Baltic Dry Index. 1546 -31 Brent Crude 75.61
There can be few fields of human endeavour in which history
counts for so little as in the world of finance. Past experience, to the extent
that it is part of memory at all, is dismissed as the primitive refuge of those
who do not have the insight to appreciate the incredible wonders of the present.
John
Kenneth Galbraith.
After a summer of
hype, and what I would call technical market rigging of the same few stocks to
drive the indexes higher, reality finally set in to global stocks with the
arrival of “crash season.”
Front running high frequency
program trading thieves, are only around to push prices higher, when needed to
support a falling market, the thieves are all back in the den.
At its heart, all
market rigs come to an end. Simply put,
rising interest rates, trade wars, tariffs raising costs, currency wars
generating uncertainty, rising global political uncertainty, are all negatives
for the global economy, which the financialised gambling casinos have ignored
all year. Reality doesn’t matter until one day it does.
That day probably
came on October 2nd, when the Saudi leadership decided on a
political murder and got caught out by the Turkish Secret Service. A series of
ever more lurid leaks against Crown Prince Mohammad, and President Trump have
followed every week since.
Today President Trump
gets a briefing from his CIA director on her return from Turkey, where the
latest leaks say she was allowed to listen to the Turk’s murder tapes. Will
President Trump finally be forced into leadership on this issue? But did
President Trump’s latest comments on the murder imply that the CIA had
foreknowledge of what the Saudis were about to do, hence his initial muted
response to the Saudi murder? “One of the worst
in the history of cover-ups” President Trump.
Below, a long overdue
correction now turning into a unnecessary rout.
"Liquidation
sometimes is orderly, but more frequently degenerates into panic as the
realization spreads that there is only so much money, not enough to enable
everyone to sell out at the top."
Charles
P. Kindleberger, Manias, Panics and Crashes.
Stocks crumble as global growth, U.S. earnings fears spook markets
October 24, 2018 / 11:30 PM / Updated 28
minutes ago
SYDNEY
(Reuters) - Asian shares plunged on Thursday as hundreds of billions of dollars
hemorrhaged from global markets after a rout in tech stocks inflicted the
largest daily decline on Wall Street since 2011, wiping out all its gains for
the year.
Stock investors have become increasingly nervous about lofty equities valuations, a likely peak in corporate earnings momentum, faster rate hikes in the United States and an ongoing Sino-U.S. trade war that threatens to hurt world growth.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS has fallen more than 18.5 percent so far this year after skidding almost 2 percent on Thursday.
Japan's Nikkei .N225 tumbled 3.3 percent to a six-month trough while Australian shares hit a more than one-year low. Tokyo's Topix index .TOPX tumbled 3 percent, evaporating more than $155 billion in market value.
Chinese shares were in the red too with the blue-chip SSE Composite index .SSEC plummeting 2.5 percent as fresh market-support measures by the Chinese government failed to ease investor worries about high leverage and the Sino-U.S. trade war.
Hong Kong's Hang Seng index .HSI sank 2.2 percent.
----
The return of the bears has already been more pronounced outside the United
States, according to data analyzed by Reuters. In addition, a Bank of America
Merrill Lynch study recently found that 58 percent of the 2,767 stocks in
MSCI’s global index are now in bear market territory.
More
Why the Dow tumbled 600 points and the Nasdaq fell into correction territory for the first time in 2 years
By Mark
DeCambre Published: Oct 24, 2018
8:44 p.m. ET
A few short weeks ago the Dow industrials were on the verge of busting
through another psychological milestone at 27,000. However, all that momentum has evaporated as a sweeping downturn grips financial markets, sending the Dow Jones Industrial Average DJIA, -2.41% tumbling more than 600 points on Wednesday and pushing the Nasdaq Composite Index COMP, -4.43% into correction territory for the first time since Feb. 11, characterized as a drop of at least 10% from a recent peak.
On top of that, the Dow and the S&P 500 index SPX, -3.09% on Wednesday wiped out all their hard-fought gains over the past 10 months to turn negative for 2018.
So, what happened?
Well, investors have grown all-too comfortable with a market that has merely churned higher as it did in 2017, producing boffo returns without a significant bump lower.
Market pragmatists and technicians say those days were statistical anomalies to start and have come to a natural conclusion. And October, an already seasonally volatile month, has delivered the clearest sign so far that the old quiescent regime is over.
Indeed, the S&P 500 has had 14 down days so far in October, representing the highest number of losing days for the broad-market benchmark since May of 2012 when it fell 14 days, according to Dow Jones Market Data. Another loss for the gauge and it will mark its highest number of down days since October of 2008.
Wednesday’s losses gained steam partly because the market has had difficulty finding support, or buyers that might steep in to stem a fall. And selling that had already eroded certain levels throughout the month in financial markets — like cutting away strands from a bridge of ropes — has made the markets more vulnerable to succumbing to subsequent downturns.
“The market selloff has taken on a life of its own and selling is begetting more selling, but so far we haven’t seen a capitulation moment, so I’m taking a more cautious approach,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Capitulation refers to the point at which market optimists succumb to fears and sell their holdings as stocks convulse lower. Earlier in the year, and last year, investors supported equities by buying dips. Now, that strategy has given way to more cautious investing as declines since early October have picked up.
---- The source of all this stock-market angst is manifold. MarketWatch has previously outlined many reasons for worry but it is worth repeating: The overarching theme is that investors are concerned about slowing growth here and abroad and the impact of tariff clashes between the U.S. and China.
- Policy mistake by the Federal Reserve
- Rising interest rates that could make borrowing more expensive
- A slowdown in global economic growth exemplified in China weakness
- An overall breakdown in stocks, represented in equities trading at multimonth lows
- Midterm election jitters, which have seasonally resulted in some jitters in U.S. markets
- Seasonal October volatility, which has tended to translate into choppy trade
- Worries that the U.S. economy is in the late stages of its expansion and due for a recession
- Brexit
- Italy’s budget crisis
- The looming end of quantitative easing in Europe
- The political implications of the killing of dissident journalist Jamal Khashoggi
More
CIA Chief to Brief Trump After Report She Heard Khashoggi Tape
Justin Sink, Bill Faries and Alaa ShahineCentral Intelligence Agency Director Gina Haspel will brief Trump Thursday after a quick trip to Turkey this week, White House spokeswoman Sarah Huckabee Sanders confirmed. That follows a report in the Washington Post that Haspel heard an audio tape allegedly made of Khashoggi’s interrogation and killing at the consulate on Oct. 2.
The CIA declined to comment when asked whether Haspel heard any such recording.
The briefing for Trump comes as his administration faces rising pressure
to act against its long-time ally Saudi Arabia and the president appeared to be
stepping back from giving Crown Prince Mohammed bin Salman his full support.
The U.S. has long been Saudi Arabia’s most important partner and Trump has made
the kingdom the centerpiece of his efforts to isolate Iran.
On
Tuesday Trump called the shifting stories over Khashoggi’s fate -- the crown
prince initially said the journalist left the consulate on this own -- “one of
the worst in the history of cover-ups.”
---- Trump told the Wall Street Journal in an interview this week that he didn’t think Saudi King Salman knew about the killing in advance. Asked about the crown prince, though, Trump said, “Well, the prince is running things over there more so at this stage.
He’s running things, and so if anybody were going to be, it would be him.”
At the same time, Trump and his top advisers have repeatedly said the
broader U.S.-Saudi relationship shouldn’t be ruptured over the killing of
Khashoggi, a 59-year-old U.S.-based critic of the Saudi government. The
president has emphasized that arms sales to the kingdom shouldn’t be canceled,
as he believes that would only push the country to look toward Russia and
China.
More
Finally, how many
more rate hikes before President Trump tries to fire someone?
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith
Fed's Kaplan sees three more interest rate hikes 'likely'
October 24, 2018 / 3:31 PM
(Reuters)
- The U.S. Federal Reserve should continue raising interest rates at least two
but probably three more times before assessing whether further rate hikes to
restrain growth are warranted, Dallas Federal Reserve Bank President Robert
Kaplan said on Wednesday.
“My
base case for 2019 is to gradually and patiently raise the federal funds rate
into a range of 2.5 to 2.75 percent or, more likely, into a range of 2.75 to 3
percent,” Kaplan said in an essay outlining policy views.
The
Fed last month raised its target range for short-term interest rates to 2 pct
to 2.25 percent, a move Kaplan said he supported. Three more rate hikes would
lift rates to 2.75 percent to 3 percent; any higher would move monetary policy
from a “neutral” stance to a “restrictive” one, he said, slowing economic
growth, pushing up on unemployment, and pushing down on inflation.
“I intend to avoid prejudging what, if any, further actions we should
take once we get into the range of our best estimate of a neutral stance,”
Kaplan said, noting that his estimate of “neutral” is modestly below the 3
percent estimate of most of his peers. “I intend to make that judgment sometime
in the spring or summer of 2019 based on the economic outlook at that time.”
The Fed next meets in November, but is expected to defer any further
rate increase until December, with most Fed policymakers expecting rates to
rise three more times next year.
More
Trump Says He ‘Maybe’ Regrets Picking Fed’s Powell
By Mike Dorning
24 October 2018, 01:44 GMT+1 Updated
on 24 October 2018, 15:25 GMT+1
President Donald Trump stepped up his attacks on Federal Reserve Chairman
Jerome Powell, saying he “maybe” regrets appointing him and demurring when
asked under what circumstances he would fire the central bank chief.Almost a year since nominating Powell to the post, Trump told the Wall Street Journal in an interview Tuesday that he was intentionally sending a direct message that he wanted lower interest rates, even as he acknowledged that the central bank is an independent entity.
Trump said in the interview that Powell “almost looks like he’s happy raising interest rates” and that it’s “too early to tell, but maybe” he regrets appointing him.
Trump sidestepped a question on what circumstances would lead him to remove Powell. “I don’t know,” the president said. That contrasted with his response to a similar question on Oct. 11, when he answered, “I’m not going to fire him.”
Powell has so far brushed off the attacks, noting the Fed is independent and arguing by raising rates gradually it’s just seeking to normalize monetary policy in an “extraordinary” economy. He’s also suggested that the central bank needs to keep its eye on possible financial froth -- the trigger for the last two recessions -- as well as inflation for signs of overheating.
more
John Kenneth
Galbraith. The Great Crash: 1929.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, a bond expert warns of a return to a long-forgotten past.
Remember when there were real bond vigilantes to keep bent politicians honest.
They’re just one inflation scare from coming back.
Beware the 'real killer' in markets that's threatening to strike after decades in hiding
Joe Ciolli 19 Oct 2018, 10:06
- The bond market has gotten crushed in recent weeks as part of a market-wide sell-off.
- Jim Paulsen, the chief investment officer of Leuthold Group, says the pain may just be getting started for bonds as a measure known as "real yield" edges toward troublesome territory.
- Since bond and stock prices are correlated right now, any continued selling pressure in the fixed-income market is likely to spill into equities.
----To make matters
worse for the market, the downward pressure on bonds has caused yields to
spike. That, in turn, has driven a tough patch of stock losses as equities have
lost appeal relative to their fixed-income brethren.
As if that isn't
scary enough, one Wall
Street expert warns that this is just the beginning of what could be
a catastrophic skid for bonds. And since stocks are correlated with bond prices
right now — something that's not usually the case— that sell-off could lead to
pain for equity investors as well.
The big looming
threat in this situation is the so-called real yield — or the difference
between the nominal Treasury yield and the consumer price inflation rate. In
simpler terms, it's a Treasury interest rate that has been adjusted to remove
the effects of inflation.
As of now, the
real yield sits at 0.85%, just above its average for the ongoing economic
recovery. But as the chart below shows, it's at the cusp of the steepest part
of its curve.
Even a slight
acceleration in wages and consumer prices "could produce an outsized and
surprisingly aggressive response from the bond market," Jim Paulsen, the
chief investment strategist at Leuthold Group,
wrote in a client note. "The 'real' killer for bond investors may yet be
forthcoming — the reestablishment of an inflation buffer, or 'real
yield.'"
Paulsen continued: "For example, a relatively modest 0.5% rise in
inflation expectations could cause an outsized 1% or more rise in the 10-year
nominal bond yield as investors finally demand a more protective inflation
buffer (a higher real yield)."
To complicate matters further, many investors may be ill-equipped to
deal with this situation. After all, as Paulsen points out, it hasn't been an
issue for several decades.
Even if inflation increases only slightly through the end of this
economic recovery, Paulsen is still on edge. He argues that "even a
moderate acceleration in wage and consumer price inflation toward 3.5% to 4%
could produce an outsized and surprisingly aggressive response from the bond
market."
"Inflation remains modest," he concluded. "But let your
grandparents remind you that the 'real' killer may be lurking nearby."
More
RECORD SET ON 30 YEAR U.S. BONDS
By MICHAEL QUINT FEB. 5, 1982
The Treasury sold new 14 percent bonds yesterday at an average yield of
14.56 percent, a record for a new 30-year issue that showed the extreme
reluctance of investors to buy long-term bonds even though inflation has
subsided.
The high yield for the bonds - up from only 13.9 percent a week ago and
12 3/4 percent in late November -seemed to confirm Wall Street warnings that
large budget deficits push up interest rates. Early last November, the Treasury
sold similar bonds at a 14.10 percent yield, but since then budget deficit
estimates for the fiscal years 1983 and 1984 have expanded sharply.
Despite this, Treasury officials had little choice but to crowd into the
credit markets this week with $20 billion of short- and long-term issues that
raised about $6.7 billion of new cash. Treasury officials estimated last week
that they needed to raise $41.25 billion of new cash this quarter to cover a
fiscal 1982 deficit estimated by private analysts and some Government officials
at $100 million.
----Although
Treasury officials have been predicting lower interest rates since the earliest
days of the Reagan Administration, the credit markets have not shared that
optimism.
The yield for 30-year Treasury bonds, a barometer of investor
confidence in the distant future, has increased in secondary market trading
from about 12 percent when President Reagan took office to a peak last autumn
of 15 1/4 percent and a still-high 14.56 percent at yesterday's sale.
By the time the smoke cleared from this week's financings, yields for
the new three, 10- and 30-year Treasury issues were all significantly higher
than the levels estimated before the auctions began.
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?
Mussel-inspired defect engineering enhances the mechanical strength of graphene fibers
Date:
October 23, 2018
Source:
The Korea Advanced Institute of Science and Technology (KAIST)
Summary:
Researchers demonstrated the mussel-inspired reinforcement of graphene fibers
for the improvement of different material properties. A research group applied
polydopamine as an effective infiltrate binder to achieve high mechanical and
electrical properties for graphene-based liquid crystalline fibers.
Researchers demonstrated the mussel-inspired reinforcement of graphene
fibers for the improvement of different material properties. A research group
under Professor Sang
Ouk Kim applied polydopamine as an effective infiltrate
binder to achieve high mechanical and electrical properties for graphene-based
liquid crystalline fibers.
This bio-inspired defect engineering is clearly distinguishable from
previous attempts with insulating binders and proposes great potential for
versatile applications of flexible and wearable devices as well as low-cost
structural materials. The two-step defect engineering addresses the intrinsic
limitation of graphene fibers arising from the folding and wrinkling of
graphene layers during the fiber-spinning process.
Bio-inspired graphene-based fiber holds great promise for a wide range
of applications, including flexible electronics, multifunctional textiles, and
wearable sensors. In 2009, the research group discovered graphene oxide liquid
crystals in aqueous media while introducing an effective purification process
to remove ionic impurities. Graphene fibers, typically wet-spun from aqueous
graphene oxide liquid crystal dispersion, are expected to demonstrate superior
thermal and electrical conductivities as well as outstanding mechanical
performance.
----Based on the theory that dopamine with subsequent high temperature annealing has a similar structure with that of graphene, the team optimized dopamine polymerization conditions and solved the inherent defect control problems of existing graphene fibers.
They also confirmed that the physical properties of dopamine are
improved in terms of electrical conductivity due to the influence of nitrogen
in dopamine molecules, without damaging the conductivity, which is the
fundamental limit of conventional polymers.
Professor Kim, who led the research, said, "Despite its
technological potential, carbon fiber using graphene liquid crystals still has
limits in terms of its structural limitations."
This technology will be
applied to composite fiber fabrication and various wearable textile-based
application devices." This work, in which Dr. In-Ho Kim participated as
first author was selected as a front cover paper of Advanced Materials on
October 4.
The monthly Coppock Indicators finished September.
DJIA: 26,458 +199 Down. NASDAQ:
8,046 +261 Down. SP500: 2,914 +166 Down.
All
three slow indicators moved down in March, but the S&P and NASDAQ turned up in August. September will be critical for confirmation
of this change. All 3 slow indicators failed to confirm August’s positive
change making October very vulnerable to a sell-off.
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