Baltic Dry Index. 1470 -20 Brent Crude 73.44
“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.
Has the Great Global Trump
Trade War already damaged the global economy, to the point of starting the next
recession? It’s to early to say for certain at this point, but there are early
signs from global manufacturing that it has.
But first this news
on Apple (and a Trump capitulation?) As I write the stock drop is only about 4+
percent, though the stock will likely remain volatile all premarket. Suddenly
the FAANGs seem so much yesterday’s fashion.
Dow set to face 110-point hit at the hands of Apple, if the iPhone maker's 7.3% stock drop holds
By Mark
DeCambre Published: Nov 1, 2018 5:56
p.m. ET
The
Dow Jones Industrial Average late Thursday looked poised to take a big hit from
one of its most influential constituents, if premarket action in shares of
Apple Inc. hold through to Friday's regular session. Shares of Apple AAPL, +1.54%
were down 7.3% in after-hours trade, which would exact a 110-point toll on the
122-year-old price-weighted Dow Jones Industrial Average DJIA, +1.06%
The
premarket moves come after the smartphone manufacturer reported
better-than-expected results for its fiscal fourth quarter but delivered a
disappointing revenue outlook for the current quarter. As opposed to the
market-capitalization weighted S&P 500 index SPX, +1.06%
the Dow is price weighted, meaning a company that has a larger share price
holds more influence over the benchmark. Apple was shedding roughly $16.22 to
$206 from the iPhone maker's Thursday closing share price of $222.22. A $1 move
in anyone one of the Dow's 30 components translates to a swing in the index of
about 6.89 points.
Because
Apple also is the largest company by market value, a downturn on Friday would
also weigh heavily on the broader market, including the Nasdaq Composite Index COMP, +1.75%
Technology and internet-related companies have been been whipsawed over the
past three or four weeks, amid worries about trade clashes between the U.S. and
China and concerns that quarterly results from American corporations may be as
good as they will get in the near future. Apple's shares ending Thursday's
regular trade with a 1.5% gain before its earnings release.
Trump Asks Cabinet to Draft Possible Trade Deal With China
By Jenny Leonard, Saleha Mohsin, and Jennifer Jacobs
Updated on 2 November 2018, 05:00 GMT
President Donald Trump wants to reach an agreement on trade with Chinese
President Xi Jinping at the Group of 20 nations summit in Argentina later this
month and has asked key U.S. officials to begin drafting potential terms,
according to four people familiar with the matter.
The push for a possible deal with China was prompted by the president’s
telephone call with Xi on Thursday, the people said, requesting anonymity to
discuss internal deliberations. Afterward, Trump described the conversation as
“long and very good” and said in a tweet that their discussions on trade were
“moving along nicely.”
Trump asked key cabinet secretaries to have their staff draw
up a potential deal to signal a ceasefire in an escalating trade conflict, the
people said, adding that multiple agencies are involved in the drafting of the
plan.
The telephone conversation on Thursday was Trump and Xi’s first publicly disclosed call in six months. Both sides reported that they had constructive discussions on North Korea and trade, with Chinese state media saying that Trump supported “frequent, direct communication” between the presidents and “joint efforts to prepare for” the planned meeting on the sidelines of the Group of 20 summit, which is scheduled to take place from from Nov. 30 to Dec. 1.
“Those
discussions are moving along nicely,” Trump wrote on Twitter Thursday. At a
campaign rally in Columbia, Missouri, on Thursday night he said, “they want to make
a deal.”
----U.S.-China talks have made little progress since May, when Trump put a stop to a deal that would see China buy more energy and agricultural goods to narrow the trade deficit. In Beijing that was seen as an insult to Xi, who sent a personal emissary to Washington for the negotiations, and cemented a view that Trump’s real goal was to thwart China’s rise.
----In recent months China has repeatedly questioned the U.S.’s sincerity in trade talks, wary of agreeing to something only to have Trump change his mind.
More
Now back to that
recession question. Is manufacturing already signalling that the trade war hit
has already brought on the next recession, hidden across the summer by the race
to beat the all the new tariffs?
With the Fed still set
to raise interest rates and the ECB stopping its bond buying program in
December, effectively tightening eurozone interest rates, 2019 already looks to
be a difficult year.
Add in all the
political uncertainty and not just in the USA next Tuesday, plus rising inflation
from tariffs and higher oil prices, and if not recession, stagflation seems the
likely outcome. Neither recession nor stagflation are reasons to buy or hold
most stocks.
Rather than a stock
market crash, death by a thousand drops all 2019 seems likely to this old
dinosaur market watcher. But if Trump’s all
out economic war on Iran starting Monday triggers an oil price spike, or worse
a new Persian Gulf shooting war, a 2008 stock shock seems probable.
Below, reasons to be
fearful.
U.S. Factory Gauge Slumps to Six-Month Low Amid Trade War
By Sho Chandra
1
November 2018, 14:00 GMT Updated on 1 November 2018, 14:32 GMT
A
gauge of U.S. manufacturing fell by more than forecast to a six-month low, as
orders and hiring cooled amid escalating trade tensions with China, data from
the Institute for Supply Management showed Thursday.
Highlights of ISM Manufacturing (October) |
|
The
report may add to concerns that President Donald Trump’s trade war with China
is starting to inflict more pain on manufacturing even as the industry continues
to expand. The export-orders gauge fell for the third time in four months,
while new orders decelerated for the fourth month in five.
Elevated price pressures and a pickup in measures of backlogs and
supplier deliveries show lingering supply-chain bottlenecks. Disruptions and
data volatility related to major storms in September and October may have
played a role. Another potential headwind is the stronger U.S. dollar, which
has rallied sharply in the past six months.
Some of the results may reflect an unwinding of gains from previous
months when manufacturers were rushing to purchase materials and export their
products ahead of U.S. tariffs and counter-levies by China. Trump has
threatened to raise the tariffs further and on more products.
Analysts
are also monitoring factory reports to assess whether the tax-cut-driven boost
to business investment may be fading. Figures last week showed corporate
spending on equipment cooled in the third quarter to the slowest pace of gains
since 2016. Meanwhile, the job market remains solid, and the October jobs
report due Friday is projected to show manufacturing payrolls climbed.
More
Bank of Japan downgrades economic growth and inflation forecast as its 2% goal remains out of reach
by Cory Baird Staff Writer Oct 31, 2018
At the conclusion of a monetary policy meeting on Wednesday, the Bank of Japan downgraded inflation and economic growth forecasts through fiscal 2020, putting its 2 percent inflation target well out of reach for the foreseeable future.In the short term, the central bank also predicted that inflation for the current fiscal year would only rise by 0.9 percent, a downward revision of 0.2 points from its July forecast.
But with little room left for further easing after years of monetary stimulus, the board voted 7 to 2 to keep monetary policy unchanged.
Speaking at a news conference, BOJ Gov. Haruhiko Kuroda denied that the revisions represented a large shift in the bank’s outlook, but said that “latent” global risks could take a bite out of domestic growth and price inflation.
----“We are paying attention to the downside risks that affect the world economy and trade,” said Kuroda, listing the U.S. normalization of interest rates, geopolitical risks in Europe and fears over financial stability in developing markets as specific risks that could potentially damage Japan’s economy.
He also raised concerns about a prolonged trade dispute between the U.S.
and China.
“Until now the effects of the U.S. and Chinese trade dispute has
remained limited,” Kuroda said.
“(But) at the Bank of Japan, we are aware of the risks posed by
protectionist trade policies to our economic outlook.”
Kuroda added that trade disputes could land on Japan’s shores as
domestic businesses may cut back investment in an uncertain business
environment.
The Outlook for Economic Activity and Prices released Wednesday also
showed the bank may be growing weary of risks in the domestic economy after
over five years of easy monetary policy.
Morehttps://www.japantimes.co.jp/news/2018/10/31/business/economy-business/bank-japan-downgrades-economic-growth-inflation-forecast-2-goal-remains-reach/#.W9se0OKYTIU
UK factories slump in worst month since Brexit vote aftermath - PMI
November 1, 2018 / 9:35 AM
LONDON (Reuters) - British factories
suffered their worst month since just after 2016’s Brexit vote in October, due
to concerns about the country’s approaching departure from the European Union
and increased global trade tensions, a survey showed.
In the clearest sign to date that Britain’s economy is slowing after a
strong summer, the IHS Markit/CIPS Manufacturing Purchasing Managers’ Index
(PMI) fell sharply to 51.1, its lowest since July 2016, from a downwardly
revised 53.6 in September.
The reading was weaker than all the forecasts in a Reuters poll of
economists.
New order books and employment contracted for the first time since July
2016.
“October saw a worrying turnaround in the performance of the UK
manufacturing sector,” IHS Markit director Rob Dobson said.
“At current levels, the survey indicates that factory output could
contract in the fourth quarter, dropping by 0.2 percent.”
Foreign demand fell for the second time in three months with some
companies saying Brexit uncertainties cost them work from within the EU.
---- Other firms pointed to rising world trade tensions and weaker demand in the global automotive industry.
Manufacturing accounts for about 10 percent of Britain’s economic
output.
So far, the world’s fifth-biggest economy has proven more resilient to
the decision to leave the EU than many forecasters predicted at the time of the
Brexit vote.
Strong spending by consumers over the summer caused growth to accelerate
in the three months to August.
More
German growth momentum evaporates as manufacturing orders shrink
Wed, Oct 24, 2018 - 4:04 PM
[FRANKFURT] Germany's economy started the fourth quarter on the back
foot, with private-sector activity slowing to the weakest since 2015 and
factory orders contracting for the first time in four years.
The composite Purchasing Managers' Index for Europe's largest economy
dropped to 52.7 in October from 55.0 last month, according to a flash reading
released by IHS Markit on Wednesday. The result is below all estimates in a
Bloomberg survey of economists.
After the Bundesbank said on Monday that German economic growth may have
temporarily stalled in the third quarter, the survey points to a more
pronounced loss of momentum. Concerns over protectionism and financial-market
volatility have increased, and business confidence probably cooled in October.
Companies from Daimler AG to HeidelbergCement AG cut their profit forecasts.
"Unpleasant reading," Phil Smith, an economist at IHS Markit,
said of the PMI. It shows "slowdowns in rates of growth across all the
main measures of business performance: output, new orders and employment."
----
Threats of a trade war, uncertainty over Britain's departure from the European
Union and wider geopolitical nerves all weighed on German sentiment at the
start of the fourth quarter, according to the report. Those factors pushed
companies' expectations for the next 12 months to the lowest level in four
years.
More
No turning back for ECB on end to bond purchases
October 31, 2018 / 1:39 PM
FRANKFURT (Reuters) - No viable argument
remains for the European Central Bank to backtrack on its plan to end
quantitative easing in December, even if euro zone growth fails to rebound
after a dismal third quarter.
After four years and 2.6 trillion euros ($2.95 trillion) spent, the
stimulus-generating scheme has run its course and more bond buying would do
little other than exhaust the ECB’s already close-to-depleted policy arsenal.
Technical constraints are already biting and much of the euro zone’s
economic pain is being inflicted by politics, an area the ECB wants to steer
clear of.
Moreover inflation, the ECB’s primary mandate, is now hovering around
target, leaving no clear policy rationale for more stimulus.
Indeed, policymakers speaking on and off the record argue that the token
caveat in the ECB’s guidance that would let them extend quantitative easing
only covers genuine crises, not a slowdown.
“It would take a lot more than this to change monetary policy,” a
Governing Council member, who asked not to be named said. “We have a super-easy
monetary policy and it would take a lot to make it easier, especially when
there is inflation momentum.”
More
“China
is forced to respond to U.S. unilateralism and trade protectionism, and has no choice but to respond with its own
tariffs.”
the Finance Ministry. 18/9/18
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, yet another red flag
for trouble arriving. Whether it’s America, GB or Europe, a consumer public
struggling for cash, is increasingly buying online.
More than 200 UK shopping centres 'in crisis'
November
1, 2018.
Analyst Nelson Blackley said the demise of "major anchor stores"
such as BHS and Toys R Us, and the rise of online retail, had caused a
"downward spiral".Many of the at-risk centres are owned by US private equity firms under deals that will need refinancing.
"If centres close, particularly in small towns, it will be catastrophic," Mr Blackley said.
The Department for Communities said it was "committed to helping communities adapt".
Mr Blackley, from the National Retail Research Knowledge Exchange Centre, said the UK had an excess of shopping centres with similar retail offerings.
"We have too many of them, doing exactly the same - the same range of stores and products - and basically that's not attractive," he said.
"New data suggests over 200 shopping centres in the UK are in danger of falling into administration, unless their owners secure fresh funding."
He said the growth of online retail in the UK - on sites such as Amazon - had been faster than in almost any other retail market in the world.
"If the major anchor store moves out, that has a halo effect on other stores in that centre. It's a downward spiral and you can't fill shopping centres with nail bars and vape shops."
Mr Blackley, who is based at Nottingham Trent University's Nottingham Business School, pointed to research in the Financial Times that suggested about £2.5bn worth of shopping centres and retail parks are up for sale in towns and cities across the UK.
"Some of this marketing is unofficial and not in the public
domain," he said.
"It's a trend that's moving very quickly. You don't necessarily
want to be in the business of owning shopping centres at the moment.
"People are suggesting a number of leading national retailers are
on the edge and may close and that would bring shopping centres down with them.
"The collapse of BHS, two years ago, left empty units in around 200
shopping centres and more than half of those large, empty units have not yet
been filled."
The crisis is affecting shopping centres across the UK, regardless of
their location Daniel Mead from APAM said.
"All kinds of shopping centres, regardless of location or whether they are in small towns or major cities, could be affected," he said.
"What they have in common is the way in which they are funded - the capital structure behind them. Obviously, if the centre is in a more affluent location, the problem could be easier to fix."
One centre which recently went into receivership is the Nicholsons Shopping Centre in Maidenhead which, according to the Financial Times, was bought by Vixcroft, a private equity-backed property specialist and hedge fund Cheyne Capital in 2015.
The paper described Nicholsons as "one of the first significant collapses among dozens of UK retail property assets bought by opportunistic investors".
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?
Flexy, flat and functional magnets
An overview on the surprising features and enormous potentials of 2D magnetic van der Waals materials
Date:
October 31, 2018
Source:
Institute for Basic Science
Summary:
Scientists have presented the latest achievements and future potentials of 2D
magnetic van der Waals (vdW) materials, which were unknown until six years ago
and have recently attracted worldwide attention.
In the nanoworld, magnetism has proven to be truly surprising. Just a
few atoms thick, magnetic 2D materials could help to satisfy scientists'
curiosities and fulfil dreams for ever-smaller post-silicon electronics. An
international research team led by PARK Je-Geun at the Center for Correlated
Electron Systems, within the Institute for Basic Science (IBS), has just
published a Perspective Review paper in Nature. It presents the latest
achievements and future potentials of 2D magnetic van der Waals (vdW)
materials, which were unknown until 6 years ago and have recently attracted
worldwide attention.
VdW materials are made of piles of ultra-thin layers held together by
weak van der Waals bonds. The success of graphene -- vdW's star material --
stimulated scientists to look for other 2D crystals, where layers can be changed,
added or removed in order to introduce new physical properties, like magnetism.
How do materials become magnetic?
You can imagine that each electron in a material acts like a tiny
compass with its own north and south poles. The orientation of these "compass
needles" determines the magnetization. More specifically, magnetization
arises from electrons' spin (magnetic moment) and depends on temperature. A
ferromagnet, like a standard fridge magnet, acquires its magnetic properties
below the magnetic transition temperature (Tc, Curie temperature), when all the
magnetic moments are aligned, all "compass needles" point in the same
direction. Other materials, instead, are antiferromagnetic, meaning that below
the transition temperature (in this case called Neel temperature, TN), the
"compass needles" point in the opposite direction. For temperatures
aboveTc or TN,the individual atomic moments are not aligned, and the materials
lose their magnetic properties.
However, the situation can dramatically change upon reducing materials
to the 2D nanometer scale. An ultra-thin slice of a fridge magnet will probably
show different features from the whole object. This is because 2D materials are
more sensitive to temperature fluctuations, which can destroy the pattern of
well-aligned "compass needles." For example, conventional bulk
magnets, such as iron and nickel, have a much lower Tc in 2D than in 3D. In
other cases, the magnetism in 2D really depends on the thickness: chromium
triiodide (CrI3) is ferromagnetic as monolayer, anti-ferromagnetic as bilayer,
and back to ferromagnetic as trilayer. However, there are other examples, like
iron trithiohypophosphate (FePS3), which remarkably keeps its antiferromagnetic
ordering intact all the way down to monolayer.
The key for producing 2D magnetic materials is to tame their spin
fluctuations. 2D materials with a preferred spin direction (magnetic
anisotropy) are more likely to be magnetic. Anisotropy can also be introduced
artificially by adding defects, magnetic dopants or by playing with the
interaction between the electron's spin and the magnetic field generated by the
electron's movement around the nucleus.However, these are all technically
challenging methods.
----Although several fundamental questions are still waiting for an answer. Controlling and modifying electrons' spins and magnetic structures is expected to lead to several desirable outputs. This Nature Perspective Review lists possible hot research directions for the future.
One of the most sought-after applications is the use of spins to store
and encode information. Controlled spins could replace the current hard drive
platters, and even become the key to quantum computing. In particular,
spintronics is the subject that aims to control electrons' spins. 2D materials
are good candidates as they would require less power consumption in comparison
with their 3D counterparts. One interesting hypothesis is to store long-term
memory in stable whorls-oriented magnetic poles patterns, called skyrmions, in
magnetic materials.
Potentially, vdW materials could unveil some exotic state of matter,
like quantum spin liquids: a hypothetical state of matter characterized by
disordered "compass needles" even at extremely low temperatures, and
expected to harbor the elusive Majorana fermions, particles that have been
theorized, but have never been seen before.
More
Another weekend and Iran
sanctions and the US elections next week to look forward to. What could
possibly go wrong? Have a great weekend everyone.
“Trade
wars are not good and they are not easy to win, and this escalation is of
course very unfortunate.”
European
Trade Commissioner Cecilia Malmstrom. 18/9/18
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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