Monday, 3 July 2017

Trade War Hamburg? Havoc Hamburg?

Baltic Dry Index. 901 -19     Brent Crude 48.86

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith.

With US markets only semi-open today ahead of tomorrow’s Independence Day celebrations, this summer week in the markets tends to kick off the summer doldrums. But this year, it might be different. Europe is full of hot air about a change in policy at the ECB. From easy, easy, to something slightly less than easy. The BOE is talking about raising interest rates soon, while the US Fedster’s are still talking up at least one more rate hike later this year.

At the end of the week, the G-20 plus all their lackey’s, and the dribs and dabs from the EUSSR, all assemble in Hamburg Germany, to gang up on each other, but especially President Trump, who in turn has his own agenda and upcoming fights, and seems inclined to use the occasion to kick off a trade war with steel tariffs. A good time is unlikely to be had by all, except perhaps the expected 100,000 protestors/rioters alleged to also be attending to air a myriad of perceived grievances.  Poor Hamburg, though it’s probably a good time to visit Berlin, Paris, and a host of other European cities, while the hard left hooligans are all away venting their hate in Hamburg.

Below, summer 2017.

Mon Jul 3, 2017 | 3:56am BST

Asian stocks start new month on firm footing, bonds under pressure

Asian stocks held two-years highs on Monday, starting the new month on a solid footing after two quarters of gains while expectations of credit tightening by the world's major central banks kept global bond markets under pressure.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat, staying within a stone's throw of its two-year peak hit last week.

Japan's Nikkei ticked up 0.2 percent while U.S. stock futures gained 0.2 percent.

"Global share markets have so far withstood rises in long-term bond yields," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

Signs of stabilizing in China's economy and a recovery in the European economy helped to boost global share prices in the first half of this year.

A private sector survey on China's manufacturing showed a surprise recovery in activity, adding to the evidence of steadying growth in the world's second largest economy.

The Bank of Japan's tankan corporate survey showed Japanese business sentiment improved slightly more than expected.

On Wall Street, the S&P 500 scored its biggest gain for the first half of the year since 2013 while the Nasdaq Composite's first-half gain was its best in eight years.

European shares had less luck after the European Central Bank and the Bank of England last week signaled their readiness to tighten their monetary policies, with pan-European Euro first 300 stock index hitting 10-week lows on Friday.

Global bond yields have risen sharply following hawkish comments from European Central Bank President Mario Draghi last Tuesday, with German bond yields posting their biggest weekly jump since December 2015 last week.

Sun Jul 2, 2017 | 2:52am BST

ECB working on move away from ultra-easy policy - Weidmann

The European Central Bank is working on moving away from its ultra-easy monetary policy, Jens Weidmann, head of Germany's Bundesbank and a member of the ECB's rate-setting body, said on Saturday.
Investors are watching for any sign that the ECB may reduce its stimulus, which includes massive bond purchases and ultra-low rates, after a hint in that direction by President Mario Draghi boosted the euro and government bond yields this week.

"It will hopefully come and we're working on that, we're also discussing it," Weidmann, a long-standing critic of the ECB's bond purchases, told an audience at the Bundesbank's open days.

Inflation in the euro zone has been low for years and it is not expected to reach the ECB's target of just under 2 percent until at least 2019 despite the central bank's efforts.

But price growth is now comfortably above 1 percent, leading some rate setters, particularly in the wealthier northern countries of the currency union, to call for a reduction in the ECB's monetary largesse.

"What we are discussing and even arguing about is how expansive monetary policy should be given our target," Weidmann said during a question-and-answer session with the public.

ECB President Draghi said this week Frankfurt could make tweaks to its policy to accompany the recent economic recovery in the euro zone.

Mon Jul 3, 2017 | 4:18am BST

China, Hong Kong launch long-awaited bond connect scheme

China and Hong Kong launched a long-awaited "Bond Connect" programme on Monday that links China's $9 trillion (6.92 trillion pounds) bond market with overseas investors, the latest step in Beijing's efforts to liberalise and strengthen the country's capital markets.

HSBC Holdings (HSBA.L) and an asset management unit of Bank of China said they have completed their first trades using the scheme.

The launch of the connection was timed to coincide with the 20th anniversary of Hong Kong's handover to Chinese rule and trading will initially commence "Northbound", meaning foreign investors will be able to buy and sell Chinese bonds.

"We continue to hold the view that there could be more than $1 trillion of additional global fixed income investments to be allocated to China domestic bonds over the coming decade," a note from Goldman Sachs said on Monday.

The connection will increase the supply of yuan-denominated assets that can be held by global investors as Beijing steps up the internationalisation of its currency.

"Bond Connect will clearly make it easier for investors to access the Chinese bond market, which in turn makes it easier for investors to hold renminbi," Andy Seaman, chief investment officer of London-based Stratton Street, said in a note.

BOCHK Asset Management said it had bought Chinese government and corporate bonds, conducted yuan spot trades related to these deals, and subscribed to a primary bond market issuance by Agricultural Development Bank of China. HSBC said it had completed its first deal as a market maker through the link but did not give additional details.

Media reports said 20 market makers for the bond connect scheme had been approved, including 14 Chinese and six overseas institutions.

Trump push for steel tariffs sparks worries about global trade war

Published: June 30, 2017 2:00 p.m. ET

White House targets China, but other nations could retaliate

WASHINGTON (MarketWatch) — If Donald Trump is “hell bent” on raising tariffs on imported steel from China and other countries, he wouldn’t be the first president to do so. Presidents, from Lyndon Johnson to Barack Obama, have been trying to restrict steel imports since the late 1960s.

What’s different under Trump is the way in which he’s targeting steel imports — and the odds that he’ll go further than his predecessors.

In a worst-case scenario, he could trigger a costly trade war. The Internet publication Axios reported that Trump is hell bent on doing exactly that, though an article in Politico suggested the administration is still sharply divided over what approach to take.

In April, the Trump administration launched an investigation into whether steel imports are a threat to national security, using authority granted under a little-known 1962 law that’s rarely invoked. A report is due any day.

-----Most experts believe China is guilty of dumping steel at below-market prices. Many Chinese suppliers rely on government support and produce so much steel that it depresses global prices, most recently in 2015.

That’s why prior American presidents, including Obama and predecessor George W. Bush, have slapped tariffs on Chinese steel imports. Obama raise tariffs on some Chinese steel in 2016 by as much as 265%.

Indeed, most Chinese steel faces U.S. tariffs or penalties in one form or another, limiting how much is allowed into the country. To get around the restrictions some Chinese steel reportedly is shipped through other countries, such as South Korea, to mask its origin.

----Yet by using national-security imperatives as a club against other countries, Trump could ignite a broader trade spat. New duties on foreign steel are more likely to hurt Europe, Canada and Japan — instead of China — and thus invite retaliation, experts say.

The fear of a wider trade war was acute enough to force Bush to remove tariffs on steel imports in 2003 after the European Union threatened to impose sanctions on U.S. goods ranging from oranges to motorcycles.

How far Trump will go is an open question. He’s almost certain to impose some kind of steel tariff, if only to prove he’s fulfilled a campaign promise. Already, he’s hit Canada with fresh tariffs on certain kinds of lumber, and the White House is also looking at new duties on aluminum and solar panels.

How do officials, experts view Xi's upcoming visit to Russia?

Source: Xinhua| 2017-07-02 17:11:46|
BEIJING, July 2 (Xinhua) -- Chinese President Xi Jinping's upcoming visit to Russia is expected to inject fresh driving force into China-Russia relations and further deepen political mutual trust between the two countries.

At the invitation of Russian President Vladimir Putin, Xi is to pay a state visit to Russia from Monday to Tuesday.

The visit will be Xi's sixth to Russia since taking office in 2013 and will also be the 21st time to hold talks with Russian President Vladimir Putin. It will also mark the third meeting between the Chinese and Russia heads of state this year.

The following are recent statements made by senior officials and experts from both countries with respect to the upcoming Russia visit by Xi, which reflects how they view the significance of the great event.

"This visit is of great significance," especially at a time when global economic recovery is still sluggish and international situation is complex and volatile, said Chinese Ambassador to Russia Li Hui.

Li said that Xi's visit to Russia will surely "inject new impetus to the development of bilateral relations" and provide new programs for regional economic integration.

"The comprehensive strategic cooperative partnership between China and Russia has been developing stably, sustainably and at a high level," said the ambassador.

In dealing with international affairs, China and Russia have strengthened strategic cooperation and have played their due role as major countries, said Li, noting that they have been jointly pushing for a political settlement of the Korean Peninsula nuclear issue and the Syrian issue.

The two countries, he pointed out, serve as a ballast for regional and global peace and stability.

It is a strategic choice for China and Russia to strengthen their relations since it is in line with the core interests of both countries and their peoples, said Li.

"No matter how the international environment changes, we should make all-out efforts to maintain and improve bilateral relations," said the ambassador.

Assistant Minister of Foreign Affairs Li Huilai said at a press conference on Thursday that Xi's visit to Russia is expected to boost high-level development of bilateral comprehensive strategic cooperative partnership to new heights, and contribute to regional and global peace and prosperity.

China has been Russia's largest trading partner for six years and Russia has been a major source for China to import energy and high-tech products.

Merkel Concerned G-20 Summit Could End in Fiasco

Ahead of the Hamburg G-20 summit, the EU trade conflict with the U.S. is threatening to escalate. Both Brussels and Washington are looking into sanctions and Chancellor Merkel is concerned that a fiasco could ensue. By SPIEGEL Staff

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

John Kenneth Galbraith

Crooks and Scoundrels Corner

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

Not the usual suspects today, today North Korea.  Is there already something underway? Has President Trump just informed Xi and Abe?

Xi, Abe Get Phone Calls From Trump as North Asia Tensions Rise

By Andy Sharp
North Korea’s nuclear ambitions dominated phone calls between Donald Trump and the leaders of Japan and China, as the U.S. president’s tougher stance on Kim Jong Un and pressure on nations in North Asia over trade sparks renewed tensions.

The separate chats with Japanese Prime Minister Shinzo Abe and Chinese President Xi Jinping preceded Trump’s expected meetings with the leaders of Asia’s two biggest economies at the Group of 20 nations summit in Germany this week.

They came against the backdrop of a freshly strident tone from the Trump administration about China’s need to rein in Pyongyang, and on Japan and South Korea over trade imbalances with America.

"The recent actions show Trump is not happy with China and other Asian countries," said Song Guoyou, an international relations professor at Fudan University in Shanghai. "The businessman wants better deals. Now everyone just has to return to the negotiating table."  

Trump and Abe agreed on the need for China to be firmer with North Korea, Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters on Monday. Kyodo News said the chat was a prelude to a planned meeting in Germany between the leaders of the U.S., Japan and South Korea. In his call with Xi, Trump also repeated his desire for more balanced ties with America’s trading partners, according to a White House statement.

After Trump enlisted Xi’s help in April to press Kim to curtail his nuclear weapons and missile programs, the U.S. president dialed back his public criticisms of China. But the tone has changed in the past few weeks: Trump now says China isn’t doing enough to help on North Korea and the U.S. slapped sanctions on Chinese companies for doing business with the isolated regime.

The U.S. Navy conducted another "freedom of navigation operation” in the South China Sea on Sunday, a U.S. official said. The U.S. has previously sailed warships close to reclaimed reefs China classes as its territory in the disputed waters, as well as features claimed by the likes of Vietnam and Taiwan. China’s Foreign Ministry protested the “trespassing” by the U.S. Navy and said it had dispatched military vessels and planes in response.

The biggest danger if Trump runs out of patience with China is that his threats to take unilateral action against North Korea escalate. North Asian nations have warned a military strike on the regime could be disastrous for the region given Kim’s ability to hit Japan and South Korea with missiles.

"Right now U.S.-China relations are not as good as China thinks they are, nor as bad as they could be with a president as volatile as Trump," said Susan Shirk, a former deputy assistant Secretary of State for East Asia. "The common threat of a nuclear North Korea has brought the two leaders together, but the honeymoon period is likely to be short as it becomes clear that the Chinese government doesn’t want to cut off Kim Jong Un."
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?

Tesla install to bring Europe’s largest community battery to Nottingham

Published: 29 Jun 2017, 11:53
What is expected to be Europe’s largest community battery is set to be installed at an innovative regeneration scheme in Nottingham, with a 2MWh Tesla battery to be deployed in September as part of a housing scheme alongside community solar.

The £100 million Trent Basin project is a new housing development built at the site of an inland dock previously derelict for around two decades. It is expected to deliver 500 homes over five phases with 375kW of rooftop and ground mounted solar and the Tesla battery to be installed by EvoEnergy.

In an innovative use of the solar farm, planning permission has been granted on the basis that the site shall be cleared by 28 February 2020. By this time, the panels from the ground mounted installation will be removed and installed on new homes built as part of the development.  

With the addition of the battery storage facility and ground source heat pumps which will also be used on site, Trent Basin is intended to provide a new way to use renewable energy sources by generating, storing and distributing all at a neighbourhood level. A local energy company, Trent Basin ESCO, has already been set up to facilitate the local energy services.

According to project lead Blueprint, the battery will store energy from the local renewable generation to be used on site while also performing grid arbitrage and smoothing out the peaks and troughs of supply and demand.

“The way we generate and distribute energy in the UK is inefficient and carbon intensive. It doesn’t have to be like this. With new technologies, especially in renewable energy and storage it is possible to do better,” commented Blueprint’s chief executive Nick Ebbs.

The pilot is intended to demonstrate how to lower cost and reduce carbon whilst allowing residents to better engage with the energy they consume. Residents that opt into the scheme will have photovoltaic panels installed on their roofs, and be provided with smart meters and voice controlled speakers for access to live data on energy created, stored and consumed.

 It is expected to provide energy savings of around 30% compared to conventional house developments and has already attracted several homeowners who have either bought or reserved properties.

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

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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