Monday, 17 July 2017

China Beats the Script.

Baltic Dry Index. 900 +12     Brent Crude 49.06

“I've read hundreds of books about China over the decades. I know the Chinese. I've made a lot of money with the Chinese. I understand the Chinese mind.”

Donald J. Trump, The Art of the Deal.

It is the summer slow season, aka the silly season, and like a dog chasing its tail, Asian stocks followed US stocks higher again. This time spurred on by China’s scripted GDP figures slightly beating the script. Everyone knows how this latest bubble ends, just not when, or why, or from what tulipmania level. “Icebergs? What icebergs?”

Below, the latest news from Asia and China.

“China is a big country, inhabited by many Chinese.”

 Charles de Gaulle

July 17, 2017 / 1:53 AM / an hour ago

Asia shares rise on strong China GDP, accommodative Fed view

SINGAPORE (Reuters) - Asian stocks set a fresh two-year high on Monday, boosted by stronger-than-expected economic growth in China and bets that lacklustre U.S. data will keep the Federal Reserve cautious about the pace of further policy tightening.

Chinese blue-chips recouped steep early losses after data showed the world's second-largest economy grew at a slightly faster than expected pace of 6.9 percent in the second quarter, thanks to robust industrial output, retail sales and exports.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS extended earlier gains to climb 0.4 percent after the buoyant China readings. Japanese markets were closed for a holiday.
Australian shares , which started the day in negative territory, were 0.1 percent higher, while South Korea's KOSPI .KS11 jumped 0.4 percent.

By midday in China, the CSI 300 .CSI300 was 0.2 percent higher, after slumping as much as 2.2 percent earlier. The Shanghai Composite .SSEC narrowed earlier losses of as much as 2.6 percent to trade 0.1 percent lower.

Jingyi Pan, a market strategist at IG in Singapore, said the market fell initially after news at the weekend that President Xi Jinping wants to create a new cabinet-level committee to coordinate financial oversight, sparking concerns of further policy tightening.

Asian markets also rode the updraft from a strong Wall Street performance on Friday.

----The chances of a Fed rate hike in December fell to 43.1 percent after the data came out from 55 percent late on Thursday, according to the CME Group's Fedwatch tool.

China Economic Expansion Exceeds Estimates on Factory Rebound

Bloomberg News
China’s economy maintained its momentum last quarter, as global trade and domestic demand spurred a pickup at the nation’s factories.

Key Points

  • Gross domestic product increased 6.9 percent in the second quarter from a year earlier, compared with a 6.8 percent median estimate in a Bloomberg survey, matching the pace of expansion in the first quarter
  • Industrial output rose 7.6 percent in June from a year earlier, compared with an estimated 6.5 percent increase
  • Fixed-asset investment climbed 8.6 percent in the first half of this year, versus a median forecast of 8.5 percent gain
  • Retail sales jumped 11 percent from a year earlier in June, compared with a median estimate of 10.6 percent in a Bloomberg survey
-----"The immediate driver is much stronger industrial production, which is being lifted by many factors: recovering exports, very low inventory, robust retail sales and investment-led demand," said Gene Ma, chief China economist at the Institute of International Finance in Washington.

"It shows that Beijing’s financial deleveraging was well-timed and carefully targeted not to have much spillover on the real economy," said Rob Subbaraman, chief economist for Asia ex-Japan at Nomura Holdings Inc. in Singapore. "Fiscal stimulus remains an important driver of growth. It’s also encouraging to see more signs of rebalancing with the pickup in retail sales growth."

July 17, 2017 / 2:43 AM / 9 minutes ago

Oil prices rise on strong China demand, signs of U.S. output slowdown

SINGAPORE (Reuters) - Oil prices rose on Monday, supported by a slowdown in the growth of rigs looking for crude in the United States and because of strong refinery demand from China.
Brent crude futures were at $49.10 per barrel at 0454 GMT, up 18 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $46.70 per barrel, up 16 cents, or 0.3 percent.
Both benchmarks extended gains from strong performances last week.

Analysts said the rising prices were a result of strong demand as well as signs that a relentless climb in U.S. oil production was slowing.

----U.S. drillers added two oil rigs in the week to July 14, bringing the total to 765, Baker Hughes said on Friday.

While that is the highest level since April 2015, the rate of additions has slowed. New rigs over the past four weeks averaged five, the lowest since November 2016.

----Chinese refineries increased crude throughput in June to the second highest on record, with some independent plants raising output even as state oil majors prepare to take drastic steps to cut production during the peak summer season.

Throughput last month hit 46.08 million tonnes, or 11.21 million barrels per day (bpd), a 2.3-percent rise from a year ago and up from May's 10.98 million bpd, data from the National Bureau of Statistics (NBS) showed on Monday.

The number was just short of December's record high of 11.26 million bpd.

July 16, 2017 / 10:07 AM / 20 hours ago

U.S.-China trade talks sputtering at 100-day deadline

SHANGHAI/BEIJING (Reuters) - Bilateral talks aimed at reducing the U.S. trade deficit with China have yielded some initial deals, but U.S. firms say much more needs to be done as a deadline for a 100-day action plan expires on Sunday. 

The negotiations, which began in April, have reopened China's market to U.S. beef after 14 years and prompted Chinese pledges to buy U.S. liquefied natural gas. American firms have also been given access to some parts of China's financial services sector.  

More details on the 100-day plan are expected to be announced in the coming week as senior U.S. and Chinese officials gather in Washington for annual bilateral economic talks, rebranded this year as the "U.S.-China Comprehensive Economic Dialogue."

"We hope to report further progress on the 100-day deliverables next week," a U.S. Commerce Department spokesman said on Saturday. "That will be the basis for judging the extent of progress."

The spokesman declined to discuss potential areas for new agreements since a May 11 announcement on beef, chicken, financial services and LNG.

Earlier in April, when Chinese President Xi Jinping met U.S. President Donald Trump for the first time at his Florida resort, Xi agreed to a 100-day plan for trade talks aimed at boosting U.S. exports and trimming the U.S. trade deficit with China.

We close on China today, with President Xi consolidating his power, and removing potential rivals ahead the 19th Communist Party Congress due to be held in October or November this year. Below, sunset for Chongqing’s Sun Zhengcai. Is it any wonder that China’s GDP figures always meet or exceed the script?

Downfall of Chinese Rising Star Points to Xi Power Play

By Ting Shi and Keith Zhai
16 July 2017, 22:41 GMT+1
The fall from grace of a rising star in China’s Communist Party sheds light on how a reshuffle of the country’s top officials may play out under the leadership of President Xi Jinping later this year.

Sun Zhengcai, 53, the youngest member of the ruling Politburo, was replaced Saturday as party chief of the southwestern metropolis of Chongqing. He is under investigation for violating party regulations, according to four officials with knowledge of the matter.

The officials said they attended a municipal meeting in Chongqing on Sunday, where they were told by a senior local party member that Sun severely damaged the party’s interests. The officials, who asked not to be identified because the discussions were private, said they were urged to eliminate Sun’s influence and were told that senior local officials committed serious mistakes under Sun’s guidance. The officials said they were also exhorted to follow the instructions of the central leadership and President Xi’s teachings.

Sun’s downfall underscores Xi’s dominance ahead of a party congress that will set the tone for his second five-year term as president, analysts said. Sun’s age and rank had positioned him to advance to the Politburo’s smaller, supreme Standing Committee at the upcoming party congress. That could have set up him for a top leadership post after 2022.

-----The 19th Party Congress is expected to be held in the final quarter of the year and will mark the halfway point for Xi’s presumed term in power. Based on recent retirement conventions, he and Premier Li Keqiang are the only ones on the seven member Standing Committee expected to stay on.

Amassing Power

The president has been amassing power ahead of the reshuffle. Xi was given the status of “core leader" at a party conclave last October, a significant semantic change in China’s elite politics, which has for more than three decades stressed collective leadership. And he’s undertaken a sweeping crackdown on graft in the party.

That could give him the opportunity to fill the party’s top positions with allies. Sun was replaced by his longtime associate Chen Miner, 56, who was party chief of the southwestern province of Guizhou.

The shakeup in Chongqing comes before an annual meeting of party elites in the seaside resort of Beidaihe -- expected to be held in early August -- which will review key decisions ahead of the party congress.

“The Master said, “The gentleman understands what is right, whereas the petty man understands profit.”


Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Not the usual suspects today. Today southern Europe is facing a drought disaster. But what will it mean for European food prices later in 2017, and how much of a drag will it be on southern Europe’s already weak economy?
“Our future begins on January 1, 1999. The euro is Europe’s key to the 21st century. The era of solo national fiscal and economic policy is over.”

German Chancellor Gerhard Schröder, December 31, 1998

July 14, 2017 / 5:42 PM / 2 days ago

One of worst droughts in decades devastates South Europe crops

ROME/MADRID (Reuters) - Italian durum wheat and dairy farmer Attilio Tocchi saw warning signs during the winter of the dramatic drought to come at his holding a mile away from the Tuscan coast.

"When it still hadn't rained at the beginning of spring we realized it was already irreparable," he said, adding that he had installed fans to try and cool his cows that were suffering in the heat.

Drought in southern Europe threatens to reduce cereal production in Italy and parts of Spain to its lowest level in at least 20 years, and hit other regional crops including olives and almonds.

Castile and Leon, the largest cereal growing region in Spain, has been particularly badly affected, with crop losses estimated at around 60 to 70 percent.

"This year was not bad, it was catastrophic. I can't remember a year like this since 1992 when I was a little child," said Joaquin Antonio Pino, a cereal farmer in Sinlabajos, Avila.

Pino said many of his fields had not even been harvested, because crop revenues would not cover the wages of laborers who gathered them.

While the EU is collectively a major wheat exporter, Spain and Italy both rely on imports from countries including France, Britain and Ukraine.

----Spain and Italy are also among the world's top producers of olive oil.

Production in both countries is expected to fall, but the decline is likely to be particularly steep in Italy, where drought is the latest headache for olive growers already plagued by insects and a bacterial disease in recent years.

A 60 percent drop in Italian output is forecast by the International Olive Council.

"We expected good production this year, but it hasn't turned out like that," said Francesco Suatoni, who tends about 4,000 olive trees on the fringe of the ancient town of Amelia, in Umbria, central Italy.

Holding up a branch with small, shriveled pods on it he added: "Each little ball could have been an olive, but it's scorched.

"This year we expect to produce 50 percent less than last year. Let's hope not, but it will be very difficult to have a good crop."

Other crops have been damaged, and Italy's agricultural association Coldiretti has estimated the drought could cost the nation's farmers more than 1 billion euros.

"The drought is affecting, to a greater or lesser extent, all crops in Spain, even those that rely on greenhouses, because there's a limit on the amount of water available," said Jose Ugarrio, analyst at the Spanish young farmers' association.

The production of nuts such as almonds and pistachios has also fallen sharply.

"We expect a 23 pct drop in almond production this year from last year," Ugarrio said.
“The euro is a sickly premature infant, the result of an over-hasty monetary union.”

German Opposition leader Gerhard Schröder, March 1998
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?

Indian Railways launches first solar-powered diesel electrical multiple unit train

By Tamal Nandi , ECONOMICTIMES.COM|Updated: Jul 14, 2017, 04.18 PM IST
Indian Railways today launched first solar-powered DEMU (diesel electrical multiple unit) train from the Safdarjung railway station in Delhi. The train will run from Sarai Rohilla in Delhi to Farukh Nagar in Haryana. A total of 16 solar panels, each producing 300 Wp, are fitted in six coaches.

The cost of these solar panels, manufactured under 'Make in India' initiative, is Rs 54 lakh. This is the first time in the world that solar panels are being used as grid in railways.
In last year's railway budget, Railway Minister Suresh Prabhu had announced that railways would generate 1,000 MW of solar energy in the next five years. Solar-powered DEMU trains are part of this plan. "Indian Railways is committed to promote clean and renewable energy," Prabhu said during the launch of the train.
Ravindra Gupta, Member (Rolling Stock), Railway Board, said solar power would be introduced first in urban trains and later in long-distance trains as well.

The railways are planning to introduce nearly 50 more such coaches in the coming days.
Nearly Rs 700 crore will be saved by Indian Railways annually once the full project is implemented, according to Ravinder Gupta, the CEO of Indian Railways Organisation for Alternative fuel.
He said that railways could save 5.25 lakh litres of diesel per such a train in 25 years. The railways will be able to save Rs 3 crore per train in the same period. The solar power will help in reducing 1,350 tonnes of carbon dioxide emission per train in 25 years. 

The monthly Coppock Indicators finished June

DJIA: 21,350 +196 Up. NASDAQ:  6,140 +235 Up. SP500: 2,423 +166 Up.

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