Baltic Dry Index. 993
+14 Brent Crude
71.84
You can get much further with a
kind word and a gun, that you can with a kind word alone.
Al Capone.
It is Friday the
thirteenth, what could possibly go wrong? Up first today, with a trade war
looming with President Trump’s America, China posted an unexpected trade
deficit in March. Hmmm.
China posts surprising March trade deficit
Published: Apr 13, 2018 12:33 a.m. ET
BEIJING--China reported a surprise monthly trade deficit in March, the
first time in 13 months, as exports dropped while import growth accelerated due
to robust domestic demand.
China's trade balance swung to a deficit of $4.98 billion from a $33.7
billion surplus in the previous month. A Wall Street Journal poll of economists
had tipped a surplus of $19.6 billion. The country last reported a monthly
deficit, of $11 billion, in February 2017.
Exports declined 2.7% in March from a year earlier, following a 44.5%
surge in February, the General Administration of Customs said Friday. The Wall
Street Journal's poll had forecast the value of shipments overseas would grow
10%.
Imports in March expanded 14.4% from a year earlier, compared with a
6.8% increase in February. The rise was larger than the poll's forecast for a
10% gain.
In the first quarter, exports rose 14.1% from a year earlier, while
imports climbed 18.9%, resulting in a surplus of $48.39 billion.
Next, faced with a
Mount Everest of new Uncle Scam debt and a possible war with Russia, buyers of
US debt are much more reluctant. Well why would China or Russia be interested
in buying such debt, and with firms from Mexico and Canada to all across Europe
under threat of trade sanctions, there’s not a lot of reasons for them to buy
it either. And if a shooting war starts with Russia, how long before one or all
are forced to use tactical nukes? Strategic nukes? Not any reason there to load
up on anybody’s debt.
Lackluster U.S. Bond Auctions Add to Worries of Foreign Pullback
By Brian Chappatta and Liz McCormick
12
April 2018, 23:00 GMT+1
For
the U.S. to borrow cheaply as it boosts borrowing, it’s going to need overseas
investors to step up at its debt auctions. The early indication from this
week’s $64 billion slate is that those buyers may be turning skittish.
Whether
it’s the ramped-up trade rhetoric, swelling government deficit projections or
just yields at the lower end of their recent range, indirect bidders retreated
during this week’s auctions. While the data may not be a perfect gauge of
foreign interest, BMO Capital Markets strategists say they “suspect it will be
made clear that foreign players sat this round out -- or were at least much
lighter than normal.”
Here’s how indirect bidders shaped up this week:
- At Tuesday’s $30 billion three-year note auction, they took the smallest share since September
- At Wednesday’s $21 billion 10-year offering, they purchased the least since November 2016, when the U.S. election roiled Treasuries
- At Thursday’s $13 billion 30-year sale, they bought 61 percent, the fourth-lowest since the end of 2016, and that result was likely aided by yields rising into the auction
Bond
traders have been keenly focused on who’s participating this year because the
market is in an unusual situation: the Federal Reserve is raising rates at the
same time that the nation’s budget deficit is widening. Without persistent
demand from some of the biggest holders of America’s debt, borrowing costs are
likely to climb -- meaning investors will see bond prices decline.
“The growing U.S. deficit coupled with protectionism are very strange
bedfellows,” said Andrea DiCenso, a portfolio manager at Loomis Sayles &
Co.
A higher deficit forecast “only shows all market participants that we
are going to continue to be reliant on foreign investors to participate in our
debt markets,” she said. Yet with the Trump administration mulling tariffs, “at
what point does that spook the foreign investors in our market? How much do
foreign investors put up with” before demanding higher yields, she said.
More
None of this was good
news for 2018’s shell-shocked stocks. Greater fool buyers, seem thinner on the
ground than ever this year, and more inclined to run away at the sound of
gunfire.
April 13, 2018 / 1:52 AM
Stocks pare gains on uncertainties over trade, mixed China data
TOKYO/SYDNEY (Reuters) - Asia stocks pared early gains on
Friday as caution crept in ahead of the U.S. earnings season and as investors
weighed the possible impact on global growth from a tariff spat between the
United States and China.
Investors were also left digesting mixed data from China which showed
March exports unexpectedly fell 2.7 percent from a year earlier while imports
grew more than forecast.
That left the country with a rare trade deficit of $4.98 billion for the
month, the first since last February.
China is the world’s biggest net crude oil consumer and top buyer of
copper, coal, iron ore and soy.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
was up a slim 0.07 percent, having risen as much as 0.5 percent in morning
trading.
It is still up about 2 percent on the week.
Chinese shares took a small knock, with both the blue-chip CSI300 index .CSI300 and Shanghai's SSE Composite .SSEC off 0.4 percent. Hong Kong's Hang Seng index .HSI eased 0.1 percent while Japan's Nikkei .N225 gained 0.5 percent.
Meanwhile, futures pointed to a weak start for U.S. shares with E-Minis for S&P 500 ESc1 down 0.3 percent.
The earnings season begins in earnest on Friday with reports from JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N).
Analysts expect quarterly profit for S&P 500 companies to rise 18.4 percent from a year ago, in what would be the biggest gain in seven years, according to Thomson Reuters I/B/E/S.
----In a change of tack, Trump Thursday asked his trade advisers to look at re-joining the Trans Pacific Partnership, a multinational trade pact he withdrew the United States from early last year.
But he later tweeted that the United States would only join the TPP if
the deal were substantially better than the one offered to former President
Barack Obama.
“Markets have been pushed around by Trump,” said Hiroshi Watanabe,
economist at Sony Financial Holdings.
“His modus operandi seems to do anything that seems to be good for his
re-election. If protectionism doesn’t work, he may switch to international
trade,” he added.
“Markets are still not yet convinced yet if the U.S. is really
re-joining the TPP. But if it does, it’s very positive for the global economy
and stock markets will like it.”
More
After 10 fat years for stock investors a lean decade is looming
Published: Apr 12, 2018 10:45 a.m. ET
Strong decades are usually followed by weak ones
It’s a phrase that comes standard on Wall Street, but which may be taking on ominous undertones in the current market: Past performance is no guarantee of future returns.It should come as no surprise that U.S. equity-market investors have been handsomely rewarded thus far this decade, a period of time that roughly corresponds with the recovery from the financial crisis (the bottom came in March 2009, roughly 10 months before the start of the 2010s). The S&P 500 SPX, +0.83% is up nearly 140% since the start of the decade, and more than 180% on a total-return basis. The Dow Jones Industrial Average DJIA, +1.21% is up more than 130% over the same period.
Those are obviously strong gains, but even the biggest bulls on Wall Street may not appreciate just how strong this period has been relative to other decades.
“The 2010s have so far been one of the highest-returning and lowest-risk decades for U.S. stocks in the last 100 years,” wrote Howard Wang, co-founder of Convoy Investments.
----“The second perspective is important because stocks returning 10% is a great deal if inflation is low and your bank is paying you 1% interest rate, but a terrible deal if inflation is high and your bank is giving you 15% interest rate,” Wang wrote.
If this average holds, the 2010s will go down as the third-best decade
of the past century, behind only the 1950s, when the U.S. economy saw massive
growth in the wake of the Second World War, when it was the globe’s only real
economic powerhouse; and the 1990s, which benefitted from the growing dot-com
era.
----“Every decade when stocks had around the level of returns of 2010s were followed by a decade or two of poor performance,” Wang wrote in a research report. “It is difficult to predict the exact timing when the dynamics change, but I believe we are nearing that turning point. U.S. stock valuations have become increasingly dislocated from most other assets as well as the underlying monetary policy, which have been the primary driver of this bull market.”
Read more: Get ready for brutally weak market returns over the next decade
Wang is not the first analyst to suggest the past decade’s performance won’t be repeated over the 2020s.
Michael Lebowitz, an investment analyst and portfolio manager for Clarity Financial, recently wrote that current valuations “leave no doubt” that investors “should be shifting to bonds.”
More.
None of this matters,
of course, because it all comes down to what happens next in Trump & Co.’s
coming war on Syria, Iran, and nuclear armed Russia. Will he huff and puff and
blow down Russia’s house of straw? Or has he miscalculated against a Russian
house made out of granite and concrete?
Having deliberately
cornered himself into a “put up or shut up,” no other option gambit this Friday
the thirteenth, President Trump seems to be desperately searching for a way out
of his self-made dilemma. He might do better to await the outcome of tomorrow’s
visit by OPCW scientists to Syria, to determine if there was a chemical attack
at all, and if so, what, when and who.
The fascination of
shooting as a sport depends almost wholly on whether you are at the right or
wrong end of the gun.
P. G. Wodehouse.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, our world flirting with global protectionism. Again, what could
possibly go wrong? Rising mass unemployment, for one thing, followed shortly thereafter,
by the end of the world as we knew it 1945 – 2005.
India’s misguided war on solar panel imports
Protectionist thrust is understandable, but Narendra Modi
has picked the wrong target
In
the hinterlands of eastern Uttar Pradesh and Bihar in the Indian heartland,
there are few reasons for optimism. Trains wind their way across the plains at
speeds barely improved in 30 years, while many roads have worsened. Jobs are
scarce. Unemployed young people sit listlessly in the shade. Yet in some
places, the evaporation of irrigation canals in place since British times has
slowed thanks to solar panels placed above them. More importantly, these have
meant that villages in remote areas have electricity for the first time. Solar
energy has been a great success story in India at a time when cities such as
Delhi, which borders Uttar Pradesh, have been choking on the foul air caused by
their dependence on thermal power, generated by plants that burn dirty coal and
lack the most modern scrubbing technology.
While the pricing of solar energy
does not always measure the cost accurately, it is fast becoming competitive
with coal-fired power plants. Or at least that seemed to be the case until
January, when Narendra Modi’s government announced it planned to introduce 70 per
cent tariffs on solar panels imported from several countries — but mostly
directed against China. India barely has a solar panel manufacturing industry.
Indeed, with a few exceptions, it doesn’t have much manufacturing at all.
The
prime minister’s much-vaunted “Make in India” campaign hasn’t really happened.
So, in some ways, India’s latest protectionist thrust is understandable.
Manufacturing has historically been the way developing economies grew and their
people prospered. India needs to create 1m jobs a month to absorb its young
people as they move from rural villages. Yet, before the government stopped
releasing data last year, India was creating fewer than 1m jobs a year, and
many of them low-end service posts.
Both the ruling BJP and the opposition Congress party have long blamed China for the lack of their own manufacturing competitiveness. But to try to focus on solar panels makes little sense. India needs manufacturing that is labour intensive rather than capital intensive, given the abundance of workers and the high cost of capital. But solar panel production is costly and does not require many workers. In introducing the plan (which is tied up in court wrangling), the Modi government “hasn’t thought through many issues such as what happens to existing contracts or input costs”, said one former senior official.
The worry
also is that protectionism becomes about protecting the well-connected and
inefficient rather than the capable and economically rational. Many coal
plants, for example, are owned by powerful industrialists with a stake in
raising the costs of solar to preserve the viability of their plants. In some
cases, they won government contracts to supply power by bidding at low prices,
seemingly in the belief that the government would come to their rescue if
needed.
More
Trade wars and the lessons from history
IMF boss Christine Lagarde warns
world leaders to avoid protectionism, saying: "History shows import
restrictions hurt everyone".
07:04, UK, Thursday 12 April 2018
There's a chance you've already visited one of the most infamous sites
in modern economic history - without even knowing it.
If you've been to the Natural History Museum in London, you've
unwittingly stepped through the room where the fight to end the great trade war
of the 1930s was lost.
There are no visible hallmarks of the event - no plaques to commemorate
it. Indeed, this ignominious episode has quite literally been papered over.
The great hall of what was once the Geological Museum has now become a
vast exhibition room - the Earth Hall, as it's known.
But it was in this room, 85 years ago, that the London Economic Conference
took place.
This meeting of finance ministers and negotiators was an attempt to
bridge the differences between America, Germany and the UK - all of whom had
been ratcheting up their tariffs and devaluing their currencies against each
other.
It was an abject failure.
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?
Solar activity crashes – the Sun looks like a cueball
Anthony
Watts April 11 2018
Right now, the sun is a cueball, as seen below in this image today from the
Solar Dynamics Observatory (SDO) and has been without sunspots for 10 days. So
far in 2018, 61% of days have been without sunspots.On Sunday NOAA posted its monthly update of the solar cycle, covering sunspot activity for March 2018. Below is my annotated version of that graph.
March 2018 was the least active month for sunspots since the middle of 2009, almost nine years ago. In fact, activity in the past few months has been so low it matches the low activity seen in late 2007 and early 2008, ten years ago when the last solar minimum began and indicated by the yellow line that I have added to the graph below. If the solar minimum has actually arrived now, this would make this cycle only ten years long, one of the shortest solar cycles on record. More important, it is a weak cycle. In the past, all short cycles were active cycles. This is the first time we have seen a short and weak cycle since scientists began tracking the solar cycle in the 1700s, following the last grand minimum in the 1600s when there were almost no sunspots.
The graph above has been modified to show the predictions of the solar science community. The green curves show the community’s two original predictions from April 2007, with half the scientists predicting a very strong maximum and half predicting a weak one. The red curve is their revised May 2009 prediction.
The graph [above], courtesy of the Sunspot Index and Long-term Solar Observations webpage (SILSO), will give you an idea how little activity occurred in March. There were only five days during the entire month where sunspots could be seen on the visible hemisphere of the Sun. We have not seen so little activity since 2009, when the Sun was in the middle of its sunspot minimum.
We could still see a recovery in sunspot cycle. Past cycles tended to ramp down slowly to solar minimum, not quickly as we have so far seen with this cycle. For example, look at sunspot activity during 2007 on the NOAA graph above. Though activity was dropping, throughout the year there were new bursts of activity, thus holding off the arrival of the minimum. It would not be surprising or unusual to see this happen now. […]
The big question remains: Are we about to head into a grand minimum, as happened during the Maunder Minimum in the 1600s? During that century there were practically no sunspots. Since it occurred immediately after the invention of the telescope, astronomers had no idea that the lack of sunspots were unusual and did not give it much attention. It wasn’t until the solar cycle resumed in the 1700s that they discovered its existence, and thus realized the extraordinary nature of the century-long minimum that had just ended. Unfortunately, it was over, and the chance to study it was gone.
Thus, if a new grand minimum is about to start, it will be a once-in-a-lifetime opportunity for today’s solar scientists. Not only will they will get to study the Sun as it behaves in a manner they have not seen before, they will be able to do it with today’s phalanx of space-based observatories. The chance to gain a better understanding of the Sun will be unprecedented.
More
https://wattsupwiththat.com/2018/04/11/solar-activity-crashes-the-sun-looks-like-a-cueball/
Another weekend and will
the Donald go off half-cocked again. Will another US led middle east war,
turnout any better than Afghanistan, Iraq and Libya? If a shooting war starts
with Russia, how many casualties does it take before someone starts lobbing over
tactical nukes? This weekend, there doesn’t seem much point in holding stocks
and bonds. Cash and physical precious metals seem the way to be positioned for
the week ahead.
“If
you're not gonna pull the trigger, don't point the gun.”
James
Baker. United States Secretary of the Treasury under President Ronald Reagan,
and U.S. Secretary of State and White House Chief of Staff under President
George H. W. Bush
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.
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