Baltic Dry Index. 912 Friday
Brent
Crude 52.19
The
quickest way of ending a war is to lose it.
George
Orwell.
We open today with the continuing fallout from the recent
NATO meeting and G-7 meeting. Compare and contrast below the anti-Trump,
American Bloomberg spin, with a chart that clearly highlights just how right
President Trump’s claim of European NATO freeloading is, (Germany spends just 45.1
billion on defence, compared with a NATO commitment of 74.9 billion, Italy just 23.1
billion v 41.4 billion,) with Germany’s Der Spiegel, already having misgivings
that Chancellor Merkel just made a German election campaign blunder of epic
proportions.
Either way the damage is done, it’s already water under the
bridge. A massive gift to the far left that wants to see NATO weakened, and the
west indecisive and split.
Will Washington ever swap Tallinn, or Riga, or Berlin, or
Warsaw, for Manhattan? Would America ever have? After Chancellor Merkel’s blunt
speech in a Munich beer tent on Sunday, all of NATO has just had its Wizard of
Oz moment.
Below, continental Europe in disarray.
“I
think we agree, the past is over.”
President
George W. Bush.
Old World Order Is Alive But Unwell After Four Months of Trump
by Marc Champion and Margaret Talev
30 May 2017, 00:00 GMT+1
Four months into Donald Trump’s presidency, the sky has not fallen in on the
system of global governance the U.S. did so much to construct since World War
II. It is, however, in deep trouble.Trump has not followed through on pre-election threats to declare the North Atlantic Treaty Organization obsolete, abandon the North American Free Trade Agreement, accept Russia’s annexation of Crimea or declare China a currency manipulator.
And yet, as he flew back to Washington at the weekend, Trump’s meetings with traditional U.S. allies during his nine-day tour of the Middle East and Europe appeared to leave them more, rather than less worried about the inventory of issues that caused such concern last November.
They emerged unsure of his commitment to NATO’s collective-defense principle, unclear as to his stance toward Russia, deeply concerned about his distrust of free-trade agreements and in suspense as to whether he’ll withdraw the U.S. from the 2015 Paris Agreement to slow climate change. Trump said in on Twitter he’d make the decision this week.
“We are not in good shape at all,’’ said Francois Heisbourg, a veteran analyst of the trans-Atlantic alliance and chairman of the International Institute for Strategic Studies. “In some ways it’s worse than I thought.’’ He described those as issues of Trump’s impetuous character and governance style.
-----However, the alliances and institutions the U.S. built with like-minded democracies fared less well.
“On the alliance front, we’re having to engage in permanent damage
limitation. There clearly isn’t much we can do together,’’ said Heisbourg,
dismissing Trump’s success last week in getting agreement to focus the alliance
more on counter-terrorism. “NATO is as equipped to deal with counter-terrorism
as the Vatican.’’
At NATO, Trump omitted to clearly state his commitment to the alliance’s
pledge of collective defense, known as Article 5, in a speech to commemorate
it. While White House officials said the speech should be read as re-affirming
his support, the encounter left allies still uncertain whether the U.S. would
come to their aid if attacked.
----As he watched footage of Trump’s meeting with Merkel, Japanese Prime Minister Shinzo Abe and other G-7 leaders in Sicily while on Bloomberg television, Ian Bremmer, president of the risk consultancy Eurasia Group said he was witnessing “the first ever formal meeting of the G-zero.’’
That’s a reference to Bremmer’s forecast that the familiar institutions
of the liberal world order built by the U.S. and other democracies since World
War II -- the G-7 and G-20, NATO, the WTO and the European Union -- will become
dysfunctional and irrelevant.
More
A Trans-Atlantic Turning Point What Was Merkel Thinking?
An historical turning point or mere campaign
bluster? Chancellor Angela Merkel's Sunday speech on relations with Donald
Trump's America has raised eyebrows the world over. What did she mean?
A "potentially seismic shift" wrote the New York Times .
A "new chapter in U.S.-European relations," proclaimed the Washington
Post. German Chancellor Angela Merkel's comments made in a beer tent in
Munich on Sunday have made headlines around the world. It was the kind of
appearance the likes of which she will make hundreds of times ahead of Sept. 24
parliamentary elections in Germany. But in this speech, she clearly distanced
herself from U.S. President Donald Trump. And she urged Europe to prepare for a
future in which it has to be much more self-reliant."The times in which we could completely rely on others are over to a certain extent. That is what I experienced in the last few days," Merkel said. "That is why I can only say: We Europeans must really take our fate into our own hands."
She went on to say: "Of course in friendship with the United States of America." She emphasized friendship with the U.S. on a few other occasions in her remarks as well. But then said: "We have to fight for our own future, as Europeans, for our destiny."
Merkel's comments were unusual on several levels. It's not just what she had to say that was interesting, but also why and when: at a folk festival following a series of summits during which she spent extensive amounts of time with Trump. The chancellor made direct reference to her strenuous week, during which the U.S. president managed to alienate his partners on several occasions.
Despite the directness of Merkel's Sunday speech, however, there are several open questions that need to be answered:
More
In market news, with
China closed for a second day, Asian markets slipped lower. There’s still two
days left for the old Wall Street adage, “sell in May, go away.”
Asia Stocks Slip, Euro Falls on Draghi Comments: Markets Wrap
by Garfield Clinton Reynolds
29 May 2017, 23:44 GMT+1
Asian equities fell in thin trading and the euro slipped with emerging
currencies after Mario Draghi’s dovish message to the European
Parliament and as investors assessed the path for higher U.S. borrowing costs.Stocks in Japan retreated as the yen strengthened. Hong Kong is on holiday Tuesday and markets in China are shut for a second day after the U.K. and U.S. were closed Monday, depressing volumes and limiting price movements. The euro dropped for a fourth straight day. South Africa’s rand extended losses after President Jacob Zuma survived a bid by some members of his party to oust him.
The key challenge for investors remains gauging the ability of the world’s economy to withstand rising borrowing costs. Despite the record highs posted by global equities, the rally in bond markets suggests traders are cautious. Donald Trump’s ability to come through with reform policies also remains an issue. Fed Bank of St. Louis President James Bullard said the new administration will need to fulfill the expectations that have driven the stock market higher.
“Washington does have to deliver at some point,” Bullard said in an interview on Bloomberg TV in Tokyo. “I think that is a concern going forward, whether the honeymoon period would end at some point and maybe the reality of American politics would settle in.”
He also said the dollar recently has weakened slightly because of “changes in perceptions of policies of other central banks in tandem with U.S. monetary policy.” European Central Bank President Draghi, speaking in Brussels, signaled there’s little urgency to start unwinding the central bank’s 2.3 trillion-euro ($2.6 trillion) bond-purchase program at the next policy meeting on June 8.
More
Sell In May And Go Away
Sell in May and go away is a
well-known trading adage that warns investors to sell their stock holdings in
May to avoid a seasonal decline in equity markets. The
sell-in-May-and-go-away strategy is where an investor sells his stock holdings
in May and gets back into the equity market
in November, thereby avoiding the typically volatile May-October period. Some
investors find this strategy more rewarding than staying in the equity markets
throughout the year. (Learn more about the old adage in The Truth About
'Sell in May and Go Away.')
http://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp
http://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp
Oh, well don't get technical at a time like this.
President Trump, with apologies to Cary Grant. His Girl Friday 1940.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Catalonia threatens Spain with default.
Things are starting to get ugly in Spain, and in the rest of the rump-EU. An unreformed Spain, along with unreformed Italy and France, threatens the continued existance of the unreformed rump-EUSSR. But is anyone in Europe's political class up for reform?
“This sucker could go
down.”
Prime Minister Mariano
Rajoy, with apologies to George W. Bush.
Catalonia Threatens Spain with “Financial Bloodbath”
by Don Quijones • May 24, 2017
Catalonia’s independence would set off Spain’s debt time-bomb.
On Monday El Pais published leaked excerpts from what it claims to be the Catalonian regional government’s road map to independence. The secret document includes a plan for the region to unilaterally break away from Spain should its citizens be prevented from holding a referendum on independence in the fall.It provoked a fierce backlash from Madrid. “This proposal is an unacceptable attempt to blackmail the state,” Spain’s Prime Minister Mariano Rajoy said in a hastily convened press conference. Spain’s defense minister María Dolores de Cospedal likened the plot to a coup d’état. In the meantime, Madrid continues to refuse to even entertain the idea of allowing a referendum on Catalan independence, despite the fact that in just about every survey of the last few years 80% of Catalans, including many unionists, have requested one.
It would mean the loss of 25-30% of Spain’s gross domestic product (GDP), says Spain’s Minister of the Economy, Luis de Guindos. And that’s something the government “will never let happen.”
But Catalonia knows it has a card up its sleeves: its tick-tocking debt bomb. Catalonia can no longer issue its own debt and depends on the central government’s national liquidity fund (FLA, for its Spanish acronym) for about 60% of its funds. As ratings agency Fitch warned in April last year when it sent Catalonian debt even deeper into junk territory, the region has grave liquidity problems that will require “proactive management” and “close collaboration with the central state ” — something that’s clearly not on the cards any time soon.
At the same time, Spain’s public debt continues to grow, recently bursting through 100% of GDP. Even with historically low interest rates (gracie, Signor Draghi), the price of servicing government debt can spiral out of control. Between 2011 and 2015 Spain’s central government spent €121 billion – the equivalent of 12% of annual GDP – on interest payments.
---- In other words, Spain’s deficit, already one of the largest in Europe, is going to remain high for the foreseeable future, despite all the threats of multi billion-euro fines emanating from Brussels. As the widely renowned Columbia University Professor of Economics (and fervent Catalan separatist) Xavier Sala i Marti recently pointed in an interview on Catalan television, all of the debt, including the debt owed by the Catalan regional government, is in the name of the King of Spain:
It’s (Spain’s) debt. They already have a debt load of 100% of GDP. If Catalonia declared independence tomorrow, and Spain were to say “you’re going to be kicked out of the EU for three generations” and everything else they threaten us with, we’d just say to them, “well, these little papers of debt (bonds), you can have them for the next three generations.” All of a sudden, they’d have a much smaller GDP and a much larger debt overhang (around 125%)… A debt-to-GDP ratio of 125% would not be feasible. Spain would not be able to pay the debt they owe the Spanish banks, the biggest holders of Spanish bonds. And that would ruin them, triggering a financial bloodbath.
Such an outcome has also been postulated by the U.S. rating agency Moody’s: in effect, any default on Catalonia’s debt would be interpreted by the markets as a Spanish default. In other words, whence goeth Catalonia, goeth Spain.
More
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?
Toward mass-producible quantum computers
Process for positioning quantum bits in diamond optical circuits could work at large scales
Date: May 26, 2017
Source: Massachusetts Institute of Technology
Summary: Mass-producible quantum computers are closer than ever,
thanks to new research. This process for positioning quantum bits in diamond
optical circuits could work at large scales, say scientists.
Quantum computers are
experimental devices that offer large speedups on some computational problems.
One promising approach to building them involves harnessing nanometer-scale
atomic defects in diamond materials.
But practical, diamond-based
quantum computing devices will require the ability to position those defects at
precise locations in complex diamond structures, where the defects can function
as qubits, the basic units of information in quantum computing. In Nature
Communications, a team of researchers from MIT, Harvard University, and
Sandia National Laboratories reports a new technique for creating targeted
defects, which is simpler and more precise than its predecessors.
In experiments, the defects
produced by the technique were, on average, within 50 nanometers of their ideal
locations.
"The dream scenario in
quantum information processing is to make an optical circuit to shuttle
photonic qubits and then position a quantum memory wherever you need it,"
says Dirk Englund, an associate professor of electrical engineering and
computer science who led the MIT team. "We're almost there with this.
These emitters are almost perfect."
The new paper has 15
co-authors. Seven are from MIT, including Englund and first author Tim
Schröder, who was a postdoc in Englund's lab when the work was done and is now
an assistant professor at the University of Copenhagen's Niels Bohr Institute.
Edward Bielejec led the Sandia team, and physics professor Mikhail Lukin led
the Harvard team.
Appealing defects
Quantum computers, which are
still largely hypothetical, exploit the phenomenon of quantum
"superposition," or the counterintuitive ability of small particles
to inhabit contradictory physical states at the same time. An electron, for
instance, can be said to be in more than one location simultaneously, or to have
both of two opposed magnetic orientations.
Where a bit in a conventional
computer can represent zero or one, a "qubit," or quantum bit, can
represent zero, one, or both at the same time. It's the ability of strings of
qubits to, in some sense, simultaneously explore multiple solutions to a
problem that promises computational speedups.
More
The monthly Coppock Indicators finished April
DJIA: 20,941 +149 Up. NASDAQ: 6,048 +190 Up. SP500: 2,384 +152 Up.
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