Baltic Dry Index. 1305 -98 Brent Crude 79.53
"For
240 years it’s been a terrible mistake to bet against America, and now is no
time to start. America’s golden goose of commerce and innovation will continue
to lay more and larger eggs. America’s social security promises will be honored
and perhaps made more generous. And, yes, America’s kids will live far better
than their parents did."
Warren
Buffett
With the Great Global
Trump Trade War now just thirteen days away, will China’s offer to buy 200
billion a year more of US products and services be enough to head off the trade
war with China? The devil is probably in the details, as the old saying goes,
and at this point, no one is talking up the details. China also offered to
resume buying US sorghum, dropping a dumping investigation, as a goodwill
gesture. [Update. China has denied making any such offer, and it's probably unachievable anyway. On sorghum, the next US crop won't be harvested until August, so it's goodwill gesture of limited use in May.]
In NAFTA negotiations
they are “nowhere near” close to a deal, says President Trump’s top trade
negotiator, so the trade war is still on for Canada and Mexico, starting June 1.
In NATO trade war
news, it was a bad day for Germany, the EU’s top economy. Germany’s new
coalition government was just ordered by Trump to increase defence spending, or
else. Germany is the EUSSR’s weakest link in a US v EU trade war, and doesn’t
President Trump know it.
“Sometimes
you move publicly, sometimes privately. Sometimes quietly, sometimes at the top
of your voice.”
James
Baker. United States Secretary of the Treasury under President Ronald
Reagan, and U.S. Secretary of State and White House Chief of Staff under
President George H. W. Bush.
May 18, 2018 / 2:01 AM
Asia stocks edge higher, investors cautious on U.S.-China trade talks
TOKYO
(Reuters) - Asian stocks edged up on Friday as investors kept a cautious watch
on developments in U.S.-China trade negotiations, with the dollar perched near
a five-month peak after the benchmark U.S. Treasury yield hit its highest in
seven years.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.1
percent higher. The index was headed for a 1 percent loss this week.
Japan’s Nikkei rose 0.25 percent, South Korea’s KOSPI was up 0.4 percent
and Australian stocks dipped 0.15 percent.
Hong Kong’s Hang Seng rose 0.25 percent and Shanghai climbed 0.3
percent.
Wall Street ended slightly lower on Thursday as investors grappled with
U.S.-China trade tensions after U.S. President Donald Trump said that China
“has become very spoiled on trade”.
But helping ease some of the tension, Beijing has offered Trump a
package of proposed purchases of American goods and other measures aimed at
reducing the U.S. trade deficit with China by some $200 billion a year, U.S.
officials familiar with the proposal said.
A second round of talks between senior Trump administration officials
and their Chinese counterparts started on Thursday, focused on cutting China’s
U.S. trade surplus and improving intellectual property protections.
More
May 18, 2018 / 5:06 AM
China halts U.S. sorghum dumping probe amid signs of trade thaw
BEIJING/WASHINGTON
(Reuters) - China said on Friday it was dropping an anti-dumping probe into
imports of U.S. sorghum, a conciliatory gesture as top officials meet in
Washington in an effort to head off a trade war between the world’s two biggest
economies.
Beijing’s announcement that it was ending its investigation, which effectively halted a trade worth roughly $1.1 billion last year, came hours after U.S. officials familiar with the matter said China was offering a package to slash the U.S. trade deficit by up to $200 billion.
“The imposition of anti-dumping and anti-subsidy measures on imports of sorghum originating from the United States would have a widespread impact on consumer living costs, and does not accord with the public interest,” China’s Commerce Ministry said in a statement.
News of China’s offer of trade concessions and increased purchases of American goods came during the first of two days of U.S.-China trade talks in Washington focused on resolving tariff threats between the two countries. However, it was not immediately clear how the total value was determined.
One of the U.S. sources said U.S. aircraft maker Boeing Co (BA.N) would be a major beneficiary of the Chinese offer to narrow the trade gap if Trump were to accept it. Boeing is the largest U.S. exporter and already sells about a quarter of its commercial aircraft to Chinese customers.
Another person familiar with the talks said the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of U.S. farm products including fruit, nuts, pork, wine and sorghum.
More
‘Nowhere near’ close to Nafta deal, U.S. negotiator says
Published: May 17, 2018 11:36 p.m. ET
Doubts about deal that could be passed by Congress this year
WASHINGTON — President Donald Trump’s trade chief said Thursday the U.S.
is “nowhere near” a deal on the North American Free Trade Agreement,
effectively brushing aside an offer from House Speaker Paul Ryan for more time
to conclude a deal that could be considered in Congress this year.
“The Nafta countries are nowhere near close to a deal,” U.S. trade
representative Robert Lighthizer said in a statement, citing “gaping
differences” on intellectual property, agricultural trade, duty-free levels for
shipments, labor rules, and other areas.
“We of course will continue to engage in negotiations,” Lighthizer said.
“And I look forward to working with my counterparts to secure the best possible
deal for American farmers, ranchers, workers, and businesses.”
All three Nafta countries — Mexico, Canada and the U.S. — had sought to
wrap up a deal before the height of the U.S. midterm season and before Mexico’s
presidential election on July 1. Ryan, who had originally set Thursday, May 17
as a deadline, sought to offer Lighthizer and his Canadian and Mexican
counterparts more time to reach a deal this spring that could still get a vote
before a new Congress takes office in January.
May 17, 2018 / 8:06 PM
Trump - Countries not meeting NATO obligations will be 'dealt with'
WASHINGTON (Reuters) - U.S. President Donald Trump said on
Thursday that NATO members that do not contribute fully to the group would be
“dealt with,” and singled out Germany as a country he said was not doing
enough.
At a Cabinet meeting attended by the North Atlantic Treaty
Organization’s secretary general, Jens Stoltenberg, Trump listed countries he
said had paid the amount “they’re supposed to be paying.”
“We have some that don’t and, well, they’ll be dealt with,” Trump said.
He added Germany “has not contributed what it should be contributing and
it’s a very big beneficiary.”
“In particular Germany must demonstrate leadership in the alliance by
addressing its longstanding shortfall in defence contributions,” Trump said.
Despite often disagreeing with Trump in other areas, German Chancellor
Angela Merkel agrees that Germany should contribute more and wants her country
to boost military spending to meet the NATO target of 2 percent. She told
senior military officers on Monday more spending is needed in light of changing
security requirements in the world.
Stoltenberg praised Trump’s work on shoring up NATO, whose continued
purpose Trump questioned while campaigning in the 2016 election.
Sitting on Trump’s right, Stoltenberg said: “Your leadership on defence
spending has really helped to make a difference.”
“It is impacting allies because now all allies are increasing defence
spending,” he said. “No allies are cutting their budgets.”
In a trade war Germany is the weakest link
Steel tariffs are a side show — extra duty on car exports
could devastate the EU
In
other news, President Trump U-turned again, this time over North Korea, in the
process quickly tossing his latest national security advisor under the bus.
Washington is certainly different under President Trump.
May 17, 2018 / 8:57 PM
Trump seeks to placate North Korea's Kim over uncertain summit
WASHINGTON
(Reuters) - U.S. President Donald Trump sought on Thursday to placate North
Korea’s leader Kim Jong Un after Pyongyang threatened to scrap an unprecedented
summit, saying Kim’s security would be guaranteed in any deal and his country
would not suffer the fate of Muammar Gaddafi’s Libya, unless that could not be
reached.
In rambling remarks in the White House’s Oval Office in which he also
sharply criticized China over trade, Trump said that as far as he knew the
meeting with Kim was still on track, but that the North Korean leader was
possibly being influenced by Beijing after two recent visits he made there.
Trump distanced himself from comments by his national security adviser
John Bolton that North Korea angrily denounced when casting doubt on the
summit, which is planned for June 12 in Singapore.
“North Korea is actually talking to us about times and everything else
as though nothing happened,” Trump told reporters at the start of a meeting
with NATO Secretary General Jens Stoltenberg.
Trump said he was not pursuing the “Libya model” in getting North Korea
to abandon its nuclear weapons programme. Bolton has repeatedly suggested the
Libya model of unilateral disarmament for North Korea, most recently on Sunday.
Gaddafi was deposed and killed after Libyans joined the 2011 Arab Spring
protests, aided by NATO allies who had encouraged him to give up his banned weapons
of mass destruction under a 2003 deal.
In a statement on Wednesday that threatened withdrawal from the summit,
North Korea’s first vice minister of foreign affairs, Kim Kye Gwan, derided as
“absurd” Bolton’s suggestion of a deal similar to that under which components
of Libya’s nuclear programme were shipped to the United States.
“(The) world knows too well that our country is neither Libya nor Iraq
which have met miserable fate,” he said in apparent reference to the demises of
Gaddafi and Iraq’s former president Saddam Hussein.
Trump said the deal he was looking at would give Kim - a hereditary
ruler who presides over a state widely criticized for serious human rights
abuses - “protections that will be very strong.”
“He would be there, he would be running his country, his country would
be very rich,” Trump said.
More
“I sometimes get the
impression that many U.S. media outlets work according to a principle which was
common in the Soviet Union. Back then, people used to joke that the newspaper
Pravda [Truth] had no truth in it, and the Izvestia [News] paper has no news in
it. I get the impression that many U.S. media operate in the same way.”
Russian Foreign Minister
Lavrov. May 2017.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
No crooks or scoundrels today, more on them next
week. Today the unintended consequences of US Iran sanctions. Putting China’s new oil futures into the big
league. China can hardly believe their luck. And with Brent crude oil flirting
with the 80s, Russian Export Blend Crude Oil (REBCO) flirting with 74, neither
can Russia, I’ll bet. Making China (and Russia,) Great Again. It’s a funny old
world as seen from outside Washington, D. C. Shame about NATO and NAFTA.
China’s petro-yuan ‘thundering into action’ as Iran ditches US dollar in oil trade
Published time: 14 May, 2018 11:14
Washington’s renewed sanctions on Tehran supports China’s newly
established oil futures, analysts say. The sanctions can make the yuan a more
preferable currency than the dollar on the oil market.
Since their launch in May, the interest in the renminbi-backed oil
contracts has steadily surged. Traded daily volumes hit a record 250,000 lots
last Wednesday, and the share of yuan contracts in global trading jumped to 12
percent compared to eight percent in March.
“The contract is thundering into action,” said
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in
Singapore, as quoted by Reuters. “It makes sense for Iran to begin selling
oil under contracts denominated in yuan rather than dollars.”
China is the largest oil consumer in the world and also buys the most
from Iran, a major OPEC producer. Beijing buys 25 percent of Iranian oil
exports, which accounts for eight percent of its needs.
“The sanctions... can potentially accelerate this process of
establishing a 3rd (oil) benchmark,” said senior vice
president for derivatives in Singapore at financial services firm INTL FCStone,
Barry White.
By using more yuan in the oil trade, Beijing both saves the costs of
exchanging dollars and promotes the renminbi as a global currency, analysts say.
Last week, Shanghai futures rose to a dollar-converted record high of around
$75.40 per barrel, growing faster than rival benchmarks Brent and WTI.
The Regulations That Could Push Oil Up To $90
International regulations on the fuels used in shipping could tighten the oil market and push prices up to $90 per barrel in the next two years.The International Maritime Organization (IMO) has new rules coming into effect at the start of 2020 requiring shipowners to dramatically lower the concentration of sulfur used in their fuels.
Ships plying the world’s oceans tend to use heavy fuel oil, a bottom-of-the-barrel fuel that is especially dirty. The IMO regulations are targeting this fuel because of its high sulfur content.
Current rules allow sulfur concentrations of 3.5 percent, but by 2020 ships must slash that to just 0.5 percent. “Effectively, bunker fuel is the last refuge for sulphur, which has been driven out of most other oil products,” the IEA wrote earlier this year in its Oil 2018 report.
Shipowners have several options to achieve this goal, and there probably won’t be a single approach. They could install scrubbers to remove sulfur from the fuel, switch to low-sulfur fuels, or switch to LNG. Scrubbers are thought to be costly, although some shipowners see the payback period as worth it. LNG is also an expensive route.
But a lot of shipowners will switch over to lower-sulfur fuels such as gasoil, a distillate similar to diesel. The IEA says that by 2020, demand for gasoil will shoot up to 1.74 million barrels per day (mb/d), an increase of over 1 mb/d relative to 2018. That will displace the heavy fuel oil that is currently widespread. The IEA says that high-sulfur fuel oil demand will crater from 3.2 mb/d in 2019 to just 1.3 mb/d in 2020.
The switchover will have enormous ramifications for the oil market. The shipping industry represents about 5 percent of the global oil market, using about 5 million barrels of oil per day. Swapping out one form of oil for others will have ripple effects across the refining industry, awarding some and dealing losses to others.
Refiners processing middle distillates – diesel and gasoil – will see a windfall. Meanwhile, refiners that churn out heavy fuel oil will be left with surplus product on their hands.
More specifically, complex refineries can use different types of crude to produce gasoil, often without being stuck with heavy fuel oil as a byproduct. On the other hand, smaller more simple refineries are unable to do that with ease, and “some simple refineries may be forced to close or to upgrade,” according to the IEA.
“We foresee a scramble for middle distillates that will drive crack spreads higher and drag oil prices with it,” Morgan Stanley analysts said in a note.
The investment bank said that Brent crude prices could jump to $90 per barrel, aided by the IMO regulations and the rush to secure compliant fuel. “The last period of severe middle distillate tightness occurred in late-2007/early-2008 and arguably was the critical factor that drove up Brent prices in that period,” Morgan Stanley wrote.
More
If all
else fails, immortality can always be assured by spectacular error.
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?
Researchers control the properties of graphene transistors using pressure
Date:
May 16, 2018
Source:
Columbia University
Summary:
Researchers have developed a technique to manipulate the electrical
conductivity of graphene with compression, bringing the material one step
closer to being a viable semiconductor for use in today's electronic devices.
A Columbia University-led international team of researchers has
developed a technique to manipulate the electrical conductivity of graphene
with compression, bringing the material one step closer to being a viable
semiconductor for use in today's electronic devices.
"Graphene is the best electrical conductor that we know of on
Earth," said Matthew Yankowitz, a postdoctoral research scientist in
Columbia's physics department and first author on the study. "The problem
is that it's too good at conducting electricity, and we don't know how to stop
it effectively. Our work establishes for the first time a route to realizing a
technologically relevant band gap in graphene without compromising its quality.
Additionally, if applied to other interesting combinations of 2D materials, the
technique we used may lead to new emergent phenomena, such as magnetism,
superconductivity, and more."
The study, funded by the National Science Foundation and the David and
Lucille Packard Foundation, appears in the May 17 issue of Nature.
The unusual electronic properties of graphene, a two-dimensional (2D)
material comprised of hexagonally-bonded carbon atoms, have excited the physics
community since its discovery more than a decade ago. Graphene is the
strongest, thinnest material known to exist. It also happens to be a superior
conductor of electricity -- the unique atomic arrangement of the carbon atoms
in graphene allows its electrons to easily travel at extremely high velocity
without the significant chance of scattering, saving precious energy typically
lost in other conductors.
But turning off the transmission of electrons through the material
without altering or sacrificing the favorable qualities of graphene has proven
unsuccessful to-date.
"One of the grand goals in graphene research is to figure out a way
to keep all the good things about graphene but also create a band gap -- an
electrical on-off switch," said Cory Dean, assistant professor of physics
at Columbia University and the study's principal investigator. He explained
that past efforts to modify graphene to create such a band gap have degraded
the intrinsically good properties of graphene, rendering it much less useful.
One superstructure does show promise, however. When graphene is sandwiched
between layers of boron nitride (BN), an atomically-thin electrical insulator,
and the two materials are rotationally aligned, the BN has been shown to modify
the electronic structure of the graphene, creating a band gap that allows the
material to behave as a semiconductor -- that is, both as an electrical
conductor and an insulator. The band gap created by this layering alone,
however, is not large enough to be useful in the operation of electrical
transistor devices at room temperature.
In an effort to enhance this band gap, Yankowitz, Dean, and their
colleagues at the National High Magnetic Field Laboratory, the University of
Seoul in Korea, and the National University of Singapore, compressed the layers
of the BN-graphene structure and found that applying pressure substantially
increased the size of the band gap, more effectively blocking the flow of
electricity through the graphene.
More
Another weekend and a
Royal Wedding, a Football Cup Final, and President Trump. Hopefully by Monday
we’ll have a better idea if a deal is possible in averting a trade war with
China and NATO. This Friday it looks like curtains for NAFTA. Have a great
weekend everyone.
A man
may be a fool and not know it, but not if he is married.
H. L.
Mencken.
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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