Tuesday 28 August 2018

Divide And Conquer. Oh Canada Left Out?


Baltic Dry Index. 1697 Friday   Brent Crude 76.19

Buy the rumour sell the fact.

Wall Street Adage.

The big news this morning is Trump’s trade war triumph over Mexico. Will Canada be the next Trump scalp? Neither the European Union, still containing GB,  nor China are likely to roll over like Mexico, both are in a far stronger position to box with Trump.

But is Mexico’s scalp enough to win the US mid-term elections for Trump and the Republicans? Maybe but I wouldn’t bet on it. A week is a long time in politics. Come November the voters will likely want a fresher dish, and if Trump’s next punitive tariffs on Chinese consumer exports to US consumers causes too much pain, America’s fickle voters will likely blame Trump and his trade wars.

Below, one down Canada to go. Asian markets like what they think they see.

"Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway."

Warren Buffett

Trump Dents Hopes for a China Deal After Agreement With Mexico

By Enda Curran
Updated on 28 August 2018, 04:31 GMT+1
President Donald Trump said it’s not the right time for trade negotiations with China, denting expectations for a near term deal after a breakthrough agreement between the U.S. and Mexico.

Speaking to reporters during his announcement Monday of the new Mexico accord, Trump said he is rejecting overtures from China to negotiate as he tries to achieve a less "one-sided" trade policy.
"They want to talk," Trump said. But "it’s just not the right time to talk right now, to be honest."

Trump’s remarks are his latest in recent weeks to suggest he doesn’t see a quick end to trade tensions with China, stoking concerns in Beijing that his actions are part of a wider plan to contain the nation’s rise. Fears are growing that the spat between the world’s biggest economies may spill over into geopolitical flash points, from North Korea to Taiwan.

Negotiations between the U.S. and China have been stalled since May, when Trump put a stop to a deal for China to buy more energy and agricultural goods to narrow the trade deficit. After mid-level trade talks in Washington last week ended with no agreement, a person familiar with the discussions said that Chinese officials had raised the prospect of suspending talks until after U.S. congressional elections in November.

The U.S. and Mexico agreed to replace the North American Free Trade Agreement and Trump called on Canada to join the deal soon or risk being left out. While share prices for South Korean and Japanese automakers gained amid expectations of reduced tariff risk, Mexico’s peso weakened 0.4 percent against the dollar in Asian trading on Tuesday, paring about half its Monday climb.

"It could be because a dose of reality is sinking in after the initial euphoria," said Mitul Kotecha, senior emerging-markets strategist in Singapore at TD Securities. "There is still some way to go before the deal is concluded, including political hurdles in both the the U.S. and Mexico and the question of how Canada will be added to a broader deal."

The Mexico breakthrough will embolden Trump’s trade hawks to double down on demands for concessions from China, according Rob Carnell and Prakash Sakpal, economists at ING Bank NV in Singapore.

"So as far as China and Asia are concerned, this new Mexico deal solves nothing," they wrote in a note. "It strengthens the U.S. position to play hard-ball with China. This doesn’t look good for the region."
More
https://www.bloomberg.com/news/articles/2018-08-28/trump-dents-hopes-for-a-china-deal-after-agreement-with-mexico

Asian stocks surge ahead as U.S. trade worries ease

Published: Aug 27, 2018 10:47 p.m. ET

Asian stock markets started strong in early Tuesday trading, building on Monday’s global gains which saw the S&P 500 and Nasdaq log record closing highs after President Donald Trump announced a pending trade deal with Mexico, easing global trade-war worries.

Japan’s Nikkei NIK, +0.21%   rose 0.7%, briefly topping 23,000 for the first time since June 12, with exporters advancing as investors were more optimistic about U.S. trade policies. Many shippers, steel producers and auto makers were some 2% to 4% higher. Mitsui OSK Lines 9104, +2.30%   jumped 3%, while Nippon Steel 5401, +0.49%   rose 1% and Toyota 7203, +0.99%   gained 2%. Analysts warned that initial enthusiasm for the U.S.-Mexico deal is unlikely to last since tougher negotiations likely loom ahead with China and other trading partners.

Hong Kong stocks added to Monday’s strong gains, with the Hang Seng HSI, +0.17%   up 0.6% early after jumping 2.2% the previous session. Tech shares were among the best performers, with heavyweight Tencent 0700, +0.89%   advancing 1.7% and Sunny Optical 2382, +2.75%   rising 2.3%. Energy stocks were also strong, with coal company Shenhua 1088, +3.40%   rebounding 3%
More
https://www.marketwatch.com/story/asian-stocks-surge-ahead-as-us-trade-worries-ease-2018-08-27

To this old dinosaur market watcher, I’m mindful of buy the rumour sell the fact.

In other news, how long can Tesla last?

August 28, 2018 / 6:05 AM / Updated an hour ago

Tesla's U-turn puts it back at square one on cash

NEW YORK (Reuters) - Elon Musk’s take-private plans for Tesla Inc (TSLA.O) have evaporated, but the company’s looming debt needs remain.

With a debt load of about $10.5 billion and the possibility of an impending cash shortfall, Wall Street expects the luxury electric carmaker may need to raise funds before long.

Tesla Chief Executive Musk said late on Friday he would heed shareholder concerns and no longer pursue a $72 billion take-private deal, abandoning an idea that stunned investors and may draw regulatory scrutiny.

None of that has done anything to help it with a looming issue: cash.

Tesla, which has had just one quarter of positive free cash flow since the fourth quarter of 2013, has $1.3 billion in debt coming due in the next 12 months. Meanwhile it has just $1.3 billion of cash on hand after backing out $942 million of customer deposits on cars.

With analysts forecasting a slowed, but continued, cash burn in the second half of 2018, Tesla may need to borrow up to $2 billion by the end of the year to stay afloat.

In response to a request for comment, a Tesla representative referred to Musk’s statement on the company’s second-quarter earnings call when he said the company planned to pay its convertible debt with internally generated cash flow.

The most likely option, according to analysts, is a convertible debt issue. Musk has historically favoured convertible bonds to raise capital, and Tesla and its SolarCity unit each have three issues of convertible senior notes, worth a total of $4.2 billion.

Convertibles give owners the right to trade their debt for equity after shares rise over a certain price. They allow holders to benefit from a rising share price, while also offering bond-like protection if it falls.

The one challenge of using more convertible debt, however, is “that it drives more short sellers to your stock. And Musk does not want that,” said Jeffrey Osborne, senior research analyst, Cowen Inc.

Frequently, convertible bond owners will hedge their positions by selling the underlying stock short. Moreover, the dilution caused by conversion could also pressure a stock, drawing the interest of short sellers.

Of the $1.3 billion Tesla has coming due in the next 12 months, $230 million is from a SolarCity convertible due on Nov. 1, and another $920 million from a Tesla convertible due on March 1, 2019. Tesla’s shares, at $319.27, are a long way from the $560.64 needed to convert the SolarCity debt but have traded above the $359.87 March 2019 debt conversion price.
More
https://uk.reuters.com/article/uk-tesla-musk-debt-explainer/teslas-u-turn-puts-it-back-at-square-one-on-cash-idUKKCN1LD0D2?il=0

Elephant hunting.

Most famously said by Warren Buffett, this means that you're looking for big deals. Here's how he put it after announcing that he would do a deal to acquire Heinz with private equity firm 3G.

"I'm ready for another elephant. Please, if you see any walking by, just call me," he told CNBC. "We're prepared. Our elephant gun has been reloaded, and my trigger finger is itchy."

Crooks and Scoundrels Corner 

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

Today, is NATO member Turkey, the up and coming new Venezuela? With Trump on a roll expect new US difficulties for Turkey.

August 28, 2018 / 5:45 AM

Turkish lira weakens against dollar, minister warns on sanctions

ISTANBUL (Reuters) - The Turkish lira weakened on Tuesday as investors weighed up Turkey’s efforts to manage its rift with the United States after Finance Minister Berat Albayrak warned that U.S. trade sanctions against Ankara could destabilise the Middle East.

The row with Washington over an American evangelical Christian pastor detained in Turkey on terrorism charges has accelerated losses in the lira, which is down about 38 percent against the dollar this year.

At 0509 GMT, the lira TRYTOM=D3 stood at 6.2000 against the dollar, easing from a close of 6.1200 on Monday, when it weakened to near 6.3 before rebounding in its first day of trade after a week-long holiday.

After meeting his French counterpart in Paris, Albayrak highlighted Ankara’s push for better ties with Europe and took aim at the United States, saying U.S. sanctions could ultimately aggravate the region’s terrorism and refugee crises.

U.S. President Donald Trump this month authorised a doubling of duties on aluminium and steel imported from Turkey, triggering retaliatory measures from Ankara.

Investors are also worried by a U.S. Treasury investigation into state-owned Turkish lender Halkbank (HALKB.IS), which could face a potentially hefty fine over allegations of busting sanctions on Iran. The bank has said all its transactions were legal.

Turkey and the United States are also at odds over their diverging interests in Syria and U.S. objections to Ankara’s plan to buy Russian defence systems.

“Sometimes your best investments are the ones you don't make."

Donald Trump

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?

Solar cells combining silicon with perovskite have achieved record efficiency of 25.2 percent

Date: June 11, 2018

Source: Ecole Polytechnique Fédérale de Lausanne

Summary: Researchers have combined silicon- and perovskite-based solar cells. The resulting efficiency of 25.2 percent is a record for this type of tandem cell. Their innovative yet simple manufacturing technique could be directly integrated into existing production lines, and efficiency could eventually rise above 30 percent.

In the field of photovoltaic technologies, silicon-based solar cells make up 90% of the market. In terms of cost, stability and efficiency (20-22% for a typical solar cell on the market), they are well ahead of the competition.

However, after decades of research and investment, silicon-based solar cells are now close to their maximum theoretical efficiency. As a result, new concepts are required to achieve a long-term reduction in solar electricity prices and allow photovoltaic technology to become a more widely adopted way of generating power.

One solution is to place two different types of solar cells on top of each other to maximize the conversion of light rays into electrical power. These "double-junction" cells are being widely researched in the scientific community, but are expensive to make. Now research teams in Neuchâtel -- from EPFL's Photovoltaics Laboratory and the CSEM PV-center -- have developed an economically competitive solution. They have integrated a perovskite cell directly on top of a standard silicon-based cell, obtaining a record efficiency of 25.2%. Their production method is promising, because it would add only a few extra steps to the current silicon-cell production process, and the cost would be reasonable. Their research has been published in Nature Materials.

Perovskite's unique properties have prompted a great deal of research into its use in solar cells over the last few years. In the space of nine years, the efficiency of these cells has risen by a factor of six. 
Perovskite allows high conversion efficiency to be achieved at a potentially limited production cost.

In tandem cells, perovskite complements silicon: it converts blue and green light more efficiently, while silicon is better at converting red and infra-red light. "By combining the two materials, we can maximize the use of the solar spectrum and increase the amount of power generated. The calculations and work we have done show that a 30% efficiency should soon be possible," say the study's main authors Florent Sahli and Jérémie Werner.

However, creating an effective tandem structure by superposing the two materials is no easy task. "Silicon's surface consists of a series of pyramids measuring around 5 microns, which trap light and prevent it from being reflected. However, the surface texture makes it hard to deposit a homogeneous film of perovskite," explains Quentin Jeangros, who co-authored the paper.

When the perovskite is deposited in liquid form, as it usually is, it accumulates in the valleys between the pyramids while leaving the peaks uncovered, leading to short circuits.

A key layer ensuring an optimal microstructure

Scientists at EPFL and CSEM have gotten around that problem by using evaporation methods to form an inorganic base layer that fully covers the pyramids. That layer is porous, enabling it to retain the liquid organic solution that is then added using a thin-film deposition technique called spin-coating. 
The researchers subsequently heat the substrate to a relatively low temperature of 150°C to crystallize a homogeneous film of perovskite on top of the silicon pyramids.
More

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 

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