Tuesday, 25 July 2017

NK An Autumn War? China v India Over Doklam?

Baltic Dry Index. 977  unch.     Brent Crude 48.88

Today it’s mostly about wars. USA v North Korea.  Is China about to wring India’s “chicken neck?”

We open today with China-North Korea-USA news. Information, disinformation, or is President Trump about to take military action later this summer or autumn? It looks like our complacent, big bubble, debt fuelled markets, are about to get a big dose of risk-off. For more on the developing China v India confrontation, scroll down to Crooks Corner.

Below, something seems to have changed. Both America and China seem to be preparing for war on the Korean peninsula.

July 25, 2017 / 5:14 AM / an hour ago

China preparing for potential crisis with North Korea - report

(Reuters) - China is preparing for a potential crisis with North Korea by increasing its defences along their shared border, including establishing a new border brigade and building bunkers for civilians, the Wall Street Journal reported. 

China has been strengthening its defences along the North Korean border since Pyongyang's first nuclear test in 2006, including building a fence along parts of the border and stepping up patrols.

China has also realigned military forces in the country's northeast, the report added, citing Chinese military and government websites and Chinese and foreign experts.

The Chinese government has repeatedly said there can be no military solution for the North Korea issue.
China is in the midst of a broad military reorganisation and modernisation programme.

On Monday, Chinese Defence Ministry spokesman Wu Qian told reporters he could not answer a "hypothetical" question on what China's military would do in the event of a clash on the Korean peninsula.

China has long worried about its porous borders and potential for war or unrest to spill over into China, and had stepped up border defences in other troublesome areas, such as with Myanmar and Central Asian nations.

US sees more signs North Korea is preparing another missile test

Updated 2125 GMT (0525 HKT) July 24, 2017
North Korea appears to be preparing for another missile test, according to a US Defense official. The official said that transporter vehicles carrying ballistic missile launching equipment were seen arriving in Kusong, North Korea on Friday.

The official said that when such equipment is seen, a launch could occur within six days, which would coincide with the upcoming July 27 North Korean Holiday celebrating the armistice which ended the Korean War.

Last Wednesday, CNN reported that US intelligence indicated that North Korea is making preparations for another intercontinental ballistic missile (ICBM) or intermediate range missile test. Two administration officials familiar with the latest intelligence confirmed they'd seen indicators of test preparations. US satellites have detected new imagery and satellite-based radar emissions indicating that North Korea may be testing components and missile control facilities for another ICBM or intermediate launch, officials say.

Kusong has been the site of North Korean missile tests in the past, including a May test of a KN-17 intermediate range missile which traveled almost 500 miles before splashing down in the Sea of Japan/East Sea, hitting the water about 60 miles from Vladivostok in eastern Russia, according to US officials.

Top U.S. General Hints at Military Action Against North Korea in a ‘Few More Months’

The chairman of the Joint Chiefs of Staff says the U.S. might use force against North Korea as early as this fall. Did you hear that, Pyongyang? How about you, Beijing?

Gordon G. Chang  07.25.17 1:00 AM ET
Several media outlets have reported that Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, said over the weekend that war with North Korea was not “unimaginable.” What has gone unreported is that he also suggested the administration is giving diplomacy only “a few more months.”

Dunford’s comments, sure to be heard in Beijing and Pyongyang, come as the Trump administration is hinting, with various degrees of subtlety, that it is willing to kill Kim Jong Un, the North Korean despot.

First, Dunford. “As I’ve told my counterparts, both friend and foe, it is not unimaginable to have military options to respond to North Korean nuclear capability,” he said at the Aspen Security Forum in a conversation with NBC’s Andrea Mitchell. “What’s unimaginable to me is allowing a capability that would allow a nuclear weapon to land in Denver, Colorado. That’s unimaginable to me. And so my job will be to develop military options to make sure that doesn’t happen.”

North Korean Travel Ban Could Disrupt Studies

Rare and hard-fought academic partnerships are left in limbo.
By | July 24, 2017
On Friday (July 21), the US State Department issued a travel ban against US passport holders traveling to North Korea. The travel restriction, prompted by concerns over North Korea’s law enforcement practices, including the long-term detention of people suspected of committing crimes, has suspended scientists’ plans for traveling to the nation.

“[I]f we are not allowed to travel to the DPRK [Democratic People’s Republic of Korea] this fall it will certainly delay, if not undermine altogether, our long-term plans for scholarly exchange with North Korea,” says Charles Armstrong, a history professor at Columbia University, in an email to The Scientist. Armstrong had organized a trip for himself and three scientists to visit Kim II Sung University in North Korea in the hopes of building relationships with researchers and scholars there. “[B]ut it is now up in the air due to the uncertainty of the new ban.”

The State Department confirmed to The Scientist that the travel restriction will go into effect 30 days after it posts a notice to the Federal Register, which is expected this week. US passport holders can apply for exemptions “for certain limited humanitarian or other purposes,” department spokesperson Heather Nauert writes in an email, but details are not yet available.

In ordinary market news, today and tomorrow it’s all about the Fed meeting.

July 24, 2017 / 1:37 AM / 8 hours ago

U.S. dollar, bond yields rise, with focus on Fed

NEW YORK (Reuters) - The U.S. dollar rose from its lowest in more than a year and U.S. Treasury yields climbed on Monday as investors braced for news from this week's U.S. central bank meeting and possible hints on when the next interest rate hike is coming.

The Nasdaq hit a record high ahead of a big week of technology earnings reports, though stocks on global markets were mostly lower. [.N/C]

Developments in Washington, weak U.S. economic data and reduced inflation expectations have weighed on the dollar for much of the month.

The dollar index was last trading 0.2 percent higher at 94.002.

Many analysts and investors expect the Federal Reserve to say it will begin reducing its bond portfolio at its September meeting, but will await firmer indications on the timing of this effort at this week's two-day meeting, which begins Tuesday.

Further U.S. rate hikes are not seen as likely until December. Futures traders are pricing in a 47-percent chance that the Fed will raise rates at its December meeting, according to the CME Group’s FedWatch Tool.

----Benchmark 10-year notes were last down 7/32 in price to yield 2.26 percent, up from 2.23 percent on Friday. Yields have fallen from 2.40 percent on July 7. Treasuries have rallied in the past two weeks on what analysts said are mainly technical factors.

Data this week includes U.S. gross domestic product for the second quarter which is due on Friday.

This week also is expected to be the busiest for U.S. corporate results this reporting period.

After the market closed, shares of Google parent Alphabet, one of the high-flying "FANG" stocks, traded down 2.2 percent following the company's quarterly report and dragged on Nasdaq 100 futures.

We end for the day with Brexit.  Suddenly the EUSSR is waking up to their hard reality of life after Brexit.   Looks like no one in the rump-EUSSR made any plans for Great Britain leaving.  But there’s still hope that EUSSSR sanity can prevail over the EC’s Barmier and Drunker.
“A good politician is quite as unthinkable as an honest burglar.”
H. L. Mencken

July 24, 2017

A quick UK-EU free trade deal is possible

We often hear from remain voters, that a free trade agreement (FTA) with the EU will take seven years as Canada’s Comprehensive Economic and Trade Agreement (CETA) did. However, I am confident that a bilateral UK-EU FTA does not need to take anywhere near as long. Here’s why.

Unlike all other countries seeking FTAs with the EU, we have the unique advantage of currently having no tariffs, quotas or unnecessary customs or trade barriers with the EU to negotiate away. With Canada’s FTA with the EU the first four years were largely spent on human rights, on dispute settlement and on negotiating away the quotas, customs barriers and 16,500 tariffs between Canada and the EU. This will not be the case with the UK as we have no tariffs or quotas to negotiate away and as we already have 100 per cent legal and regulatory equivalence with the EU. The EU’s FTA with the South Korea took about three and a half years to negotiate and Hong Kong’s FTA with the EU took just two years and ten months. Under Tony Abbott’s leadership, Australia negotiated three new FTAs in just one year. Even Karel De Gucht, the EU’s Trade Commissioner from 2010 to 2014, has said a UK-EU FT A said ‘I am reading everywhere that it takes five, six, seven, eight years to do a trade negotiation. Yes, that’s true but it’s not for technical reasons, it’s because you can’t get an agreement. Technically you could make an agreement within a very reasonable period of time because we know each other’. The EU’s own Trade Commissioner, Cecilia Malmström, has herself said that the EU will stroke a FTA with the UK ‘for sure’ and the President of the European Council, Donald Tusk, made it clear in his reply letter to the letter invoking Article 50 that the EU is also aiming for a FTA with the UK. The leaders of Belgium and France have very recently put pressure on the European Commission (EC) for it to progress sooner onto negotiating a FTA with the UK.

It would be much simpler, both for the UK and the EU, for us to go from minimal customs checks, zero tariffs and quotas to minimal customs checks, zero tariffs and quotas (to retain the status quo) than it would be to go from minimal customs checks, zero tariffs and quotas to tariffs, quotas and extra customs checks.

----- We have a second unique advantage of already having 100 per cent legal and regulatory equivalence with the EU as we have been an EU member state ever since 1973. We will still have that 100% equivalence on 1st April 2019 due to the so-called “Great Repeal Bill” (European Union (Withdrawal) Bill). No other country seeking a FTA with the EU has already had 100 per cent equivalence when trade negotiations began. We also the third unique advantage of already being, by far and away, the EU’s largest single market and most important export destination in the entire world. In 2015, we had a huge £60bn trade deficit in goods with the EU. The EU exports €290bn worth of goods to the UK every year and 5-6 million EU jobs rely on exports to the UK. Why would the EU put these jobs and this trade and profit at risk by unnecessarily delaying a FTA or by unnecessarily wasting 7 years on an FTA which could be done much more quickly? This is another unique advantage as the incentive to continue existing, mutually-beneficial trade (and the disincentive of losing this already-existent, mutually beneficial trade) is significantly greater than starting from scratch and having little/no trade before as is the case with all other countries seeking FTAs with the EU.

'You're a shambles, Merkel!' German leader warned 750,000 jobs on line over Brexit stance

ANGELA Merkel’s administration was today branded a shambles over Brexit as industry leaders warned 750,000 manufacturing jobs face the axe due to her negotiating stance.

PUBLISHED: 10:44, Mon, Jul 24, 2017 | UPDATED: 13:05, Mon, Jul 24, 2017
Political opponents ripped into the German chancellor, saying businesses were “very concerned” by her approach and bemoaning that in Berlin “nobody is in charge” of directing the divorce talks towards a good result. 

Mrs Merkel was accused of attempting to “humiliate” Britain by pushing for a punitive deal and of ignoring top industry figures who fear the economic fallout from such a strategy. 

The blistering broadside came from two senior figures in the German Free Democrats (FDP), which is currently set for a crucial role as kingmaker when the next coalition government is formed in September.

Germany, along with other member states, has shaped Europe’s conditions for the ongoing divorce talks with the UK but has handed over control of all the heavy lifting to the Jean-Claude Juncker’s EU Commission. 

As a result the chancellor has largely been reluctant to talk about Britain’s decision to leave, preferring to focus instead on completing the crumbling eurozone with further federalisation. 

But now dissension against that stance is starting to grow with the implications of a no-deal Brexit, and the possibility of tariffs being imposed on German exports, causing concern amongst employers. 

Influential MEP Michael Theure, who is the FDP’s spokesman on economics, said it was time for the government in Berlin to take back control of the talks and ensure they end in a good free trade deal. 

He told the Telegraph: “We are hearing an uttering of concerns from German companies and trade unions about what could happen if there is a crash Brexit and no deal in place. Criticism is growing.

“Small enterprises are very concerned. There are also a lot of German companies that rely on financing from the City of London, and they are very happy with the service they get now.”

The FDP is calling for a special “Brexit Cabinet” to be set up in Berlin to help inject some purpose into Mrs Merkel’s thus far lacklustre approach to the negotiations. 

‘We RELY on you’ Ireland panic as Brexit threatens £53.5bn short-cut across UK for exports

IRELAND’S food exporting ‘short-cut’ to Europe via the UK could be cut after Brexit, the country’s haulage experts have warned.

By Joey Millar PUBLISHED: 08:06, Mon, Jul 24, 2017 | UPDATED: 09:59, Mon, Jul 24, 2017
Irish food currently reaches mainland Europe in a little over 10 hours by cutting across the British mainland - a route that may be cut off or slowed after the UK leaves the European Union (EU).

This would force hauliers to ship Irish food via achingly-slow ferries, a move which could double or even triple transport times to European markets.

Renewal, a tax and customs agency working on behalf of the Irish government, said the issue of food transportation to Europe was “one of the biggest challenges” after Brexit.

And Freight Transport Association Ireland admitted the country was in a vulnerable situation due to its dependence on its nearest neighbour. 

Manager Aidan Flynn told Politico: “Ireland is reliant on that accessibility to the UK more than any other country in Europe.

“We’re all looking for transition, in terms of whatever changes are going to be required … but effectively, if there’s no likelihood of a plan by October 2018 in terms of UK-EU negotiations you’re going to be without a doubt going into … a cliff-edge situation.”

Haulage through the UK will most likely be very different for Irish companies after Brexit. 

We hold these truths to be self evident: that all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness outside of the EUSSR.”

With grateful thanks to the writers of the US Declaration of Independence.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, in other Asian war news, will China attack India to cut off Bhutan and India’s vulnerable North East?  Is China about to try to wring India’s “chicken neck," the Siliguri corridor?”

Construction at Bhutanese Tri-Junction Will Harm Our Security Interests, India tells China

New Delhi: India has told China that construction of a road in the Doklam area of Bhutan would harm Indian security interests as well as violate a written understanding between Indian and Chinese Special Representatives on the border issue that the status of the boundary at any tri-junction would be resolved only with participation of the concerned third country.

Two weeks after the Chinese side started building a road in territory at the tri-junction that Thimphu and New Delhi both say is inside Bhutan but which Beijing insists is in China, the Indian government said on Friday that it remains “deeply concerned at the recent Chinese actions and has conveyed to the Chinese government that such construction would represent a significant change of status quo with serious security implications for India”.

The “security implications” are serious as Chinese construction activity usually precedes a strong claim on the territory. The Doklam area – which is part of Bhutan, but now claimed by China – will bring the Chinese even closer to the vulnerable ‘chicken neck’ Siliguri corridor that connects West Bengal and the rest of India to the north-eastern parts of the country.

July 24, 2017 / 5:19 AM

China warns India not to harbour illusions in border stand-off

BEIJING (Reuters) - China's defence ministry on Monday warned India not to harbour any illusions about the Chinese military's ability to defend its territory, amid a festering border dispute.

The stand-off on a plateau next to the mountainous Indian state of Sikkim, which borders China, has ratcheted up tension between the neighbours, who share a 3,500-km (2,175-mile) frontier, large parts of which are disputed.

"Shaking a mountain is easy but shaking the People's Liberation Army is hard," ministry spokesman Wu Qian told a briefing, adding that its ability to defend China's territory and sovereignty had "constantly strengthened".

Early in June, according to the Chinese interpretation of events, Indian guards crossed into China's Donglang region and obstructed work on a road on the plateau.

The two sides' troops then confronted each other close to a valley controlled by China that separates India from its close ally, Bhutan, and gives China access to the so-called Chicken's Neck, a thin strip of land connecting India and its remote northeastern regions.

India has said it warned China that construction of the road near their common border would have serious security implications.

Can China do a repeat of 1962 in 2017 ?

Siliguri Corridor

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?

No update today. Normal service resumes tomorrow.

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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