Baltic Dry Index. 1732 -41 Brent Crude 74.66
"The leaders of the
French Revolution excited the poor against the rich; this made the rich poor,
but it never made the poor rich."
Fisher Ames.
We open today with
yet another sign of just how much our world has changed under President
Trump. While our complacent, overpriced,
stock mania bubbles continue apace, in the quaint belief that it’s still
business as usual. The reality is that under President Trump it’s far from
business as usual, and it’s only likely to get far worse as President Trump
plays to his domestic supporters in the run-up to the crucial,
win-at-all-costs, November mid-term elections.
In Trump’s new nasty
America, America sides with Saudi Arabia over its neighbour to the north
Canada, With friends like this who need enemies? I suspect it will not be long before we see
rising global boycotts of US made goods and a global decline in US tourism and
students. The decline in US global
leadership is just starting.
Welcome to the
downslope of the Great Nixonian Error of fiat money, August 15, 1971, communist
money. We will all get something for nothing. But the benefits of fiat money
were all front loaded, and long ago dissipated in wars, louche lifestyle, bribes
to voters and special interests, vanity projects, pork barrel bridges to
nowhere. Now comes the bill for that “free
lunch,” but no one wants to pay it, but pay it we will, one way or another. Our
new age of populism is underway.
Below, when all turn
against all, can we expect a good result?
“I am a most unhappy man. I
have unwittingly ruined my country. A great industrial nation is controlled by its
system of credit. Our system of credit is concentrated. The growth of the
nation, therefore, and all our activities are in the hands of a few men. No
longer a government by free opinion, no longer a government by conviction and
vote of majority, but a government by the opinion and duress of a small group
of dominant men.”
President Woodrow Wilson
(regretting signing into law the Federal Reserve Act)
August 7, 2018 / 7:44 PM
Canada to ask allies to help cool Saudi dispute; U.S. offers no aid
OTTAWA
(Reuters) - Canada plans to seek help from the United Arab Emirates and Britain
to defuse an escalating dispute with Saudi Arabia, sources said on Tuesday, but
close ally the United States made clear it would not get involved.
The Saudi government on Sunday recalled its ambassador to Ottawa, barred
Canada’s envoy from returning and placed a ban on new trade, denouncing Canada
for urging the release of jailed rights activists. Riyadh accused Ottawa on
Tuesday of interfering in its internal affairs.
One well placed source said the Liberal government of Prime Minister
Justin Trudeau - which stresses the importance of human rights - planned to
reach out to the United Arab Emirates.
“The key is to work with allies and friends in the region to cool things
down, which can happen quickly,” said the source, who declined to be identified
because of the sensitivity of the situation.
Another source said Canada would also seek help from Britain. The
British government on Tuesday urged the two nations to show restraint.
The United States, traditionally one of Canada’s most important friends,
stayed on the sidelines. U.S. President Donald Trump - who criticized Trudeau
after a Group of Seven summit in June - has forged tighter ties with Riyadh.
“Both sides need to diplomatically resolve this together. We can’t do it
for them; they need to resolve it together,” U.S. State Department spokeswoman
Heather Nauert told a briefing.
The first Canadian source said Ottawa shared the view of foreign policy
experts who believe the Saudi reaction reflected internal strains inside the
kingdom, where 32-year-old Crown Prince Mohammed bin Salman is trying to push
through domestic reforms.
The office of Foreign Minister Chrystia Freeland did not respond to
requests for comment.
----The dispute looks set to damage what is a modest bilateral trade relationship worth nearly $4 billion (£3.09 billion) a year. Canadian exports to Saudi Arabia totalled about $1.12 billion in 2017, or 0.2 percent of the total value of Canadian exports.
Canada says it does not know what will happen to a $13 billion defence
contract to sell Canadian-made General Dynamics Corp armoured vehicles to Saudi
Arabia.
European traders said the main Saudi wheat-buying agency had told grains
exporters it will no longer accept Canadian-origin wheat and barley.
Saudi Arabia has also ordered roughly 15,000 Saudis studying in Canada
to leave.
More
August 8, 2018 / 3:55 AM
Nikkei up on tech shares but gains limited before US-Japan trade talks
TOKYO, Aug 8 (Reuters) - Japan’s Nikkei rose on Wednesday morning led by
tech shares on the back of a solid performance from their U.S. peers, while
investors also bid up firms with brisk earnings such as Nikon and Daikin.
Overall gains, however, were limited as the market braced for U.S.-Japan
trade talks slated in Washington on Thursday. Tokyo is seeking ways to counter
U.S. pressure for a bilateral free trade agreement (FTA) and head off a rise in
tariffs on its auto exports.
The Nikkei share average rose 0.4 percent to 22,754.28 in midmorning
trade, hovering at its one-week highs.
“People are cautious ahead of Thursday’s trade talks... they are bracing
for the U.S.’s hard stance on Japan because that has been the pattern with
China and Europe,” said Hikaru Sato, a senior technical analyst at Daiwa
Securities.
Tech shares outperformed, with TDK Corp rising 3.9 percent, Hitachi Ltd
gaining 1.7 percent and Sumco Corp adding 2.3 percent.
More
Finally, in trade war
news, China like Germany seems to have weathered the opening phase of the trade
war in its stride. But the Trump v
China trade war might soon produce some serious collateral damage. When you put
a bull in a china shop, you’ve got to expect a little damage.
I suspect a whole lot
of damage to come, the longer this madness continues, and bitterness rises.
Phase two for America, China, and Germany, is likely to be one of rising pain
and unexpected distress. How long before
the global economy starts to really reflect the new reality? Not too much
longer I suspect, as more and more of international trade gets increasingly
tied up in knots by tariffs. And still to come, Trump’s attempt to generate an
international oil crisis come November, with economic warfare on Iran and
anyone trading with Iran.
“By this means (fractional
reserve banking) government may secretly and unobserved, confiscate the wealth
of the people, and not one man in a million will detect the theft.”
John Maynard Keynes, The
Economic Consequences of the Peace (1920)
Apple could be used as a 'bargaining chip' in the trade war, Chinese state media warn
- Apple has benefited from cheap labor and strong supply chain in China which has helped it boost profit and get to a $1 trillion valuation, the state-backed People's Daily said.
- The U.S. firm should share that money with Chinese citizens, the article urged.
- Apple could be the target of "anger and nationalist sentiment" amid the ongoing trade war.
BEIJING
(Reuters) - China’s exports growth unexpectedly accelerated in July despite
fresh U.S. tariffs, while its trade surplus with the United States remained
near record highs as Beijing and Washington ramped up a bitter dispute that has
rattled financial markets.
Imports also rose much faster in July thanks to still solid domestic
demand, official data showed on Wednesday, with purchases of commodities like
copper and iron ore rising from June.
The headline numbers are the first readings of the overall trade picture
for the world’s second-largest economy since U.S duties on $34 billion of
Chinese imports came into effect on July 6.
China’s closely watched surplus with the United States dipped only
slightly to $28.09 billion last month from a record $28.97 billion in June.
Washington has long criticised China’s trade surplus with the United States and
has demanded Beijing cut it. Still, disagreements between the two major
economic powers run deeper than just the trade balance and tensions remain over
market access, intellectual property, technology transfer and investment.
----The two sides have shown no signs of letting up, with the U.S. earlier Wednesday saying it will begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23, and Chinese media resorting to personal attacks against Trump earlier in the week.
China’s July exports rose 12.2 percent from a year earlier, beating
forecasts for a 10 percent increase according to the latest Reuters poll, and
up from a 11.2 percent gain in June.
A weaker yuan, which marked its worst 4-month fall on record between
April and July, may have taken the sting out of 25 percent tariffs on $34
billion exports to the United States. However, analysts still expect a less
favourable trade balance for China in coming months given it’s early days in
the tariff brawl.
More
August 7, 2018 / 11:48 AM
BEIRUT/LONDON (Reuters) - Companies doing business with Iran
will be barred from the United States, President Donald Trump said on Tuesday,
as new U.S. sanctions took effect despite pleas from Washington’s allies.
Iran dismissed a last-minute offer from the Trump administration for
talks, saying it could not negotiate while Washington had reneged on a 2015
deal to lift sanctions in return for curbs on Iran’s nuclear programme.
Trump decided this year to pull out of the agreement, ignoring pleas from
the other world powers that had co-sponsored the deal, including Washington’s
main European allies Britain, France and Germany, as well as Russia and China.
European countries, hoping to persuade Tehran to continue to respect the
deal, have promised to try to lessen the blow of sanctions and to urge their
firms not to pull out. But that has proven difficult: European companies have
quit Iran, arguing that they cannot risk their U.S. business.
“These are the most biting sanctions ever imposed, and in November
they ratchet up to yet another level. Anyone doing business with Iran will NOT
be doing business with the United States. I am asking for WORLD PEACE, nothing
less!” Trump tweeted on Tuesday.
Iranian Foreign Minister Mohammad Javad Zarif criticized Trump’s tweet
as a tired cliche and denounced “US unilateralism.”
“And it is not the first time that a warmonger claims he is waging war
for ‘world peace’,” Zarif tweeted.
----Few
American companies do much business in Iran so the impact of sanctions mainly
stems from Washington’s ability to block European and Asian firms from trading
there.
More
August 6, 2018 / 7:24 AM
BERLIN
(Reuters) - Germany’s hesitancy to reduce its trade surplus is contributing to
trade tension and adds to risks that could undermine global financial
stability, Maury Obstfeld, chief economist at the International Monetary Fund
(IMF), said.
“In
(current account) surplus countries such as Germany we see hesitant measures,
at best, to counteract the surplus,” Obstfeld wrote in a guest commentary
published in German daily Die Welt on Monday.
The
IMF and the European Commission have long urged Germany to boost domestic
demand by lifting wages and investment to reduce what they call global economic
imbalances. Since his election, U.S. President Donald Trump has also repeatedly
criticised Germany’s export strength.
Obstfeld said that countries like the United States, in which the external
current account balance is too low, should reduce budget deficits, encourage
households to save more, and gradually normalise their monetary policy.
Countries in which the balance is too high, like Germany, should
increase government spending, for instance by investing in infrastructure or
digitalisation, so that companies invest more domestically rather than looking
abroad.
“The net external positions will diverge more. That increases the risk
of disruption by currency or asset price adjustments in indebted countries, to
the disadvantage of all,” he said.
“If there is a sudden adjustment, then both the debtor and creditor
countries will suffer,” he added.
More
“Give me control of a nation’s
money and I care not who makes the laws.”
Amschel Rothschild
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, Reuters thinks the unthinkable, America
might/will lose the trade war with China. Bloomberg sees Germany uber alles.
August 6, 2018 / 4:56 PM
If
you want to know why Donald Trump shouldn’t expect to win a trade war against
China, look no further than Alibaba, the country’s giant e-commerce version of
Amazon. Last month, I had two in-depth conversations with Ming Zeng, the
e-commerce giant’s head of strategic planning and among the smartest minds in
business and finance in China. Ming made it clear that China has little real
need for America any more – not U.S. products, but especially not U.S. ideas.
When thwarted, China has shown it can think up its own.
At
the same time, the Trump administration seems to be doing its level best to run
a competition calculated from the starting gate to lose the race, or the war,
whichever it turns out to be. The U.S. president’s latest
effort was to threaten a rise in tariffs on $200 billion worth of
Chinese goods – from 10 percent to 25 percent. Within 24 hours, China quickly reciprocated
with a list of 5,207 American products, worth $60 billion, on which it pledged
to exact new tariffs ranging from 5 to 25 percent if Trump implements his
threats.
And there we’ll have a full-blown trade war.
Fortunately, Trump has extended a comment period before implementation until September. Meanwhile, markets on both sides of the Pacific continue unsettled – at times balancing on the edge of panic.
While the Chinese stock market has taken more of a beating than the American, Trump seems to think that the United States can stand the pain longer than China and tightening the screws will bring Beijing to the negotiating table. But that reflects little understanding of either the Chinese mindset or the underlying strength of the Chinese economy which, though weaker than a year ago, is still growing nearly twice as fast as the American.
And this by no means reflects how bad it could get as individuals with little understanding of either the stakes or the mechanisms plunge into this pending maelstrom.
Last week, Secretary of State Mike Pompeo unveiled with some fanfare another way of dealing with, even isolating China, that approaches the ridiculous in its scale and futility. Dubbed the “Indo Pacific Economic Vision Program” it was widely viewed as a counter to China’s long-standing Belt and Road development initiative that has ensnared nations across Asia and onward to Europe. But a decidedly skinflint counter. Trump has committed a derisory $113 million to his program – a rounding error compared with the $900 billion estimated for Beijing’s Belt and Road, which China bankrolled at $82 billion three years ago. This hardly even seems to be a competition. Yet as the South China Morning Post put it, the U.S. initiative is “likely to fuel suspicions from Beijing… and could in turn worsen relations that are already fraught with trade tensions.”
----For Washington to win any trade war with China – or even arrive at some mutually satisfactory conclusion, the most desirable outcome in the long run – there must be an understanding of the forces it will be facing. My takeaway from my interviews with Ming, which ran in full in Forbes Asia, is that large swaths of China’s rapidly advancing economy, especially the domestically-focused areas, are either largely immune from any trade imbroglios or will manage to circumvent them.
In January, the United States barred a takeover by Alibaba’s Ant Financial of Moneygram, the money transfer agency. So Alibaba created a different, in many respects more innovative, product using blockchain-based technology. “Any new business, while growing up, always encounters obstacles. We understand that. It is part of the cost of doing business,” Ming said. “So we might be frustrated. But because the value we create is so overwhelming, we will find some way to overcome that barrier.”
That
doesn’t mean that many Chinese companies and state-run enterprises in China
aren’t still poised to appropriate innovations from Silicon Valley. But the
more America tries to block them, the more likely the Chinese are to come up
with their own solutions.
----The
Chinese, and especially its leadership, have quite a strong and evolved sense
of self. Their ability to withstand external forces dates back not just to Mao
Zedong and the communist revolution that brought them to power after World War
Two. It’s more useful to look back to the Zhou dynasty a thousand years before
Christ, which based the legitimacy of its emperor on whether he was
sufficiently virtuous to rule – and receive the Mandate from
Heaven to do so. A people with such an evolved sense of destiny and
self-worth is unlikely to see a secular leader like Donald Trump as a major
obstacle.
In
China, losing face is the ultimate failure. While the best, and most lasting,
trade agreements must be at least perceived as a win-win, Trump now seems to
have dug himself so deeply into his America First corner that it allows little
room for the Chinese leadership to maneuver without losing that face. Trump
must brace for a long and bruising conflict. But if he is not persuaded to give
up, it is all Americans who must prepare to pay for his trade crusade.
By Paul Gordon and Catherine Bosley
7 August 2018, 10:50 GMT+1
Germany’s trade surplus with the U.S. is showing little sign of buckling
under President Donald Trump’s accusations of unfair practices.
The nation’s exports to the U.S. exceeded imports by 24.4 billion euros
($28.3 billion) in the first half of the year, German data showed on Tuesday.
That’s barely changed from the 24.5 billion euros in the same period of 2017.
The booming U.S. economy is continuing to suck in German goods from cars
to chemicals, even amid repeated criticism from the Trump administration and
threats of tariffs on Europe. Still, the latest figures show how tensions could
flare up again, despite Trump’s agreement with European Commission President
Jean-Claude Juncker to refrain from any action while the two sides negotiate.
“At the moment, we don’t see much of a decline in the trading relationship with the U.S.,” said Jan-Philipp Schulz, treasury manager at Sparkasse Suedholstein. While some confidence indicators have weakened amid a worsening of ties, “this overflow into the real economy hasn’t happened.”
Trump, who has German ancestry, has lambasted the country for its underspending on defense, links to Russia and exports. He has complained on Twitter about the “MASSIVE trade deficit” with Germany and at a meeting with European Union leaders called the country “very bad” for selling “millions of cars” in America. His top trade adviser, Peter Navarro, has accused it of benefiting from a “grossly undervalued” euro.
Yet while German exporters do benefit from a weaker currency, and the
euro has softened against the dollar recent years, the country doesn’t set the
exchange rate. That’s largely a consequence of the European Central Bank, which
is running looser monetary policy than the Federal Reserve because the bloc’s
recovery from global financial crisis has been slower.
There’s little sign that dynamic will change any time soon, with the Fed
pledging to keep raising rates at a gradual pace and the ECB saying it expects
to keep borrowing costs at current record lows at least through the summer of
2019.
Exporters are still nervous about the outlook, even after Trump’s meeting with Juncker last month. The U.S. Commerce Department is continuing an investigation into car imports under an act that permits trade restrictions if needed to safeguard national security.
That’s a particular concern for Germany. Vehicles were its largest export category by value in 2017, accounting for almost a fifth of the total, and levies on vehicles including Mercedes-Benz, BMW AG and Porsche models would represent a significant blow to the economy. Chancellor Angela Merkel last month described potential auto tariffs as “a danger for the prosperity for many in the world.”
The U.S. is also Germany’s largest non-European Union export destination, taking 9 percent of the nation’s shipments last year.
The breadth of the economy’s manufacturing base shows how difficult it would be to curb exports through product-specific tariffs though. The country is also a major seller overseas of machinery, chemicals, electronics and electrical equipment.
More
“The modern banking process
manufactures currency out of nothing. The process is perhaps the most
astounding piece of slight hand that was ever invented…If you want to be slaves
of the bankers, and pay the cost of your own slavery, then let the banks create
currency”.
Lord Josiah Stemp, Former
Director of the Bank of England (1937)
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?
Date:
August 6, 2018
Source:
University of Illinois at Urbana-Champaign
Summary:
The effects of global climate change taking place in the Arctic may influence
weather much closer to home for millions of Americans, researchers report.
The effects of global climate change taking place in the Arctic may
influence weather much closer to home for millions of Americans, researchers
report.
The United States has experienced many changes in severe-weather
behavior over the past decade, including fewer tornado touchdowns in than in
the past. A new study suggests that atmospheric circulation changes that
coincide with a loss of Arctic sea ice may be partly to blame.
Atmospheric scientists from the University of Illinois at
Urbana-Champaign and Purdue University report their findings in the journal Climate
and Atmospheric Science.
"A relationship between Arctic sea ice and tornadoes in the U.S.
may seem unlikely," said (Robert) Jeff Trapp , a professor of atmospheric
sciences at the U. of I. and a co-author. "But it is hard to ignore the
mounting evidence in support of the connection."
The researchers performed statistical analyses of nearly three decades
of historical weather and climate data and found significant correlations
between tornado activity and the extent of Arctic sea ice -- especially during
the month July.
The team believes that the reduction in tornado activity boils down to
how the diminishing Arctic sea ice controls the path of the jet stream. As
Arctic sea ice retreats, the jet stream migrates from its traditional summer
path over states like Montana and South Dakota to areas farther north, and the
atmospheric conditions that are favorable for tornado formation follow suit.
"Tornadoes and their parent thunderstorms are fueled by wind shear
and moisture," Trapp said. "When the jet stream migrates north, it
takes the wind shear along for the ride, but not always the moisture. So, even
though thunderstorms may still develop, they tend not to generate tornadoes
because one of the essential ingredients for tornado formation is now
missing."
The team believes that the correlation between Arctic ice retreat and
jet stream migration may lead to advances in seasonal severe weather
prediction.
"One of the reasons that we focused on sea ice is because, like the
ocean and land, it is relatively slow to evolve," Trapp said.
"Because sea ice and the atmosphere are coupled, the response of the
atmosphere is also relatively slow. We can use this property to help make
long-term predictions for tornadoes and hail, similar to the way predictions
are made for hurricane seasons." But before doing so, Trapp said they
still need to understand the drivers of the sea ice changes and what role the
tropics may be playing.
More
Well if you say so, it must be true!
The monthly Coppock Indicators finished July.
DJIA: 25,415 +213 Down. NASDAQ:
7,672 +259 Down. SP500: 2,816 +166 Down.
All
three slow indicators moved down in March and have continued down ever since.
For some a new bear signal, for others a take profits and get back to cash
signal.
The way to become rich is to invest money, not to save it.
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