Baltic Dry Index. 1093 +75 Brent Crude 59.68
In the absence of the gold
standard, there is no way to protect savings from confiscation through
inflation. There is no safe store of value.
Alan Greenspan.
It is all too likely
to be an edgy week in stock and commodity markets. After a crude oil price rout last week, can
prices stabilise this week? That might depend on President Trump’s treatment of
Crown Prince Mohammad of Saudi Arabia at Friday and Saturday’s G-20 meeting in
Argentina.
The US trade war
against the rest of the world and specifically China may also depend on how
well Presidents Trump and Xi get on in their coming meetings on the G-20 side-lines
and how much each wants a deal that will end the trade wars, now threatening to
bring on a recession in 2019.
Adding to the
pressure points this week, someone launched a chemical attack on Aleppo in
government controlled Syria, from rebel controlled Idlib. Russia seized 3
Ukrainian patrol boats attempting to enter the Sea of Azov via Russian
controlled Crimea waters. Ukraine has responded by shelling Russian controlled
East Ukraine.
Below, a difficult
week ahead.
Markets do very weird things
because it reacts to how people behave, and sometimes people are a little
screwy.
Alan Greenspan
Shares tick up on U.S. holiday sales hopes, but oil rout checks enthusiasm
November 26, 2018 / 12:59 AM
TOKYO (Reuters) - Asian stocks and U.S. equity futures posted modest
gains on Monday on hopes of solid U.S. holiday sales, though plunging oil
prices fanned worries about a dimming outlook for the global economy.
Investors were also cautious before U.S. and Chinese leaders meet for crucial talks at the end of the week as trade tensions between the economic superpowers showed no signs of easing.
“The U.S.-China summit is the biggest event for the rest of the year,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.7 percent, led by gains in Hong Kong and Taiwan, while Japan's Nikkei .N225 advanced 0.8 percent.
In China, the Shanghai composite index .SSEC ticked up 0.3 percent.
U.S. stock futures ESc1 tacked on 0.4 percent in Asian trade, on hopes of brisk spending by U.S. consumers on so-called Black Friday and Cyber Monday sales.
Shoppers across the United States snapped up deep discounts on toys, clothing and electronics both online and at stores on Black Friday, giving retailers a strong start to their make-or-break holiday season.
U.S. stock markets had another tough session on Friday, when the benchmark S&P 500 .SPX hit its lowest close in more than six months as the energy sector took a beating in the wake of the oil slump.
The S&P 500 fell 0.66 percent to end about 10.2 percent down from its Sept. 20 closing record high, the second time this year it has entered a 10-percent correction after a rout in early February.
Oil prices were fragile, keeping near their lowest levels since October last year, having dived 8 percent on Friday for the biggest weekly losses in almost three years as rising U.S. production intensified fears of a supply glut.
So far this month, both WTI and Brent futures were down more than 21 percent, on track for their biggest fall since October 2008 unless they recoup some of those losses this week.
---- U.S. President Donald Trump and his Chinese counterpart Xi Jinping are expected to hold talks on the sidelines of a G20 summit in Argentina at the end of this month.
Barring any deals there, the U.S. tariffs on $200 billion goods,
introduced in late September, are likely to be raised to a proposed 25 percent
next year from 10 percent.
“July-September corporate earnings have hardly been affected by the
latest tariffs. It’s in the next earnings that we will see the impact. And if
the tariffs are raised further next year, earnings will be hit further,” said
Mizuho’s Kuramochi.
More
As oil plunges, real Opec meeting will be at next week’s G20 summit
Saudi Arabia and Russia’s leader both likely to reach a deal
ahead of Opec meeting
Published: November 24, 2018 16:26
For the oil market, it looks like the real Opec meeting will come a week
ahead of schedule.
The group is set to meet on December 6 in Vienna, but days earlier, the
key decision makers will meet on the sidelines of the G20 summit in Buenos
Aires, and they may well decide the direction of 2019’s oil prices.
Saudi Arabia’s Crown Prince Mohammad Bin Salman (MBS) and Russian
President Vladimir Putin — leading the world’s two largest oil exporters and
working together to manage the oil market for the past two years — both plan to
be in the Argentinian capital at the end of next week. Just as important will
be US President Donald Trump, who’s made his opposition to Opec a regular theme
in his Twitter diplomacy.
“I expect President Trump will be discussing the optimal price range
with Crown Prince Mohammad Bin Salman and President Putin at the G20,” said Bob
McNally, president of Washington consultant Rapidan Energy Advisors LLC and a
former White House energy official.
The oil market is abuzz with talk that Saudi Arabia may not be in a
political position to cut production. “The market is assuming the Saudis won’t
be able to cut,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd in
London.
Khalid Al Falih and Alexander Novak, the Saudi and Russian energy
ministers, are also scheduled to travel to Buenos Aires together with their
principals, according to anonymous sources. Their presence reinforces the
impression that Saudi Arabia and Russia will try to reach a deal ahead of the Opec
meeting a few days later.
---- The gathering in Buenos Aires comes after a week of near-panic in the oil market. Brent crude, the global benchmark, plunged 6.1 per cent to a one-year low of $58.80 (Dh216) a barrel on Friday, down 22 per cent this month on growing concerns the world is oversupplied. West Texas Intermediate, the US benchmark, fell close to $50 a barrel.
Trump had already celebrated the plunge on Wednesday, tweeting: “Oil
prices getting lower. Great!” Yet, he wants more: “Thank you to Saudi Arabia,
but let’s go lower!”
More
Grim Stock Signals Piling Up as Wall Street Mulls Recession Odds
By Elena Popina and Vildana Hajric
Nine turbulent weeks and a correction in U.S. stocks have left analysts
with a thorny question. What’s the market saying about the economy?
And while few see incontrovertible signs investors are bracing for a
recession, it’s a word that’s been coming up more as they seek a signal in the
chaos.
From the ascent of defensive industries to the sudden craze for
companies that resist volatility, stocks are acting in ways that have presaged
slowing growth in the past. That makes sense: gains in the economy and corporate
earnings are forecast to ease in 2019 from this year’s torrid pace.
Befitting that, most of the charts that follow reflect observations by
analysts who don’t see a recession as the most obvious conclusion. Many view
the sell-off as healthy after a 10-year run of gains. But with a trade war
flaring and the Federal Reserve set to boost interest rates again, the number
of stock researchers who are at least willing to mention the possibility is
rising.
“What’s driving the sell-off? The idea that the market sees something that we don’t,” said Bruce McCain, chief investment strategist at KeyBank. “That global growth and the global economy are much weaker than you would’ve thought otherwise reinforces concern that there aren’t too many places to hide.”
It doesn’t take a degree in technical analysis to be concerned. More than $3 trillion has been lopped from U.S. equity values since late September, a sell-off that has driven the S&P 500 down 10 percent and tech stocks well past the threshold for a correction.
To
see how violent it’s been, look at the number of stocks where this year’s
once-robust price momentum has come asunder -- those trading below their
200-day average. Support is wearing thin, with just 37 percent of S&P 500
companies exceeding their long-term moving mean.
More
Goldman Models Impact of Rate-Shock Scenarios on Markets
By Joanna Ossinger
Updated on 26 November 2018, 01:17 GMT
Goldman Sachs Group Inc. economists have proposed some “rules of thumb”
for the impact of Federal Reserve interest-rate hikes on financial conditions
and the U.S. economy, which showcase the importance of policy makers’
communications.
While an unexpected 1.5 percentage points of Fed rate rises would tend
to boost 10-year Treasury yields by 45 basis points, cut equity prices by 9
percent and boost the dollar by 4 percent, anticipated monetary moves have a
“much smaller” effect, Goldman’s modeling showed.
Ten-year Treasury yields have already climbed by more than 60 basis
points this year, following 75 basis points of Fed rate hikes. The S&P 500
Index is down 1.5 percent for the year to date, while the Bloomberg Dollar Spot
Index is up 4 percent.
Most forecasters see the Fed tightening by another 1 percentage point or
less, with little likelihood of an acceleration from the quarter-point per
quarter pace of the past year. Speculation instead has centered on the
potential for a pause in 2019, in part thanks to the surge in financial-market
volatility since early October. More hawkish Fed scenarios typically center on
the historically tight job market at some point triggering a break-out of
inflation.
----Goldman’s
model now calculates the risk of a recession is 26 percent on a two-year
horizon, up 5 percentage points this year -- mostly due to tightening financial
conditions -- but still below average. For a three-year horizon, recession risk
is now 43 percent, “just above the historical average,” the economists wrote.
Finally, add the
Ukraine back to the ever growing list of global political danger points. Who
gains from reigniting war in east Ukraine?
Russia fires on and seizes Ukrainian ships near annexed Crimea
November 25, 2018 / 10:40 AM
MOSCOW/KIEV (Reuters) - Russia
seized three Ukrainian naval ships off the coast of Russia-annexed Crimea on
Sunday after opening fire on them and wounding several sailors, a move that
risks igniting a dangerous new crisis between the two countries.
Russia’s FSB security service said early on Monday its border patrol
boats had seized the Ukrainian naval vessels in the Black Sea and used weapons
to force them to stop, Russian news agencies reported.
The FSB said it had been forced to act because the ships - two small
Ukrainian armoured artillery vessels and a tug boat - had illegally entered its
territorial waters, attempted illegal actions, and ignored warnings to stop
while manoeuvring dangerously.
“Weapons were used with the aim of forcibly stopping the Ukrainian
warships,” the FSB said in a statement circulated to Russian state media.
“As a result, all three Ukrainian naval vessels were seized in the
Russian Federation’s territorial waters in the Black Sea.”
The FSB said three Ukrainian sailors were wounded in the incident and
were getting medical care. Their lives were not in danger, it said.
With relations still raw after Russia’s annexation of Crimea and its
backing for a pro-Moscow insurgency in eastern Ukraine, the incident risks
pushing the two countries towards a wider conflict.
Ukraine denied its ships had done anything wrong, accused Russia of
military aggression, and asked for the international community to mobilise to
punish Russia.
The U.N. Security Council will meet on the latest developments at the
request of Russia and Ukraine, diplomats said.
---- Russia annexed Crimea in 2014 and then built a giant road bridge linking it to southern Russia that straddles the Kerch Strait - a narrow stretch of water that links the Black Sea to the Sea of Azov, which is home to two of Ukraine’s most important ports.
Russia’s control of Crimea, where its Black Sea Fleet is based, and of
the bridge mean it is able to control shipping flows.
The crisis began on Sunday after Russia stopped the three Ukrainian
ships from entering the Sea of Azov by placing a cargo ship beneath the bridge.
----- Russian politicians denounced Kiev, saying the incident looked like a calculated bid by Poroshenko to increase his popularity ahead of an election next year.
In another sign of rising tensions, Russia’s state-controlled RIA news
agency reported on Sunday night that Ukrainian forces had started heavy
shelling of residential areas in eastern Ukraine, which is controlled by
pro-Moscow separatists.
We really can't forecast all
that well, and yet we pretend that we can, but we really can't.
Alan Greenspan.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Yes, banksters again. Is there anything banksters won’t do in the
pursuit of the filthy lucre?
Ex-IMF chief Rato in dock again in major Bankia trial
25 November 2018 - 06H52
MADRID (AFP) -
A mega-trial harking back to the dark years of Spain's economic crisis
kicks off Monday over the alleged fraudulent 2011 listing of financial giant
Bankia, with former IMF leader Rodrigo Rato in the dock.
The Spanish state was forced to step in to prevent the bank's collapse
and then to borrow 41 billion euros from the EU to keep Spain's banking sector
afloat.
The 69-year-old Rato, head of the bank at the time, is accused of
falsifying the books and fraud to the detriment of investors.
The trial is expected to last at least seven months, until the end of
June.
A total of 35 people and companies including Bankia, its parent company
BFA and Deloitte consultants are on trial.
Prosecutors are seeking a five-year jail sentence for Rato, who is
already serving four-and-a-half years in prison for misusing funds when he was
the boss of Caja Madrid, another bank, and of Bankia between 2010 and 2012.
- 'Delusions of grandeur' -
The image of a smiling Rato ringing the bell and sipping champagne on
July 20, 2011 to mark the start of Bankia's listing has since become a symbol
of the scandal.
More than 300,000 small shareholders had bought share packages for a
minimum of 1,000 euros ($1,100), attracted by a major advertising campaign and
the profits boasted by the bank.
But in 2012, after a disastrous year that saw its share value drop, the
bank admitted that the year it listed it had actually made a loss of close to
three billion euros.
That forced the state to nationalise the bank to save it from bankruptcy
by injecting more than 22 billion euros into Bankia.
That in turn prompted an EU rescue plan for Spain's banking sector.
The results presented to investors had been "completely
false," investigating magistrate Fernando Andreu wrote in a court
document.
He said the moment when the bank recognised it was in difficulty brought
to an end "the dreams and delusions of grandeur of the entity", born
in 2010 through the fusion of struggling savings banks.
For its part, Bankia said it had handed back 1.9 billion euros to more
than 220,000 small shareholders since 2016.
"For us, that doesn't settle the incredibly serious fraud that was
committed," said Fernando Herrero, secretary general of the Adicae
association of bank users, a plaintiff at the trial.
The state, which still owns 61 percent of Bankia and should in theory
privatise the bank again, has recognised several times that it won't be able to
recover much of the money it disbursed.
More
Corruption, embezzlement,
fraud, these are all characteristics which exist everywhere. It is regrettably
the way human nature functions, whether we like it or not. What successful
economies do is keep it to a minimum. No one has ever eliminated any of that
stuff.
Alan Greenspan.
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?
Making wind farms more efficient
Date:
November 9, 2018
Source:
Penn State
Summary:
With energy demands rising, researchers have completed an algorithm -- or
approach -- to design more efficient wind farms, helping to generate more
revenue for builders and more renewable energy for their customers.
With energy demands rising, researchers at Penn State Behrend and the
University of Tabriz, Iran, have completed an algorithm -- or approach -- to
design more efficient wind farms, helping to generate more revenue for builders
and more renewable energy for their customers.
Wind energy is on the rise, and not just in the US," said Mohammad
Rasouli, assistant professor of electrical engineering at Penn State Erie, the
Behrend College. "The efficiency of solar panels is less than 25 percent,
and is still a subject of current research. Wind turbines, on the other hand,
are much more efficient and convert over 45 percent of the wind energy to
electricity."
Though wind turbines are efficient, wind farm layouts can reduce this
efficiency if not properly designed. Builders do not always put turbines in the
places with the highest wind speeds, where they will generate the most power,
said Rasouli. Turbine spacing is also important -- because turbines create drag
that lowers wind speed, the first turbines to catch the wind will generate more
power than those that come after.
To build more efficient wind farms, designers must take these factors
into account wind speed and turbine spacing, as well as land size, geography,
number of turbines, amount of vegetation, meteorological conditions, building
costs, and other considerations, according to the researchers.
Balancing all of these factors to find an optimum layout is difficult,
even with the assistance of mathematical models.
"This is a multi-objective approach," said Rasouli. "We
have a function and we want to optimize it while taking into account various
constraints."
The researchers focused on one approach, called
"biogeographical-based optimization." Created in 2008 and inspired by
nature, BBO is based on how animals naturally distribute themselves to make the
best use of their environment based on their needs. By creating a mathematical
model from animal behavior, it is then possible for the researchers to
calculate the optimal distribution of objects in other scenarios, such as
turbines on a wind farm.
"Analytical methods require a lot of computation," said
Rasouli. "This BBO method minimizes computation and gives better results,
finding the optimum solution at less computational cost."
Other researchers used simplified versions of the BBO approach in 2017
and 2018 to calculate more efficient wind farm layouts, but these simplified
versions did not take into account all factors affecting the optimum layout.
The researchers from Penn State and the University of Tabriz completed
the approach by incorporating additional variables, including real market data,
the roughness of the surface -- which affects how much power is in the wind --
and how much wind each turbine receives.
The research team also improved the BBO approach by incorporating a more
realistic model for calculating wakes -- areas with slower wing speeds created
after the wind blows past a turbine, similar to the wake behind a boat -- and
testing how sensitive the model was to other factors such as interest rates,
financial incentives, and differences in energy production costs. They report their
results online in the Journal of Cleaner Production, which will be
published in November.
"This is a more realistic optimization approach compared to some of
the simplifying methods that are out there," said Rasouli. "This
would be better to customers, to manufacturers, and to grid-style, larger-size
wind farms."
More
Fear and euphoria are dominant
forces, and fear is many multiples the size of euphoria. Bubbles go up very
slowly as euphoria builds. Then fear hits, and it comes down very sharply. When
I started to look at that, I was sort of intellectually shocked. Contagion is
the critical phenomenon which causes the thing to fall apart.
Alan Greenspan.
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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