Wednesday, 2 August 2017

North Korea – Uncle Sam Blinks.

Baltic Dry Index. 965 +19.     Brent Crude 51.33

Never believe anything in politics until it has been officially denied.

Otto von Bismarck.

Did the USA policy on North Korea just do a massive U-turn?  From all-out war, to allowing NK to have a nuclear program modelled somewhat on Israel?  “Don’t tell, don’t use.” Information or disinformation?  But will anyone in paranoid NK believe it?

The global stock and commodity markets never believed for a second that the US was seriously considering the war option, but how will this U-turn, if it is a U-turn, play out in the capitals of Beijing, Tokyo, Seoul, Taipei and Moscow?

But is it just a ruse to lull Pyongyang into lowering its guard? With President Trump “the U-turn President,” how long before America U-turns  back again to the war option?

North Korea: US not seeking regime change, says Rex Tillerson

7 hours ago
The US government is not seeking a regime change in North Korea, the secretary of state says, amid tensions over Pyongyang's weapons programme.

"We're not your enemy," Rex Tillerson said, adding that the US wanted a dialogue at some point.
Meanwhile, a senior Republican senator said President Trump considered going to war with North Korea as an option.

Pyongyang claimed that its latest missile test could hit the US west coast and beyond.

"We do not seek a regime change, we do not seek the collapse of the regime, we do not seek an accelerated reunification of the peninsula, we do not seek an excuse to send our military north of the 38th parallel," said Mr Tillerson, referring to the border between the Koreas.

"We're not your enemy, we're not your threat but you're presenting an unacceptable threat to us and we have to respond."

The second test of an intercontinental ballistic missile (ICBM) on Friday, celebrated by North Korean leader Kim Jong-un, was the latest to be conducted in defiance of a UN ban.

North Korea's recent long-range missile tests have deepened concern about the threat Pyongyang poses to the US mainland, and strengthened determination here to prevent any strike. That's what the president had in mind in his war talk with Senator Lindsey Graham.

The Pentagon has updated military options, but at the same time says a confrontation would be catastrophic. In light of that, Mr Tillerson repeated at length that the US wasn't seeking regime change and said the goal was dialogue, but one not based on the assumption that North Korea could keep its nuclear weapons.
Pyongyang has categorically refused such terms.

The strategy, said Mr Tillerson, is a sustained campaign of peaceful but intensifying economic pressure to change its mind. But given the advances in ballistic technology demonstrated by the recent ICBM tests, there's growing doubt that denuclearisation is a realistic possibility.

In the global markets, it was party on like it’s never going to stop. A new US v NK war has always been completely discounted, probably erroneously. Below, the latest market news from Asia. Still with NK appearing to get the green light from Washington, will a new nuclear arms race now get under way in East Asia? Does anyone even remember Fukishima?

August 2, 2017 / 1:56 AM / an hour ago

Asia tech stocks bathe in Apple glow, dollar overshadowed

SYDNEY (Reuters) - Asian technology stocks hit 17-year peaks on Wednesday as blockbuster earnings from Apple (AAPL.O) rippled out to component makers globally, helping offset a pullback in the energy sector.

Shares in the world's most valuable company surged 6 percent after hours to a record of more than $159, taking its market capitalization above $830 billion.

That should help carry the Dow through the 22,000 mark when trading resumes in New York. E-Mini futures for the Dow YMc1 were up 0.2 percent in Asia trade.

The tech giant reported better-than-expected iPhone sales, revenue and earnings per share and signaled its upcoming 10th-anniversary phone is on schedule.

Among Apple suppliers, LG Innnotek (011070.KS) jumped 9 percent and SK Hynix (000660.KS), the world's second-biggest memory chip maker, rose almost 3 percent. Murata Manufacturing (6981.T) firmed 4 percent and Taiyo Yuden (6976.T) 3.8 percent.

The MSCI tech index for Asia .MIAS0IT00PUS climbed 0.8 percent to ground not trod since early 2000, bringing its gains for the year to a heady 40 percent.

In trade war news, is America finally about to pull the trigger on China? Not according to our overly complacent global stock markets. President Trump may huff and puff away all that he wants, he’s never going to pull the trigger, in our highly inter-dependent global economy, say the global stock markets.  I am not so sure.

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

John Kenneth Galbraith.

U.S. plans to take action against Chinese trade practices

Published: Aug 1, 2017 9:51 p.m. ET
WASHINGTON — The Trump administration is planning trade measures to force Beijing to crack down on intellectual-property theft and ease requirements that American companies share advanced technologies to gain entry to the Chinese market.

The administration is considering invoking a little-used provision of U.S. trade law to investigate whether China’s intellectual property policies constitute “unfair trade practices,” according to people familiar with the matter.

That would pave the way for the U.S. to impose sanctions on Chinese exporters or to further restrict the transfer of advanced technology to Chinese firms or to U.S.-China joint ventures.

American business frustration with Chinese trade and market-access practices has mounted in recent years, with U.S. business groups urging the government to take a tougher trade line with China. Many organizations have complained that the Trump administration hasn’t pushed hard enough in areas like intellectual property, as it has focused more on Chinese manufacturing and China’s $347 billion trade surplus with the U.S. last year.

In EUSSR news, is it already too late to save Germany’s cheating, dirty killer diesels? Who would want to buy a car with little to no resale market, and facing a mountain of city driving bans, and a slew of higher future pollution taxes?

Germany Makes Last-Ditch Play to Save Diesel at Emergency Summit

By Elisabeth Behrmann and Birgit Jennen
2 August 2017, 05:00 GMT+1
After nearly two years of constant crisis, the German car industry is looking to salvage its beleaguered diesel technology and draw a line under an emissions scandal that shows no signs of abating.

At an emergency summit in Berlin called by the government, the chief executives of Volkswagen AG, Daimler AG and BMW AG will face off with ministers and state leaders to convince them that, despite the steady drumbeat of negative news, diesel has a future. In return for political support to avoid driving bans, automakers are willing to further upgrade existing vehicles to lower their pollution.

There’s a lot at stake for all sides. German automakers need diesel as a stop-gap technology to buy time to catch up with the electric offerings of Tesla Inc. and Nissan Motor Co. And with less than two months until a federal election, Chancellor Angela Merkel, whose ruling bloc runs the ministry overseeing carmakers, has to ward off criticism that the government is too lenient on carmakers while also not endangering the country’s 800,000 industry jobs.

“The manufacturers will play their part to improve air quality in cities and make diesel fit for the future,” said Matthias Wissmann, head of German auto lobby VDA, proposing reduction in nitrogen oxide emissions of at least 25 percent on average. “Diesel is enormously important for climate protection as well as prosperity in Germany.”

The two sides are expected on Wednesday to agree to a host of measures designed to lower emissions of nitrogen oxide, which causes smog and health problems, in Germany’s 15 million diesels to avoid driving bans by cities. In the run-up, carmakers and the government were haggling over software fixes -- costing several hundred million euros -- and much more expensive hardware changes that would lift the total bill to around 5 billion euros ($5.9 billion). Much of that would be born by the companies.

We close out the day with America. Is this the death of the nuclear power industry? As goes America, so goes the world. Is this the death of the UK’s deeply flawed Hinkley Point nuclear project with France and China?

U.S. Nuclear Comeback Stalls as Two Reactors Are Abandoned

In a major blow to the future of nuclear power in the United States, two South Carolina utilities said on Monday that they would abandon two unfinished nuclear reactors in the state, putting an end to a project that was once expected to showcase advanced nuclear technology but has since been plagued by delays and cost overruns.

The two reactors, which have cost the utilities roughly $9 billion, remain less than 40 percent built. The cancellation means there are just two new nuclear units being built in the country — both in Georgia — while more than a dozen older nuclear plants are being retired in the face of low natural gas prices.

Originally scheduled to come online by 2018, the V.C. Summer nuclear project in South Carolina had been plagued by disputes with regulators and numerous construction problems. This year, utility officials estimated that the reactors would not begin generating electricity before 2021 and could cost as much as $25 billion — more than twice the initial $11.5 billion estimate.

The utilities also struggled with an energy landscape that had changed dramatically since the large reactors were proposed in 2007. Demand for electricity has plateaued nationwide as a result of major improvements in energy efficiency, weakening the case for massive new power plants. And a glut of cheap natural gas from the hydraulic fracturing boom has given states a low-cost energy alternative.

Facing those pressures, the two owners of the project, South Carolina Electric & Gas and Santee Cooper, announced they would halt construction rather than saddle customers with additional costs.

---- A decade ago, industry officials were predicting a “nuclear renaissance” in a country that had not broken ground on a new reactor since the 1970s.

The South Carolina utilities selected an advanced reactor design from Westinghouse Electric Company, the AP1000, reported to have more safety features than earlier models. The utilities planned to build the two reactors next to an existing nuclear unit at the V.C. Summer plant in Fairfield County.

But pitfalls soon followed. Construction began before Westinghouse, a subsidiary of Toshiba of Japan, had finalized its AP1000 design, and several safety changes had to be made midway through the process. Engineers struggled with the complicated, novel project, as various components needed to be reworked.

“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."

John Kenneth Galbraith. The Great Crash: 1929.

Crooks and Scoundrels Corner

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

In a rant from the past, yesterday’s man old “Bubble’s” Greenspan thinks he sees a bubble in bonds. Strange how he can see other people’s bubbles but never once saw any of the multiple bubbles he created as head of the Fed.

In any great organization it is far, far safer to be wrong with the majority than to be right alone.

John Kenneth Galbraith.

No Bubble in Stocks But Look Out When Bonds Pop, Greenspan Says

By Oliver Renick and Liz McCormick
31 July 2017, 23:00 GMT+1
Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone.

“By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends. Deutsche Bank AG’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market.

“The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy -- to a stagflation not seen since the 1970s. That is not good for asset prices.”

Stocks, in particular, will suffer with bonds, as surging real interest rates will challenge one of the few remaining valuation cases that looks more gently upon U.S. equity prices, Greenspan argues. While hardly universally accepted, the theory underpinning his view, known as the Fed Model, holds that as long as bonds are rallying faster than stocks, investors are justified in sticking with the less-inflated asset.

Right now, the model shows U.S. stocks at one of the most compelling levels ever relative to bonds. Using Greenspan’s reference of 10-year inflation-adjusted bond yields, currently around 0.47 percent, the gap with the S&P 500’s earnings yield at around 4.7 percent, is 21 percent higher than the 20-year average. That justifies records in major equity benchmarks and P/E ratios near the highest since the financial crisis.

If rates start rising quickly, investors would be advised to abandon stocks apace, Greenspan’s argument holds. Goldman Sachs Group Inc. Chief Economist David Kostin names the threat of rising inflation as one reason he isn’t joining Wall Street bulls in upping year-end estimates for the S&P 500.

While persistently low inflation would imply a fair value of 2,650 on the benchmark gauge, the more likely case is a narrowing of the gap between earnings and bond yields, Kostin says. He is sticking to his estimate that the index will finish the year at 2,400, implying a drop of about 3 percent from current levels.
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?

Single-photon emitter has promise for quantum info-processing

Carbon nanotubes form first known tunable room-temperature quantum emitters at telecom wavelengths

Date: July 31, 2017

Source: DOE/Los Alamos National Laboratory

Summary: Scientists have produced the first known material capable of single-photon emission at room temperature and at telecommunications wavelengths.

Los Alamos National Laboratory has produced the first known material capable of single-photon emission at room temperature and at telecommunications wavelengths. These carbon nanotube quantum light emitters may be important for optically-based quantum information processing and information security, while also being of significant interest for ultrasensitive sensing, metrology and imaging needs and as photon sources for fundamental advances in quantum optics studies. The research was reported today in the journal Nature Photonics.

"By chemically modifying the nanotube surface to controllably introduce light-emitting defects, we have developed carbon nanotubes as a single photon source, working toward implementing defect-state quantum emitters operating at room temperature and demonstrating their function in technologically useful wavelengths," said Stephen Doorn, leader of the project at Los Alamos and a member of the Center for Integrated Nanotechnologies (CINT). "Ideally, a single photon emitter will provide both room-temperature operation and emission at telecom wavelengths, but this has remained an elusive goal. Up to now, materials that could act as single photon emitters in these wavelengths had to be cooled to liquid helium temperatures, rendering them much less useful for ultimate applications or scientific purposes," he said.

A critical breakthrough in the CINT nanotube work was the ability of the team to force the nanotube to emit light from a single point along the tube, only at a defect site. The key was to limit defect levels to one per tube. One tube, one defect, one photon. By emitting light only one photon at a time, one can then control the photons' quantum properties for storage, manipulation and transmission of information.

---- The functionalized carbon nanotubes have significant prospects for further development, Doorn noted, including advances in functionalization chemistry; integration into photonic, plasmonic and metamaterials structures for further control of quantum emission properties; and implementation into electrically driven devices and optical circuitry for diverse applications.

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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