Baltic Dry Index. 1522 +03 Brent Crude 77.11
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.
Ordinarily, US stocks
would be coming towards the end of the first phase of our new correction. All
the more so with a month-end coming up tomorrow, and with the S&P entering
what ought to be support from the February through April action. The money manager
pros, ought to be about to dress up the markets for the all important month-end
bonuses.
But life under
President Trump isn’t exactly ordinary. President Trump’s trade war hooligan
team, chose yesterday to tell Bloomberg that if next month’s meeting between
Trump and Xi Jinping fails, President Trump will in December put tariffs on all
remaining Chinese US imports. What did the poor US consumer do to deserve that
right before Christmas?
Effectively,
President Trump is asking President Xi to cave in and kowtow at their November
meeting. While it might happen, I would expect pigs to fly first. Team Trump
seems to be effectively, deliberately shutting the door on negotiations.
While that hurts
China’s economy more than America’s, it's not cost free to the USA, and it increases
the likelihood of an emerging market blow up, if China scales back on EM
imports ahead. Add in a Europe reeling from Italy mimicking Greece, and German
voters calling time on Chancellor Merkel, and a very difficult to call US
elections next Tuesday, and we are ending October in The Great
Uncertainty.
But a time of great
uncertainty is not a time to start dressing up stocks, nor a time to get
reckless with cash. My guess is we stabilise just enough to get past the
month-end then fall again ahead of the weekend and next week’s elections and
Iran sanctions. Of course, yesterday’s action might have set off a wave of
mutual fund redemptions, but those will be too late for October.
Asian stocks on edge over escalation in U.S.-China trade tensions
October 30, 2018 / 1:37 AM
TOKYO (Reuters) - Asia shares recouped
early losses and crept higher on Tuesday as China made a fresh attempt to
stabilise its stock markets, but the gains looked fragile amid fears of a sharp
escalation in the U.S.-China trade war.
Major U.S. indexes fell sharply on Monday after a Bloomberg report that
the United States is preparing to announce tariffs on all remaining Chinese
imports by early December if talks next month between presidents Donald Trump
and Xi Jinping falter.
Trump had raised the possibility of such a move previously, but had not
indicated a timeframe.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
swung in and out of negative territory in morning trade and was up 0.2 percent
by midday.
The index has lost 12 percent this month and is on track for its biggest
October decline since 2008, during the global financial crisis.
Mainland China's benchmark Shanghai Composite .SSEC and the blue-chip CSI 300 .CSI300 were also choppy, falling in early trade before rising 0.7 percent and 1.0 percent, respectively, by midday.
China’s securities regulator said it would encourage share buybacks and mergers and acquisitions by listed firms, and would enhance market liquidity, in the latest attempt to put a floor under the country’s skidding equity markets.
Japan's Nikkei average .N225 also erased early losses and advanced 1.3 percent. Traders said investors were looking for bargains among beaten-down stocks.[.T]
“At this point, nobody can say the equity market is bottoming out.
Global investor sentiment remains shaky,” said Yasuo Sakuma, chief investment
officer at Libra Investments in Tokyo.
The CBOE Global Markets volatility index .VIX, known as Wall Street’s
“fear gauge”, jumped to as much as 27.86 points, its highest since Oct. 11 and
the second highest since the volatility shock of early February.
“The probability of global stocks turning to a bear market is
increasing,” said Masanari Takada, cross-assets strategist at Nomura
Securities.
“While some investors who look at fundamentals buy stocks on dips, there
are other players who keep selling automatically in response to heightened
volatility. At times like this, buyers can easily be overwhelmed by negative
headlines on tariffs, etc.”
Adding to the jitters, China’s yuan continued to weaken, drawing closer
to a closely watched support level.
More
Dow stages biggest intraday reversal in more than 8 months; Nasdaq sees biggest U-turn in 3 years
Published: Oct 29, 2018 7:23 p.m. ET
Boeing takes a 163-point chunk out of the Dow industrials
Talk about a blown lead. The Dow Jones Industrial Average gave up a 352-point gain to end lower Monday and highlighted a market that has grown increasingly unsettled amid concerns about global growth and escalating tariff clashes between the U.S. and China.The action marked the biggest U-turn for the Dow industrials DJIA, -0.99% since Feb. 7, when the Dow erased a roughly 382-point gain to finish with gut-wrenching losses. On Monday, the Dow closed down 245 points, or 1%, at 24,442.92. The day’s losses were even more stomach-churning than that closing level implies because the blue-chip gauge earlier had been down by as many as 566.08 points to an intra-session low of 24,122.23, which would have put the Dow in correction territory for the second time in 2018. Corrections are usually defined by a drop of at least 10% from a recent peak. (The S&P 500 index SPX, -0.66% already is in correction territory after last week’s ugly action.)
Losses
accelerated late Monday after a Bloomberg News report surfaced indicating that President
Donald Trump’s administration was prepared to impose tariffs on all China’s
imports, ramping up a tit-for-tat spat between the world’s biggest economic
superpowers that has been at the heart of the recent downturn, market
participants say. Industrial giant and Dow component Boeing Co. BA, -6.59%
led the 122-year-old stock index’s losses, contributing a whopping 163
points to the price-weighted Dow’s decline. Boeing’s shares declined $23.68 or
6.6%, and is the Dow’s most influential component by dint of its $335.59 price.
The stock is set to drop by almost 10% this year.
Perhaps
even more stunning, the Nasdaq Composite Index COMP, -1.63%
finished the session off 1.6% at 7,050.29, a loss of 117 points. The
index, which is known for its association with technology and internet-related
companies, saw its biggest reversal from an opening gain since Aug. 25, 2015,
when it ended lower after boasting a 163-point advance.
More
Monday’s nasty stock-market reversal is evidence that the worst is far from over for Wall Street
Published: Oct 30, 2018 12:56 a.m. ET
Don’t be fooled by the stock market’s early, manic Monday moves, some market
participants caution.A jump by the Dow Jones Industrial Average DJIA, -0.99% the S&P 500 index SPX, -0.66% and the Nasdaq Composite Index COMP, -1.63% in early trade has investors hoping that a withering rout that has played out since early October may be coming to an end. Stocks ended sharply negative, with traders blaming fresh news on U.S.-China trade talks, and hard-to-shake worries about global growth.
----The
cautious optimism may come with good reason, markets in Europe rose sharply
Monday. And International Business Machines Corp.’s IBM, -4.13%
planned acquisition of Red Hat Inc. RHT, +45.38%
in a deal valued at $33 billion, may suggest that Wall Street still views the
current atmosphere as one conducive to deal making, despite the selloff in the
market that has been led by technology and internet names and threatens to
leave the three main indexes with their worst October since 2008.
“I don’t think we’re quite settled down yet,” veteran trader Art Cashin, UBS director of floor operations said on CNBC late-morning Monday.
Read: Opinion : 5 reasons to buy stocks now—and 5 reasons to run from the market
Jesse Colombo, economic analyst and registered investment adviser at Houston-based Clarity Financial had this to say: “People are getting excited about today’s market bounce. Stop…just stop.
This bounce means absolutely nothing. Last week’s important technical breakdown is still intact:
Check
out the Colombo’s chart below, if it isn’t clear in the tweet. The idea is that
damage to stock market technicals is severe and equities still have
considerably more work to do before bulls can declare a reinstatement of the
uptrend (see the chart below):
----Shares of Amazon.com were on pace to enter bear-market territory, down by at least 20% from a recent peak, underscoring the notion that the uptrend has come to a screeching halt, especially if shares of the most influential companies over the past 18 months are turning decidedly lower.
On top of that, the average stock in the S&P 500 has fallen by at
least 20%.
More
Trump’s Next Tariff Blow Could Be 10 Times Worse for U.S. Shoppers
By Bruce EinhornThe U.S. is said to be preparing to announce tariffs on all remaining Chinese imports by early December, and the impact at the checkout counter may be as much as 10 times higher than earlier rounds of levies, according to a report from Citigroup economists.
“Amid tight labor markets and higher input costs, we think
there is a risk that firms decide to pass through some of the costs to
consumers,” analysts Cesar Rojas, Catherine Mann and Veronica Clark wrote in
the Citigroup Global Markets report dated Oct. 29. “The additional tariffs on
China have the potential to boost inflation even more than what we currently
anticipate.”
The new penalties, which could take effect in early February, would encompass Chinese-made consumer goods like Apple iPhones and Nike shoes that the Trump administration has so far left untouched. The impact of a 10 percent tariff on the $267 billion of imports could be 10 times larger than the first $50 billion round and double that of the $200 billion tariffs in the second round, the analysts wrote.
More
"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”
John Kenneth Galbraith. The Great Crash: 1929.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
“When a
country (USA) is losing many billions of dollars on trade with virtually every
country it does business with, trade wars are good, and easy to win.”
President Trump.
Many U.S. firms in China eyeing relocation as trade war bites: survey
October 29, 2018 / 9:07 AM
SHENZHEN (Reuters) - More than 70 percent
of U.S. firms operating in southern China are considering delaying further
investment there and moving some or all of their manufacturing to other
countries as the trade war bites into profits, a business survey showed on
Monday.
U.S. companies operating in China believe they are suffering more from the
trade dispute than firms from other countries, according to the poll by the
American Chamber of Commerce in South China, which surveyed 219 companies,
one-third from the manufacturing sector.
Sixty-four percent of the companies said they were considering
relocating production lines to outside of China, but only 1 percent said they
had any plans to establish manufacturing bases in North America.
“While more than 70 pct of the U.S. companies are considering delaying
or cancelling investment in China, and relocation of some or all manufacturing
out of China, only half of their Chinese counterparts share the same
consideration,” the AmCham report said.
The trade war is shifting both supply chains and industrial clusters,
mostly towards Southeast Asia, the survey found.
U.S. companies reported facing increased competition from rivals in
Vietnam, Germany and Japan, while Chinese companies said they were facing
growing competition from Vietnam, India, the United States and South Korea.
Customers are slowing down orders or not placing them at all, Harley
Seyedin, president of AmCham South China, told Reuters.
“It could very well be that people are holding back on placing orders
until times are more certain or it could very well be that they are shifting to
other competitors who are willing to offer cheaper products, even sometimes at
a loss, in order to get market share,” he said.
“One of the most difficult things about market share is once you lose
it, it is very hard to get back.”
Companies in the wholesale and retail sectors have suffered the most
from U.S. tariffs, while agriculture-related businesses have been most hit by
Chinese measures, the survey found.
The survey was conducted between Sept. 21 and Oct. 10, shortly after the
U.S. imposed tariffs on another $200 billion worth of Chinese goods. That
prompted Beijing to retaliate with additional tariffs on $60 billion of U.S.
products, escalating a tariff war between the world’s two largest economies.
The U.S. duties are set to rise sharply on Jan. 1.
---- Nearly 80 percent of the survey respondents said the tariffs have knocked their businesses, with U.S. tariffs having slightly more impact than the Chinese ones.
Around 85 percent of U.S. companies said they have suffered from the
combined tariffs, compared with around 70 percent of their Chinese
counterparts. Companies from other countries also reported similar impacts as
their American counterparts.
More
Donald Trump’s trade war is hurting the people he promised to help
In the town of Plymouth, a giant statue of a Holstein stands in the middle of the “cheese capital of the world.” An astonishing 15 per cent of all the cheese in America passes through this part of Wisconsin’s Dairyland.
But Plymouth has a problem: the product at the centre of the economy is under assault as a result of President Trump’s trade wars.
The uncertainty starts on dairy farms, like the one belonging to Josh Goeser.
He says farmers were initially encouraged when Trump promised to stand up for them and win access to Canada’s protected dairy industry as part of a renegotiated NAFTA, but then reality set in.
“It was good that he wanted fair deals and it was bad about how he
approached it,” Goeser said.
That’s because Trump didn’t just pick one trade fight, he picked several
at the same time.
When the U.S. added tariffs to imported steel and aluminum, Canada,
Mexico, China and the European Union fought back with their own reciprocal
tariffs.
Suddenly Wisconsin found itself at the centre of an international trade
war.
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?
Highly efficient wet-processed solar cells with molecules in the same orientation
Date:
October 26, 2018
Source:
Kanazawa University
Summary:
Researchers document a new method for controlling the orientation of conducting
molecules in organic solar cells that results in the enhanced light adsorption
and performance of the cells.
Solar cells are a cost-effective, alternate source of energy. A subtype
of these, organic solar cells make use of organic polymers inside the cell.
Using these polymers makes the cells light-weight and increases their
flexibility. Organic solar cells are produced by two different chemical
methods: dry processing and wet processing, with the latter being a faster method.
There are several parameters used to assess the efficiency of solar cells with
absorption of light and transportation of charge being widely used.
A prevailing problem with the structure of organic cells is that
molecules in the active organic layer responsible for light absorption and
charge transport tend to face both towards the edges of cells, as well as
towards the light absorbing substrate. Maximizing the number of molecules
facing the substrate, however, is the key to maximising absorption and conductivity
of the cell. Scientists have modified the dry processing method to achieve such
an orientation, but it has not been possible with the wet method. The research
team led by Tetsuya Taima at Kanazawa University, is the first to successfully
do so.
----This
is the first study that effectively demonstrates a method of producing such
efficient organic solar cells using the wet processing method. Besides saving
time, the wet method also results in larger film areas. "This technique is
expected to greatly contribute to the development of organic thin film solar
cells fabricated by wet processing in the future," conclude the authors.
Their approach paves the way for producing high-performance solar cells faster.
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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