Friday, 19 May 2017

Soap Opera America.

Baltic Dry Index. 957 -03     Brent Crude 52.93

Patriotism is supporting your country all the time, and your government when it deserves it.

Mark Twain

After a rocky week in high stakes soap opera America, the markets seem to be returning to normality and complacency. From what we know so far, President Trump isn’t going anywhere, let alone to be impeached, and the “deep state” sharks circling for the kill, just remain circling. Though in overly litigious America, it’s probably time for President Trump to hire his own outside personal attorney. That aside, America’s wobble is probably down to far more than the concerted extreme left effort to unseat President Trump, suggests the Hagerty Market Index.

Below, US hysteria abating, other events including in Brazil, Venezuela, and Europe, came into focus. There’s life in the rest of the world beyond soap opera America.

Asia-Pacific stocks stabilize after uneasy week of trading

Published: May 18, 2017 11:04 p.m. ET
Stock markets were mostly steady in the Asia-Pacific region on Friday following strong rebounds off session lows a day earlier and overnight gains on Wall Street.

Investors continue to take a wait-and-see approach amid the week’s developments, which were centered on U.S. politics but also included troubles in Brazil after asset prices there plunged on Thursday amid a scandal involving that country’s president.

After two days of selling, Asian stocks appear to be consolidating.

“However, I think that a lot of traders are probably yet to be convinced that we have seen the end of this turmoil, and that I think this accounts for the steady market action with no real signs of any bargain-hunting” early Friday, said Ric Spooner, chief market analyst at CMC Markets.

Australia again underperformed the region as stocks continue to be pressured by a proposed bank tax on the nation’s biggest lenders. The industry’s Big Four, which collectively make up about a quarter of the weighting in the S&P/ASX 200 XJO, -0.28%  , were down some 1% on Friday. Westpac Banking Corp. WBC, -1.28%   and National Australia Bank NAB, -0.85%   have dropped about 6% this week.

The headline stock index was down 0.5%, putting the week’s decline above 2% and on pace for its worst week since October.

Other markets were more muted, with the Nikkei Stock Average NIK, +0.12%   down 0.2% ahead of the midday break even as automotive companies saw modest gains with the dollar USDJPY, -0.12%  rebounding from overnight lows against the yen. It was recently around ¥111.15, versus ¥110.30 late Thursday in Asia.

Thu May 18, 2017 | 10:50pm EDT

Trump denies asking Comey to drop probe, decries 'witch hunt'

U.S. President Donald Trump, striking a defiant tone on Thursday after days of political tumult, denied asking former FBI Director James Comey to drop a probe into his former national security adviser and decried a "witch hunt" against him.

Trump's terse denial followed reports by Reuters and other media about a memo written by Comey alleging that Trump made the request to close down the investigation into Michael Flynn and Russia in February. Trump fired Comey on May 9.

"No. No. Next question," Trump told a news conference in the White House, when asked if he "in any way, shape or form" ever urged Comey to end the probe.

Comey's dismissal last week set off a series of jarring developments that culminated on Wednesday in the Justice Department's appointment of a special counsel to probe possible ties between Russia and Trump's 2016 presidential campaign.

They included media reports that Trump discussed sensitive intelligence on the Islamic State militant group with Russia's foreign minister.

In a pair of morning Twitter posts and at a later news conference, the Republican president described calls by some on the left for his impeachment as "ridiculous" and said he had done nothing to warrant criminal charges.

"The entire thing has been a witch hunt and there is no collusion between certainly myself and my campaign - but I can always speak for myself - and the Russians. Zero," he told the news conference, standing alongside Colombian President Juan Manuel Santos.

In his earlier Twitter posts, Trump criticized the naming of former FBI Director Robert Mueller as a special counsel by Deputy Attorney General Rod Rosenstein, an official he himself appointed.

"With all of the illegal acts that took place in the Clinton campaign & Obama Administration, there was never a special counsel appointed!" Trump wrote on Thursday morning.

The wheels are coming off for U.S. stocks, this classic gauge shows

Published: May 18, 2017 7:37 a.m. ET
Another day, another Trump controversy.
Fresh reports that the president’s team was in contact with the Russkies during the presidential race are keeping the White House drama alive and well, setting investors up for another thrill ride. Dow futures are down around 100 points in the early going today.

That’s after traders on Wednesday got a taste of how a “Trexit” (as an early Trump exit now is called) could upset the snoozefest on the U.S. stock markets — the S&P 500 sank the most since last September and the VIX went through the roof.

Now, the big question is whether this was just a blip in the Trump rally or something more serious? The jury is still out this morning, with analysts arguing about whether to buy the dip or throw in the towel altogether.

According to our call of the day, you’d probably be better off taking the latter course. And the tell is coming from a somewhat unexpected arena: prices of classic cars, according to Wolf Richter from the Wolf Street blog.

The index for collector cars — the Hagerty Market Index — has already slumped to an almost three-year low, flashing a warning signal that other assets will take the same downhill route.

“The global asset class of collector cars ... is quietly but persistently and very unenjoyably experiencing a downturn that parallels and in some aspects already exceeds the one during the financial crisis,” Richter notes.

And here’s why that’s important. Classic car prices move similarly to other assets, such as equities and real estate. The Hagerty index peaked and then plunged in April 2008, a few months before U.S. stocks suffered the biggest crash in decades, suggesting it’s an early indicator of what could be in store for other asset classes.

The index is down around 10% over the past year, but there are no signs of complete panic yet, Richter says. Instead, we are seeing the slow unwinding of the post-crisis asset bubble created by cheap central bank money.

“Collector car prices indicated what’s in store: Despite all liquidity and QE, prices can rise only so far, and then investors back away, gradually, one after the other,” he says.

Talking of wheels coming off, the wheels seem to be flying off at Fiat Chrysler. Europe’s dirty, killer diesel scandal just grows and grows. Do any European made diesel engines meet any of the emission standards? From London it seems a good idea to start with the assumption, they don’t.

Wed May 17, 2017 | 7:37am EDT

EU starts legal action against Italy over Fiat Chrysler emissions

The European Commission launched legal action against Italy on Wednesday for failing to respond to allegations of emission-test cheating by Fiat Chrysler (FCHA.MI), in a procedure that could lead to the country being taken to court.

The Commission said Italy had failed to convince it that devices used to modulate emissions on Fiat Chrysler vehicles outside of narrow testing conditions were justified.

"The Commission is now formally asking Italy to respond to its concerns that the manufacturer has not sufficiently justified the technical necessity – and thus the legality – of the defeat device used," the Commission said in a statement.

Italy has two months to respond to the Commission's request and may be eventually taken to the European Court of Justice if the answer is found to be unconvincing.

Italy had asked the European Union to postpone its plan to launch legal action against Rome over emissions at Fiat Chrysler (FCHA.MI), Transport Minister Graziano Delrio said.

"Considering that after the end of the mediation process, we did not receive any request for further information ... we ask that you delay starting the infringement procedure while we await a letter asking for clarification on issues raised by your relevant offices," Delrio told EU Industry Commissioner Elzbieta Bienkowska, according to the ministry's statement.

The European Commission has been mediating a dispute between Rome and Berlin after Germany accused Fiat Chrysler of using an illegal device in its Fiat 500X, Fiat Doblo and Jeep Renegade models. That mediation ended without fanfare in March.

EU officials have become increasingly frustrated with what they see as governments colluding with the powerful car industry and the legal move is the biggest stick the European Commission has available to force nations to clamp down on diesel cars that spew out polluting nitrogen oxide (NOx).

Wed May 17, 2017 | 8:48pm EDT

U.S. preparing to sue Fiat Chrysler over excess diesel emissions

The U.S. Justice Department plans to file a civil lawsuit against Fiat Chrysler Automobiles NV (FCHA.MI) over excess diesel emissions as early as this week if no agreement is reached with the Italian-American automaker, two sources briefed on the matter said on Wednesday.

The U.S. Environmental Protection Agency in January accused FCA of illegally using undisclosed software to allow excess diesel emissions in about 104,000 cars and SUVs, the result of a probe that stemmed from regulators' investigation of rival Volkswagen AG (VOWG_p.DE).

The EPA and California Air Resources Board have been in talks with FCA about the excess emissions and whether the agencies would approve the sale of 2017 FCA diesel models.

A federal judge in California has set a May 24 hearing on a series of lawsuits filed by owners of vehicles against Fiat Chrysler and the Justice Department is expected to file its action by then if no agreement is reached.

FCA said on Wednesday it believed that any litigation would be "counterproductive" to ongoing discussions with the EPA and California Air Resources Board.

The company added that "in the case of any litigation, FCA US will defend itself vigorously, particularly against any claims that the company deliberately installed defeat devices to cheat U.S. emissions tests."

The Justice Department took the same procedural step in early 2016 against Volkswagen, nearly four months after the German company admitted using software to emit excess diesel emissions in nearly 500,000 vehicles.

The Justice Department has had an ongoing criminal investigation into FCA's conduct since last year, Reuters reported in January. The probe has turned up internal emails written in Italian and other documents about engine development and emissions issues, sources briefed on the probe said.

U.S. regulators said FCA failed to disclose engine management software in 104,000 U.S. 2014-2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0-liter diesel engines.

Elsewhere, it was situation normal, corruption, chaos, and life on a different planet. 

Chaos Takes Hold in Brazil as Markets Sink, Temer Vows to Fight

by Bruce Douglas and Raymond Colitt
19 May 2017, 00:54 GMT+1
The impeachment of one president was traumatic. The prospect of two back-to-back spread dread and disbelief across Brazil Thursday as federal police raided politicians’ homes, helicopters droned over the capital city, markets collapsed and a defiant President Michel Temer declared he wouldn’t step down.

It has been just 12 months since the removal of his predecessor, Dilma Rousseff, on charges she broke budget laws. Allegations against Temer could end his tenure too, if what the O Globo newspaper reported is true -- that he endorsed the payment of hush-money to the imprisoned former speaker of the lower house of Congress.

The news exploded “like an atomic bomb,” in the words of Alessandro Molon, an opposition lawmaker. Calls for the president’s ouster mounted. Temer was holed up with advisers for much of the day before saying in a televised speech that he intends to hold on to power and prove his innocence. “I know what I did,” he said. “I know my actions were correct.”

For investors who bought into his pledge to push austerity measures on a nation enduring the worst recession on record, the day delivered a crushing blow, including a 15 percent drop in the shares of state-owned oil company Petroleo Brasileiro SA, which is at the center of the sweeping Operation Carwash corruption investigation. The stock-market losses totaled $150 billion.

Brazilians, long familiar with scandal and upheaval, aren’t looking forward to more legal proceedings and political wrangling, maddeningly reminiscent of the tumultuous months preceding Rousseff’s impeachment. In a gritty open-air shopping arcade in downtown Brasilia, some people said they’d be better off with a return to a military dictatorship.

Thu May 18, 2017 | 5:46pm EDT

Greece voted reforms, it's time for debt relief: Greek PM

Greece has met its commitments on reforms and the country now expects its international lenders to do the same on debt relief, Prime Minister Alexis Tsipras told reporters just after parliament passed a bill on bailout reforms.

"It's their (the lenders) turn to fulfill their commitments, just like we did," Tsipras told reporters at parliament.
"We deserve and we expect from Monday's Eurogroup a decision regulating debt relief which will correspond to the sacrifices of the Greek people," he said.

Prime minister Tsipras still doesn’t get it. EUSSR paymaster Germany is not going to give debt relief ahead of the German election in September, and probably not even after, in a very German run rump-EUSSR with Britain leaving. Time for the Greeks, and everyone else, to start learning German.

"We decide on something, leave it lying around, and wait and see what happens. If no one kicks up a fuss, because most people don't understand what has been decided, we continue step by step until there is no turning back."

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

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, Macron’s France goes German. I wonder what the French voters think? In the rump-EUSSR without Great Britain, when the German flag gets run up the flagpole, everyone including France, must now salute twice. Herr Juncker needs to revise his observation below.
Decisions can only be reached in Europe if France and Germany agree.

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

Macron Taps Republican Le Maire for French Finance Ministry

by Mark Deen And Helene Fouquet
17 May 2017, 14:28 GMT+1 17 May 2017, 16:38 GMT+1
President Emmanuel Macron recruited Republican lawmaker Bruno Le Maire as finance minister, scoring a victory in his effort to draw support from the France’s mainstream right and assigning a fluent German speaker to rebuild economic credibility in Europe.
Among 16 ministers appointed Wednesday, European lawmaker Sylvie Goulard, a centrist, was named defense minister and Socialist Jean-Yves Le Drian will take the helm at the renamed ministry of Europe and foreign affairs, signaling the new administration’s commitment to the European Union.
Macron, who was elected 10 days ago on a centrist, pro-EU program, needs members of France’s Republican party to show that his administration won’t just be a re-run of his unpopular predecessor Francois Hollande’s. The 39-year-old president is aiming for a majority in parliamentary elections in June and the Republicans represent the political force most capable of preventing that.
“This government is mostly anchored with the center and the right,” said Jean-Daniel Levy, a pollster at Harris Interactive in Paris. “The fracture on the right is already apparent and it will become more so.”
Gerard Collomb, the mayor of Lyon and a longtime Macron backer, was named interior minister and No. 2 in the government after Prime Minister Edouard Philippe. Television presenter Nicolas Hulot was recruited to the ecology ministry and Gerald Darmanin, another Republican, was named budget minister.
“The appointments of Le Maire and Darmanin are a real coup,” said Antonio Barroso, a political risk analyst at Teneo Intelligence in London. “The choice of Le Maire is also probably aimed at sending a strong signal to Germany about Macron’s commitment to reform.”
Francois Baroin, head of the Republican campaign for next month’s legislative elections, said he regretted losing Philippe, Le Maire and Darmanin.
“The three of them are gone, it’s their choice,” Baroin told Agence France-Presse. “I regret it on a personal level without calling our friendship into question.”
The Republican party said it is expelling all three.
Thu May 18, 2017 | 6:41am EDT

Confidence in new French leaders at its lowest in 20 years: poll

France's new president and prime minister have the lowest public confidence levels for French leaders starting their terms in at least the last 20 years, a poll found on Thursday.
Some 45 percent of voters said they trusted in centrist President Emmanuel Macron's ability to tackle France's problems, while 36 percent trusted his newly appointed prime minister, Edouard Philippe, a conservative, the Elabe poll showed.
"This result shows an unprecedented situation ... there is no grace period for the president," Elabe said in a note. Macron, a 39-year-old former economy minister, said before his election this month that he expected no honeymoon.
The poll shows that despite his comfortable 66-34 percent victory over far-right leader Marine Le Pen in the May 7 election, Macron still has to convince many voters of his ability to confront France's social and economic problems.
By contrast, Socialist President Francois Hollande had confidence ratings of 58 percent when he took office in May 2012, conservative Nicolas Sarkozy 59 percent in 2007, Jacques Chirac 53 percent when re-elected in 2002 and 61 percent when he was first elected in 1995.
Past prime ministers' ratings stood at between 50 and 59 percent at those same dates.
“Of course, there will be transfers of sovereignty. But would I be intelligent to draw the attention of public opinion to this fact?”

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. European Commission President. Scotch connoisseur.
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?

IBM reveals prototype of its first commercial quantum computer processor

Michael Irving May 18, 2017
Research teams looking to crunch massive data sets have had access to IBM's quantum processor through the cloud for about a year, and now the company is upping that power with a new generation of processors. The first, boasting 16 quantum bits (qubits), will increase the processing power available through the cloud, while the second is twice as powerful again and designed as a prototype of a commercial quantum processor.

Quantum computers have the potential to be, in some cases, exponentially faster and more powerful than "classic" computers, thanks to the wizardry of quantum mechanics. Traditionally, one bit of information is either a one or a zero, but a qubit has the quirky ability to be a one, a zero, or both simultaneously.

This power grows exponentially as more qubits are added to the computer: two bits can exist in four states (00, 01, 10 or 11), but two qubits can represent those four at the same time. In other words, a quantum computer could process all four states at once, while a classic computer would have to do each one in turn. As a result, quantum computers could be great for tackling huge amounts of data simultaneously.

IBM's current cloud-accessible quantum processor is built with 5 qubits, meaning it effectively has the computing power of 32 traditional bits. With 16 qubits, the new version has the equivalent of 65,536 bits, which will allow for much more complicated experiments to be run by developers and researchers through the cloud.

The second new processor boasts 17 qubits, which makes it twice as powerful as the 16-qubit unit and the most powerful quantum processor IBM has created so far, thanks to improvements to its architecture and materials. This device is designed to be a prototype of IBM's first commercial quantum computer system to be made available through the IBM Q initiative, which is the company's roadmap for developing practical quantum computers. In future, this groundwork could pave the way for far more powerful quantum processors.

Another weekend, and what new disaster has America’s “deep state” in store for President Trump and his team of Putin clones? In this ugliest of political civil wars, America’s credibility and leadership, long ago became collateral damage. Now the deep state seems to want to make the US economy and markets collateral damage. The next recession get closer by the day, but will it be triggered early by America’s seditious deep state? Hopefully not, but I wouldn’t bet against it now. In going in for the kill, the deep state seem to think the end (of Trump) justifies any means. Have a great weekend everyone.

"Get a good night's sleep and don't bug anybody without asking me."

President Richard M. Nixon.

The monthly Coppock Indicators finished April

DJIA: 20,941 +149 Up. NASDAQ:  6,048 +190 Up. SP500: 2,384 +152 Up.