Friday, 11 August 2017

NK – China Sets Out Its Position.

Baltic Dry Index. 1092 +42     Brent Crude 51.97

China is North Korea’s ally. In 1961, the two countries signed the Sino-North Korean Mutual Aid and Cooperation Friendship Treaty, in which both parties are obliged to offer immediate military and other assistance to the other in the case of an outside attack. This treaty has been prolonged twice, and is valid until 2021.

Well the good news is that we’re all still here this morning, and despite all the belligerent talk, no one is as yet shooting at, or bombing anyone, though for how much longer is still an open question. Official Washington seems to be rowing back from President Trump’s fiery rhetoric, though no one seems to have yet told President Trump. Was President Trump reigned in yesterday?

In the markets, volatility jumped, but from historically low levels, and markets retreated from their recent highs, but the markets are still reading this as a storm in a teacup, no one is going to pull the trigger and unleash war.

Below, today’s latest developments as we head into a jittery weekend.

Sometimes you move publicly, sometimes privately. Sometimes quietly, sometimes at the top of your voice.

James Baker

August 11, 2017 / 5:49 AM / an hour ago

China stocks fall as North Korea tensions simmer: Hong Kong drops too

SHANGHAI, Aug 11 (Reuters) - China stocks fell sharply early Friday as fears over escalating tensions between North Korea and the United States spread to mainland investors, and as cyclical shares continued to retreat after recent gains.

The CSI300 index fell 1.5 percent, to 3,659.34 points at the end of the morning session, while the Shanghai Composite Index lost 1.6 percent, to 3,209.66 points.

The Hang Seng index tumbled 1.9 percent, to 26,926.38 points. The Hong Kong China Enterprises Index lost 2.0 percent, to 10,566.39.

"Tensions between the U.S. and North Korea have been affecting markets around the world, and they are now affecting markets in China," said an analyst at Huarong Securities in Beijing.

Stocks Drop Most Since May, Bonds Rally on Tension: Markets Wrap

By Jeremy Herron
Rising geopolitical tension rattled financial markets around the world Thursday, sending U.S. stocks to the biggest loss since May and stoking demand for haven assets.

The S&P 500 Index halted an unprecedented stretch of calm on American equity markets and the CBOE Volatility Index spiked to its highest since April after President Donald Trump dialed up his warning to North Korea on threats to American allies. Gold surged to a nine-week high, the yen advanced below 110 per dollar and Treasuries strengthened.

Risk assets succumbed Thursday to a third day of saber rattling by Trump and Kim Jong Un, as the spat threatened to boil over into military confrontation. The selloff in U.S. stocks halted a streak of 15 days without a swing of 0.3 percent in either direction for the S&P 500 and jolted the VIX above 16 for only the fourth time this year. Gold futures neared $1,300 and crude slumped toward $48 a barrel.

“The markets in general are very on edge and they’re very leery about risk,” said Mariann Montagne, a portfolio manager at Gradient Investments LLC, which oversees about $1.4 billion. “When earnings are not beating expectations there’s a sell off in the companies, and we’re just not seeing that money reinvested because of the geopolitical risks.”

Geopolitical tensions may be the trigger for the latest bout of risk aversion, but with global equities trading near record highs and yield premiums on high-yield debt creeping up, some of the biggest names in the asset management industry have already been warning that it’s time to take risk off the table.

Up next China reigns in NK, clarifies its position, and greatly limits President Trumps regime change options. The Sino-North Korean Mutual Aid and Cooperation Friendship Treaty, is still only valid if North Korea doesn’t fire first, China appears to be publicly signalling, but remains valid if the US or South Korea fire first.

August 8, 2017 / 1:28 AM

China should be neutral if North Korea fires first on U.S. - Global Times

BEIJING/BEDMINSTER, N.J. (Reuters) - China should remain neutral if North Korea launches an attack that threatens the United States, a Chinese state-run newspaper said on Friday, sounding a warning for Pyongyang over its plans to fire missiles near the U.S. Pacific territory of Guam.

The comments from the influential Global Times came after U.S. President Donald Trump stepped up his rhetoric against North Korea again on Thursday, saying his earlier threat to unleash "fire and fury" on Pyongyang if it launched an attack may not have been tough enough.

China, North Korea's most important ally and trading partner, has reiterated calls for calm during the current crisis. Beijing has expressed frustration with both Pyongyang's repeated nuclear and missile tests and with behaviour from South Korea and the United States, such as military drills, that it sees as escalating tensions.

"China should also make clear that if North Korea launches missiles that threaten U.S. soil first and the U.S. retaliates, China will stay neutral," the Global Times, which is widely read but does not represent government policy, said in an editorial.

"If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so," it said.

North Korea's state-run KCNA news agency said on Thursday its army would complete plans in mid-August to fire four intermediate-range missiles over Japan to land near Guam.

Trump said North Korean leader Kim Jong Un was not going to get away with his "horrific" comments and disrespecting America.

"Let's see what he does with Guam. He does something in Guam, it will be an event the likes of which nobody's seen before, what will happen in North Korea," Trump told reporters in New Jersey, without offering specifics.

August 10, 2017 / 11:40 AM / 19 hours ago

China seethes on sidelines amid latest North Korea crisis

BEIJING (Reuters) - Angered as the United States and its allies ignore Chinese calls to calm tensions over North Korea, and distracted by domestic concerns, China is largely sitting out the latest crisis with nuclear-armed Pyongyang.

While a conflict on the Korean peninsula would affect China, and in worst-case scenarios unleash a radioactive cloud or waves of refugees into its northeast, Beijing has kept a low profile as tension has escalated in recent days.

North Korea dismissed on Thursday warnings by U.S. President Donald Trump that it would face "fire and fury" if it threatened the United States as a "load of nonsense", and outlined plans for a missile strike near the Pacific territory of Guam.

China, whose regular daily foreign ministry press briefings are suspended for a two week summer holiday, has said little in public about the situation this week, reiterating its usual calls for calm and restraint.

President Xi Jinping has been out of the public eye for more than a week, likely because he is at a secretive Communist Party conclave in the seaside resort of Beidaihe preparing for a key party congress in the autumn, diplomats say.

One Beijing-based Asian diplomat said China was also distracted by a protracted border dispute with India.
"China has different priorities and it's clear what they are," said the diplomat, speaking on condition of anonymity.

State media has as usual called for dialogue to end the crisis, but has also lambasted the United States and its allies for doing little to damp down the flames.

The official Xinhua news agency on Thursday accused Japan of "fishing in troubled waters", using North Korea as an excuse for its own remilitarisation. Japan issued a defence white paper this week that warned it was possible that North Korea had already developed nuclear warheads.

Chinese tourists flock to North Korea, despite missile crisis

Idea of a bit of danger adds to the thrill and mystery of North Korea, says one tour operator
PUBLISHED : Friday, 11 August, 2017, 1:09pm

Greeting them on the North Korean side are dozens of tour buses, collecting them for itineraries ranging from a day in neighbouring Sinijiu to a week visiting North Korea’s main cities, including the capital Pyongyang.
“We’re curious. We want to see how they live,” Xu Juan said on Thursday before crossing the Yalu River, which marks the border between the two countries. Xu was travelling with friends and family from Hangzhou in eastern China.

“I just want the sense of nostalgia, to see a country that is poor, like [China was] when I was young,” said a man in his early 50s, from Jilin province, declining to give his name.

Few expressed concern over the North’s persistent missile tests in recent months, which led the United Nations Security Council on Saturday to impose tough new sanctions against Pyongyang.

North Korea dismissed on Thursday warnings by US President Donald Trump that it would face “fire and fury” if it threatened the United States as a “load of nonsense”and outlined plans for a missile strike near the Pacific territory of Guam.

But tour operators said their industry remains robust.

Traffic, especially on cheaper group tours, has grown steadily to one of the world’s most isolated states over the past few years, despite North Korea’s persistent nuclear and missile tests, which have drawn ever-tightening UN sanctions.

---- China’s tourism authority has not published a breakdown of the total number of Chinese visitors to North Korea since 2012, when it said 237,000 made the trip.

But the number travelling just from Dandong spiked to 580,000 in the second half of 2016 alone, according to the state-run China News Service. The report said 85 per cent of Chinese tourist visits to North Korea originated from Dandong.

In other China news, China made a giant leap in “hack-proof” communications. China’s air force commander issued a warning to Japan.

August 10, 2017 / 5:09 AM

Chinese quantum satellite sends 'unbreakable' code

BEIJING (Reuters) - China has sent an "unbreakable" code from a satellite to the Earth, marking the first time space-to-ground quantum key distribution technology has been realised, state media said on Thursday.
China launched the world's first quantum satellite last August, to help establish "hack proof" communications, a development the Pentagon has called a "notable advance".

The official Xinhua news agency said the latest experiment was published in the journal Nature on Thursday, where reviewers called it a "milestone".

The satellite sent quantum keys to ground stations in China between 645 km (400 miles) and 1,200 km (745 miles) away at a transmission rate up to 20 orders of magnitude more efficient than an optical fibre, Xinhua cited Pan Jianwei, lead scientist on the experiment from the state-run Chinese Academy of Sciences, as saying.

"That, for instance, can meet the demand of making an absolute safe phone call or transmitting a large amount of bank data," Pan said.

Any attempt to eavesdrop on the quantum channel would introduce detectable disturbances to the system, Pan said.

"Once intercepted or measured, the quantum state of the key will change, and the information being intercepted will self-destruct," Xinhua said.

The news agency said there were "enormous prospects" for applying this new generation of communications in defence and finance.

China still lags behind the United States and Russia in space technology, although President Xi Jinping has prioritised advancing its space programme, citing national security and defence.

China insists its space programme is for peaceful purposes, but the U.S. Defense Department has highlighted its increasing space capabilities, saying it was pursuing activities aimed at preventing adversaries from using space-based assets in a crisis.
August 11, 2017 / 5:11 AM / an hour ago

Tokyo does not own the Sea of Japan, China's air force chief says

BEIJING (Reuters) - China's air force chief defended military manoeuvres in the Sea of Japan, saying the waters did not belong to Tokyo, after a Japanese defence review warned of increasing Chinese military activity there.

Japan worries that China's probing of its air defences is part of a push to extend its military influence in the East China Sea and western Pacific, where Japan controls an island chain stretching 1,400 km (870 miles) south towards Taiwan.

In an annual defence white paper released on Tuesday, Japan said the number of its jet scrambles against Chinese aircraft hit a record in the year to March 2017.

It warned that Chinese naval and air force activities in the Sea of Japan could pick up pace.

"The Sea of Japan is not Japan's sea," People's Liberation Army Air Force Commander Ma Xiaotian said on Thursday, in response to a question at a military event in the northeastern city of Changchun.

"We must carry out drills at sea. China's air force cannot simply guard on land and not go out," Ma said in a report broadcast by Hong Kong-based Phoenix Television, which was posted to the air force's official microblog late the same day.

"But (activities) in the Sea of Japan are still not that many. What they have said is a bit of an exaggeration."
Tokyo's ties with Beijing have long been plagued by a territorial dispute over a group of tiny, uninhabited East China Sea islets and the legacy of Japan's wartime aggression.

The Sea of Japan separates Japan from the Korean peninsula. China said in July that its navy had the right to pass though a strait linking it with the Pacific Ocean, after one of its warships entered the area.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Too good not to share, as was shared to me. The whole article is well worth the read.

Why Americans Get Conned Again and Again

Their admiration for ingenuity and gumption leaves room for opportunists.

Brooke Harrington  Jul 31, 201
For decades, Donald Trump has been compared to the legendary showman P.T. Barnum. Trump himself has publicly embraced being likened to a man described by historians as “vulgar, childish, surely just a little crooked.” His willingness to invoke that set of values—quite different from the Horatio Alger-style “luck and pluck” that serve as an unofficial national ethos—may be what his supporters are praising when they say he “tells it like it is.” His base seems to view his readiness to dispense with ideals and ethics (“anyone would have taken that meeting”) as a sign of fitness to deal with the world as it is: a cesspool of corruption and “carnage” in which only suckers still believe that honesty is the best policy.

At this political moment, few books could be more timely than Fraud: An American History From Barnum to Madoff, by the Duke University historian Edward Balleisen. Other academics have documented the ways that the United States has been steeped in fraud and chicanery from the earliest days of the republic—notably, Stephen Mihm’s outstanding A Nation of Counterfeiters. But Balleisen’s book provides a far more sweeping view than its predecessors, offering a much-needed big-picture perspective. Balleisen never mentions Donald Trump, but effectively contextualizes his ascent by tracing centuries of grift, fraud, and con men in American history.

While Balleisen’s text is often rollicking and engaging, it leads readers to a rather bleak conclusion: Americans don’t really want cheaters and con artists punished, or driven out of national institutions. On the contrary, the historical record Balleisen reviews suggests that many Americans actually admire con artists and seek to emulate them.

Fraud is a phenomenon that knows no borders, but American exceptionalism, as Balleisen shows, includes a special vulnerability to fraudsters and con artists. As he points out, “Many of the world’s most expensive and ambitious frauds have occurred in America” because “openness to innovation has always meant openness to creative deception.” The country’s lionization of entrepreneurs and inventors creates tempting opportunities for those trafficking in highly implausible scenarios. It has made the U.S. home to genuine innovators, from Thomas Edison to Oprah Winfrey, but it has also facilitated the far-reaching deceptions and empty promises perpetrated by people like Bernie Madoff on Wall Street and Elizabeth Holmes in Silicon Valley. Madoff’s Ponzi scheme was the largest known financial fraud in history, and Holmes’s biotech start-up Theranos faces multiple lawsuits and federal investigations after its products didn’t work as claimed. (Holmes and the company deny any wrongdoing.)
 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?

Hackers 'could target electricity grid' via solar panel tech

8 August 2017

Hackers could target electricity grids through security flaws in solar panel equipment, a Dutch researcher has said.

Willem Westerhof found 17 vulnerabilities in inverters, which convert electricity produced by the panels so it can be used on the grid.

He said internet-connected inverters could be targeted by hackers.

One manufacturer said that only "a small fraction" of its devices were affected.

After discovering vulnerabilities in devices produced by a range of manufacturers, Mr Westerhof carried out a field test near Amsterdam on two inverters made by SMA.

He told the BBC the test showed it would be possible for an attacker to remotely control the devices and alter the flow of power.

Because energy equipment on the grid needs to balance supply with demand, overloading the system could result in a power cut.

'Serious consequences'

"If an attacker does that on a large scale, that has serious consequences for the power grid stability," said Mr Westerhof.

Energy researcher Iain Staffell, at Imperial College London, told the BBC, "It's certainly a risk to electricity
supply and could stress grid operations."

However, he did not believe it could cause blackouts and he pointed out that a large number of inverters would have to be attacked at once for any significant effect to occur.

SMA responded by pointing out the limitations to such an attack:
  • only four of its models are affected by the vulnerabilities
  • users are advised to change default passwords when installing the devices, though this is not required
  • inverters not connected to the internet are safe
"The security of our devices has highest priority for SMA in all respects," the company said in a statement.
"We already assessed the mentioned issues on a technical basis and [are working] intensively on the correction."

It added that it would publish further responses to Mr Westerhof's research in the coming days and that it was working on a report about the security of its products with the Dutch National Cyber Security Centre.

Another weekend and a nervous one at that. Will cooler heads prevail in Washington and Pyongyang?  Will Pyongyang prepare another missile test? What will happen if Washington fires first? Will China invoke the Sino-North Korean Mutual Aid and Cooperation Friendship Treaty? If they did, what will happen to the world’s fiat currencies?  Have a great weekend everyone.

“My view is that you don't just talk to your friends. You talk to your enemies, as well. And the diplomacy involves talking to your enemies. You don't reward your enemies necessarily, by talking to them if you're tough and you know what you're doing. You don't appease them. Talking to an enemy is not, in my view, appeasement. I made 15 trips to Syria in 1990-1991 at a time when Syria was on the list of countries who are state sponsors of terrorism. And the 16th trip, guess what? Lo and behold, Syria changed 25 years of policy and agreed for the first time in history to come sit at the table with Israel, which is what Israel wanted at the time. And, thereby, implicitly recognized Israel's right to exist. Now, all I'm saying is that would never have happened if we hadn't been sufficiently dedicated that we were going to keep at it.”

James Baker

The monthly Coppock Indicators finished July

DJIA: 21,891 +207 Up. NASDAQ:  6,348 +250 Up. SP500: 2,470 +171 Up.

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