Baltic Dry Index. 1273 -32 Brent Crude 79.06
“Many
people want the government to protect the consumer. A much more urgent problem
is to protect the consumer from the government.”
Milton
Friedman
The Chinese came to
Washington, they talked, they returned with everything that they wanted, no
trade war for now, with President Trump’s America. While the US side talked up
big on an agreed Chinese 200 billion dollar reduction in the US trade deficit
with China, China merely said that they would try harder at buying more stuff
from the USA, adding buying more stuff from the rest of the world too.
Few economists think
a 200 billion reduction is doable anyway, not in the short term, the medium
term, and possibly not even in the long term.
But with US domestic politics about get white hot over the summer as
POTUS and the Democrats fight over the spoils of the mid-term elections, many
think this truce will be relatively short lived. One thing it’s got in its
favour, the US grain harvest is getting underway. Across the summer, China can
appear to be loading up on cargoes of grain.
Below what looks like
merely a pause, while each side works on their defensive strategy.
“One of
the great mistakes is to judge policies and programs by their intentions rather
than their results.”
Milton
Friedman
U.S.-China Trade Truce May Be Fleeting as Tensions Linger
Bloomberg News
Updated on 21 May 2018, 04:30 GMT+1
The newly-declared economic truce between the U.S. and China will prove
temporary if the world’s two largest economies fail to deliver on vague
commitments to re-balance trade.
“We’re putting the trade war on hold,” Treasury Secretary Steven Mnuchin
said Sunday. “Right now, we have agreed to put the tariffs on hold while we
execute the framework.”
President Donald Trump had threatened to slap tariffs on up to $150
billion in Chinese imports, while Beijing vowed to respond in kind. For now,
Mnuchin’s cease-fire declaration will soothe the nerves of investors worried
that the world’s two biggest economies were on the verge of an all-out trade
conflict.
The U.S. and China released a joint statement on Saturday, after two days of meetings in Washington between Chinese Vice Premier Liu He and senior American officials, including Trump.
The statement was “little more than a brief de-escalation of tensions,” said Eswar Prasad, a trade policy professor at Cornell University and former head of the IMF’s China unit. "The fundamental differences on trade and other economic issues remain unresolved."
Asian stocks gained Monday as U.S. equity futures jumped in the wake of news that the Sino-American trade war is on hold for now. Treasury yields nudged higher, taking the dollar with them.
China and the U.S. agreed to “substantially” reduce the U.S. trade deficit in goods with China.
Beijing promised to “significantly” increase purchases of U.S. goods and services. But there was no dollar figure attached, despite assurances by the White House that Beijing would cave to its demand for a $200-billion annual reduction in the goods shortfall.
Trump has an important strategic reason for removing the tariff threat against China: he needs Beijing’s cooperation as he prepares for an historic summit with North Korean leader Kim Jong Un in Singapore on June 12. It’s hard to imagine a peace deal with North Korea without the involvement of China, Kim’s most important political and economic ally.
China Rhetoric
Yet if trade talks with China fizzle, the president may soon feel the pressure to clamp down again, especially with midterm congressional elections looming in November. In their efforts to save the party’s majorities in the House and Senate, Republicans will lean hard on Trump’s brand, which he built on promises to help the working class in states like Ohio and Pennsylvania, where Trump’s fiery rhetoric on China resonated with voters.“As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations,” U.S. Trade Representative Robert Lighthizer said in a statement Sunday. “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake.”
----It’s “difficult to contemplate” how the two countries could cut their trade imbalance by $200 billion, said Victor Shih, a professor at the University of California in San Diego who studies China’s politics and finance.
“Even with a drastic reallocation of Chinese imports of energy, raw materials and airplanes in favor of the U.S., the bilateral trade deficit may reduce by $100 billion,” said Shih. “A $200 billion reduction would mean a drastic reduction in Chinese exports to the U.S. and a dramatic restructuring of the supply chain.”
More
May 21, 2018 / 12:44 AM / Updated
3 hours ago
Stocks rally after Mnuchin says Sino-U.S. trade war "on hold"
TOKYO (Reuters) - Stocks rose on Monday as U.S. Treasury
Secretary Steven Mnuchin declared the U.S. trade war with China “on hold”
following an agreement to drop their tariff threats that had roiled global
markets this year.
U.S. S&P mini futures ESc1 rose 0.60 percent in Asian trade on Monday.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.55 percent in early trade, led by strong gains in greater China. Hong Kong's Hang Seng .HSI was up 1.0 percent, Taiwanese shares .TWII 1.1 percent and mainland shares .CSI300 0.4 percent.
Japan's Nikkei .N225 gained 0.4 percent.
Mnuchin and U.S. President Donald Trump’s top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future.
“The weekend talk appears to have made progress. While they still need to work out details of a wider trade deal, it is positive for markets that they struck a truce,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
More
With China resolved
for now, the Great Global Trump Trade War is likely to intensify on NATO and
NAFTA. Essentially, Germany, Canada and
Mexico take top place in Trump’s firing line.
Germany and the US disagree over Russia's new Nordstream 2 pipeline
18/05/2018
Sparks fly and machines whirr as workers in Mukran near Berlin prepare thousands of steel pipes that will become part of a vast undersea pipeline bringing gas from Russia to Germany's northeastern Baltic coast.The Nord Stream 2 project will double the amount of natural gas Russia can funnel directly to the heart of Europe from newly tapped reserves in Siberia, intentionally skirting eastern European nations like Poland and Ukraine.
It also promises much-needed jobs in this poor German backwater, some three hours' drive north of Berlin.
The United States and some other German allies have bristled at the project, warning that it could give Moscow greater leverage over Western Europe.
Energy-poor Germany already relies heavily on Russian gas and so far Chancellor Angela Merkel has deftly kept the new 11 billion US dollar pipeline off the table while imposing sanctions against Russia for its aggression against Ukraine.
But as plans become closer to reality, the pressure has increased on her.
Last month after meetings with Ukrainian President Petro Poroshenko she acknowledged that Nord Stream 2 was more than just a business project, saying that "political factors have to be taken into account."
With Merkel heading to Sochi on Friday for talks with Russian President Vladimir Putin, a senior US diplomat warned that proceeding with the project could result in sanctions for those involved.
Jens Mueller, a spokesman for Nord Stream 2, dismissed concerns from the US and several European countries, saying the new pipeline would merely be one of many sources of natural gas for Europe.
"The competition within the domestic market is working and therefore this pipeline cannot be used to blackmail or negatively affect any country," he said.
More
Finally, with China
allegedly “sorted” is Japan next up in Trump’s Asian firing line?
May 21, 2018 / 2:34 AM
Japan's exports accelerate in April as volumes rise, outlook positive
TOKYO (Reuters) - Japan’s exports accelerated in April on
increased shipments of cars and machines used to make semiconductors, with
rising volumes suggesting healthy overseas demand could help the economy
recover quickly from a dip in the first quarter.
Exports grew 7.8 percent in April from the same period a year ago, below
the median estimate for an 8.1 percent annual increase expected by economists
in a Reuters poll. In March, exports grew an annual 2.1 percent.
In terms of volume, which strips away the impact of exchange rates,
Japan’s exports rose an annual 4.6 percent in April, faster than the 1.8
percent annual increase seen in March.
Exports are likely to continue to grow thanks to increased demand for
manufacturing equipment, cars and car parts, but Japan’s trade surplus with the
United States makes it a potential target for U.S. President Donald Trump’s
protectionist policies.
“Overseas economies are in a growth phase, so Japan’s exports will continue
to do well,” said Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan
Stanley Securities.
“The U.S. government may turn its attention to Japan’s trade surplus,
but there are steps Japan can take, especially given the close defense relationship
between the two countries.”
The rise in the volume of exports was another reason to be optimistic,
Miyazaki noted.
Exports of cars rose 15.3 percent in April from the same period a year
ago, while exports of semiconductor manufacturing equipment rose 18.2 percent
year-on-year, finance ministry data showed on Monday.
Japan’s economy contracted more than expected at the start of this year,
ending the best run of expansion in decades.
More
“The
Great Depression, like most other periods of severe unemployment, was produced
by government mismanagement rather than by any inherent instability of the
private economy.”
Milton
Friedman
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
With the USA cut off from Europe over the Iran nuke deal, is a new
informal alignment starting to get underway? With GB Brexiting by 2021, America’s
proxy can’t act as spoiler for much longer. Is an EU- SCO trade deal about to
emerge for the next decade?
May 20, 2018 / 2:05 AM
Europe, China, Russia discussing new deal for Iran - newspaper
BERLIN
(Reuters) - Diplomats from Europe, China and Russia are discussing a new accord
to offer Iran financial aid to curb its ballistic missile development and
meddling in the region, in the hope of salvaging its 2015 nuclear deal, a
German newspaper reported on Sunday.
The officials will meet in Vienna in the coming week under the
leadership of senior European Union diplomat Helga Schmid to discuss next steps
after the May 8 decision by U.S. President Donald Trump to pull out of a 2015
nuclear accord with Iran, the Welt am Sonntag newspaper said, citing senior EU
sources.
Germany, France, Britain, Russia and China would participate in the
meeting, but the United States would not, it said. It was not immediately clear
if Iran - which has resisted calls to curb its ballistic missile programme in
the past - would take part.
Under the 2015 deal, Iran agreed to curb its nuclear programme in return
for the lifting of most Western sanctions. One of the main complaints of the
Trump administration was that the accord did not cover Iran’s missile programme
or its support for armed groups in the Middle East which the West considers
terrorists.
Concluding a new agreement that would maintain the nuclear provisions
and curb ballistic missile development efforts and Tehran’s activities in the
region could help convince Trump to lift sanctions against Iran, the paper
said.
“We have to get away from the name ‘Vienna nuclear agreement’ and add in
a few additional elements. Only that will convince President Trump to agree and
lift sanctions again,” the paper quoted a senior EU diplomat as saying.
No immediate comment was available from the German foreign ministry.
The EU’s energy chief sought to reassure Iran on Saturday that the
28-member bloc remained committed to salvaging the nuclear deal, and
strengthening trade with Tehran.
Officials from the EU, Germany and other countries that remain committed
to the deal have said it would disastrous if EU efforts fail to preserve it.
Iran has struggled to achieve financial benefits from the deal, partly
because remaining unilateral U.S. sanctions over its missile programme deterred
major Western investors from doing business with Tehran.
The officials are looking for a new approach given an understanding that
it would be difficult for European firms to work around new U.S. sanctions, the
newspaper reported.
It said the new deal could include billions of dollars of financial aid
for Iran, in line with an EU deal that provided billions in aid to Turkey for
taking in millions of migrants and closing its borders, which helped end a 2015
migrant crisis.
Iran and European powers have made a good start in talks over how to
salvage the 2015 deal but much depends on what happens in the next few weeks,
Foreign Minister Mohammed Javad Zarif said last week.
“Our minds tell us, and
history confirms, that the great threat to freedom is the concentration of
power. Government is necessary to preserve our freedom, it is an instrument
through which we can exercise our freedom; yet by concentrating power in
political hands, it is also a threat to freedom. Even though the men who wield
this power initially be of good will and even though they be not corrupted by
the power they exercise, the power will both attract and form men of a
different stamp.”
Milton Friedman
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?
EGEB: Perovskite cells may revolutionize solar power, India release a new energy draft policy, Solar Exchange to power Moldavia
May. 18th 2018 7:50 am ET
Electrek Green Energy Brief: A daily technical, financial, and
political review/analysis of important green energy news.Today on EGEB, the Fraunhofer Institute for Solar Energy Systems ISE made a breakthrough that may turn photovoltaic production upside-down. India bets on solar-wind farm hybrids in their new energy draft policy. Solar Exchange and the United Nations Development Programme team up to bring solar power to one of Europe’s most impoverished country.
Scientists pioneer on-site or “in-situ” solar installations deployment. Silicon-based photovoltaic technology dominates the market now, but an important competitor is on the way that may bring down costs. Perovskite cells skip several steps as they
“reverse the manufacturing process so that first the solar module is produced and subsequently filled with the photovoltaic material then directly activated on site, or “in-situ”? “With perovskite, a photovoltaic material that is currently being intensely investigated, and a photoactive salt, we have now succeeded, for the first time, in realizing a printed solar cell with an efficiency of 12.6 %”
This low success rate warrants more work, but this technology is very promising and eco-friendly as it requires nearly the same process as glass production. Wastes from this production could then be recycled, transportation and infrastructure costs slashed, making solar power even more competitive than it is now.
India releases its new energy draft policy, suggests superimposition of solar and wind farms. As the greatest weakness of both energy sources is the inconsistent energy production, Indian authorities want to hybridize both so production can go on while one part is unproductive, like solar during the night.
“It is a great combination because then you have steady power coming
from six in the morning to six in the evening from the solar, and then have
wind which starts around 12 and goes on till about two or three in the
morning,” said Ramesh Kymal, CEO of wind turbine maker Siemens Gamesa’s India business.
Savings are to be expected also in the electricity transmission
infrastructure.
More
“For
example, the supporters of tariffs treat it as self-evident that the creation
of jobs is a desirable end, in and of itself, regardless of what the persons
employed do. That is clearly wrong. If all we want are jobs, we can create any
number--for example, have people dig holes and then fill them up again, or
perform other useless tasks. Work is sometimes its own reward. Mostly, however,
it is the price we pay to get the things we want. Our real objective is not
just jobs but productive jobs--jobs that will mean more goods and services to
consume.”
Milton
Friedman
The monthly Coppock Indicators finished April.
DJIA: 24,163 +255 Down. NASDAQ:
7,066 +282 Down. SP500: 2,648 +188 Down.
All
three slow indicators moved down in March and continued down in April. For some
a new bear signal, for others a take profits and get back to cash signal.
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