Monday, 30 April 2018

The Calm Before The Storm.

Baltic Dry Index. 1361 -14     Brent Crude 74.14

"I cannot imagine any condition which would cause a ship to founder. I cannot conceive of any vital disaster happening to this vessel. Modern ship building has gone beyond that." 

Captain Smith, Commander of Titanic

With much of Asia on holiday today, and much of Europe closed tomorrow, today’s attempt to dress up the month end stock numbers might fast become a meaningless flash in the pan. At midnight tonight the EU’s temporary exemption to US steel and aluminium tariffs expires, with the Europeans closing ranks to retaliate. It they do in fact retaliate, President Trump has threatened retaliation against Europe’s auto exports, which would be devastating to Germany, the EU’s leading economy. In trade wars nobody wins, although not everyone losses to the same degree or at the same time.

Adding to the coming storm problem, President Trump has promised to walk away from America’s nuclear treaty commitment with Iran within the next 12 days, casting doubt on the value of America’s other signed treaties, and the reliability of future treaties. The other signatories to the Iran treaty are furious, and promising to keep trying to uphold it. 

But if Uncle Sam renegs, Iran is threatening to reneg as well. By the end of the week, crude oil might well be trading in the 80s.

Below, an unpromising start to our week for the global economy.

Icebergs dead ahead!

The Ed.

April 30, 2018 / 2:06 AM

Asian shares climb as Korea tensions ease, earnings boom

SYDNEY (Reuters) - Asian shares extended gains on Monday as tensions in the Korean Peninsula eased and first-quarter earnings shone, although some investors were cautious about the outlook amid the backdrop of a simmering U.S.-China trade dispute.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.9 percent after gaining more than 1 percent on Friday. The index is poised to eke out a modest rise this month after two consecutive losses.

South Korea's KOSPI index .KS11 rose 0.6 percent and is set to end April nearly 2.5 percent higher following record profits from tech giant Samsung Electronics (005930.KS) and after a spectacularly successful inter-Korean summit.

Hong Kong's Hang Seng index .HSI climbed 1.6 percent, Australia's benchmark index gained 0.5 percent while New Zealand shares .NZ50 gave up early losses to be up 0.3 percent.

Liquidity was low on Monday with Japan, China and India on holiday and much of Asia closed on Tuesday.

European Leaders Reaffirm Commitment to Retaliate on Tariffs

By Carolynn Look
European leaders reaffirmed their commitment to protect the region’s trade interests and address elements of a nuclear accord with Iran, even as attempts to lobby the U.S. president on those issues last week appeared to have failed.

France’s Emmanuel Macron and Germany’s Angela Merkel made separate trips to Washington in recent days to persuade President Donald Trump to grant the European Union a reprieve from U.S. tariffs, as well as remain in a nuclear deal. With no indications that Trump has eased his stance on either issue, Merkel and Macron discussed next steps with U.K. Prime Minister Theresa May by phone this weekend, according to statements from Berlin and London.

“The three reiterated a preference for the United States to remain in the nuclear agreement with Iran,” German government spokesman Steffen Seibert said in one of the statements.

Trump has long signaled his displeasure with the nuclear pact, saying it offered relief to the Islamic Republic without addressing the country’s ballistic missile program or its support for groups the U.S. considers to be terrorist organizations.

The European leaders “reaffirmed their willingness to engage in a broader framework of additional agreements with all parties on the duration of nuclear restraints and other issues, in particular Iran’s ballistic missile program and its regional role,” Seibert said.

They also agreed to maintain a firm stance on defending the European Union’s interests should the U.S. not grant the region a permanent exemption from tariffs on steel and aluminum. An initial exemption granted to the EU is set to expire Monday night, and Trump has insisted he wants economic or security concessions from countries seeking a permanent waiver.

Why investors should dread the month of May—especially this year

Published: Apr 29, 2018 12:45 p.m. ET

Mays during midterm years tend to be worse, historically speaking

The U.S. stock market is preparing to end a positive—but volatile—month of April, and investors may be hoping that performance in May is even better.

History, however, suggests otherwise.

According to the Stock Trader’s Almanac, May is typically a mixed month for the major indexes, and the results are particularly bad in midterm years, as is 2018.

The Dow Jones Industrial Average DJIA, -0.05%  is typically flat over the month of May, historically speaking. Based on data that go back to 1950, it declines 0.02% over the month, the ninth-best monthly performance of the year. Over the past 67 years, the Dow had 35 Mays that were positive, and 32 that were negative.

For the S&P 500 SPX, +0.11% May is the eighth-best month of the year, rising an average of 0.2%. The past 67 years have seen 39 Mays where the benchmark index ends in positive territory for the month, and 28 when it declines.

The Nasdaq Composite Index COMP, +0.02% which is the top performer among the main U.S. gauges thus far this year, should continue that strength if history is any indication. May is the fifth-best month of the year for the tech-heavy index, rising an average of 0.9%. Over the past 46 years that data exists for, May has been a positive month for the Nasdaq in 26 of them.

“As the market is finally making rally attempt at the end of April, the past month of the ‘Best Six Months’ we are obligated to remind you that the ’Worst Six Months’ are now upon us,” wrote Jeffrey Hirsch, chief executive officer of Hirsch Holdings, and editor of the Almanac. “This bearish seasonal stretch has been more pronounced in midterm years.”

The “Worst Six Months” Hirsch was referring to is a historical idea, embodied by the phrase “sell in May and go away,” that the stretch between the start of May and the end of October tends to be a seasonally weak period for markets. While this has been true over the long term, as seen in the following table that looks at S&P 500 performance, the trend hasn’t held over the past five years, according to the WSJ Market Data Group.

Thus far this month, the Dow is up 0.9% while the S&P 500 is up 1.1% and the Nasdaq has gained 0.8%. Historically, April is the best month of the year for the Dow. Year-to-date, the Dow is down 1.7%, the S&P is off 0.1%, and the Nasdaq is up 3.1%.

While history suggests the coming month’s moves will be quiet, there could be an element of uncertainty given the coming midterm election. Per the Almanac, the Dow falls 0.7% in Mays during midterm years, a far worse performance than the overall average 0.02% decline.

For the S&P and the Nasdaq, midterm years have historically been significantly worse than non-midterm years. The S&P declines 0.9% in midterm Mays, while the Nasdaq has historically lost 1.2%. Again, the overall average is a gain of 0.2% for the S&P 500, and a rise of 0.9% for the Nasdaq.

"Many brave things were done that night but none more brave than by those few men playing minute after minute as the ship settled quietly lower and lower in the sea...the music they played serving alike as their own immortal requiem and their right to be recorded on the rolls of undying fame." 

Lawrence Beesley, Titanic Survivor

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, Comrade Agent Corbyn’s model economy, the Socialist Workers Paradise of oil rich Venezuela. When fiat currencies go wrong, in the Great Nixonian Error of Fiat Money, communist money, destitution sweeps the land.  What happens to all of us if populist communists take over as fiat currency systems fail.

‘Their Country Is Being Invaded’: Exodus of Venezuelans Overwhelms Northern Brazil

ACARAIMA, Brazil — Hundreds turn up each day, many arriving penniless and gaunt as they pass a tattered flag that signals they have reached the border.

Once they cross, many cram into public parks and plazas teeming with makeshift homeless shelters, raising concerns about drugs and crime. The lucky ones sleep in tents and line up for meals provided by soldiers — pregnant women, the disabled and families with young children are often given priority. The less fortunate huddle under tarps that crumple during rainstorms.

The scenes are reminiscent of the waves of desperate migrants who have escaped the wars in Syria and Afghanistan, spurring a backlash in Europe. Yet this is happening in Brazil, where a relentless tide of people fleeing the deepening economic crisis in Venezuela has begun to test the region’s tolerance for immigrants.

This month, the governor of the northern Brazilian state of Roraima sued the federal government, demanding that it close the border with Venezuela and provide additional money for her overburdened education and health systems.

“We’re very fearful this may lead to an economic and social destabilization in our state,” said the governor, Suely Campos. “I’m looking after the needs of Venezuelans to the detriment of Brazilians.”

The tens of thousands of Venezuelans who have found refuge in Brazil in recent years are walking proof of a worsening humanitarian crisis that their government claims does not exist.

They also constitute an exodus that is straining the region’s largely generous and permissive immigration policies. Earlier this month, Trinidad deported more than 80 Venezuelan asylum seekers. 

In Colombian and Brazilian border communities, local residents have attacked Venezuelans in camps.
During the early months of this year, 5,000 Venezuelans were leaving their homeland each day, according to the United Nations. At that rate, more Venezuelans are leaving home each month than the 125,000 Cuban exiles who fled their homes during the 1980 Mariel boat crisis and transformed South Florida.

----But as their numbers have swelled — and as a larger share of recent migrants arrive without savings and in need of medical care — some officials in the region have begun to question the wisdom of open borders.

Ms. Campos said she took the “extreme measure” of suing the federal government because the influx of Venezuelans led to a spike in crime, drove down wages for menial jobs and set off an outbreak of measles, which had been eradicated in Brazil.

At least 93 people were killed during the first four months of this year, already exceeding the 83 violent deaths recorded last year, Ms. Campos said. And law enforcement officials say drug trafficking in the region has increased as destitute Venezuelans have been drafted into Brazilian smuggling networks.

----As she watched smoke billowing across the campsite, Ana García, 56, said she could scarcely believe her new reality in Brazil.

She was a homeowner who ate well and lived comfortably on a social worker’s salary in the Venezuelan city of Maturín. But as her paycheck became worthless last year because of soaring inflation, she quit her job of more than a decade, hoping to get a payout large enough to go abroad.

Instead, she walked away with an amount that was so little it only enabled her to buy a small bag of rice, half a chicken and a banana. As food became increasingly scarce, Ms. García set out on a nearly 600-mile journey with her 18-year-old daughter, hitchhiking most of the way.

The first night she slept in the plaza, Ms. García said, she broke down in tears before crawling under a black tarp she now shares with her daughter.
“I never thought we could find ourselves in this situation. We’re not used to living like indigents,” Ms. García said, her eyes welling. “But Venezuela is destroyed. People are dying of hunger.”
If you look in your dictionary you will find: Titans - A race of people vainly striving to overcome the forces of nature. Could anything be more unfortunate than such a name, anything more significant?
Arthur Rostron, Captain of the rescue ship Carpathia ('Home From The Sea' 1931)
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?

Discovery of new material is key step toward more powerful computing

Date: April 26, 2018

Source: Oregon State University

Summary: Researchers have created a new material that represents a key step toward the next generation of supercomputers.

A new material created by Oregon State University researchers is a key step toward the next generation of supercomputers.

Those "quantum computers" will be able to solve problems well beyond the reach of existing computers while working much faster and consuming vastly less energy.

Researchers in OSU's College of Science have developed an inorganic compound that adopts a crystal structure capable of sustaining a new state of matter known as quantum spin liquid, an important advance toward quantum computing.

In the new compound, lithium osmium oxide, osmium atoms form a honeycomb-like lattice, enforcing a phenomenon called "magnetic frustration" that could lead to quantum spin liquid as predicted by condensed matter physics theorists.

Corresponding author Mas Subramanian, Milton Harris Professor of Materials Science at OSU, explains that in a permanent magnet like a compass needle, the electrons spin in an aligned manner -- that is, they all rotate in the same direction.

"But in a frustrated magnet, the atomic arrangement is such that the electron spins cannot achieve an ordered alignment and instead are in a constantly fluctuating state, analogous to how ions would appear in a liquid," Subramanian said.

The lithium osmium oxide discovered at OSU shows no evidence for magnetic order even when frozen to nearly absolute zero, which suggests an underlying quantum spin liquid state is possible for the compound, he said.

"We are excited about this new development as it widens the search area for new quantum spin liquid materials that could revolutionize the way we process and store data," Subramanian said. "The quantum spin liquid phenomenon has so far been detected in very few inorganic materials, some containing iridium. Osmium is right next to iridium in the periodic table and has all the right characteristics to form compounds that can sustain the quantum spin liquid state."

Titanic sinks in REAL TIME - 2 HOURS 40 MINUTES

Will the global  economy do any better, when the trade war starts?

The monthly Coppock Indicators finished March.

DJIA: 24,103 +272 Down 10. NASDAQ: 7,063 +300 Down 13. SP500: 2,641 +202 Down 10.
All three slow indicators moved down in March. For some a new bear signal, for others a take profits and get back to cash signal. 

Saturday, 28 April 2018

Weekend Update Part Two 28/04/2018 Trade War Starts Tuesday

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”

President Trump.  Friday March 2, 2018.

Macron and Merkel came separately to Washington, they saw Trump, Trump conquered. Barring an unlikely Kim Jong-un like climb down by President Trump, Trump’s trade war on NATO starts Tuesday. Uncle Scam start reneging on his treaties, starting with Iran no later than May 12.  If either actually happens, bad things for the global economy will start to happen fast across the summer.

Below, the EUSSR faces a crisis far bigger than Brexit. Trump’s about to crash Europe’s cars.

EU Sounds Trade-War Alarm as Trump Points Gun `at Our Head'

By Nikos Chrysoloras and Jonathan Stearns
Updated on 28 April 2018, 12:09 GMT+1
The European Union warned about the costs of a trans-Atlantic trade war while bracing for one to erupt after the U.S. signaled it will reject the bloc’s demand for an unconditional waiver from metals-import tariffs.

“A trade war is a losing game for everybody,” Belgian Finance Minister Johan Van Overtveldt told reporters in Sofia. “We should stay cool when we’re thinking about reactions but the basic point is that nobody wins in a trade war so we try to avoid it at all costs.”

Donald Trump’s administration is asking Europe, Canada and other allies to accept quotas in exchange for an exemption from steel and aluminum tariffs that kick in May 1, when a temporary waiver expires. “We are asking of everyone: quotas if not tariffs,” Commerce Secretary Wilbur Ross said on Friday.

This puts the EU in the difficult position of either succumbing to U.S. demands that could breach international commerce rules or face punitive tariffs. Forcing governments to limit shipments of goods violates World Trade Organization rules, which prohibit so-called voluntary export restraints. The demand is also contrary to the entire trade philosophy of the 28-nation bloc, which is founded on the principle of the free movement of goods.

The White House last month temporarily shielded some trading partners including the EU from the duties, at 25 percent for imported steel and 10 percent for aluminum on the grounds of protecting national security. U.S. Trade Representative Robert Lighthizer is negotiating with countries seeking permanent exemptions. So far, South Korea is the only nation to be spared from the duties, after reaching a deal to revise its bilateral free-trade agreement with the U.S.

While WTO rules foresee the possibility of countries taking emergency “safeguard” measures involving import quotas for specific goods, such steps are rare, must be temporary and can be legally challenged. The EU is demanding a permanent, unconditional waiver from the U.S. tariffs.

Trump’s demands to curb steel and aluminum exports to 90 percent of the level of the previous two years are unacceptable, an EU government official said. The official, who asked not to be named as talks are ongoing, signaled the EU’s response would depend on the level of the quotas after which the punitive tariffs would kick in.

Trump Shows Merkel and Macron That Europe's Clout Is Dwindling

By Patrick Donahue and Justin Sink
Updated on 28 April 2018, 05:01 GMT+1
Europe’s preeminent leaders gave it their best shot this week. All signs are it didn’t work.
France’s Emmanuel Macron and Germany’s Angela Merkel made their separate ways to Washington with a joint mission: to persuade President Donald Trump to stay in the Iran nuclear accord and grant the European Union a reprieve from U.S. tariffs on steel and aluminum.

Instead, Macron ended up improvising a new Iran initiative, and Merkel left the White House saying the decision on preventing a trade war was out of her hands. “The president will decide, that’s clear,” Merkel told reporters alongside Trump at the White House on Friday.

It was widely predicted that neither Macron’s personal rapport with Trump nor Merkel’s more businesslike approach would sway him on policy -- after all, the American president’s positions on both Iran and trade are popular with his political base. But the combined failure of the French president and the German chancellor underscored how little influence they have with Trump.

The meetings laid bare the chasm across the Atlantic since Trump took office. Merkel was queried about her declaration last year in a Munich beer tent that reliable partnerships forged after World War II were “to some extent over.” She signaled that the close relationship with the U.S. was changing.

“Germany and Europe will take more of its destiny into its own hands, because it’s no longer the Cold War era,” she said on Friday.

The German leader’s two-hour working lunch at the White House on Friday began with a cordial exchange; Trump lauded Merkel as an “extraordinary woman.” It was a contrast to her first awkward trip to Trump’s Oval Office in March 2017, when the president appeared to avoid shaking her hand.

But the meeting was overshadowed by fading hopes that Merkel would be able to move the U.S. president on trade and the Iranian nuclear accord.

In a trade war Germany is the weakest link

Steel tariffs are a side show — extra duty on car exports could devastate the EU

Whether trade wars are easy to win, as US President Donald Trump asserts, depends a great deal on your opponent. If your target is Germany — a country with a current account surplus of some 8 per cent of gross domestic product — then yes, a trade war is easy to win.

For the US to target Germany is in some respects a category error. As a member of the EU, Germany does not have an independent trade policy. As a member of the eurozone, it does not have a national currency. The right geographical counterpart to the US would be either the EU or the eurozone: the first if your grievance is trade policy, the second if it is the currency. But in the end, this distinction does not matter. The eurozone ran a current account surplus of 3.5 per cent of GDP in 2017 — which is huge given the size of the economy.

The eurozone’s anti-crisis strategy since 2012 has been short-sighted, pushing the current account into a strong surplus and expecting the world to absorb it. It was a beggar-thy-neighbour strategy, more appropriate for small countries than the world’s second-largest economy. The reason why such a strategy is unsustainable is now becoming clear. It makes you vulnerable to protectionist action, such as the 25 per cent tariffs on steel and the 10 per cent tariffs on aluminium imposed by the US. These are due to take effect on Friday, barring a last-minute reprieve.

Germany is a large exporter of steel to the US, but steel is only a side show. The real issue is whether Mr Trump is going to follow up on his repeated threats by slapping tariffs on imported cars. The Brussels-based think-tank Bruegel calculated the effects of a hypothetical 35 per cent tariff hitting the European car industry — it comes up with a revenue loss estimate of €17bn a year. The overall economic impact would be higher because of network effects. The EU is not only hooked on exports but also on producing cars to sell to the world.

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

The monthly Coppock Indicators finished March.

DJIA: 24,103 +272 Down 10. NASDAQ: 7,063 +300 Down 13.
SP500: 2,641 +202 Down 10.
All three slow indicators moved down. For some a new bear signal, for others a take profits and get back to cash signal. 
DJIA. Buy: 29/7/16 - 18,432.  Sell: 29/3/18 – 24,103.
SP500. Buy: 29/7/16 – 2,174.  Sell: 29/3/18 – 2,641.
NASDAQ. Buy: 29/7/16 – 5,762.  Sell: 29/3/18 – 7,063