Baltic Dry Index. 1117 +30 Brent Crude 64.72
Don’t fight the Fed.
Wall Street Adage.
And so the epic battle between debt and
equities opened up yesterday. In the opening skirmish equities merely wobbled,
which was a victory of sorts. But in the larger picture of interest rates normalisation,
opening skirmishes don’t amount to much. This tidal wave of US debt is going to
repeat, and repeat, and repeat.
Below, day one in what is likely to be a
decade long war.
All the best
stories in the world are but one story in reality - the story of escape. It is
the only thing which interests us all and at all times, how to escape.
Walter Bagehot.
U.S. Stocks Fall With Treasuries, Dollar Climbs: Markets Wrap
By Jeremy Herron and Brian Chappatta
19 February 2018, 22:15 GMT Updated
on 20 February 2018, 21:00 GMT
U.S. stocks halted a six-day rally as disappointing results from Walmart
Inc. weighed on major indexes as the dollar pushed higher. Treasuries fell amid
a heavy slate of U.S. debt issuance, with short-end auctions drawing some of
the highest yields in almost a decade.
The S&P 500 Index slipped below its average price for the past 50
days. Walmart sank the most since 1988, while a rally in chipmakers boosted the
Nasdaq 100 Index. The Treasury’s auctions of two-year notes and three- and
six-month bills went off at rates unseen since 2008, while the 10-year rate was
up to 2.89 percent. The greenback gained versus major peers.
----While speculators
are turning bearish, money managers are looking at the highest U.S. yields in
years as a buying opportunity in a world where shorter-term Japanese and German
notes still carry negative yields. Investors will also get to parse minutes
this week from the most recent meetings of both the Federal Reserve and the
European Central Bank.
----In
Europe, the Stoxx 600 index edged higher after a pullback in equities emerged
in Asia following several days of increases. Benchmarks in Japan and South
Korea slid more than 1 percent. The yen weakened. Elsewhere, WTI
oil traded in New York climbed above $62 a barrel for the first time in
more than a week. Bitcoin broke above $11,500, almost double its intraday low
from just two weeks ago.
More
U.S. Pays Up to Auction $179 Billion of Debt in a Span of Hours
By Alex Harris
Updated on 20 February 2018, 19:16 GMT
The U.S. Treasury on Tuesday sold $179 billion of securities
as it works to rebuild its cash balance, with yields at its auctions of three-
and six-month debt rising to levels unseen since 2008.
The government began at 11:30 a.m. New York time by auctioning $51
billion of three-month bills at a yield of 1.64 percent, 6 basis points more than
similar-tenor debt sold on Feb. 12, and $45 billion of six-month bills at 1.82
percent.
Its $55 billion sale of four-week notes at 1 p.m. had a yield of 1.38
percent, with a gauge of demand known as the bid-to-cover ratio falling to
2.48, the lowest level since 2008. The first coupon offering of the week, a $28
billion auction of two-year notes, yielded 2.255 percent, the highest in almost
a decade.
All told, the offerings saw decent demand, given the market is facing a
deluge of sales following the recent U.S. debt ceiling suspension. The
bid-to-cover ratios on the three- and six-month auctions were 2.74 and 3.11,
respectively.
----The $258 billion slate of U.S. auctions set for this week is helping to push up the rates investors demand. Concerns about the U.S. borrowing cap had forced the Treasury to trim the total amount of bills it had outstanding, but with the latest debt-ceiling drama over, the government is now busy ramping up issuance. Financing estimates from January show that the Treasury expects to issue $441 billion in net marketable debt in the current quarter, with the bulk of that in the short-term market.
This is just the beginning of the U.S. debt auction schedule. The Treasury will sell five- and seven-year maturities in the next two days, with both offerings larger than last month. It will also issue $15 billion of two-year floating-rate notes.
More
Morgan Stanley Says Stock Slide Was Appetizer for Real Deal
By Chris Anstey
20 February 2018, 04:12 GMT Updated
on 20 February 2018, 08:50 GMT
The U.S. stock market only had a taste of the potential damage from
higher bond yields earlier this year, with the biggest test yet to come,
according to Morgan Stanley.
“Appetizer, not the main course,” is how the bank’s strategists led by
London-based Andrew Sheets described the correction of late January to early
February. Although higher bond yields proved tough for equity investors to
digest, the key metric of inflation-adjusted yields didn’t break out of their
range for the past five years, they said in a note Monday.
While many have warned that faster inflation could hurt stocks, in
theory bigger price gains should be at worst neutral, if they boost earnings
along the way. Higher real yields, on the other hand, mean a bigger discount
rate to value future earnings. Should they break out of the range over the past
five years as investors anticipate greater central bank policy normalization,
that could hit stocks harder, according to the Morgan Stanley thinking.
Relatively low real yields were a big support for equity valuations, so
a break higher would indicate that stocks will have to rely on earnings -- not
multiple expansion -- to drive them higher, Sheets and his colleagues wrote.
And the challenge there is that a slowdown may loom starting in the second
quarter, they said.
“It’s when growth softens while inflation is still rising that returns suffer most,” the strategists wrote. “Strong global growth and a good first-quarter reporting season provided an important offset. We remain on watch for ‘tricky hand-off’ in the second quarter, as core inflation rises and activity indicators moderate.”
JPMorgan Chase & Co. strategists have also pointed to real rates as a potential inflection point for markets, though they identified in December the inflation-adjusted cash rate as the one to watch. That measure has a ways to go until their threshold.
More
"The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice."
Henry
Hazlitt
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, anyone got any ideas on where to store 2,000 unicorns? Like any
bad trade error, I would sell them fast for real cash, closing out the error,
and let everyone argue over the fiat money later. One day Finland might just
find out that unicorns had gone home.
2,000 Confiscated Bitcoins Create a Storage Puzzle in Finland
By Kati Pohjanpalo
20 February 2018, 12:09 GMT
Finland is trying to figure out how to handle the roughly 2,000 Bitcoins
authorities in the country have confiscated.
Worth almost $40 million on Dec. 18, 2017, when the cryptocurrency
peaked, the Bitcoins are now valued at about $22.8 million. Finnish government
guidelines released on Tuesday make clear that authorities handling the coins
won’t be allowed to store them on virtual currency exchanges. Instead, they’ll
be required to keep them off the Internet, according to documents seen by
Bloomberg News.
Most of the coins have been confiscated in dozens of raids conducted
since 2016, according to the customs office in Helsinki. It declined to
say how it’s been storing the cryptocurrencies until now.
The new guidelines also state that authorities can’t treat Bitcoin or
its crypto competitors like a currency. It’s an asset that, as a rule, can’t be
used or accepted as a means of payment or as an investment, according to the
Treasury document.
Cryptocurrencies seized by the Finnish state can be converted into euros
after a court ruling on their appropriation has become binding. The sales
should primarily take place via public auctions rather than commercial
exchanges, which can be untrustworthy and opaque, the Treasury said.
Hedge-fund honcho Singer says bitcoin is ‘one of the most brilliant scams in history’
Published: Feb 20, 2018 1:53 p.m. ET
“When the history is written, cryptocurrencies will likely be described as one of the most brilliant scams in history,” Singer said in a letter to clients dated January, which was first reported by Business Insider.
Singer, who founded hedge fund Elliott Management, said digital assets, which have ballooned in mainstream attention over the past months, represented “not just a bubble. It is not just a fraud. It is perhaps the outer limit, the ultimate expression, of the ability of humans to seize upon ether and hope to ride it to the stars.”
Singer’s comments come as the No. 1 cryptocurrency, bitcoin BTCUSD, -5.43% is making a comeback after a dreadful start to 2018. After losing more than half its value, bitcoin has traded back above $11,000 for the first time since Jan. 28, despite the continuing attacks from industry skeptics. The latest being Goldman Sachs, that said there is a substantial likelihood some cryptocurrencies will head to zero within the next decade.
Read: Most cryptocurrencies are heading to zero, says Goldman analysts
This isn’t the first time Singer has taken a shot at the cryptocurrency market. In 2014, he called out bitcoin proponents, who argue that the digital currency will replace gold. Singer said bitcoin has yet to stand the test of time like traditional asset gold GCJ8, -0.09% and the difficulty extracting gold makes it a more lucrative store of value.
Read: Winklevoss: If you can’t see bitcoin at $320,000, you just lack imagination
More
Remember
that there is nothing stable in human affairs; therefore avoid undue elation in
prosperity, or undue depression in adversity.
Socrates
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?
Precision experiments reveal gaps in van der Waals theory
Experiments reveal the inadequacies of theory for modelling two-dimensional (2-D) van der Waals materials
Date:
February 16, 2018
Source:
University of Tsukuba
Summary:
Scientists have used single-crystal synchrotron X-ray diffraction measurements
to establish the electron density of TiS2. Given the broad range of
applications for 2-D materials, this fundamental understanding is expected to
have a wide-reaching influence on their uses, such as in topological
insulators, electrode materials, catalysts, and charge-density-wave materials.
The discovery of graphene, with its high strength-to-weight ratio,
flexibility, electrical conductivity, and ability to form an impenetrable
barrier, led to an explosion of interest in 2D solids. Weak, long-range
interactions give 2D solids some of their most interesting behaviors;
therefore, understanding these interactions is crucial for further developing
these materials. However, experimental support for theoretical modelling of the
van der Waals interactions that hold these materials' layers together has been
wanting.
Now, an international research group led by the University of Tsukuba
and Aarhus University has performed synchrotron X-ray diffraction experiments
on titanium disulfide (TiS2) -- a transition metal dichalogenide (TMD) material
with a layered 2D structure -- and compared the results with theoretical
calculations. Their benchmark work was recently published in Nature
Materials.
----These interactions are known to be much weaker than those within the 2D sheets, however, using high-energy synchrotron X-ray radiation to precisely measure a single TiS2 crystal, the researchers were able to show that the interlayer interactions are in fact stronger than theory indicates, and involve significant electron sharing.
"This work provides a fundamental understanding of an exciting
class of materials with numerous potential applications in technologies such as
ion batteries, catalysis, and superconductors," lead author Hidetaka Kasai
says. "Our experiments are the first to reveal the true nature of the
interactions that make 2D materials so interesting, and we hope they will
underpin many future developments in this area."
The outstanding agreement of the synchrotron diffraction data with
theoretical calculations in describing the intralayer Ti-S interactions,
supports the validity of these new-found differences for the long-range
interactions across the interlayer gaps. The findings are expected to
substantially contribute to the fundamental understanding of weak chemical
bonding in 2D layered materials in general, and to the development of TMD
materials.
The U.K. Had a Record Year for Wind Generation
By Rachel Morison
Wind farms produced a record 15 percent of Britain’s electricity last
year, helping damp emissions from power.
Wind generation was double the output of coal as new sites started and
several storms swept through Britain, boosting turbine speeds by 5 percent
compared with 2016, according to a report published by Imperial College London
and Drax Plc. The U.K. power grid was free from coal for 618 hours last year,
the equivalent of almost 26 days, it said.
“As the share of fossil fuels falls and more intermittent renewables
come onto the system, we need to think about how we maintain stable, secure
power supplies,” said Andy Koss, chief executive office of Drax Power. “We can
expect more days without coal on the system as we gear up to the U.K. coming
off coal in 2025.”
More
The market, like the Lord, helps those who
help themselves. But, unlike the Lord, the market does not forgive those who know not what they do.
Warren Buffett.
The monthly Coppock Indicators finished January
DJIA: 26,149 +282 Up. NASDAQ: 7,411 +310 Up. SP500: 2,824 +212 Up.
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