Baltic Dry Index. 1376 +30 Brent Crude 73.58
There
is no art which one government sooner learns of another than that of draining
money from the pockets of the people.
Adam
Smith. The Wealth of Nations, 1776.
It is day two of the
Great Beijing Trade Pow Wow to save planet Earth from the Great Global Trump Trade
War, and the best that can be said so far is that the American delegation haven’t
picked up their ball and gone home. Possibly because they’re all to jet lagged
after such a long Pacific flight, since there’s no indication from the Chinese
side that much of anything is being achieved.
Oh well, on to today’s
other event of real interest, the US employment figures. Does wage inflation
lie ahead this summer? Probably not.
Below, yet more reasons
to think we are at a global inflection point.
Asia Stocks Drop as Trade Talks Held; Dollar Slips: Markets Wrap
By Adam Haigh
Updated on 4 May 2018, 04:29 GMT+1
Asian stocks declined as investors assessed the implications of ongoing
trade talks between the U.S. and China. The dollar extended a drop ahead of the
monthly U.S. jobs report, while the Aussie advanced.
Stocks in from Sydney to Hong Kong retreated. The Aussie rose as traders
assessed the Reserve Bank of Australia’s decision to edge up core inflation and
unemployment forecasts. The 10-year Treasury yield dipped overnight. With Japan
closed for a public holiday, Treasuries will remain shut until the London session.
Attention
now turns to the health of the U.S. economy, with wages growth and jobs data
due Friday. The Federal Reserve kept rates on hold as expected earlier this
week, admitting inflation is near target without suggesting any need to
accelerate its gradual hiking path. U.S. earnings season rolls on with HSBC
Holdings Plc and Alibaba reporting on Friday.
Elsewhere,
the trade talks continue between the U.S. and China after both sides dialed
back expectations. Argentina’s peso tumbled to a fresh record of 23 per dollar,
defying efforts by the central bank which raised interest rates for the second
time in a week in an attempt to shore up its currency. West Texas oil held on
to gains as traders weighed an increase in stockpiles against concern about
U.S. sanctions on Iran.
More
May 3, 2018 / 3:18 AM
U.S. Treasury Secretary says having good trade talks in China
BEIJING
(Reuters) - A U.S. trade delegation in China has been having very good
conversations, U.S. Treasury Secretary Steven Mnuchin said on Friday, as he
heads into the second and likely last day of talks in Beijing.
A breakthrough deal to fundamentally change China’s economic policies is
viewed as highly unlikely during the two-day visit, though a package of
short-term Chinese measures could delay a U.S. decision to impose tariffs on
about $50 billion worth of Chinese exports.
The discussions, led by Mnuchin and Chinese Vice Premier Liu He, are
expected to cover a wide range of U.S. complaints about China’s trade
practices, from accusations of forced technology transfers to state subsidies
for technology development.
“We are having very good conversations,” Mnuchin told reporters as he
left his hotel. He made no other remarks.
China, which has threatened retaliation in equal measure, including
tariffs on U.S. soybeans and aircraft, has so far given no comment on how the
talks are going.
The official China Daily newspaper said in a Friday editorial that the
brewing tensions between the two countries underscored how “niggly” differences
had become and “how difficult it will be for the two sides to walk away happy”.
It added “fingers would be crossed” around the world that a deal could
be stuck because “failure would herald a slug fest of tariffs that would leave
global trade reeling”.
More
May 4, 2018 / 3:18 AM
China vows to open up more futures markets as iron ore goes international
DALIAN/MANILA (Reuters) - China plans to open more of its futures contracts
to foreign investors, its securities regulator said on Friday, as Beijing
launched its “internationalised” iron ore contract in a bid to boost its sway
over pricing for one of its top imports.
Iron ore is the second commodity China has opened to outside investors
after launching crude oil futures in March. The move is expected to increase
trading in the contract, which was launched in 2013 and is already among
China’s most liquid derivatives.
Major Western traders previously had access to the iron ore contract
through local Chinese entities, but Dalian’s decision to internationalise means
foreign companies no longer need to set up local Chinese units, opening the
door to more market participants.
The most actively traded September iron ore on the Dalian Commodity
Exchange DCIOcv1 fell 1.2 percent to 471.50 yuan ($74) a tonne by 0153 GMT,
retreating from a two-day spike that pushed the contract to a more than
one-week high on Thursday.
Volume on the most-traded contract reached 1.74 million lots, over
two-thirds of the total volume in the prior session.
“We will accelerate the process to attract more foreign investors,” Fang
Xinghai, vice president of the China Security Regulatory Commission, told a
packed crowd at the trading floor of the Dalian exchange.
“We will internationalise all the mature futures contracts and expand
Chinese influence,” he said.
Unlike oil, gold and copper, for which prices are set in London and New
York, iron ore is one of the few commodities whose global pricing takes its cue
from China.
With massive volumes of iron ore futures traded on the Dalian exchange,
prices there virtually dictate the path for the physical market. In 2017,
Dalian iron ore volumes reached nearly 33 billion tonnes versus global annual
iron ore trade of about 1.5 billion tonnes.
May 3, 2018 / 6:12 PM
China customs expands checks on U.S. fruit imports - sources
BEIJING/CHICAGO (Reuters) - China’s major ports of entry
have ramped up checks on fresh fruit imports from the United States, five
Chinese industry sources said, which could delay shipments from U.S. growers
already dealing with higher tariffs as Sino-U.S. trade ties worsen.
Fruits were among 128 U.S. goods that China slapped with more expensive
import tariffs in retaliation for U.S. levies on Chinese steel and aluminium as
trade tensions between the world’s two biggest economies flared this year.
A U.S. trade delegation led by Treasury Secretary Steven Mnuchin is in
Beijing for talks with Chinese officials. The two sides are expected to discuss
an array of U.S. complaints about China’s trade practices, from accusations of
forced technology transfers to state subsidies for technology development.
Since last week, Beijing has dispatched quarantine experts to major
ports including Shanghai and Shenzhen to make more thorough on-site checks for
disease and rot, a source based in Shanghai with direct knowledge of the matter
told Reuters, declining to be named due to the sensitivity of the matter.
“China has resumed the practise of inspecting every batch of U.S. fresh
fruit,” the source said, adding that inspectors had previously checked only
around 30 percent of shipments. China had dialled back the checks in November
2017.
Since Monday, all U.S.-originated fruit shipments have been subject to
up to seven days of quarantine check on arrival in Shenzhen, said an industry
source based at the port in China’s south.
Previously, customs officers in China had let shipments through while
they conducted sample checks.
More
May 4, 2018 / 3:44 AM
Japan, China, South Korea finance leaders warn of rising trade protectionism
MANILA (Reuters) - Finance leaders of Japan, China and South Korea on
Friday warned of the risks of protectionism and agreed to ensure open and
rule-based multilateral trade.
The three countries said geopolitical uncertainty is a source of risk to
the global economy, according to a statement issued after their meeting.
The three countries welcomed a declaration between the leaders of North
Korea and South Korea to denuclearize the Korean peninsula in a statement after
their meeting.
The trilateral meeting was held on the sidelines of the Asian
Development Bank’s annual meeting in Manila.
It is
the maxim of every prudent master of a family, never to attempt to make at home
what it will cost him more to make than to buy...What is prudence in the
conduct of every private family, can scarce be folly in that of a great
kingdom.
Adam
Smith. The Wealth of Nations, 1776.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, an inside look at the swamp. But is there such a thing as a
benevolent holder of an ISDA master agreement?
It is
not from the benevolence of the butcher, the brewer, or the baker, that we expect
our dinner, but from their regard to their own interest. We address ourselves,
not to their humanity but to their self-love, and never talk to them of our
necessities but of their advantages.
Adam
Smith. The Wealth of Nations, 1776.
Inside the World’s Most Elite (and Secret) Traders’ Club
The nameless group confers “a hunting license” that lets an
investor sit at the “big boy table and make high-level trades not available to
stupid amateurs.”
By Alastair Marsh 3 May 2018, 05:01 GMT+1
In an industry where power and influence are measured in dollars and
cents, this may be the most exclusive club in finance: The price of admission
is at least $25 million.
It has no name and no board of directors but has a roster drawn
from the world’s wealthiest and most successful traders. Members essentially
become their own one-person firms, even firms within firms, by gaining a seal
of approval to deal in the complex products typically reserved for institutions
that manage hundreds of billions of dollars. And all without drawing the
attention of Wall Street’s everyday millionaires.
Their ranks are getting more selective. While no one keeps count, people
in the industry guesstimate that the total peaked at no more than 3,000 a
decade ago and has shrunk considerably since the financial crisis. Months of
interviews have yielded the identities of just 12 individuals who held the
prize: an ISDA master agreement.
They have included hedge fund titans Chris Rokos and Michael Platt, as well as whales at Deutsche Bank AG and Goldman Sachs Group Inc., which became clients of their own employers.
In the $542-trillion market for over-the-counter derivatives, ISDA agreements set out the trading terms between two parties. In the vernacular of Adam McKay’s adaptation of Michael Lewis’s The Big Short, they represent “a hunting license” that lets an investor sit at the “big boy table and make high-level trades not available to stupid amateurs.” The firms that hand them out gain access to the most desirable customers possible.
“Banks do this business because they can charge two or three times more than they would a company,” said Manuel de Souza-Girao, a former senior wealth manager at Deutsche Bank and Credit Suisse Group AG. “And it’s a good way of attracting valuable clients.”
People such as Rokos, 47, who has a net worth of $1.2 billion, according to the Bloomberg Billionaires Index. The British co-founder of Brevan Howard Asset Management, who now runs his own hedge fund, was personally the counterparty on ISDA agreements in 2013 when he set up a family office. That meant Rokos himself was on the hook if the trades went against him.
Platt, 49, who runs BlueCrest Capital Management, also previously had a
personal ISDA agreement, said people familiar with the matter. Platt’s net
worth is estimated at $2.9 billion by the Bloomberg Billionaires Index.
“This is not a product rolled out to your average trader earning $2 to
$5 million a year,” said Nelson Rangel, a former credit trader who is now the
chief investment officer of Raven Capital BV, an investment-management firm for
wealthy individuals. “It would be something for famous traders or investors
with significant personal wealth who would have no trouble posting large
amounts of collateral.”
Rokos declined to comment for this article, while Platt did not respond
to multiple emails seeking comment.
More
People of the same trade
seldom meet together, even for merriment and diversion, but the conversation
ends in a conspiracy against the public, or in some contrivance to raise
prices…. But though the law cannot hinder people of the same trade from
sometimes assembling together, it ought to do nothing to facilitate such
assemblies, much less to render them necessary.
Adam Smith. The Wealth of Nations, 1776.
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?
Anheuser-Busch Will Buy Nikola’s Hydrogen-Powered Trucks
An order for up to 800 vehicles for beverage distribution adds energy to a competition with Tesla and others to bring alternative-fuel big rigs to trucking
Jennifer
SmithMay 3, 2018 9:00 a.m. ET
Anheuser-Busch is reserving up to 800 of Nikola Motor Co.’s hydrogen-electric trucks, one of the largest orders so far for alternative-fuel vehicles as the company races with Tesla Inc. TSLA -6.88% and other manufacturers to move trucking away from diesel-guzzling big rigs.
The U.S. subsidiary of Anheuser-Busch InBev
SA BUD 1.93% plans to use the vehicles for long-haul
deliveries from breweries to its distributors starting in 2020. Nikola says it
will build 28 hydrogen stations along the routes of the beer maker’s so-called
dedicated fleet, between 750 and 900 trucks that bear its branding but are
generally owned and managed by outside carriers.
Truck operators are increasingly looking at
alternative-fuel vehicles as the technology in the field improves and pressures
grow to cut operating costs and reduce emissions. Companies have been testing
trucks that run on electricity or fuels
such as compressed natural gas, but commercial operations generally
have been limited to short distances and smaller vehicles such as parcel
delivery vans.
Heavy-duty trucks that can haul tens of thousands of
pounds along long distances consume about 39 billion gallons of diesel fuel
annually, according to the American Trucking Associations, offering potentially
bigger savings, as well as a market that buys between 200,000 and 300,000 big
rigs annually.
Nikola’s hyrdrogen-electric semi can travel between
500 to 1,200 miles before needing to be refueled, the company says. The system
provides power through hydrogen that passes through a fuel cell to produce
electricity, which then goes to a battery that sends energy to the vehicle’s
wheels.
More
Another weekend and soon
we will find out more about those “very good conversations” in Beijing. Generally in diplomacy, “Very good” conversations,
are far from good, with the conversation often taking place between the deaf.
More over the weekend, possibly. Have a great weekend everyone.
Meetings are indispensable
when you don't want to do anything.
John Kenneth Galbraith
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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