Baltic Dry Index. 1304 -91 Brent Crude 72.01
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.
“Gridlock is good,”
say the stock peddling perma-bulls, buy more! I have my doubts that gridlock will
be good under this polarising president, nor with a Democrat House of Congress looking
to settle scores. 1973-1974 comes to mind. Nor in the past, was the USA engaged
in a trade war with the rest of the world and coming off three decades of
falling interest rates changing into rising rates.
I hope to be wrong
but think we have just entered the final exit rally. I’m also concerned that the Baltic Dry (shipping)
Index has begun rapidly sinking again, suggesting that front running all the
2018 tariffs has probably come to an end.
On the other hand,
election over, Team Trump Trade War, have one last opportunity to drop the
voter grandstanding, and try to reach a deal with China before the punitive 25
percent tariffs start against China on January 1. Three times this week China
has signalled its ready to do a trade deal that makes sense, and might just
delay the next global recession.
But who am I to rain
on the bull’s parade today? There’ll be plenty of time to do that next year
after the new House takes up arms in January.
“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.
Why stock-market investors say ‘gridlock is good’ after midterms deliver split Congress
By William
Watts Published: Nov 7, 2018 4:24
p.m. ET
Stock-market bulls are cheering midterm election results that, as expected,
saw Democrats take control of the House and Republicans hold control of the
Senate, delivering a split Congress and expectations for legislative gridlock
over the remaining two years of President Donald Trump’s term.“Gridlock is good” is an oft-heard mantra when it comes to stocks. It comes from the notion that the likely inability of lawmakers and the president to accomplish much means politicians won’t be able to do much harm nor to undo market-lifting measures already in place. The chart below from Bank of America Merrill Lynch helps explain why investors have faith in the concept.
----As the chart shows, since 1928, stocks have produced an annual average return of 12% in years when a Republican president held office and control of Congress was split between Democrats and Republicans.
And in the year following a midterm election that resulted in a
Republican president and a split Congress, returns have averaged more than 20%,
one of the highest returns of all the scenarios the analysts explored, though
they noted that the sample size of midterm years is small (see chart below).
---- The Senate results, meanwhile, will give Republicans more breathing room heading into 2020, which means there is a greater likelihood the corporate tax cuts will survive regardless of the outcome of the presidential election in two years, said Jeffrey Schulze, investment strategist for ClearBridge Investments, an affiliate of Legg Mason, said in a phone interview.
Meanwhile, expectations that a split Congress will prevent Trump from
seeking further tax cuts and restrain lawmakers from adding to a rapidly
growing budget deficit set the tone in the Treasury market, analysts said. And
curtailing, or at least slowing, a rise in yields could remain a near-term
positive for stocks.
More
Asian markets make strong gains, led by export-heavy stocks
By Dow
Jones Newswires Published: Nov 7,
2018 11:02 p.m. ET
Asian stock markets posted strong gains in early trading Thursday, following
Wall Street higher after results of the U.S. midterm elections.Japan’s Nikkei NIK, +1.87% was the regional standout, up about 2%. With the dollar’s recovery against the yen USDJPY, +0.17% , export-heavy stocks were helping lead the way for Japanese stocks. Toyota 7203, +0.59% was up more than 1%, while Sony 6758, +2.23% gained 2% and oil company Inpex 1605, +7.11% jumped 5%.
Hong Kong stocks also started strong, with the Hang Seng Index HSI, +0.96% up 1%. The index has notched five increases in the past six trading days. Helping was oil producer CNOOC 0883, +3.46% , which was up 2%. Tencent 0700, +1.91% was some 2% higher while recently weak AAC Tech 2018, -1.58% gave up an early 4% gain and was last down 2%.
Wynn Macau 1128, -10.05% was among the worst-performing stocks in Hong Kong, after giving a downbeat fourth-quarter guidance in its earnings report before the bell. Shares were down 10% after having bounced 16% last week, the most in three years. Parent Wynn Resorts WYNN, +3.92% ended U.S. after-hours trading down 13%. Other Hong Kong casino stocks tumbled too, with Galaxy Entertainment 0027, -2.93% and Sands China 1928, -2.96% each down more than 3%.
Chinese stocks rose, with the Shanghai Composite SHCOMP, +0.61% and the smaller-cap Shenzhen Composite 399106, +0.60% both up about 0.6%. Consumer stocks rebounded while most so-called technology-innovation names retreated after days of sharp gains. Investors were buoyed by data that found Chinese exports rose sharply in October, despite U.S. tariffs.
More
Despite tariffs, China's exports surge in October
By MarketWatch
Published: Nov 7, 2018 10:29 p.m. ET
BEIJING--China's exports continued to show resilience last month despite
a trade battle with the U.S., defying economists' expectations.
Total exports rose 15.6% from a year earlier, accelerating from a 14.5%
increase in September, the General Administration of Customs said Thursday.
Economists polled by The Wall Street Journal had forecast an 11% growth in
overseas shipments.
Imports were up 21.4% in October from a year earlier, accelerating
sharply from a 14.3% increase the previous month and beating economists' median
forecast of 13% growth.
China's total trade surplus widened to $34.0 billion from $31.7 billion
in the previous month, customs data showed. Economists had expected a $37.3
billion surplus.
U.S., China should ensure G20 talks go well - senior Chinese diplomat
November 8, 2018 / 12:24 AM
SHANGHAI (Reuters) - The United States and China must work to ensure
that talks to take place between the two countries’ leaders at this month’s G20
summit go well, said a senior Chinese diplomat, amid a bitter trade war.
The two countries have slapped tariffs on hundreds of billions of
dollars of each other’s goods and U.S. President Donald Trump has threatened to
set tariffs on the remainder of China’s $500 billion-plus (£381 billion-plus)
exports to the United States if the trade dispute cannot be resolved.
Trump and Chinese President Xi Jinping plan to meet on the sidelines of
a G20 summit, in Argentina at the end of November for a high-stakes talk.
The two sides should “properly manage differences and carefully prepare
to ensure positive results in the Argentine meeting,” said politburo member
Yang Jiechi in a statement posted on the official Ministry of Foreign Affairs
website.
“China is committed to working with the U.S. to achieve a
no-confrontational, conflictless, mutually respectful co-operation in which
both sides win,” added Yang.
“Both sides should seek an appropriate solution through equal and
mutually beneficial negotiations,” said Yang, adding that the essence of China,
U.S. trade and economic ties is mutually beneficial.
U.S. to impose new duties on Chinese aluminium sheet products
November 7, 2018 / 7:39 PM
WASHINGTON (Reuters) - The U.S. Commerce
Department on Wednesday said it would impose final anti-dumping and
anti-subsidy duties on Chinese common alloy aluminium sheet products of 96.3
percent to 176.2 percent.
The decision marks the first time that final
duties were issued in a trade remedy case initiated by the U.S. government
since 1985. The Trump administration has promised a more aggressive approach to
trade enforcement by having the Commerce Department launch more anti-dumping
and anti-subsidy duties on behalf of private industry.
“We will continue to do everything in our power under U.S. law to
restrict the flow of dumped or subsidized goods into U.S. markets,” said Commerce
Secretary Wilbur Ross in a statement.
The final aluminium sheet duties, however, were reduced from those first
imposed in April and July. The initial combined range was 198.4 percent to
280.46 percent.
In 2017, imports of common alloy aluminium
sheet from China were valued at an estimated $900 million, the Commerce
Department said. The flat-rolled product is used in transportation, building
and construction, infrastructure, electrical and marine applications.
More
Finally, food for thought via
a Smithsonian book review. The more things change…. But do we have a Tiberius Gracchus
in sight?
Lessons in the Decline of Democracy From the Ruined Roman Republic
A new book argues that violent rhetoric and disregard for political norms was the beginning of Rome’s end
The U.S. Constitution owes a huge debt to ancient Rome. The Founding Fathers were well-versed in Greek and Roman History. Leaders like Thomas Jefferson and James Madison read the historian Polybius, who laid out one of the clearest descriptions of the Roman Republic’s constitution, where representatives of various factions and social classes checked the power of the elites and the power of the mob. It’s not surprising that in the United States’ nascent years, comparisons to ancient Rome were common. And to this day, Rome, whose 482-year-long Republic, bookended by several hundred years of monarchy and 1,500 years of imperial rule, is still the longest the world has seen.
Aspects of our modern politics reminded University of California San Diego historian Edward Watts of the last century of the Roman Republic, roughly 130 B.C. to 27 B.C. That’s why he took a fresh look at the period in his new book Mortal Republic: How Rome Fell Into Tyranny. Watts chronicles the ways the republic, with a population once devoted to national service and personal honor, was torn to shreds by growing wealth inequality, partisan gridlock, political violence and pandering politicians, and argues that the people of Rome chose to let their democracy die by not protecting their political institutions, eventually turning to the perceived stability of an emperor instead of facing the continued violence of an unstable and degraded republic. Political messaging during the 2018 midterm elections hinged on many of these exact topics.
Though he does not directly compare and contrast Rome with the United States, Watts says that what took place in Rome is a lesson for all modern republics. “Above all else, the Roman Republic teaches the citizens of its modern descendants the incredible dangers that come along with condoning political obstruction and courting political violence,” he writes. “Roman history could not more clearly show that, when citizens look away as their leaders engage in these corrosive behaviors, their republic is in mortal danger.”
Historians are cautious when trying to apply lessons from one unique culture to another, and the differences between the modern United States and Rome are immense. Rome was an Iron-Age city-state with a government-sponsored religion that at times made decisions by looking at the entrails of sheep. Romans had a rigid class system, relied on slave labor and had a tolerance for everyday violence that is genuinely horrifying. Then again, other aspects of the Roman Republic feel rather familiar.
---- The Roman
people’s strong sense of patriotism was unique in the Mediterranean world. Like
the United States after World War II, Rome, after winning the Second Punic War
in 201 B.C. (the one with Hannibal and the elephants), became the world’s
hegemon, which lead to a massive increase in their military spending, a baby
boom, and gave rise to a class of super-wealthy elites that were able to use
their money to influence politics and push their own agendas. Those
similarities make comparisons worthwhile, even if the togas, gladiator battles
and appetite for dormice seem completely foreign.
---- So what does the story of the Roman Republic mean for the United States? The comparison is not perfect. The U.S. has had its share of political violence over the centuries and has more or less recovered. Politicians used to regularly duel one another (See the Hamilton soundtrack, song 15), and in the run-up to the Civil War, the ultimate act of political violence, there was the raid on Harper’s Ferry, Bleeding Kansas, and the near murder of Charles Sumner in the Senate chamber. Joanne B. Freeman, author of Field of Blood, a history of violence in Congress before the Civil War, tells Anna Diamond at Smithsonian she found at least 70 incidents of fighting among legislators, including a mass brawl in the House, though they often tried to paper over the conflicts. “It’s all hidden between the lines in the Congressional record; it might say “the conversation became unpleasantly personal.” That meant duel challenges, shoving, pulling guns and knives.”
The better comparison, surprisingly, applies to post-WWII America.
More
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Yes, it’s the banksters again. They can resist anything except
temptation.
“The
world is a place that’s gone from being flat to round to crooked.”
Mad
Magazine.
Wells Fargo says internal error caused more home foreclosures than expected
November 6, 2018 / 3:46 PM
(Reuters) - Wells Fargo & Co (WFC.N)
said on Tuesday an internal underwriting error had caused it to reject home
loan modifications, resulting in the bank foreclosing more homes than expected.
The bank said in a filing with regulators that an expanded review found
that 870 customers were incorrectly denied mortgage changes, leading to 545 of
them losing their homes.
This comes after the bank in August had for the first time disclosed a
calculation error in an internal underwriting software had caused 625 borrowers
to be incorrectly denied mortgage loan modifications under a federal assistance
program, 400 of whom had their homes foreclosed upon.
“We’re very sorry that the errors occurred and have assigned a single,
dedicated point of contact to ensure that each customer is engaged with and
assisted individually,” Tom Goyda, a spokesman for the company, said in an
email.
The company said the expanded review is still under way and took into
account customers who were in the foreclosure process between March 15, 2010,
and April 30, 2018.
Goyda said the bank had contacted a substantial majority of the affected
customers to provide remediation as well as the option to pursue no-cost
mediation with an independent mediator.
The revelations are an additional headache for the San Francisco-based
bank which is facing numerous regulatory penalties and private lawsuits, most
of which stem from a sales practices scandal that touched on all of the bank’s
major business units.
The bank said the issue stems from a calculation error that overstated
attorneys’ fees that were needed in determining whether a customer qualified
for a mortgage loan modification or repayment plan.
In August, the bank said it rectified the calculation errors and had set
aside $8 million to compensate borrowers. On Tuesday, the bank, however, did
not update that figure.
The bank updated disclosures on issues it discovered in auto lending,
saying it had tacked on an additional $241 million for customer compensation on
top of the $212 million announced earlier, related to a practice where it
forced customers auto insurance that in some cases resulted in vehicle
repossessions.
The bank has since discontinued that
practice.
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.
Cary Grant. To Catch A Thief.
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?
New material cleans and splits water
Date:
November 5, 2018
Source:
Ecole Polytechnique Fédérale de Lausanne
Summary:
Researchers have developed a photocatalytic system based on a material in the
class of metal-organic frameworks. The system can be used to degrade pollutants
present in water while simultaneously producing hydrogen that can be captured
and used further.
Some of the most useful and versatile materials today are the
metal-organic frameworks (MOFs). MOFs are a class of materials demonstrating
structural versatility, high porosity, fascinating optical and electronic
properties, all of which makes them promising candidates for a variety of
applications, including gas capture and separation, sensors, and
photocatalysis.
Because MOFs are so versatile in both their structural design and
usefulness, material scientists are currently testing them in a number of chemical
applications. One of these is photocatalysis, a process where a light-sensitive
material is excited with light. The absorbed excess energy dislocates electrons
from their atomic orbits, leaving behind "electron holes." The
generation of such electron-hole pairs is a crucial process in any
light-dependent energy process, and, in this case, it allows the MOF to affect
a variety of chemical reactions.
A team of scientists at EPFL Sion led by Kyriakos Stylianou at the
Laboratory of Molecular Simulation, have now developed a MOF-based system that
can perform not one, but two types of photocatalysis simultaneously: production
of hydrogen, and cleaning pollutants out of water. The material contains the
abundantly available and cheap nickel phosphide (Ni2P), and was found to carry
out efficient photocatalysis under visible light, which accounts to 44% of the
solar spectrum.
The first type of photocatalysis, hydrogen production, involves a
reaction called "water-splitting." Like the name suggests, the
reaction divides water molecules into their constituents: hydrogen and oxygen.
One of the bigger applications here is to use the hydrogen for fuel cells,
which are energy-supply devices used in a variety of technologies today,
including satellites and space shuttles.
The second type of photocatalysis is referred to as "organic
pollutant degradation," which refers to processes breaking down pollutants
present in water. The scientists investigated this innovative MOF-based
photocatalytic system towards the degradation of the toxic dye rhodamine B,
commonly used to simulate organic pollutants.
The scientists performed both tests in sequence, showing that the
MOF-based photocatalytic system was able to integrate the photocatalytic
generation of hydrogen with the degradation of rhodamine B in a single process.
This means that it is now possible to use this photocatalytic system to both
clean pollutants out of water, while simultaneously producing hydrogen that can
be used as a fuel.
"This noble-metal free photocatalytic system brings the field of
photocatalysis a step closer to practical 'solar-driven' applications and
showcases the great potential of MOFs in this field," says Kyriakos
Stylianou.
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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