Baltic Dry Index. 1346 +19 Brent Crude 73.14
Be
wiser than other people if you can, but do not tell them so.
Lord
Chesterfield, statesman.
Tag Team Trump is in
China to fight round two of the Great Global Trump Trade War against China. The
GGTTW against NATO and NAFTA is back on hold for another month. In Beijing, Tag
Team Trump is already back pedalling fast, and talking about picking up their
ball and heading home early, if they’re not allowed to win. As negotiating strategies
go it’s different, though unlikely to be very helpful or successful in Beijing.
The markets, at least, are underwhelmed.
Below, how the world
turns this iffy Thursday morning.
Stocks in Asia Retreat After Fed; Dollar Declines: Markets Wrap
By Adam Haigh and Andreea Papuc
Updated on 3 May 2018, 06:00 GMT+1
Asian stocks tracked U.S. shares lower after the Federal Reserve said
inflation is close to its target, without indicating any need to waver from its
path of gradually tightening monetary policy. The dollar declined.
Hong Kong stocks underperformed just as Chinese smartphone maker Xiaomi
Corp. filed for what’s expected to be the world’s biggest IPO since 2014.
Equities rose in Sydney, with recently battered Australian banks extending a
recovery. Japan is closed for a holiday. The dollar retreated after hitting its
highest since January. The Australian dollar climbed after a widening in the
nation’s trade surplus and better-than-expected building approvals.
Fed officials may have signaled their willingness to allow inflation to
exceed their 2 percent goal somewhat by adding a reference to the “symmetric”
nature of their target. The Federal Open Markets Committee also noted a soft
patch in growth in the first quarter, removing a reference in the March
statement that the economic outlook had “strengthened in recent months.”
They balanced that out by noting strong growth in business investment.
The U.S. begins trade talks in China on Thursday, with both sides
dialing back expectations. Beijing won’t agree to preconditions that include
abandoning its advanced manufacturing program and agreeing to cut the trade gap
by a fixed amount, a Chinese official said. American delegates said earlier
that a breakthrough is unlikely, and they might leave early if unsatisfied.
More
Why the stock market is unimpressed by the best first-quarter results in 24 years
Published: May 2, 2018 10:22 p.m. ET
By at least one measure, corporate earnings are the best in nearly a
quarter-century. However, the stock market is not enthused!
Rather than rally on the back of upbeat results, the main equity
benchmarks have sulked lower.
According to Thomson Reuters I/B/E/S, of the 343 companies, or about
70%, of S&P 500 members that have reported earnings to date, 79.9% have
reported earnings per share that were above analysts’ expectations, putting the
season on track for the highest earnings beat rate on record, going back to
1994.
----So why has the stock market not snapped out of its doldrums? The Dow Jones Industrial DJIA, -0.72% has shed about 1.8% since April 12, just as first-quarter earnings season was about to get under way. The S&P 500 index SPX, -0.72% has lost 0.8%, while the technology-centric Nasdaq Composite Index COMP, -0.42% has fallen by 0.3%, through midday Wednesday.
Although it is isn’t easy to pinpoint exactly what’s troubling investors, here are a few theories as to why this dynamic may be playing out:
----Frederick believes the new regime of volatility, which resulted in the first correction for the Dow and S&P 500 in about two years, has pushed investors to the sidelines, which has resulted in prices hovering lower due to a lack of buyers.
Indeed, the number of 1% moves for the S&P 500 has already tripled that of 2017.
Although the VIX is currently trading below its historical average of around 19, Frederick believes that the mode—a statistical average representing the most frequently occurring levels over time—is a better gauge of the normal level for so-called fear index. Based on the mode, the VIX should be around 12.5, compared with its current level around 15.
“That kind of shows you that we are in the period of short -term exhaustion and I think people are just tired of being whipsawed,” he said.
More
Should markets expect a recession? Every Republican since Teddy Roosevelt has had one in their first term
Published: May 2, 2018 4:16 p.m. ET
The bull cycle is already much longer than is typical, historically
U.S. stock-market investors should know better than to base their
investments on superstitions or trivia, but there’s a curious trend that has
persisted for decades that could serve as yet another reason to be cautious
about markets.
Since the presidency of Theodore Roosevelt, who left office in 1909,
every single Republican president has seen a recession take hold in their first
term.
While analysts consider this a fluke of timing more than an explicit
economic reaction to Republican policies, the odds of this streak continuing
during the presidency of Donald Trump are seen as plausible, particularly as he
presides over what is already the second-longest bull market in history.
“Republican presidents seeing recessions has more to do with cycles —
both political and economic — than policy,” said Sam Stovall, chief investment
strategist of U.S. equity strategy at CFRA. “Most economic cycles last five to
six years, presidential terms are four years, and you usually don’t see more
than two straight terms of the same party. Right now we’re already late in an
economic cycle that’s already much longer than average ones.”
In an April interview with MarketWatch, Stovall noted that bull markets
don’t die of old age, but because of worsening economic conditions. However, he
sees signs the economy may have already peaked, prompting him to forecast a
recession at some point in Trump’s term. He added, “By the way, that’s not a
brave forecast.”
More
In China news, it’s eyeball
to eyeball in Beijing, but Trump’s Trade War Team is in China but already down
playing expectations. China ups the ante. What a mess! As Trump dithers over
Iran, China joins Russia and the Europeans issuing a warning.
May 3, 2018 / 3:21 AM
U.S. trade team arrives in Beijing for talks, China media cautious
BEIJING
(Reuters) - A U.S. trade delegation arrived in Beijing on Thursday for key
talks over tariffs, with Chinese state media saying China will stand up to U.S.
bullying if needed but that it was still better to hash things out around the
negotiating table.
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
around $50 billion worth of Chinese exports.
The discussions, led by U.S. Treasury Secretary Steven Mnuchin and
Chinese Vice Premier Liu He, are expected to cover a wide range of U.S. complaints
about China’s trade practices, from allegations of forced technology transfers
to state subsidies for technology development.
“Thrilled to be here. Thank you,” Mnuchin told Reuters upon arriving at
his hotel, when asked if he expected progress. He made no other comments.
As Mnuchin arrived, U.S. President Donald Trump tweeted: “Our great
financial team is in China trying to negotiate a level playing field on trade!
I look forward to being with President Xi in the not too distant future. We
will always have a good (great) relationship!”
Throughout his 2016 election campaign, Trump routinely threatened to
impose a 45 percent across-the-board tariff on Chinese goods as a way to level
the playing field for American workers. At the time, he was also accusing China
of manipulating its currency to gain an export advantage, a claim that his
administration has since dropped.
The U.S. Embassy in Beijing said the delegation planned meet Chinese
officials on both days, in addition to U.S. Ambassador Terry Branstad, before
departing on Friday evening.
In an editorial, the official China Daily said Beijing wanted the talks
to produce “feasible solutions to put an end to the ongoing feud” and that they
could go well if the U.S. delegation genuinely wants to listen as well as talk.
China “will stand up to the U.S.’ bullying as necessary. And as a
champion of globalisation, free trade and multilateralism, it will have strong
support from the international community”, the English-language paper added.
May 2, 2018 / 10:03 AM
China reiterates call to continue upholding Iran nuclear deal
BEIJING
(Reuters) - China’s foreign ministry on Wednesday reiterated that all sides
should continue to uphold the Iran nuclear agreement, and that the
International Atomic Energy Agency (IAEA) has said many times Iran is in
compliance with the deal.
Speaking
at a daily news briefing, ministry spokeswoman Hua Chunying said China had
noted reports about Israeli Prime Minister Benjamin Netanyahu unveiling what he
called evidence of a secret Iranian nuclear weapons programme as well as the
reaction sparked by the disclosure.
The IAEA is the only international body with the right to supervise the
agreement and make judgements about it, and China has noted that the agency has
said several times Iran is in compliance, Hua said.
All sides need to continue upholding the pact, she added.
Israel said on Tuesday it does not seek war with Iran and suggested U.S.
President Donald Trump backed Israel’s latest attempt to kill the 2015 Iran
nuclear deal by disclosing the purported evidence of past Iranian nuclear arms
work.
China, a permanent member of the U.N. Security Council, was one of the
architects of the agreement, and has said many times it should continue to be
upheld by all the signatories.
May 2, 2018 / 11:01 PM
Trump has all but decided to withdraw from Iran nuclear deal - sources
WASHINGTON (Reuters) - U.S. President Donald Trump has all
but decided to withdraw from the 2015 Iran nuclear accord by May 12 but exactly
how he will do so remains unclear, two White House officials and a source
familiar with the administration’s internal debate said on Wednesday.
There is a chance Trump might choose to keep the United States in the
international pact under which Iran agreed to curb its nuclear programme in
return for sanctions relief, in part because of “alliance maintenance” with
France and to save face for French President Emmanuel Macron, who met Trump
last week and urged him to stay in, the source said.
A decision by Trump to end U.S. sanctions relief would all but sink the
agreement and could trigger a backlash by Iran, which could resume its nuclear
arms program or “punish” U.S. allies in Syria, Iraq, Yemen and Lebanon,
diplomats said.
Technically, Trump must decide by May 12 whether to renew “waivers”
suspending some of the U.S. sanctions on Iran. One of the White House officials
who spoke on condition of anonymity said it was possible Trump will end up with
a decision that “is not a full pullout” but was unable to describe what that
might look like.
More
Finally, is BYD heading
Tesla’s way? Is the global rout in stocks just getting underway in 2018?
Warren Buffett’s Chinese Car Bet Has Plunged $9 Billion
By Sofia Horta E Costa
2 May 2018, 04:52 GMT+1 Updated on 2 May 2018, 09:34 GMT+1
The rout in BYD Co. shares is nearing $9 billion as investors desert what
was the world’s top stock
only months ago.The Chinese maker of electric vehicles, which counts Warren Buffett’s Berkshire Hathaway Inc. as its biggest investor in Hong Kong, lost another 2.1 percent on Wednesday after two brokerages that had been bullish on BYD cut their rating to the equivalent of neutral. That followed at least another downgrade last week, according to data compiled by Bloomberg. Its recommendation consensus -- a gauge of analyst confidence in a stock on a scale of 1 to 5 -- stands at 3.7, the lowest in almost three years.
Investors
and analysts alike are losing faith in BYD’s ability to thrive with fewer
government subsidies and growing competition, with the company last week
predicting first-half profit may tumble as much as 83 percent. It’s among the
year’s worst performing Chinese companies in Hong Kong, and has given back
almost all of the gains triggered by last year’s euphoria over
China’s plan to get rid of fossil-fueled cars.
Buffett’s investment in BYD has been quite profitable since a unit of Berkshire Hathaway first bought 225 million shares in September 2008, paying a discounted HK$8 apiece. The billionaire, known for his long-term investing style, held on to the stake even as prices soared to HK$80.45 last October. He once told a Chinese state broadcaster that he “loved” the shares.
BYD has a habit of whipsawing investors. The Hong Kong shares have been either oversold or overbought -- and often both -- every year since its 2002 initial public offering in the city. The company’s mainland-listed shares tumbled 7 percent on Wednesday, the steepest loss among China’s 50 largest firms, as onshore equity traders caught up following a two-day holiday.
In the factory we make cosmetics; in the store
we sell hope.
Charles Revson.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, does history repeat? If it does, my initial downside targets are
18,500 to 16,500 for the Dow, and 2100 to 1900 for the S&P500.
When making market predictions, give them a target
or a time frame, never both.
Wall Street Adage.
At the Fed, the Scene Is Being Set for Financial Disaster
A crash could prove to be Donald Trump’s worst legacy.
By Nomi
Prins April 26, 2018
---- While we’ve been bombarded with a litany of scandals from the Oval Office and the Trump family, there’s a crucial institution in Washington that few in the media seem to be paying attention to, even as President Trump quietly makes it his own. More obscure than the chambers of the Supreme Court, it’s a place where he has already made substantial changes. I’m talking about the Federal Reserve.
As the central bank of the United States, the “Fed” sets the financial tone for the global economy by manipulating interest-rate levels. This impacts everyone, yet very few grasp the scope of its influence.
During times of relative economic calm, the Fed is regularly forgotten. But what history shows us is that having leaders who are primed to neglect Wall Street’s misdoings often sets the scene for economic dangers to come. That’s why nominees to the Fed are so crucial.
We have entered a landmark moment: no president since Woodrow Wilson (during whose administration the Federal Reserve was established) will have appointed as many board members to the Fed as Donald Trump. His fingerprints will, in other words, not just be on Supreme Court decisions, but, no less significantly, on Fed policy-making for years to come—even though, like that court, it occupies a mandated position of political independence.
---- Not surprisingly, Wall Street has embraced Trump’s new Fed lineup because its members are so favorably disposed to loosening restrictions on financial institutions of every sort. Initially, the financial markets reflected concern that Chairman Powell might turn out to be a hawk on interest rates, meaning he’d raise them too quickly, but he’s proved to be anything but.
As Trump stacks the deck in his favor, count on an economic impact that
will be felt for years to come and could leave the world devastated. Rest
assured, if the Fed can help Trump keep the stock market buoyant for a while by
letting money stay cheap for Wall Street speculation and the dollar competitive
for a trade war, it will.
---- Although during the election campaign of 2016 Trump chastised the Fed for its cheap-money policies, he’s since evidently changed his mind (which is, of course, very Trumpian of him). That’s because he knows that the lower the cost of money is, the easier it is for major companies to borrow it. Easy money means easy speculation for Wall Street and its main corporate clients, which sooner or later will be a threat to the rest of us.
The era of trade wars, soaring stock markets, and Trump gaffes may feel like it’s gone on forever. Don’t forget, though, that there was a moment not so long ago when the same banking policies still reigning caused turmoil, ripping through the country and devouring the finances of so many. It’s worth recalling for a moment what happened during the Great Meltdown of 2008, when unrestrained mega-banks ravaged the economy before being bailed out. In the midst of the current market ecstasy, it’s an easy past to ignore. That’s why Trump’s takeover of the Fed and its impact on the financial system matters so much.
---- After nearly tripling since the post-financial crisis spring of 2009, last year the Dow Jones Industrial Average rose again magically by nearly 24 percent. Why? Because, despite all of his swamp-draining campaign talk, Trump embraced the exact same bank-coddling behavior as President Obama. He advocated the Fed’s cheap-money policy and hired Steve Mnuchin, an ex–Goldman Sachs partner and Wall Street’s special friend, as his Treasury secretary. He doubled down on rewarding ongoing malfeasance and fraud by promoting the deregulation of the banks, as if Wall Street’s greed and high appetite for risk had vanished.
Impending Signs of Crisis
A quarter of the way into 2018, shadows of 2008 are already emerging. Only two months ago, the Dow logged its worst single-day point decline in history before bouncing back with vigor. In the meantime, the country whose banks caused the last crisis faces record consumer- and corporate-debt levels and a vulnerable geopolitical global landscape.---- The zero-interest-rate and bond-buying central-bank policies prevailing in the US, Europe, and Japan have been part of a coordinated effort that has plastered over potential financial instability in the largest countries and in private banks. It has, in turn, created asset bubbles that could explode into an even greater crisis the next time around.
So, today, we stand near—how near we don’t yet know—the edge of a
dangerous financial precipice. The risks posed by the largest of the private
banks still exist, only now they’re even bigger than they were in 2007–08 and
operating in an arena of even more debt. In Donald Trump’s America, what this
means is that the same dangerous policies are still being promoted today. The
difference now is that the president is appointing members to the Fed who will
only increase the danger of those risks for years to come.
More
The enemy of the conventional wisdom is not ideas
but the march of events.
John Kenneth Galbraith.
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?
One-dimensional material packs a powerful punch for next generation electronics
The new technology has applications in nanometer-scale transistors and circuits
Date:
May 1, 2018
Source:
University of California - Riverside
Summary:
Engineers have demonstrated prototype devices made of an exotic material that
can conduct a current density 50 times greater than conventional copper
interconnect technology.
Engineers at the University of California, Riverside, have demonstrated
prototype devices made of an exotic material that can conduct a current density
50 times greater than conventional copper interconnect technology.
Current density is the amount of electrical current per cross-sectional
area at a given point. As transistors in integrated circuits become smaller and
smaller, they need higher and higher current densities to perform at the
desired level. Most conventional electrical conductors, such as copper, tend to
break due to overheating or other factors at high current densities, presenting
a barrier to creating increasingly small components.
The electronics industry needs alternatives to silicon and copper that
can sustain extremely high current densities at sizes of just a few nanometers.
The advent of graphene resulted in a massive, worldwide effort directed
at investigation of other two-dimensional, or 2D, layered materials that would
meet the need for nanoscale electronic components that can sustain a high
current density. While 2D materials consist of a single layer of atoms, 1D
materials consist of individual chains of atoms weakly bound to one another,
but their potential for electronics has not been as widely studied.
One can think of 2D materials as thin slices of bread while 1D materials
are like spaghetti. Compared to 1D materials, 2D materials seem huge.
A group of researchers led by Alexander A. Balandin, a distinguished
professor of electrical and computer engineering in the Marlan and Rosemary
Bourns College of Engineering at UC Riverside, discovered that zirconium
tritelluride, or ZrTe3, nanoribbons have an exceptionally high
current density that far exceeds that of any conventional metals like copper.
The new strategy undertaken by the UC Riverside team pushes research
from two-dimensional to one-dimensional materials -- an important advance for
the future generation of electronics.
"Conventional metals are polycrystalline. They have grain
boundaries and surface roughness, which scatter electrons," Balandin said.
"Quasi-one-dimensional materials such as ZrTe3 consist of
single-crystal atomic chains in one direction. They do not have grain
boundaries and often have atomically smooth surfaces after exfoliation. We
attributed the exceptionally high current density in ZrTe3 to the
single-crystal nature of quasi-1D materials."
In principle, such quasi-1D materials could be grown directly into
nanowires with a cross-section that corresponds to an individual atomic thread,
or chain. In the present study the level of the current sustained by the ZrTe3
quantum wires was higher than reported for any metals or other 1D materials. It
almost reaches the current density in carbon nanotubes and graphene.
More
The man
with a new idea is a crank until the idea succeeds.
Mark
Twain.
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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