Wednesday, 31 May 2017

Why “America First.” Cadilac v Beamer.

Baltic Dry Index. 900 -12    Brent Crude 51.63

Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out!

President Andrew Jackson.

From the original minutes of the Philadelphia committee of citizens sent to meet with President Jackson, February 1834. (President Trump is a mere pussycat.)

Below, what part of President Trump’s “America First” policy, doesn’t Mrs. Merkel and her band of German trade pirates get? Mr Trump must get elected and stay elected by American voters, not free riding European voters. Germany the scourge of Greece screams when it gets “Greecefied” itself. In picking a war with America, Chancellor Merkel heads up a fractious, European polyglot “army,” already at war with itself.

How globalization sunk many Americans deeper in debt

Published: May 30, 2017 5:20 a.m. ET
Even as U.S. policymakers continue to debate the relative advantages and drawbacks of globalization, it’s abundantly clear that international trade is not the benevolent force it was once thought.

For all its promise of boosting incomes and strengthening growth, trade has had a disproportionately damaging impact on regions of the U.S. that have long depended on manufacturing. Recent data shows that these communities have suffered a great deal of economic distress, including high rates of underemployment and joblessness.

These communities have also become much more indebted compared with the rest of the nation, according to my latest research. During the years 2000 to 2007 — also known as the runup to the Great Recession — overall American household debt doubled. That debt peaked in 2008, at almost $13 trillion. This leverage, however, was not shared equitably. Household debt in regions of the country where manufacturing jobs had shifted overseas grew an additional 20-30% over that period. In other words, nearly a third of American household debt during that timeframe can be attributed to import competition with China and other low-wage countries.

Why does this matter? For starters, the research — which I undertook with my colleagues Jean-Noel Barrot of MIT, Matthew Plosser of the New York Federal Reserve, and Julien Sauvagnat of Bocconi University — shifts the narrative on what fueled the credit bubble that preceded the Great Recession. To date, most of the economic literature has focused on the supply side and the private sector’s drive for short-term profit. Greedy banks sold unsuspecting customer risky loan products. Money-hungry private lenders made mortgages too easy to get. And fund managers sought new investments through high-yield mortgage-backed securities.

But our study shows that the demand for debt was also a big contributing factor. Perhaps more importantly, our study suggests that a great deal of this household debt can be tied directly to globalization.

It’s not difficult to piece together what happened. As factories shut down and manufacturing jobs were shipped overseas, many Americans — especially blue-collar laborers without a college degree — found themselves without a paycheck. So they borrowed to make ends meet. This borrowing often came in the form of home equity loans or mortgage refinancing. (In fact, we found that the rise in household debt was strongest in areas where house prices had appreciated the most.)

In theory, this is how financial markets ought to work. People should be able to borrow money when they need it — and it makes sense to use a home as collateral, particularly when the value of that home has increased.

In hindsight, though, we know better. When house prices collapsed, many Americans were so overly burdened with household debt that they couldn’t afford to maintain their spending. They had already tapped into their homes for equity to pay for everyday spending and without any income, that debt load became untenable. Millions of Americans defaulted on their mortgages.

It wasn't so long ago that economists thought that international trade was uniformly positive for global growth. While it’s true that free-trade practices can open markets and lead to broader economic development, this carries real costs, and in certain regions these costs have been overwhelming. Many Americans have seen their jobs and incomes disappear; they’ve lost their homes and gone deeply into debt.

The lesson for policymakers is clear: globalization has winners and losers. We must not pretend otherwise.

Erik Loualiche is an assistant professor of finance at the MIT Sloan School of Management.

Trump Blasts Germany Again as Merkel, Modi Cite Mutual Values

by Patrick Donahue and Arne Delfs
30 May 2017, 12:18 GMT+1 30 May 2017, 14:28 GMT+1
President Donald Trump blasted Germany anew over trade and defense, ratcheting up a dispute with Chancellor Angela Merkel that risks getting personal and undermining a trans-Atlantic bond that is the bedrock of U.S.-European relations.

Trump’s comments came in an early-morning tweet on Tuesday issued just as Merkel hosted Indian Prime Minister Narendra Modi in Berlin, where they held a joint cabinet meeting and signed cooperation agreements. Modi suggested that India will adhere to the Paris climate accords, while Trump makes up his mind.

“We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military,” the U.S. president posted on Twitter. “This will change.”

The message came minutes after Merkel and Modi held a joint press conference in which the German leader called India a “reliable partner with respect to big projects.” That contrasted with her comments in Munich on Sunday that dependable trans-Atlantic ties that formed the basis of German foreign policy since World War II “are to some extent over.”

Trump’s tweet showed the deterioration of links with a key NATO ally, yet his timing also highlighted Germany’s web of relations with international partners who broadly share Merkel’s free-trade outlook and conviction on combating climate change. After hosting Modi, Merkel is due to meet with Chinese Premier Li Keqiang on Thursday.

In a speech to a German-Indian business forum later on Tuesday, Merkel took another tilt at a president elected on a ticket of “America First,” referring to “a whole series of protectionist tendencies” emerging worldwide. She said “it’s necessary to be open to achieve fair trade conditions.”

While it’s unclear whether Merkel has deliberately picked a fight with Trump or misspoken and bitten off more than she can chew, challenging his stance is popular in Germany.

In better business news, finally some good news from Asia. But remember in China’s case, these are just China’s official scripted figures.

China's manufacturing beats forecast, stays steady

Published: May 30, 2017 11:24 p.m. ET
BEIJING--A gauge of manufacturing activity in China held steady in May as the property market remained buoyant, signaling stronger-than-expected economic momentum in the second quarter.

China's official manufacturing purchasing managers index was 51.2 in May, unchanged from April, according to the China Federation of Logistics and Purchasing, which releases the data with the National Bureau of Statistics. The May reading released Wednesday beat a median of 51.0 forecast by economists polled by The Wall Street Journal.

The index, closely watched as a gauge of business sentiment, has remained above the 50 mark that separates expansion from contraction for 10 consecutive months. May subindexes were mixed, with export activity slightly up, new orders holding steady and production edging down from April levels.

Economists said the May manufacturing PMI points to an economy slowing less rapidly than expected. "The first quarter was the peak, and April declined only slightly," said Mizuho Securities Asia Ltd. economist Jianguang Shen, who expects China's growth to weaken significantly in the second half of the year. "The government is trying to tighten the housing bubble, but it's been careful not to overtighten."

Beijing's strategy in recent months of imposing strict administrative restrictions on property sales in China's largest cities while trying to encourage sales in smaller, overbuilt cities is paying early dividends, economists said, allowing the economy to weaken at a gradual pace.

May's stronger-than-expected PMI data also suggests that recent regulatory tightening hasn't yet affected the real economy, said Zhang Yiping, an analyst with China Merchants Securities Co. He predicts second-quarter growth will slow to around 6.7%, from 6.9% in the first quarter. "But it won't be as bad as many expected," he said.

By the second half, however, higher interest rates, tighter restrictions on local government spending, weaker infrastructure outlays and a weaker property market are expected to result in a more significant, if still measured, slowdown, economists said.

----Those likely to feel the slowdown first include commodities, steel, cement, glass and related sectors, economists said. Profits in the mining, chemicals and building materials industries already started slipping in April.

Baotou Julong Group, a private mining company based in the northern city of Baotou, said prices for its iron ore have declined 10% since their March peak, denting the company's bottom line.

"If prices drop further, we'll have to cut investment spending. And if they fall below our costs, we could stop producing altogether," said company Vice President Huang Zhiguo. "With slumping demand, many of our workers could lose their jobs, and up to 700 families could face real trouble."

China's official nonmanufacturing PMI, which includes services and other activity away from the factory floor, ticked up to 54.5 in May from 54.0 in April as consumption remained strong.

Japan industrial output posts best gain in 6 years

Published: May 30, 2017 11:22 p.m. ET
TOKYO--Japanese industrial production rose 4.0% on month in April, government data showed Wednesday, posting the biggest jump in nearly six years.

Output of cars and semiconductor production equipment buoyed the figures for the biggest percentage gain since June 2011, when industrial production jumped 4.2% in the aftermath of the massive earthquake and tsunami that struck Japan earlier that year.

Still, the gain was lower than a 4.5% rise forecast by economists polled by the Nikkei.

The figure has been volatile in recent months. In March, industrial production fell 2.1%, after rising 3.2% in February.

A survey included in the report suggests that volatility could continue in coming months. Manufacturers expect output to fall 2.5% in May, before increasing 1.8% in June.

The Ministry of Economy, Trade and Industry kept its assessment of production unchanged, saying that production was picking up.

“Why, sometimes I've believed as many as six impossible things before breakfast.”

President Xi, with apologies to Lewis Carroll.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today whaling JP Morgan style. The SEC all at sea and fishy. And Bruno’s French revenge. Don’t you just love 21st century banksterism. It’s about as close to banking as Pluto is to the sun.
I dreamed once that I was going to be hanged; but I was not at all surprised about it. Nobody was. My relations came to see me off, I thought, and to wish me "Good-by!" They all came, and were all very pleasant; but they were not in the least astonished—not one of them. Everybody appeared to regard the coming tragedy as one of the most-naturally-to-be-expected things in the world.
Ebenezer Squid, with apologies to Jerome K. Jerome.

‘London Whale’ case at risk of collapse

Bruno Iksil faces questions over a book he has written that allegedly contradicts the SEC's version of events

By Lucy McNulty  May 30, 2017 Updated: 1:28 p.m. GMT
The US government’s case against two former JP Morgan staff embroiled in the $6.2bn ‘London Whale’ losses is at risk of collapse, with the key witness Bruno Iksil facing questions over a book he has written about the saga.

Lawyers defending Iksil’s boss, Javier Martin-Artajo, and the team’s junior trader, Julien Grout, plan to file a motion asking former JP Morgan trader Iksil to be questioned over a 400-page book that disagrees with the Securities and Exchange Commission’s version of events, according to a person familiar with the matter.
Edward Little, a partner at US law firm Hughes Hubbard & Reed, and Grout’s legal representative, told a New York court in February that there are “numerous spots” in Iksil’s book that contradict the SEC's findings.

The SEC alleges Martin-Artajo and Grout fraudulently mismarked investments in the multibillion-dollar portfolio they managed in order to conceal “hundreds of millions of dollars” in losses. In an enforcement notice published in 2013, the SEC said the mismarking began in March 2012 and continued until JP Morgan discovered the full extent of the losses in April that year.

However, according to a transcript of court proceedings seen by Financial News, Little said Iksil’s account of the London Whale saga undermined the SEC’s case. He said the book included allegations that there was “no fraud” in terms of how traders behaved. According to the book, the difference in marking techniques was known to senior management and that the real fraud came from those above Martin-Artajo and Grout.

Little described the discovery of the Frenchman’s memoirs as “a shocking development” and said it was “something that has to be addressed further”.

Lawyers for Martin-Artajo and Grout hope their motion to cross-examine Iksil will force the SEC to resolve its case against the pair outside of court, according to a person familiar with their thinking.

An SEC spokeswoman declined to comment.

Iksil, who acquired his 'Whale' nickname for the size of his bets in the credit markets, has been helping the SEC with its investigation into the losses. He gave evidence against Martin-Artajo and Grout via a formal deposition in New York in September 2016 as part of a non-prosecution deal he signed with the US Justice Department in 2013. Criminal charges against Martin-Artajo and Grout have stalled as both have avoided extradition to the US.
Ambitious people are the leaven which raises it into wholesome bread. Without ambitious people the world would never get up. They are busybodies who are about early in the morning, hammering, shouting, and rattling the fire-irons, and rendering it generally impossible for the rest of the house to remain in bed.
Jerome K. Jerome. "On Getting on in the World".
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?

When man plays God, some unintended consequences.

CRISPR gene-editing tool causes unintended genetic mutations

Rich Haridy May 29, 2017
It's not hyperbolic to say that the CRISPR-Cas9 gene-editing technique has been a revolutionary breakthrough, allowing scientists the ability to quickly, easily and precisely edit sections of DNA. But questions over how precise the CRISPR tool is have been raised in a new study from Columbia University Medical Center, which shows this gene-editing technology can introduce hundreds of unintended mutations into the genome.

CRISPR has sparked a flurry of new avenues of research around the world, from targeting cancer to HIV, with the first human trials involving CRISPR-edited cells already underway in China and a US trial slated for 2018. But this new study urges caution moving forward, suggesting we are still yet to understand the greater genomic effects of the tool.

The team of scientists involved in the study had previously been working with the CRISPR tool to treat a serious eye disease called retinitis pigmentosa, which leads to blindness. They decided to examine the entire genome of the CRISPR-treated mice from their previous experiments, looking for any potential mutations, even those that altered just a single nucleotide.

Generally, when scientists are trying to identify whether a CRISPR edit has resulted in an off-target mutation or deletion they use computer algorithms to identify areas most likely to be affected and focus their attention on those.

"These predictive algorithms seem to do a good job when CRISPR is performed in cells or tissues in a dish," says co-author of the study, Professor Alexander Bassuk, "but whole genome sequencing has not been employed to look for all off-target effects in living animals."

In examining the entire genome from the CRISPR-treated mice, they found that the tool had successfully corrected the specific gene they were targeting, but it also potentially caused a great deal of other genetic changes. In two CRISPR-treated animals, more than 100 large gene deletions or insertions and over 1,500 single-nucleotide mutations were identified.

Most significantly, all of these identified mutations were not picked up by the general computer algorithms most researchers use to look at the off-target effects of CRISPR-editing. There were no obvious or immediately deleterious effects in the animals from these unexpected mutations, but it is unknown what longer term effects the altered genes could have.

"Researchers who aren't using whole genome sequencing to find off-target effects may be missing potentially important mutations," says co-author Dr. Stephen Tsang. "Even a single nucleotide change can have a huge impact."

The team is still upbeat about CRISPR technology, but they caution other scientists to more closely study the off-target effects of any gene-editing that is undertaken. They especially note that whole-genome sequencing is vital in developing more accurate ways of using the CRISPR tool.

In Graphene news:

Graphene and Quantum Dots put in motion a CMOS-integrated camera that can see the invisible

CFO develops the first graphene-quantum dot based CMOS integrated camera, capable of imaging visible and infrared light at the same time. Over the past 40 years, microelectronics has advanced by leaps and bounds thanks to silicon and CMOS (Complementary metal-oxide semiconductors) technology, making possible computing, smartphones, compact and low-cost digital cameras, as well as most of the electronic gadgets we rely on today. However, the diversification of this platform into applications other than microcircuits and visible light cameras has been impeded by the difficulty to combine semiconductors other than silicon with CMOS.

This obstacle has now been overcome. ICFO researchers have shown for the first time the monolithic integration of a CMOS integrated circuit with graphene, resulting in a high-resolution image sensor consisting of hundreds of thousands of photodetectors based on graphene and quantum dots (QD). They operated it as a digital camera that is highly sensitive to UV, visible and infrared light at the same time. This has never been achieved before with existing imaging sensors. In general, this demonstration of monolithic integration of graphene with CMOS enables a wide range of optoelectronic applications, such as low-power optical data communications and compact and ultra sensitive sensing systems.

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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