Baltic Dry Index. 1157 +28 Brent Crude 69.84
To widen the market and to narrow the competition,
is always the interest of the dealers…The proposal of any new law or regulation
of commerce which comes from this order, ought always to be listened to with
great precaution, and ought never to be adopted till after having been long and
carefully examined, not only with the most scrupulous, but with the most
suspicious attention. It comes from an order of men, whose interest is never
exactly the same with that of the public, who have generally an interest to
deceive and even oppress the public, and who accordingly have, upon many
occasions, both deceived and oppressed it.
Adam Smith, The Wealth Of
Nations. 1776.
Day two of the elite
Lords of the Universe meeting in Davos, I wonder what got “fixed” in yesterday’s
meetings, and what will get “fixed” today? As we approach the end of January
2018, hopium rules everywhere. Stocks and everything else except the dollar,
have nowhere to go but higher. Pessimists, realists, naysayers, are all so
yesterday’s failures. This time it’s different,
just like 1929, 1987 and 2008. Isn’t
life fun living out the mania dream on the Costa Concordia cruise.
For now, all news
remains good news. What could possibly go wrong? Even Trump’s trade war is good
news.
January 24, 2018 / 12:52 AM
Asia shares take a breather, dollar takes a dive
SYDNEY
(Reuters) - Asian share markets took a time out on Wednesday as investors were
left breathless at the breakneck pace of recent gains, while a fresh burst of
speculative selling took the U.S. dollar to three-year lows on the euro.
Most Asian stock indices are up anywhere from 5 to 10 percent since the start of the year with many at all-time highs.
“These markets are absolutely flying and have had seemingly one-way moves since late December,” noted Chris Weston, chief market strategist at broker IG.
“There has clearly been a wall of capital hitting these markets, as is the case with many Asian currencies,” he added. “One simply can’t rule out further upside here, even if there are growing risks of buyers’ fatigue kicking in.”
Early Wednesday, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.2 percent, having jumped 1.2 percent on Tuesday to an all-time peak.
Japan's Nikkei .N225 lost 0.8 percent as the yen strengthened, though that was from a 26-year top.
Figures out of Japan showed exports growing for a 13th straight month, led by record demand from China and Asia as a whole, while manufacturing activity expanded at the fastest pace in almost four years.
Investors looked to have largely shaken off worries about a trade war, sparked when U.S. President Donald Trump’s slapped steep import tariffs on washing machines and solar panels in a move condemned by China and South Korea.
Korea's main index .KS11 was flat, while China's blue-chip CSI300 index .CSI300 dipped 0.1 percent. The latter is still up more than 8 percent on the year so far and near its highest since mid-2015.
On Wall Street, a 10 percent surge in Netflix (NFLX.O) led gains across the tech sector as it became just the latest to top market forecasts. So far, 82 percent of reporting companies have beaten estimates.
The Nasdaq .IXIC ended Tuesday with gains of 0.71 percent and the S&P 500 .SPX 0.22 percent, while the Dow .DJI edged down a tiny 0.01 percent.
More
January 24, 2018 / 5:20 AM
2018 global growth to roll to highs not seen in eight years: Reuters poll
BENGALURU
(Reuters) - The global economy is expected to grow at a robust pace this year
and reach an altitude not seen since 2010, as momentum builds in developed
economies and inflation revives, Reuters polls of over 500 economists showed.
Major central banks are expected to move away from ultra-easy monetary
policy this year, but borrowing costs are still accommodative and should
underpin growth.
The latest Reuters polls taken this month, covering more than 45
countries, not only underscored optimism on growth but also showed inflation
forecasts were either upgraded or left unchanged in nearly 70 percent of those
economies.
“For the first time in a long while, global growth is speeding up away
from its average rather than recovering back towards it,” said James Sweeney,
chief economist at Credit Suisse.
The global economy is predicted to grow 3.7 percent this year, the
fastest since the 4.3 percent in 2010.
That was an upgrade from the 3.6 percent predicted in October’s poll but
lower than the International Monetary Fund’s outlook of 3.9 percent growth this
year.
Nearly 70 percent of over 140 respondents who answered an extra question
said the global economic boom was more likely to gain momentum this year and
push inflation higher than currently predicted.
More
If economists could
manage to get themselves thought of as humble, competent people on a level with
dentists, that would be splendid.
John Maynard Keynes
In cryptocurrency news, yet another red flag from Goldie.
Apparently, the Goldmanites can resist anything except temptation. “Despite Goldman’s pessimism, the investment
bank is reportedly weighing a new trading operation dedicated to bitcoin
and other digital currencies.”
“Call
it the Goldman Sachs test. If this is something Goldman would do to its
clients, don't do it."
Felix
Salmon.
Goldman issues a warning on bitcoin -- and an even bigger warning on Ethereum
Published: Jan 22, 2018 4:32 p.m. ET
Goldman quotes historian on ‘tulip bubble’: ‘Our descendants doubtless will laugh at the human insanity of our Age’
The chorus of bitcoin bears is growing louder by the day.
The latest to issue a stern warning against the world’s largest digital
currency is Goldman Sachs’s investment management division, which wrote that
there is “no doubt” that the cryptocurrency’s astronomical rise over the past
year “has pushed it into bubble territory.”
The firm added that bitcoin’s “meteoric rise in a short time has dwarfed
the rise seen during the dot-com bubble.” They added: “We also believe that cryptocurrencies
have moved beyond bubble levels in financial markets, and even beyond the
levels seen during the Dutch ‘tulipmania’ between 1634 and early 1637.”
Bitcoin BTCUSD, +0.76% last traded at $10,200.77, down over 11% on the day. The digital currency, maintaining one of its most notorious qualities, has been incredibly volatile in 2018, seeing massive swings on a near daily basis. Over the past year, bitcoin has risen by a factor of more than 10, although it has also dropped significantly. After closing 2016 under $1,000, it subsequently soared throughout most of last year, peaking near $20,000 in December before turning sharply lower.
The volatility of the market, along with a lack of regulation, was cited by the Securities and Exchange Commission as reasons why it was unlikely to approve an exchange-traded fund related to bitcoin soon.
Related: Bitcoin could fall off cliff, drop 90%, one Wall Street strategist warns
Other digital currencies have seen similar moves over the past year, both up and down. Ripple, which is currently the third-largest cryptocurrency, went from trading under one penny a year ago to more than $3.30 in early January. It subsequently shed more than half of that gain, and is currently trading around $1.22. Ether, which runs on the Ethereum blockchain, was trading around $10 a year ago. It surged above $1,330 in mid-January, but last traded Monday at $943.09.
Goldman is not the first analyst to deem crypto the biggest bubble in history, and it sees ether as a potentially larger one than even bitcoin. When Ether’s price move is compared against stocks, tulips, and bitcoin, the scale of the other rises essentially disappears in comparison, a fact Goldman called “astonishing.”
“While we do not know if bitcoin or any other cryptocurrency will double or triple from prevailing prices, we do not believe that these cryptocurrencies will retain their value in the long run in their current incarnation,” it wrote to clients.
Despite Goldman’s pessimism, the investment bank is reportedly weighing a new trading operation dedicated to bitcoin and other digital currencies.
In another sign of the crypto universe’s potential bubble, Goldman also noted the recent trend of companies that have seen their stock prices soar after they announce initiatives related to blockchain or even simply change their name to include the term.
More
https://www.marketwatch.com/story/the-bitcoin-bubble-now-dwarfs-tulips-and-dot-com-stocks-goldman-warns-2018-01-22
If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too.
Lloyd
Blankfein, CEO Goldman Sachs, Mr. Goldman “Sacks” 2008 ominous threat/promise.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today yet another red flag for stocks. Are cash-flow and the yield curve
signalling a “nasty surprise” ahead for US stocks?
Stock market headed for ‘nasty surprise’ if this signal proves correct
Published: Jan 22, 2018 5:26 p.m. ET
Slowing cash-flow growth a concern: SocGen’s Lapthorne
Anticipating a cut in U.S. corporate tax rates, Wall Street analysts late last year ratcheted up earnings estimates for 2018, forecasting an 18% increase in profits, but declining cash-flow growth remains problematic for markets, according to Société Générale’s Andrew Lapthorne.In a note to investors, he pointed out that despite continued economic growth and a tax windfall, U.S. equities have underperformed the rest of the world since Dec. 15.
The S&P 500 SPX, +0.81% the large-cap U.S. equity benchmark, is up 5.6% year to date. The iShares MSCI U.S. ETF ACWX, +0.53% is up 5.9% since the start of the year.
Lapthorne is not convinced about the bullish posture of U.S. equity investors, however, citing messages coming from a flattening yield curve and a weaker dollar, both of which normally reflect weaker growth in future.
The yield curve — the difference between the short-dated and long-dated yields — has been flattening steadily since 2013, when it was at about 265 basis points. The spread between two- TMUBMUSD02Y, -0.39% nd 10-year Treasury yields TMUBMUSD10Y, -0.63% is currently at 60 basis points.
An inverted yield curve preceded all of the past seven recessions, but a flattening yield curve does not always mean it will invert. In fact, the yield curve steepened over the past few weeks after narrowing to 48 basis points.
The weakness in the dollar over the past 12 months came despite the Federal Reserve hiking interest rates three times last year, and promising another three in 2018, with some analysts suggesting that it a reflection of weaker long-term growth prospects.
But Lapthorne’s main concern centers on cash flow. In the chart below, Lapthorne shows that net operating cash-flow growth in the U.S., once the energy sector is excluded, decelerated from around 7% annually to just below 3% now, “a rate of growth normally associated with a period of weak economic growth.”
Lapthorne sees a clear relationship between the decline in cash-flow growth and the yield curve, as well as the dollar.
Lapthorne quotes an old saying, “Revenue is vanity, profit is sanity,
cash is reality,” and suggests investors take note of the slowdown in cash
flows.
“If the cash-flow growth signal is correct, and that reinforces the
yield-curve view of U.S. economic prosperity, then equity markets could be in
for a nasty surprise,” Lapthorne wrote in a note Monday.
"The principal cause of
the crisis was the dismantling of the system of regulation and supervision in
the financial sector which had for much of the post-war period kept the most
dangerous elements of that sector in check. In the absence of an appropriate
system of effective supervision and regulation, what happens is that the actors
in the system, who are intent upon taking the greatest degree of risk —
including actors who are intent upon using fraudulent methods to increase their
returns — come to dominate parts of the system. As they do that, the general
methods of assessing performance in the market, specifically stock-market
valuations, become counter-productive. That is to say, they invariably reward
the worst actors, while they force more traditional actors, who are still
respecting the old norms of conduct, into a competitively disadvantaged
position. Thus the bad actors, the fraudulent actors, and the speculative
extremists quickly take over.”J. K. Galbraith.
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?
MIT discovery resurrects potential of molten salt batteries for grid level power storage
23 January, 2018
One of the primary problems with renewable energy, particularly wind and
solar, is that power gets generated when the wind or sun is available, rather
than when it's most needed. This problem would more or less disappear if the
world could come up with a massive, cheap, long-lasting battery design that
could be used to store power at grid-scale levels and feed it back out when
required.
Lithium batteries are the current darlings (heh heh) of the electric
vehicle and consumer electronics industries, due to their high performance,
power density and light weight. But lithium is way too expensive a material for
grid-scale storage, and when you're talking about making batteries for a whole
city, size and weight are far less important than making something super cheap,
safe and reliable that will last for as long as possible. All the better if it
can be made out of common and easily available materials.
Good news, then, from MIT on this front, as a team of researchers has
found a cheap, effective and durable way of resurrecting an old battery idea
first documented 50 years ago.
The discovery centers around molten salt batteries such as sodium/sulfur
or sodium/nickel chloride designs in which electrodes are kept at high
temperatures to keep them in a molten state and allow charge to transfer
between them.
Typically, the electrodes need to be kept separate by a special type of
membrane that allows certain molecules through and keeps others separate. This
has been successfully done in the past with a thin beta-alumina ceramic layer,
but commercial use of these batteries has been limited by how fragile and
brittle this ceramic layer is, and its tendency to shatter. Not the kind of
thing you want to bet your city's power supply on.
The MIT team has discovered a different way of separating the
electrodes, using a regular steel mesh coated with titanium nitride. Where the
ceramic layer sorts molecules according to their physical size, using the size
of holes in the porous ceramic material, the steel mesh uses its electrical
properties instead to achieve the same result. And it's much more durable.
The steel mesh technique is applicable to a number of different
molten-electrode battery chemistries, and while it doesn't help with small,
lightweight battery designs like you'd see in an electric car or mobile phone,
the researchers believe it could be a game changer for large-scale, low-cost,
fixed-location energy storage.
Such an advance could allow cities to safely and easily ramp up the
amount of renewables in its energy mix – and that's good news for everyone.
"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”
J. K. Galbraith. The Great Crash: 1929.
The monthly Coppock Indicators finished December
DJIA: 24,719 +265 Up. NASDAQ: 6,903 +297 Up. SP500: 2,674 +199 Up.
SBI (-2.5%), Tech Mahindra (-2.3%), Yesh Bank (-2.2%), TCS (-1.8%) and HCL Tech (-1.8%) were the top losers in today’s trade.
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