Thursday, 30 August 2018

Global Economy Rolling Over. Look Out Below.


Baltic Dry Index. 1661 -23   Brent Crude 77.19

Border Collie Update:  Rosie successfully underwent her breast cancer surgery, and is now home and in recovery mode. Far stronger than I expected, wearing a hood, tired but still  interested in life and on a little bland food.  My thanks to all who asked about her and offered their thoughts and prayers. My especial thanks to God and her LIR benefactor.

“Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little.”

Fred Schwed Jr., Where Are the Customers' Yachts?

First the good news, Trump’s trade war team finally seem to have become aware of the global havoc they have caused and are causing. But does President Trump really care?

U.S. grants steel, aluminum relief for some trade partners: report

Published: Aug 29, 2018 10:51 p.m. ET

President Donald Trump has approved targeted relief on steel and aluminum quotas for some U.S. trade partners, Reuters reported late Wednesday. Citing the Commerce Department, Reuters said steel from South Korea, Brazil and Argentina, and aluminum from Argentina, will be granted relief on U.S. import quotas. "Companies can apply for product exclusions based on insufficient quantity or quality available from U.S. steel or aluminum producers," the Commerce Department said, according to Reuters. "In such cases, an exclusion from the quota may be granted and no tariff would be owed." Shares of Korean steelmakers, such as Hyundai Steel 004020, +1.13% and Posco 005490, +1.21% shot up following the news.

Sadly, even if Canada surrenders to Trump’s economic and financial bullying over NAFTA reform, it’s all to likely to be a pyrrhic victory, the emerging market rout continues unabated, just don’t let on to Wall Street. They’ll find out soon enough, when defaults and all the currency turmoil blows right back into the G-7 major economies.

How long before Italy and Deutsche Bank become EU crisis points again? With the global economy rolling over again, how long before Trump’s “miracle grow” economy withers and dies? Not very long, I’d bet. Rigging the FANGS and stock buybacks is a castle built on sand, when the sea change hits.

Trudeau will walk away from trade deal if it is bad: Ex-US ambassador to Canada

  • There's "very high possibility" for a trade deal between the U.S., Mexico and Canada, says Bruce Heyman, former U.S. ambassador to Canada.
  • If the deal is good, Prime Minister Justin Trudeau will do it for the Canadians, he says.
  • "If it's a bad deal, he will walk away. I know he will."
Published 7 Hours Ago CNBC.com

There is a "very high possibility" for a trade deal between the United States, Mexico and Canada if the parties compromise, according to Bruce Heyman, former U.S. ambassador to Canada.
However, Canadian Prime Minister Justin Trudeau just won't simply sign onto any deal, Heyman told CNBC on Wednesday.

"I've worked with the prime minister," he said on "Closing Bell." "If a good deal's there, he'll do it for the Canadians. But, if it's a bad deal, he will walk away. I know he will."

Earlier in the day, Trudeau said it may be possible to reach an agreement ahead of Friday's deadline set by President Donald Trump.

"We recognize that there is a possibility of getting there by Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada," Trudeau said at a press conference in northern Ontario. "No NAFTA deal is better than a bad NAFTA deal."

Heyman, who said he has spoken with people in both nations' capitals, said it "looks like we are moving in the right direction."

However, historically there have been certain "no-go zones" for Canada, said Heyman, who served under President Barack Obama from 2014 to 2017.

For one, Canada wants to keep the ability to have a third party settle any disputes. In the revised deal, the U.S. is trying to dump the Chapter 19 dispute resolution mechanism that hinders the U.S. from pursuing anti-dumping and anti-subsidy cases.

Dairy is also an issue, Heyman said. Trump has warned that he expected concessions on Canada's dairy protections.

----Trump said Wednesday he was optimistic a deal would be struck that included Canada. The president intends to replace the North American Free Trade Agreement with what he's now calling "The United States-Mexico Trade Agreement."

"I think Canada very much wants to make the deal," Trump told reporters at the White House, while adding, "it probably won't be good at all if they don't."
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August 30, 2018 / 5:49 AM

Emerging market equities near bear territory; declines led by China, Turkey

(Reuters) - Most emerging equity markets are hovering near bear territory after sharp declines since hitting highs in January, and appear set for fresh lows as the simmering U.S.-Sino trade war and rising U.S. yields undermine them. 

Twenty out of 23 emerging market stock indexes are trading below their 200-day moving average, a technical analysis showed, suggesting further downside risks to these markets.

China has the worst ratio, with 88 percent of its companies trading below the 200-day moving average, followed by the Philippines and Poland.

Analysts consider the percentage of stocks trading above or below 200-day moving average as an indicator of strength or weakness of the underlying market.

Another signal that analysts look to confirm a bear market is whether stocks have declined 20 percent from their year-highs.

Turkey's BIST 100 share index .XU100 has fallen about 25 percent after reaching its year-high in January, while China's Shanghai Composite index .SSEC is down 23 percent from its high.

MSCI’s widely tracked emerging market index .MSCIEF has fallen 18 percent from its January high, based on Monday’s close.

August 30, 2018 / 1:51 AM

Asia stocks slip; weakness in China outweighs NAFTA trade optimism

TOKYO (Reuters) - Asian stocks surrendered earlier gains and dipped on Thursday, with Chinese markets fixed firmly on risks from the Sino-U.S. trade war and taking little comfort from an apparent easing in business tensions in North America and Europe. 

The leaders of the United States and Canada expressed optimism on Wednesday that NAFTA negotiations would meet a Friday deadline for a deal, days after the U.S. and Mexico reached a bilateral agreement.

But MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.2 percent, with broad gains across the region offset by losses in China.

The Shanghai Composite Index .SSEC slid 0.8 percent and Hong Kong's Hang Seng .HSI fell 0.7 percent.

“Investors are relatively pessimistic and cautious for now amid low levels of trading volume, as there are still concerns over the development of the Sino-U.S. trade spat,” said Yan Kaiwen, an analyst with China Fortune Securities.

U.S. tariffs on another $200 billion of Chinese goods are expected to take effect later next month.
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August 29, 2018 / 3:53 PM

IMF studying Argentina request for early help as peso crashes

BUENOS AIRES (Reuters) - The International Monetary Fund said it was studying a request from Argentina to speed up disbursement of a $50 billion (38.46 billion pounds)loan program after a collapse in investor confidence in President Mauricio Macri’s government sent the peso tumbling more than 7 percent on Wednesday.

It was the biggest one-day decline in the peso ARS=RASL since the currency was allowed to float in December 2015. It closed at a record low of 34.10 per U.S. dollar and is down more than 45.3 percent against the greenback this year, prompting massive central bank interventions.

Nerves are frayed in Latin America’s No. 3 economy as it struggles to break free from its notorious cycle of once-a-decade financial crises. The last one, which was punctuated by a 2002 debt default, tossed millions of middle-class Argentines into poverty.

The run on the peso prompted Argentina to turn to the IMF for the $50 billion credit line earlier this year. As part of the deal, Argentina’s government pledged to speed up plans to reduce the fiscal deficit.

But given the peso’s continued depreciation, which makes the country’s dollar-denominated debts more expensive to pay, investors are increasingly concerned that the IMF help may not be enough.

“We have agreed with the International Monetary Fund to advance all the necessary funds to guarantee compliance with the financial program next year,” Macri said in a televised address on Wednesday. “This decision aims to eliminate any uncertainty.”

----IMF Managing Director Christine Lagarde responded by saying in a statement that the multi-lateral lender’s staff would “reexamine the phasing of the financial program.” She said that the “more adverse international market conditions” had not been “fully anticipated” when the IMF and Argentina reached the deal in June.
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South African Rand: Things Could Get Worse before They Get Better

The Rand has been volatile this week as markets digest the latest events around President Cyril Ramaphosa's controversial land reform programme but things could get worse for the South African currency before they get better, according to multiple analysts covering the currency.

South Africa's parliament withdrew a 2016 bill designed to enable a quicker but more forceful approach to land reform. This would have ended the "willing buyer, willing seller" model by enabling the government to expropriate land from farmers after a price had been determined by a government adjudicator. 

This, coming amid a separate push for constitutional reform that would enable the government to expropriate land without paying compensation to the farmers, caused the Rand to whipsaw between the 14.00 and 14.20 levels against the US Dollar.

"The retraction of the Bill sparked an exaggerated response, reflecting the extent of investor angst over the issue of land expropriation without compensation," says Nema Ramkhelawan-Bhana, head of research at Rand Merchant Bank. "This type of reaction might well become commonplace ahead of the 2019 general elections as there are concerns that decisive action on high-profile amendments will be delayed."

----The Expropriation Act was designed to placate the radical Economic Freedom Fighters grouping of the parliament but will require wholesale constitutional change that not only casts Ramaphosa's grip on power in a much weaker light, but also places a question mark directly over South Africa's commitment to private property rights. President Ramaphosa confirmed earlier in August that the government will push ahead with the reforms.

President Donald Trump hit out at the expropriation plan soon after in a post on Twitter soon after, saying he has asked Secretary of State Mike Pompeo to study the plan. This intervention came after Fox News reported that the South African government is "seizing land from white farmers", which itself followed closely on the heels of a Cato Institute report calling for US action. 
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https://www.poundsterlinglive.com/zar/9795-south-african-rand-things-could-get-worse-before-they-get-better

Turkey insists economy is strong despite lira plunge

Turkey’s finance minister insisted that the country’s economy did not face significant risks, despite the lira plunging to its lowest point in a fortnight as new data pointed to a sharp slowdown. The embattled currency, which has lost about 40 per cent of its value against the dollar this year, extended a slide after Turkey’s economic confidence index slumped 9 per cent month on month to 83.9 in August. Trade data also showed a 6.7 per cent year-on-year contraction in imports in July. Late on Tuesday, rating agency Moody’s downgraded 20 Turkish financial institutions, citing heightened risk of a sudden shift in investor sentiment. This could leave banks struggling to attract the foreign financing that keeps the sector afloat. However, Berat Albayrak, Turkey’s finance minister, said in remarks published by Hurriyet newspaper on Wednesday: “We do not see a big risk regarding the Turkish economy and financial system, as our economy has strong fundamentals.”

----The fledgling finance minister, son-in-law of President Recep Tayyip Erdogan, also announced that he would visit London next week. It is not clear if he will meet foreign investors.

Analysts warned that Turkey faced a rapid slowdown and risked a painful recession unless policymakers took urgent steps to rebalance the economy and bolster investor confidence. “The latest signs show that higher inflation, coupled with a severe tightening of financial conditions, is filtering through into an abrupt slowdown in economic growth,” said Jason Tuvey, of Capital Economics consultancy. He forecast a contraction in GDP growth of 2 to 4 per cent year on year in the final quarter of 2018 and the first half of 2019.

---- The eruption of a bitter row with Donald Trump over a detained American evangelical pastor at the start of August plunged the country into a full-blown currency crisis. The US president’s decision to impose sanctions in an effort to force the release of Andrew Brunson sent the lira spiralling. This piled pressure on Turkey’s indebted corporates and sparked fears about wider emerging market contagion. The central bank has ignored calls from investors for a large interest rate rise, fuelling the perception that it is stymied by Mr Erdogan. The president is a self-declared “enemy” of high interest rates.
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August 29, 2018 / 5:53 PM

Iran accuses Washington of bullying even U.S. allies

LONDON (Reuters) - Iranian Foreign Minister Mohammad Javad Zarif accused the United States on Wednesday of bullying even its own allies, as he arrived in Turkey which is locked in a row with Washington.

The United States has doubled tariffs on Turkish steel and aluminium imports over the detention of an American Christian pastor, with Ankara responding with its own retaliatory measures even though both countries are NATO allies.

“The Americans have shown they have no limit or boundary in imposing pressure and using force on others, even on their own allies,” Zarif said in Ankara.

“Turkey and some U.S. allies in Europe have come to the conclusion that the United States is not a trustworthy partner,” Zarif was quoted as saying by the Iranian state news agency IRNA.

Washington is imposing waves of much severer sanctions on Iran following its withdrawal from a 2015 international deal curbing Tehran’s nuclear programme.

Zarif is in Turkey to meet Turkish President Tayyip Erdogan, who is due to visit Iran on Sept. 7.

Finally, trade war? What trade war? Geely scales up.

August 29, 2018 / 9:30 AM

China's Geely building new plant to make 250,000 bigger-sized cars - sources

BEIJING (Reuters) - China’s Geely is building a new plant to produce a quarter of a million bigger-sized cars that will help meet a goal of selling more than 2 million vehicles by 2020 and power its growth, two people familiar with the matter said.

Zhejiang Geely Holding Group Co [GEELY.UL], one of China’s five biggest automakers, and the owner of Sweden’s Volvo Cars, is building the facility in the eastern port city of Ningbo where it already operates an assembly plant, as per the sources and information from a Geely-owned construction bidding procurement website.

The new capacity will enable Geely (0175.HK) to produce roughly 250,000 more cars a year in Ningbo and add larger cars to its small-car-focused lineup, as well as ramp up launches at its new brand Lynk & Co.

Geely was once known for cheaper, copycat designs but has assumed upmarket aspirations after the Volvo deal. The capacity increase underscores its ambitions as well as the shift in customer preferences towards bigger vehicles in China, the world’s biggest auto market.

The plant will have two assembly lines. According to information on the Geely-owned website, the automaker plans to spend 3.4 billion yuan ($498.31 million) for one of them. The overall investment planned for the plant was not immediately known.

“All investors are equal, but some investors are more equal than others.”

With apologies to George Orwell, Animal Farm

Crooks and Scoundrels Corner

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

What’s wrong with this? What kind of future are we generating for the next generation?

Soy boom devours Brazil’s tropical savanna

A REUTERS SPECIAL REPORT
Industrial farming in South America’s largest savanna has turned Brazil into an agricultural powerhouse. And it has lured producers away from the Amazon rainforest. But destruction of the so-called Cerrado biome is hastening global warming, damaging watersheds and putting wildlife at risk.
By JAKE SPRING  Filed Aug. 28, 2018, 11 a.m. GMT

CAMPOS LINDOS, Brazil – When farmer Julimar Pansera purchased land in Brazil's interior seven years ago, it was blanketed in tiers of fruit trees, twisted shrubs and the occasional palm standing tall in a thicket of undergrowth.

He mowed down most of that vegetation, set it ablaze and started planting soybeans. Over the past decade, he and others in the region have deforested an area larger than South Korea.

Permissive land-use policies and cheap farm acreage here have helped catapult Brazil into an agricultural superpower, the world's largest exporter of soy, beef and chicken and a major producer of pork and corn. This area has also lured farmers and ranchers away from the Amazon jungle, whose decline has spurred a global outcry to protect it.

The tradeoff, environmentalists say, is that while Brazil has slowed destruction of the renowned rainforest from its worst levels, it has put another vital ecological zone at risk: a vast tropical savanna that is home to 5 percent of species on the planet.

Known as the Cerrado, this habitat lost more than 105,000 square kilometers (40,541 square miles) of native cover since 2008, according to government figures. That's 50 percent more than the deforestation seen during the same period in the Amazon, a biome more than three times larger. Accounting for relative size, the Cerrado is disappearing nearly four times faster than the rainforest.
The largest savanna in South America, the Cerrado is a vital storehouse for carbon dioxide, the greenhouse gas whose rising emissions from fossil fuels and deforestation are warming the world’s atmosphere. Brazilian officials have cited protection of native vegetation as critical to meeting its obligations under the Paris Agreement on climate change. But scientists warn the biome has reached a tipping point that could hamper Brazil's efforts and worsen global warming.

By focusing on one problem, Brazil essentially created another, said Ane Alencar, science director of the non-profit Amazon Environmental Research Institute, known as IPAM.

"There's a high risk for the climate associated with this expansion,” Alencar said. "Limiting and calling attention to deforestation in the Amazon, in a way it forced the agribusiness industry to expand in the Cerrado."

The toll can already be seen in the region's water resources. Streams and springs are filling with silt and drying up as vegetation around them vanishes. That in turn is weakening the headwaters of vital rivers flowing to the rest of the country, scientists say. The imperiled waterways include the Sao Francisco, Brazil's longest river outside the Amazon, where water levels are hitting never-before-seen lows in the dry season.

"The removal of vegetation can lead a body of water to extinction," said Liliana Pena Naval, an environmental engineering professor at the Federal University of Tocantins.
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“Man is the only creature that consumes without producing. He does not give milk, he does not lay eggs, he is too weak to pull the plough, he cannot run fast enough to catch rabbits. Yet he is lord of all the animals. He sets them to work, he gives back to them the bare minimum that will prevent them from starving, and the rest he keeps for himself.”

George Orwell, Animal Farm

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?

Engineers upgrade ancient, sun-powered tech to purify water with near-perfect efficiency

Low-cost device -- shaped like a birdhouse -- could help provide drinking water to people affected by natural disasters

Date: May 3, 2018

Source: University at Buffalo

Summary: The idea of using energy from the sun to evaporate and purify water is ancient. The Greek philosopher Aristotle reportedly described such a process more than 2,000 years ago. Now, researchers are bringing this technology into the modern age, using it to sanitize water at what they report to be record-breaking rates. 

The idea of using energy from the sun to evaporate and purify water is ancient. The Greek philosopher Aristotle reportedly described such a process more than 2,000 years ago.

Now, researchers are bringing this technology into the modern age, using it to sanitize water at what they report to be record-breaking rates.

By draping black, carbon-dipped paper in a triangular shape and using it to both absorb and vaporize water, they have developed a method for using sunlight to generate clean water with near-perfect efficiency.

"Our technique is able to produce drinking water at a faster pace than is theoretically calculated under natural sunlight," says lead researcher Qiaoqiang Gan, PhD, associate professor of electrical engineering in the University at Buffalo School of Engineering and Applied Sciences.

As Gan explains, "Usually, when solar energy is used to evaporate water, some of the energy is wasted as heat is lost to the surrounding environment. This makes the process less than 100 percent efficient. Our system has a way of drawing heat in from the surrounding environment, allowing us to achieve near-perfect efficiency."

The low-cost technology could provide drinking water in regions where resources are scarce, or where natural disasters have struck. The advancements are described in a study published on May 3 in the journal Advanced Science.

The project, funded by the National Science Foundation (NSF), was a collaboration between UB, Fudan University in China and the University of Wisconsin-Madison. UB electrical engineering PhD graduate Haomin Song and PhD candidate Youhai Liu were the study's first authors.

Gan, Song and other colleagues have launched a startup, Sunny Clean Water, to bring the invention to people who need it. With support from the NSF Small Business Innovation Research program, the company is integrating the new evaporation system into a prototype of a solar still, a sun-powered water purifier.

"When you talk to government officials or nonprofits working in disaster zones, they want to know: 'How much water can you generate every day?' We have a strategy to boost daily performance," Song says. "With a solar still the size of a mini fridge, we estimate that we can generate 10 to 20 liters of clean water every single day."

Solar stills have been around for a long time. These devices use the sun's heat to evaporate water, leaving salt, bacteria and dirt behind. Then, the water vapor cools and returns to a liquid state, at which point it's collected in a clean container.

The technique has many advantages. It's simple, and the power source -- the sun -- is available just about everywhere. But unfortunately, even the latest solar still models are somewhat inefficient at vaporizing water.

Gan's team addressed this challenge through a neat, counterintuitive trick: They increased the efficiency of their evaporation system by cooling it down.

A central component of their technology is a sheet of carbon-dipped paper that is folded into an upside-down "V" shape, like the roof of a birdhouse. The bottom edges of the paper hang in a pool of water, soaking up the fluid like a napkin. At the same time, the carbon coating absorbs solar energy and transforms it into heat for evaporation.

As Gan explains, the paper's sloped geometry keeps it cool by weakening the intensity of the sunlight illuminating it. (A flat surface would be hit directly by the sun's rays.) Because most of the carbon-coated paper stays under room temperature, it can draw in heat from the surrounding area, compensating for the regular loss of solar energy that occurs during the vaporization process.
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“This work was strictly voluntary, but any animal who absented himself from it would have his rations reduced by half.”

George Orwell, Animal Farm

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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