Baltic Dry Index. 1052 +27 Brent Crude 72.16
In a time of universal deceit, telling the
truth is a revolutionary act.
George Orwell
Despite relatively calming markets and subsiding global geopolitical pressure for now, and still about a month away from any active trade war with anyone, there is rising concern that the party may already be ending, and the Fed hasn’t yet taken away the punchbowl. Was January as good as stocks got? Will the last Greater Fool turn out the lights? Was all the good news already priced in?
We are rapidly approaching “sell in May, go away.” Where will a fresh supply of Greater Fools come from, to buy near the top as the smart money tries to sell out?
Somebody has to
be on the other side.
George Goodman, aka Adam
Smith. The Money Game. Why Are The Little People Always Wrong?
Morgan Stanley Warns Markets the Best Times May Be Near an End
By Joanna Ossinger
17 April 2018, 13:45 GMT+1
Investors need to prepare for downside as the end of the economic cycle is
near and U.S. markets are priced for best-case scenarios, Morgan Stanley says.
While fiscal stimulus is supportive of growth in the near term, the
benefits are already likely “in the price” and increase potential downside for
markets at the end of the cycle, Morgan Stanley strategists including Michael
Zezas, Matthew Hornbach and Andrew Sheets wrote in a note Tuesday. They also
said U.S. stock valuations peaked before the tax bill was enacted with a
cyclical top for equities later this year, while peak margins and rate of
change on organic earnings growth coming by late 2018 or early 2019.
“There’s less reason to behave like it’s ‘morning in America’ than
‘Happy Hour in America,”’ the report said. Markets are “closer to the end of
the day than the beginning.”
The report said the fiscal expansion factor supports a range-bound path
for stocks, as well as a flatter U.S. Treasury yield curve with a lower yield
bias.
“We advocate a focus on sector and stock-specific alpha as these
late-cycle dynamics portend narrowing markets and a cyclical top for equities
later this year, in our view,” the strategists said. “In Treasuries, we see the
curve continuing to flatten on Fed hikes, and yield downside as the year
progresses and the economic outlook becomes more mixed.”
https://www.bloomberg.com/news/articles/2018-04-17/morgan-stanley-warns-markets-the-best-times-may-be-near-an-endIMF Spots Trouble Ahead for the Global Economy After 2020
By Andrew Mayeda
17 April 2018, 14:00 GMT+1
The International Monetary Fund predicted the world economy’s strongest
upswing since 2011 will continue for the next two years, but warned the seeds
of its demise have already been planted.
The fund on Tuesday left its forecasts for global growth this year and
next at the 3.9 percent it estimated in January and raised its outlook for the
U.S. as Republican tax cuts take effect.
Beyond that horizon, it was more pessimistic, projecting global growth
will fade as central banks tighten monetary policy, the U.S. fiscal stimulus
subsides, and China’s gradual slowdown continues.
“Global growth is projected to soften beyond the next couple of years,”
the IMF said in its latest World Economic Outlook report. “Once their output
gaps close, most advanced economies are poised to return to potential growth
rates well below pre-crisis averages, held back by aging populations and
lackluster productivity.”
The IMF warned the expansion could be derailed if countries resort to
tit-for-tat trade sanctions.
“The first shots in a potential trade war have now been fired,” IMF
Chief Economist Maurice Obstfeld said in a foreword to the fund’s outlook,
reiterating the IMF’s warning earlier this month that the global trading order
is in danger of being “torn apart.”
“Conflict could intensify if fiscal policies in the United States drive
its trade deficit higher without action in Europe and Asia to reduce surpluses,”
he said.
Investors with $543 billion of assets are the least optimistic about
global growth momentum since the U.K. voted to leave the European Union,
according to Bank of America Merrill Lynch. Just 5 percent of money managers
project the international economy to be stronger in the next 12 months, the
lowest level since June 2016, according to the bank’s April survey.
Underscoring diminished growth momentum, earnings expectations have peaked.
Morehttps://www.bloomberg.com/news/articles/2018-04-17/imf-spots-trouble-ahead-as-solid-global-growth-poised-to-slow-jg3oe4z8
Opinion: This proven recession predictor is close to sounding an alarm
Published: Apr 17, 2018 1:55 p.m. ET
What an inverted Treasury yield curve means for stocks
It’s time to submit inverted — or negative — yield curves to a reality check.That’s because the yield curve appears to be close to inverting, and an inverted yield curve is widely considered to indicate an imminent economic recession. So you will be reading more and more about them in coming weeks.
The yield curve, of course, is the difference between Treasury yields of longer and short maturities. One widely-used yield curve, which is what is plotted in the accompanying chart, is the difference between the yields on the 10-year TMUBMUSD10Y, +0.10% and the two-year Treasury. It currently stands at 0.45%. As you can see from the chart, below, it’s been declining more or less steadily since its 2.66% reading at the end of 2013.
Yet close analysis of the data suggests that the yield curve’s current
level is not as scary as it might otherwise appear — at least in the short
term. Even if the yield curve continues to decline and becomes negative in
coming months, a recession would most likely not start for more than a year
thereafter.
On average prior to U.S. recessions of the last five decades, for
example, the yield curve turned negative a full 18 months in advance. (To
calculate this average, I relied on the recession calendar maintained by the
National Bureau of Economic Research. Because only 12 months separated the
January-to-July 1980 and July 1981-to-November 1982 recessions, I focused only
on the first of those two.) The shortest lead time was 13 months.
Morehttps://www.marketwatch.com/story/this-proven-recession-predictor-is-close-to-sounding-an-alarm-2018-04-17
Why China’s US trade stand-off is not a replay of Japan’s in the 1980s
Washington is using some of the same trade tools against Beijing that it once used against Tokyo – but this time things are different
PUBLISHED : Monday, 16 April, 2018, 12:14am UPDATED :
Monday, 16 April, 2018, 9:15pm
At first glance, China’s trade frictions with the US seem to be of a piece with the confrontations Japan faced in the 1980s: a surging Asian economy becomes a threat to American dominance in world trade and the US retaliates by crying foul and demanding concessions.
Last Monday People’s Daily ran a commentary by former
Japanese prime minister Yasuo Fukuda comparing the trade war threat China is
facing with what happened to Japan in the 1980s and cautioned China to “learn
from the painful lesson of Japan”.
But there, analysts say, is where the similarities end. China is not
Japan and Beijing is better positioned today than Tokyo was three decades ago
to manage the threat of a trade war.
When they initiated trade action against China, US President Donald
Trump’s trade policy team, led by US Trade Representative Robert
Lighthizer, appeared to be relying on the approach Washington took in
battles with Japan. (Lighthizer had been a deputy trade representative in the
Reagan administration.)
Last August, the US began a Section 301 investigation under the Trade
Act of 1974 – a tool it used frequently against Japan – of what it contends is
China’s discriminatory industrial policy and intellectual property thefts.
While Trump continues to press China to narrow its trade surplus with the
US, this round of 301 Section investigation has centred on Beijing’s industrial
policy and hi-tech ambitions.
“The tension between Beijing and Washington reflects the confrontation
of a market-driven model and state intervention in the economy, the contest of
industrial competitiveness in the global production chains and even the fight
for global economic governance rules,” a Chinese expert who advises the
Ministry of Commerce said.
----“[Japan] has more reasons
to go along with US demands and respond to the US pressure in the way that it
did,” said Julian Evans-Pritchard, senior China economist in Singapore with
Capital Economics, an economics research consultancy based in London.
China’s economic growth relied less on exports than Japan did, he noted.
Thus, he said, China had less to lose in a trade war and it would be more
difficult for the US to compel China, a tougher opponent, to shift its
industrial policy.
Morehttp://www.scmp.com/news/china/diplomacy-defence/article/2141824/why-chinas-us-trade-stand-not-replay-japans-1980s?aid=197778625&sc_src=email_2211009&sc_llid=147&sc_lid=150776318&sc_uid=164ZJlR5S5&utm_source=emarsys&utm_medium=email&utm_campaign=GME-O-tradewar-Apr18&utm_content=row-180417
Finally, in the Great Nixonian Error of fiat money, meet the next Great Error in Waiting, Universal Guaranteed Income, already being trialled in parts of Scandinavia. Welcome to the road back to serfdom, for surely, “he who pays the piper will call the tune”.
“Beyond
this, the problem is universal. It is that governments are now held responsible
for the welfare of the people. The aspirations of the people can outrun their
ability to pay for them, and nobody has yet found a way to create answers to
the aspirations out of thin air.”
George Goodman, aka Adam Smith, The Money Game. 1968
Budget watchdog pegs cost for national basic income at $76 billion
A government determined to institute the idea would have to
decide what benefit programs to replace, the value of the benefit itself, and
how to address some of the non-financial factors that affect poverty, said
Mostafa Askari, the deputy parliamentary budget officer.
Tues., April 17, 2018
OTTAWA—Federal coffers would have to dole out more than $76 billion a
year to provide every low-income household with a guaranteed minimum income if
the government ever embarked on such a radical overhaul of the social safety
net, Parliament’s budget watchdog said Tuesday.
In a new report, the parliamentary budget officer estimated the federal
government would have to find about $43.1 billion to cover the full cost of the
program to top up the $32.9 billion Ottawa already spends on support to
low-income Canadians.
A guaranteed minimum income often means different things to different
people, but at its core it can be described as a no-strings-attached benefit
that governments provide to citizens instead of various targeted social
benefits. It can be delivered as a universal payment, or as a means-tested
benefit that declines in value as incomes rise.
Spending $76 billion would affect more than 7.5 million people, who
would receive on average $9,421 a year, with the maximum amount reaching
$16,989 for individuals and $24,027 for couples, before deductions for any
income earned.
A government determined to institute the idea would have to decide what
benefit programs to replace, the value of the benefit itself, and how to
address some of the non-financial factors that affect poverty, said Mostafa
Askari, the deputy parliamentary budget officer.
“If politicians were to implement this, then they would have to really
decide about the structure of this program,” he said.
The federal Liberals have been lukewarm to the idea at a national level,
arguing the Canada Child Benefit, among other measures, amounts to a guaranteed
minimum income.
A recurring theme in the government’s work on a poverty reduction
strategy has been the need to modernize the social safety net and the 61
federal income support programs involving eight departments.
----Macdonald, who has studied basic incomes, said the concept isn’t a silver bullet to poverty eradication, but it can be part of the solution.
Ontario is testing the idea and federal officials are keeping on an eye
on the pilot project, the parameters of which formed the basis for the budget
officer’s report released Tuesday.
Hugh Segal, a former senator who helped design the Ontario pilot, said
the numbers in the budget officer’s report suggest a federal program wouldn’t
break the bank.
The cost of a basic income system is a key concern from critics, as is
worry that the money would act as a disincentive to work.
Conservative finance critic Pierre Poilievre, who requested the budget
estimates, tweeted that the report doesn’t eliminate that concern: “The welfare
state apparatus remains & the financial penalties for working grow — the
opposite of what basic income was supposed to do.”
Morehttps://www.thestar.com/news/canada/2018/04/17/budget-watchdog-pegs-cost-for-national-basic-income-at-76-billion.html
Universal Basic Income, currently under trial in Sweden and Finland and apparently Canada, seems to me another Great Error in Waiting. Whatever level it starts at will never be enough, and as with minimum wages, will endlessly rise as people demand more. A great debt increase multiplier, it seems to me if adopted, likely to accelerate the decline in fiat money purchasing power. It will probably bring about the failure of the Great Fiat Money experiment.
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today Tesla again. Is Tesla really worth more than
GM, or is Tesla about to go the way of the Edsel?
Model 3 Production Line Skids to a Halt for Tesla
By Dana Hull
17 April 2018, 01:11 GMT+1 Updated
on 17 April 2018, 10:55 GMT+1
Tesla
Inc.
is temporarily suspending production of the Model 3 sedan for at least the
second time in roughly two months, just after Elon Musk admitted to mistakes
that hindered his most important car.
The
company informed employees that the pause will last four to five days, Buzzfeed
reported Monday. A Tesla spokesman referred
back to a statement provided last month, when Bloomberg News first reported
that Model 3 production was idled from Feb. 20 to 24. The carmaker
said then that it planned periods of downtime at both its vehicle and battery
factories to improve automation and address bottlenecks.
The hiatus is another setback for the first model Musk has tried to
mass-manufacture. In addition to trying to bring electric vehicles to the
mainstream, the chief executive officer had sought to build a competitive
advantage over established automakers by installing more robots to quickly
produce vehicles. Last week, he acknowledged “excessive” automation at Tesla
was a mistake.“Traditional automakers adjust bottlenecks on the fly during a launch,” Dave Sullivan, an analyst at AutoPacific Inc., said in an email. “This is totally out of the ordinary.”
Tesla employees are expected to use vacation days or stay home without pay during the Model 3 downtime, though a small number may be offered paid work elsewhere at the factory in Fremont, California, Buzzfeed reported.
Factory Tour
The shutdown is taking place a week after Musk gave CBS This Morning a tour of Tesla’s assembly plant and said the company should be able to sustain producing 2,000 Model 3 sedans a week. He said manufacturing issues that had been crimping output were being resolved and that Tesla probably will make three or four times as many of the cars in the second quarter.Shares of Tesla fell as much as 2.1 percent in early trading Tuesday, extending Monday’s decline of 3 percent, which was the most in a week. China said Tuesday it would remove ownership limits this year for automakers making NEVs, a move that may temper further losses in the stock.
Tesla built 9,766 Model 3 sedans in the first quarter.
More
This is the way things are,
and the Game has been so successful that, like everything, it will get more and
more successful until it stops being successful.
George
Goodman, aka Adam Smith, The Money Game. 1968.
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?
Can this plastic-eating enzyme devour our PET pollution problem?
April 17 2018
Our
plastic pollution crisis is only getting worse, but scientists may soon have a
valuable new tool to chip away at the problem. With a little luck, researchers
have happened upon an engineered enzyme with an appetite for some of the most
commonly disposed of types of plastic, meaning this waste could conceivably be
broken down relatively quickly rather than contaminating the environment for
hundreds of years.
We produce hundreds of millions of tons of polyethylene terephthalate (PET) plastic each year for use in things like soda and shampoo bottles. Little of this is recycled, which means we are polluting our environment with materials that take centuries to degrade, much of which washes out into the ocean where it breaks into tiny pieces that are nearly impossible to track, let alone clean up.
Scientists have made some promising discoveries when it comes to putting living organisms to work on this dilemma, with wax worms and bacteria a couple of recent examples. Another is the recently discovered enzyme that consumes PET plastics called PETase, which scientists at the University of Portsmouth and the US Department of Energy's National Renewable Energy Laboratory (NREL) used as a starting point for their groundbreaking research.
The researchers set out to better understand the crystalline structure of PETase, which is believed to have come of age in a Japanese recycling center. What interested the scientists was the evolution of the enzyme, given that PET plastics have only existed in the environment since the 1940s. Their thinking was that if they could understand how it came about in a relatively short space of time, perhaps they could understand how to make it more effective at eating plastic.
They began by using a synchrotron at the Diamond Light Source facility in the UK, which allows them to see individual atoms inside the structure of the enzyme by blasting them with beams of X-ray light 10 billion times brighter than the sun. Through this method they wound up with a ultra-high resolution 3D model of PETase.
"The Diamond Light Source recently created one of the most advanced X-ray beamlines in the world and having access to this facility allowed us to see the 3D atomic structure of PETase in incredible detail," says Professor John McGeehan from the University of Portsmouth. "Being able to see the inner workings of this biological catalyst provided us with the blueprints to engineer a faster and more efficient enzyme."
-----The engineered enzyme has the added benefit of being able to degrade polyethylene furandicarboxylate (PEF), a PET alternative that has been floated as a replacement for glass beer bottles. The team is now working to continue refining the engineered enzyme to make it even more effective.
"The engineering process is much the same as for enzymes currently being used in bio-washing detergents and in the manufacture of biofuels – the technology exists and it's well within the possibility that in the coming years we will see an industrially viable process to turn PET and potentially other substrates like PEF, PLA, and PBS, back into their original building blocks so that they can be sustainably recycled," says McGeehan.
The research will be published in the journal Proceedings of the National Academy of Sciences.
Source: University of Portsmouth
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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