Baltic Dry Index. 1330 +24 Brent Crude 73.80
Predicting rain doesn't count.
Building arks does.
Warren Buffett
It’s time to get out
of Dodge City. Stocks are so last year. A three decade long bond bear market in
yields is definitely over, and along with it the bull market in most stocks. A
multi-decade long bull market in bond yields is just starting. Most stocks, but
especially those that loaded up on cheap debt to finance stock buybacks, face
years of trouble surviving ahead.
What was a central
bankster rigged game of easy pickings in stocks is now over. With rising
interest rates the new norm, a rising interest rate tide simply sinks those
stocks overloaded and hopelessly holed by debt. Our greater fool bull market is
ever so surely getting replaced with a bear market game of skill. Picking up nickels in front of steamrollers
now turns very messy.
Most professional
money managers have never known anything but a central bankster rigged bull
market. Long forgotten are the last normal bear markets of the 60s, 70s, and
Volker early 80s. Doing nothing and biding one’s time, now have to be re-learned
all over again. When to take profits, is a skill set, few modern money managers
possess. “Past performance,” as they say, “is no guarantee of future results.”
President Trump, and his munchkins initiating trade wars in the Treasury,
without consulting the CIA World Fact Book regarding the importance of Rusal in
global aluminium supply, is just the first of many blunders still to come.
Below, when they do
ring a bell at the top.
The investor of today does not
profit from yesterday's growth.
Warren Buffett
April 25, 2018 / 1:54 AM
Asian shares spooked by rising U.S. yields, cost worries
TOKYO
(Reuters) - Asian shares fell on Wednesday as a rise in U.S. bond yields to 3
percent and warnings from bellwether U.S. companies of higher costs drove fears
that corporate earnings growth may peak soon.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.7 percent to its lowest in almost three weeks, with tech-heavy Taiwan shares .TWII hitting two-month lows on worries about slowing semi-conductor demand.
Japan's Nikkei .N225 also dropped 0.7 percent.
S&P E-mini futures ESc1 slipped 0.2 percent. Wall Street shares skidded overnight, with the S&P 500 .SPX falling 1.34 percent, the most in two-and-a-half weeks.
Industrial heavyweight Caterpillar (CAT.N) beat earnings estimates due to strong global demand but its shares tumbled 6.2 percent after management said first-quarter earnings would be the “high water mark” for the year and warned of increasing steel prices.
“We’ve seen quite a lot of companies announcing above-estimate earnings and their shares falling sharply,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
Fujito noted major financial shares such as Goldman Sachs (GS.N) and Citigroup (C.N) as well as Google parent Alphabet GOOG.N, the first major tech firm to report earnings, have followed a similar pattern.
----“If shares are falling when corporate earnings are rising 20 percent and the economy is growing at 3 percent, the market is in trouble. The market reaction so far feels as if we are starting to see an end of its long rally since 2009. Investors could be thinking that the best time will be soon behind us,” he said.
Creeping gains in U.S. Treasury yields are fuelling fears. The 10-year
yield, a benchmark for global borrowing costs, has been driven steadily higher
by a combination of concerns over inflation, growing debt supply, and rising
Federal Reserve borrowing costs.
The 10-year U.S. Treasuries yield US10YT=RR rose to as high as 3.003
percent on Tuesday and last stood at 2.992 percent.
More
Treasuries’ March Above 3% Faces Challenge From Stock Slump
By Brian Chappatta and Liz McCormick
Updated on 25 April 2018, 03:45 GMT+1
The 10-year Treasury yield finally reached 3 percent, a milestone that bond
traders were eyeing for months to guide their next moves.Then that pesky stock market got in the way.
After all the hoopla surrounding 10-year yields touching the highest in four years, they couldn’t sustain their highest levels of the day, ending at 2.9995 percent. That’s in part because of the dive in equities, driven both by losses in technology shares and by Caterpillar Inc. effectively saying its first-quarter profit will be as good as it gets in 2018.
It’s the latest manifestation of the tug-of-war between stocks and bonds that’s already been evident this year. In February, the specter of accelerating wage growth sent U.S. yields to four-year highs just below 3 percent, which played a role in the equities correction that followed. Last month, Treasuries finally rallied through key resistance levels amid turmoil around Facebook Inc. and other tech companies.
----JPMorgan Chase & Co. estimates the 10-year yield will end 2018 at 3.15 percent, the same as the median forecast of 56 analysts surveyed by Bloomberg.
In some ways, the Treasury market still hasn’t tested the true
high-water mark of the recent past. That would be 3.0516 percent, the peak from
Jan. 2, 2014. For Goldman Sachs Asset Management, 3 percent is just a passing
point.
“We’ve consistently been saying we expect 3.5 percent before 2.5
percent,” Sheila Patel, chief executive officer of GSAM’s international division,
said in an interview with Bloomberg Television.
“If it’s a measured reasonable
pace, and if the reasoning is because of growth, it doesn’t mean a debacle.’’
The 10-year yield flitted around 3 percent on Wednesday.
More
Here’s the threat to the stock market from rising bond yields
Published: Apr 24, 2018 4:44 p.m. ET
Corporate debt, high valuations make equities vulnerable: SocGen
Lofty valuations and record U.S. corporate debt make rising bond yields a risk to the stock market, according to Andrew Lapthorne, head of global quantitative research at Société Générale.Investors have shrugged off increasingly expensive U.S. stocks in recent years for a number of reasons, including solid earnings, low interest rates and nearly absent inflation. But as both yields and inflation rise, earnings might not be enough to propel stocks higher.
A correction in February that sent the S&P 500 SPX, -1.34% down more than 10% combined with a near-20% expected increase in earning growth has lowered the trailing and forward price to earnings ratios. However, both measures remain above historical averages.
According to FactSet, the 12-month forward PE of the S&P 500 is at 16.5, far above the 5-year or 10-year averages at 16 and 14.2, respectively.
Lapthorne said high U.S. corporate debt is one of the reason why investors are concerned about rising borrowing costs.
The yield on the 10-year Treasury note TMUBMUSD10Y, +0.00% , a benchmark for interest rates touched and briefly traded slightly above 3% for the first time in more than four years on Tuesday, and remains near 2.98%. That’s still historically low. But higher rates and rising debt servicing costs could present a challenge to U.S. companies, whose leverage is at record levels.
According to FactSet, the total debt to total equity ratio is at 95.5, the highest level since 1999. In February, S&P Global Ratings warned that the number of defaults by heavily indebted companies could rise significantly amid tightening credit conditions.
More
In the business world, the
rearview mirror is always clearer than the windshield.
Warren Buffett
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, the totally doubled over, fiat dollar. Issued by a country
operating on trillion dollar deficits, headed towards debt in the
quadrillions. We all know how fiat
currency ends, just not when or why. But for now is there any other fiat
currency better? Cryptocurrency? Unicorns?
Iran, China Seek to Loosen Dollar’s Grip on Global Markets
Iran, China among those trying to end dominance of the U.S. currency
Updated April 23, 2018 5:30 p.m. ET
A small but growing number of countries are stepping up efforts to wean
themselves off the dollar, aiming to chip away at the U.S. currency’s
decadeslong dominance.
Iran last week became the latest when it pledged to replace the dollar
with the euro in its foreign-currency accounting.
China introduced the world’s first yuan-denominated oil contracts last
month, part of a continuing effort to raise its currency’s global profile,
while Venezuela launched a bitcoin-like cryptocurrency earlier this year.
Russia has ramped up its gold reserves to diversify away from the dollar.
Still, none of these new efforts has threatened the dollar’s global role.
Some analysts say the governments moving against the dollar may be
trying to capitalize on growing unease among many nations, including U.S.
allies, over recent or perceived shifts in U.S. trade policy, Washington’s
approach to global alliances, and conflicting signals from the Trump
administration about its preference for a strong dollar.
Increased uncertainty on those fronts could eventually fuel additional
efforts to create an alternative to the dollar. For now, however, the attempts
are unlikely to succeed, analysts and economists say, just as previous efforts
had little or no success.
“The U.S. has been using financial sanctions very aggressively so, of
course, countries like Russia and Iran will do what they can to move away from
the dollar,” said Kenneth S. Rogoff, a professor at Harvard University and the
former chief economist of the International Monetary Fund.
For other nations, boosting use of their currencies would require
substantial changes in policy. China’s yuan, for example, is unlikely to
increase its tiny share in global transactions until Beijing removes
longstanding curbs on foreign investment, an effort that could take many years,
analysts said.
The dollar’s dominance looks secure. Nearly 60% of all countries,
accounting for 76% of the world’s gross domestic product, had exchange-rate
regimes that were in some way anchored to the dollar in 2015, Mr. Rogoff’s
research found.
The U.S. currency is involved in nearly nine out of every 10
transactions in the daily $5.1 trillion foreign-exchange market, 2016 data from
the Bank for International Settlements showed. The dollar makes up nearly
two-thirds of the $11.42 trillion in foreign-exchange reserves held by central
banks.
Over recent decades, there has been “a stunning rise in the dominance of
the dollar,” Mr. Rogoff said.
In fact, most nations would agree that there is a global benefit to
doing business in one main currency, since it is easier and cheaper for
companies to conduct international business and for investors to buy and sell
commodities.
The euro gained traction internationally after its introduction in 1999,
with a rise in cross-border lending denominated in the currency. But when the
eurozone’s sovereign-debt crisis raised the specter of countries defaulting on
their debt, the chances of it supplanting the dollar were dashed.
In 2009, the euro peaked at 28% of global FX reserves. In data for the
fourth quarter of 2017, the single currency made up around 20%, though some
analysts expect that to move higher as the European Central Bank winds down
stimulus and reverts to more traditional monetary policy.
More
Economic medicine that was
previously meted out by the cupful has recently been dispensed by the barrel.
These once unthinkable dosages will almost certainly bring on unwelcome
after-effects. Their precise nature is anyone's guess, though one likely
consequence is an onslaught of inflation.
Warren Buffett
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?
India Exempts Imported Solar Panels From Customs Duty
April 23rd, 2018 by Saurabh Mahapatra
In a major
relief to solar power project developers in India, the government has exempted
imported solar panels from customs duty.
The
Central Board of Indirect Taxes and Customs (CBITC) has reclassified imported solar modules in order to provide exemption from customs duty.
In September 2016, CBITC had classified solar panels as “electrical motors and
generators” under the Customs Act (HS Code 8501). Items in this category
attract 7.5% customs duty.
Several
project developers had challenged the move in court and had left several
hundred containers of solar panels at the ports delaying the project for weeks.
The move would have had a profound impact on the Indian solar market, as 90% of
solar panels used in India are imported mostly from China, Malaysia, and Taiwan.
Now, solar
modules and panels with bypass diodes are classified under the code 8541 while
modules and panels with blocking diodes or those with blocking and bypass diodes
will be classified under the code 8501. Articles under code 8541 will not
attract any import duties while articles under code 8501 will continue to
attract import duty.
The customs
duty was only one of the incremental costs that developers were facing and
continue to face. Indian agencies were until recently were conducting
anti-dumping investigations into imports from China, Malaysia, and Taiwan. The
investigations were wrapped up prematurely after the Indian Solar
Manufacturers Association withdrew its petition calling for the probe. ISMA is
expected to file a fresh petition soon.
A probe to
check if imported panels should be subjected to safeguards duty continues.
Initial recommendation by the government agency called for the implementation of a 70% safeguards duty on imports. A project developer managed to win
a legal stay on implementation of this interim order.
Uncertainty
related to implementation of these duties has already led to a spike in tariff
bids and fall in number of bids by project developers. Recent bids have
increased by around 18% from the all-time lows.
April 24, 2018 / 12:16 PM
General Electric to trial world’s largest wind turbine in Britain
LONDON (Reuters) - U.S. conglomerate General Electric (GE.N)
will test the world’s largest wind turbine in a facility in northeast England,
it said on Tuesday.
GE Renewable Energy, the renewable arm of the U.S. firm, and the British
government-funded Offshore Renewable Energy Catapult signed a five-year
agreement to test GE’s Haliade-X 12 megawatt (MW) turbine in Blyth,
Northumberland.
“This is an important agreement because it will enable us to prove
Haliade-X in a faster way by putting it under controlled and extreme
conditions,” John Lavelle, president & CEO of GE’s Offshore Wind business
said in a statement.
Britain is aiming to be a leader in offshore wind technology
and its capacity could grow by five times current levels to 30 gigawatts by
2030, according to a report funded by a range of industry participants.
Britain’s energy and clean growth minister Claire Perry welcomed the
agreement and said it highlights Britain’s world class research and testing
facilities.
The largest wind turbines currently in operation are MHI Vestas’ 9 MW
turbines installed at Vattenfall’s windfarm off the coast of Aberdeen,
Scotland.
Companies have been building larger turbines to help get more power from
each turbine installed and drive down the cost of the electricity they produce.
The agreement also includes a 6 million pound combined investment from
Britain’s Innovate UK and the European Regional Development Fund (ERDF) to
install the world’s largest and most powerful grid emulation system at the
Catapult’s Blyth centre.
For a graphic on giant wind turbines, click - tmsnrt.rs/2rr299K
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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