Baltic Dry Index. 1704 -28 Brent Crude 72.49
"You
can get much farther with a kind word and a gun than you can with a kind word
alone."
Al
Capone, White House Trade Advisor.
With China sharpening
its knives, getting ready to take on America’s Apple, in the increasingly
bitter and illogical Trump Trade War on the Rest of the World, other signs are
arriving that suggest while “winning trade wars” isn’t so easy, collapsing the global
economy might be.
Whether China
actually moves to slice up trillion dollar Apple in response to Trump’s latest
threats against China, and Chinese firms and workers, remains to be seen, but it’s
a highly tempting target to bring down America’s overpriced stock markets, now
that President Trump has twitted that bringing down China’s stock markets shows
that his trade war against China has "succeeded." Two (or more) can play at that dangerous, weaponised game of stock market Russian roulette.
Almost as bad for the global economy is Saudi Arabia’s,
apparently US approved, financial attack on poor Canada, busy yesterday
celebrating with the rest of the allies the Battle of Amiens, which started the
German collapse that led to the end of World War One.
Who wants a weaponised Saudi Sovereign Wealth Fund as an
investor in either stocks or bonds? And if Trump’s America is going to play
second fiddle to Saudi attacks, time for the EUSSR and others to fast restrict
the scale and timing of any Saudi sovereign wealth fund sales. Tomorrow will
not be like today, it will be far more erratic, while today is already far
scarier than yesterday.
Below our increasingly unstable and dangerous global
financial world.
"In
politics stupidity is not a handicap."
Napoleon
Bonaparte, European Dictator.
August 9, 2018 / 1:35 AM
Japan machinery orders tumble, stoke doubts on capex
TOKYO (Reuters) - Japan’s core machinery orders tumbled in June at the fastest pace in six months, with firms expecting another modest drop in the third quarter in a sign capital expenditure may slow, especially as international trade worries cloud the horizon.
The 8.8 percent fall in core machinery orders, a highly volatile data
series regarded as a leading indicator of capital spending, was more than the
median estimate for a 1.3 percent decline in a Reuters poll and marked the
biggest drop since December 2017.
Manufacturers surveyed by the Cabinet Office have forecast that core
orders will edge down 0.3 percent in July-September after a 2.2 percent
increase in April-June.
The machinery orders, which come a day before data expected to show the
economy resumed expansion in the second quarter due to robust consumer spending
and capital expenditure, may increase policymaker concerns about future growth.
“Machinery orders are moving in line with a temporary slowdown in global
manufacturing activity,” said Hiroaki Muto, an economist at Tokai Tokyo
Research Center.
“Japan’s economy will continue to grow but at a slightly slower pace.
Trade friction is a risk, but there is no substantial impact so far.”
By sector, orders from manufacturers slumped by 15.9 percent in June,
after a 1.3 percent increase in May, while service-sector orders decreased 7.0
percent, versus a 0.2 percent increase the previous month.
----Risks to the outlook remain as U.S. President Donald Trump’s protectionist trade policies and his threats to impose tariffs on imported autos and auto parts cloud the prospect for Japan’s export-reliant economy.
Japanese companies could cut back on capital expenditure if they think
exports will slow due to trade friction with the United States, some economists
have said.
August 9, 2018 / 4:02 AM
Nikkei drops on strong yen; auto sector weighs on improper inspection worries
TOKYO, Aug 9 (Reuters) - Japan’s Nikkei dropped on Thursday morning as a
strong yen hurt investor risk appetite, while the auto sector saw a sell-off on
news that some automakers improperly conducted vehicle inspections in the
domestic market.
Mazda Motor Corp, Suzuki Motor Corp and Yamaha Motor Co have submitted
reports to Japan’s transport ministry that they conducted improper fuel economy
and emissions tests on their vehicles, the ministry said on Thursday.
Mazda fell 1.3 percent, Suzuki tumbled 6.1 percent and Yamaha declined
4.3 percent, dragging down the transport equipment sector by 1.1 percent.
The Nikkei share average dropped 0.3 percent to 22,576.06 in midmorning
trade.
Hurt by trade tensions ahead of the U.S.-Japan talks on Thursday in
Washington, the dollar dropped 0.15 percent at 110.78 yen, its weakest in nine
days.
“Although the market is not overly concerned that something specific
related to Japan will come out, currency investors are risk averse and buying
the yen, and stock investors are also refraining from taking large positions,”
said Isao Kubo, an equity strategist at Nissay Asset Management.
Japan will try to avert steep tariffs on its car exports and fend off
U.S. demands for a bilateral free trade agreement at talks on Thursday.
Tech shares lost ground, with Kyocera Corp declining 1.2 percent,
Hitachi Ltd dropping 1.8 percent.
More
As Canada feuds with Saudi Arabia, Trump administration pursues friendly relations, downplays human rights
Tom
Blackwell August 7, 2018 8:14 PM EDT
WASHINGTON, D.C. — When Donald Trump became U.S. president, his first
foreign trip was not to Canada, Mexico or anywhere in Europe, his closest
neighbours and allies.
It was to Saudi Arabia for a lavish state welcome that left Trump
literally beaming.
Since then, the White House has steadfastly supported the Saudis’ bloody
war in Yemen, sided with it against longtime U.S. ally Qatar and largely
overlooked the Arab power’s suppression of dissidents.
And when the Saudis lashed out at Canada this week for criticizing their
human rights record, the U.S. response was muted, referring to both countries
as allies and declining to endorse Canada’s position.
On Tuesday, a State Department spokeswoman said the U.S. would not get
involved in the spat, amid reports the Liberal government was looking to other
countries for help to resolve the tension.
The American reaction points to a study in contrasts: as Canadians
chastise Saudi Arabia for imprisoning human-rights activists, the White House
has made embrace of the kingdom — warts and all — a cornerstone of its Middle
East strategy.
----The American stance may even have contributed to Saudi Arabia’s aggressive reaction to Canadian lecturing on Twitter in the first place, said one analyst.
“The broad contours of U.S. foreign policy, especially under President
Donald Trump’s administration, clearly signal decreased appetite to engage on
foreign issues or support democratization efforts,” said Ayham Kamel of the
Eurasia Group. “Absent a strong U.S. voice on human rights and democratic
values, Arab leaders have become less willing to tolerate Western advice on
either political reform of governance.”
Meanwhile, Finance Minister Bill Morneau defended Canada’s actions
Tuesday, saying it is important to propagate Canadian values around the world.
Saudi Arabia expelled Canada’s ambassador, ordered a freeze on new trade
and recalled thousands of its students studying in Canadian universities, after
Global Affairs Canada voiced concerns in a tweet last week about the activists’
arrest.
More
August 9, 2018 / 5:03 AM
Oil prices rebound after heavy declines over trade dispute
TOKYO
(Reuters) - Oil prices on Thursday eked out gains on concerns about Iranian
crude supplies as the U.S. hit Tehran with renewed sanctions, halting the
previous session’s declines amid the escalating China-U.S. trade dispute and
worries over China’s demand.
Brent crude futures were up 30 cents, or 0.4 percent, at $72.58 barrel
by 0417 GMT, following a decline of more than 3 percent on Wednesday.
U.S. West Texas Intermediate (WTI) crude futures had gained 11 cents, or
0.2 percent, to $67.05 a barrel, after dropping 3.22 percent the previous
session.
“The market is supported by concerns the sanctions on Iran are going to
reduce Iranian supply,” said Tony Nunan, oil risk manager at Mitsubishi in
Tokyo.
“The geopolitical risk from Iran is keeping a floor under the price,” he
said.
The U.S. reimposed sanctions on some industries on Tuesday against Iran,
third-biggest producer in the Organization of the Petroleum Exporting Countries
(OPEC).
The renewed sanctions won’t directly target Iranian oil until November,
although U.S. President Donald Trump has said he wants as many countries as
possible to cut their imports of the nation’s crude to zero.
China is slapping tariffs of 25 percent on a further $16 billion in
imports from the United States, hitting trade goods from fuel and steel
products to autos and medical equipment.
The ongoing trade war is rattling global markets and investors fear any
slowdown in the world’s two largest economies would slash demand for
commodities.
China’s crude imports recovered slightly in July after two months of
decline, but were still among the lowest this year due to a drop-off in demand
from smaller independent refineries.
China, the world’s top importer of crude, took 8.48 million barrels per
day (bpd) last month, up from 8.18 million bpd a year earlier and June’s 8.36
million bpd, customs data showed.
The U.S. Energy Information Administration, meanwhile, reported that
crude inventories fell 1.4 million barrels in the latest week, less than half
the 3.3 million-barrel draw analysts had expected. [EIA/S]
More
Finally, Trump tax
giveaways for corporate stock buybacks to rig stock prices higher and boost CEO
bonuses notwithstanding, (I don’t get to use that word often,) is it all over
for US stocks? Was the Trump tax giveaway as good as it gets/got? In 2018, we’re
all NASDAQ now.
Time for a few put options,
or more conservatively, a few synthetic double options. Is another 1987 Black
Monday lurking ahead?
Behold the ‘scariest chart’ for the stock market
Published: Aug 8, 2018 5:43 p.m. ET
By one measure, the stock market’s valuation is twice as high as 2000
A lot has changed since the stock market crash of 2000. Apple Inc. has
gone from being just another computer brand to becoming the most valuable
company in the world, Amazon.com Inc. went from being an e-book retailer to a
byword for online shopping and Tesla’s Elon Musk has risen from obscurity to
Twitter stardom.
Yet some things never change and Doug Ramsey, chief investment officer
at Leuthold Group, has been on a mini-campaign highlighting the parallels
between 2000 and 2018.
Among the numerous similarities is the elevated valuation of the S&P
500 then and now, which Ramsey illustrates in a chart that he has dubbed as the
“scariest chart in our database.”
----“Recall that the initial visit to present levels was followed by the
S&P 500’s first-ever negative total return decade,” he said in a recent
blog post.
Price-to-sales ratio is one measure of a stocks value. It isn’t as
popular as the price-to-earnings ratio, or P/E, but is viewed as less
susceptible to manipulation since it is based on revenue.
He also shared a chart which he claims is “unfit for a family-friendly
publication” that shows how in terms of median price to sales ratio, the
S&P 500 is twice as expensive as it was in 2000.
“Overvaluation
in 2000 was highly concentrated; today it is pervasive, with the median S&P
500 Price/Sales ratio of 2.63 times more than double the 1.23 times prevailing
in February 2000.
More
August 8, 2018 / 1:21 PM
Commentary: Volatility slump stokes flames for post-summer blow up
LONDON
(Reuters) - Financial market volatility is slumping across the board to
historically - or, dangerously - low levels, potentially fanning the flames for
a repeat of February’s “volmageddon” explosion that sparked a 10 percent
correction in U.S. and world stocks.
Then, major bond and currency markets remained reasonably insulated from
the turmoil that swept through equities. They may not be so lucky next time around,
because positioning in some cases is even more extreme than it is in stocks.
A breakdown of how speculative investors like hedge funds are positioned
across U.S. futures markets shows that short VIX positions as a share of
overall open interest are higher now than they were just before that record
surge in February.
The net short position in 10-year U.S. Treasuries as a share of total
open interest is the highest since 2010 and close to a record high, while
specs’ net long dollar bet as a share of open interest is the highest since May
last year.
Dollar positioning might not seem too extreme. But the currency has
traded in such a narrow range this summer that its daily ‘standard deviation’
is now the lowest this year, and closing in on historically low levels.
I don’t
even know what street Canada is on.
President
Trump, with apologies to Al Capone.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, did an ill thought out attempted short
squeeze in Tesla stock, just bury Elon Musk and Tesla under a mountain of tort
claims and regulatory scrutiny. From faraway London my money is on that it did.
Sounds more penny stock ploy, than real to this old dinosaur market follower.
Some Twits are too clever by half. How’s that “peado” twit doing?
Oh,
what a tangled web we weave
When first we practise to deceive!
When first we practise to deceive!
Sir Walter Scott. Marmion.
August 8, 2018 / 6:11 AM
Elon Musk's Tesla buyout would reengineer take-private deals
(Reuters)
- Billionaire investor Elon Musk has always done things his own way, from
designing space rockets to manufacturing electric cars. Now the Tesla Inc CEO
is looking to reengineer how a company can be taken private.
Musk announced on Twitter on Tuesday that he was considering taking
Tesla private for $420 per share, or $72 billion, in what would be the biggest
deal of this kind. He said the funding for the deal was secured, but did not
provide details.
Tesla shares ended up 11 percent at $379.57, indicating investors gave
some credence to the plan.
But investment bankers and analysts reacted with skepticism, telling
Reuters it would be hard for Musk, whose net worth is pegged by Forbes at $22
billion, to raise the equity and debt financing needed for the deal given Tesla
is not turning a profit.
“The company is cash-flow negative. How do you use any debt on a company
that is cash-flow negative?” said Steven Kaplan, a University of Chicago
professor who researches private equity.
Finding equity partners and bank financing is key to take-private deals.
When Michael Dell took his eponymous computer maker private for $24.9 billion
in 2013, for example, he brought in buyout firm Silver Lake that contributed
$1.4 billion in equity, raised more than $10 billion in bank debt, and received
a $2 billion loan from Microsoft Corp.
When a Twitter user commented on Musk’s proposed deal by posting “Just
like Dell did. It saves a lot of headaches”, Musk responded by tweeting “Yes”.
Dell’s take-private deal, however, may not be possible to replicate with Tesla, which has a $10.9 billion debt pile, is losing money, and whose bonds are rated junk by credit ratings agencies. Without the ability to add more debt, Musk may have to turn to sources of capital that are less accustomed to using debt to juice returns in the way private equity firms are.
One option could be sovereign wealth funds, investment bankers said.
Saudi Arabia’s Public Investment Fund (PIF) has taken a stake of less than 5 percent in Tesla, a source familiar with the matter said on Tuesday. PIF did not respond to a request for comment on whether it would bankroll Musk’s take-private deal.
SoftBank Group Corp’s $93 billion Vision Fund, whose investors include the sovereign wealth funds of Saudi Arabia and Abu Dhabi, is seen as an obvious partner given its appetite for big technology investments, but was not contacted by Musk and is not interested in a deal given its investment in Tesla competitor Cruise, the self-driving car unit of General Motors Co, according to a source familiar with the matter. SoftBank declined to comment.
China’s Tencent Holdings, which took a 5 percent stake in Tesla last year, is another possible partner.
However foreign capital sources would be subject to scrutiny by the Committee on Foreign
Investment in the United States, which reviews deals for potential national security risks. Any proposal for funding from Chinese firms could face even tougher checks amid mounting U.S.-China trade tensions.
----Musk has said he would be looking to keep his ownership of Tesla at around 20 percent and that a special purpose vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose, and then cash out when they wanted.
But sources familiar with SpaceX told Reuters it is not clear how Musk
would apply it to Tesla. Fidelity Investments, the major backer of SpaceX, did
not invest in it through a special purpose vehicle, according to the sources.
Fidelity declined to comment, while SpaceX and Tesla did not immediately
respond to requests for comment.
More
August 8, 2018 / 2:37 PM
Tesla board evaluating CEO Musk's idea to take company private
(Reuters) - Tesla Inc said on Wednesday its board
is evaluating Chief Executive Elon Musk’s idea of taking the company private
after he brought the matter up for discussion last week.
Musk took Tesla shareholders and the stock market by surprise on Tuesday
by announcing on Twitter he was considering taking the loss-making electric
car-maker private at $420 (325.4 pounds) a share. In his first tweet he said
funding was secured but provided no details.
That would mark the biggest such transaction in history, worth more than
$70 billion (54.2 billion pounds).
In a statement on Tesla’s website on Wednesday, six of Tesla’s nine
directors said the board had met several times over the last week to discuss
the idea and was “taking the appropriate next steps to evaluate this.”
They said the board also addressed the issue of how to fund such a deal,
but gave no details.
Tesla’s shares were down slightly at $377.38 (292.4 pounds) in morning
trading on Wednesday after closing up 11 percent at $379.57 on Tuesday.
In a letter to shareholders after his tweet on Tuesday, Musk fleshed out
his idea, suggesting they would get the option to sell their shares for $420
each or remain investors in a private Tesla, out of the glare of Wall Street
and its need for quarterly results.
He said that would allow Tesla to “operate at its best, free from as
much distraction and short-term thinking as possible.”
Some Wall Street analysts are skeptical of Musk’s ability to gather the
financial backing to complete such a deal.
“Who gives $30 to $50 billion to buy back the shares?,” asked NordLB
analyst Frank Schwope. “And if you stay as a shareholder you get less
information than before and you depend more and more on Elon Musk.”
JPMorgan analyst Ryan Brinkman said he gave only a 50 percent probability
that Tesla would go private.
More
August 8, 2018 / 2:37 PM
U.S. SEC examining Musk's tweets on taking Tesla private - WSJ
(Reuters) - U.S. regulators are asking Tesla Inc
why Chief Executive Elon Musk announced his plan to take the electric carmaker
private on Twitter and whether his statement was truthful, the Wall Street
Journal reported on Wednesday.
Musk announced his plan on his personal Twitter account on Tuesday, and
the U.S. Securities and Exchange Commission has asked Tesla about the facts of
the matter, why it was disclosed on Twitter rather than in a regulatory filing
and whether it believed investor-protection rules had been met, the Journal
said.
The agency declined to comment and Tesla did not immediately respond to
requests for comment.
Tesla shares fell 2.4 percent to $370.34 on Wednesday after closing up
11 percent on Tuesday, ending about $50 per share below what Musk said he was
considering offering.
More
"We
hang the petty thieves and appoint the great ones to public office."
Aesop.
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?
Airbus Spy Drone Stretches Flight-Endurance Record to 25 Days
By Christopher Jasper Floating almost motionless at an altitude of 70,000 feet, Airbus SE’s Zephyr spy drone has extended the record for the longest flight within the Earth’s atmosphere to 25 days, two-thirds more than the previous best.The first production version of the solar-powered pseudo-satellite spent more than three weeks in the stratosphere on its maiden trip after taking off from Arizona on July 11, Airbus revealed Wednesday after the craft landed safely.
The flight broke the previous endurance record of 14 days set by a
prototype Zephyr in 2015 and was aimed at establishing the drone’s credentials
as a less costly, more nimble alternative to conventional satellites. The
craft, which has a 25-meter (82-foot) wingspan but weighs 75 kilos (165
pounds), is one of two ordered by Britain’s defense ministry and was built at
Farnborough, England.
Additional test flights are planned from a site in Western Australia,
according to Airbus, which says
the Zephyr could also play a part in remote
communications, maritime surveillance, border patrols, gauging environmental
change and monitoring the spread of wildfires and oil spills.
The Zephyr operates at an altitude above the planet’s weather systems
where only the Concorde, the U2 spy plane and Mach 3 SR-71 Blackbird previously
flew. Its ultra-light construction means it can be hand-launched by three
people.
06 Aug 2018
Supersmart Manufacturing Tools are Lowering Prices on TVs, Bulbs, and Solar Panels
As technology commoditization begins speeding up again, it’s a great time to be a consumer in search of a state-of-the-art flat panel TVs, but less comfortable for manufacturers hoping to make a profit. That’s according to recent research by Willy Shih, Robert and Jane Cizik Professor of Management Practice in Business Administration at Harvard Business School, who recently published a paper on the topic of technology commoditization in MIT Sloan Management Review.According to Shih, manufacturers are able to duplicate the latest technology used in cutting-edge products much more quickly and cheaply than ever before. The reason? Tools are being developed that have more knowledge baked into them, meaning manufacturers don’t have to develop as much custom technology to compete.
Sean Silverthorne: Can you explain what you mean when you say that knowledge, particularly tacit knowledge, is now being embedded into the tools and building blocks used to make products?
Willy Shih: Knowledge is one of the core resources in a company, and translating that knowledge into processes that produce products and services is how companies create value. There are two types of knowledge—explicit and tacit. Explicit knowledge is something that is documented and is something we can search for. Maybe we look it up in a library, a recipe book, or an instruction manual for making something. As long as you can write it down or clearly explain it so other people can understand it and duplicate what you have done, it is explicit. Tacit knowledge, on the other hand, is trickier. It is know-how that is carried around in the heads of people that hasn’t necessarily been written down, and combines skills, prior experiences, and ideas that are not easily expressed. “We can know more than we can tell,” was how Michael Polanyi described it in his book Personal Knowledge in 1958. Sharing tacit knowledge is obviously harder, and that’s why it is often extremely valuable.
Knowledge gets embedded in tools when machine makers distill specialized know-how that might be
critical to making something into mechanisms within that machine that allow the process to become routine and repeatable. Let’s use an example.
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.
this is important for car owners.
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