Baltic Dry Index. 1199 -40 Brent Crude 79.11
"It
is never difficult to distinguish between a US President with a grievance and
ray of sunshine."
With
apologies to P. G. Wodehouse.
Is President U-Turn already getting set to
U-turn on the Trump v China trade war deal? Probably not, and although the US
climb down deal got widespread flak from the left and right alike in America,
repudiating his trade war negotiating team after just three days is probably a
step too far even for the erratic President Trump. For now, the China – USA trade
war truce holds, with Germany looking likely to be the biggest short term loser.
Below, as reality sets in, our fractured
west, is about to get much more fractured yet. Who would be a corporate
strategist in 2018? What is the Baltic Dry Index signalling?
I could see that,
if not actually disgruntled, President Trump, was far from being gruntled.
With
apologies to P. G. Wodehouse.
May 23, 2018 / 1:47 AM
Asian shares pressured as Trump tempers Sino-U.S. trade optimism
TOKYO (Reuters) - Asian shares were mostly
weak on Wednesday with investors cautious after U.S. President Donald Trump
tempered optimism over progress made so far in trade talks between the world’s
two largest economic powers.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.2 percent, while Japan's Nikkei .N225 lost as much as 1.4 percent to hit a 1-1/2-week low and the Shanghai Composite Index .SSEC retreated 0.6 percent.
On Wall Street, the S&P 500 .SPX shed 0.31 percent overnight, losing steam after hitting a two-month high.
Trump said on Tuesday he was not pleased with recent trade talks between the United States and China, souring the improved market sentiment following weekend comments from U.S. Treasury Secretary Steven Mnuchin that the “trade war” is “on hold”.
His remarks followed Beijing’s announcement that it would cut import tariffs for automobiles and car parts.
Trump also floated a plan to fine ZTE Corp (000063.SZ), (0763.HK) and shake up its management as his administration considered rolling back more severe penalties.
“The market probably became overly optimistic on Monday. The reality is the talks are still continuing as they haven’t made headway on various issues, including intellectual property,” said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities.
More
Who will be the biggest losers from a China-US trade war truce?
Some of China’s major suppliers could lose out if Beijing diverts purchases to the US to placate Washington, analysts say
PUBLISHED : Tuesday, 22 May, 2018, 1:03pm UPDATED : Tuesday,
22 May, 2018, 1:23pm
Exporters in Brazil, Australia
and Russia could feel the pinch if China switches suppliers of some of its
big-ticket imports to head off a trade war with the United States, according to
analysts.
That was the assessment after two days of “constructive” high-level
talks in Washington last week yielded a commitment from China to
“substantially” reduce the trade imbalance between the two countries.
As a result, US Treasury Secretary Steven Mnuchin said the US expected
American agricultural exports to China to rise by between 35 and 40 per cent
this year and energy purchases to double over the next three to five years.
That could leave some of China’s
trading partners, including its biggest soybean supplier Brazil, beef producer
Australia, and even regional semiconductor makers, out in the cold if China
shifts orders to the US.
“The state-led efforts to increase China’s imports from the US will lead
to trade diversion – other economies will see their exports to China fall as a
result,” Louis Kuijs, chief Asia economist of Oxford Economics, wrote in a
note.
Washington wants Beijing to cut the bilateral trade gap by US$200
billion by the end of 2020, or more than half of last year’s US$375 billion
difference, based on US figures.
Kuijs said that target would be “practically impossible” to meet.
One area where Washington is hoping to boost sales is in agriculture.
US farm products accounted for about 20 per cent, or US$21 billion, of
China’s agricultural imports last year. About two-thirds of this was in
soybeans.
China buys about 60 per cent of globally traded soybeans and last year
about half of its imports came from Brazil, while the US supplied around a
third.
The US could also eat into Australia’s 90 per cent share of China’s
chilled beef imports if Beijing decides to bring down the barriers.
But Wang Jun, chief economist of regional Chinese bank Zhongyuan Bank,
said this was a zero-sum game.
“There is limited room to further increase the purchase of American
agricultural products unless it is at the cost of other countries,” Wang said.
More
China's Trade Deal With U.S. Leaves Germany Squeezed in Middle
Patrick Donahue, Arne Delfs and Peter Martin
Chancellor Angela Merkel heads to China with another U.S.-prompted
headache threatening to hurt German interests.
China’s pledge to buy more American goods as part of a deal to avert a
trade war with the U.S. puts Germany on the spot. As China’s biggest European
trading partner, with a total volume of some $179 billion last year, Germany is
first in line to suffer the impact of any reduction in business.
“China will buy more and more products from the U.S. that we might have
otherwise bought from Europe or other partners,” said Wang Yiwei, director of
Renmin University’s Institute of International Affairs in Beijing, and a former
Chinese diplomat in Brussels. “This will certainly have a spillover effect.”
The upshot is a complex balancing act for the chancellor, as she champions open trade and the multilateral system, knowing that China is failing to allow reciprocal access to its markets while targeting strategic interests across Europe. On the other axis is the U.S. under Donald Trump, whose protectionist moves are straining the trans-Atlantic bond and preventing a common front against China’s trade transgressions.
With a large group of corporate leaders in tow, Merkel plans to drive home Germany’s demand for China to ease barriers on foreign investment when she meets President Xi Jinping in Beijing on Thursday. Fresh from a visit with Russia’s Vladimir Putin, she’s also expected to seek China’s backing for upholding the Iran nuclear accord.
----It would take much
to dismantle the European Union as a favored region for Chinese business. China
has bought or invested in European assets amounting to at least $318 billion
over the past 10 years, according
to data compiled by Bloomberg, a figure that’s approximately 45
percent more than the equivalent in the U.S. Germany is Europe’s largest
economy.
More
China Makes Massive Cut to Car Tariffs After Truce With Trump
Bloomberg News
Updated on 22 May 2018, 11:22 GMT+1
China will cut the import duty on passenger cars to 15 percent, further
opening up a market that’s been a chief target of the U.S. in its trade fight
with the world’s second-largest economy.The Finance Ministry said Tuesday the levy will be lowered effective July 1 from the current 25 percent that has been in place for more than a decade, boosting shares of automakers from India to Europe. Bloomberg News reported last month that China was weighing proposals to reduce the car import levy to 10 percent or 15 percent.
A reduction in the import duty follows a truce between President Donald Trump’s administration and Chinese officials as they seek to defuse tensions and avert an all-out trade war. While the levy reduction could be claimed in some quarters as a concession to Trump and will be a boon to U.S. carmakers such as Tesla Inc. and Ford Motor Co., the move will also end up benefiting European and Asian manufacturers from Daimler AG to Toyota Motor Corp.
“This is, without a doubt, positive news,” said Juergen Pieper, Frankfurt-based head of automobiles research at Bankhaus Metzler. “You can’t completely disregard the fact that there are certain imbalances in China’s favor. This could be a signal that if one side is making concessions, it could lead to the Americans easing some of their pressure as well.”
Shares of Jaguar Land Rover owner Tata Motors Ltd. and BMW AG posted their biggest intraday gains in more than a month on the news.
----The import duty on car parts will be reduced to 6 percent, China’s Finance Ministry said. The shift is significant more for its optics than its potential impact given imported cars made up only about 4.2 percent of the country’s 28.9 million in automobile sales last year.
More
In
dying EUSSR news, France tells Italy to know its place, and pits itself against
Italy’s new government. The dangers of a breakup are rising with each passing
week. Brexit now before the all against France and Germany civil war breaks
out.
May 22, 2018 / 3:16 PM
France warns future Italy government against 'going it alone' in the EU
PARIS (Reuters) - French European Affairs
Minister Nathalie Loiseau on Tuesday cautioned Italy’s future government
against acting like a lone rider in the European union.
“Our destinies are intimately bound and it is note possible nor
desirable to go it alone in Europe,” Loiseau said during a question and answer
session in the French parliament.
Italy’s anti-establishment 5-Star Movement and the far-right League are
in the process of forming a government after reaching a coalition pact aimed at
ending months of deadlock after inconclusive elections on March 4.
May 22, 2018 / 4:07 PM
Breakingviews - Italy’s next economy minister is the one to watch
MILAN (Reuters Breakingviews) - Italy’s
next economy minister is the one for investors to watch. The anti-establishment
5-Star Movement and right-wing League have proposed little-known academic
Giuseppe Conte to be prime minister of their radical government. Yet the person
they nominate to steer Italy’s finances matters more for the indebted country’s
future.
President Sergio Mattarella will probably decide on Wednesday whether to
accept Conte as prime minister. The politically inexperienced law professor
appears to have had no say in drafting the budget-busting government “contract”
between 5-Star boss Luigi Di Maio and his League counterpart Matteo Salvini.
Conte may not be able to overrule the party leaders if they take cabinet posts,
as expected. It’s an inauspicious start for a government that has promised to
“rewrite Italy’s history”.
With the premier downgraded to the role of spokesman, investors should
focus on the economy ministry to gauge the government’s attitude towards the
single currency. Italian news reports that professor Paolo Savona – who says
the euro is a “German cage” – is being considered for the post pushed up the
spread on yields between Italian and German 10-year government bonds to 180
basis points. With public debt of 2.3 trillion euros, Italy can ill afford
higher borrowing costs.
The nascent executive’s attitude towards
the euro remains ambiguous. While the coalition’s final agenda does not call
into question Italy’s membership of the single currency, an earlier draft
called for the government to create procedures to leave the euro. Some
prominent League members, including economic spokesman Claudio Borghi, are
critical of the European Union’s fiscal compact and want Italy to abandon it.
Salvini considers the euro a mistake. Eurobarometer opinion polls show Italians
have gone cold on the single currency. However, 5-Star has ditched an earlier
proposal of holding a national referendum on euro membership.
More
Finally, so will China shrink it’s US trade
surplus by 200 billion or so? Well probably not, think the trade experts. And
it might not be such a good idea anyway. Americans might quickly find
themselves buying via the internet directly from China.
Don’t believe promises that the trade deficit with China will shrink by $200 billion
Published: May 21, 2018 5:40 p.m. ET
U.S. economy simply can’t produce enough new goods for China to buy anytime soon
President Donald Trump has demanded China cut the trade gap with the U.S. by $200 billion by 2020 or face a host of punishing tariffs. After recent talks with the U.S., China agreed to reduce it but wouldn’t commit to a target.Regardless, my research in international economics tells me that meeting Trump’s demand is implausible.
Economists use the term current account to refer to the difference between a nation’s exports and its imports in a given time period. If the U.S. exports more than it imports, then its account is in surplus. If imports exceed exports, there’s a deficit.
With China, the U.S. imports a whopping $375 billion more than it exports.
How could it whittle that down to $175 billion? There are three ways.
First, China could buy more U.S. goods and services. Second, Americans could buy less Chinese stuff. Finally, both actions could happen simultaneously.
The kinds of Chinese goods that Americans buy tend to be relatively
inexpensive consumer goods, so even a dramatic decline is likely to have only a
trivial impact on the deficit. And since China explicitly controls only one
lever — its imports — it’ll have to buy a lot more American-made things to
achieve this goal.
For this to happen, without upsetting other trade balances, the American
economy would have to make a lot more than it currently produces, something
that isn’t possible in so short a time frame.
That’s because when a nation’s economy is using its resources to produce
goods efficiently, economists say that it has reached its production possibility frontier and cannot produce more goods.Analysts believe the U.S. economy has either reached or is very close to its frontier, and hence, at least in the short run, there is no way for it to significantly increase the goods it exports to China.
Read: The best-case scenario is the U.S. trade gap with China will get worse
If the Chinese reduced purchases from other nations and instead bought those goods from the U.S., it would have only a very modest impact on the deficit.
What if the U.S. instead of selling goods like airplanes and soybeans to Europe sent more of those products to China? Well, that would reduce the U.S.-China trade deficit but widen it elsewhere.
Maybe Trump would be able to score a win by declaring that the U.S.’ biggest bilateral trade deficit had come down. But his ultimate goal of more economic growth would still be unattainable because the U.S. would be selling no more stuff to the world than before.
More
The Problem With Buying Cheap Stuff Online
Sites like Wish.com are taking out the middleman in retail. Will
customers like this new dynamic?
May 22 2018.
The package came in a small black box, covered in tape. It had no return
address. Under layers of packaging, there was a box labeled Smart Watch, with
no brand name. Inside the box was the watch itself, which looked nothing like the
inexpensive Apple Watch I’d hoped it would be. Instead, the large digital face
featured icons for Twitter, Facebook, a pedometer, and a photo-taking app
called “Camina” rather than “camera.” It was about what you’d expect for a
smart watch that cost less than $20.
I ordered the watch from Wish.com, one of a growing number of sites that
allows consumers from around the world to buy deeply discounted goods from
China, directly from sellers or manufacturers there. After receiving
promotional emails from Wish offering bikinis for $4 (marked down from $75!),
camera drones for $29 (down from $1,399!), and, for some reason, a spoon that
says “My Peanut-Butter Spoon” for $1 (down from $12), I could no longer resist.
I ordered the smart watch, advertised as “Hot Sell New product Q18S Smart Wrist
Watch” for $18, marked down, supposedly, from $896. The product had more than
8,000 reviews in dozens of languages, averaging four stars. “Its cool I like it
for the price,” read one.
Wish
is emblematic of a growing trend in e-commerce: shoppers buying directly from
Chinese manufacturers and merchants. Wish and sites like AliExpress,
LightInTheBox, and even Amazon have enabled more Chinese sellers to penetrate
the U.S. market, where they compete with U.S. manufacturers and U.S. retailers
who themselves have been importing goods from China. Though the products from
these sites take longer to arrive because they’re coming from overseas, some
analysts think sites like Wish represent the future of shopping. Wish is, according to Forbes, worth $8.5
billion, about the same as Macy’s, J.C. Penney, and Sears combined. Its
valuation has more than doubled since a year ago, when it received $500 million
in funding. Its logo now appears on the jerseys of the Los Angeles Lakers.
----“As long as retail has existed, you’ve always had retailers sell to customers, because many manufacturers were unfit to do so,” Juozas Kaziukėnas, the founder and CEO of Marketplace Pulse, an e-commerce research site, told me. “But over time, as information has spread and it becomes easier, you have manufacturers selling, too.” Kaziukėnas estimates that as many as one-third of Amazon’s sellers are based in China. Often, Chinese sellers will ship products in bulk to the United States, where they’ll sit in warehouses operated by Amazon, Wish, or other companies, until U.S. companies order them, he said.
Though it’s difficult to track just how much the direct-from-China market has grown, the number of packages received from overseas in the United States has exploded in recent years. The U.S. Postal Service delivered 175 million letters and packages from overseas in the first three months of 2018, up from 97 million in the same period in 2013, according to the USPS. The Postal Service makes it easy for Chinese sellers to ship cheaply to the United States: Under a program called ePacket, merchants can ship items that weigh less than 4.4 pounds, and receive tracking and delivery confirmation services for a low rate. Often, it costs less to ship a package to a U.S. destination from China than it does to ship that item domestically.
More
I don’t
want yes men around me. I want everybody to tell me the truth even if it costs
them their jobs.
Samuel
Goldwyn.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
More today on the bitcoin scam again. Something about separating fools
and their money.
There’s a ‘decent probability’ bitcoin goes to zero, says Vanguard economist
Published: May 21, 2018 8:22 p.m. ET
A senior economist at the Vanguard Group, the $5 trillion investment fund,
is the latest market participant to pour cold water on the No. 1 digital
currency.In an op-ed Monday, Joe Davis said bitcoin BTCUSD, -1.10% is not a currency, it makes for a poor investment choice and its biggest threats are the very institutions it was meant to overthrow.
“Over the past few months, I’ve gotten this question more than any other,” wrote Davis. “As for bitcoin the currency? I see a decent probability that its price goes to zero.”
The head of the Vanguard Investment Strategy Group argues that bitcoin does not meet the criteria of a currency — which its creator(s) and proponents believe it to be — saying it’s a dubious medium of exchange and its excessive volatility does not make it a suitable store of value.
Read: Bitcoin bull argues for rally to $20,000
Davis, who works for the largest mutual-fund provider and second-largest provider of exchange-traded funds, said bitcoin doesn’t stack up as a traditional investment. “Unlike stocks and bonds, currencies generate no cash flows such as interest payments or dividends that can explain their prices,” wrote Davis.
----While supporters of bitcoin and other digital assets see the technology as an alternative to central banks, Davis said bitcoin is not a true threat to them, arguing that there’s a good chance central banks will eventually adopt their own digital currencies, and will have the upper hand because they impose the regulations on exchanges.
Like many cryptocurrency naysayers, Davis was more positive on
blockchain, the distributed ledger technology that underpins bitcoin and other
cryptocurrencies, but said the two do not go hand-in-hand like some argue.
“Although cryptocurrencies are built using a blockchain, they are not
necessarily tied to the value of blockchain applications that may improve the
cost, speed and security of executing transactions or contracts,” wrote Davis.
“Bitcoin is an investment in blockchain in the same way that Pets.com
was an investment in the internet.”
Men occasionally stumble over the truth, but most
of them pick themselves up and hurry off as if nothing had happened.
Sir Winston Churchill.
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?
Graphene paves the way to faster high-speed optical communications
Technology could lead to new devices for faster, more reliable ultra-broad bandwidth transfers
Date:
May 21, 2018
Source:
Graphene Flagship
Summary:
Researchers created a technology that could lead to new devices for faster,
more reliable ultra-broad bandwidth transfers. For the first time, researchers
demonstrated how electrical fields boost the non-linear optical effects of
graphene.
Graphene, among other materials, can capture photons, combine them, and
produce a more powerful optical beam. This is due to a physical phenomenon
called the optical harmonic generation, which is characteristic of nonlinear
materials. Nonlinear optical effects can be exploited in a variety of
applications, including laser technology, material processing and
telecommunications.
Although all materials should present this behaviour, the efficiency of
this process is typically small and cannot be controlled externally. Now,
partners of the Graphene Flagship project in Cambridge (UK), Milan, and Genova
(Italy) have demonstrated for the first time that graphene not only shows a
good optical response, but also how to control the strength of this effect
using an electric field.
Researches envision the creation of new graphene optical switches, which
could also harness new optical frequencies to transmit data along optical
cables, increasing the amount of data that can be transmitted. Currently, most
commercial devices using nonlinear optics are only used in spectroscopy.
Graphene could pave the way towards the fabrication of new devices for
ultra-broad bandwidth applications.
"Our work shows that the third harmonic generation efficiency in
graphene can be increased by over 10 times by tuning an applied electric
field," explains Giancarlo Soavi, lead author of the paper and researcher
at the Cambridge Graphene Centre (University of Cambridge, UK).
"The authors found again something unique about graphene:
tuneability of THG over a broad wavelength range. As more and more applications
are all-optical, this work paves the way to a multitude of technologies,"
said said ICREA Professor Frank Koppens from ICFO (The Institute of Photonic
Sciences), Barcelona, Spain, who is the leader of the Photonics and
Optoelectronics Work Package within the Graphene Flagship.
More
If A equals success, then the
formula is A = X+Y+Z. X is work, Y is
play, Z is to keep your mouth shut.
Albert Einstein.
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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