Baltic Dry Index. 1453 -12 Brent Crude 77.40
What do you want to be a
sailor for? There are greater storms in politics than you will ever find at
sea. Piracy, broadsides, blood on the decks. You will find them all in
politics.
David Lloyd George
The Great Disconnect from reality, has
returned in stocks. All news is good news again. Except, of course, it isn’t.
We ignore rising oil prices, rising interest rates, the start of the Great
Trade War getting closer by the day, and rising geopolitical tensions, at ever
higher risk. Hurricane season starts June 1 in the Atlantic, ironically the same
day President
Trump has chosen to kick off his trade war with China and NATO. I
suspect that tomorrow will not be like today which was like yesterday.
America First, has broken all the rules of
the old game of global integration. Why buy US made or licenced components, if
they can be cut off overnight, and your company can be ZTE-ed. A long term change in buying patterns is only
just starting to get underway.
May 11, 2018 / 1:56 AM
Asian stocks near three-week top, dollar eases after U.S. inflation
SYDNEY
(Reuters) - Asian shares rallied on Friday as risk appetite got a boost from
soft U.S. inflation, helping alleviate worries of faster rate hikes by the
Federal Reserve, while investors also cheered U.S.-North Korean steps to
further ease tensions on the Korean Peninsula.
Thursday’s slower-than-expected April consumer price rises followed
payrolls data last week which pointed to sluggish wage growth.
The two data sets meant “inflation may be rising but not so rapidly that
the Fed would have to take aggressive actions to keep the economy from
overheating,” said James McGlew, analyst at Perth-based stock broker Argonaut.
The recent shakeout in markets, partly stoked by Sino-U.S. trade
tensions, has also eased off, while money managers expect the relatively global
low rates that fueled the ‘goldilocks’ boom in stock markets last year will
remain in place for some time.
“While inflation is continuing to trend up its only happening slowly. So
Goldilocks continues,” Shane Oliver, chief investment manager at AMP, said in a
note.
Indeed, a key measure of expected market swings, the Cboe Volatility
Index, or VIX, has fallen very close to levels last seen in early January when
stock markets were buoyant.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9
percent to near three-week highs with broad-based gains across all sectors.
Japan’s Nikkei climbed 1 percent while South Korea’s KOSPI added 0.7
percent. Hong Kong’s Hang Seng index jumped 1.4 percent. Chinese shares gave up
early gains to be marginally lower.
On Wall Street, the Dow rose 0.8 percent, the Nasdaq Composite gained
0.89 percent and the S&P 500 rose 0.9 percent, surging past key resistance
of 2,717 points.
More
May 11, 2018 / 3:46 AM
U.S., Chinese officials to meet Friday, discuss Liu visit - U.S. official
WASHINGTON (Reuters) - U.S. and Chinese officials are set to meet in
Washington on Friday to discuss trade disputes between the world’s two largest
economies ahead of a pending visit by China’s top economic official, a U.S.
Treasury official said.
The official described the meeting as a follow-up to last week’s
high-level trade talks in Beijing and in preparation for Chinese Vice Premier
Liu He’s visit to Washington. However, the official declined to provide details
of the Friday meetings, or specify the precise timing of Liu’s visit.
White House spokeswoman Sarah Sanders said on Monday Liu, Chinese
President Xi Jinping’s top-ranking economic adviser, would come to Washington
next week “to continue discussions with the president’s economic team.”
Trade talks in Beijing last week, led by U.S. Treasury Secretary Steven
Mnuchin and Liu, failed to produce any breakthroughs to stave off U.S. tariff
threats on up to $150 billion worth of Chinese goods, and China’s threats to
retaliate in kind.
U.S. officials presented a lengthy list of trade demands, including
reducing China’s trade surplus by $200 billion a year.
A source familiar with planning for the visit said a lower level
delegation would likely head to Washington first and that might delay the Liu
visit slightly.
U.S. Commerce Secretary Wilbur Ross told CNBC the timing of the Liu’s
arrival was unclear and “there’s a chance it’s not next week.”
Ross also told a CNBC-sponsored event he thought the Chinese officials
at the Beijing meetings “agreed to the concept of a trade deficit reduction -
the questions are how much and how do you get there?”
May 10, 2018 / 3:11 PM
Ryan sets May 17 deadline for NAFTA deal, Mexico sees time running short
WASHINGTON (Reuters) - U.S. House Speaker Paul Ryan has set a May 17
deadline to be notified of a new NAFTA trade deal to give the current Congress
a chance of passing it, while Mexico’s top trade official on Thursday said time
was running short to meet such a deadline.
Ryan, who controls legislation in the House of Representatives, set his
deadline in remarks delivered on Wednesday to the Ripon Society in Washington
and publicized on Thursday.
Under the “fast track” trade negotiating law, there are lengthy
notification periods before U.S. President Donald Trump could sign a new North
American Free Trade Agreement and before Congress could begin considering it.
Letting negotiations drag on much longer would punt consideration to a
new Congress elected in November that will take office in January 2018, one
that could cede more control to Democrats.
“We have to have the paper — not just an agreement, we have to have the
paper — from USTR by May 17 for us to vote on it this year, in December, in the
lame duck” session, Ryan said.
----Major differences remain between the three members of NAFTA after more than eight months of largely slow-moving negotiations launched at the insistence of President Trump, who wants major changes to the 1994 pact.
Mexico’s Economy Minister Ildefonso Guajardo said he expected to learn by the end of Friday whether a new deal was possible. He and his counterparts have been meeting in Washington since Monday to try to bridge major gaps.
More
Banking is a very treacherous
business because you don't realize it is risky until it is too late. It is like
calm waters that deliver huge storms.
Nassim Nicholas Taleb
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Scalp one in the Great Global Trump Trade War. How long before we get
scalp two?
Trump's trade fight with China just claimed its first big victim
10 May 2018
President Donald Trump's crackdown on trade claimed a massive victim this
week, with Chinese tech giant ZTE shutting down most of its operations in
recent days. The Commerce Department recently barred ZTE from using US-made parts, effectively crippling its operations and leading to a shutdown of its factories. In a statement Wednesday, ZTE said "the major operating activities of the company have ceased."
The firm is the second-largest telecom equipment firm in China and pulled in almost $17 billion in revenue last year.
The US sanctions were the result of an investigation into alleged sales to North Korea and Iran that violated existing US sanctions against those countries.
According to the New York Times, the company's workers are now only participating in occasional training sessions, and ZTE's stock remains frozen. The company tried to quell concerns about its future in the statement.
"As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations," ZTE said.
But replacing US-made parts for its phones is a tall task. For instance, the company uses Google's Android software in many of its phones and get parts from companies like Qualcomm and Intel.
ZTE said it is working with the Trump administration to reverse the sanctions and "forge a positive outcome in the development of the matters."
ZTE's shutdown is perhaps the most severe sanction facing a single company in the escalating trade tension between the US and China. In March, Trump imposed tariffs on steel and aluminum coming into the US. Later, he slapped tariffs on $50 billion worth of Chinese goods.
China announced retaliatory tariffs. More recently, reports have suggested that the Trump administration is considering various ways to limit Chinese firms' ability to invest in the US.
The Trump administration also barred ZTE and fellow telecom equipment maker Huawei from selling goods on US military bases and is considering a broader crackdown on the pair's sales into the US.
During a meeting with seven high-level members of the Trump administration last week in Beijing, Chinese officials reportedly brought up the ZTE crackdown and urged the US to ease up.
Along with the simmering trade fight between Trump and China, the ZTE decision represents an example of the global consequences of the fraying ties.
For instance, MTN, a South Africa-based wireless carrier with 220 million customers throughout Africa and the Middle East, said the possibility ZTE would collapse forced the carrier to develop contingency plans.
ZTE Ban May Spell Trouble for Chinese Operators and 5G
May 10, 2018 10:24 am PT
The Trump administration’s decision to ban ZTE from using components made in
the United States for the next seven years will likely result in widespread
ramifications for service providers, particularly those in China. This ZTE ban
could also pose a bit of challenge for Chinese operators such as China Mobile
and China Unicom, which have very aggressive 5G deployment plans.Yesterday, ZTE announced that it is no longer manufacturing telecom equipment and has stopped all “major operating activities” in its Shenzhen, China factory. That means that service providers using ZTE’s optical gear in their networks will have to find another supplier.
According to Jimmy Yu, optical transport analyst with Dell’Oro Group, the majority of ZTE’s optical business is with Chinese operators. Dell’Oro Group estimates that in 2017 optical transport was a $2.2 billion business for ZTE. Yu estimates that ZTE accounts for about 16 percent of the global optical transport business. Huawei is the leader with 29 percent of the market.
ZTE does have a significant presence in the Chinese market where Yu said it has about 40 percent market share. Raymond James analyst Simon Leopold has speculated that in China, Huawei, Nokia, and Fiberhome are best positioned to pick up ZTE’s business.
But switching from one vendor to another isn’t an easy proposition. According to Yu, optical equipment isn’t interoperable. Most have proprietary features that will make if challenging for service providers to switch from one vendor to another. “Getting another vendor, qualifying them on the network, and installing it — that requires a lot of truck rolls,” he said.
Emir Halilovic, principal analyst with GlobalData, agrees with Yu. He said that while vendors have made some improvements to make their gear more interoperable, particularly with software-defined networking (SDN), few operators have multi-vendor environments deployed in their networks. And like Yu, Halilovic said that optical networks are “notorious” for being proprietary to some degree.
More
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?
Alcoa and Rio Tinto Announce World’s First Carbon-Free Aluminum Smelting Process
- A revolutionary process to make aluminum produces oxygen and replaces all direct greenhouse gas emissions from the traditional aluminum smelting process.
- Alcoa and Rio Tinto launch new joint venture, Elysis, for larger scale development and commercialization of the process, with a technology package planned for sale beginning in 2024.
- Alcoa, Rio Tinto, the Government of Canada, the Government of Quebec and Apple agree to provide a combined investment of $188 million (CAD).
- Apple helped facilitate the collaboration between Alcoa and Rio Tinto on the carbon-free smelting process, and has agreed to provide technical support to the JV partners.
- Technology represents the culmination of decades’ worth of research and development. Elysis will have access to a host of patents and intellectual property.
- Rio Tinto’s Vincent Christ named Chief Executive Officer of Elysis.
Thursday,
May 10, 2018 2:22 pm EDT
PITTSBURGH--(BUSINESS
WIRE)--Alcoa Corporation (NYSE: AA) and Rio Tinto (NYSE: RIO) today announced
a revolutionary process to make aluminum that produces oxygen and eliminates
all direct greenhouse gas emissions from the traditional smelting process. Executives of Alcoa, Rio Tinto and Apple were joined by Canadian Prime Minister Justin Trudeau and Premier of Québec Philippe Couillard for the announcement, which signals the most significant innovation in the aluminium industry in more than a century.
To advance larger scale development and commercialization of the new process, Alcoa and Rio Tinto are forming Elysis, a joint venture company to further develop the new process with a technology package planned for sale beginning in 2024.
Elysis, which will be headquartered in Montreal with a research facility in Quebec’s Saguenay–Lac-Saint-Jean region, will develop and license the technology so it can be used to retrofit existing smelters or build new facilities.
When fully developed and implemented, it will eliminate direct greenhouse gas emissions from the smelting process and strengthen the closely integrated Canada-United States aluminum and manufacturing industry. The new joint venture company will also sell proprietary anode and cathode materials, which will last more than 30 times longer than traditional components.
Canada and Quebec are each investing $60 million (CAD) in Elysis. The provincial government of Quebec will have a 3.5 percent equity stake in the joint venture with the remaining ownership split evenly between Alcoa and Rio Tinto.
Apple is providing an investment of $13 million (CAD). The company helped facilitate the collaboration between Alcoa and Rio Tinto on the carbon-free smelting process, and Apple has agreed to provide technical support to the JV partners.
Alcoa and Rio Tinto will invest $55 million (CAD) cash over the next three years and contribute specific intellectual property and patents.
The patent-protected technology, developed by Alcoa, is currently producing metal at the Alcoa Technical Center, near Pittsburgh in the United States, where the process has been operating at different scales since 2009. The joint venture intends to invest up to $40 million (CAD) in the United States, which would include funding to support the supply chain for the proprietary anode and cathode materials.
More
Another
weekend and in stocks, nothing but a summer of verdant plains, cooling rains,
pleasant temperatures, and goodwill to all men, lies directly ahead. They will beat their swords into plowshares and their spears into pruning hooks. Well maybe, but maybe not. With ZTE on the brink of collapse in China and about fire
thousands of workers, all due to President Trump’s sanctions, I have doubts
that President Xi is about to just rollover as Trump and our complacent markets
now expect. Have a great weekend everyone.
You, too, will be driven away
from your native land and ancient domains as leaves are driven before the
wintry storms. Sleep not longer, O Choctaws and Chickasaws, in false security
and delusive hopes. Our broad domains are fast escaping from our grasp.
Tecumseh
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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