Baltic Dry Index. 1366 Brent Crude 66.59
“The
champions of socialism call themselves progressives, but they recommend a
system which is characterized by rigid observance of routine and by a
resistance to every kind of improvement. They call themselves liberals, but
they are intent upon abolishing liberty. They call themselves democrats, but
they yearn for dictatorship. They call themselves revolutionaries, but they
want to make the government omnipotent. They promise the blessings of the
Garden of Eden, but they plan to transform the world into a gigantic post
office. Every man but one a subordinate clerk in a bureau.”
Ludwig
von Mises
As we end year one of the Great Trump Presidency on a massive mania in stocks,
bonds, and cryptocurrencies, we focus today on rising trouble in Asia. If the bitcoin mania blows up, will it take
out South Korea? China? And if it does, how far will the contagion spread? Stay
tuned for 2018. Will the end of the speculative mania end in socialism?
December 29, 2017 / 12:47 AM
Boom year for stocks and commodities, downer for the dollar
SYDNEY (Reuters) - Asian markets
were ending 2017 in a party mood on Friday after a year in which a concerted
pick-up in global growth boosted corporate profits and commodity prices, while
benign inflation kept central banks from snatching away the monetary punch
bowl.
MSCI’s broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.3 percent as three
straight weeks of gains left it within a whisker of decade peaks. The index has
been on an upward trajectory for pretty much all of 2017, putting it 33 percent
higher for the year so far.
Hong Kong .HSI
led the charge with gains of 36 percent for the year, while South Korea .KS11
notched up 22 percent and India .BSESN
27 percent. Japan's Nikkei .N225 and the S&P 500 are both ahead by almost 20 percent, while the Dow has risen by a quarter. In Europe, the German DAX has gained nearly 14 percent, though the UK FTSE has lagged a little with a rise of 7 percent.
Craig James, chief economist at fund manager CommSec, said of the 73 bourses it tracks globally, all but nine have recorded gains in local currency terms this year.
“For the outlook, the key issue is whether the low growth rates of prices and wages will continue, thus prompting central banks to remain on the monetary policy sidelines,” said James.
“Globalization and technological change have been influential in keeping inflation low. In short, consumers can buy goods whenever they want and wherever they are.”
More
December 29, 2017 / 6:05 AM
South Korea students dive into virtual coins, evens as regulators crack down
SEOUL (Reuters) - Hackers have stolen millions, lawmakers are pushing
for new taxes and regulations, and a leading financial official has called them
a “Ponzi scheme”.
But that hasn’t cooled a frenzy for bitcoin and other virtual currencies
that is gripping young investors in South Korea.
On a recent weeknight at Sungkyunkwan University in Seoul, more than a
dozen students crammed into a classroom to share tips on investing in so-called
cryptocurrencies, which have driven tales of fantastic returns for savvy
investors.
The group sat in rapt silence – broken only by a sudden shout of “there
was just a big jump!” from someone monitoring his virtual currencies - as one
student gave a presentation on how to read financial data and predict future
trends.
“I no longer want to become a math teacher,” said 23-year-old Eoh
Kyong-hoon, who founded the club, Cryptofactor. “I’ve studied this industry for
more than 10 hours a day over months, and I became pretty sure that this is my
future.”
Driven in part by a dismal economic outlook – including an unemployment
rate almost three times the national average - young South Koreans are
flocking to virtual currencies despite the risks and warnings from officials,
analysts say.
It’s a trend that has caught the eye of South Korean leaders and
regulators, who announced new measures this week to regulate speculation in
cryptocurrency trading within the country.
Concerns about security and thefts of cryptocurrencies by hackers have
also been rising. A South Korean cryptocurrency exchange recently shut down and
filed for bankruptcy after being hacked for the second time this year.
“Young people and students are rushing into virtual currency trading to
earn huge profits in just a short period of time,” Prime Minister Lee Nak-yeon
said in November. “It is time for the government to take action as it could
lead to serious pathological phenomena if left unchecked.”
Eoh said the talk of more regulation had not dented his plans,
especially after making what he said was a 20-fold gain on his investments over
the past six months.
He said that many students were bringing laptops to class to track the
movements of their investments and participate in actual trading. “Even when
professors are giving lectures right in front of them,” he said.
Younger investors have especially gravitated toward so-called
“altcoins”, or virtual currencies other than bitcoin, which often trade at much
lower values, analysts say.
More
Bitcoin Holds Above $14,000 as Investors Find a Bottom, For Now
By Eric Lam
Bitcoin appeared to find a bottom
above $14,000 on Friday after moves by South Korea to curb speculation and protect retail
customers took the cryptocurrency down more than 8 percent yesterday.
Bitcoin was up about 6 percent at $14,800 as of 10:14 a.m. Hong Kong time,
composite Bloomberg pricing showed. The digital currency has slumped about 24
percent from its record $19,511 reached on Dec. 18, when the CME Group Inc.
introduced its futures contract. While bitcoin’s debut on regulated derivatives
exchanges in Chicago was thought to have given it a new mainstream channel for
investors to tap, so far trading volume has been limited.For more about cryptocurrencies, see the following:
Move Over Bitcoin, New Blockchain Applications Are 2018’s Story
Bitcoin’s Store of Value Is Eroded by Its Digital Rivals: Gadfly
Get Set for Petro, Venezuela’s Cryptocurrency Answer to Bitcoin
Bitcoin the New Mattress Full of Cash for Divorce Cheats
----The South Korean
government has been among the loudest voices of concern about a possible
speculative bubble in the largest cryptocurrency, which is still up about 1,400
percent for the year. The country is something of a bellwether for global demand, with
South Koreans paying premiums above 20 percent over prevailing international
rates as of Friday.
China's leaders fret over debts lurking in shadow banking system
The complex lending hidden in the shadow banking sector compounds
the threat posed by China’s rapid accumulation of debt. Economic pain from a
string of defaults would present a challenge for a one-party regime that draws
its legitimacy from the promise of prosperity.
SHANGHAI/BEIJING/HONG KONG - In March 2013, retired chemical company
employee Anne Xing, her older sister and their husbands visited a China
Everbright Bank branch on the outskirts of Shanghai. A private wealth manager
at the bank had a special deal to offer them.
“He said there is a high-quality product,” Xing recalls. “Only elite
customers can buy it. We asked him if there was any risk. He said there was no
risk.”
The two couples sank about 5 million yuan (about $762,000) into the
investment product, which offered 9.5 percent annual interest over two years -
substantially higher than the 3.75 percent they could earn on a fixed, two-year
deposit at the same bank. Xing’s sister said she sold a property for 3 million
yuan to fund her investment. The two families say they didn’t know exactly
where the money was going at the time. When the contracts arrived weeks later,
it turned out they had entered China’s $9.8 trillion shadow banking
industry.
By December 2015, the interest payment for the second year was already
well overdue and the couples were worried. “Then the sky came crashing down,”
Xing said. “The money was gone, a couple of million.”
Everbright had actually sold the two couples a stake in Chang’an Trust
Coal Industry Resource Investment Fund Three – A Collective Investment Fund
Plan. Their money had been lent to a coal miner that soon went bust. The
Chang’an Trust product was one of countless so-called wealth management
products sold to investors to help raise money for a massive wave of
lending in China that began in the aftermath of the 2008 global financial
crisis.
More
In other less manic, but still troubling news, Trump’s Trade War with China is back on. Italy remains, well Italy.
December 28, 2017 / 4:36 PM
Trump says China's stance on North Korea influences his trade policy
WASHINGTON (Reuters) - U.S. President Donald Trump on Thursday said he had “been soft” on China on trade issues and said he was not happy that China had allowed oil shipments to go into North Korea.
“I have been soft on China because the only thing more important to me
than trade is war,” Trump said in an interview with The New York Times.
Earlier on Thursday, Trump said on Twitter that China has been “caught”
allowing oil into North Korea and said such moves would prevent “a friendly
solution” to the crisis over Pyongyang’s nuclear program.
“Caught RED HANDED - very disappointed that China is allowing oil to go
into North Korea. There will never be a friendly solution to the North Korea
problem if this continues to happen!” Trump wrote.
In The New York Times interview, Trump explicitly tied his
administration’s trade policy with China to the country’s perceived cooperation
in resolving the North Korea nuclear crisis.
Morehttps://uk.reuters.com/article/uk-northkorea-missiles-china-trump/trump-says-chinas-stance-on-north-korea-influences-his-trade-policy-idUKKBN1EM1IV
December 29, 2017 / 5:57 AM
South Korea seizes Hong Kong-flagged vessel it says transferred oil to North Korea
SEOUL (Reuters) - South Korea has seized a Hong Kong-flagged vessel
suspected of transferring oil to North Korea in defiance of international
sanctions, a foreign ministry official said on Friday.
The vessel, Lighthouse Winmore, transferred refined petroleum products
to a North Korean ship in international waters in late October, the official
told Reuters.
The United States proposed blacklisting the Hong Kong-flagged ship to
the U.N. Security Council for circumventing sanctions slapped on North Korea
for its nuclear and missile programmes, documents seen by Reuters this month
showed.
https://uk.reuters.com/article/uk-northkorea-missiles/south-korea-seizes-hong-kong-flagged-vessel-it-says-transferred-oil-to-north-korea-idUKKBN1EN0CT?il=0
December 28, 2017 / 2:01 PM
Italy to vote on March 4, with hung parliament feared
Prime Minister Paolo Gentiloni’s cabinet set the date of the vote after the president dissolved parliament on Thursday, formally opening an election campaign which in practice has already been raging bitterly for weeks.
With opinion polls suggesting no one will win a parliamentary majority,
Gentiloni said he would remain in office and ensure continuity until a new
administration was in place.
As things stand, a centre-right alliance around Silvio Berlusconi’s
Forza Italia (Go Italy!) looks set to take the largest number of seats -
potentially catapulting the 81-year-old four-times premier back to centre stage
even though he cannot become prime minister due to a tax fraud conviction.
Gentiloni told reporters at the end of his one-year spell in power that
Italy should not fear uncertainty, noting that it was now common to many
European countries.
Morehttps://uk.reuters.com/article/uk-italy-election/italy-to-vote-on-march-4-with-hung-parliament-feared-idUKKBN1EM19L
“Every
socialist is a disguised dictator.”
Ludwig
von Mises
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, the magic of
the law of unintended consequences. One obvious solution, just don’t lend to or
borrow money from, the US subsidiary of foreign banks.
Trump's Tax Overhaul May ‘Punish’ Foreign Banks With U.S. Units
By Yalman Onaran
A
provision in the new tax law, intended to prevent American companies from
shifting profits abroad to benefit from a lower overseas rate, might also hit
the largest foreign banks with significant U.S. operations.
Under the Base Erosion and Anti-Abuse Tax, commonly called BEAT, payments
made by U.S. businesses to related companies abroad must be counted when
calculating global tax liability. The law doesn’t say whether the payments
are counted on a gross or net basis, said Gavin Ekins
of the Tax Foundation, a policy group. Because global banks frequently move
money among units, a gross basis requirement would amplify their income for the
calculation.Credit Suisse Group AG said last week that BEAT may increase its U.S. tax liability, while Barclays Plc said on Wednesday that the provision might reduce the benefit of the lowered corporate tax rate. Both companies referred to uncertainties in how the clause will eventually be implemented. The U.S. Treasury might provide guidance that eliminates the BEAT disadvantage for banks, Ekins said.
“I can’t imagine Congress really wanted to punish big banks with this provision,” said Ekins, a research economist who has studied the international aspects of the tax bill. “Global banks have hundreds of subsidiaries around the world borrowing from each other as well as lending to each other.
On a gross basis, all the money going out of the U.S. would be captured while the money coming in would be ignored.”
Read more: Banks offer clients a way to game Trump’s tax plan
The tax overhaul signed into law on Dec. 22 by President Donald Trump contains a raft of new rules, including a cut in the corporate tax rate to 21 percent from 35 percent and reductions in individual levies across the board. It also switched to a system in which non-U.S. earnings are taxed at a lower rate, necessitating the global calculation.
While the BEAT provision would exaggerate U.S. income for foreign banks, the impact on U.S. firms won’t be as significant because most of their income is domestic and would be taxed under the regular corporate rate set by the new law, Ekins said. The BEAT will initially be 6 percent for banks, one percentage point higher than for non-financial firms.
Mark
Leeds, a tax attorney with Mayer Brown LLP, said non-U.S. firms face the threat
of double taxation. Foreign banks typically have subsidiaries incorporated in the
U.S. and registered branches that are an extension of the parent. Under BEAT,
payments between subsidiaries and branches are counted as money going from the
U.S. unit to the foreign affiliate. The branches and the units already pay
domestic taxes, so the new law means the firm could pay twice on the same
income.
More
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?
How China Is Killing India’s Solar Industry
India’s solar energy plans seem to have run into a spot of a bother.The Indian government’s target is to boost installed solar power capacity more than five-fold to 100 gigawatt (GW) by 2022.
The problem, though, is India meets about 85 percent of its solar cell demand through imports from China, and photovoltaic modules account for over half the costs of a solar project.
Now, the Indian government is left contemplating whether the domestic industry of solar cells and modules manufacturers should be “protected” from cheap imports. In that vein, the government is actively thinking of imposing an anti-dumping duty.
In a related development over last week, the Ministry of New and Renewable Energy has come out with a “concept note” for offering “direct financial support” of approximately U.S. $1.7 billion (Rs 11,000 crore), as well as a tech upgrade fund for solar manufacture. At the same time, it has said cell and module manufacturing capacity in the country is “obsolete.”
The concept note pointed India had installed capacity for producing 3.1 GW of cells and 8.8 GW of modules, but even this capacity was not being fully exploited because of obsolete technology. The Ministry of New and Renewable Energy believes only 1.5 GW of cell manufacture and 3 GW of module manufacture is being used. Related: A New Era For Oil And Gas Majors
Now, as per the concept note, the Indian government aims to provide a 30 percent subsidy for setting up new plants, while also expanding existing ones. Heavy equipment required to set up projects shall also be exempt from customs duty, according to the scheme to be operated by the Indian Renewable Energy Development Agency.
According to a news report, the Ministry’s note targets creation of solar cell manufacturing capacity of 10 GW over five years and includes interest subvention of 3 percent to manufacturers, setting up new capacity for loans taken through state-managed banks.
Cheap imports from China have brought down solar power tariffs to record lows, according to the Indian Solar Manufacturers Association. The latter has now petitioned the government to impose an anti-dumping duty on inbound shipments from China.
More
https://oilprice.com/Alternative-Energy/Solar-Energy/How-China-Is-Killing-Indias-Solar-Industry.html
U.K. Power Industry on Track for Greenest Year in Blow for Coal
By Jess Shankleman
28
December 2017, 12:24 GMT
Britain’s
effort to scrap coal as a power generation fuel and spur renewables means its
electricity industry is on track for its greenest year ever.
Renewable-energy production broke 13 records this year in the U.K.,
including the first day with zero coal power, according to data compiled by
National Grid Plc and WWF.
“We now have significant volumes of renewable energy on the system,
which poses an exciting challenge for us in ensuring the supply and demand is
matched second by second,” said Duncan Burt, director of the system
operator at National Grid, according to the statement.
Among the records broken for renewable energy in the U.K. were:
- The first 24-hour period without coal generation since the Industrial Revolution, on April 21
- The longest period without coal generation -- 40 hours and 35 minutes, on Oct. 28-29
- The first time that wind, solar and nuclear power combined generated more than gas and coal combined
Another
weekend and the New Year too. A very
happy, healthy, and prosperous 2018 to all our readers and contributors.
“It is
vain to fight totalitarianism by adopting totalitarian methods. Freedom can
only be won by men unconditionally committed to the principles of freedom. The
first requisite for a better social order is the return to unrestricted freedom
of thought and speech.”
Ludwig
von Mises
The monthly Coppock Indicators finished November
DJIA: 24,272 +243 Up. NASDAQ: 6,874 +289 Up. SP500: 2,648 +189 Up.
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