Baltic Dry Index. 1773 unch. Brent Crude 73.94
It is better to keep your
mouth closed and let people think you are a fool than to open it and remove all
doubt.
Mark Twain
Bubble mania is back, says Goldie, and they ought to know bubble mania better than most. So much for Trump’s tax cuts boosting the US economy, boosting jobs and prosperity. We’re all going to be trillion-dollar companies thanks to stock buybacks.
And the one percent win in the casino yet again over the metal bashing, hamburger flipping, sales clerk, ninety-nine percent. What a surprise, although how it plays out in the coming mid-term elections is likely to be a bit of a shock to President Trump, and his New Republicans.
Stock valuations
already have little connection to firms underlying prospects or what’s going on in
the real world economy. Expect this stock mania too, to end up in a spectacular
fall back to earth, most likely next year when all the trade war damage has to
be paid for, and interest rate tightening makes rolling over the massive cheap
debt incurred since 2009, come face to face with debt’s new costs.
Of course it could be
later this year, if the Great Global Trump Trade War, actually succeeds in
crashing the Chinese economy, or if a Turkey or Iran crash spills over into
Europe or India, pushing either into a new recession.
Below, August madness
continues to build.
Whenever you find yourself on
the side of the majority, it is time to pause and reflect.
Mark Twain
Stock market to get $1 trillion boost via buybacks, says Goldman
Published: Aug 6, 2018 4:46 p.m. ET
Tech and internet-related stocks likely to be biggest beneficiaries of generous buyback programs
The stock market’s new buzzy number is $1,000,000,000,000. And after one
prominent tech giant hit that market-value milestone last week, the 13-digit
figure may hold a different level of resonance for the broader market in terms
of share buybacks.
Indeed, analysts at Goldman Sachs project that stock repurchases will
reach $1 trillion this year, up 46% from 2017 on the back of tax reform and
strong corporate cash flows. And investors are likely to see immediate the
impact of those repurchases as August tends to be the most popular month for
buybacks. The month usually accounts for 13% of such deals for the year,
Goldman says.
“More than 80% of firms in the S&P 500 have reported results and may
resume repurchasing stock on a discretionary basis after being on hiatus for
the past month,” said David Kostin, chief U.S. equity strategist at Goldman
Sachs, in a note released Monday.
Kostin is referring to a so-called blackout period in which companies
cease repurchasing their shares ahead of announcing their latest quarterly
financial updates to avoid running afoul of regulatory disclosure rules.
Howard Silverblatt, senior index analyst at S&P Dow Jones Indices,
also noted that buybacks are occurring at a more accelerated pace.
“Buybacks are again running stronger than expected,” he said.
Second-quarter repurchases are up 57% from the same period a year
earlier, with notable activity in the tech sector where buybacks surged 130%
year-over-year, according to Silverblatt.
Going forward, buybacks are expected to play a critical role in
supporting prices as big investors such as mutual funds and pension funds have
been net sellers, Kostin said.
The Goldman strategist maintains his year-end S&P 500 forecast of
2,850 which suggests that the market is largely expected to be rangebound until
the end of the year although he projected a 12-month target of 2,925.
More
Asian markets advance as stocks in China bounce back
Published: Aug 6, 2018 11:18 p.m. ET
Asian stock markets were largely up to start Tuesday’s trading following
fresh gains to begin the week on Wall Street.Chinese indexes jumped out to near-1% gains in early trading after hitting fresh multiyear lows Monday as the U.S.-China trade fight continues. The Shanghai Composite SHCOMP, +1.43% was last up 1% and the smaller-cap Shenzhen Composite 399106, +1.41% was up 0.9%. Hong Kong’s Hang Seng HSI, +0.96% advanced 0.6%, Casino stocks were among the biggest gainers, with Galaxy Entertainment 0027, +0.09% and Sands China 1928, +1.75% advancing. Tech industry heavyweight Tencent 0700, +0.23% dipped 0.5%.
Japan’s Nikkei NIK, +0.59% was up 0.2%, helped by SoftBank’s 9984, +5.85% quarterly earnings report late Monday. Shares of the tech firm were up 6.7%, on pace for their best day in 14 months, after a delayed opening due to a rush of buyers.
South Korea’s Kospi SEU, +0.24% advanced behind solid gains by Samsung 005930, +1.64% and SK Hynix 000660, +1.51% . Taiwan’s Taiex Y9999, -0.24% slipped as Taiwan Semiconductor 2330, -0.81% recovered from a weekend virus that shut some of its factories. Indexes in Singapore STI, +1.61% and Malaysia FBMKLCI, +0.43% posted gains.
Stocks were lower Down Under, though. Australia’s benchmark XJO, -0.33% was off 0.4% as investors bailed on sales-financing firm Eclipx ECX, -44.34% after it halved its yearly profit outlook. Shares have plunged 44% to a record low of A$1.71. New Zealand’s NSX-50 NZ50GR, -0.14% was down fractionally.
Next, more on how easy it is to “win” trade wars. Can one even know when
someone has “won?” One thing though, with or without a new war, the winner won’t
be Iran or Turkey.
Beyond tariffs: China’s ‘precision strikes’ on US businesses
American firms in China report higher costs and much greater regulatory scrutiny, and fear a major drop-off in business from rising nationalism, observers say
PUBLISHED : Sunday, 05 August, 2018, 9:03pm UPDATED : Sunday, 05 August, 2018, 11:21pm
US
companies in China are bracing for more retaliatory pain from Beijing as the
trade row between the two countries shows no sign of abating.
Observers said some American firms had reported higher costs and much
greater regulatory scrutiny, and feared a major drop-off in business from
rising nationalism.
The fallout follows a decision by Washington and then Beijing to impose
25 per cent tariffs on US$34 billion worth of imports from the other country.
More duties are in the pipeline and the White House is weighing up whether to
more than double tariffs on another US$200 billion worth of products from
China.
There are indications that the tariffs are starting to bite. One US
maker of mechanical equipment spare parts said the duties were expected to add
US$6 million to the cost to its headquarters of buying products from its China
operations.
“We are one of those who have been hit by a ‘precision strike’,” a
Chinese executive in the company’s China office said.
In
absolute terms, the tariff game is not one China can win, given it buys much
less from the United States than the US imports from China. So Beijing has
vowed to impose “qualitative” measures.
“The
retaliation has been subtle and mostly involving hold-ups of incoming goods by
China Customs and unnecessary delays in approvals for routine administrative
matters,” said James Zimmerman, a partner in the Beijing office of
international law firm Perkins Coie.
Jake Parker, vice-president of China operations with the US China
Business Council, said customs officials were inspecting all imports by one US
car company, compared with a previous 2 per cent average.
Parker said also some US food importers were subject to longer
quarantine periods at airports, resulting in food spoiling or being sent back
to the US.
In addition, US firms were concerned that the Chinese government was
“deliberately” encouraging Chinese domestic companies to diversify supply
chains away from the US products and services in areas such as agriculture and
semiconductors.
---- At the local level, US companies were under tighter
scrutiny for possible violations of labour, advertising and environment
regulations, infractions that could result in hefty penalties, he said.
“There is a variety of different ways to be implemented. We are just
beginning to see what they are now,” Parker said.
“The key point is it is very difficult for us to find a causative link
between US-China trade conflicts and those actions. Never have they been stated
specifically by Chinese authorities, but we are seeing anecdotal evidence that
it may relate to that link.”
Parker also said big iconic US companies were concerned about the risks
of anti-Americanism and boycotts of their products in China.
More
August 7, 2018 / 1:54 AM
Chinese newspaper mocks Trump's claim of winning trade war as 'wishful thinking'
SHANGHAI
(Reuters) - Chinese state media kept up their criticism of U.S. President
Donald Trump’s trade policies, with a newspaper on Tuesday describing as
“wishful thinking” Trump’s belief that a fall in Chinese stocks was a sign of
his winning the trade war.
As the world’s two biggest economies remained locked in a heated tariff
dispute, Beijing and Washington have kept up a blistering rhetoric with threats
and counter-threats of more punitive trade measures.
The editorial in the official China Daily underscored an increasingly
aggressive stance adopted by Chinese state media against Trump, a shift from
their previous approach of tempering any direct criticism against the U.S.
president.
On
Monday, the overseas edition of the Communist Party’s People’s Daily newspaper
singled out Trump, saying he was starring in his own “street fighter-style
deceitful drama of extortion and intimidation”.
----The China Daily referred to a Saturday Tweet by Trump which said “Tariffs are working far better than anyone anticipated. China market has dropped 27 percent in last four months.”
China’s stock market was performing poorly before the U.S.
administration imposed tariffs, said the English-language newspaper, asserting
that the downturn was partly due to Beijing’s attempts to cut corporate debt.
The paper said Trump’s claim that “tariffs are working big time” was
undermined by data showing the U.S. trade deficit climbed $3 billion to $46.3
billion in June, the first increase in four months.
The China Daily is often used by the government to communicate its
message to an international audience.
----In a separate commentary, in the People’s Daily overseas edition, a researcher at the Commerce Ministry reiterated this stance, saying China was strong and resilient enough to weather the trade dispute.
“We absolutely have reason to believe that during this complex trade
friction, and relying on the domestic market, China can continue to enhance its
leading position in the global economic and industrial system,” researcher Mei
Xinyu wrote.
Despite the U.S. tariffs, a Reuters poll of economists forecast China’s
exports to have grown in July, though many see a deteriorating outlook for
shipments especially if Trump goes ahead with his threats to slap more punitive
duties on Chinese imports
Recent data showed growth in the world’s second largest economy has
already started to cool. The government has responded by releasing more
liquidity into the banking system, encouraging lending and promising a more
“active” fiscal policy.
August 6, 2018 / 10:19 AM
Renewed U.S. sanctions target Iran's economy, Tehran cool on talks
WASHINGTON/ANKARA (Reuters) - President Donald Trump’s top security adviser on Monday urged Iran to take up an offer of talks with the United States or suffer more pain from economic sanctions, but Iran’s president said Washington needed first to prove it can be trusted.
Hours before revived U.S. sanctions were due to kick in, White House
national security adviser John Bolton said Iran should pay heed to Trump’s
willingness to negotiate.
“They could take up the president’s offer to negotiate with them, to
give up their ballistic missile and nuclear weapons programs fully and really
verifiably,” Bolton told Fox News.
“If the ayatollahs want to get out from under the squeeze, they should
come and sit down. The pressure will not relent while the negotiations go on,”
said Bolton, one of the administration’s main hawks on Iran.
So-called snapback sanctions, due to come into force early on Tuesday,
target Iranian purchases of U.S. dollars, metals trading, coal, industrial
software and its auto sector.
Foes for decades, the United States and Iran have been increasingly at
odds over Iran’s growing political and military influence in the Middle East
since Trump took office in January 2017.
The renewed sanctions were among those lifted under a 2015 deal between
world powers and Tehran on curbing Iran’s nuclear program. Trump abandoned the
deal in May. Heavier U.S. sanctions, aimed at Iran’s oil sector, are due in
November.
Iran’s rial currency has lost half its value since April under the
threat of revived U.S. sanctions. The currency’s collapse and soaring inflation
have sparked sporadic demonstrations in Iran against profiteering and
corruption, with many protesters chanting anti-government slogans.
More
Turkey Crisis Deepens as Sanctions Threat Sends Lira to Low
By Rita Nazareth
Updated on 7 August 2018, 04:57 GMT+1
Turkey’s lira sank to a record low and bonds tumbled as heightened concern
over a diplomatic spat with the U.S.
overshadowed the central bank’s attempt to support the currency. The lira slumped as much as 6.3 percent Monday before rising 1.1 percent Tuesday after a report Turkish officials will head to the U.S. The rate on 10-year bonds hovered just below 20 percent after President Recep Tayyip Erdogan said on Saturday that Turkey will respond in kind to U.S. sanctions over a detained American pastor. The iShares MSCI Turkey exchange-traded fund plunged 7.5 percent -- the lowest level since 2009.
As the currency tumbled, Turkish policymakers changed reserve rules to boost banks’ foreign-exchange liquidity -- a measure seen by analysts as insufficient to prop up the lira.
“This is chump change and the fact that this is all they can do while the lira is in free-fall is quite disappointing,” said Win Thin, a strategist at Brown Brothers Harriman in New York.
With the lira already under pressure from one of the largest current-account deficits in emerging markets, escalating tension has pushed the currency’s loss this year to 28 percent against the dollar. That has hampered the ability of companies to repay their foreign-currency loans, stoked inflation and put pressure on the central bank to keep raising rates. The bank is scheduled to next meet on Sept. 13.
More
Patriot: the person who can
holler the loudest without knowing what he is hollering about.
Mark Twain
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, stop complaining Londoners. The NYC subway system, when collapse
becomes inevitable. 70 year old wiring, water, garbage, rats, unions, (not the
same thing,) money divergence, and more. Welcome to the hundred plus year old
NY Subway system. Well someone had to
lose out fighting all those expensive discretionary wars all around the globe.
A major accident waiting to happen, like when sections of the
unmaintained elevated, cobbled, old West Side Highway started to fall
down. I managed to drive it many times
from around Wall Street up to 72nd, though it was engineered for smaller older 1920s and 30s slower
cars. (Mayor Lindsay had stolen the budget for something or other.)
In the good old days of the 70s, some of the NY subway rolling stock
dated to the 1930s. Graffiti covered of course. So many stories for another
day.
What’s with the New York City Subway System?
By Lambert Strether of Corrente.I’m no expert on the New York subway system, although its map makes fine wall art, and Massimo Vignelli and Bob Noorda’s (“iconic“) 1970 New York City Transit Authority Graphics Standards Manual is said to be a modernist masterpiece (besides delivering wonderfully functional signage and wayfindig, plus genius branding). But the trains, the cars, the tunnels, the signals…. There are some problems. Two tweets sum up — as so much goes — the contrast between what the United States does, and what the rest of the world can do[1]. First, the tweet that got me thinking about this post:
---- The New York Subway System Is Critical Infrastructure
For those of you who are, like me, from out of town, some numbers:
Opened in 1904, the New York City Subway is one of the world’s oldest public transit systems, one of the world’s most used metro systems, and the metro system with the most stations. It offers service 24 hours per day on every day of the year, though some routes may operate only part-time.
The New York City Subway is the largest rapid transit system in the world by number of stations, with 472 stations in operation[16] (424 if stations connected by transfers are counted as single stations).
The system is also one of the world’s longest. Overall, the system contains 236 miles (380 km) of routes, translating into 665 miles (1,070 km) of revenue track;[10] and a total of 850 miles (1,370 km) including non-revenue trackage.
By annual ridership, the New York City Subway is the busiest rapid transit rail system in both the Western Hemisphere and the Western world, as well as the seventh busiest rapid transit rail system in the world; only the metro (subway) systems in Beijing, Shanghai, Seoul, Tokyo, Guangzhou, and Moscow record higher annual ridership.[21] In 2017, the subway delivered over 1.27 billion rides, averaging approximately 5.5 million daily rides on weekdays and a combined 5.7 million rides each weekend (3.2 million on Saturdays; 2.5 million on Sundays). On September 23, 2014, more than 6.1 million people rode the subway system, establishing the highest single-day ridership since ridership was regularly monitored in 1985.
The Subway is critical to New York City’s economy, hence to New York State’s, hence to the nation. The Atlantic:
Today, subway cars in New York carry passengers on over 5 million rides each day. [If it ceased to function], more than half the city’s population could find itself without a way to get to work, bringing the city’s $4 billion a day economy to a grinding halt.
And yet, service levels have significantly deteriorated. Some anecdotes from Vox (in 2017):
New York’s subway is in crisis. After years of growing ridership, use of the system took a dip in 2016, with further declines this year. Last month saw a train sit in the tunnel in sweltering heat for 45 minutes and a derailment with dozens of injuries. The media describes the situation as hell (Slate), a meltdown (Curbed), or a crisis (NBC).
And the Atlantic:
Subway delays have more than doubled over a five-year period. Track fires increased.
And from the Gothamist, some numbers:
---- Infrastructure Problems with the New York Subway System
The cars. From The Atlantic:
The 1960s-era Brightliners, those stainless-steel C-train cars, break down constantly—every 33,000 miles on average, The New York Times recently reported. That’s compared with the average subway car, which breaks down every 400,000 miles, and the newest cars, which break down every 750,000 miles, according to the newspaper.
The tunnels. If the subway has capacity problems, one solution would be to take a cue from Moscow, and build more lines. That’s not happening, CityLab:
Since December 16, 1940, New York has not opened another new subway line, aside from a handful of small extensions and connections. Unlike most other great cities, New York’s rapid transit system remains frozen in time: Commuters on their iPhones are standing in stations scarcely changed from nearly 80 years ago.
Indeed, in some ways, things have moved backward. The network is actually considerably smaller than it was during the Second World War, and today’s six million daily riders are facing constant delays, infrastructure failures, and alarmingly crowded cars and platforms.
(The CityLab article is an excellent historical overview, with a timeline.) The signaling system[2].
From the New York Daily News, with so much amazing detail I can’t forbear to quote a lot:
Even something as basic as a cable is an antique.
Workers popped open a junction box to show a 70-year-old cloth-covered cable, due for the scrap heap next year, connected to newer rubber-covered wires.
Dispatchers in the tower room of the station monitored train locations on a massive electromechanical machine half as big as the room itself.
Green and blue lights moved across white lines against a blackboard as big as an overhead deli menu.
Below the lights, the machine featured a row of red and black levers that must be manually pulled and pushed to control switches and signals on the tracks.
In a musty room tucked away in the back, drab green cabinets house 120-volt signal relays that communicate between the tower room machines and equipment on the tracks.
Habersham used a light on his cell phone and squinted to read the dates scrawled on the machines. Some still bore the name of the original manufacturer, General Railway Signal Co.
One relay was dated April 2, 1940. A second relay machine from 1940 was since refurbished — 40 years ago, in 1977[3].
More
If you hold a cat by the tail
you learn things you cannot learn any other way.
Mark Twain
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?
Power Worth Less Than Zero Spreads as Green Energy Floods the Grid
Wind and solar farms are glutting networks more frequently, prompting a market signal for coal plants to shut offBy Jesper Starn 6 August 2018, 05:00 GMT+1 Bright and breezy days are becoming a deeper nightmare for utilities struggling to earn a return on traditional power plants.
With wind and solar farms sprouting up in more areas -- and their power getting priority to feed into the grid in many places -- the amount of electricity being generated is outstripping demand during
certain hours of the day.
The result: power prices are slipping to zero or even below more often in more jurisdictions. That’s adding to headaches for generators from NRG Energy Inc. in California to RWE AG in Germany and Origin Energy Ltd. in Australia. Once confined to a curiosity for a few hours over windy Christmas holidays, sub-zero cost of electricity is becoming a reality for hundreds of hours in many markets, upending the economics of the business in the process.
“There is no time pattern for having negative prices in Belgium,” said Marleen Vanhecke, an official at the nation’s grid manager, Elia System Operator SA. “This phenomena is mainly determined by high wind generation in Germany and enough import capacity towards Belgium.”
The chart below shows the incidence of so-called negative power prices so far this year, indicating the biggest issue is in Germany, where the government has been working for more than a decade to shift the economy toward cleaner forms of energy.
Periods with negative prices occur when there is more supply than demand, typically during a mid-day sun burst or early morning wind gust when demand is already low. A negative price is essentially a market signal telling utilities to shut down certain power plants. It doesn’t result in anyone getting a refund on bills -- or in electric meters running backward.
Instead, it often prompts owners of traditional coal and gas plants to
shut down production for a period even though many of the facilities aren’t
designed to switch on and off quickly. It’s left the utilities complaining that
they can’t earn the returns they expected for their investment in generation
capacity.
“Energy market price signals are critical to telling generators where to
build new resources,” said Abe Silverman, deputy general council at NRG Energy,
which is concerned about the anomaly in California. “As negative prices become
more prevalent, we’ll have to evolve our energy market price formation strategies
to ensure that we will continue to drive efficient investment.”
More
https://www.bloomberg.com/news/articles/2018-08-06/negative-prices-in-power-market-as-wind-solar-cut-electricity
Patriotism is supporting your
country all the time, and your government when it deserves it.
Mark Twain
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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