Thursday 22 March 2018

The Great Trump Trade War Starts Today?


Baltic Dry Index. 1117 -05    Brent Crude 69.52

"Markets are only a tiny facet of society, but being made by mass psychology, they are a good litmus paper for what is going on.  Markets only work when they believe, and this confidence is based on the idea that men can manage their affairs rationally.  If that belief fades, then so do the markets.  They do not merely dive, they dive and then they disappear.  It happened here in the blight of the spirit from 1930 - 1933, and it happened in other countries." 

“Adam Smith” aka George Goodman.

According to a report on Bloomberg, President Trump's trade war on China starts today, with a broadside of $50 billion of tariffs. I suspect we will not wait long for China’s broadside in reply. No one ever really wins in a trade war, although not everyone loses at the same time or to the same degree. But with Uncle Scam now wracking up one trillion dollar deficits every six months, picking on Johnny Foreigner is as good a way of diverting attention and driving up nationalism, as any other.

Below, we all know that another crash and recession is coming, just not when or why. Is oil signalling the return of inflation ahead?

"Why are the economists almost always wrong?"

“Adam Smith” aka George Goodman.

Trump to Announce $50 Billion in China Tariffs, Sources Say

By Andrew Mayeda, Jennifer Jacobs, and Saleha Mohsin
Updated on 22 March 2018, 03:33 GMT
President Donald Trump is set to announce about $50 billion of tariffs against China over intellectual-property violations on Thursday, according a person familiar with the matter.

The president is considering targeting more than 100 different types of Chinese goods, according to the person, who spoke on the condition of anonymity. The value of the tariffs was based on U.S. estimates of economic damage caused by intellectual-property theft by China, the person said.

“Tomorrow the president will announce the actions he has decided to take based on USTR’s 301 investigation into China’s state-led, market-distorting efforts to force, pressure, and steal U.S. technologies and intellectual property,” White House official Raj Shah said in an emailed statement on Wednesday.

It will be Trump’s first trade action directly aimed at China, which he has blamed for the hollowing out of the American manufacturing sector and the loss of U.S. jobs. The decision comes as policy makers including IMF Managing Director Christine Lagarde warn of a global trade conflict that could undermine the broadest world recovery in years.

"If Trump really signs the order, that is a declaration of trade war with China,” said Wei Jianguo, former vice commerce minister and now an executive deputy director of the China Center for International Economic Exchanges, a government-linked think tank.

"China is not afraid, nor will it dodge a trade war," Wei said. "We have plenty of measures to fight back, in areas of automobile imports, soybean, aircraft and chips. On the other hand, Trump should know that this is a very bad idea, and there will be no winner, and there will be no good outcome for both nations."
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Fed Lifts Rates, Steepens Path Through 2020 for More Hikes

By Craig Torres
Updated on 21 March 2018, 19:34 GMT
Federal Reserve officials, meeting for the first time under Chairman Jerome Powell, raised the benchmark lending rate a quarter-point and forecast a steeper path of hikes in 2019 and 2020, citing an improving economic outlook. Policy makers continued to project a total of three increases this year.

“The economic outlook has strengthened in recent months,” the policy-setting Federal Open Market Committee said in a statement Wednesday in Washington. Officials repeated previous language that they anticipate “further gradual adjustments in the stance of monetary policy.”

The upward revision in their rate path suggests Fed officials are looking through soft first-quarter economic reports and expect a lift this year and next from tax cuts passed by Republicans in December. Financial conditions have tightened since late January as investors look for signs that the central bank might raise rates at a faster pace, while forecasters predict stronger U.S. growth and tight labor markets.

“The job market remains strong, the economy continues to expand, and inflation appears to be moving toward the FOMC’s 2 percent longer running goal,” Powell said in a press conference that he kept somewhat shorter than those conducted by his predecessor, Janet Yellen. Powell said he’s “carefully considering” expanding the number of such briefings where he explains Fed decision, cautioning that he wanted to be sure that didn’t send any signals about the path of policy.
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‘Mother of all yield shocks’ is about to crush stocks, warns ‘Father of Reaganomics’

Published: Mar 21, 2018 1:35 p.m. ET
David Stockman, the so-called “Father of Reaganomics,” hasn’t been shy — or close to right — about his frantically bearish calls in recent years.

---- “There is not a snowball’s chance in the hot place that the mother of all yield shocks can be avoided,” Stockman wrote on his blog this week.

He explains that we’re in a uniquely dangerous position, one that really couldn’t have even happened under previous administrations.

“Had Lyndon Johnson, Tricky Dick, Jimmy Carter or even Ronald Reagan suggested that the Federal Reserve buy government debt at rates which exceeded annual issuance by the U.S. Treasury, as was the case during the peak years of QE, they would have been severely attacked — if not subjected to impeachment — for advocating rank financial fraud,” Stockman claimed.

He said ever since former Federal Reserve Chairman Alan Greenspan “commenced the age of monetary central planning,” Wall Street has used deficits as a tool in Washington’s kit of “whatever it takes,” instead of something to be feared.

“Anything that could fuel even the appearance of short-term economic growth was embraced unthinkingly,” he said, “because ‘growth’ of any shape, form or quality became the predicate for endless increases in the stock market averages.”

That’s a recipe for disaster, says Stockman.

“As the Fed pivots to quantitative tightening for the first time in decades — and at a scale that has never before been imagined because the Fed’s balance sheet had never previously approached anything like a quintupling in just six years — the level of complacency on Wall Street and in Washington is staggering,” he wrote.

Now that the “age of monetization” is over, the Fed’s balance sheet “shrinkage campaign” is on auto-pilot, which, Stockman warns, will ultimately elicit a biblical “road to Damascus experience” on Wall Street.
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It didn’t take long for the U.S. to rack up another trillion dollars of debt

Published: Mar 20, 2018 12:48 p.m. ET

Latest $1 trillion jump took about six months

It has taken a little more than six months for the U.S. national debt to grow by a trillion dollars, a quick clip that has little precedent over the nation’s recent history.

Last week, the debt hit $21 trillion for the first time, rising from the $20 trillion mark it notched on Sept. 8. The debt is guaranteed to go higher, with President Donald Trump having signed a debt-limit suspension in February, allowing unlimited borrowing through March 1, 2019. Economists expect wider deficits to result from the tax cut Trump signed in December.

While a trillion-dollar increase over roughly six months isn’t unprecedented — there was one in 2009, during the Great Recession, and another in 2010 — it’s certainly fast.

The national debt exceeded $20 trillion in September 2017, after taking 20 months to add a trillion dollars. A debt limit that had been in place since March 2015 was raised in March 2017, and again on Sept. 8, 2017.

Farther back, however, such trillion-dollar increases took longer: 43 months, for instance, near the end of Bill Clinton’s first term.

The first time the nation’s debt hit $1 trillion was in October 1981, during Ronald Reagan’s first term.
Looking ahead, analysts see the nation much deeper in debt. The Committee for a Responsible Budget projects trillion-dollar deficits returning permanently by next year, and debt exceeding the size of the economy within a decade.

Guggenheim's Minerd Sees Defaults, U.S. Recession on the Horizon

By Kate Smith
21 March 2018, 14:45 GMT
Companies that went on a borrowing binge may default on their debt as interest rates increase and the prospect of a recession grows, according to Scott Minerd, chief investment officer of Guggenheim Partners.

After skirting defaults and bankruptcies during the last recession, corporations may not be as lucky this time around, Minerd said in an interview on Bloomberg TV on Wednesday.

“There are a lot of companies that are zombie companies that survived the last cycle,” he said. “With rates going up, it will be harder and harder (for them) to stay alive.”

Since the last recession, low interest rates have spurred U.S. companies to lever up, using cheap debt to buy back stock and boost equity prices. Within three months, as Libor rates tick up, many are going to struggle with debt service and free cash flow, Minerd said. Highly-levered firms will also get hit with a new tax reform policy that limits their ability to deduct interest costs.

Minerd said as far as debt risk media and utilities sectors are “disturbing places.” Guggenheim is “moving away” from high-yield debt and bank loans, he said.

Minerd also predicted the yield curve would be “relatively flat” by this time next year, and, if the Federal Reserve continues raising rates, the curve will be inverted by the end of 2019. Following historic trends, the U.S. economy would be looking at a recession within six to 12 months of a yield inversion, or as soon as late next year or the first half of 2020, he said.

Finally, Facebook. When Obama and the Democrats do it, it’s ok. When Trump and the Republicans do it, it’s a scandal or crime.  Sounds like the extreme left wing BBC.

Below, the Z’berg starts shutting the stable door. It’s all greatly exaggerated says the nerd behind that infamous app.

Some people make things happen, some people watch while things happen, and some people ask what happened?

Anon.

March 21, 2018 / 7:53 AM / Updated 3 hours ago

Zuckerberg apologises for Facebook mistakes with user data, vows curbs

SAN FRANCISCO (Reuters) - Facebook Inc Chief Executive Mark Zuckerberg apologised on Wednesday for mistakes his company made in how it handled data belonging to 50 million of its users and promised tougher steps to restrict developers’ access to such information.

The world’s largest social media network is facing growing government scrutiny in Europe and the United States about a whistleblower’s allegations that London-based political consultancy Cambridge Analytica improperly accessed user information to build profiles on American voters that were later used to help elect U.S. President Donald Trump in 2016.

“This was a major breach of trust. I’m really sorry this happened. We have a basic responsibility to protect people’s data,” Zuckerberg said in an interview with CNN, breaking a public silence since the scandal erupted at the weekend.

Zuckerberg said in a post on Facebook the company "made mistakes, there's more to do, and we need to step up and do it." (bit.ly/2DHAlUJ)

He said the social network planned to conduct an investigation of thousands of apps that have used Facebook’s platform, restrict developer access to data, and give members a tool that lets them to disable access to their Facebook data more easily.

His plans did not represent a big reduction of advertisers’ ability to use Facebook data, which is the company’s lifeblood.

Zuckerberg said he was open to additional government regulation and happy to testify before the U.S. Congress if he was the right person.
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March 21, 2018 / 7:55 AM

Academic behind Facebook breach says political influence was exaggerated

LONDON (Reuters) - The consultancy at the center of a storm over Facebook (FB.O) data greatly exaggerated its role in Donald Trump’s 2016 U.S. presidential victory and would not have been able to sway an election result, the academic who provided the data said.

Psychologist Aleksandr Kogan also told the BBC in an interview broadcast on Wednesday that he was being made a scapegoat by Facebook and Cambridge Analytica, a British-based company hired by Trump for his election campaign.

Facebook has been rocked this week by a whistleblower who said that Cambridge Analytica had improperly accessed information on millions of Facebook users to build detailed profiles on American voters.

The revelation has knocked nearly $50 billion off Facebook’s stock market value in two days and hit the shares of Twitter and Snap over fears that a failure by big tech firms to protect personal data could deter advertisers and users and invite tougher regulation.

Facebook and Cambridge Analytica have both blamed Kogan, an academic at Cambridge University who gathered the data by running a survey app on Facebook.

Many election campaign groups across the globe gather data on their electorates, hoping to target swing voters who might be sympathetic to their message.

However, Kogan said the services provided by the UK political consultancy had been greatly exaggerated.

“I think what Cambridge Analytica has tried to sell is magic, and they’ve made claims that this is incredibly accurate and it tells you everything there is to tell about you. But I think the reality is it’s not that,” he said.

Arron Banks, who campaigned for Britain to leave the European Union in a 2016 referendum, also questioned the value of psychologically-based data.

Banks told Reuters that Cambridge Analytica had unsuccessfully pitched for work with his Leave.eu campaign group.

“I don’t think they have this magical system that they say they have. I think they are nothing more than a company that places Facebook ads and shrouds in a sort of mystery,” he said.
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"Such a corporation is called a "conglomerate" or a "free-form" company, very popular when the market gets to tulip-time.  A conglomerate is a company that grows by acquiring other companies, and other companies can be in wildly different businesses.  Conglomerate managers are supposed to be a new breed of brilliant wheeler-dealers, and the idea of the whole game is to take an ice-cream freezer company and merge it into a valve company and merge with a flour mill.  The valves and the flour and the ice cream never get together except on a balance sheet and an income statement, but Wall Street does look for growing earnings, and with the right accountant this whole process can make the earnings grow like crazy.  Capitalism enters a new stage."

The contemporary “Adam Smith” aka George Goodman.

Crooks and Scoundrels Corner

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

Brexit deal? Brexit baloney. Can the EUSSR Tower of Babel ever agree on anything sensible?

EC President, Demi God Juncker, a glutton for punishment, stared at himself in the mirror.

With apologies to P G Wodehouse.

Spain refuses to back withdrawal deal over Gibraltar concerns

Madrid wants veto over UK territory enjoying single market access post-Brexit
Tue 20 Mar 2018
The hard-fought agreement between the UK and EU over a 21-month transition period after Brexit has been thrown into doubt after Spain refused to endorse the deal without further concessions over Gibraltar.

With days to go before the 27 EU leaders are expected to welcome the two sides coming together over a 129-page withdrawal agreement, including the terms of the transition, Madrid said it was withholding its support.

It is understood that Spain, which lays claim to the Rock, wants the legal text to be clearer that it has a veto on Gibraltar continuing to enjoy the benefits of the single market and the customs union.

While EU officials are confident they can persuade Spain to back the withdrawal agreement before a sign-off by leaders in Brussels on Friday, it would be a hammer blow if the full 27 member states were not able to endorse a deal in principle on the transition period, given the need to offer reassurance for British businesses.

Spain has gained the rest of the EU’s agreement that the UK must come to a bilateral accord over the future of Gibraltar for it to enjoy the benefits of the deal struck by the British government with Brussels.

The Spanish government was concerned, however, by comments from the Brexit secretary, David Davis, on Monday in which he suggested that this was in doubt. Asked by a Spanish journalist on Monday whether the transition agreement covered Gibraltar, Davis replied: “Yes, it does cover Gibraltar. That is our view of it.”

In an open letter before a leaders’ summit, where the 27 member states were expected to give their support to the withdrawal agreement, Donald Tusk, the president of the European council, warned of the possible breakdown but said he was working to rectify the situation.

“Yesterday [Monday] our negotiators reached a solution on parts of the withdrawal agreement,” he said. “Whether all 27 member states can welcome this at the European council remains open.”

An EU official said: “Spain needs reassurance.”

The EU’s chief negotiator, Michel Barnier, refused to be drawn on the last-minute talks, but told reporters in a press conference on Tuesday: “No agreement between the European Union and the United Kingdom can apply to the territory of Gibraltar without a bilateral agreement between the Kingdom of Spain and the United Kingdom.”
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"We can also do stupid."

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. European Commission President. Scotch connoisseur.
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?

Subsidy-free renewable energy projects set to soar in UK, analysts say

Falling cost of wind and solar will unlock £20bn of investment, Aurora Energy Research says
Tue 20 Mar 2018 18.00 GMT Last modified on Tue 20 Mar 2018 22.00 GMT

The UK is well on the way to a new era of subsidy-free renewable energy projects that will largely kill off prospects for new gas power stations, according to industry analysts.

The falling cost of wind and solar projects combined with advances in battery storage technology will unlock about £20bn of investment in the UK between now and 2030, Aurora Energy Research said. Onshore wind and solar will both be viable without subsidies by 2025 in the UK, it added.

The prediction comes as the Swedish energy firm Vattenfall announced that it had won a Dutch government tender to develop a windfarm which will become the world’s first without subsidies when built off the Netherlands coast in 2022.

“The [subsidy-free] future is within reach,” Magnus Hall, Vattenfall’s chief executive, told an industry audience in Oxford.

But the switch to a post-subsidy world would still require some financial aid during the transition period, Hall said, to ensure that risk was fairly shared between energy firms and governments.

Hall urged ministers to consider reversing the UK’s ban on subsidies for onshore windfarms, saying developers of these projects should be allowed to compete in auctions for subsidies.

His call was echoed by two of the UK’s big six energy firms, SSE and ScottishPower.

Alistair Phillips-Davies, chief executive of SSE, said onshore windfarms should be given a chance where communities support them. “I’d like to see onshore wind coming back in the UK,” he said.

Keith Anderson, chief corporate office at Scottish Power, told the Guardian: “Let’s use it, let’s deploy it. There are still areas absolutely where we could build onshore windfarms, areas where the local community are acceptive of windfarms.”

Wind power is expected to account for half of the 18GW of subsidy-free renewables to be built in the UK between now and 2030, according to a new Aurora Energy Research report.

The other half will be from solar power, which had largely stalled after subsidy cuts in 2015 but received a boost when the UK’s first subsidy-free solar farm opened last year.

Having so much green energy generation will squeeze out the opportunity for the likes of Germany’s RWE to build large gas power stations in the UK.

The government has already downgraded the amount of new gas power capacity it expects to be added by 2030 from 22GW to 7GW, but Aurora said that would shrink to just 1GW if subsidy-free renewables took off as anticipated.
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'You just never know. That unpredictability is the great thing about life. You change. The world changes. You live in a country where we are still blessed with enormous opportunity. Leave yourself open to the world of possibility. You have the ambition, you have the smarts and you have the toughness. So, turn the page on your biography - you have just started a new chapter in your lives.'

Lloyd Blankfein, “Mr. Goldman  Sacks,” CEO of Goldman Sachs unintentionally backs Brexit in a US speech to graduates, mid 2016.

The monthly Coppock Indicators finished February

DJIA: 25,029 +283 Up 01. NASDAQ:  7,273 +313 Up 03. SP500: 2,714 +212 Flat.

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