Friday 27 July 2018

Trade War Chaos. Everyone A Winner.


Baltic Dry Index. 1708 -64   Brent Crude 74.54

“Protect the downside and the upside will take care of itself.”

Donald Trump. The Art of the Deal.

“Step up, step up,” barked General Store manager Donald Trump, “get yer soybeans and LNG here.”

“Maybe tomorrow,” said cashless euromerchant Juncker, sampling another batch of imported scotch, “I must clear it with my governing board of 28 first.” 

“No soybeans, or any other kind of beans,” snapped French President Macron, seconded by Spanish Prime Minster Sanchez.

“Wanna buy a used VW diesel?” said Chancellor Merkel. “Only one previous owner, now ceasing driving for health reasons.”

But all agreed they were winners in the non-deal, trade deal struck on Wednesday between horse trader Trump and the wobbly cashless euromerchant.

Below, everyone’s a winner in the Great Global Trump Trade War, except perhaps China.

“Don’t count us out,” fumed President Xi, as he violently slammed the door on QUALCOMM’s fingers.

Below, how everyone became winners in our bizarre world of July 2018. What could possibly be wrong?

“The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you’re dead.”

Donald Trump. The Art of the Deal.

Macron Says He Needs to See More Detail on Trump-Juncker Accord

By Helene Fouquet and Esteban Duarte
French President Emmanuel Macron said he will seek clarifications from the European Commission on elements of the trade agreement its leader, Jean-Claude Juncker, thrashed out with U.S. President Donald Trump this week.

“A good trade negotiation, as I have said before, can be only done on balanced and reciprocal basis and under no circumstances under threat,” Macron said during a joint press conference in Madrid with Spanish Prime Minister Pedro Sanchez. “We have some questions that we will want to clarify in the coming days with our European partners.”

Macron’s reservations about the deal sealed Wednesday in Washington reflect concern that the accord may create imbalances among European countries, and Germany in particular. Sanchez matched his French counterpart’s caution.

“The Spanish don’t believe in unilateralism or that a specific economy imposes its policies and criteria in international trade,” said Sanchez.

In return for a pledge by Trump to suspend the threat of an extra tariff on European Union car exports, Juncker reheated proposals to bolster transatlantic economic ties and buy more liquefied natural gas from the U.S. Such a move would ease Europe’s reliance on Russian gas.

Macron said that agricultural products should be excluded from talks, citing European standards on food safety and environment that should not be abandoned in talks.

----He said that European firms should be given better access to public-sector tenders in the U.S. and called from Trump to make a gesture of goodwill over the “illegal tariffs” he’s imposed on steel and aluminum.

“This must comes ahead of any concrete advances” on trade, he said.

July 26, 2018 / 5:09 PM

U.S. touts EU trade truce, attention now turns to China

WASHINGTON (Reuters) - The United States signaled on Thursday it is set to push ahead on trade talks with Canada and Mexico after agreeing to suspend hostilities over tariffs with Europe in a fragile deal that may clear the way for renewed pressure on China.

A surprise deal struck on Wednesday will see Washington suspend the imposition of any new tariffs on the European Union, including a proposed 25 percent levy on auto imports, and hold talks over tariffs on imports of European steel and aluminum.

The deal boosted share markets initially, and U.S. industrial shares were stronger on Thursday as fears of a trade war with Europe ebbed.

Both sides claimed victory in the deal, reached by Trump and European Commission President Jean-Claude Juncker in Washington. In return for the talks and a suspension of auto tariffs, the EU will import more soybeans and energy from the United States.

It will also help the United States in its battle to stop Chinese theft of companies’ intellectual property. Trump has announced a series of punitive tariffs on Chinese imports in a bid to halt a Chinese surge in high-technology industries that threatens to displace U.S. dominance.

On the North American Free Trade Agreement talks with Canada and Mexico, Treasury Secretary Steve Mnuchin said he was “hopeful that we’ll have an agreement in principal in the near future.”

“Whether it’s one deal or two deals, so long as we get the right agreement, we’re indifferent,” Mnuchin told CNBC.

----EU officials said little had been given away by Juncker and that they had emerged as the winners by deferring the threatened car tariffs, which would have hit European carmakers hard.

The deal was hailed by commentators in the United States and Europe for drawing back from an escalation in a trade war that had threatened to take the world back to the kind of protectionism not seen since the 1930s, although some cautioned the relief may be only temporary.

----“U.S. and EU will be allied in the fight against China, which has broken the world trading system, in effect,” Trump’s economic adviser Larry Kudlow said. “President Juncker made it very clear yesterday that he intended to help us, President Trump, on the China problem.”
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July 26, 2018 / 6:31 AM

Breakingviews - Xi takes trade war gloves off by blocking Qualcomm

HONG KONG (Reuters Breakingviews) - Xi Jinping is taking off the trade war gloves. Beijing’s effective veto of chipmaker Qualcomm’s $44 billion bid for NXP - by dragging its feet to clear the deal - likely wasn’t what President Donald Trump expected when he lifted a ban on China’s ZTE earlier this month. But in weaponising monopoly law, President Xi has found a sharp response to U.S. tariffs.

As the trade war between the world’s two largest economies heats up, it is getting harder to sort tit from tat. ZTE looked in deep trouble when it was slapped with U.S. sanctions after admitting to violating rules on exports to Iran and North Korea. Perhaps Trump thought easing up on the company would be reciprocated by approval of Qualcomm’s bid.

The American leader’s gesture, though, was undermined in two ways. First, when Trump implemented tariffs on $34 billion in Chinese goods and promised duties on hundreds of billions more. Second, by new policies targeting inbound investment from the People’s Republic which saw its FDI in the United States fall 90 percent in the first half of 2018, according to the Rhodium Group.

U.S. exports to China are much lower which leaves less for Xi to target. Letting the Qualcomm bid die on the vine without explanation was an easy additional measure. The central bank has also let the yuan plunge 7 percent against the dollar since April, which naturally offsets the price impact of any trade duties. True, the slide has inversely tracked a rally in the global dollar, but if Xi wants to send a sharper message to Trump, he could make a radical decision to order the central bank to force the pace of depreciation.

   On Thursday, Trump called China “vicious” for targeting American agriculture exports. His response to Qualcomm’s failed deal could further up the ante. He might move to further warm relations with Taiwan, which China considers a renegade province. He could also re-apply pressure to ZTE, in theory. Whatever comes next won’t be pretty.

In the markets, a subdued welcome, as we head towards next week’s dress up Tuesday end of the month. After Tuesday, the deluge?

July 27, 2018 / 2:11 AM

Asian shares post modest gains as trade fears keep investors cautious

TOKYO (Reuters) - Asian stocks struggled to gain traction on Friday, following a mixed Wall Street finish and as the worsening Sino-U.S. trade dispute kept investors in the region cautious, despite signs of rapprochement between the United States and Europe.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1 percent. The CSI300 of Chinese shares fell 0.5 percent.

Japan’s Nikkei eked out a 0.1 percent gain though it was capped by worries that the Bank of Japan could scale down its asset purchase at its upcoming policy review next week.

MSCI’s gauge of stocks across the globe, ACWI, hit four-month highs on Thursday, with European car maker shares gaining 2.6 percent after the European Union and the United States agreed to negotiate on trade, easing fears of a Transatlantic trade war.

U.S. industrial shares also made gains, rising 0.8 percent though the S&P 500 Index dipped 0.30 percent on Thursday, due to a 19 percent dive in Facebook on its earnings showing slowing usage.

While that pushed down the Nasdaq Composite 1.01 percent, other U.S. tech firms held firm, with Amazon.com shares gaining 3.2 percent after market following its stellar earnings.

The 10-year U.S. Treasuries yield edged up to 2.9840 percent, its highest level in 1-1/2 months, on receding worries about trade tensions.

Yet Asian shares were more subdued as trade disputes between Washington and Beijing have shown few signs of abating.

“Now that Washington does not need to use its energy to fight with Europe, it could increase pressure on China,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.

So far this month, MSCI China A shares have fallen 2.6 percent, taking the biggest hit from U.S. President Donald Trump’s threats on tariffs and other issues among major markets, compared to 3.3 percent gains in MSCI ACWI.
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In other news, has the global economy already peaked? What happens next in our brave new trade war, if it has?

July 26, 2018 / 1:14 AM

Global economy has peaked; trade war torpedoes optimism - Reuters poll

BENGALURU (Reuters) - Global economic activity remains solid but has already passed its peak, according to economists in Reuters polls who expect protectionist policies on trade, which show no signs of abating, to tap the brakes significantly.

While trade conflict between the United States and other major trading partners, in particular China, has had only a modest impact on global trade and the world economy so far, the turmoil in financial markets clearly suggests confidence has taken a hit.

World stocks have been whipsawed by several sell-offs in recent weeks. The dollar has risen 5 percent since April on those concerns and on still-solid expectations for several more Federal Reserve interest rate hikes this year and next.

Reuters polls of economists, foreign exchange analysts, bond market and equity market strategists in recent months have raised alarm bells and the U.S. government bond market is also close to flashing a recessionary signal.

In the latest Reuters polls taken this month, nearly three-quarters of the 150 economists who answered an additional question said trade protectionism would have a significant downward impact on global growth next year.

That conclusion is based on trade barriers already raised and U.S. President Donald Trump’s threat to impose further tariffs on all $500 billion of imported goods from China will likely make sentiment worse.

“The protectionist measures announced so far are unlikely in themselves to have a strong negative impact on growth, but we are deeply concerned about a possible escalation of the trade conflict,” noted Marco Valli, head of macro research at UniCredit.
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“You can’t con people, at least not for long. You can create excitement, you can do wonderful promotion and get all kinds of press, and you can throw in a little hyperbole. But if you don’t deliver the goods, people will eventually catch on.”

Donald Trump. The Art of the Deal.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today more Trump tariffs, more “winners.” It’s a funny old world when we start down the road to perdition.

'Sorry losers and haters, but my I.Q. is one of the highest – and you all know it! Please don’t feel so stupid or insecure, it’s not your fault.'

President Trump.

25 July 2018 - 04H16

Ailing US newspapers feel new pain from newsprint tariffs

WASHINGTON (AFP) - 
US newspapers have taken a hit from a shift to digital news and a sharp loss of advertising, but a round of tariffs on Canadian newsprint is pushing some publications to the brink.

The Commerce Department earlier this year slapped preliminary tariffs of up to 30 percent on newsprint from Canada -- the largest source for US newspapers -- in response to a complaint from Washington state-based North Pacific Paper Co.

Tariffs have heightened the economic woes for the US industry, notably for small dailies and weeklies facing the prospect of belt-tightening that may including cutting back print editions or slashing staff.

As newspapers reel from the current economic landscape, many have already been making hefty newsroom cuts, including a 50 percent reduction at the storied New York Daily News.

Andrew Johnson, publisher of three Wisconsin weeklies and president of the National Newspaper Association of 2,300 local community newspapers, said the tariffs are imperiling many news organizations.

"I lost some subscribers over the years. I cannot pass along another increase now without damaging my business," Johnson told a July 17 hearing of the US International Trade Commission, the quasi-judicial agency reviewing the tariffs.

Johnson said many newspapers "are freezing all hiring and trying to cut pages or page sizes," and that if the tariffs remain in place, some may have to shut down or sell.

Penelope Abernathy, a University of North Carolina professor who studies media economics, said many small dailies and weeklies still bring in most of their money from print, with digital subscription and ad revenues largely disappointing.

Abernathy said that since 2004, around 60 dailies and more than 1,800 weeklies have shut down in the United States, creating "news deserts" with a dearth of local coverage.

The new tariffs could lead to even more papers disappearing, she said.

"When you add on tariffs, that's going to be the death knell for a lot of smaller newspapers that still rely on the print edition," said Abernathy.

- Protecting or hurting? -

Several members of Congress criticized the tariffs at the ITC hearing as counterproductive and urged the panel to overturn the findings.

"The tariffs will harm the US paper industry because they will cause permanent harm to newspapers, printers, and book publishers, shrinking the US paper industry's customer base," said Senator Susan Collins of Maine.

Paul Tash, president and chief executive at the Tampa Bay Times newspaper, said if the tariffs remain in place it will cost his organization $3.5 million a year, "an extra cost we simply cannot absorb."

"After payroll, newsprint is our single biggest expense, and we are cutting back there too," Tash told the hearing.

- Already reeling -

Newspaper industry employment in the US fell from more than 400,000 in 2001 to 173,000 in 2016, according to government data, highlighting the troubles faced by the shift to digital.
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?
July 25, 2018 / 1:05 PM

Waymo self-driving cars to ferry Walmart shoppers in Arizona trial

(Reuters) - Alphabet Inc’s Waymo is starting trials to ferry shoppers to Walmart Inc’s stores in Phoenix, Arizona, the company said on Wednesday.

Walmart shoppers in Phoenix metropolitan area can order groceries on Walmart.com and as their order is being prepared at the store, self-driving cars will transport them to the store and bring them back, Waymo said.

Waymo has also teamed up with U.S. shopping center owner DDR Corp to offer shoppers and diners rides in its self-driving vehicles to and from the Ahwatukee Foothills Towne Center in Chandler, Arizona.

Additionally, Waymo has expanded its existing partnerships with AutoNation Inc and Avis Budget Group Inc in Phoenix. AutoNation will offer customers a Waymo, rather than a loaner car, to get around while their personal vehicles get serviced.

Avis Budget Group, which keeps Waymo vehicles charged and refueled for an upcoming ride, will provide its customers these self-driving vehicles as a last-mile solution to help them pick up or drop off their rental cars.

Having worked on self-driving cars since 2009 and with 5 million miles (8 million km) driven on public roads under its belt, Waymo is generally considered to be ahead of rivals in the development of autonomous vehicle technology.

Global automakers, suppliers and tech companies like Waymo and Uber Technologies Inc are pouring resources into the development of autonomous driving systems and launching networks of test fleets aimed at pushing the technology forward.

The complex challenges of self-driving and the high costs of research and development has led to a host of partnerships between automakers, suppliers and others.

Another weekend and yet more tweets to come from President Twitter. What fun!  Have a great weekend everyone.

'By the way, I have great respect for China. I have many Chinese friends. They live in my buildings all over the place.'

President Trump.

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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