Baltic
Dry Index. 1626
+48
Brent Crude 63.44
Meetings
are indispensable when you don't want to do anything.
John
Kenneth Galbraith
As
the EUSSR’s good, bad and ugly “Great Leaders,” jet off to
Brussels today for their annual Christmas gathering with little joy
and goodwill to all men, we focus today on America, and the coming
tax deal, plus crypto-currencies, the “next big thing,” or the
next big fraud? The jury’s still out on that, but more and more of
finance’s bigwigs are taking sides.
Call
me old fashioned, but I prefer to stay out of fads and bubbles, and
mysteries like how many angels can dance on the head of a pin, or
when if ever Microsoft will ever get my Office 365 suite working
again. I prefer the safety of gold and silver against the day that
the central banksters finally destroy the Great Nixonian Error of
fiat money.
December
3, 2017 / 11:52 PM / Updated 4 hours ago
Dollar gains on U.S. tax cut progress; Asian shares listless
Asian
shares were less euphoric, with MSCI’s broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS hovering near a
one-month trough on fears U.S. policy tightening could suck liquidity
from emerging markets and derail global growth.
Traders will be focusing their
attentions on a meeting scheduled for British Prime Minister Theresa
May and EU President Jean-Claude Juncker to work on a Brexit deal.
The euro EUR=
slipped 0.1 percent, while the British pound GBP=
was steady amid media reports that a deal was near on the terms of
the Brexit divorce.
The
U.S. Senate approved a tax overhaul on Saturday, moving Republicans
and President Donald Trump a big step closer to their goal of
slashing taxes for businesses and the rich.
The move could further boost
corporate profits and lead to a slew of share buy-backs. U.S. stock
markets have already rallied for months on hopes that Washington
would provide significant tax cuts for corporations.
Indeed, EMini S&P stock futures
ESc1 jumped 0.6 percent on Monday, though most major Asian markets
started the week with a whimper.
China's CSI 300 index .CSI and SSE
Composite .SSEC
were down 0.2 percent each, while Australian shares dipped 0.1
percent. Japan's Nikkei .N225
eased 0.2 percent.
“If you do see a U.S. fiscal
stimulus in 2018 all its likely to do is accelerate the need for
further U.S. policy tightening which indirectly could be negative for
emerging markets,” said Chris Weston, Melbourne-based chief market
strategist at IG.
“If real yields trend higher and
the U.S. dollar rises further that would put emerging markets and
Asia on the back burner,” Weston added.
More
U.S. Tax Cuts Seen Giving Modest Growth Boost as Recession Looms
By Andrew Mayeda
December
4, 2017, 5:01 AM GMT
Fiscal
stimulus, including large Republican-backed tax cuts, will deliver a
modest boost to the U.S. economy in the next two years, although many
economists also expect a recession to start during that time,
according to a new survey.
About half of economists say fiscal
policy changes will augment U.S. growth by 0.2 to 0.39 percentage
point in 2018, according to a survey of 51 forecasters by the
National Association for Business Economics conducted Nov. 6-15.
About one-fifth project a bigger gain and another fifth see no
benefit to growth.
Since the survey was conducted, the
Republican tax proposal has undergone numerous changes that could
alter its impact on the economy, with the potential for further
modifications during Senate and House negotiations
before it heads for President Donald Trump’s signature.
Even with the bump, a slight majority
anticipates a recession beginning sometime before the end of 2019,
with most of that group seeing a business-cycle peak in the second
half of that year. That compares with 48 percent who see the
expansion running through at least 2020. Economists were most likely
to cite trade
protectionism as a top risk to expansion, followed by a
substantial stock-market decline and higher interest rates.
The effects on the economy from the
tax plan,
pushed by the Trump administration and congressional Republicans, has
been a contentious topic. Republicans have said that the additional
growth unleashed by the legislation means the cuts pay for themselves
by increasing revenues; many economists disagree. The White House
says the package will trigger an investment boom by companies that
will lift growth to a sustained 3 percent pace and make up for the
loss of tax revenue from lower rates.
More
Goldman Sees U.S. Tax Cut Boosting Growth 0.3% Point in 2018-19
By Chris Anstey
December
3, 2017, 11:26 PM GMT
The
U.S. Congress will probably pass tax-cut legislation within the next
two weeks, ushering in reductions that will boost economic growth by
around 0.3 percentage point for next year and 2019, according to
estimates by Goldman Sachs Group Inc.
With the Senate passing legislation
on Saturday that matched the House of Representatives in including up
to $10,000 in state and local property-tax deductions, that
eliminated "the most important political difference between the
bills before the conference negotiations start," Goldman
economists led by Jan Hatzius in New York wrote in a note.
"We expect the final structure
of the bill to reflect more of the Senate bill than the House bill,
including a 20 percent corporate tax rate effective in 2019,"
the Goldman analysts wrote. While that’s down from 35 percent
today, considering the expected package more broadly, the effective
corporate tax rate will come down by "only a couple of
percentage points," Goldman said.
The median estimate of economists
surveyed by Bloomberg is for the U.S. economy to expand 2.5 percent
next year and 2.1 percent in 2019, after 2.2 percent growth in 2017.
Economics
is extremely useful as a form of employment for economists.
John
Kenneth Galbraith
Crooks and Scoundrels Corner
The
bent, the seriously bent, and the totally doubled over.
Today
more on crypto-currencies. Fraud or early pricing inefficiencies?
France’s Market Regulator Calls Bitcoin a ‘Dangerous Illusion’
By Russell Ward and Rishaad Salamat
December
4, 2017, 4:39 AM GMT
The chairman of
France’s market regulator denounced bitcoin as a “dangerous
illusion” and a tool for criminals, siding firmly against the
cryptocurrency as its value climbed further past $11,000.
“It’s a way to purchase illicit
goods, it’s a way to launder illicit income, it’s a way to
develop and pay for cybercrimes and it’s a pure empty commodity,”
Robert Ophele, chairman of the Autorite des Marches Financiers, said
in a Bloomberg Television interview from Tokyo Monday. “If it were
a currency, it would be a very bad one.”
Ophele said he
isn’t sure he’d want to regulate bitcoin because it has no link
to the real economy. Authorities and banks worldwide are
grappling with how to treat the cryptocurrency, which has surged more
than 10 times this year on growing speculation that it will find a
lasting role in the financial system.
Goldman Sachs Group Inc. Chief
Executive Officer Lloyd Blankfein said last week that it’s too
early for his bank to need a bitcoin strategy and he doesn’t
consider it to be a store of value. BNP Paribas SA Chairman Jean
Lemierre said at a forum in Tokyo Monday that it’s a commodity
rather than a currency. Meanwhile, U.S. exchanges including CME Group
Inc. were allowed last week to start trading of bitcoin futures.
“It’s a challenge for central
bankers and for financial supervisors,” said Ophele, who was also
in Tokyo to attend the Paris Europlace forum. “It’s an
unregulated market and I should say it’s a dangerous illusion.”
Now Quants Want to Program Robots to Track Bitcoin as Smart Beta
By Dani Burger
December
4, 2017, 5:00 AM GMT
Quant
blended with cryptocurrency sounds like a cocktail poured in hell.
But behind closed doors, a few intrepid souls in the investing world
are starting to drink it.
Part academic exercise, part arranged
marriage of Wall Street fads, a handful of theorists and traders are
looking at what investment factors like momentum and value can tell
you about -- yep -- the price of bitcoin. Factors, the wiring behind
smart
beta exchange-traded funds, already revolutionized equities,
proving that groups of stocks with traits like cheapness and low
volatility return more than the market as a whole.
That discovery was a gold mine,
launching $700 billion in smart beta ETFs, so it’s no surprise
people want to turn it loose elsewhere. A more abstract motive
hearkens to the foundation of quantitative investing. It’s the idea
that no matter where you look -- stocks, bonds, ICO tokens -- mental
mistakes by investors cause the same trading opportunities to arise
in every market.
In the theory camp is Stefan Hubrich,
the director of asset allocation research at T. Rowe Price Group
Inc., who set out to publish the first academic paper linking factor
anomalies to blockchain assets. After building models and analyzing
data, Hubrich says he can show that factor investing beats a simple
buy-and-hold strategy in digital tokens.
“Our
results should not be taken as an endorsement of cryptocurrencies as
an asset class,” Hubrich wrote
in his Oct. 28 research. “Instead, we view our findings as an
intriguing confirmation of the efficacy of the underlying factors
themselves.”
Too Little Data
One reason bitcoin and its peers are
a tempting laboratory for academic quants is how different they are
from traditional assets. Stocks may bounce around, but they’ve got
nothing on cryptocurrencies, where jarring price swings, flash
crashes and cataclysmic exchange malfunctions happen regularly. If
concepts like value and momentum stand in that jungle, researchers
reasoned, it would help confirm that behavioral biases operate
everywhere.
More
One
of the greatest pieces of economic wisdom is to know what you do not
know.
John
Kenneth Galbraith
Solar & Related 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?
Elon Musk's Battery Boast Will Be Short-Lived
By Perry Williams and Kanika Sood
Billionaire Elon
Musk defied his doubters to beat
Friday’s 100-day deadline and install the world’s biggest battery
in the Australian outback. He’ll probably relinquish that crown by
February.
South Korea’s Hyundai
Electric & Energy Systems Co. is building a 150-megawatt
lithium-ion unit, 50 percent larger than Musk’s, that the company
says will go live in about three months in Ulsan near the southeast
coast.
With battery prices tumbling by
almost half since 2014, large-scale projects are popping up around
the world. Developers have announced lithium-ion battery projects
with total capacity of 1,650 megawatts per hour in 2017, four times
the amount for all of 2016, according to Bloomberg New Energy
Finance.
“Musk has set a benchmark on how
quickly you can install and commission a battery of this size,” Ali
Asghar, a BNEF senior associate, said in an interview. Falling costs
are “making them a compelling mainstream option for energy-storage
applications in many areas around the world, and projects even bigger
than Tesla’s are now under construction.”
Though Musk’s Palo Alto,
California-based Tesla Inc. is best known for making electric cars,
the company sells its lithium-ion batteries to utilities eager for
cost-effective ways to integrate renewable sources of power like
solar and wind into their electric grids.
Musk agreed to up the stakes for
South Australia, the mainland state with the biggest exposure to
clean energy, by providing 100 megawatts of power, roughly the size
of an electricity shortfall the region suffered in a February
blackout
----The
battery-storage industry is becoming increasingly important in places
like South Australia, which has less access to traditional
fossil-fuel sources like coal and gas than the rest of the nation.
Instead, the region gets 41 percent of its electricity from renewable
energy, one of the highest penetrations of wind and solar in the
world.
Smoothing out the intermittent nature
of those sources when the wind dies down and the sun stops shining
has traditionally rested with natural gas “peaker” plants that
can fire up to meet demand at night and in the early morning. Now
with the cost of batteries falling, large projects can be deployed
within three months to meet that need.
Big renewable-energy companies AES
Corp. and AltaGas Ltd. have already dabbled in the large-scale
energy-storage market. Others such as NextEra Energy Inc. and E.ON
will soon produce battery packs that are cost-competitive, said Sam
Jaffe, a battery analyst at Cairn Energy Research Advisors in
Boulder, Colorado.
More
The monthly Coppock Indicators finished November
DJIA:
24272
+243
Up
NASDAQ:
6874
+299
Up.
SP500:
2648
+189
Up.
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