Baltic Dry Index. 1666 +34 Brent Crude 74.85
“Ask no questions, and you'll be told no lies.”
Charles Dickens, Great
Expectations
Today we await the final act of President
Trump’s bull-in-a-China-shop European tour, his informal summit with President
Putin in Helsinki. President Trump said yesterday
from his vacation in Scotland at Trump Turnberry, that he has low expectations
of the outcome, matching the expectations of President Putin and most of
Europe.
While we await the outcome of that final act,
the economic news out China suggests that the trade war is now starting to
impact China’s factory output, although this may just be a result of some
orders that were placed early to beat the incoming tariffs. Next quarter’s figures
will likely be far more important. Still the second quarter numbers were enough
to make Asian markets skittish.
July 16, 2018 / 3:04 AM
China second quarter GDP growth cools as factory output weakens, trade row flares
BEIJING
(Reuters) - China’s economy expanded at a slower pace in the second quarter as
Beijing’s crackdown on debt risks crimped activity, while June factory output
growth weakened to a two-year low in a worrying sign as a heated trade war with
the United States threatens to knock exports.
The
more timely activity indicators for last month backs market views that growth
is cooling, with some analysts calling for the government to take stronger
measures to support the economy
They need to slow financial deleveraging slightly and to turn their
focus more on growth-supportive measures, for example increasing liquidity
through (bank reserve requirement) cuts,” said Iris Pang, Greater China
Economist at ING in Hong Kong.
“If the situation gets worse a lot faster than what we expect I do think
Chinese authorities need to beef up supportive measures, both fiscal and
monetary.”
The economy grew 6.7 percent in the second quarter from a year earlier,
in line with expectations and slightly lower from the first quarter, the
National Bureau of Statistics said on Monday.
First half fixed asset investment growth was a record low, while
industrial output for June matched the slowest growth rate in over two years at
6.0 percent and missed forecasts centered on 6.5 percent expansion.
Analysts polled by Reuters had expected the economy to expand 6.7
percent in the April-June quarter.
On a quarterly basis, growth picked up 1.8 percent from 1.4 percent in
the first quarter, beating expectations of 1.6 percent growth.
More
July 16, 2018 / 1:54 AM
Asian shares fall on soft China data, trade war fears
SHANGHAI
(Reuters) - Asian shares fell on Monday as new data showed China’s economy
slowed slightly in the second quarter, compounded by fears of a full-scale
Sino-U.S. trade war looming over markets.
----While the GDP figures were in line with market expectations, the new data also showed slower-than-expected growth in China’s industrial output, pointing to slowing momentum and prompting some analysts to call for stronger government measures to support growth.
Taken together, the data show an economy continuing to slow under the
influence of a multi-year crackdown on excessive financial risk, even as trade
war headwinds gather.
-----After briefly moving higher on early gains in China’s share markets, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.3 percent.
The Shanghai Composite Index .SSEC and the blue-chip CSI300 index .CSI300 fell 0.5 percent.
Hong Kong's Hang Seng index .HSI was down less than 0.1 percent, but the China Enterprises Index .HSCE took a bigger hit, falling 0.6 percent.
Australian shares were down 0.3 percent, and Seoul's Kospi .KS11 lost 0.1 percent. Shares in Taiwan were mostly flat.
Japan’s markets are closed for a holiday.
The soft China data undermined a boost to sentiment from Friday’s gains on Wall Street, which were underpinned by strong profits from industrial and energy firms and helped offset investor concerns over the U.S.-China trade war.
More
July 16, 2018 / 2:07 AM
Trump and Putin to hold first summit talks as twitchy West looks on
HELSINKI (Reuters) - After months of exchanging long-distance
compliments, Donald Trump and Vladimir Putin sit down on Monday for their first
ever summit, a potential political minefield at home for the U.S. president but
a geopolitical win for his Russian counterpart.
Neither side expects major breakthroughs from the talks in the Finnish
capital beyond warm words, an agreement to begin repairing battered U.S.-Russia
relations, and maybe a deal to start talks on issues such as nuclear arms
control and Syria.
The two men, who have praised each other’s leadership qualities from
afar, could also agree to start restocking their respective embassies and
returning confiscated diplomatic property after a wave of expulsions and
retaliatory action prompted by the poisoning of a former Russian spy in Britain.
Ahead of the summit, both sides talked down the event, however, with
Trump telling CBS he was going in with “low expectations” and John Bolton,
Trump’s national security adviser, saying on ABC’s “This Week” that the United
States was not looking for “deliverables” and that the meeting would be
“unstructured.”
Russian Foreign Minister Sergei Lavrov told Russia’s RT TV station that
he also had low expectations. He would regard the summit as a success if there
was an agreement to merely reopen severed lines of communications across the
board, he said.
For Putin, the fact that the summit is even happening despite Russia’s
semi-pariah status among some Americans and U.S. allies is a geopolitical win
because, in Russian eyes, it shows that Washington recognises Moscow as a great
power whose interests must be taken into account.
For Russia, it is also a powerful sign that Western efforts to isolate
Moscow have failed.
More
In other news, with
another round of tit-for-tat tariffs looming in August, the EUSSR is getting
increasingly nervous. But is anyone in Washington listening? Below, one of the many
EUSSR dime-a-dozen presidents sounds off, but is it the sound on one hand
clapping?
July 16, 2018 / 4:29 AM
EU's Tusk calls on China, U.S., Russia not to start trade wars
BEIJING
(Reuters) - European Council President Donald Tusk said on Monday China, the
United States and Russia had a duty not to start trade wars and called on the
three countries to reform the World Trade Organization.
He
said there was still time to prevent conflict and chaos. Tusk and European
Commission President Jean-Claude Juncker are in Beijing to meet Chinese Premier
Li Keqiang for an annual China-EU leaders dialogue.
July 16, 2018 / 12:37 AM
China looks to get cozy with EU in annual talks as Trump tariffs bite
BEIJING (Reuters) - The European Union will open an annual
meeting with China on Monday, and will be looking to fend off overtures for an
anti-U.S. alliance as China seeks a European counterbalance to U.S. tariffs.
Premier Li Keqiang will host European Council President
Donald Tusk and European Commission President Jean-Claude Juncker in Beijing,
where the two sides could reinvigorate long-running investment treaty talks
with the expected exchange of markets access offers for the first time.
The meeting is expected to produce a modest communique affirming the
commitment of both sides to the multilateral trading system. Leaders failed to
find sufficient consensus for such a joint statement after meetings in 2016 and
2017.
This year’s talks come with the United States and China increasingly
mired in a trade dispute with no sign of negotiations on the horizon.
U.S. President Donald Trump has warned he may ultimately impose tariffs
on more than $500 billion worth of Chinese goods - nearly the total amount of
U.S. imports from China last year.
China has sworn to retaliate at each step.
European envoys say they have sensed a greater urgency from China since
last year to find like-minded countries willing to stand up against Trump’s
“America First” policies.
China’s ambassador to the European Union, Zhang Ming, said in a
commentary in the ruling Communist Party’s official People’s Daily newspaper on
Sunday that the focus of the meeting would be how China-EU relations could
become a “standard of stability” amid the “din of unilateralism and
protectionism”.
More
In slightly better
news, Trump’s trade war team, gave China’s ZTE a walk, but for how long? Meanwhile
lasting damage has been done to US firms
global credibility, and the financial settlement stinks of blackmail. I doubt
ZTE will be relying on US firms or components for long.
July 16, 2018 / 3:44 AM
ZTE shares soar after U.S. lifts supplier ban
HONG
KONG (Reuters) - Shares of China’s ZTE Corp surged more than 12 percent in Hong
Kong on Monday after the United States lifted a ban on American companies
selling parts to the telecommunications equipment maker that had crippled its
business.
The U.S. Commerce Department removed the ban shortly after ZTE deposited
$400 million (302 million pounds) in a U.S. bank escrow account as part of a
settlement reached last month. The settlement also included a $1 billion
penalty that ZTE paid to the U.S. Treasury in June.
ZTE’s Hong Kong-listed shares opened up 5.5 percent and quickly extended
gains to rise more than 12 percent to HK$15.48. That is still around 40 percent
lower than its last trading price in April when its shares were suspended for
two months.
Uncertainty over the ban battered ZTE shares, wiping out nearly $11
billion of the company’s market valuation.
Underscoring the impact of the U.S. penalty, ZTE said on Friday it
expected to record a net loss in the first half of the year due to the hefty
fine.
Many U.S. lawmakers see the company as a national security threat and,
on Thursday, a group of Republican and Democratic U.S. senators urged that
ZTE’s penalties be reinstated.
The U.S. Senate paved the way for a showdown with U.S. President Donald
Trump over the issue last month, when it passed an annual defence policy bill
with an amendment attempting to reverse the deal.
More
Finally. bad times
make for unlikely friends. The enemy of my enemy, and all that.
Russia, France rebuilding cooperation mechanisms: Putin
Source: Xinhua| 2018-07-16 03:19:33
MOSCOW, July 15 (Xinhua) -- Russian President Vladimir Putin on Sunday
praised the positive development in Russia-France relations and confirmed that
mechanisms of cooperation between the two countries are being restored, the
Kremlin said.
I would like to note a positive trend in trade and economic sphere: last
year's growth of trade was around 15 percent, while in the first six months of
2018, it is 19 percent," Putin said at a meeting with his French
counterpart Emmanuel Macron held at the Kremlin, according to a Kremlin
transcript.
Hailing an upcoming meeting of the Russia-France inter-parliamentary
commission, Putin expressed his optimism about prospects of bilateral
cooperation.
"The usual cooperation mechanisms are gradually being restored.
This gives grounds to believe that we will overcome all the difficulties
encountered in the previous period, and will embark on the path of positive
development of multifaceted ties," he said.
The Russian president also noted the development of bilateral relations
have gained "a good impetus" during the recent St. Petersburg
International Economic Forum, where the two heads of state held talks on the
sidelines.
On his part, Macron also spoke highly of the results of the meeting on
various bilateral, regional and global issues and expressed readiness to
continue its dialogue with the Russian side.
More
“Take
nothing on its looks; take everything on evidence. There's no better rule.”
Charles Dickens, Great Expectations
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, the sad story of what
goes badly wrong next decade, assuming that is that Trump’s Great Global Trade War
doesn’t trigger a recession in late 2018, or more likely 2019. Sadly, the whole
article is well worth the read.
Charles Dickens, David Copperfield
THE US IS DEAD BROKE
July 13, 2018
“The rich rules over the poor, and the borrower becomes the lender’s slave.”
– Solomon
This is the story about Debtor, a newborn American baby. Debtor has just
been born into the greatest economy in the world, a land full of promises and
opportunities. This is what his parents tell him. But unbeknown to Debtor, he
has been given a very bad start in life. Because the parents haven’t told
Debtor, and how could they since they are not aware themselves, that he starts
life with a massive debt burden that will grow manifold during his lifetime.
THE AMERICAN DEBT SLAVE
King Solomon’s words will ring true for almost every American born today. The average American is a debt slave already at birth. And by the time he dies, his debt will have increased exponentially, thus passing on an even bigger debt and greater enslavement to the next generation.This is a vicious circle that has gone on for just over 100 years. A very small elite has become incredibly wealthy and the masses have become enslaved by private and government debt.
For the majority of people it will be impossible to extricate themselves from this massive debt stone around their neck. Instead they will add to the debt by taking on more debt.
US DEBT GOING FROM $21 TRILLION TO $43 QUADRILLION
But the government will also do their part. They will at least double the national debt every 8 years as they have been doing for several decades ( see last week’s article). Starting from $21 trillion debt today and assuming that Debtor will live until 88 years old, a doubling of the debt every 8 years would lead to a $43 quadrillion federal debt in 2106. Most of us will of course not be around to check that forecast but since it is just an extrapolation of long term trends, it is difficult to argue with although a lot can of course happen in 88 years.Even the $43 quadrillion US debt in 2106 could be conservative. Higher deficits and higher interest rates, both being likely, could multiply the $43 quadrillion many, many times.
I am sure that no one expected, in 1981 when Reagan started with a $900 billion debt, that the US debt would have gone up 23x to $21 trillion, 37 years later. No one likes forecasting the truth, because the truth looks horrific when it comes to all the mismanaged economies in the world.
But the federal debt is of course only a smaller portion of the total debt and liabilities that Debtor and his fellow Americans are responsible for.
US UNFUNDED LIABILITIES $220 TRILLION
The biggest burden will be the unfunded liabilities of Medicare and Social Security. Professor Laurence Kotlikoff has calculated that these amount to $220 trillion. That is 10x current federal debt and a liability that is unlikely to ever be funded. The best solution would of course be a miraculous increase in prosperity and tax revenues – Very unlikely.Another alternative would be that Debtor and his young friends spend all their working life just to pay the pension and medical costs of the older generation – Unlikely, plus it would lead to a revolution.
More likely is that the government will just create more debt to pay for these commitments. We know of course that a debt problem will not be solved by incurring more debt and whatever additional money the government will create out of thin air will have zero value and therefore also zero effect.
So that leaves the option that there will be virtually no medical care or pension for Debtor and his fellow Americans – This will lead to civil unrest as well as poverty, famine and disease. Not a very desirable outcome but sadly very likely.
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?
Graphene could be key to controlling water evaporation
Date:
July 12, 2018
Source:
IOP Publishing
Summary:
Graphene coatings may offer the ability to control the water evaporation
process from various surfaces, according to new research. The study looked at
the interactions of water molecules with various graphene-covered surfaces.
Graphene coatings may offer the ability to control the water evaporation
process from various surfaces, according to new research.
The study, carried out by a team from the Chinese Academy of Sciences
and the Collaborative Innovation Center of Quantum Matter (Beijing), looked at
the interactions of water molecules with various graphene-covered surfaces.
It is published today in the journal 2D Materials.
Lead author Dr Yongfeng Huang, from the Chinese Academy of Sciences,
said: "Water droplet evaporation is a ubiquitous and complicated
phenomenon, and plays a pivotal role in nature and industry. Understanding its
mechanism at the atomic scale, and controlling evaporation rate rationally is
important for applications including heat transfer and body-temperature
control. However, it remains a significant challenge."
The team's experiments showed that a graphene coating controls water
evaporation by suppressing the evaporation rate on hydrophilic surfaces, and
accelerating evaporation on hydrophobic ones.
Dr. Huang said: "More importantly, we found graphene is
'transparent' for evaporation. When a hydrophilic surface is coated with
graphene, the contact line of the water droplet is dramatically shortened or
elongated, because of adjustment in wetting angles. This leads to changes in
the evaporation rate."
The researchers wanted to understand the 'transparency' in
graphene-mediated evaporation, and uncover its underlying structure on the
atomic scale. To do this, they conducted molecular dynamics simulations on
water droplet evaporation, on surfaces with and without a graphene coating.
For the first time, they identified the atomic-scale mechanism for
substrate-induced evaporation events. They found that water molecule forms a
precursor state at the contact line before it evaporates.
----Professor James Sprittles from the University of Warwick, UK
assessed the work. He said: "Using experiments supplemented with molecular
dynamics simulations, Dr. Huang and co-workers have provided fascinating
insights into the molecular mechanisms governing the evaporation of water
droplets on technologically-relevant graphene coated substrates.
"Their research shows that wettability is solely responsible for
evaporation rate changes, and simultaneously opens up several interesting
topics for future research, such as how molecular effects (e.g. precursor
nanofilms and thermal fluctuations) can be incorporated into macroscopic
modelling."
The monthly Coppock Indicators finished June.
DJIA: 24,271 +221 Down. NASDAQ:
7,510 +267 Down. SP500: 2,718 +169 Down.
All
three slow indicators moved down in March and have continued down in April. May
and June. For some a new bear signal, for others a take profits and get back to
cash signal.
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