What a whiff! After staging what was shaping up to be a healthy stock-market surge, equity-index benchmarks buckled Wednesday, ending squarely in the red and registering their worst reversal since February 2016.

The Dow Jones Industrial Average DJIA, -0.20% which briefly boasted a nearly 200-point gain, up 1%, erased all those gains—and then some—to end down 0.2% at 20,648.15. According to Dow Jones data, that reversal marked the largest blown lead for the market since Feb. 10, 2016 (see chart below which shows the day’s action, with the red line representing Tuesday’s close).

It was also the worst pivot lower for the S&P 500 index SPX, -0.31% which was as high as 0.8%, but ended down 0.3% at 2,352.95, also in about 14 months.

Still, the tech-heavy Nasdaq Composite Index’s COMP, -0.58% retreat might be the most gutting. The gauge touched an all-time trading high of 5,936.39 and was on track to mark its 22nd closing record of 2017, up 0.6%, until things unraveled in the final hour or so of trading (see chart below).

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Why Xi Jinping Needs to Tread Carefully When He Meets Trump

Bloomberg News
Nothing is supposed to go off script for President Xi Jinping in what is the equivalent of an election year in one-party China.

Enter Donald Trump, who rarely stays on message and regularly bashes China on Twitter. The U.S. president will host Xi on Thursday and Friday at his Mar-a-Lago resort in Florida for the first face-to-face meeting between the pair. On the agenda will be everything from trade to North Korea’s nuclear threat.

For Xi, the meeting represents an opportunity to establish a personal rapport with Trump and potentially stave off a trade war that threatens to make China’s economic slowdown much more painful. Yet it also carries risk: An errant Trump tweet or off-the-cuff remark seen as disrespectful could give ammunition to party members who want to thwart Xi’s reform plans.

“Major conflict with the United States in the first half of the year would be very bad news for Mr. Xi because it could undermine the leadership credentials he’s been cultivating for the past five years,” said Zhang Lifan, a Beijing-based historian whose father was a minister under Communist rule before being purged in the Cultural Revolution. “It’s the most unstable, risky and fragile moment for Mr. Xi domestically. Trump might use this to put pressure on him.”
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In worrying news for Trumpmania, US auto sales seem to have lost fifth gear. The Fed has picked an odd time to start raising interest rates and start shrinking their US Treasury bonds and mortgage portfolios.

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.

U.S. Car Demand Collapse Jeopardizes Trump's Auto Factory Push

By David Welch and Jamie Butters
4 April 2017, 01:06 BST 4 April 2017, 13:52 BST
Ford Fusion: down 37 percent. Chevrolet Malibu: down 36 percent. Toyota Prius: down 29 percent.
As those grim numbers suggest, the U.S. auto industry was blindsided last month by just how fast sedans have fallen out of favor with Americans now embracing roomier sport utility vehicles. Family-friendly crossovers may be more profitable, but the quick shift is causing headaches.

The swerve in consumer taste is just one of the forces -- along with slumping used-car values and a pullback in subprime auto lending -- that are changing the equation for manufacturers as President Donald Trump leans on the industry to build new plants and boost hiring. That’ll be hard to pull off: A glut of both new and used vehicles on the market has sparked an incentives battle, meaning new production lines are the last thing the companies need.

Industrywide deliveries in March were supposed to show a rebound following small dips in January and February. But the annualized sales pace, adjusted for seasonal trends, slowed to 16.6 million vehicles, from 16.7 million a year earlier, according to researcher Autodata Corp. Analysts had projected the rate would accelerate to about 17.2 million.

Automakers set a record in the U.S. last year, with 17.6 million vehicles sold.

“I’ve been expecting a slowdown for a while,” said Morningstar Inc. analyst David Whiston. “It shouldn’t be a surprise. Once you hit peak sales, it seems like you only have bad news ahead.”

Ample discounts have failed to spur demand for models like General Motors Co.’s Chevrolet Malibu and Ford Motor Co.’s Fusion, which are being surpassed by crossovers as the new American family vehicle of choice. The Toyota Prius sedan model continued its slump despite a thorough makeover in late 2015 that improved the staid hybrid’s ride.
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In other pre-summit US news, some very big wigs have turned antsy.

This is what scares Nobel Prize-winning economist Robert Shiller about the economy

Published: Apr 4, 2017 11:08 a.m. ET
Concerns about robots taking jobs are not just confined to low-wage workers, who are seen as more at risk to trends of automation, but also on the minds of some of the most noted thinkers about the economy.
Robert Shiller, the Nobel-Prize winning economist who is the Sterling Professor of Economics at Yale University, said that automation and artificial intelligence are the trends that most concern him about the economy’s prospects going forward.
“A.I. is a deeply challenging thing,” he said. “People who are growing up today don’t know if they’re preparing for the right career, and challenges associated with that could lead to secular stagnation.”
Shiller said that even he wasn’t immune to this threat, noting how videos of his lectures at Yale could be accessed free online. “If you can do that, then what’s the additional value of attending [in person]? Sometimes it makes me feel like I’ve outmoded myself.”
Concerns over automation and artificial intelligence have existed for years, but talk over them has accelerated amid new technologies—such as driverless cars and “bot” programs that can mimic human speech patterns—that threaten to disrupt ever-larger segments of the economy. According to recent research, every industrial robot takes up to six jobs, meaning that up to 6 million jobs could be lost to automation over the coming decade.

Last year, the White House’s annual economic report of the president (under President Barack Obama) forecast an 83% chance that automation will take a job with an hourly wage below $20, a 31% chance automation will take a job with an hourly wage between $20 and $40, and just a 4% chance automation will take a job with an hourly wage above $40.
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Dimon Warns ‘Something Is Wrong’ With the U.S.

by Laura J Keller
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has two big pronouncements as the Trump administration starts reshaping the government: “The United States of America is truly an exceptional country,” and “it is clear that something is wrong.”

Dimon, leader of world’s most valuable bank and a counselor to the new president, used his 45-page annual letter to shareholders on Tuesday to list ways America is stronger than ever -- before jumping into a much longer list of self-inflicted problems that he said was “upsetting” to write.

Here’s the start: Since the turn of the century, the U.S. has dumped trillions of dollars into wars, piled huge debt onto students, forced legions of foreigners to leave after getting advanced degrees, driven millions of Americans out of the workplace with felonies for sometimes minor offenses and hobbled the housing market with hastily crafted layers of rules.
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In Brexit news, the UK’s media, Berlin Broadcasting Corporation excepted, are starting to get over project fear. The continentals are in delusion and deep denial.

“I am 150% in favour of having Britain as a constructive member state of the European Union. We need Britain.”

J-C “Glenlivet” Juncker.

Wednesday 5 April 2017 4:15am

Forget a €60bn Brexit bill: The EU should pay Britain to leave

----Likewise, supporters of remaining tied to the EU warned us we would face a metaphorical plague of locusts were we to abandon their sinking ship.

And so it has come to pass. Well sort of. We may not have had George Osborne’s emergency recession budget – and all the commitments to stay and invest in Britain by foreign manufacturers have certainly confounded the bleak predictions of post-Brexit industrial ruin – but that’s because businesses live in the real world while politicians and their favoured economists do not.

In the unreal world of EU mandarins and politicians, the gesture politics are still alive and well. We can expect more examples like Spain’s claim to Gibraltar being used as a joker in the pack to sow division in our ranks, but the most outrageous ploy is claiming the UK owes a €60bn separation bill – and it needs to be challenged with ridicule and hard facts.

If, as EU Council president Donald Tusk says, trade talks cannot commence until good progress is made on severance, then we should be prepared to sit down to their empty chairs.

When you leave a club – be it boules or bowls – you are obliged to pay for any outstanding bar bill, but you would tell the club secretary what to do with any request to pay for the greenkeepers’ pensions. You have paid your membership fees dutifully every year to cover such costs, but after you depart they become the responsibility of the remaining members.

Fortunately, this is the approach being taken by our own chancellor Philip Hammond, who has said he does not recognise the sum being mentioned. While this riposte is to be welcomed, it still reflects the unreal world of politics – what is required is for proper negotiations to open up by discretely letting it be known the UK has its own request for compensation after leaving.

Not with the intention of receiving a cent, but to point out the absurdity of the severance argument and to provide a suitable cancelling-out sum.

At the very least, the UK could legitimately claim that Britain’s share of the assets that we have paid for from all of our net contributions over the last 44 years is worth at least as much as that €60bn.

Think of all those politicians’ palaces in Brussels and Strasbourg, the eurocrat offices in European capitals, the consular buildings around the world, and the courts of justice in Luxembourg. Then there’s the countless miles of roads we funded in Ireland and Spain, those beautiful promenades on Iberian beaches, the bridges and tunnels, the airports and community centres. We’ve all seen the blue flags and signs telling us we’ve paid for them – so surely we must be entitled to a share?

Back in the 1980s and 90s we even refitted the entire Spanish fishing fleet. Can we have our boats back please?

More seriously, British consultants such as Miles Saltiel and Bob Lyddon have already done some useful work on this by estimating the liabilities the EU could be in for.

Lyddon has written a number of papers for Global Britain on subjects such as our involvement in the European Investment Bank. We have a right to have our €35.7bn subscribed-but-not-called share capital expunged and the €3.5bn paid-in portion repaid because, as the UK will no longer be a party to the EU treaties, we have no obligation to remain an EIB shareholder.

We could also claim a share of the reserves the EIB has accumulated over the lifetime of the UK’s membership, in the same proportion as we have of the EIB’s share capital – 16 per cent. That would require a comparison between the EIB’s reserves in 1973 and their level at our exit – they stood at €42bn at the end of 2015.

At the same time, the UK should buy out the €40bn or so of loans that the EIB has made to UK borrowers by issuing gilts to take over the loan book. It would not be a cost of exit because the UK would obtain an asset.
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"When it becomes serious, you have to lie"             

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

At the Comex silver depositories Wednesday final figures were: Registered 29.18 Moz, Eligible 162.03 Moz, Total 191.21 Moz.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Presented without need for comment, except in online banking it’s depositor beware.
04.04.17

How Hackers Hijacked a Bank’s Entire Online Operation

The traditional model of hacking a bank isn’t so different from the old-fashioned method of robbing one. Thieves get in, get the goods, and get out. But one enterprising group of hackers targeting a Brazilian bank seems to have taken a more comprehensive and devious approach: One weekend afternoon, they rerouted all of the bank’s online customers to perfectly reconstructed fakes of the bank’s properties, where the marks obediently handed over their account information.

Researchers at the security firm Kaspersky on Tuesday described an unprecedented case of wholesale bank fraud, one that essentially hijacked a bank’s entire internet footprint. At 1 pm on October 22 of last year, the researchers say, hackers changed the Domain Name System registrations of all 36 of the bank’s online properties, commandeering the bank’s desktop and mobile website domains to take users to phishing sites. In practice, that meant the hackers could steal login credentials at sites hosted at the bank’s legitimate web addresses. Kaspersky researchers believe the hackers may have even simultaneously redirected all transactions at ATMs or point-of-sale systems to their own servers, collecting the credit card details of anyone who used their card that Saturday afternoon.

“Absolutely all of the bank’s online operations were under the attackers’ control for five to six hours,” says Dmitry Bestuzhev, one of the Kaspersky researchers who analyzed the attack in real time after seeing malware infecting customers from what appeared to be the bank’s fully valid domain. From the hackers’ point of view, as Bestuzhev puts it, the DNS attack meant that “you become the bank. Everything belongs to you now.”

DNS Stress

Kaspersky isn’t releasing the name of the bank that was targeted in the DNS redirect attack. But the firm says it’s a major Brazilian financial company with hundreds of branches, operations in the US and the Cayman Islands, 5 million customers, and more than $27 billion in assets. And though Kaspersky says it doesn’t know the full extent of the damage caused by the takeover, it should serve as a warning to banks everywhere to consider how the insecurity of their DNS might enable a nightmarish loss of control of their core digital assets. “This is a known threat to the internet,” Bestuzhev says. “But we’ve never seen it exploited in the wild on such a big scale.”

The Domain Name System, or DNS, serves as a crucial protocol running under the hood of the internet: It translates domain names in alphanumeric characters (like Google.com) to IP addresses (like 74.125.236.195) that represent the actual locations of the computers hosting websites or other services on those machines. But attacking those records can take down sites or, worse, redirect them to a destination of the hacker’s choosing.

---- Ultimately, the hijack was so complete that the bank wasn’t even able to send email. “They couldn’t even communicate with customers to send them an alert,” Bestuzhev says. “If your DNS is under the control of cybercriminals, you’re basically screwed.”
Aside from mere phishing, the spoofed sites also infected victims with a malware download that disguised itself as an update to the Trusteer browser security plug-in that the Brazilian bank offered customers. 
According to Kaspersky’s analysis, the malware harvests not just banking logins—from the Brazilian banks as well as eight others—but also email and FTP credentials, as well as contact lists from Outlook and Exchange, all of which went to a command-and-control server hosted in Canada. The Trojan also included a function meant to disable antivirus software; for infected victims, it may have persisted far beyond the five-hour window when the attack occurred. And the malware included scraps of Portugese language, hinting that the attackers may have themselves been Brazilian.
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"On the whole, J-C Juncker wants to be good, but not too good, and not quite all the time.”

With apologies to George Orwell.

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?

No technology update today. More tomorrow.

The monthly Coppock Indicators finished March

DJIA: 20,663  +131 Up. NASDAQ:  5,912 +165 Up. SP500: 2,363 +135 Up.

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