Baltic Dry Index. 1476 +54 Brent Crude 78.12
“All nations
are equal, but some nations are more equal than others.”
President
Trump, with apologies to George Orwell, Animal
Farm
While America takes a
break today from Make America Great Again, MAGA, to celebrate it’s escape from the tyrant
empire of Mad King George III, America’s “tyrant” Russian elected President,
Donald Trump, declared some very bad news for Europe’s NATO members, the US
piggy bank has closed.
Most NATO members
will now have to greatly increase their defence spending in addition to
fighting a trade war with President Trump. Exactly how this helps Russia or
President Putin hasn’t been explained, though we are still awaiting
explanations from Special Prosecutor Mueller, and the leading Democrats.
Below, the latest
news from our World Turned Upside Down. So much so, that much to the nation’s
stunned disbelief, the English Football Team delivered a first last night and
actually won a penalty shoot-out to progress in the World Cup. Brexit now,
Europe’s finished! EUSSR and remainiac style, Columbia will probably demand a
replay.
“Let's
face it: our lives are miserable, laborious, and short.”
EC
President Juncker, with apologies to George Orwell, Animal Farm
July 3, 2018 / 11:32 PM
Trump will tell NATO nations U.S. cannot be the world's piggy bank
ABOARD
AIR FORCE ONE (Reuters) - President Donald Trump will tell fellow NATO
countries at next week’s summit that the United States cannot be “the world’s
piggy bank,” White House spokesman Hogan Gidley said on Tuesday.
“What
the president is going to do is go into these meetings with the mindset to
protect the American people, stand with our partners and allies - but as he has
said many times before America is thought so often to be the world’s piggy
bank. And that’s gotta stop,” Gidley told reporters as Trump flew to West
Virginia. Trump has pressured some NATO allies to significantly increase
military expenditure.
Asia Stocks Fall Toward 9-Month Low; Yuan Gains: Markets Wrap
By Adam Haigh
Updated on 4 July 2018, 04:42 GMT+1
Greenback extends decline; U.S. bonds, stocks shut for holiday
Equities in Hong Kong and China slide, reversing gains
Asian stocks slipped toward the lowest level since October even as the yuan recovered from its recent decline, which had unsettled investors amid trade tensions and prompted verbal intervention from Chinese officials.Equities in China and Hong Kong dropped, reversing gains within the first 30 minutes of trading. Shares in Japan, South Korea and Australia also declined, though to a lesser degree. China’s yuan rose for a second day after the nation’s central bank vowed to keep the currency stable and not to deploy it as a weapon in the trade conflict with the U.S.. The yen gained with gold, a sign that havens remain in demand. The greenback remained under pressure ahead of a U.S. holiday Wednesday.
While
reassurances from Chinese central bankers helped assuage concerns about the
biggest developing economy, lifting its currency, sentiment in the stock market
remains fragile after the benchmark index fell into a bear market. U.S. shares
were under pressure Tuesday after a Chinese court temporarily banned chip sales
by the American firm Micron Technology Inc. in the country. Next up in the
trade dispute are U.S. tariffs on some Chinese goods, scheduled to come into
effect on Friday.
More
Fitch warns President Trump’s trade fight could cost the world $2 trillion in global trade
By Sue Chang Published: July 3, 2018 2:25 p.m. ET
Global trade skirmish could shave 0.5 percentage point off U.S. growth
Fitch Ratings on Tuesday warned that rising tensions between the U.S.
and its trading partners could lead to new measures with a greater impact on
global growth with as much as $2 trillion in global trade in jeopardy if
President Donald Trump remains on a trade warpath.
“The U.S. investigation into auto tariffs, possible additional U.S.
tariffs on Chinese imports, and the likely reactions of other countries and
blocs, point to a potential serious escalation, albeit with an impact that
falls short of across-the-board tariffs imposed on all major trade flows,”
Brian Coulton, chief economist at Fitch, said in a report.
Coulton noted that although the actions taken by the U.S. as well as
China and the EU so far have been too muted to affect his outlook on global
economic performance, further measures could herald a significant escalation in
the war.
----No one has been immune from Trump’s attacks, including close allies such as Canada and Mexico, signatories of the North American Free Trade Agreement.
“If tensions rise further, the U.S. hardens its stance and fully
withdraws from Nafta—which is not our base case—this would magnify the impact.
The imposition of high tariffs on U.S. auto imports would represent an
existential threat to Nafta,” said Coulton.
More
July 3, 2018 / 2:02 PM
Exclusive - China presses Europe for anti-U.S. alliance on trade
BRUSSELS/BERLIN
(Reuters) - China is putting pressure on the European Union to issue a strong
joint statement against President Donald Trump’s trade policies at a summit
later this month but is facing resistance, European officials said.
In meetings in Brussels, Berlin and Beijing, senior Chinese officials,
including Vice Premier Liu He and the Chinese government’s top diplomat, State
Councillor Wang Yi, have proposed an alliance between the two economic powers
and offered to open more of the Chinese market in a gesture of goodwill.
One proposal has been for China and the European Union to launch joint
action against the United States at the World Trade Organisation.
But the European Union, the world’s largest trading bloc, has rejected
the idea of allying with Beijing against Washington, five EU officials and
diplomats told Reuters, ahead of a Sino-European summit in Beijing on July
16-17.
Instead, the summit is expected to produce a modest communique, which
affirms the commitment of both sides to the multilateral trading system and
promises to set up a working group on modernising the WTO, EU officials said.
Vice Premier Liu He has said privately that China is ready to set out
for the first time what sectors it can open to European investment at the
annual summit, expected to be attended by President Xi Jinping, China’s Premier
Li Keqiang and top EU officials.
Chinese state media has promoted the message that the European Union is
on China’s side, officials said, putting the bloc in a delicate position. The
past two summits, in 2016 and 2017, ended without a statement due to
disagreements over the South China Sea and trade.
More
Trump Cites Car-Tariff Threat as Biggest Trade Leverage
Fox interview comments suggest recent steel tariffs were a dry run for bigger fight on autos
Jacob M. Schlesinger Updated July 2, 2018 4:20 a.m. ET
WASHINGTON—President Donald Trump said he sees his threat to impose global
auto tariffs as his biggest weapon to extract concessions from trading
partners, shedding more light on his broader trade policy strategy.Mr. Trump was referring to the prospect of imposing 20% tariffs on imported vehicles in the name of national security, a proposal his administration is studying.
The U.S. car market is much bigger than the steel market, which Mr. Trump has previously targeted for tariffs. The economies of Mexico, Germany and Japan in particular are much more dependent on exporting vehicles to the U.S.
Mr. Trump’s comments show the significance he places on cars in his broader effort to pressure countries spanning from China to Germany to Canada to give the U.S. what he considers more favorable trade deals.
Some of Mr. Trump’s supporters worry such tactics will only intensify the wave of retaliatory measures already slamming into the U.S. economy following earlier tariffs. Several Republican lawmakers are trying to find ways to limit Mr. Trump’s powers to take such moves.
Administration officials have said no auto-tariff decision has yet been made, but they have suggested they are looking to do so before the November midterm elections.
Mr. Trump used a similar rationale—invoking a rarely used Cold War-era law that gives the president wide discretion to block imports—to justify recently imposed steel and aluminum tariffs. His latest remarks suggest that was a dry run for a bigger fight on cars.
In discussing ongoing talks to renegotiate the North American Free Trade Agreement with Mexico and Canada, for example, the Republican president said in the Fox interview that “if they’re not fine, I’m going to tax their cars coming into America, and that’s the big one.”
“The European Union is possibly as bad as China just smaller, OK,” Mr. Trump said. “It’s terrible what they did to us. European Union—take a look at the car situation. They send a Mercedes in; we can’t send our cars in.”
Mr. Trump has repeatedly complained about Europe’s 10% tariff on car imports compared with the 2.5% imposed by the U.S., but he hasn’t mentioned the 25% tariff the U.S. imposes on imports of light trucks.
----But so far, those countries have called the U.S. bluff, absorbing the U.S. tariffs and, in the case of Canada and Europe, fighting back with penalties of their own.
Canadian retaliatory tariffs took effect Sunday. And Europe has claimed a victory of sorts in that tiff, when Harley-Davidson Inc., the Milwaukee-based motorcycle maker, said last week it would shift some production outside the U.S. to avoid the cost of European tariffs.
The European Union is now warning of even greater pain for the U.S. should Mr. Trump follow though on cars. In a comment submitted to the administration Friday, the EU delegation to the U.S. said that it estimated that $294 billion dollars of U.S. exports—or 19% of last year’s U.S. exports—“could be subject to countermeasures” in response to car tariffs.
China on Sunday followed through on a pledge announced in May to cut tariffs on car imports to 15% from 25%. But in the weeks since that announcement China and the U.S. have edged closer to a full-scale trade war, and Beijing is preparing to raise tariffs on U.S. auto imports to 40% this Friday.
Rather than back down, Mr. Trump said he now wants to raise the stakes, by adding autos to the mix. The U.S. imported about $29 billion in steel in 2017, compared with about $192 billion in cars. The car industry makes up nearly a quarter of the country’s $500-billion-plus trade deficit.
More
“The
EUSSR serves the interests of no nation except itself.”
With
apologies to George Orwell, Animal Farm
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, bitcoin. The more things change the more the
same old scams stay the same. Bitcoin or Euros anyone?
It's morally wrong to allow a
sucker to keep his money.
W. C. Fields
Look Out, Bitcoin Has Lost Its Tether
Even Isaac Newton didn’t appreciate how the law of gravity applies to markets.
Andy KesslerJuly
1, 2018 4:37 p.m. ET
Would Isaac Newton have fallen for bitcoin? By the spring of 1720,
Newton was one of the most famous scientists in the world—and a very wealthy
man. He decided to sell his shares in the South Sea Co., earning a 100% profit.
The physicist, said to be worried the market was getting out of hand,
supposedly quipped that he “can calculate the motions of the heavenly bodies,
but not the madness of the people.” Yet a few months later, as he watched the stock
trade ever higher, he let his own madness get the best of him. Newton got back
in, and he eventually lost the equivalent of millions in today’s dollars when
the price crashed. Sound familiar?
Investment bubbles are almost always created the same way: Someone takes
money—maybe cash or debt—from the balance sheet and moves it to the income side
of the ledger. This transformation makes profit prospects seem better than they
truly are, and the perceived value goes up. The bubble bursts when the balance
sheet has no more to give.
Britain gave the South Sea Co., founded in 1711, a monopoly on trade
with South America. The company was part of a clever scheme to finance
government debt, which could be converted into South Sea shares. As the stock
rose, South Sea’s profit would come from the difference between the share price
and the value of the underlying debt.
There
was a government slush fund buying up South Sea shares, making it easier to get
rid of more government debt. The company would even lend money to those buying
its shares. In 1720 government and company balance-sheet cash sent the stock
from £100 to £1,000. When there weren’t any more buyers, the bubble burst and
financial gravity took hold.
----Fast forward to 1999. If your dot-com company was eyeing an initial public offering, Goldman Sachs and Morgan Stanley wouldn’t do it unless your website had a marketing distribution deal. What that meant is you’d go to AOL and ask for the IPO special. AOL would deliver millions of pop-up ads to its users in exchange for a 747 full of cash. If the IPO you were contemplating was $100 million, AOL might ask for half. From your balance sheet straight to AOL’s income statement.
Theoretically, your company would get new users. But in reality, hardly anyone clicked on pop-up ads. The biggest losers, though, were the Isaac Newtons who invested in these vacuous IPOs as they failed to deliver profits and eventually imploded. Bubbles need continuous hot air and always peter out eventually.
Enron played a similar game. Its executives convinced the accountants that they could do risky deals off the balance sheet so long as outside investors had at least a tiny stake. To entice investors, the company promised to make up any losses with shares of Enron stock. There it is: balance sheet to income statement. It worked when the stock was $40. But as the price began to fall, the whole scheme came undone, because the company would’ve had to issue billions of $1 Enron shares.
The 2008-09 financial crisis wasn’t much different. Bear Stearns and Lehman Brothers would borrow short-term based on their strong balance sheets and then buy bundles of mortgage-backed securities, which were often hedged against default by AIG’s balance sheet. Prices rose as the rest of Wall Street copied this scheme to create seemingly safe and temporarily repeatable income. It didn’t work—as the world learned a decade ago.
Why relive this painful history? Because half of bitcoin’s price increase over the past year came from market manipulation via another cryptocurrency known as tether, according to a paper last month from University of Texas researchers. Bitcoin has a fixed number of coins. Tether is the opposite. Its price is fixed at $1 and as buying increases, more coins are issued—now 2.7 billion of them. Turns out it was pretty easy to issue tether coins and use the proceeds to buy bitcoin. Hence the price of one bitcoin rose from around $2,500 a year ago to about $19,000 last December. Except it was the tether balance sheet and not real demand driving the purchases. Like Newton’s apple, bitcoin is trading below $6,500 and dropping.
More
Never give a sucker an even
break.
Satoshi
Nakamoto with apologies to W. C. Fields
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?
New insights bolster Einstein's idea about how heat moves through solids
Date:
June 28, 2018
Source:
DOE/Oak Ridge National Laboratory
Summary:
A discovery supports a century-old theory by Albert Einstein that explains how
heat moves through everything from travel mugs to engine parts.
A discovery by scientists at the Department of Energy's Oak Ridge
National Laboratory supports a century-old theory by Albert Einstein that
explains how heat moves through everything from travel mugs to engine parts.
The transfer of heat is fundamental to all materials. This new research,
published in the journal Science, explored thermal insulators, which are
materials that block transmission of heat.
"We saw evidence for what Einstein first proposed in 1911 -- that
heat energy hops randomly from atom to atom in thermal insulators," said
Lucas Lindsay, materials theorist at ORNL. "The hopping is in addition to
the normal heat flow through the collective vibration of atoms."
The random energy hopping is not noticeable in materials that conduct
heat well, like copper on the bottom of saucepans during cooking, but may be
detectable in solids that are less able to transmit heat.
This observation advances understanding of heat conduction in thermal
insulators and will aid the discovery of novel materials for applications from
thermoelectrics that recover waste heat to barrier coatings that prevent
transmission of heat.
Lindsay and his colleagues used sophisticated vibration-sensing tools to
detect the motion of atoms and supercomputers to simulate the journey of heat
through a simple thallium-based crystal. Their analysis revealed that the
atomic vibrations in the crystal lattice were too sluggish to transmit much
heat.
"Our predictions were two times lower than we observed from our
experiments. We were initially baffled," Lindsay said. "This led to
the observation that another heat transfer mechanism must be at play."
Knowing that the second heat transfer channel of random energy hopping
exists will inform researchers on how to choose materials for heat management
applications. This finding, if applied, could drastically reduce energy costs,
carbon emissions and waste heat.
MoreThe 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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