Wednesday 7 November 2018

A Relief Rally. China 1840.


Baltic Dry Index. 1395 -33   Brent Crude 71.99

“To understand the history of [China] in the past 70 years, one has to go back to the year 1840 when China was bullied and oppressed by imperialist powers” 

Vice-President Wang Qishan.

With many results still to come in the US elections, US major media are predicting that the Democrats will take the House while the Republicans will hold the Senate, perhaps increasing their majority. If that is in fact the result, a technical win for President Trump in that it practically guarantees no attempt at impeachment, and no or very little change in President Trump’s foreign policy.

No greatly weakened President Trump, when he gets to sit down with President Xi at the end of the month at the G-20 meeting. Already twice this week, China has signalled it’s ready for serious trade talks but only on the basis of equals. A relief rally looks likely today, albeit tomorrow’s Fed meeting might limit stock market optimism.

With the elections over and a technical win for President Trump, Trade War Team Trump can now drop some of the bad rhetoric and get on with negotiating a trade deal with China, while there is still time to avert a global recession next year.

Below, better news from China.

China is ready to talk to resolve US trade war, says Vice-President Wang Qishan

·         The two countries ‘wish to expand cooperation’ and Beijing is prepared to ‘push for a proposal acceptable to both sides’
·         Tuesday’s speech strikes similar themes to those in Xi Jinping’s address a day earlier
Sarah Zheng  Updated: Tuesday, 6 Nov, 2018 11:23pm

China is ready to engage with the US to resolve their months-long trade war, Vice-President Wang Qishan said at a new economic forum in Singapore hosted by US billionaire Michael Bloomberg.

Wang, widely reputed to be a “firefighter” and one of President Xi Jinping’s most trusted allies, pushed back against Washington’s “America first” trade policies in a nearly 20-minute keynote address on Tuesday at the newly inaugurated Bloomberg New Economy Forum, without making reference to US President Donald Trump by name.

At the same time, he promoted a vision of globalisation that was an echo of Xi a day earlier in Shanghai at a government-sponsored import fair, in another effort by Beijing to quell global scepticism about its resolve to adopt economic reforms.
He said China and the US needed to cooperate closely to resolve the problems facing the world, and that economic globalisation would move forward despite twists and turns.

“Negativity and anger are not the way to address the problems that have emerged from globalisation, nor will barriers and disputes help solve one’s own problems; instead, they will only exacerbate global market turbulence,” Wang said.

He added that China needed to stay “calm and sober-minded”, invoking the country’s history of oppression by “imperialist powers”.

“To understand the history of [China] in the past 70 years, one has to go back to the year 1840 when China was bullied and oppressed by imperialist powers,” he said.

“Since then, the unyielding Chinese people have been fighting to once again stand on their feet and achieve prosperity and strength.”


His remarks at the inaugural forum – which brought together 400 business leaders to rival the annual World Economic Forum in Davos, Switzerland – came ahead of a proposed meeting between Trump and Xi at the G20 summit in Argentina later this month.

Analysts said a meeting between the two heads of state could mark a turning point in the months-long trade dispute between the world’s two largest economies – relief that businesses and markets are eager to see.

It also comes on the heels of Xi’s pledges on Monday at this week’s China International Import Expo in Shanghai, where the Chinese leader vowed to buy US$40 trillion in goods and services over the next 15 years.

Henry Kissinger: China, US must reveal red lines to avoid conflict

·         China’s continued growth means Washington and Beijing will inevitably “step on each others’ toes”, says American former secretary of state, 95
·         But he is “optimistic” about US-China ties, saying problems can be worked through if each side is clear about the concessions they are willing to make
Updated: Tuesday, 6 Nov, 2018 9:42pm

Speak openly to each other about your red lines and the concessions you are willing to make to avoid conflict.

That was Henry Kissinger’s advice to feuding world powers on Tuesday, as he warned Washington and Beijing an all-out conflict between them would destroy the current world order.

Speaking at the Bloomberg New Economy Forum in  Singapore, the American former secretary of state, 95, who is widely respected for his prescient views on geopolitics, said it was inevitable that the world’s two biggest economies would “step on each others’ toes” as the Asian power continued to grow rapidly.

“The challenge is to maintain a fundamentally cooperative relationship amid inherent differences of approach,” Kissinger said.

He said: “It is essential for China and the United States to [talk] to each other about what the objectives are that they feel they must achieve and what the concessions are that they must not be asked to make, and the concessions each is willing to make.”

Kissinger, who played a key role in Washington’s rapprochement with Beijing in 1971, said both sides could do better in dealing with one another.

In the US, Kissinger said, officials needed to learn that “not every crisis is caused by ill will” and that there was a “difference between educating people and learning to cooperate with them”.

Washington also tended to believe that “if there is a problem, there is a short-term solution,” he said.

The US, he said, needed “to understand that the new world is not necessarily an adaptation of everything with which we are familiar”.

Beijing, on the other hand, was bogged down by its view that admitting to a problem would lead to more problems rather than conflict resolution, he said.
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https://beta.scmp.com/news/asia/diplomacy/article/2171889/henry-kissinger-china-us-must-reveal-red-lines-avoid-conflict?utm_source=mailchimp&utm_medium=email&utm_content=181106&utm_campaign=gme-o-tradewar&MCUID=7c9a8b8fe6&MCCampaignID=67e1c1e26b&MCAccountID=7b1e9e7f8075914aba9cff17f

First Opium War

The First Opium War (Chinese: 第一次鴉片戰爭), also known as the Opium War or the Anglo-Chinese War, was a series of military engagements fought between the United Kingdom and the Qing dynasty of China over their conflicting viewpoints on diplomatic relations, trade, and the administration of justice in China.[7]

In the 17th and 18th centuries, the demand for Chinese goods (particularly silk, porcelain, and tea) in Europe created a trade imbalance between Qing Imperial China and Great Britain. European silver flowed into China through the Canton System, which confined incoming foreign trade to the southern port city of Canton. To counter this imbalance, the British East India Company began to auction opium grown in India to independent foreign traders in exchange for silver, and in doing so strengthened its trading influence in Asia. This opium was transported to the Chinese coast, where local middlemen made massive profits selling the drug inside China. The influx of narcotics reversed the Chinese trade surplus, drained the economy of silver, and increased the numbers of opium addicts inside the country, outcomes that worried Chinese officials.
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https://en.wikipedia.org/wiki/First_Opium_War

In other news, will President Trump’s sledgehammer finally force a largely idle continental Europe into action? Will the EC or EU actually develop a new EU based, US proof, international payments system? If they do, it wont be swift in coming, but it will radically alter the rest of the century.

Iran sanctions take a sledgehammer to U.S.-Europe relations

Published: Nov 5, 2018 1:58 p.m. ET

Even pro-U.S. Europeans recoil at this new tyranny of the dollar

BERLIN (Project Syndicate) — Donald Trump may not want to launch wars in the Middle East, but that doesn’t mean he’s getting the United States out of the regime-change business. His administration has made it clear that it wants crippling sanctions on Iran to serve the same purpose as the Bush administration’s 2003 invasion of Iraq.

Since withdrawing in May from the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), Trump has been looking for ways to turn up the pressure on the Iranian regime. On Nov. 4, U.S. sanctions on the country’s vital oil industry went into force. And the administration is ready to go even further, by imposing secondary sanctions on other countries with the goal of shutting Iran out of the dollar-based global economy entirely.

To that end, the U.S. wants to bar Iranian banks from the Society for World Interbank Financial Telecommunications (SWIFT) and the global payments system that it oversees. This would effectively send Iran back to a pre-globalization dark age. The problem for Trump and his advisers, though, is that SWIFT is not a U.S. institution. It is registered and based in Belgium, which, along with the European Union’s 27 other member states, supports the JCPOA.

America’s exploration of increasingly sophisticated “smart” sanctions is not new. At least since the start of the “war on terror,” the U.S. has been pulling every financial lever that it can to destroy global networks like the one Osama bin Laden used to launch the attacks of Sept. 11, 2001.

At first, the U.S. focused mainly on freezing the assets of extremist groups and their affiliates. But then Stuart Levey, the under secretary for terrorism and financial intelligence at the Department of the Treasury, had another idea. While traveling in Bahrain, he read a local newspaper report about a Swiss bank shutting down its business with Iran. It occurred to him that the U.S. could use its own influence over the private sector to block malign actors from the global economy.

Soon thereafter, the U.S. started pressuring banks around the world to drop their business with Iran. Eventually, the authorities declared that any bank doing business with Iran would be shut out of the U.S. market. With that announcement, “secondary sanctions” were born.

Levey’s secondary sanctions were tremendously successful. No sane business leader would ever choose the basket-case economy of a Middle Eastern mullah state over that of the U.S. And when banks (namely, France’s BNP Paribas) were accused of violating the sanctions, the fines were so large that they sent shockwaves through global financial markets. It didn’t take long for the U.S. to deploy similar methods of “connectivity warfare” against North Korea, Sudan, and even Russia.

----Under President Barack Obama, targeted sanctions became America’s weapon of first resort. Together with the EU, the Obama administration sharpened and fine-tuned the punitive measures against Iran. This proved so effective that Iran eventually came to the negotiating table, where it agreed to limit its nuclear-enrichment activities under the JCPOA.

In Trump’s hands, however, the scalpel has become a sledgehammer. As one senior European policy maker put it to me, the Trump administration’s new sanctions are like cluster bombs, falling on friend and foe alike.

Since Trump scrapped the JCPOA, European leaders have been looking for ways to preserve some of the benefits for Iran, so that it will not restart its nuclear program. But the U.S. has been making this difficult, by threatening individuals on European corporate boards, including the directors of SWIFT, with targeted sanctions.

Even more shocking, similar threats have reportedly been made against key European public officials. European leaders’ request to the European Investment Bank for its help in supporting the Iran nuclear deal doesn’t seem to have borne fruit, most likely owing to U.S. threats against the EIB’s corporate interests and directors.
More
https://www.marketwatch.com/story/iran-sanctions-take-a-sledgehammer-to-us-europe-relations-2018-11-05

EU officials hail Trump setback in midterm elections


November 7, 2018 / 9:32 AM / Updated 14 minutes ago

BRUSSELS (Reuters) - The European Union’s deputy chief executive hailed Democratic victories in the U.S. midterm elections in comments that took a clear swipe at what he called “rudeness” and “racism” under President Donald Trump.

“Inspired by voters in the U.S. who chose hope over fear, civility over rudeness, inclusion over racism, equality over discrimination,” tweeted Frans Timmermans, a former Dutch foreign minister who is first vice president of the European Commission led by Jean-Claude Juncker.

“They stood up for their values. And so will we,” he added.

Campaigning is getting under way in Europe for May elections to the European Parliament, in which Timmermans is leading the campaign for the centre-left.

A fellow Socialist commissioner, former French finance minister Pierre Moscovici who oversees economic affairs, also tweeted an ironic comment about Trump, who had earlier declared on Twitter that the election was a “tremendous success”.

“The Democrats win the House of Representatives for the first time in eight years despite powerful Republican gerrymandering,” Moscovici wrote. “Donald Trump is right: ‘Tremendous success tonight’.”

There was no immediate official comment from Juncker or the Commission as an institution.

Trump’s criticisms of the EU, including praise for Britain’s decision to leave the bloc, his policies in the Middle East and threats of a trade war against the Union, worry EU leaders.

Commission President Juncker secured a deal with Trump in July to stave off new U.S. tariffs on EU goods, but relations remain tense. However, losing control of the House may undermine Trump’s ability to push through some of his trade policies.
https://uk.reuters.com/article/uk-usa-election-eu/eu-officials-hail-trump-setback-in-midterm-elections-idUKKCN1NC14Z?il=0


“Under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth... The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”

Alan Greenspan

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, more on that Great Trump Trade War on the Rest of the World. It’s not always easy.

Their Soybeans Piling Up, Farmers Hope Trade War Ends Before Beans Rot

North Dakota’s soybean crops are flourishing. But China has stopped buying.
Nov. 5, 2018
ARTHUR, N.D. — This is harvest season in the rich farmlands of the eastern Dakotas, the time of year Kevin Karel checks his computer first thing in the morning to see how many of his soybeans Chinese companies have purchased while he was sleeping.

Farmers here in Cass County have prospered over the last two decades by growing more soybeans than any other county in the United States, and by shipping most of those beans across the Pacific Ocean to feed Chinese pigs and chickens.

But this year, the Chinese have all but stopped buying. The largest market for one of America’s largest exports has shut its doors. The Chinese government imposed a tariff on American soybeans in response to the Trump administration’s tariffs on Chinese goods. The latest federal data, through mid-October, shows American soybean sales to China have declined by 94 percent from last year’s harvest.

Mr. Karel, the general manager of the Arthur Companies, which operates six grain elevators in eastern North Dakota, has started to pile one million bushels of soybeans on a clear patch of ground behind some of his grain silos. The big mound of yellowish-white beans, already one of the taller hills in this flat part of the world, will then be covered with tarps.

The hope is that prices will rise before the beans rot.

“We’re sitting on the edge of our seat,” Mr. Karel said.

President Trump sees tariffs as a tool to force changes in America’s economic relationships with China and other major trading partners. His tough approach, he says, will revive American industries like steel and auto manufacturing that have lost ground to foreign rivals. But that is coming at a steep cost for some industries, like farming, that have thrived in the era of globalization by exporting goods to foreign markets.

China and other trading partners hit with the tariffs, including the European Union, have sought to maximize the political impact of their reprisals. The European Union imposed tariffs on bourbon, produced in Kentucky, the home state of the Senate majority leader, Mitch McConnell, and on Harley-Davidson motorcycles, from Wisconsin, the home state of House Speaker Paul Ryan. China's decision to impose tariffs on soybeans squeezes some of Mr. Trump's staunchest supporters across the Midwestern farm belt.

---- Like most successful American exports, soybeans are produced at high efficiency by a small number of workers using cutting-edge technologies, like tractors connected to satellites so the optimal mix of fertilizers can be spread on each square foot of farmland. The United States exported $26 billion in soybeans last year, and more than half went to China.

Some farmers in North Dakota say they trust Mr. Trump to negotiate in the nation’s interest. Mr. Karel said many of his customers wear red “Make America Great Again” caps and insist that the pain of lost business and lower profits is worthwhile. They say they’ll suffer now so their children benefit later — echoing the argument Mr. Trump has made.

Others are less enthused. Greg Gebeke, who farms 5,000 acres outside Arthur with two of his brothers, said he struggled to understand the administration’s goals.

“I’m trying to follow and figure out who the winners are in this tariff war,” Mr. Gebeke said. “I know who one of the losers are and that’s us. And that’s painful.”

---- China is by far the world’s largest importer of soybeans. The country consumed 110 million tons of soybeans in 2017, and 87 percent of those beans were imported — the vast majority from either Brazil or the United States. While soybeans are grown throughout the Midwest, the soybean fields of North Dakota are the part of soybean country that is closest to the Pacific Ocean, and so its beans are mostly sent to China.

In the mid-1990s, there were 450,000 acres of soybeans in the state. Last year, there were 6.4 million. As the state’s production of soybeans increased, companies spent millions of dollars on larger grain elevators, on the 110-car trains that carry the soybeans west to the Pacific Coast, on bigger terminals at the ports. A few years ago, Mr. Gebeke traded his grain drill, used to plant wheat, for a second machine to plant soybeans.
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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?

Physicists name and codify new field in nanotechnology: 'electron quantum metamaterials'

Date: November 5, 2018

Source: University of California - Riverside

Summary: New materials are being synthesized by twisting and stacking atomically thin layers. To bring it all under one roof, physicists propose this field of research be called ''electron quantum metamaterials.' 

When two atomically thin two-dimensional layers are stacked on top of each other and one layer is made to rotate against the second layer, they begin to produce patterns -- the familiar moiré patterns -- that neither layer can generate on its own and that facilitate the passage of light and electrons, allowing for materials that exhibit unusual phenomena. For example, when two graphene layers are overlaid and the angle between them is 1.1 degrees, the material becomes a superconductor.

"It's a bit like driving past a vineyard and looking out the window at the vineyard rows. Every now and then, you see no rows because you're looking directly along a row," said Nathaniel Gabor, an associate professor in the Department of Physics and Astronomy at the University of California, Riverside. "This is akin to what happens when two atomic layers are stacked on top of each other. At certain angles of twist, everything is energetically allowed. It adds up just right to allow for interesting possibilities of energy transfer."

This is the future of new materials being synthesized by twisting and stacking atomically thin layers, and is still in the "alchemy" stage, Gabor added. To bring it all under one roof, he and physicist Justin C. W. Song of Nanyang Technological University, Singapore, have proposed this field of research be called "electron quantum metamaterials" and have just published a perspective article in Nature Nanotechnology.

"We highlight the potential of engineering synthetic periodic arrays with feature sizes below the wavelength of an electron. Such engineering allows the electrons to be manipulated in unusual ways, resulting in a new range of synthetic quantum metamaterials with unconventional responses," Gabor said.

Metamaterials are a class of material engineered to produce properties that do not occur naturally. Examples include optical cloaking devices and super-lenses akin to the Fresnel lens that lighthouses use. Nature, too, has adopted such techniques -- for example, in the unique coloring of butterfly wings -- to manipulate photons as they move through nanoscale structures.
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“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

“Adam Smith” aka George Goodman.

The monthly Coppock Indicators finished October.

DJIA: 25,116 +176 Down. NASDAQ: 7,306 +232 Down. SP500: 2,712 +146 Down. All three slow indexes went sharply down in October, suggesting there’s more of the correction to come.

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