Baltic Dry Index. 1125 -22 Brent Crude 69.37
Don’t
fight the Fed.
Wall
Street Adage.
Will it be Black
Tuesday today? Have the FAANGs been defanged? Will the stock markets collapse
be enough to force the Fed to stop raising interest rates? My guess is no, yes and maybe, but with the
Fed only delaying a rate hike into early 2019.
All year the FAANGs
drove the market the market higher, I suspect in a rigged fashion. Now everyone
wants out. “Sell? To whom sir?”
Below, after a small
bounce, reasons to fear more downside to come. The Fed will raise interest rates
all next year.
“There
is only one side of the market and it is not the bull side or the bear side,
but the right side.”
Stocks close sharply lower as Dow tumbles 600 points in wake of oil-market woes
Stocks closed sharply lower Monday, with the Dow Jones Industrial
Average tumbling 600 points as crude oil prices extended their retreat while a
firmer U.S. dollar also sparked worries about the competitiveness of U.S.
corporations in an increasingly challenging economic environment.
Trading, however, was relatively active, as gauged by the number of
shares changing hands, despite Veterans Day. The only major market to close in
commemoration was the bond market.
Preliminary trading volume hit 6.7 billion shares, slightly off from the year-to-date average of 6.9 billion shares, according to the Dow Jones Data Group.
Representatives from Saudi Arabia over the weekend said that the kingdom would cut its oil production, while the Organization of the Petroleum Exporting Countries weighs a more sweeping reduction of output by members of the oil cartel.
West Texas Intermediate crude for December delivery CLZ8, -1.37% has fallen for 11 sessions in row, finishing Monday below $60 a barrel for the first time since February.
A shock drop in oil prices has raised questions among investors about the health of the global market and investors will closely watch talk of cuts to crude production that could stabilize moves in the commodity, which entered a bear market, defined as a drop of at least 20% from a recent peak, last week.
More
Apple iPhone sales fears rock Wall Street
Apple shares sank by 5% on Monday, dragging down US markets and wiping
more than $40bn (£31bn; €35bn) off the tech giant's market value.
The fall followed a profit warning from some of the firm's suppliers,
which exacerbated concerns that demand for iPhones is slowing.
The declines made the company one of the biggest losers on the Dow,
which closed down 2.3%.
The wider S&P 500 ended about 2% lower, while the Nasdaq fell more
than 2.75%.
Technology stocks led the Wall Street sell-off which saw shares in most
sectors tumble.
Tech firms helped drive many of the stock market gains earlier in the
year but now face rising calls for regulatory and tax changes that could hurt
their growth.
Amazon shares lost more than 4%, Alphabet dropped over 2.5% while
Facebook fell 2.3%.
Apple's share price fall came after Lumentum, a US manufacturer of facial recognition technology and Apple supplier, said one of its major customers had reduced its shipments.
As a result, Lumentum downgraded its sales and profit outlook, sending its shares down over 30%.
Lumentum's warning came shortly after another Apple supplier, Japan Display, also cut its full-year guidance blaming "volatile customer demand".
The warnings from Apple suppliers extended a slide in Apple shares that started earlier this month after the firm's sales forecast disappointed investors.
The shares closed at about $194, down 5% for the day and more than 15% below their peak in October.
More
Wholesale inflation surges in October at fastest pace in six years, PPI shows
By Jeffry
Bartash Published: Nov 9, 2018 12:00 p.m. ET
The numbers: U.S. wholesale inflation in October posted the
biggest increase in six years, driven by higher gas prices and rising costs for
some goods such as machinery and equipment critical for businesses. The producer price index jumped 0.6% last month after barely any change since July, the government said Friday. The increase exceeded the 0.2% forecast of economists polled by MarketWatch.
Yet if some of the goods whose prices are especially up and down are stripped out, the increase in wholesale prices was more modest. The so-called core PPI that excludes food, energy and trade margins rose 0.2%.
What’s more, there was little change in the direction of wholesale inflation.
Producer prices rose 2.9% in the 12 months ended in October from 2.6% in the prior month. But it was still markedly lower than the seven-year high of 3.3% reached four months ago.
More
Opinion: The big danger to the stock market is lurking in this chart
By Nigam
Arora Published: Nov 12, 2018 3:35 p.m. ET
The big danger to the stock market is lurking in a chart that most
investors are ignoring.Please click here for the chart of the core Producer Price Index (PPI) through October. Please note the following:
• PPI measures inflation at the producer level. Core PPI excludes food and energy. At The Arora Report we use core PPI in our timing model that has inputs in 10 categories. (Please click here to see the 10 inputs.)
• Yes, we all eat food and use energy. The reason for excluding food and energy is that they are volatile and make it difficult to make reasonable projections.
The reason this chart is being ignored is that, for a while, producers have
been absorbing the higher costs and have not been passing them on to consumers.
That cannot last forever. Soon, PPI will show up in the Consumer Price Index
(CPI), a key gauge for the Federal Reserve in determining interest rates.
• Higher inflation will result in higher interest rates.
More
Finally, what’s wrong with this? We all know how it
ends, the failure of the Great Nixonian Error of fiat money, communist money.
Just not when, nor how devastating the ultimate crash will be. But it’s a whole
lot closer today. Use dips on gold and silver to add more.
Today Japan, tomorrow
Europe and the USA.
Everything's fine today, that
is our illusion.
Voltaire
Bank of Japan's balance sheet now larger than country's GDP
November 13, 2018 / 2:34 AM
TOKYO
(Reuters) - Japan’s central bank has become the first among G7 nations to own
assets collectively worth more than the country’s entire economy, following a
half-decade spending spree designed to accelerate weak price growth.
The 553.6 trillion yen ($4.87 trillion) of assets the Bank of Japan holds are worth more than five times the world’s most valuable company Apple Inc. (AAPL.O) and 25 times the market capitalisation of Japan’s most valuable company Toyota Motor Corp. (7203.T).
They’re also bigger than the combined GDPs of five emerging markets — Turkey, Argentina, South Africa, India and Indonesia.
Central bank data released on Tuesday showed how much the BOJ has amassed over 5-1/2 years of what it calls “quantitative and qualitative” easing policy.
The BOJ has become the world’s second central bank after the Swiss National Bank and the first among Group of Seven countries to own a pool of assets bigger than the economy it is trying to stimulate.
Japan’s nominal gross domestic product for the April-June, the latest data available, was an annualized 552.8207 trillion yen. The reading for July-September, due on Wednesday, is expected to show a contraction after natural disasters.
While some analysts credit its unique policies with lifting the economy out of decades of deflationary pressures, the BOJ has had little success meeting its two percent inflation target or reviving domestic demand and growth.
Some investors see the BOJ’s inflation target as too ambitious and one
that has forced it to keep buying a massive amount of bonds and stocks even as
other major central banks have started to remove crisis-era policy
accommodation.
At the same time, the aggressive asset purchases in recent years now
mean the BOJ owns about 45 percent of the 1 quadrillion yen Japanese government
bond (JGB) market, crowding out banks and other investors.
“The Bank of Japan’s policy is clearly not sustainable. The BOJ would
suffer losses if it would have to raise interest rates to, say, two percent,”
said Hidenori Suezawa, a fiscal analyst at SMBC Nikko Securities. “Also, in case
of emergencies, such as a natural disaster or a war, the BOJ won’t be able to
finance government bonds any longer.”
More
No problem can withstand the
assault of sustained thinking.
Voltaire
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Yes, the banksters again, why
do these entities still have banking licences?
I’m just a banker doing God’s work”
Lloyd
Blankfein, “Mr. Goldman Sacks,” CEO of Goldman Sachs.
Goldman Sachs 'cheated' Malaysia over 1MDB - PM Mahathir
November 13, 2018 / 4:34 AM
KUALA LUMPUR (Reuters) - Goldman Sachs
Group Inc (GS.N) “cheated” Malaysia over its dealings with
state fund 1MDB which is the subject of corruption and money-laundering
investigations, Prime Minister Mahathir Mohamad told CNBC in an interview aired
on Tuesday.
The United States, Malaysia and at least four other countries are
investigating how billions of dollars went missing from 1MDB, founded by former
Malaysian premier Najib Razak.
U.S. prosecutors filed criminal charges against two former Goldman Sachs
bankers earlier this month. One of them, Tim Leissner, pleaded guilty to
conspiracy to launder money and conspiracy to violate the Foreign Corrupt
Practices Act.
Goldman Sachs earned about $600 million (466.5 million pounds) in fees
for its work with 1MDB, which included three bond offerings in 2012 and 2013
that raised $6.5 billion.
Mahathir said “there is evidence that Goldman Sachs has done things that
are wrong”.
“Obviously we have been cheated through the compliance by Goldman Sachs
people,” he said in the interview.
The bank’s compliance controls “don’t work very well”, he added.
A Goldman Sachs spokesman in Hong Kong declined to comment on the
allegation. The bank denied any wrongdoing on Monday.
Goldman Sachs shares fell to their lowest in nearly two years on Monday
after Malaysian Finance Minister Lim Guan Eng said Malaysia would seek a “full
refund” from the bank of the fees from 1MDB deals.
The U.S. Department of Justice has said about $4.5 billion was misappropriated
from 1MDB by high-level officials of the fund and their associates between 2009
and 2014.
Former premier Najib has been charged with corruption in Malaysia as
part of the investigation into 1MDB. He has pleaded not guilty and denied any
wrongdoing.
Malaysian financier Low Taek Jho was also charged by U.S. prosecutors.
He remains at large.
If the financial
system goes down, our business is going down and, trust me, yours and everyone else's is going down, too.
Lloyd
Blankfein, CEO Goldman Sachs, threat 2008. “Mr. Goldman Sacks.”
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?
Wind Turbine Manufacturers Hit Turbulence
November 12, 2018
ByBloomberg News Editors
The shakeout in wind turbine manufacturing industry is starting to
produce winners and losers after increasing competition gutted margins.
Wind is one of the lowest-cost forms of energy generation and getting
cheaper, with turbine prices down more than 50 percent in the past decade. That
has hurt profit and spurred gloomier market outlooks from wind machinery makers
from General Electric Co. to Vestas Wind Systems A/S.
Some companies are weathering this better than others. GE said last
month that its renewables unit’s operating profit fell 72 percent in the third
quarter even though it sold more units. Vestas maintained its full-year outlook
despite missing some earnings estimates in the third quarter. Siemens Gamesa
Renewable Energy SA rallied after the Spanish-German company’s earnings met its
2018 guidance. Nordex SE reports on Nov. 13.
After a rough patch last year following its creation, Siemens Gamesa is
recovering with focus on cutting costs both for its operations and turbines.
The company had full-year revenue of 9 billion euros ($10 billion) and is
targeting savings of 2 billion euros between 2018 and 2020. It was formed in
2016 through combining the wind manufacturing assets of Siemens AG and Gamesa
Corp. Tecnologica SA.
“We’re simplifying our product portfolio and at the same time targeting
product affordability,” said Chief Executive Officer Markus Tacke. “That is, a
combination of enhanced product capabilities while reducing costs at the same
time.”
Around the world, about 65 governments now auction renewables projects,
marking the end of the once-standard practice of handing out subsidies known as
feed-in tariffs to anyone who wanted to build a project. States now plan how
much renewable power they want and tender it to developers, who compete for
contracts on price. Those developers are pushing all their suppliers for lower
costs, starting with wind turbine makers.
“The market both went from feed-in tariffs to auctions and at the same
time, volumes were squeezed, and of course, that created a bit of pressure, as
we have seen,” said Anders Runevad, the chief executive officer at Vestas.
Wind economics have fundamentally changed mainly in two ways. First,
orders are more sporadic, aligned with a government’s schedule rather than a
developer’s. Secondly, there is a global race to the bottom on price as
developers compete for a smaller pool of projects.
More
https://www.renewableenergyworld.com/articles/2018/11/wind-turbine-manufacturers-hit-turbulence.html
Alan Schwartz, CEO Bear Stearns, March 12, 2008.
Bust March 16, 2008.
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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