Baltic Dry Index. 1117 -unch. Brent Crude 69.55
The difference between
stupidity and genius is that genius has its limits.
Albert Einstein
Crash, bang, wallop, and
with a “Glasgow Kiss” to China, President Trump launched round two of the Great
Global Trump Trade War. Boeing went into an immediate dive while Caterpillar
fell into a hole. American consumers can
look forward to inflation ahead in domestic and foreign made cars, and a host
of consumer goods imported from China. Offsetting that, they might get a break
from cheaper pork and California wine, if China does actually block US exports.
Below, day one of Round
Two of President Trump’s Great Gamble; lets repeat the early 1930s and see if
this time it’s different.
Only two things are infinite,
the universe and human stupidity, and I'm not sure about the former.
Albert Einstein
Asia Stocks Slump, Bonds Rise; Yen Climbs Past 105: Markets Wrap
By Adam Haigh
Updated on 23 March 2018, 03:32 GMT
Asian
stocks followed their U.S. counterparts lower after President Donald Trump’s
decision to slap tariffs on China heightened concern a trade war could hurt
global growth. The yen climbed to its strongest in over a year.
Equity
indexes from Tokyo to Shanghai tumbled more than 3 percent. U.S. stock futures
also declined, signaling a further retreat for the S&P 500 Index after it
tumbled 2.5 percent, the most in six weeks. As investors dumped stocks, they
rushed to the safety of Treasuries, where yields fell back toward 2.8 percent,
and the yen, which jumped past 105 per dollar for the first time since November
2016. Follow live coverage of reaction here.
The sell-off began after Trump instructed U.S. Trade Representative Robert Lighthizer to levy tariffs on at least $50 billion in Chinese imports. Subsequently, China announced plans for reciprocal tariffs on $3 billion of imports from the U.S., including products from steel to pork.
Adding to the image of the ascendance of the "America first" faction, Trump said he is replacing White House National Security Adviser H.R. McMaster with John Bolton, a controversial foreign-affairs specialist whom the U.S. Senate declined to confirm as President George W. Bush’s ambassador to the United Nations.
Investor fears of escalating trade tensions are being realized as the U.S. tariffs quickly sparked a reciprocal response from China. Traders had already been bracing for the possibility of slowing economic growth as the Federal Reserve reiterated its commitment to further interest-rate increases after Wednesday’s hike. Furthermore, the U.S. president’s continued shake up of his administration’s top ranks adds an additional level of uncertainty to the current geopolitical environment.
“It’s a significant step in escalation in trade tensions between the U.S. and China,” said Paul Eitelman, senior investment strategist at Russell Investments. “The biggest watchpoint from here is how China responds to this and any potential escalation that creates going forward.”
More
Stocks Drop Most in Six Weeks on Trade War Tension: Markets Wrap
Sarah Ponczek and Jeremy Herron
Updated on 22 March 2018, 20:53 GMT
U.S. stocks tumbled, pushing benchmark gauges back toward the lows set
during the worst of the February rout, as President Donald Trump’s decision to
slap tariffs on Chinese goods heightened concern that a trade war could
throttle global growth.
The S&P 500 Index sank 2.5 percent, the biggest one-day drop in six
weeks, and the Dow Jones Industrial Average lost more than 700 points. As
investors dumped stocks, they rushed to the safety of the Treasury bond market,
where yields fell back toward 2.8 percent, and the yen, which rallied the most
in three weeks.
In a stock market that’s been floundering ever since it hit record highs
in late January, the prospect of a widening trade spat only added to jitters.
Traders had already been bracing for the possibility of slowing growth as the
Federal Reserve reiterated its commitment to further interest-rate increases
after Wednesday’s hike. Not even technology stocks, long the favorite of Wall
Street investors, have provided relief of late as the latest data fiasco at
Facebook sparked a rout in the sector this week. The Nasdaq is down more than 6
percent since its record 10 days ago.
“Tariffs
mean a trade war and the news has the world’s investors running for the exits,”
Chris Rupkey, chief financial economist at MUFG Union Bank. “Those are storm
clouds out there, that’s what the stock market is saying and that’s why
investors are running for the exits.”
More
Here’s why the stock market took the China tariffs so hard
Published: Mar 22, 2018 7:04 p.m. ET
The stock market plunged Thursday in a broad selloff that analysts pinned
largely on President Donald Trump’s announcement that he would impose tariffs
on billions of dollars of Chinese imports.For investors, it might inspire déjà vu after the administration’s decision in early March to impose tariffs on steel and aluminum imports provoked a steep selloff, only to see most of the decline reclaimed in subsequent weeks.
The decline Thursday accelerated into the close. At the finish, the Dow DJIA, -2.93% was down 724.42 points, or 2.9%, while the S&P 500 SPX, -2.52% dropped 2.5% — marking the biggest one-day percentage drop for both since early February.
Will this pullback also prove fleeting or does it reflect a heightening of trade tensions that pose a real threat to global growth and corporate bottom lines? Here’s what investors need to know:
In themselves, the tariffs outlined Thursday won’t have a big impact on the economy even if implemented in full, but that doesn’t necessarily dictate how market participants respond, said Andrew Hunter, U.S. economist at Capital Economics, in a note.
See: Trump-Xi relationship enters rocky phase as U.S.-China trade fight heats up
As Thursday’s market reaction highlights, “there is a clear risk that sentiment continues to deteriorate. And the damage from a further escalation of the trade conflict with China could be much greater,” he said.
Indeed, the worry for investors might have more to do with concerns about potential retaliation and escalation. China’s government criticized the punitive actions and said it would take “all necessary measures” in response.
“For companies that sell to China, or indeed any country outside the U.S., the effects are likely to be negative — which is why markets are reacting again. Even the best-case results would still be worse, economically, than where we are now,” said Brad McMillan, chief investment officer at Commonwealth Financial Network, in a note.
More
Cracks Are Starting to Appear in the Global Economy's Momentum
By Piotr Skolimowski, Alessandro Speciale, and Carolynn Look
22 March 2018, 12:43 GMT Updated on
22 March 2018, 14:06 GMT
The
global economy’s upswing showed signs of strain in March as a drop in momentum
at businesses from Japan to the euro region underscored the world’s
vulnerability to confidence shocks from a trade war.
Hours after the U.S. Federal Reserve raised interest rates and boosted growth forecasts for this year and next, survey data from elsewhere provided a reminder of how the international economic outlook could turn. The euro area’s private sector grew at the slowest pace in 14 months, Japanese manufacturing lost steam and German business confidence fell to the weakest level in almost a year, reports on Thursday showed.
The U.S. nevertheless showed resilience with IHS Markit’s gauge of American factory purchasing managers advancing to a three-year high of 55.7 in March. The preliminary reading for the month was driven by employment and longer lead times as producers attempt to boost inventories.
The environment outside of the U.S. might suggest cracks in a picture of
global economic thrust that Group of 20 finance chiefs highlighted as recently
as this week. Officials meeting in Buenos Aires also failed to agree on a truce
as escalating trade tensions threaten to drag the world into a war of attrition
over commerce.
“The kind of growth that we saw at the end of last year was a peak” in
the euro area, said Dirk Schumacher, an economist at Natixis in Frankfurt. “The
question is what happens now, and how the trade issue evolves is key here. For
now, some tightening from the Fed was expected, momentum remains solid and
there is no reason why expansion shouldn’t continue, unless things deteriorate
politically.”
---- Tit-for-tat actions on trade aren’t “going to be any good for the whole economy,” Cofco Corp. President Patrick Yu said in a Bloomberg Television interview at the state-run firm’s headquarters in Beijing. “It just creates a lot of conflicts and misunderstandings.”
While the European Union may be exempted from some tariffs, the threat of protectionism is weighing on sentiment in Germany. The country’s Ifo institute said that business confidence in Europe’s biggest economy continued to drop in March. Its gauge of sentiment fell to 114.7 from 115.4 in February, marking the second month of declines.
More
The road to perdition has ever
been accompanied by lip service to an ideal.
Albert Einstein
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, NATO gets a steel trade war walk, China gets an ala carte menu.
March 23, 2018 / 4:13 AM
Trump temporarily excludes EU, six other allies from steel tariffs
WASHINGTON
(Reuters) - U.S. President Donald Trump has temporarily excluded six countries,
including Canada and Mexico, and European Union states from higher U.S. import
duties on steel and aluminium meant to come into effect on Friday.
In
a presidential proclamation published late on Thursday, Trump said he would
suspend tariffs for Argentina, Australia, Brazil, South Korea, Canada, Mexico
and the European Union, the U.S.’s biggest trading partner, until May 1, 2018
as discussions continue.
After
May 1, Trump would decide whether to permanently exempt the countries based on
the status of talks, the White House said in a statement.
Here Are U.S. Targets Most Vulnerable to China Trade Retaliation
By Steve Matthews, Alan Bjerga, and Andrew Mayeda
22 March 2018, 00:14 GMT
China could hit back with measures against America’s $140 billion of annual
exports to the Asian powerhouse if President Donald Trump imposes tariffs.The president is expected to announce punitive actions on Thursday after the U.S. Trade Representative’s office concluded that China is violating intellectual-property rules. When the Chinese respond, “they’ll pick and choose with political aims in mind,” said Claude Barfield, a resident scholar at the American Enterprise Institute, who was a consultant to the Reagan administration on trade policy.
To date, China has followed a policy of "strategic composure" in dealing with Trump’s America First ethos. If that changes, below are some potential targets.
Agriculture may be on the front line of Chinese retaliation -- and the
sector, one of the few in America that runs a trade surplus, is painfully
aware.
The U.S. shipped $14.6 billion of soybeans to China, its biggest buyer,
in the last marketing year -- more than a third of the entire crop. China is
making noise about the purchases, with a Tuesday editorial in its Global Times
newspaper accusing the U.S. of “dumping” its government-subsidized beans.
Rumblings against U.S. sorghum, also dependent on China trade, sent that
commodity plunging in February. The chief executive of the American Soybean
Association has said Chinese retaliation would have long-term consequences, as
Brazil and other competitors would likely take market share.
China would feel some impact if it cuts back -- it’s heavily dependent
on U.S. soybeans for cooking oil and animal feed, especially in seasons when
Brazil isn’t harvesting. But the damage would be real, both economic and
political. Soybean production is concentrated in middle-American states that
voted for Trump.
---- Another possibility is that China emulates the European Union’s retaliatory tactics, the AEI’s Barfield said. The EU is considering restrictions on imports of U.S. goods including Harley-Davidson motorcycles (whose maker is based in House Speaker Paul Ryan’s home state of Wisconsin) and jeans from San Francisco-based Levi Strauss & Co. (headquartered in House Minority Leader Nancy Pelosi’s district.)
Aircraft
China hasn’t been shy about threatening U.S. corporate interests. The Global Times warned in late 2016 that a trade war would have economic consequences. “Boeing orders will be replaced by Airbus,” the Communist Party newspaper said in an editorial.
More
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?
A lithium battery that operates at -70 degrees Celsius, a record low
Date:
February 28, 2018
Source:
Cell Press
Summary:
Researchers in China have developed a battery with organic compound electrodes
that can function at -70 degrees Celsius -- far colder than the temperature at
which lithium-ion batteries lose most of their ability to conduct and store
energy. The findings could aid engineers in developing technology suited to
withstand the coldest reaches of outer space or the most frigid regions on
Earth.
While batteries can operate in relatively cold climates, they have their
limits. Most perform at only 50% of their optimal level when the temperature
hits -20 degrees Celsius, and by -40 degrees Celsius, lithium-ion batteries
only have about 12% of their room temperature capacity. This can be severely
limiting when it comes to operating batteries in space, where temperatures can
dip to -157 degrees Celsius, or even in parts of Canada and Russia, where
temperatures can be lower than -50 degrees Celsius.
But a team of battery researchers have found a design that can function
even where other batteries might fail. "It is well known that both the
electrolyte (the chemical medium that carries ions between electrodes) and
electrodes (the positively charged cathode and negatively charged anode) have
great influence on the battery performance," says Dr. Yong-yao Xia, a
battery researcher at the Department of Chemistry of Fudan University in
Shanghai, China.
When it gets cold, the ester-based conventional electrolytes that
lithium-ion batteries often use become sluggish conductors and the
electrochemical reactions that occur at the interface of the electrolyte and
the electrode struggle to continue -- meaning that lithium-ion batteries don't
hold up too well in ultra-chilly climates. It's a problem that has consistently
vexed researchers.
The team experimented with using an ester (ethyl acetate)-based
electrolyte, which has a low freezing point that enables it to conduct a charge
even at extremely low temperatures. For the electrodes, they used two organic
compounds -- a polytriphenylamine (PTPAn) cathode and
1,4,5,8-naphthalenetetracarboxylic dianhydride (NTCDA)-derived polyimide
(PNTCDA) anode. Unlike the electrodes used in lithium-ion batteries, these
organic compounds don't rely on intercalation -- the process of continuously
integrating ions into their molecular matrix, which slows down as the
temperature drops.
"Benefitting from the ethyl acetate-based electrolyte and organic
polymers electrodes, the rechargeable battery can work well at the ultra-low
temperature of -70 degrees Celsius," Xia says.
Xia and his team believe this may be a more elegant solution than
alternative attempts to boost lithium-ion battery function in extreme
temperatures. Other battery researchers have tried to remedy the issue by
developing additives to externally heat the batteries or by using a liquefied
gas electrolyte, but these solutions require additional materials that add
extra weight.
More
Another weekend and an
exciting one in our new global trade war. Mainstream media will be full of
pundits, gloom, fake news, but not yet doom. It’s far too early for the doom of
rising unemployment. That probably comes nearer to Christmas, if we stay on
present policies. But what will the new trade war mean in the currency wars? Stay long fully paid up physical gold
and silver, held outside of the hypothecating financial system, just in case.
Nothing is so admirable in politics as a short memory.
John Kenneth Galbraith.
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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