Baltic Dry Index. 1330 -09 Brent Crude 59.03
“Those who don't know history are destined to repeat it.”
Edmund Burke.
Yesterday the Dow
soared as Fed Chairman Powell’s speech was taken by the market as the Fed
caving in to President Trump. If that really is the case and the Fed will now
pass on its widely trailed interest rate hike next month, a belated Santa Claus
rally looks likely in an attempt to undo all the damage from October and
November in stocks. Is it enough to have
President Trump declare victory and settle his trade war on China at the
weekend?
But having a
political Fed under the control of the President, any President, but especially
one as erratic as President Trump, is very bad news. It’s a giant leap on the
way for America to becoming a banana republic. That would have nothing but bad
implications for the rest of the world. It would accelerate central banks quiet
hoarding of gold
So did the Fed
Chairman really just kowtow to President Trump? We’ll know the answer after the
next Fed meeting. No interest rate hike and the answer is yes. An interest rate
hike and the answer is no.
But to this old
dinosaur commodities trader any Santa Claus rally is an exit rally. The trade
wars are already slowing the global economy with more pain still to come. Next month the ECB starts cutting back on its
bond market support programs. Next year
the Fed will resume tightening again if only to gain firepower against the next
recession. The benefits of the Trump tax cuts are already in the markets.
From January onwards,
a Democratic controlled House start out on the warpath for Trump’s scalp. 2019
still looks very ugly to me. I would use any year-end rally to liquidate any
underwater stocks getting back to breakeven. Cash will likely be king in 2019.
Seemingly dovish, Powell says interest rates are ‘just below’ level where they won’t stimulate economy
By Steve
Goldstein Published: Nov 28, 2018
4:02 p.m. ET
Federal Reserve Chairman Jerome Powell on Wednesday used a softer tone to
describe where interest-rate policy presently is, in what could be construed as
implying fewer interest-rate hikes to come. “Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy -- that is, neither speeding up nor slowing down growth,” Powell told the Economic Club of New York.
His comments on their face appear more dovish than in early October, when Powell said, in reference to the Fed’s interest rates, “we may go past neutral, but we’re a long way from neutral at this point, probably.”
Stocks extended gains after Powell’s remarks, with the Dow Jones Industrial Average DJIA, +2.50% rallying more than 600 points. The dollar DXY, -0.17% declined.
There were some observers who said Powell wasn’t trying to shift expectations.
“If there has been one certainty of late it is the market’s ability to misinterpret Fed Chairman Powell," said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “Powell is not suggesting that since they are just below the range they may stop soon. All he is doing is pointing out an obvious idea.”
Related: Why economists insist Powell wasn’t as dovish as market thinks
The Fed’s summary of economic projections has a range of neutral interest-rate estimates between 2.5% and 3.5% — so a likely December hike brings the upper end of the Fed’s target to 2.5%.
More
Did Fed’s Powell ‘light the fuse’ for a year-end stock-market rally?
By William
Watts Published: Nov 28, 2018 6:40
p.m. ET
One down, two to go?Stock market bulls rejoiced Wednesday, with the S&P 500 SPX, +2.30% and Dow Jones Industrial Average DJIA, +2.50% erasing November losses and posting their biggest one-day percentage gains since March after Federal Reserve Chairman Jerome Powell soothed worries about the pace of future interest-rate increases.
The remarks were seen “possibly” setting aside one of the “trio of tribulations” — rate increases, trade tensions and a peak in corporate earnings growth — blamed for the stock market’s fall swoon, said Sam Stovall, chief investment strategist at CFRA, in a note.
Read: Here are the stocks that powered the Dow after the Fed’s Powell soothed investors
“Investor optimism over a near-term end to the rate-tightening cycle has likely lit the fuse for an end-of-year celebration, with the addition of a booster to be supplied by a possible resumption of trade talks,” he said, with talks this weekend between President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires now in the spotlight.
Technical outlook
Stovall, however, said the technical bias for the market “remains bearish” with the probability of more downside movement elevated as long as the S&P 500, which closed at 2,743.79, remains below the top end of a resistance zone on the chart at 2,746. A close above that level, however, would open the door to a move toward the 2,796-2,815 area, he said.More
https://www.marketwatch.com/story/did-feds-powell-light-the-fuse-for-a-year-end-stock-market-rally-2018-11-28
Why the bloodletting in FAANG stocks is just getting started: Canaccord
By Barbara
Kollmeyer Published: Nov 28,
2018 7:27 a.m. ET
Hide behind defensives? That doesn’t seem like such a crazy strategy lately
as investors wait to see if worries about the U.S. economy turn into real
problems in the coming year.Tuesday’s session offered the most recent evidence of that as health care, consumer staples and utilities drove the gains for the S&P 500. Compare these numbers—the Utilities Select Sector SPDR XLU, +0.75% is up 4% for the quarter, while the Technology Select Sector SPDR XLK, +0.20% has slumped over 12%.
Another burning question for investors is whether the bloodletting has stopped for shooting-star growth names—Facebook FB, +1.04% , AAPL, +1.27% Amazon AMZN, +1.81% Netflix NFLX, +1.83% and Google-parent Alphabet GOOGL, +0.63% —which have been shoved into bear territory after helping to drive a nearly decadelong bull market.
Our call of the day from analysts at Canaccord says stay hunkered down. They see the outperformance for defensives as just getting started, because FAANG underperformance is also in its early innings.
Defense stocks were supposed to be the story for 2019 but have stepped
up to the plate early because big value sectors—financials and energy—didn’t,
say Canaccord’s Martin Roberge and Guillaume Arseneau.
Portfolio managers haven’t seen any big hurt when it comes to that group
of growthy stocks because year-to-date, some of those tech-focused names are
still outperforming the market, they note. Beaten-down Apple is still up nearly
3% year-to-date, against a 0.3% rise for the S&P.
“We expect the real pain will come when a clear rotation occurs. This rotation should get under way when it becomes clear that earnings growth for FAANGs and other technology names in 2019 do not live up to expectations,” said the Canaccord analysts. And that second wave of selling should start in January when fourth-quarter results start rolling out, they say.
Last word goes to hedge-fund manager Mark Yusko, who likens this year’s stock pullback to a “melting ice cube.”
“I think next year, with the economic slowdown, it gets worse—probably double-digit drawdown. The big year is 2020, when the credit bubble starts to blow up,” as companies that have been binging on cheap debt will have to pay the piper,the founder and CEO of Morgan Creek Capital told CNBC.
More
Construction machine makers brace for weaker China sales as economy slows
November 29, 2018 / 4:58 AM
SHANGHAI
(Reuters) - China’s construction equipment industry is bracing for a decline in
sales in 2019 after two years of rapid growth, as work slows on new projects
and firms replace fewer old diggers and cranes, executives at an industry event
in Shanghai said this week.
China is likely to see sales of excavators, loaders and dump trucks —
proxies for the country’s infrastructure and building sectors — fall 7-8
percent next year, down from 30 percent growth in 2018, data from consultancy
Off-Highway Research show.
The expected downturn in demand underscores a major challenge facing
Beijing even as it looks to fast-track infrastructure projects to support
economic growth, which has cooled to its slowest pace since the global
financial crisis and is facing mounting pressure from U.S. tariffs.
Many economists believe business conditions in China will get worse before they get better, noting recent government stimulus measures will take some time to be felt.
“There are a number of uncertainties (in 2019), be it in relation to the global economy or world trade,” Lu Chuan, president of XCMG Construction Machinery Co Ltd (000425.SZ), said on the sidelines of the biennial Bauma China fair.
Industry
executives said there were signs that growth had peaked and that customers were
turning more cautious, a concern for firms from Caterpillar Inc (CAT.N) to local rival Zoomlion (000157.SZ) and Japan’s Komatsu Ltd (6301.T) in the world’s largest market for
construction equipment by unit sales.
---- The industry’s recent sharp growth came on the back of a five-year-long downturn that began with a collapse in commodity prices in 2011. Unit sales rose 81 percent in 2017 and are set to grow almost a third this year, Off-Highway Research said.
However, China’s multi-year clampdown on debt and pollution has seen
fixed-asset investment growth — a key gauge of future activity — fall to record
lows this year, a trend that policymakers are now scrambling to reverse.
While more road, rail and airport projects are getting the greenlight to
proceed, analysts note their backers will still need to secure funding before construction
can begin.
More
Trump Renews Auto Tariff Threat as Trade Czar Aims at China
By Ryan Beene and Shawn Donnan
Updated on 29 November 2018, 02:30 GMT
President Donald Trump raised the prospect of slapping a 25 percent tariff
on imported cars and ordered a review of China’s retaliatory auto tariffs
against the U.S. as his administration continued to scramble to respond to General
Motors Co.’s announcement of plant closures this week.In a pair of Twitter posts on Wednesday, Trump pointed to a longstanding U.S. tariff on imported pickup trucks that has helped U.S.-based automakers dominate that market. He argued that a similar import tax on cars would have prevented GM’s move to close plants in the U.S.
“The
reason that the small truck business in the U.S. is such a go-to favorite is
that, for many years, tariffs of 25% have been put on small trucks coming into
our country. It is called the ‘chicken tax,”’ Trump said on Twitter Wednesday.
A 25 percent duty on imported light trucks was applied in the 1960s by President Lyndon Johnson in retaliation to West German tariffs on U.S. poultry. Other products were included in those American levies initially but have since been eliminated. The pickup tariff, which also applies to work vans, has remained and has been a major contributor to U.S.-automaker dominance in the domestic pickup market.
More cars would be assembled in the U.S. if the same tariff were applied on imported autos, Trump said, adding in a second tweet that “G.M. would not be closing their plants in Ohio, Michigan & Maryland.”
More
"Any nation
which gives up its freedom in pursuit of economic advantage deserves to lose
both."
Thomas Jefferson, US President 1801-1809.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
With a new weak El Nino forming in the Pacific, will it be enough or in
time to make for a mild UK and western European winter? Where will get drought
and where excess rains?
Brace Yourselves for El Niño Likely in 2019
Nov. 27, 2018 01:04PM EST
There
is a 75-80 percent chance of an El Niño developing by February, the United
Nations' World Meteorological Organization (WMO) announced Tuesday. So what exactly does that entail?
Well, the last time we had an El Niño was in 2015-2016, which caused extreme weather-related events (droughts, fires, floods and coral bleaching) around the world, pushed atmospheric concentrations of CO2 to 400 parts per million for the first time, and drove 2016 to be the hottest year in recorded history.
Although this year's forecasted El Niño is not expected to be as powerful as the one in 2015-2016, it's not to be overlooked, weather experts warned
"It
can still significantly affect rainfall and temperature patterns in many
regions, with important consequences to agricultural and food security sectors,
and for management of water resources and public health, and it may combine
with long-term climate change
to boost 2019 global temperatures," Maxx Dilley, director of WMO's Climate
Prediction and Adaptation branch, said in a news release.
El Niños are naturally occurring phenomenons that happen every two to
seven years. They have a major effect on global weather patterns, including
spikes in temperatures.
----The WMO said the chance of a full-fledged El Niño event between December 2018 and February 2019 is estimated to be about 75-80 percent, and about 60 percent for it to continue through February to April 2019.
U.S. weather forecasters also said there's a high chance of a El Niño forming. "Sea surface temperatures in the tropical Pacific were comfortably above the threshold for El Niño in October 2018, but the atmospheric response is lagging. A deep pool of warm water is available below the surface to renew and sustain the surface anomaly, however, and forecasters estimate an 80 percent chance of a weak El Niño during Northern Hemisphere winter 2018-19," according to Climate.gov.
More
El Niño
----ENSO conditions have occurred at two- to seven-year intervals for at least the past 300 years, but most of them have been weak. Evidence is also strong for El Niño events during the early Holocene epoch 10,000 years ago.[28]El Niño may have led to the demise of the Moche and other pre-Columbian Peruvian cultures.[29] A recent study suggests a strong El-Niño effect between 1789 and 1793 caused poor crop yields in Europe, which in turn helped touch off the French Revolution.[30] The extreme weather produced by El Niño in 1876–77 gave rise to the most deadly famines of the 19th century.[31] The 1876 famine alone in northern China killed up to 13 million people.[32]
An early recorded mention of the term "El Niño" to refer to climate occurred in 1892, when Captain Camilo Carrillo told the geographical society congress in Lima that Peruvian sailors named the warm north-flowing current "El Niño" because it was most noticeable around Christmas.[33] The phenomenon had long been of interest because of its effects on the guano industry and other enterprises that depend on biological productivity of the sea.
Charles Todd, in 1888, suggested droughts in India and Australia tended to occur at the same time;[34] Norman Lockyer noted the same in 1904.[35] An El Niño connection with flooding was reported in 1894 by Víctor Eguigurenes (1852–1919) and in 1895 by Federico Alfonso Pezet (1859–1929).[36][37] In 1924, Gilbert Walker (for whom the Walker circulation is named) coined the term "Southern Oscillation".[38] He and others (including Norwegian-American meteorologist Jacob Bjerknes) are generally credited with identifying the El Niño effect.[39]
The major 1982–83 El Niño led to an upsurge of interest from the scientific community. The period 1991–1995 was unusual in that El Niños have rarely occurred in such rapid succession.[40] An especially intense El Niño event in 1998 caused an estimated 16% of the world's reef systems to die. The event temporarily warmed air temperature by 1.5 °C, compared to the usual increase of 0.25 °C associated with El Niño events.[41] Since then, mass coral bleaching has become common worldwide, with all regions having suffered "severe bleaching".[42]
More
“Europe exemplifies
a situation unfavourable to a common currency. It is composed of separate
nations, speaking different languages, with different customs, and having
citizens feeling far greater loyalty and attachment to their own country than
to a common market or to the idea of Europe".
Professor Milton Friedman, The Times 19 November
1997.
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?
Artificial Intelligence Is Giving Rise to Fake Fingerprints. Here's Why You Should Be Worried
28 November 2018Fake digital fingerprints created by artificial intelligence can fool fingerprint scanners on smartphones, according to new research, raising the risk of hackers using the vulnerability to steal from victims’ online bank accounts.
A recent paper by New York University and Michigan State University researchers detailed how deep learning technologies could be used to weaken biometric security systems. The research, supported by a United States National Science Foundation grant, won a best paper award at a conference on biometrics and cybersecurity in October.
Smartphone makers like Apple and Samsung typically use biometric technology in their phones so that people can use fingerprints to easily unlock their devices instead of entering a passcode. Hoping to add some of that convenience, major banks like Wells Fargo are increasingly letting customers access their checking accounts using their fingerprints.
But while fingerprint scanners may be convenient, researchers have found
that the software that runs these systems can be fooled. The discovery is
important because it underscores how criminals can potentially use cutting-edge
AI technologies to do an end run around conventional cybersecurity.
The latest paper about the problem builds on previous research published
last year by some of the same NYU and Michigan State researchers. The authors
of that paper discovered that they could fool some fingerprint security systems
by using either digitally modified or partial images of real fingerprints.
These so-called MasterPrints could trick biometric security systems that only
rely on verifying certain portions of a fingerprint image rather than the
entire print.
One irony is that humans who inspect MasterPrints
could immediately likely tell they were fake because they contained only
partial fingerprints. Software, if turns out, could not.
Julian Togelius, one of the paper’s authors and an NYU associate computer science professor, said the team created the fake fingerprints, dubbed DeepMasterPrints, using a variant of neural network technology called “generative adversarial networks (GANs),” which he said “have taken the AI world by storm for the last two years.”
Researchers have used GANs to create convincing-looking but fabricated photos and videos known as “deep fakes,” which some lawmakers worry could be used to create fake videos and propaganda that the general public would think was true. For example, several researchers have described how they could use AI techniques to create fabricated videos of former President Barack Obama giving speeches that never took place, among other things.
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"[European
Monetary Union is] a German racket designed to take over the whole of Europe
... [if you are prepared to give up Sovereignty to the EU] you might just as
well give it to Adolf Hitler, frankly."
Nicholas Ridley (1929 - 1993) Secretary of State for
Trade and Industry. Spectator magazine,
July 1990.
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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