Baltic Dry Index. 1340 +91 Brent Crude 75.84
“Why, sometimes I've believed
as many as six impossible things before breakfast.”
President Trump, with apologies
to Lewis Carroll.
All news is good news
again in the return of stock mania. In the latest version of stock mania the
ECB will next week announce the end of its “whatever it takes” bond buying support
program, triggering higher rates, and higher interest rates are good for
financial stocks and currencies.
Well maybe, but I’ll
stay in the maybe not camp. Higher interest rates are not good for most stocks,
especially those that loaded up on cheap debt to buyback their stock to rig the
stock price, while higher interest rates will likely sink Italy, and most of
the emerging market countries.
Higher interest rates,
plus the Great Global Trump Trade War just finally kicking off, make this
iteration of stock mania probably the final exit rally before an emerging
market crisis hits over the summer, followed by a debt crisis, and a tariff
crisis.
Below, picking up
pennies in front of steamrollers is back in fashion.
June 7, 2018 / 2:24 AM
Asian shares hit 2-1/2-month high; euro, yields up after ECB comments
TOKYO
(Reuters) - Asian shares rose to a fresh 2-1/2-month high on Thursday,
supported by sound economic fundamentals, while expectations the European
Central Bank (ECB) could start to wind down its stimulus boosted the euro and
global bond yields.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.4 percent to extend its gains, hitting a 2-1/2-month high for a second straight day. Japan's Nikkei average .N225 rose 0.8 percent.
Notable gainers include the technology-heavy Taiwanese stocks, with Taiwan's main index .TWII nearing the 27-year high of 11,270 hit on January 23. The index has rallied 4.25 percent since last Wednesday, boosted by the rally in tech stocks and the Nasdaq.
The euro EUR= held near a two-week high while Germany's benchmark 10-year bond
DE10YT=TWEB hit its own two-week high of 0.486 percent growing conviction the European Central Bank would announce as early as next week its intention to end a drawn-out stimulus programme by year-end.
The 10-year U.S. Treasury yield US10YT=RR hit a fresh 1-1/2-week peak of 2.985 percent.
ECB Chief Economist Peter Praet said on Wednesday that robust growth made the central bank increasingly confident that inflation is on its way back to target, raising the chances it may use next week’s meeting next week to reveal more about the end of its bond-buying program.
----White House economic adviser Larry Kudlow said late on Wednesday that U.S. President Donald Trump would meet French President Emmanuel Macron and Canadian Prime Minister Justin Trudeau at the G7 summit this week.
Although Kudlow said Trump would not back down from the tough line he has taken on trade, the comments appeared to calm investors.
The Dow Jones Industrial Average .DJI rose 1.4 percent to 25,146.39, the S&P 500 .SPX gained 0.86 percent to 2,772.35 and the Nasdaq Composite .IXIC added 0.67 percent to hit its record closing high of 7,689.24.
More
Now back to the real
world far from the stock casinos.
France Warns Trump It Won’t Sign a G-7 Statement
By Helene Fouquet
France has joined Germany to warn President Donald Trump that it won’t
sign a joint statement of the Group of 7 at the summit in Quebec this week, a
French official in the president’s office said.
President Emmanuel Macron has signaled that progress on tariffs, Iran
nuclear agreement and Paris climate accord must be made before he’ll be willing
to sign a joint statement, the official told reporters Wednesday in Ottawa. The
French president spent the day meeting with Prime Minister Justin Trudeau and
other Canadian officials ahead of the June 8-9 summit in La Malbaie, Quebec.
The official requested anonymity in keeping with rules of the French
president’s office.
Macron has concluded that the other members of the G7 -- the U.K., Germany, Japan, France, Italy and Canada -- must stand up to the U.S. over Trump’s decision to impose tariffs on steel and aluminum from the European Union, Canada and Mexico as well as other issues.
Macron’s stance emerged as world leaders converged upon Canada for the summit and echo German Chancellor Angela Merkel’s vow to challenge Trump on trade and climate change at the summit. She also said the lack of room for compromise meant leaders might not agree on the traditional final statement.
More
Trump, Trudeau had a testy phone exchange over steel tariffs
U.S. president cites torching of White House during War of 1812
· CBC News · Posted:
Jun 06, 2018 12:13 PM ET
Donald Trump and Justin Trudeau held a tense telephone call last month over
the U.S. president's decision to slap Canada with steep tariffs on steel
and aluminum.Trump mentioned the burning of the White House during the War of 1812 during the confrontational May 25 call, which was first reported by CNN and confirmed by CBC News.
Trudeau reportedly asked Trump how tariffs could be imposed on Canada on "national security" grounds. Trump reportedly responded: "Didn't you guys burn down the White House?"
It's not clear if Trump was attempting to inject humour into a discussion on a topic that could have serious economic repercussions.
British troops burned down the White House in 1814 during the War of 1812, in retaliation for an American attack on York, Ont., a British colony at the time.
More
Trump plans confrontational approach with world leaders at economic summit
June 6 at 2:19 PM
June 6, 2018 / 11:08 AM
EU plans to hit U.S. imports with duties from July
BRUSSELS
(Reuters) - The European Union expects to hit U.S. imports with additional
duties from July, ratcheting up a transatlantic trade conflict after Washington
imposed its own tariffs on incoming EU steel and aluminium.
EU members have given broad support to a European Commission plan to set
25 percent duties on up to 2.8 billion euros (2.4 billion pounds) of U.S. exports
in response to what is sees as illegal U.S. action. EU exports that are now
subject to U.S. tariffs are worth 6.4 billion euros.
“The Commission expects to conclude the relevant procedure in
coordination with member states before the end of June so that the new duties
start applying in July,” Commissioner Maros Sefcovic told a news conference on
Wednesday after he and other commissioners endorsed the plan for duties on U.S.
imports.
That plan also includes duties of between 10 and 50 percent on a further
3.6 billion euros of U.S. imports in March 2021 or potentially sooner if the
World Trade Organization has ruled the U.S. measures illegal.
U.S. products on the list include orange juice, bourbon, jeans,
motorcycles and a variety of steel products.
The European Union, Canada and Mexico have all responded after U.S.
President Donald Trump last Friday ended their exemptions from tariffs of 25
percent for steel and 10 percent for aluminium.
Canada has announced it will impose retaliatory tariffs on C$16.6
billion ($12.9 billion) worth of U.S. exports from July 1. Mexico put tariffs
on American products ranging from steel to pork and bourbon on Tuesday
Some of the products chosen are designed to target states of senior
Republicans who are seeking to retain control of both chambers of Congress in
hotly contested November elections.
More
After Steel and Aluminum Tariffs, U.S. Allies Move to Coordinate Retaliation Efforts
Canada, Japan and the European Union look to step up pressure on Trump administration
By
Emre Peker in Brussels, Paul Vieira in Ottawa and Bojan Pancevski
in Berlin
June 6, 2018 3:33 p.m. ET
U.S. allies Canada, Japan and the European Union are banding together to increase pressure on Washington following the Trump administration’s metals tariffs as they head to a meeting of Group of Seven industrialized countries in Quebec on Friday.
With trade likely to dominate the agenda of the
summit, the U.S. tariff move has driven a wedge between the U.S. and the other
six nations, say leaders and officials, and has dashed hopes that the group
would focus on a coordinated response to another longstanding trade issue: the
global steel glut driven by Chinese production.
“Tariffs imposed last week by President Trump on EU
and Canada have increased significantly tensions before the meeting,” a senior
EU official said, adding that a breakthrough to ease trade tensions was
unlikely. “We have extremely low expectations.”
----“Japan and the EU will team up on this issue and call on cooperation from other countries,” Japanese Trade Minister Hiroshige Seko told reporters Tuesday. Mr. Seko noted that Japan and the EU had issued a statement critical of the U.S. after he and EU Trade Commissioner Cecillia Malmström met in Paris last week. “This is an unusual step,” he said.
Canadian Prime Minister Justin Trudeau told
reporters Wednesday there would be “some very direct conversations”
on tariffs at this weekend’s talks, relating to what he called the Trump
administration’s “insulting” levies on steel and aluminum.
More
“But I
don’t want to go among mad people," Trump remarked.
"Oh, you can’t help that," said Trudeau: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Trump.
"You must be," said Trudeau, "or you wouldn’t have come here.”
"Oh, you can’t help that," said Trudeau: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Trump.
"You must be," said Trudeau, "or you wouldn’t have come here.”
With apologies to Lewis Carroll.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, a rare “get ready to panic,” warning from the World Bank. Start a
trade war and the sky could fall, especially on the emerging market economies.
When a country (USA) is losing many billions of dollars
on trade with virtually every country it does business with, trade wars are
good, and easy to win. Example, when we are down $100 billion with a certain
country and they get cute, don’t trade anymore-we win big. It’s easy!
Threat of trade war is already hurting growth and could be ‘devastating’ if tariffs go up
Tim Wallace5 June 2018 • 9:00pm
A global trade war would be “devastating” for economic growth as even modest
hikes in tariffs would cause as much damage to trade as the financial crisis.The stark warning from the World Bank is based on governments raising taxes on imports to the maximum level currently allowed under current trade rules – not even the introduction of new barriers.
“A worldwide escalation of tariffs up to the limits permitted under existing international trade rules could lead to cumulative trade losses equivalent to those experienced during the global financial crisis in 2008-09, with particularly severe consequences for emerging markets and developing economies,” said the World Bank in its Global Economic Prospects report.
“Protectionist threats cast a dark cloud over future growth. If these threats lead to trade wars, the consequences could be devastating. Even if they do not, uncertainty about economic policy dampens investor sentiment.”
Hiking these tariffs by 2020 would knock 6.2pc off advanced
economies’ trade and 14pc from emerging markets’ and developing economies’
trade, the World Bank estimates.
Even without
a trade war breaking out, even its threat could be enough to
reduce business investment.This comes at a time when global economic growth is already moderating.
GDP is expected to grow by 3.1pc in 2018, matching 2017’s spurt, before slowing to 3pc in 2019 and 2.9pc in 2020.
The US will slow from 2.7pc in 2018 to 2pc in 2020, the eurozone from 2.1pc to 1.5pc over the same time period and Japan from 1pc to 0.5pc.
Britain will defy the rich world trend with a modest acceleration from 1.4pc this year to 1.7pc in 2020.
Other threats to growth include higher interest rates.
“A sudden tightening of global financing conditions, combined with disorderly exchange rate movements, would leave highly indebted emerging markets and developing economies particularly vulnerable, with rising debt service costs hampering investment and heightening financial stability risks,” the report said.
Corporate debt levels in emerging markets stand at 86pc of GDP, up by 30 percentage points in the past decade.
Much of that has come in China. But even excluding China the figure is up 10 percentage points.
Almost half of the rise in corporate debt in those non-Chinese emerging markets has been raised in foreign currencies, potentially making the borrowers vulnerable to exchange rate shifts.
This could emerge through further hikes in interest rates by the US Federal Reserve, which is expected to tighten policy several times over this year and 2019.
---- “Rising borrowing costs could substantially increase the burden of debt servicing, which was compressed in recent years by low global interest rates and risk premiums. In turn, rising debt service costs could weaken investment and lower medium-term growth,” the World Bank warned.
“A reversal in capital inflows and sharp currency depreciations could
also increase default risks and raise financial stability concerns among
economies with external vulnerabilities. Emerging market debt denominated in US
dollars remains elevated in many countries and increased in 2017 amid favorable
borrowing conditions.”
“Trump Hatter: “Why is a
trade war like a writing-desk?”
“Have you guessed the riddle yet?” the Trump Hatter said, turning to Trudeau again.
“No, I give it up,” Trudeau replied: “What’s the answer?”
“I haven’t the slightest idea,” said the Trump Hatter”
“Have you guessed the riddle yet?” the Trump Hatter said, turning to Trudeau again.
“No, I give it up,” Trudeau replied: “What’s the answer?”
“I haven’t the slightest idea,” said the Trump Hatter”
With apologies to Lewis Carroll.
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?
Highview Power Completes UK Plant to Test ‘Liquid Air’ Storage Technology
This long-duration challenger to lithium-ion storage hopes to avoid the pitfalls that have stymied similar startups.
Julian SpectorJune 05, 2018
A novel long-duration energy storage technology got one step closer to
commercialization this week.
U.K.-based Highview Power has completed a test plant for its liquid air
energy storage technology. The company uses equipment developed for the
conventional power and oil and gas industries to liquefy gas, store it in tanks
and release it to spin turbines and produce electricity on demand.
If it works at larger scale, Highview could pull away from the pack of
long-duration storage companies challenging lithium-ion’s market dominance.
The periodic influxes of wind and solar power create demand for storing
energy longer than is economical with current batteries, but the field of
alternatives so far has produced more bankruptcies and small-scale pilots than
runaway successes.
Highview has avoided some of these pitfalls. It doesn’t have to convince
anyone about a new battery chemistry, because it isn’t using one. Instead, it
repurposes equipment from conventional energy infrastructure, which means it
can access mature supply chains with bankable suppliers.
----Highview Power completed commissioning for a
5-megawatt/15-megawatt-hour demonstration project in the Manchester area. The
U.K. government provided £8 million ($10.7 million) to fund this effort, which
builds on an earlier 350-kilowatt pilot.
The project took longer to complete than originally planned: When GTM covered the company's partnership with GE in 2014, the demo was expected to begin operations in spring 2015. Issues with some of the components caused the delays, but now everything is performing as expected, Brett said.
The plant's job now is to prove out the technology's usefulness for grid-balancing roles like Short Term Operating Reserve and peak capacity.
“The fact that it isn’t a black-box technology is really important," said Matthew Barnett, director of business development. "It’s not just a laboratory-based experiment."
The new plant looks like a grid-scale project compared to the earlier pilot, but it doesn’t yet earn the title of long-duration storage.
Brett already has his sights on bigger things. The next units he wants
to build will be 50 megawatts and at least 200 megawatt-hours. At that scale,
the supply chain is healthier and more varied than it is for 5-megawatt plants,
he noted.
Highview’s design uses an industrial air liquefier to cool down air,
which it stores at around -180 degrees Celsius in low pressure tanks. When
needed, the plant releases the air through an expansion turbine that generates
electric power.
These parts come from the liquefied natural gas and power plant
industries, so they are designed for power-plant scale.
More
The monthly Coppock Indicators finished May.
DJIA: 24,416 +201 Down. NASDAQ:
7,442 +276 Down. SP500: 2,705 +180 Down.
All
three slow indicators moved down in March and have continued down in April and
May. For some a new bear signal, for others a take profits and get back to cash
signal.
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