Baltic Dry Index. 1709 +18 Brent Crude 72.84
On October 19th, 1987, known forever after as Black Monday, the day the VIX spiked to close at 150 for the only time in its history, the US stock markets crashed. While we can look back today with 20/20 hindsight and smugly discount the events of late October 1987, they were absolutely terrifying at the time. If you meet anyone today who was speculating in 1987 who claims they weren’t scared to death about the crash, they are lying through their teeth. It felt like Equity Armageddon when it happened, exceedingly frightening.Handicapping Market Crashes. Adam Hamilton, CPA
As Asian markets
steady this morning, is the Turkey Tempest over? Unlikely, is my guess. It’s a
guessing game now as to who has survived unscathed and who is irreparably holed
in the Turkish economy. A guessing game as to which European banks are sitting
on non-performing Turkish loans, but just don’t know it yet. A guessing game as
to how much collateral damage has occurred in the emerging market economies,
and in the EM Exchange Traded Funds.
Below, the calm after
the storm or the eye of the hurricane? With more Trump Trade War Tariffs about
to kick in next week unless he U-turns again, if not a hurricane a new storm
is forming. Not that anyone in Washington of Ankara seems to be aware. Both
President Trump and President Erdogan are
way too busy tilting at different windmills.
Nikkei leads Asian-market rebound following Turkish currency jitters
Published: Aug 13, 2018 11:04 p.m. ET
Asian stocks mostly gain, a day after widespread losses
Asian stocks were largely higher in early trading Tuesday, a day after widespread regional declines following Turkey’s currency crisis.Japan’s Nikkei NIK, +1.78% led the way, up 1.2%, driven by the yen’s overnight pullback. Export-heavy names performed the best, with Sony 6758, +1.49% and Honda 7267, +1.50% in the green. Tokyo Electron 8035, +1.62% erased half of yesterday’s 3% slide.
Korea’s Kospi SEU, +0.50% edged up 0.2%, with mixed results from tech names, as Samsung 005930, +0.55% rose but LG Electronics 066570, -3.41% tumbled.
Chinese stock benchmarks lagged others in the region. The Shanghai Composite SHCOMP, -0.51% was up 0.1% and the Shenzhen Composite 399106, -0.63% was about flat. Birth-related stocks were generally higher, anticipating a subsidized policy on couples having a second child, while gold names were lower amid the metal’s overnight skid..
Hong Kong’s Hang Seng HSI, -1.04% was down 0.4%. Tencent 0700, -3.55% fell 2% after Beijing blocked sales of the company’s new videogame. The tech company is due to report second-quarter results Wednesday.
Australia’s ASX 200 XJO, +0.68% was up 0.8% and New Zealand’s NZX-50 NZ50GR, +0.30% gained 0.3%. Taiwan’s Taiex Y9999, +0.74% was up as well, while Singapore’s Strait Times Index STI, -0.17% dipped.
August 13, 2018 / 4:17 PM
Erdogan vows action against 'economic terrorists' over lira plunge
ANKARA (Reuters) - President Tayyip Erdogan on Monday accused
“economic terrorists” of plotting to harm Turkey by spreading false reports and
said they would face the full force of the law, as authorities launched
investigations of those suspected of involvement.
The lira currency, which has lost more than 40 percent against the U.S.
dollar this year, pulled back from a record low of 7.24 earlier on Monday after
the central bank pledged to provide liquidity, but it remained under selling
pressure and its meltdown continued to rattle global markets.
“There are economic terrorists on social media,” Erdogan told a
gathering of Turkish ambassadors at the presidential palace in Ankara, adding
that the judiciary and financial authorities were taking action in response.
“They are truly a network of treason,” he added. “We will not give them
the time of day... We will make those spreading speculations pay the necessary
price”.
Erdogan, who gained sweeping new powers following his re-election in
June, said rumours had been spread that authorities might impose capital
controls in response to the slump in the currency, which tumbled as much as 18
percent on Friday alone.
The interior ministry said it had so far identified 346 social media
accounts carrying posts about the exchange rate that it said created a negative
perception of the economy. It said it would take legal measures against them
but did not say what these would be.
Separately, the Istanbul and Ankara prosecutor’s offices launched
investigations into individuals suspected of being involved in actions that
threaten Turkey’s economic security, broadcaster CNN Turk and state news agency
Anadolu reported.
Turkey’s
Capital Markets Board (SPK) and financial crime board have also said they would
take legal steps against those who spread misinformation about financial
institutions and firms, or reports that the government would seize
foreign-currency deposits.
More
August 13, 2018 / 2:01 AM
Turkey's economic woes hurt euro, emerging market currencies
NEW YORK (Reuters) - The fallout from the Turkish lira’s
plunge sent the euro to a new 13-month low and hammered emerging market
currencies as investors worried about contagion scrambled for the safety of the
yen and the Swiss franc.
Turkey’s lira clawed back some losses on Monday from a record
low 7.24 lira per dollar after the country’s central bank said it would provide
liquidity and cut reserve requirements for banks, but the currency was still
down around 10 percent on the day. It has shed more than two-fifths of its
value in 2018.
That knocked emerging market currencies. The South African rand was down
1.5 percent, after earlier falling over 10 percent to a more than two-year low
in earlier trading. The Indian rupee stumbled to a record low, while the
Mexican peso lost more than 1 percent.
Investors have grown increasingly concerned about President Tayyip
Erdogan’s growing control over the economy and a deepening diplomatic rift with
the United States, with those concerns snowballing into a market panic last
week.
Aaron Hurd, senior portfolio manager in the currency group at SSGA in
Boston, said however that while contagion was happening, it was “muted when
compared to other emerging market crises.”
Nevertheless,
traders anxious about the euro and emerging market currencies piled into yen
and Swiss franc, which are seen as safe-haven currencies in times of market
turbulence.
More
August 13, 2018 / 11:16 AM
Italy expects financial market attack in August - government official
ROME (Reuters) - Speculators will probably attack Italian financial
markets this month but the country has the resources to defend itself, a senior
and highly influential government official said in a newspaper interview on
Sunday.
Giancarlo Giorgetti, undersecretary in the prime minister’s office and a
leading light in the far-right League party, said thin summer trading volumes
helped fuel market assaults.
“I expect an attack (in August),” Giorgetti told Libero.
“The markets are populated by hungry speculative funds that choose their
prey and pounce ... In the summer the market volumes are small, you can lay the
groundwork for aggressive initiatives against countries. Look at Turkey.”
Turkish markets slumped last week on growing concerns over the country’s
economy and political leadership.
Italian assets have also come under strain in recent weeks, with
investors concerned that the governing coalition, made up of the League and the
anti-establishment 5-Star Movement, might tear up EU fiscal rules to pay for
big-spending budget plans.
“If the (market) storm comes, we will open our umbrella. Italy is a big
country and has the resources to react, thanks in part to its large amount of
private savings,” said Giorgetti, who is seen as a moderating force within the
League.
----In an interview with Il Foglio newspaper on Saturday, Foreign Minister Enzo Moavero Milanesi, who is not a member of any political party, said the collapse of Turkey’s lira currency showed how important it was for Italy to be a part of the euro.
“What is happening in Turkey should be carefully considered by those who
continue to have doubts over whether a currency like the euro is a positive
thing or not,” he said.
----Underscoring deep divisions within the coalition on the issue, the League’s chief economist Claudio Borghi, who is head of the lower house budget committee, said on Sunday that Moavero did not understand what he was talking about.
“We should worry about the euro, not celebrate its presumed stability,”
he told La Verita daily, warning that plans by the European Central Bank to
finish its three-year-old stimulus programme could prove highly damaging to
Italy.
“Either a new (market) guarantee is put in place, or we need to prepare
for a plan B,” he said, in an apparent reference to Italy exiting the euro. “We
already have a (trade) surplus. The moment we have our own currency, we will
have a super surplus.”
More
Finally, forget tiny Turkey or Italy, China. Has
Team Trump’s Trade War killed China’s and the world’s golden goose? It’s all
downhill fast if Team Trump has. Cash will be king, debt a millstone of death.
All those debt fuelled stock buybacks, malinvestment of a bygone era of delusion.
A day of reckoning will arrive.
August 14, 2018 / 3:10 AM
China's economy cools further, investment growth at record low
BEIJING
(Reuters) - China’s economy is showing further signs of cooling as the U.S.
prepares to impose even tougher trade tariffs, with investment in the first
seven months of the year slowing to a record low and retail sales softening,
data showed on Tuesday.
Fixed-asset investment growth slowed more than expected to 5.5 percent
in January-July, highlighting weakening domestic demand and faltering business
confidence as the U.S. trade war adds to domestic pressures from Beijing’s
crackdown on debt and pollution.
The pace of investment was the weakest on record going back to early
1996, according to data on Reuters Eikon. Investment had been expected to grow
6.0 percent in the first seven months of the year, steady from January-June.
Retail sales also missed expectations, with Chinese consumers more
reluctant to spend on everything from cosmetics and other everyday goods to
big-ticket items such as home appliances and furniture.
Sales rose 8.8 percent in July from a year earlier, below an expected
9.1 percent and down from 9.0 percent in June.
Industrial output failed to accelerate as expected. It rose 6.0 percent
in July, the National Bureau of Statistics said, missing analysts’ estimates
for a rise of 6.3 percent and compared with a rise of 6.0 percent in June.
While recent readings on trade and inflation have so far shown only
limited impact from the trade war with Washington on the world’s second-largest
economy, there are growing concerns that the escalating dispute could produce a
sharper Chinese economy slowdown than expected just a few months ago.
China and the United States have slapped a series of tit-for-tat tariffs
on each other’s goods in July and August and more are due to kick in next week.
More
August 14, 2018 / 1:39 AM
Asia tries to find its footing, China disappoints
SYDNEY
(Reuters) - Asian share markets fought to regain their footing on Tuesday as
tremors from the collapse of the Turkish lira ebbed, though sentiment took a
fresh knock when Chinese economic data proved softer than expected.
Retail
sales, industrial output and urban investment all grew by less than forecast in
July, a trifecta of disappointment that underlined the need for more policy
stimulus in China.
----Investors had been encouraged that falls on Wall Street were only minor overnight. The Dow .DJI ended Monday down 0.5 percent, while the S&P 500 .SPX lost 0.40 percent and the Nasdaq .IXIC 0.25 percent. [.N]
Turkey's lira found a moment's respite at 6.9250 per dollar TRYTOM=D3 after the country's central bank said it would provide liquidity and cut reserve requirements for banks.
The rot spread to the South African rand and the Argentine peso. Argentina’s central bank surprised by raising interest rates by 5 percentage points on Monday, but it was still not enough to stop the peso hitting a record low.
JPMorgan economist David Hensley argued that strains in most other emerging markets (EM) would be contained.
“Negative developments in Turkey will likely be eventually seen, along with Argentina, as isolated given their exceptional external imbalances compared to most EM countries,” he said.
“Nonetheless, we are mindful of political risk elsewhere in the EM involving Russia as well as Brazil, Mexico, and even India.”
For now, concerns about the exposure of European banks to Turkey pushed up bond yields in Spain and Italy and hobbled the euro. The single currency was last at $1.1405 EUR=EBS, having touched its lowest since July 2017 on Monday.
It also reached one-year lows on the yen and Swiss franc, traditional safe harbors in times of stress.
More
Interest rates are the most important prices
in the economy, according to Nobel laureate F.A. Hayek, because they reflect
the collective time preference of individuals to consume either now or later.
Accordingly, interest rates co-ordinate allocation of capital across the
economy by signalling to businesses whether they should invest. Distortions in
interest rates can cause “clusters of errors” in which large swathes of
businesses unwittingly miscalculate at the same time.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, another view on Brexit. If the rump-EU wants
to shoot themselves in both feet, there’s nothing John Bull can do to stop
then, nor should he. At the next European elections, the continent’s voter will
get their chance to give the Commission hell.
The WTO option is now the best choice for Brexit
Written by Ruth Lea
Ruth Lea is Economic Adviser at Arbuthnot Banking Group.
I have been an advocate of a straightforward
Canada-style free trade agreement with the EU for several years and indeed
still am. Given our close trading relationship with the EU, which will
naturally continue when we leave the Single Market and the Customs Union,
tariff-free trade is a bonus. I have also supported a special deal for financial
services, based on enhanced regulatory equivalence. Without spending too much
time on the pluses and minuses of this model, there was another clear advantage
to this approach. Yes, it would benefit the UK on Brexit, but it would also
clearly benefit the EU27 with their huge visible trade surplus in goods (£95bn
in 2017, over £31bn with Germany alone) and their beneficial business
relationships with the City of London. So, one would have thought, such a deal
could have been agreed relatively easily.
However, political events have conspired against
this outcome and it is reasonable to assume that it is now extremely unlikely
that, if there is an agreement by the end of the year on the future UK-EU trade
relationship, it will be Canada-style deal. Granted there are rumours and
counter-rumours this may yet be considered, but politically it does not seem
feasible. Too many concessions have been made, that cannot be unmade. And, if
there is a “trade deal”, it is almost certain it will be based (however loosely)
on Chequers. This is, of course, a political judgement and I may yet be proved
to be wrong. We shall see.
However, assuming I am right we are now clearly
faced with two main options. The first is, of course, a Chequers-style
agreement, which incidentally may or may not translate itself into a Treaty
during the transition period. Nothing can be guaranteed. Such an outcome
strikes me as the “worst of all worlds.” I am aware that there are voices
claiming that a Chequers-style agreement would not really be much of a problem
because it could be rectified “later”. Well maybe yes or maybe no. But, in the
meantime, we would be stuck in BRINO limbo that could persist for years.
The second option is to accept a “deal” on the
future trade relationship (along with the weaponised Irish border which has
proved impossible), shake hands and leave with “no deal”. Presumably March’s
Withdrawal Agreement, which covered the transition period, citizens’ rights and
the financial settlement, would then bite the dust. Meanwhile negotiations
would (presumably) continue to finalise administrative matters such as
aviation, visas, residency, passports and customs administration prior to
Brexit, if they had not already been finalised. Our trade with the EU with then
be conducted under WTO rules after 29 March 2019, the “WTO option”, unless or
until the UK and the EU negotiated a mutually beneficial trade deal when the UK
would be a third country.
The WTO option:
clearly preferable to Chequers
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?
Quantum chains in graphene nanoribbons
Breakthrough in nanoresearch
Date:
August 9, 2018
Source:
Swiss Federal Laboratories for Materials Science and Technology (EMPA)
Summary:
Researchers have achieved a breakthrough that could in future be used for
precise nanotransistors or -- in the distant future -- possibly even quantum
computers, as the team reports.
A material that consists of atoms of a single element, but has
completely different properties depending on the atomic arrangement -- this may
sound strange, but is actually reality with graphene nano-ribbons. The ribbons,
which are only a few carbon atoms wide and exactly one atom thick, have very
different electronic properties depending on their shape and width: conductor,
semiconductor or insulator. An international research team led by Empa's
"nanotech@surfaces."
laboratory has now succeeded in precisely adjusting the properties of
the ribbons by specifically varying their shape. The particular feature of this
technology is that not only can the "usual" electronic properties
mentioned above be varied -- it can also be used to generate specific local quantum
states.
So what's behind it? If the width of a narrow graphene nanoribbon
changes, in this case from seven to nine atoms, a special zone is created at
the transition: because the electronic properties of the two areas differ in a
special, so-called topological way, a "protected" and thus very
robust new quantum state is created in the transition zone. This local
electronic quantum state can now be used as a basic component to produce
tailor-made semiconductors, metals or insulators -- and possibly even as a component
in quantum computers.
----"The importance of this development is also underlined by the fact that a research group at the University of California, Berkeley, came to similar results independently of us," said Gröning. The work of the US research team has been published in the same issue of Nature.
On the way to nanoelectronics
Based on these novel quantum chains, precise nano-transistors could be
manufactured in the future -- a fundamental step on the way to nanoelectronics.
Whether the switching distance between the "1" state and the
"0" state of the nanotransistor is actually large enough depends on
the bandgap of the semiconductor -- and with the new method this can be set
almost at will.
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.
helpful blog.
ReplyDeleteNot all storms come to disrupt your life, some come to clear your path.
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