Monday 7 May 2018

Iran Week. Oil, How High?


Baltic Dry Index. 1384 +08     Brent Crude 75.68

In BBC False Newspeak: Despite Brexit most of Great Britain is about to experience its hottest early May bank holiday, today, ever.

With President Trump’s decision on whether to reneg on the Iran nuclear deal struck by President Obama just 5 days away, the week will likely be dominated by Iran v USA news, and what it might mean for oil prices, and with oil prices the wider global economy. It is hard to see President Trump backing down his Iran position now, and retaining any future credibility in his statements.

For this week, Trump’s trade war against China and NATO, will likely take a back seat, but with Trump’s protectionist tariffs set to kick in on June 1, and retaliation kick in on June 1 too, the coming trade war won’t be on a back seat for very long. In fact reports out of  “the grain mafia” already suggest that China has stopped buying US soybeans and sorghum, with US fruit shipments now subject to intense extra customs scrutiny and delay,  and US pork cargoes getting switched from China to South Korea.

Below, why it might be a good time to sell in May, taking profits, and go away, with the cash. 

May 7, 2018 / 1:34 AM

Asia shares edge ahead, U.S. crude tops $70

SYDNEY (Reuters) - Asian shares crept higher on Monday after a tame reading on U.S. wages lowered the risk of faster rate hikes by the Federal Reserve, although Sino-U.S. trade tensions and a looming deadline for the Iranian nuclear deal argued for caution.

Oil prices hit their highest in more than three years as global supplies remained tight and the market awaited news from Washington on possible new U.S. sanctions against Iran.

President Donald Trump has set a May 12 deadline for Europeans to “fix” the deal with Iran over its nuclear program or he would refuse to extend U.S. sanctions relief for the oil-producing Islamic Republic.

Brent crude futures LCOc1 added 31 cents to $75.18 a barrel, while U.S. crude CLc1 climbed 44 cents to $70.16 to finally crack the $70 barrier.

The week ahead also has important readings on the health of the Chinese economy, and hence global demand, as well as the latest data on U.S. consumer price inflation.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS put on 0.3 percent, while Chinese blue chips .CSI300 rose 0.7 percent.

----Friday’s U.S. jobs report showed unemployment dropping to a new cycle low of 3.9 percent yet wages remained benign, suggesting the Federal Reserve would keep raising rates but at a gradual pace.
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After earnings barrage and data, stock-market moves now hinge on global trade

Published: May 6, 2018 10:19 a.m. ET
With the Federal Reserve meeting, monthly jobs report and the bulk of the earnings season behind us, U.S. equity investors will have no choice but to turn their focus back to global trade headlines in coming weeks.

Much will depend on incremental news from various trade negotiations happening concomitantly as the Trump administration’s delegation arrived in Beijing last week to hammer out a deal with the world’s second-largest economy.

Concerns over global trade and potential trade wars may have been keeping investors on the sidelines despite solid earnings season and positive economic background, so far.

Read: Why the stock market is unimpressed by the best first-quarter results in 24 years

The S&P 500 index SPX, +1.28%  remains nearly flat since the start of the year, having traded in a wide range over the past two months. On Friday, the S&P 500 closed 1.2% higher at 2,663.42, about 7% below its January peak.

But even with the recent volatility, the market cannot accurately price in all the potential risks of trade wars, according to Kristina Hooper, chief global market strategist at Invesco.

Indeed, little progress was made in trade talks between Beijing and Washington officials so far, as neither side could find common ground on sweeping demands.

The U.S. asked China to cut its trade surplus by $200 billion while the Chinese officials sought to get Washington to ease national-security reviews of Chinese investments.

An inability to strike a deal could lead to retaliatory tariffs, the impact of which has been seen in some commodity prices already, such as steel and aluminum.
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https://www.marketwatch.com/story/after-earnings-barrage-and-data-stock-market-moves-now-hinge-on-global-trade-2018-05-05

 WTI Oil Rises Above $70 a Barrel on U.S.-Iran Sanctions

By Tsuyoshi Inajima
Crude futures in New York topped $70 a barrel for the first time since November 2014 as traders brace for a re-imposition of U.S. sanctions on Iran that risks disrupting exports from OPEC’s third-largest producer. Oil has rallied 16 percent so far this year as OPEC and allied producers crimp a global glut and geopolitical risks multiply in the Mideast region that’s home to almost half the world’s crude.
https://www.bloomberg.com/news/articles/2018-05-07/wti-oil-rises-above-70-a-barrel-on-u-s-iran-sanctions-chart

May 7, 2018 / 4:02 AM

China's trade imbalance with U.S. a long-term problem, says central bank governor - Caixin

BEIJING (Reuters) - China’s “huge” trade imbalance with the United States is a structural and long-term problem and should be viewed with rationality, the Chinese central bank governor was quoted as saying by financial magazine Caixin.

Yi Gang, appointed to head the People’s Bank of China (PBOC) in March, also called for concerted efforts from the United States and China to resolve the trade dispute, Caixin said in a report published late on Friday.

The comments came after an inconclusive two-day meeting between Chinese and U.S. top level officials in Beijing amid escalating tit-for-tat tariff threats between the world’s two biggest economies. Washington demanded that China reduce its trade surplus with the United States by at least $200 billion by the end of 2020, according to sources.

China had a record U.S. goods trade surplus of $375 billion in 2017.

China’s opening up will not be affected by the current trade frictions with the United States, Yi said.
Yi only weighed in briefly on the U.S.-China trade issue in an extensive interview with Caixin in Washington in late April. The PBOC governor reiterated China’s existing stance on a variety of matters including monetary policy, the opening up of its economy, the yuan and the country’s deleveraging efforts.

He reiterated China’s commitment to its prudent and neutral monetary policy and its focus on stabilising its macro leverage ratio and reducing financial risks. On the currency front, Yi said that the PBOC has not intervened in the foreign exchange market for almost a year now, and authorities are committed to market-based foreign exchange rate reform.
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https://uk.reuters.com/article/uk-usa-trade-china-cbank/chinas-trade-imbalance-with-u-s-a-long-term-problem-says-central-bank-governor-caixin-idUKKBN1I806L

May 6, 2018 / 2:13 PM / Updated 15 hours ago

ZTE says asked U.S. Commerce Department to suspend business ban

BEIJING (Reuters) - China’s ZTE Corp (0763.HK) (000063.SZ) has submitted an application to the U.S. Commerce Department’s Bureau of Industry and Security (BIS) for the suspension of a business ban, it said in a filing to the Shenzhen stock exchange on Sunday.

Washington imposed a seven-year ban on U.S. companies selling components and software to ZTE last month after finding the Chinese telecoms company breached U.S. sanctions on Iran.

ZTE’s exchange filing on Sunday did not give details of its request or say when it had been made, but it did say that the company had provided additional material at the BIS’s request.

Last week, Chinese negotiators holding trade talks with U.S. counterparts in Beijing asked the United States to hear ZTE’s appeal, take into account the company’s efforts to improve its compliance and amend the ban.

U.S. officials have said the action against ZTE was not related to trade policy, but the move has been seen by many in China as part of the broader trade spat playing out between the world’s two biggest economies.

The ban on sales to ZTE, which is heavily reliant on imports of U.S. chips, had threatened to scupper the Chinese firm’s smartphone business.

It has also underscored China’s heavy reliance on semiconductor imports amid growing trade tensions with the United States. ZTE has said the ban was unacceptable and threatened its survival.
https://uk.reuters.com/article/us-usa-china-zte/zte-says-asked-u-s-commerce-department-to-suspend-business-ban-idUKKBN1I70FR

Smoot and Hawley ginned up The Tariff Act of 1930 to get America back to work after the Stock Market Crash of '29. Instead, it destroyed trade so effectively that by 1932, American exports to Europe were just a third of what they had been in 1929. World trade fell two-thirds as other nations retaliated. Jobs evaporated.

Elaine Chao

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

In President Trump’s intellectual property trade war with China, a new development. China can play intellectual property hardball too.

Flood of Trademark Applications From China Alarms U.S. Officials

Most of the Chinese filers are tiny merchants hawking goods like pocketbooks, binoculars and phone chargers

May 5, 2018 8:00 a.m. ET
Huge numbers of Chinese citizens are seeking trademarks in the U.S., flooding the U.S. Patent and Trademark Office with applications that officials say appear to be rife with false information.

The surge of filings from China has surprised the patent office. Officials say it could be fueled by cash subsidies that Chinese municipal governments are offering to citizens who register a trademark in a foreign country.

Trademark applications from China have grown more than 12-fold since 2013 and for fiscal 2017 totaled thousands more than the combined filings from Canada, Germany and the U.K. About one in every nine trademark applications reviewed by the U.S. agency is China-based, according to government data.

Patent and trademark officials say cash incentives could be a factor. As part of a national effort to ramp up intellectual-property ownership, China’s provincial governments are paying citizens hundreds of dollars in Chinese currency for each trademark registered in the U.S.

Many Chinese applicants list addresses in the southeastern city of Shenzhen, often referred to as the Silicon Valley of China. Shenzhen pays companies and individuals up to roughly $800 for a U.S. registered trademark, according to the city’s intellectual-property bureau.

The U.S. officials say many China filings show a pattern of suspicious claims about the goods in question and the qualifications of the attorneys handling them.

----osh Gerben, a Washington, D.C., trademark lawyer, said fraudulent trademarks could cause costly delays for other filers if their names are too similar, a grounds for a refusal. “The significant number of fraudulent trademark filings being made from China is disrupting our trademark system,” he said.

Most of the Chinese filers are tiny merchants hawking online goods, such as pocketbooks, binoculars, phone chargers and knit hats, under an array of odd-sounding and sometimes vowel-less brand names.

----The trademark subsidies are part of China’s “planned approach to intellectual property,” said Mark Cohen, a China-focused intellectual-property expert at Berkeley Law School and former senior counsel at the patent office. As with patents, China has a “highly metric, numbers-oriented approach” to intellectual property, he said.

Having a trademark registered in the U.S. is crucial for sellers on Amazon, whose brand-registry program rewards officially trademarked products with more site visibility and a higher listing in search results.
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The history of tariffs in the US does not paint an encouraging picture. The broad tariffs of the 1930s are widely accepted as disastrous for that economy, and even targeted tariffs designed to protect the steel industry imposed by presidents over the past 40 years proved to be ineffective at best, studies say.
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?

Atomically thin magnetic device could lead to new memory technologies

Date: May 3, 2018

Source: University of Washington

Summary: Scientists have discovered a method to encode information using magnets that are just a few layers of atoms in thickness. This breakthrough may revolutionize both cloud computing technologies and consumer electronics by enabling data storage at a greater density and improved energy efficiency.

Magnetic materials are the backbone of modern digital information technologies, such as hard-disk storage. A University of Washington-led team has now taken this one step further by encoding information using magnets that are just a few layers of atoms in thickness. This breakthrough may revolutionize both cloud computing technologies and consumer electronics by enabling data storage at a greater density and improved energy efficiency.

In a study published online May 3 in the journal Science, the researchers report that they used stacks of ultrathin materials to exert unprecedented control over the flow of electrons based on the direction of their spins -- where the electron "spins" are analogous to tiny, subatomic magnets. The materials that they used include sheets of chromium tri-iodide (CrI3), a material described in 2017 as the first ever 2-D magnetic insulator. Four sheets -- each only atoms thick -- created the thinnest system yet that can block electrons based on their spins while exerting more than 10 times stronger control than other methods.

"Our work reveals the possibility to push information storage based on magnetic technologies to the atomically thin limit," said co-lead author Tiancheng Song, a UW doctoral student in physics.

In related research, published April 23 in Nature Nanotechnology, the team found ways to electrically control the magnetic properties of this atomically thin magnet.

"With the explosive growth of information, the challenge is how to increase the density of data storage while reducing operation energy," said corresponding author Xiaodong Xu, a UW professor of physics and of materials science and engineering, and faculty researcher at the UW Clean Energy Institute. "The combination of both works points to the possibility of engineering atomically thin magnetic memory devices with energy consumption orders of magnitude smaller than what is currently achievable."

The new Science paper also looks at how this material could allow for a new type of memory storage that exploits the electron spins in each individual sheet.
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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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