Baltic Dry Index. 1207 +11 Brent Crude 63.54
As we learned after President
Herbert Hoover signed the Smoot-Hawley tariff at the outset of the Great
Depression, vibrant international trade is a key component to economic
recovery; hindering trade is a recipe for disaster.
Asa Hutchinson
Today the nervous
wait. We await more details from the
Trump team on the new trade war with the rest of the world. Will team Trump
backtrack on the proposed tariffs? Will the rest of the world actually back up
their words by retaliating? If no, and yes, how long before the global economy
takes a dive. How long before unemployment everywhere starts to rise?
We are also watching
and awaiting developments in China, where it’s day one of the two week session
of the National People’s Congress.
In Europe, everyone
is waiting on the final results of Sunday’s general election. Just how hung,
will Italy’s hung parliament be?
Trump Trade Adviser Says Tariff ‘Exemptions’ Possible
By Miles Weiss, Mark Niquette, and Rich Miller
4 March 2018, 14:49 GMT Updated
on 4 March 2018, 16:54 GMT
Tariffs of 25% on steel, 10% on aluminum imports on the way - U.K.’s Theresa May raises ‘deep concerns’ on unilateral move
The president’s trade advisers fanned out across television news shows on Sunday to defend the move, saying it was necessary to ensure the survival of the domestic steel and aluminum industries and would be put into effect soon.
In spite of pleas from Canada, Great Britain and other U.S. partners, shipments from U.S. allies will not be excluded from the action, they said. Some exemptions though may be granted to specific products deemed necessary to U.S. businesses.
“There’s a difference between exemptions and country exclusions,” Peter Navarro, director of the National Trade Council at the White House, said Sunday on CNN’s “State of the Union.” “There’ll be an exemption procedure for particular cases where you need to have exemptions so that business can move forward, but at this point in time, there’ll be no country exclusions.”
Navarro didn’t specify under what circumstances exemptions may be considered but they are likely to be confined to specific types of steel or aluminum products used by different industries, which may not be made at all in the U.S.
May’s Protest
“As soon as he starts exempting countries, he has to raise the tariff on everybody else,” Navarro said in a separate interview on “Fox News Sunday.” “As soon as he exempts one country, his phone starts ringing with the heads of state of other countries.”In that vein, the U.K. Prime Minister Theresa May spoke with Trump about the tariffs on Sunday.
----Meanwhile, Representative Kevin Brady of Texas, chairman of the House Ways and Means Committee, on Sunday said steel duty exemptions should be made for Nafta members Canada and Mexico. Brady spoke to reporters in Mexico City, where negotiators are in the seventh round of talks to renegotiate the North American Free Trade Agreement.
Trump is expected to sign a formal order for the tariffs in the coming
week or the following week at the latest, after all legalities are
finalized, Navarro said.
More
China Political Advisers Urge Response to U.S. Tariffs
Bloomberg News
3 March 2018, 08:46 GMT Updated on 4 March 2018, 05:59 GMT
- Annual two-week session of legislature opens Monday in Beijing
- Lawmakers expected to grant President Xi unlimited tenure
China’s Vice Foreign Minister Zhang Yesui, spokesman for the National
People’s Congress, held a press conference Sunday, a day before the opening
session of the annual legislative meetings. During the two-week session, the
rubber-stamp parliament is expected to enact sweeping changes that would allow
President Xi Jinping to rule indefinitely and give him greater control over the
levers of money and power. The agenda also includes creation of a powerful new
agency to police officials and possibly approving the biggest regulatory
overhaul of the $43 trillion finance-and-insurance sector in 15 years.
On Saturday, delegates from the top political advisory body, the Chinese
People’s Political Consultative Congress, opened their sessions, which runs
concurrently with the NPC.
We follow developments here. Time stamps are Beijing:
New Law to Protect Foreign Investment (1:26 p.m.)
China will consolidate three previous laws as it drafts new legislation aimed at promoting and protecting foreign investment, Zhang Yesui, spokesman for the National People’s Congress, said at a briefing before the session starts on Monday. He said China will create a transparent, stable and predictable environment while widening market entry for foreign investors.----Vice Foreign Minister Zhang Yesui, who is the National People’s Congress spokesman, sidestepped a question at the legislature’s opening news conference about whether Xi would stay on “forever.” Zhang said repealing term limits was necessary to preserve unified leadership, since Xi’s other two titles -- party leader and military chief -- don’t face similar restrictions. “It is conducive to upholding the authority of Central Committee of the Communist Party, with Xi Jinping at its core,” Zhang said.
See full story: Trump Calls China’s Xi ‘President for Life’ at Fundraiser
More
https://www.bloomberg.com/news/articles/2018-03-03/political-advisers-urge-response-to-u-s-tariffs-china-update
March 4, 2018 / 10:46 PM /
Updated 21 minutes ago
Shares falter on trade war fears; euro choppy amid Italian uncertainty
SYDNEY (Reuters) - Asian investors dumped shares and drove to the safety of the yen and gold on Monday amid fears of a global trade war and worries of political uncertainty in Italy, risks that cloud the outlook for world growth.
Italian voters delivered a hung parliament on Sunday, flocking to
anti-establishment and far-right parties in record numbers and casting the euro
zone’s third-largest economy into a political gridlock that could take months
to clear.
The euro traded choppily around $1.2320, easing from a two-week high of
$1.2365 as the eurosceptic 5-Star Movement saw its support soar to become the
largest single party, according to projections based on early vote-counting.
In the United States, President Donald Trump proposed tariffs on
imported steel and aluminium, a pledge that met with warnings of retaliation
from the rest of the world over the weekend.
The spectre of a global trade war hit risk appetite, sending MSCI’s
broadest index of Asia-Pacific shares outside Japan down 0.8 percent to the
lowest since mid-February.
U.S. stock futures did not inspire much confidence, with S&P E-Minis
down 0.6 percent and Dow futures off 0.4 percent.
----The euro
still found support after Germany’s Social Democrat party decisively backed the
renewal of an alliance with Chancellor Angela Merkel’s conservatives, allowing
her to form a new government more than five months since the country’s
inconclusive election.
The single currency also got a lift from some safe-haven flows, as did
the Japanese yen.
The dollar fell for a fourth straight session to trade around 105.52
yen, but was slightly above Friday’s low of 105.23, a level not seen since
November 2016.
“Nothing’s happened over the weekend to soften concerns about trade wars
or retaliatory actions by other countries,” said Ray Attrill, head of forex
strategy at National Australia Bank.“There is no rowing back so that gets us to
a cautious start.”
Canada and Mexico have threatened retaliation, and the European Union
said it would apply 25 percent tariffs on about $3.5 billion of imports from
the United States if Trump carried out his threat.
China said on Sunday it did not want a trade war with the United States
but will defend its interests, warning that policies based on“mistaken
assumptions” will damage bilateral relations.
Investors fear the current momentum in the global economy could be lost
if Trump starts a trade war.
Asian markets were a sea of red with Japan’s Nikkei and South Korea’s
KOSPI both down about 1 percent, while Chinese shares eased too after starting
on a positive note.
Hong Kong’s Hang Seng index slipped 1.4 percent.
---- Investors will keep an eye on a deluge of data this week, culminating in
the U.S. non-farm payrolls on Friday. The annual opening of the National
People’s Congress in China was another focus for investors. China’s parliament
has kept the economy’s growth target at 6.5 percent for this year.
In commodities, oil prices climbed ahead of a meeting between OPEC and
U.S. shale firms in Houston, raising expectations that oil producers would
discuss further how to clear a global glut.
Brent crude was up 25 cents at $64.63 a barrel while U.S. light crude
added 23 cents to $61.48.
Spot gold climbed 0.3 percent to $1,326.46.
In other China news.China Sets 2018 GDP Target at About 6.5% as Stability Push Intensifies
Bloomberg News
Updated on 5 March 2018, 05:00 GMT
China stepped up its push to curb financial risk, cutting its budget deficit
target for the first time since 2012 and setting a growth goal of around 6.5
percent that omitted last year’s aim for a faster pace if possible.The deficit target -- released Monday as Premier Li Keqiang delivered his annual report to the National People’s Congress in Beijing -- was lowered to 2.6 percent of gross domestic product from 3 percent in the past two years. The 6.5 percent goal is consistent with President Xi Jinping’s promise to deliver a “moderately prosperous” society by 2020.
Policy makers dropped a target for M2 money supply growth, saying it’s expected to expand at similar pace to last year. Authorities reiterated prior language saying prudent monetary policy will remain neutral this year and that they’ll ensure liquidity at a reasonable and stable level.
Xi has ratcheted up his drive to curb debt risk, pollution and poverty at a time when the world’s second-largest economy is on a long-term growth slowdown. His efforts to rein in spending contrast with an historic expansion of U.S. borrowing under Donald Trump during a period of economic expansion.
The 2018 targets “suggest slower growth and a fiscal drag,” said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. “This makes sense for China in the context of the new focus on financial de-risking, poverty alleviation and environmental clean-up, but is less good news at the margin for those economies that have high export exposure to China.”
More
https://www.bloomberg.com/news/articles/2018-03-05/china-keeps-economic-growth-target-steady-at-around-6-5
And finally, Italy. How do you solve a problem like Italy? Euros anyone?
March 4, 2018 / 12:13 AM /
Updated an hour ago
Italy faces political gridlock as 5-Star surges in election
ROME (Reuters) - Italy faces a prolonged period of political
instability after voters delivered a hung parliament in Sunday’s election,
spurning traditional parties and flocking to anti-establishment and far-right
groups in record numbers.
With half the ballot counted, it looked almost certain that none of
Italy’s three main factions would be able to rule alone and there was little
prospect of a return to mainstream government, giving the European Union a new
headache to handle.
Scenarios now include the creation of a more euro-sceptic coalition,
which would likely challenge EU budget restrictions and be little interested in
further European integration, or swift new elections to try to break the
deadlock.
A rightist alliance including former prime minister Silvio Berlusconi’s
Forza Italia (Go Italy!) emerged with the biggest bloc of votes, ahead of the
anti-system 5-Star Movement, which saw its support soar to become Italy’s
largest single party.
Despite overseeing a modest economic recovery, the ruling centre-left
coalition came a distant third, hit by widespread anger over persistent
poverty, high unemployment and an influx of more than 600,000 migrants over the
past four years.
The full result is not due until much later on Monday.
“I'm in
a hole because at some point I found a shovel and started digging. Maybe I
should trade my shovels for ladders and start climbing.”
Craig
D. Lounsbrough
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Below, an oddity or the first of many losing months
to come. Is 2018 the antidote to 2017?
World's Best Performing Macro Hedge Fund Lost 16% Last Month
By Klaus WilleThe fund, the world’s best performer last year among macro funds with assets of more than $100 million, lost 16 percent, mainly from stock bets, according to preliminary figures in a newsletter obtained by Bloomberg. The decline in the Singapore-based fund’s Class-B shares compares to a 0.9 percent drop in the Eurekahedge Macro Hedge Fund Index last month.
Markets were roiled last month by strong U.S. jobs growth, a surge in volatility, and new Fed Chairman Jerome Powell suggesting the central bank could accelerate the pace of monetary tightening this year.
“Despite the fund’s preparation with de-risking for the inevitable correction in the markets, the technical behavior of the markets proved to be highly unexpected in the beginning of February,” PruLev said in its letter. “As the fund invests based on fundamentals, it was negatively affected in this occasion.”
Other hedge funds have also suffered during the market turmoil. David Einhorn’s main hedge fund at Greenlight Capital fell 6.2 percent in February, extending losses to 12.3 percent this year, according to a client update seen by Bloomberg. Man Group Plc Chief Executive Officer Luke Ellis said recent market moves had impacted performance in some areas, particularly momentum strategies.
PruLev’s slump stands out after it outperformed rivals in the past two calendar years. Funds betting on macroeconomic developments gained 3 percent in 2016 and 3.6 percent last year, according to Eurekahedge. PruLev gained 34 percent and 52 percent in those years respectively, the newsletter shows.
The fund’s equity portfolio lost 17 percent last month, according to the newsletter. Fixed income gained 1.4 percent, while commodities and currencies were barely changed. PruLev had $113 million in assets as of last month, according to the preliminary figures.
Manufacturing and commercial
monopolies owe their origin not to a tendency imminent in a capitalist economy
but to governmental interventionist policy directed against free trade and
laissez faire.
Ludwig von Mises
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?
Neutrons reveal the wild Weyl world of semimetals
Date:
February 20, 2018
Source:
Oak Ridge National Laboratory
Summary:
The observation of an abnormal state of matter in a 2-D magnetic material is
the latest development in the race to harness novel electronic properties for
more robust and efficient next-generation devices. Neutron scattering has
helped researchers investigate a graphene-like strontium-manganese-antimony
material that hosts what they suspect is a Weyl semimetal phase.
Neutron scattering at the Department of Energy's (DOE's) Oak Ridge
National Laboratory (ORNL) helped a multi-institutional team led by Tulane University
investigate a graphene-like strontium-manganese-antimony material (Sr1-yMn1-zSb2)
that hosts what researchers suspect is a Weyl semimetal phase.
The properties of Weyl semimetals include both magnetism and topological
semimetal behavior, in which electrons -- or charge carriers -- are nearly
massless and immune to conduction defects. The team's results are published in
the journal Nature Materials.
"Weyl semimetals are kind of the Holy Grail in physics right
now," said Alan Tennant, chief scientist at ORNL's Neutron Sciences
Directorate. "Some of these types of materials are showing quantum
behavior at room temperature, which is precisely what has to be achieved to
provide a path toward quantum electronics."
Significantly stronger than steel, and an excellent conductor of heat
and electricity, graphene is a highly desirable building material for
electronics. However, it lacks traditional magnetic properties necessary to
achieve greater control over electron transport. That's why researchers are
searching for Weyl semimetals, says Qiang Zhang, a visiting scientist from
Louisiana State University (LSU) working in ORNL's Shull Wollan Center -- a
Joint Institute for Neutron Sciences.
"Weyl semimetals are rare, and most of them are nonmagnetic. We
found one that is magnetic," Zhang said. "If we can better understand
the electronic behaviors we found in this material, it could significantly
speed up computer and smart phone technologies."
The electrons in graphene have a famous property: They form a
"Dirac cone," in which their momentum and energy are related in much
the same way as happens in light.
Unlike graphene, the team's material exhibits traditional magnetism, or
ferromagnetism, meaning the electrons align in a parallel arrangement like the
north and south poles of a typical bar magnet. But it also exhibits
antiferromagnetism, in which the electrons point in opposite directions to
their neighboring electrons.
The magnetism has a profound effect, Tennant explains. The opposing
motions of the electrons cause the Dirac cone to rip apart or split in two, so
that two new cones are formed. This breaks a principle known as time reversal
symmetry, meaning the system would not be the same if time were rewound.
"Think of a spinning top going in reverse," he says.
When the two cones break the time reversal symmetry, they induce a Weyl
semimetal state in which the electrons lose mass.
The significance is that electrons, like
many particles, have mass. Because of that -- in addition to increasingly
smaller sizes of transistors and similar charge-carrying materials -- electrons
have a tendency to bottleneck, or create traffic jams. In Weyl semimetals, the
electrons are more like charge carriers that behave as if they are nearly
massless, which makes them highly mobile.
More
The E.U., China, and Japan all
talk free trade, and they all practice protectionism.
Wilbur Ross
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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