Tuesday, 4 July 2017

Preparing for Hamburg.

Baltic Dry Index. 882 -19     Brent Crude 49.39

The Fourth of July, when we get to play our favorite American guessing game — fireworks or gunshots?


With America closed to celebrate their independence from the tyrant King George the third, we focus today on the coming grand G-20 summit in Germany.
Twenty national egos are headed to Hamburg, Germany, on Friday, for the great potential “Summit of the Century,”  together with a few odds and sods from the EC and EU, intended to give the EC and EU a fig leaf of cover that they still actually matter any more. President Xi is stopping of en-route for a state visit to Russia, i.e. to coordinate their G-20 strategy. Mrs Merkel has already has already hosted a tag-team EUSSR meeting for the same purpose. President Trump hasn’t yet let us know of his strategy, via Twitter.

By all early indications, Hamburg promises to be a “near run thing,” similar to the Battle of Waterloo, where France retained its tradition of losing battles, following the Battle of the Plains of Abraham, and the loss of Quebec.

The lightweight Europeans, still including the much lighter weight than usual, minority governed UK, intend to thump Trump over his pulling out of the greenhouse gas treaty. President Trump is unlikely to really notice much if any effect. Hot air, remains hot air, inside or outside, the Treaty of Paris.

President Xi wants to thump Trump, over his arms deal with Taiwan, and support for Japan’s continued control over China’s Diaoyu Islands.

President Trump intends to thump Xi over China’s dumping of steel exports, and failure to disarm North Korea.

As of now, it is unclear who President Putin intends to thump, but it’s likely to be all of the above, except Presidents Trump and Xi.

If President Trump does thump Xi over steel, it’s likely to result in a TKO for Canada and Germany’s steel producers. I know, I know, it gets a little complicated, but that’s what all the experts and steel gurus say will happen.

Germany backed by flyweight tag-team Europe, has threatened to retaliate with a TKO of its own, against US farmers. While farming aint what it used to be in modern America, the vast majority of farmers in fly-over America, are what got President Trump into the Presidency. While China’s immense over supply of steel production, would definitely feel Trumps impact, President Xi would likely respond by easing up on North Korea. But isn’t this G-20 meeting supposed to come up a plan to defang North Korea.

A good time had by all, there’s hopefully still time to move on, on Saturday, to discuss Syria, Iraq, Iran, Qatar, and Libya, before all finally get around to little things like normalising interest rates, buying more American made goods, and getting on with the job of everyone learning American, and opening up many more Trump Golf Resorts.

While it might just be better to call the whole thing off, that will greatly disappoint the expected 100,000 rioters from all over Europe, plus the Hamburg and other forces police.

China Warns Against ‘Negative’ U.S. Turn as Trump Raises Heat

By Ting Shi
3 July 2017, 13:18 GMT+1
President Xi Jinping’s complaint about a “negative” turn in China’s relationship with the U.S. showed the challenge facing Donald Trump when the two leaders meet in Germany this week.

Xi’s comment during a phone call with Trump on Monday followed several assertive U.S. moves in Asia, including a naval patrol past a Chinese-controlled islet a day earlier. The American president called in part to advance talks on curbing North Korea’s nuclear weapons program, which have progressed little since Xi’s sunny April visit to Trump’s Florida resort.

“Ties are also affected by some negative elements, and the Chinese side has already expressed our stance to the U.S.,” Xi told Trump, according to state broadcaster China Central Television. “China and the U.S. should tightly grasp the overall direction of development based on the consensus we reached at Mar-a-Lago.”

The remarks were Xi’s first acknowledgment of rekindled tensions between the world’s two largest economies ahead of an expected meeting at the Group of 20 summit that begins Friday in Hamburg, Germany. Besides Trump’s frustration with China’s contribution to reining in Kim Jong Un -- expressed in a tweet last month -- members of his administration have also renewed criticism of the country while returning to a harder line on trade.

The risk is that Trump rethinks his early detente with Xi and advances a punitive approach similar to what he advocated during the campaign. Moves such as levying tariffs or boosting ties with Taiwan could prompt retaliation from China, especially as Xi prepares for a key Communist Party party reshuffle.

---- While Trump initially focused on getting China’s help to prevent Kim from developing an intercontinental nuclear missile, other old disputes have been resurfacing. The U.S. has in recent days announced a $1.3 billion arms sale to Taiwan, published a report ranking China among the world’s human-trafficking offenders and called on Beijing to let ailing Noble Peace Prize winner Liu Xiaobo seek cancer treatment abroad.

Whether such moves were isolated, part of a campaign to show China the price of inaction or steps toward a more confrontational strategy was unclear. The U.S. is raising the pressure at a sensitive time for Xi, who must project strength ahead of a party congress in the fourth quarter that will shape his influence into the next decade.

The political atmosphere makes moves toward Taiwan, which China considers a breakaway province and one of “core” issues, particularly provocative. That’s especially true after Trump broke with decades of protocol against interactions with Taiwanese leaders in December and accepted a phone call with the island’s president.

“Going overboard in trying to put pressure on Beijing may prove counterproductive, since it will simply prompt a tit-for-tat response from which the U.S. will not emerge unbruised,” the state-run China Daily said in an editorial Sunday. The piece, titled “It’s unwise for Washington to play the Taiwan card,” warned against any efforts to embrace a congressionally supported push to allow U.S. Navy visits at the island’s ports.

China’s summary of the presidential phone call said that Trump reaffirmed the long-standing U.S. policy recognizing Beijing as the sole legitimate government of China. The White House made no mention of the subject.

Tue Jul 4, 2017 | 5:37am BST

North Korea test-fires ballistic missile ahead of G20 summit

North Korea test-launched a ballistic missile from its western region into the sea off its east coast on Tuesday, South Korea's military said, ahead of a summit of leaders from the Group of 20 nations in Germany later this week.

The missile flew for about 40 minutes and landed in Japan's Exclusive Economic Zone (EEZ), the Japanese government said, adding it had strongly protested what it called a clear violation of UN resolutions.

The missile flew about 930 kilometres (580 miles), the South's Office of the Joint Chiefs of Staff said, adding the altitude reached by the projectile was still being analysed.

North Korea is ignoring repeated warnings from the international community, Japan's Prime Minister Shinzo Abe said on Tuesday. Abe said he will ask the presidents of China and Russia to play more constructive roles in efforts to stop the North's arms programme.

"Leaders of the world will gather at the G20 meeting. I would like to strongly call for solidarity of the international community on the North Korean issue," Abe told reporters.

It was the fourth ballistic missile launched by the North since South Korean President Moon Jae-in took office in May, vowing to use dialogue as well as pressure to bring Pyongyang's nuclear and missile programmes under control.

Following the news of the latest launch, U.S. President Donald Trump wrote on Twitter: "North Korea has just launched another missile. Does this guy have anything better to do with his life?" in a reference to the North's leader Kim Jong Un.

"Hard to believe South Korea and Japan will put up with this much longer. Perhaps China will put a heavy move on North Korea and end this nonsense once and for all!"

In other news, Goldie crashed and burned in commodities, 2017. “Mr Copper” 2.0. Commodity markets and the Baltic Dry Index are all signalling trouble ahead in the rest of 2017, just don’t let on to the mania fuelled global stock markets. China’s wobble resumes, but don’t worry, it’s only a technical correction, say the bulls. US factory activity soared, giving cover for the next Fed rate hike.

Goldman to Review Commodities After Worst Start in a Decade

By Jack Farchy and Dakin Campbell
Goldman Sachs Group Inc., the dominant commodities trader on Wall Street, is reviewing the direction of the business after a slump in the first half of the year, according to people with knowledge of the matter.
By reconsidering the bank’s long-held view that the downturn in profitability is cyclical and will eventually reverse, Chief Executive Officer Lloyd Blankfein, who started his career in the commodities business, is drawing closer to the industry’s prevailing wisdom. Morgan Stanley, JPMorgan Chase & Co., Barclays Plc and Deutsche Bank AG have cut back or exited commodities trading in recent years amid falling revenue and tougher regulation.

While the bank flagged the poor results for the first quarter -- without giving specific numbers -- the weakness has continued and the unit’s start to the year has been the worst in more than a decade, said one of the people, who asked for anonymity to discuss internal deliberations. The commodities division was one of the topics of discussion at a board meeting held in London late last month, the people said.

No decision has been reached and the bank may not pursue large-scale changes, according to the people. It’s common for the bank to review struggling business units to see what can be improved, one of the people said.

----The informal review is being led by Isabelle Ealet, one of three global co-heads of the securities division who ran the commodities unit for five years until 2012 -- a golden age for the division when revenue regularly topped $3 billion per year.

Ealet, who joined Goldman in 1991 as an oil products trader, is known in the industry for her relentless focus on controlling costs. In a rare interview a few years ago with the French magazine L’Expansion, she said: “What I appreciate most is the culture of results. At Goldman Sachs, you are judged on your performance."
Goldman has for decades boasted the leading commodity franchise among Wall Street banks. Its revenue from commodities rose from less than $500 million a year between 1981 and 2000 to a peak of $3.4 billion in 2009, according to a Senate report on U.S. banks’ involvement in the commodity markets.

Metals Trading Has a Paper Fraud Problem

By Mark Burton
For all the high-tech wizardry of modern financial markets, there’s one corner of the commodity world that still depends almost entirely on printed paper -- making it an easy target for crooks.

Buyers and sellers of base metals like copper, aluminum and nickel use documents known as warehouse receipts to prove every pound involved in a transaction actually exists and who owns it. The receipts, from a long list of issuers who often stamp them with holograms and secret codes, have become the linchpin of bank loans backed by the metal as collateral.

But like most pieces of paper, warehouse receipts can be faked, and there are signs that more lenders are being ripped off by crooks exploiting weaknesses in what commodity businesses refer to as trade financing. For the second time since 2014, some banks are facing hundreds of millions of dollars in losses after being tricked into making loans secured by goods that didn’t exist.

“It’s a pervasive problem,” said John Barlow, a partner at Holman Fenwick Willan LLP who advises insurers of banks on risks including trade financing. “There’s an inherent risk in transacting business in this way, and banks face the choice of either accepting that risk, or completely restructuring the way the industry operates,” he said by phone from Dubai.

Lending against commodities sitting in a warehouse somewhere is a bread-and-butter business for banks involved in trade finance, a $4 trillion industry spanning everything from commodities, logistics and shipping. Producers and traders use the deals as a way to quickly get cash by temporarily pledging inventories. Given the global inventory at risk, the incidence of fraud remains relatively rare.

However, warehouse receipts are a favorite target of commodity fraudsters. French lender Natixis SA and Melbourne-based Australia & New Zealand Banking Group Ltd.are facing loan losses after discovering fake documents used to verify nickel stored in Asian warehouses owned by Access World, a subsidiary of Glencore Plc. The deals involved $305 million for ANZ and $32 million to Natixis, according to court filings this year.

The Copper King: An Empire Built On Manipulation

----Sumitomo responded to the probe by "transferring" Hamanaka out of his trading post. The removal of Mr. Copper was enough to bring the shorts on in earnest. Copper plunged, and Sumitomo announced that it had lost over $1.8 billion, and the losses could go as high as $5 billion, as the long positions were settled in a poor market. They also claimed Hamanaka was a rogue trader and his actions were completely unknown to management. Hamanaka was charged with forging his supervisor's signatures on a form and was convicted.
Sumitomo's reputation was tarnished, because many people believed that the company couldn't have been ignorant of Hamanaka's hold on the copper market, especially as it profited from it for years. Traders argued that Sumitomo must have known, as it funneled more money to Hamanaka every time speculators tried to shake his price.

Sumitomo responded to the allegations by implicating JPMorgan Chase and Merrill Lynch. Sumitomo blamed the two banks for keeping the scheme going by granting loans to Hamanaka through structures like futures derivatives. All of the corporations entered litigation with one another, and all were found guilty to some extent. This fact hurt Morgan's case on a similar charge related to the Enron scandal and the energy-trading business Mahonia Ltd. Hamanaka, for his part, served the sentence without comment.

Tue Jul 4, 2017 | 5:37am BST

China blue-chips extend falls as rally unwinds, Hong Kong also down

SHANGHAI, July 4 China stocks fell on Tuesday morning, led by the blue-chip index losing ground for the third straight session following a strong rally on the back of its inclusion in a key MSCI index.

The CSI300 index fell 0.8 percent, to 3,620.69 points at the end of the morning session, while the Shanghai Composite Index lost 0.5 percent, to 3,180.03 points.

"The recent correction is technical as blue-chips had far outperformed the broader market this year, but we see little chances for a major downturn in industry-leading big-caps as they are not overvalued," said Xu Wei, an analyst with Hongxin Securities.

The robust trend in China's "nifty 50", the 50 most representative blue-chips in Shanghai, is broadening to the so-called "MSCI222", and investors could explore opportunities in blue-chips with solid fundamentals as rotation into those stocks is very prominent, Xu added.

U.S. index provider MSCI last month decided to add 222 China-listed stocks to its Emerging Markets Index, tracked by around $1.6 trillion.

The inclusion is widely expected to benefit the long-term development of China's stock market, in particular blue-chips.

Worries over tight liquidity conditions have eased after the mid-year macro-prudential assessment (MPA), although sellers have been pressuring Chinese markets over the past week or so on lingering fears of a cash crunch and slowing economic growth.

China's central bank injected a net 99.5 billion yuan ($14.64 billion) into the financial system via short-and medium-term liquidity tools in June, up 95 percent from the previous month, to ease tight cash conditions at the end of the quarter.

The central bank will hold off on further monetary policy tightening and could even slightly loosen its grip in coming months as a deleveraging drive threatens economic growth and job creation ahead of a leadership reshuffle, policy insiders said.

Mon Jul 3, 2017 | 6:22pm BST

U.S. factory activity jumps to near three-year high, construction spending flat

U.S. factory activity rose sharply in June to its highest level in almost three years suggesting economic growth in the second quarter gained some steam, while construction spending held steady in May.

The Institute for Supply Management (ISM) said on Monday its index of national factory activity rose to a reading of 57.8 last month, its best performance since August 2014, from 54.9 in May.

A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for roughly 12 percent of the overall U.S. economy.

"The ISM index provides further evidence that the prospects for the manufacturing sector remain bright," said Andrew Hunter, an economist at Capital Economics.

The reading adds to encouraging signs that the U.S. economy rebounded strongly in the April-June quarter. Following the data, the Atlanta Federal Reserve raised its forecast for second-quarter GDP to a 3.0 percent annualised rate from its previous forecast of 2.7 percent.

On Friday, the Commerce Department also reported that the U.S. economy grew at a 1.4 percent annual rate in the first quarter, less slowly than previously estimated.

The ISM survey's new orders sub-index rose to 63.5 in June from 59.5 the prior month. A measure of factory employment increased to a reading of 57.2 from 53.5 in May.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, oh what a tangled web America weaves. Obama’s Syrian war leaves blood all over everyone but mostly all over Obama and Clinton. Europe got the traumatised refugees, encouraged to come by Migrant Mad Merkel, continental Europe’s new Overlord.

How America Armed Terrorists in Syria

Another Middle East debacle

Three-term Congresswoman Tulsi Gabbard of Hawaii, a member of both the Armed Services and Foreign Affairs committees, has proposed legislation that would prohibit any U.S. assistance to terrorist organizations in Syria as well as to any organization working directly with them. Equally important, it would prohibit U.S. military sales and other forms of military cooperation with other countries that provide arms or financing to those terrorists and their collaborators.

Gabbard’s “Stop Arming Terrorists Act” challenges for the first time in Congress a U.S. policy toward the conflict in the Syrian civil war that should have set off alarm bells long ago: in 2012-13 the Obama administration helped its Sunni allies Turkey, Saudi Arabia, and Qatar provide arms to Syrian and non-Syrian armed groups to force President Bashar al-Assad out of power. And in 2013 the administration began to provide arms to what the CIA judged to be “relatively moderate” anti-Assad groups—meaning they incorporated various degrees of Islamic extremism.

That policy, ostensibly aimed at helping replace the Assad regime with a more democratic alternative, has actually helped build up al Qaeda’s Syrian franchise al Nusra Front into the dominant threat to Assad.

The supporters of this arms-supply policy believe it is necessary as pushback against Iranian influence in Syria. But that argument skirts the real issue raised by the policy’s history.  The Obama administration’s Syria policy effectively sold out the U.S. interest that was supposed to be the touchstone of the “Global War on Terrorism”—the eradication of al Qaeda and its terrorist affiliates. The United States has instead subordinated that U.S. interest in counter-terrorism to the interests of its Sunni allies. In doing so it has helped create a new terrorist threat in the heart of the Middle East.

The policy of arming military groups committed to overthrowing the government of President Bashar al-Assad began in September 2011, when President Barack Obama was pressed by his Sunni allies—Turkey, Saudi Arabia and Qatar—to supply heavy weapons to a military opposition to Assad they were determined to establish. Turkey and the Gulf regimes wanted the United States to provide anti-tank and anti-aircraft weapons to the rebels, according to a former Obama Administration official involved in Middle East issues.

Obama refused to provide arms to the opposition, but he agreed to provide covert U.S. logistical help in carrying out a campaign of military assistance to arm opposition groups. CIA involvement in the arming of anti-Assad forces began with arranging for the shipment of weapons from the stocks of the Gaddafi regime that had been stored in Benghazi. CIA-controlled firms shipped the weapons from the military port of Benghazi to two small ports in Syria using former U.S. military personnel to manage the logistics, as investigative reporter Sy Hersh detailed in 2014. The funding for the program came mainly from the Saudis.

A declassified October 2012 Defense Intelligence Agency report revealed that the shipment in late August 2012 had included 500 sniper rifles, 100 RPG (rocket propelled grenade launchers) along with 300 RPG rounds and 400 howitzers. Each arms shipment encompassed as many as ten shipping containers, it reported, each of which held about 48,000 pounds of cargo. That suggests a total payload of up to 250 tons of weapons per shipment. Even if the CIA had organized only one shipment per month, the arms shipments would have totaled 2,750 tons of arms bound ultimately for Syria from October 2011 through August 2012. More likely it was a multiple of that figure.

The CIA’s covert arms shipments from Libya came to an abrupt halt in September 2012 when Libyan militants attacked and burned the embassy annex in Benghazi that had been used to support the operation. By then, however, a much larger channel for arming anti-government forces was opening up. The CIA put the Saudis in touch with a senior Croatian official who had offered to sell large quantities of arms left over from the Balkan Wars of the 1990s. And the CIA helped them shop for weapons from arms dealers and governments in several other former Soviet bloc countries.

Flush with weapons acquired from both the CIA Libya program and from the Croatians, the Saudis and Qataris dramatically increased the number of flights by military cargo planes to Turkey in December 2012 and continued that intensive pace for the next two and a half months. The New York Times reported a total 160 such flights through mid-March 2013. The most common cargo plane in use in the Gulf, the Ilyushin IL-76, can carry roughly 50 tons of cargo on a flight, which would indicate that as much as 8,000 tons of weapons poured across the Turkish border into Syria just in late 2012 and in 2013.

One U.S. official called the new level of arms deliveries to Syrian rebels a “cataract of weaponry.” And a year-long investigation by the Balkan Investigative Reporting Network and the Organized Crime and Corruption Reporting Project revealed that the Saudis were intent on building up a powerful conventional army in Syria. The “end-use certificate” for weapons purchased from an arms company in Belgrade, Serbia, in May 2013 includes 500 Soviet-designed PG-7VR rocket launchers that can penetrate even heavily-armored tanks, along with two million rounds; 50 Konkurs anti-tank missile launchers and 500 missiles, 50 anti-aircraft guns mounted on armored vehicles, 10,000 fragmentation rounds for OG-7 rocket launchers capable of piercing heavy body armor; four truck-mounted BM-21 GRAD multiple rocket launchers, each of which fires 40 rockets at a time with a range of 12 to 19 miles, along with 20,000 GRAD rockets.

The end user document for another Saudi order from the same Serbian company listed 300 tanks, 2,000 RPG launchers, and 16,500 other rocket launchers, one million rounds for ZU-23-2 anti-aircraft guns, and 315 million cartridges for various other guns.

Those two purchases were only a fraction of the totality of the arms obtained by the Saudis over the next few years from eight Balkan nations. Investigators found that the Saudis made their biggest arms deals with former Soviet bloc states in 2015, and that the weapons included many that had just come off factory production lines. Nearly 40 percent of the arms the Saudis purchased from those countries, moreover, still had not been delivered by early 2017. So the Saudis had already contracted for enough weaponry to keep a large-scale conventional war in Syria going for several more years.

By far the most consequential single Saudi arms purchase was not from the Balkans, however, but from the United States. It was the December 2013 U.S. sale of 15,000 TOW anti-tank missiles to the Saudis at a cost of about $1 billion—the result of Obama’s decision earlier that year to reverse his ban on lethal assistance to anti-Assad armed groups. The Saudis had agreed, moreover, that those anti-tank missiles would be doled out to Syrian groups only at U.S. discretion. The TOW missiles began to arrive in Syria in 2014 and soon had a major impact on the military balance.

This flood of weapons into Syria, along with the entry of 20,000 foreign fighters into the country—primarily through Turkey—largely defined the nature of the conflict. These armaments helped make al Qaeda’s Syrian franchise, al Nusra Front (now renamed Tahrir al-Sham or Levant Liberation Organization) and its close allies by far the most powerful anti-Assad forces in Syria—and gave rise to the Islamic State.

By late 2012, it became clear to U.S. officials that the largest share of the arms that began flowing into Syria early in the year were going to the rapidly growing al Qaeda presence in the country. In October 2012, U.S. officials acknowledged off the record for the first time to the New York Times that  “most” of the arms that had been shipped to armed opposition groups in Syria with U.S. logistical assistance during the previous year had gone to “hardline Islamic jihadists”— obviously meaning al Qaeda’s Syrian franchise, al Nusra.
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?

Researchers create very small sensor using 'white graphene'

Posted on July 03, 2017
Researchers from TU Delft in The Netherlands, in collaboration with a team at the University of Cambridge (UK), have found a way to create and clean tiny mechanical sensors in a scalable manner. They created these sensors by suspending a two-dimensional sheet of hexagonal boron nitride (h-BN), or 'white graphene' over small holes in a silicon substrate. This innovation could lead to extremely small gas and pressure sensors for future electronics. Hexagonal boron nitride (h-BN) is an interesting material, since it has a honeycomb lattice structure similar to that of graphite. But while graphite conducts electricity, h-BN acts as an insulator. This property makes h-BN popular as a high-end lubricant, especially in industrial applications where electrical conductivity is undesirable. Since h-BN has the added benefit of being chemically and thermally more stable than graphite, it is also used in harsh environments such as space, for example in deep ultraviolet applications.

While layers of the two-dimensional material graphene can be exfoliated from graphite with sticky tape, creating single layers of h-BN is much more difficult. The reason for this is that the layers that make up h-BN 'stick' to one another - and other materials - much more strongly than layers of graphene do. Thus, not many researchers have been able to study the properties of h-BN as a 2D material until now. "There are only two or three institutions in the world that can produce single, two-dimensional layers of white graphite, and the University of Cambridge is one of them", said lead author Santiago J. Cartamil-Bueno. "This project is a success thanks to our effective collaboration with them."

Using a technique called chemical vapour deposition, researchers at the University of Cambridge grew a one-atom thick sheet of h-BN, or 'white graphene', onto a piece of iron foil. They then mailed it to TU Delft in The Netherlands. There, through a series of steps, the Delft researchers transferred the sheet of transparent white graphene onto a silicon substrate containing tiny circular cavities. By doing so, they created microscopic 'drums'. These drums function as mechanical resonators and could be used as infinitesimal gas or pressure sensors, for instance in mobile phones.

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