Thursday, 6 July 2017

Hamburg Minus One.

Baltic Dry Index. 847 -24     Brent Crude 48.12

We are one day away from the Great Pow Wow in Hamburg. Which nation(s) will walk away the winner? Which nation(s) will crawl away as loser? Never has a G-20 summit been more hyped, or more acrimonious in the build up. All the main protagonists have held pre-summit meetings to shore up allies. No G-20 summit has ever had a less predictable outcome. Will it be a new trade war, or will everyone back down? But it’s hard for anyone to back down, given all the pre-summit hype.

Below, how the G-20 summit is playing out in the markets. Will Trump’s America start beating China over North Korea? Will China and Germany really gang up on Trump’s America. What will Russia get from a rift between America and Europe, or have they already got what they wanted?  How did Germany let it all come to this?

Asian markets adrift amid global uncertainty

Published: July 5, 2017 10:53 p.m. ET

Trading mixed ahead of G-20 summit as oil futures rebound

Equity markets in Asia struggled for direction early Thursday after underwhelming overnight moves in Europe and the U.S., as investors adopted a collective wait-and-see attitude.

Market participants are especially concerned about the repercussions of North Korea’s missile launch earlier this week, in addition to a Group of 20 meeting in Germany and Friday’s U.S. jobs report.

Given those factors, markets are “quite contained so far,” said Arthur Kwong, head of Asia-Pacific equities at BNP Paribas Investment Partners.

Most stock indexes in Asia have stayed close to Wednesday’s closing levels. Taiwan’s Taiex Y9999, -0.43%   was recently the only benchmark that was more than 0.3% off yesterday’s finish; it dropped 0.6%.

Oil prices fell 4% overnight. That put an end to what had been the longest uptrend in at least five years for U.S. and global crude benchmarks. They rose for eight consecutive sessions, following five straight weeks of declines.

“Oil prices collapsed as U.S. markets reopened, with investors taking a glass-half-empty approach to events in the market,” ANZ Research analysts said.

Australia’s energy stock subindex was down 0.6%, helping to push the S&P/ASX 200 XJO, -0.09%   0.3% lower. Oil prices also hit the Nikkei NIK, -0.55%  , which was down 0.3% as distributor JXTG 5020, -2.72%   slid 2.6% and explorer Inpex 1605, -0.97%   fell 1%.

In Hong Kong, major Chinese oil companies PetroChina 0857, -1.42%   and Cnooc 0883, -1.26%   fell about 1%. But the Hang Seng Index HSI, -0.32%   was slightly higher as insurers continued to gain.

Thu Jul 6, 2017 | 4:05am BST

Ahead of fractious G20, Germany and China pledge new cooperation

Ties between China and Germany are about to enter a new phase, China's president said, as he met the German chancellor before a G20 summit that is expected to highlight their differences with the United States on a host of issues.

President Xi Jinping and Chancellor Angela Merkel pledged on Wednesday to work together more closely on a range of issues, two days ahead of the G20 summit in Hamburg that U.S. President Donald Trump is also due to attend.

Trump's testy relationship with both China and Germany is pushing the two countries closer together, despite Berlin's concerns about human rights in China and frustrations over market access.

"Chinese-German relations are now about to have a new start where we need new breakthroughs," Xi told a joint news conference with Merkel in Berlin. He said he hoped to make a "new blueprint, set our sights on new goals and plan new routes" for cooperation during his visit to Germany.

"We will have difficult discussions, since bringing 20 states together with all their developments and ideas is not easy," Merkel said.

Tension is likely both at the summit and outside it. Thousands of protesters are expected to demonstrate for a raft of causes, ranging from anti-globalisation to failure to tackle climate change. Already, German police have used water cannon to disperse around 500 anti-capitalist protesters.

Much of the tension will revolve around Trump. In an article for German newspaper Handelsblatt Japanese Prime Minister Shinzo Abe urged the G20 states to continue working together on climate protection, after Trump pulled the United States out of the 2015 Paris agreement on climate change policy.

And World Bank President Jim Yong Kim told Handelsblatt he agreed with Merkel on climate change, saying: "We cannot wait". In contrast to Trump's protectionist stance, Kim also stressed that free trade was key to alleviating poverty and boosting prosperity.

Merkel has lashed out at Trump's administration for taking the view that globalisation is creating winners and losers. She told the newspaper Die Zeit that as G20 president, she had to work on reaching agreement rather than contributing "to a situation where a lack of communication prevails".

Wed Jul 5, 2017 | 7:37pm BST

Exclusive: Siemens turbines delivered to Crimea despite sanctions - sources

Russia has delivered electricity turbines made by Germany's Siemens to Crimea, a region subject to European Union sanctions barring EU firms from supplying it with energy technology, three sources with knowledge of the delivery told Reuters.

Reuters was unable to determine if Siemens knew of or condoned the equipment transfer, but the move exposes the German company to potential accusations of indirect sanctions-busting and of not taking sufficient safeguards to ensure its equipment does not end up on territory most countries view as illegally annexed, say legal experts.

"Siemens has not delivered turbines to Crimea and complies with all export control restrictions," said Wolfram Trost, a spokesman for Siemens in Munich, when asked to confirm the turbine transfer to Crimea.
Citing client confidentiality, he did not answer written questions asking whether Siemens was aware that the turbines had been shipped to Crimea and whether it would now be activating or servicing them.

Russia needs the turbines for two Crimean power plants the Kremlin wants to get up and running to fulfill a promise, made by President Vladimir Putin, to ensure a stable power supply for the region's residents after it was annexed by Moscow from Ukraine in 2014.

Delivery of the turbines, intended for the two new power stations under construction, had been delayed for over a year because the firms involved feared violating EU sanctions, people involved in the project have told Reuters.

Russia's Energy Ministry, which oversees the Crimea power plants project, declined to comment. It referred questions to Technopromexport, the Russian state-owned firm which is building the plants. Technopromexport declined to comment.

In other market news, is the Fed about to take away the punch bowl? US stock markets have never looked more vulnerable to a summer correction.

B. of A. warns the rise of ETFs is distorting the stock market

Published: July 5, 2017 5:40 p.m. ET

Vanguard holds more than 5% in 491 of S&P 500 stocks

The number of passive investors who trade stocks via exchange-traded funds has surged in recent years in what some see as a sign of a dysfunctional market in the making.

Strategists at Bank of America Merrill Lynch, led by Savita Subramanian, earlier this week warned in a report that the surge of ETFs is distorting the stock market and making it less efficient in the process.

----ETFs currently account for nearly a quarter of U.S. stock-market trading volume versus 76% for individual stocks. Three years ago, ETFs accounted for 20%. Meanwhile, the percentage of equity-fund assets has jumped in the wake of the U.S. financial crisis, rising to 37% in 2017 from 19% in 2009, according to Bank of America.

“Investors have increasingly shifted to passive investments: Clients have been net buyers of over $160 billion in ETFs versus net sellers of over $200 billion in single stocks since 2009,” said Subramanian, citing Bank of America Merrill Lynch’s equity client flow data.

At the forefront of this charge has been Vanguard, whose share of the S&P 500 SPX, +0.15%  market capitalization doubled from 2010 to 6.8% today, Subramanian said. In fact, the number of S&P 500 stocks in which Vanguard holds more than a 5% stake totaled 491 recently, versus 116 in 2010. Put another way, only nine stocks in the S&P 500 are not owned by the investment management giant or have less than 5% Vanguard ownership.

Now Fed Officials Are Starting to Wonder If the VIX Is Too Low

By Oliver Renick
Wondering why three Federal Reserve officials were moved last week to make public pronouncements about rising asset prices? Evidently, it’s because of the potential for a “buildup of risk to financial stability.”

At least, that’s one way to read minutes to the June 13-14 meeting, where a few participants expressed concern about “subdued market volatility” and higher valuations. While far from an obsession -- others said rising stocks simply reflect more risk tolerance -- concern about markets is taking a bit more shape of late among policy makers.

For a Fed that has spent half a decade fretting about mistakes that might lay stocks and bonds low, commentary is coming faster now about the danger of pushing them too high. As always, central bankers walk a fine line keeping stimulus flowing to the economy without blowing bubbles in assets.

“We’re seeing this buildup of discussion about asset valuations -- it’s starting to make sense what’s going on,” Stewart Warther, an equity and derivatives strategist at BNP Paribas, said by phone. “There’s an increased focus on preserving financial stability through restraining excess in markets and jawboning and balance sheet reduction are the methods they’re looking at.”

By most measures, markets are calm and prices elevated. The CBOE Volatility Index averaged 10.5 in June, roughly half its historical average, while the S&P 500 touched a record on June 19 that represented a 19 percent annualized gain since it bottomed in March 2009.

It remains hard to get investors to care about any of this for an extended period. The S&P 500 was up 0.2 percent to within about 25 points from a record as of 2:54 p.m. in New York, trading at a P/E of 21.5. The Nasdaq 100 was up 1 percent, its multiple of 25.5 about 30 percent higher than its bull market average.

Fed officials have periodically cautioned investors about elevated prices over the last three years. Never has the impact lasted more than a day or two.

----“We have not yet reached the point that the FOMC could be viewed as an ‘enemy of the market,”’ Michael Shaoul, chairman and CEO at Marketfield Asset Management LLC in new York, wrote in a note to clients. “But stronger equity and credit markets are likely to encourage a faster path for rate hikes in the months ahead.”

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, North Korea. Is the Korean War about to resume? Can the USA really wait until NK gets a nuclear ICBM really capable of reaching LA? With no good options over North Korea, what’s the least bad option around? Do nothing and hope regime change comes from within? Getting China and Russia to join in a new Korean War?

U.S. Threatens Trade With Countries Over Support for North Korea

By Nick Wadhams and Kambiz Foroohar
5 July 2017, 00:02 GMT+1
The U.S. threatened trade ties with countries that continue to do business with North Korea following Pyongyang’s test of an intercontinental ballistic missile, a warning to China and other nations the administration says aren’t doing enough to rein in Kim Jong Un’s regime.

“There are countries that are allowing, even encouraging, trade with North Korea in violation of UN Security Council resolutions,” U.S. Ambassador to the United Nations Nikki Haley said Wednesday at an emergency meeting of the council. “Such countries would also like to continue their trade arrangements with the United States. That’s not going to happen.”

Haley said the U.S. will present a resolution in the coming days with a response “proportionate” to the North Korean action. She wouldn’t detail its contents but said a unified international community could cut off hard currency, restrict the flow of oil and boost air and maritime restrictions. The administration is willing to “go our own path if other countries didn’t join in.”

Haley’s comments signal a more severe U.S. approach to North Korea’s nuclear and missile ambitions days before President Donald Trump and Chinese leader Xi Jinping are due to meet at the Group of 20 summit in Hamburg, Germany. But Trump is also confronting a problem in North Korea that has bedeviled U.S. presidents for decades. Carrying out Haley’s threat could rebound badly for the U.S. and China, and by extension the entire world, given the interdependence of the two countries’ economies.

Trade between the U.S. and China totaled about $600 billion last year, according to International Monetary Fund data. And while China has long been North Korea’s primary trading partner, nations including India, the Philippines, Russia, Thailand and Pakistan also transact trade.

Trump Faces the Limits of China Strategy After North Korean Missile Launch

By Justin Sink and Nick Wadhams
6 July 2017, 00:00 GMT+1
Donald Trump is grappling with the limits of his strategy to rely on China to get North Korea to limit its nuclear and ICBM programs following Kim Jong Un’s July 4 test of an intercontinental ballistic missile.

The U.S. president must now decide whether the test, coupled with the death last month of an American college student who had been imprisoned in North Korea, means giving up on collaboration and more directly confronting Beijing. Those advocating a hard line within the administration are emboldened by the recent North Korean actions, and the White House is weighing a series of gestures that could antagonize President Xi Jinping’s government.

But Trump’s options are limited by practical and economic realities. The president must calibrate a response that would prompt Chinese pressure on Kim without causing difficult repercussions for U.S. interests. Trump must also convince Beijing he’s willing to follow through on his threats, particularly after Chinese authorities appeared to shrug off promises to solve the North Korean issue on his own, if necessary.

Trump has expressed increasing exasperation with China on Twitter. “So much for China working with us - but we had to give it a try!” he said in a tweet on Wednesday.

His United Nations ambassador, Nikki Haley, threatened on Wednesday to cut off U.S. trade with any nation that does business with North Korea. The U.S. will present a new resolution to punish North Korea for its missile test in coming days, Haley said during an emergency session of the UN Security Council.

“We will look at any country that chooses to do business with this outlaw regime,” Haley said.

----So far, Trump’s approach is cautious escalation. The administration plans to increase pressure on China by letting the country know it can be squeezed on economic issues, including currency and trade, according to a State Department official who requested anonymity to discuss internal deliberations. The U.S. is also encouraging other allies to publicly declare how they’re working to cut off North Korea, seeking to build momentum on the world stage.

“I think the Chinese are afraid that if they really put the squeeze on Kim Jong Un he would do something desperate, he could cause a conflict, he could cause a war,” said Gary Samore, a former White House coordinator for arms control and weapons of mass destruction under President Barack Obama.

“Or if North Korea did collapse you’d have chaos, North Korea being absorbed by the south, refugees fleeing across the border,” according to Samore, now the executive director for research at Harvard University’s Belfer Center for Science and International Affairs.

Kim Jong Un’s Big Nuclear Push Is Closing In on America

Kim Jong Un has sped up North Korea’s nuclear program since he took power in late 2011, testing more powerful weapons and developing longer-range missiles to carry them.

On July 4, North Korea said it had successfully test-fired an intercontinental ballistic missile called the Hwasong-14, a claim that brings the isolated state closer to its aim of building a device capable of hitting the U.S. mainland with a nuclear warhead. The United Nations Security Council will hold an emergency meeting later Wednesday after the U.S. confirmed North Korea’s rocket launch was its first intercontinental ballistic missile.

Still, the launch risks a serious escalation with North Korea’s neighbors and the U.S. over its weapons program. The regime is thought to possess rockets that can hit South Korea and Japan with as many as 20 atomic bombs.

David Wright, a co-director of the Union of Concerned Scientists, wrote on the group’s website that the projectile had the potential to reach all of Alaska and could be a modified version of the Hwasong-12 missile that was launched in May.

Jeffrey Lewis, a scholar at the Middlebury Institute of International Studies at Monterey, California, said: “It’s an ICBM for sure. It appears to be a new design that we had not previously seen. The North Koreans seem to have made quite a lot of progress in the past year.”

“It demonstrated that it could go 6,700 kilometers. There is no reason to think that’s the max,” he said. “I don’t want to speculate until we can measure everything carefully, but it’s possible that it could strike targets in the continental U.S.”

While the regime already possesses the Taepodong-2, which can reach all parts of the U.S., analysts say it has been used only for launching satellites into orbit and probably wouldn’t be suitable for the delivery of nuclear warheads.
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?

Aldi UK marks Solar Independence Day with new solar rollout pledge

Published: 4 Jul 2017,
Aldi UK has marked the fourth Solar Independence Day with the announcement that it will install a further 11,000 solar panels across more than 50 of its stores by the end of the year.

The supermarket has already installed more than 85,000 solar panels on all nine of its regional distribution centres and more than 275 stores across the UK, generating over 17,500 MWh of electricity a year.

This deployment will now be extended by the end of the year, bringing its total store investment in solar to almost £17 million and saving more than 8,100 tonnes of CO2 in the process.

Mary Dunn, communications director at Aldi UK, said: “We are committed to reducing our carbon footprint and harnessing the power of solar energy is just one of the ways we’re doing that.

“It also means that we are using all of our distribution centres and more than a third of our stores across the UK to generate electricity from solar power, marking a further significant step in our journey to reduce greenhouse gas emissions by 30% by 2020, while continuing to grow.”

The announcement comes as the Solar Trade Association (STA) celebrates 2017’s Solar Independence Day, intended to draw attention to the successes of UK solar. 

According to MyGridGB, which tracks the amount of electricity produced from solar and other low carbon sources, solar supplied 6.5% of the UK’s electricity over the last month. Almost one million homes, businesses and schools are thought to have solar on their roofs, while ground mount solar has grown exponentially in recent years to reach in excess of 12.5GW of total UK solar.

Leonie Greene, STA's head of external affairs, said: “This is the fourth year we’ll be celebrating solar and the British solar industry has delivered spectacularly, despite a rocky ride. Since the first Solar Independence Day in 2014 solar power capacity has grown nearly three-fold.

The monthly Coppock Indicators finished June

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

No comments:

Post a Comment