Baltic Dry Index. 1281 -49 Brent Crude 59.67
Meetings are indispensable
when you don't want to do anything.
John Kenneth Galbraith
Today and tomorrow it’s
all about President Trump v the rest of the G-20. Will President Trump declare
victory in his trade war on China and the Rest of the World (ROW,) making peace
with China’s President Xi when they meet for dinner after the formal G-20 ends,
or will he double down with his punitive tariffs on China due to come in on
January 1st?
Will he double down
on the EU, imposing tariffs on EU autos, triggering an EU tit for tat tariff response?
Will Trump renew his rudeness to Canada’s Prime Minister Trudeau again?
With extensive coverage
in mainstream media, I’ll pass on the subject today and cover it probably in
the weekend update.
Below, nervous Asian
markets await tomorrow’s main event. Goldman’s not optimistic.
The only function of economic
forecasting is to make astrology look respectable.
John Kenneth Galbraith
Asian markets subdued but higher ahead of U.S.-China trade talks
Published: Nov 29, 2018 11:24 p.m. ET
Asian stock markets mostly rose in subdued trading early trading Friday,
looking to cap a full week of broad gains as investors hope that trade tensions
will ease after a weekend meeting between the leaders of U.S. and China.Japan’s Nikkei NIK, +0.42% was up 0.3%, on pace for its fifth straight gain, with advances by the mining and pharmaceutical sectors leading the way. Shares of health-care company Sysmex 6869, +7.53% and drug maker Otsuka 4578, +4.15% surged.
In Hong Kong, the Hang Seng Index HSI, +0.38% rose 0.6%, with the energy sector leading gainers as oil rebounded in the U.S.; Cnooc 0883, +2.81% was up some 4%.
Chinese equities struggled for direction in early trading, bouncing up and down ahead of the weekend Xi-Trump meeting, which was keeping some investors on the sidelines. The Shanghai Composite SHCOMP, -0.01% was last up 0.2%, while the smaller-cap Shenzhen Composite 399106, -0.29% was about flat. That came as manufacturing PMI slowed further in November, missing expectations.
South Korea’s Kospi SEU, -0.49% fell 0.4%, threatening a four-day winning streak, as Samsung 005930, -2.09% declined 1%. Benchmark indexes in Taiwan Y9999, +0.03% and Singapore STI, +0.45% each rose about 0.5%.
Australia’s ASX 200 XJO, -1.58% fell more than 1%, dragged down by big banks. Westpac WBC, -1.70% and Commonwealth Bank of Australia CBA, -1.66% were each down about 1%. New Zealand’s benchmark NZ50GR, +0.33% rose slightly, on pace for its fourth
https://www.marketwatch.com/story/asian-markets-subdued-but-higher-ahead-of-us-china-trade-talks-2018-11-29
Goldman Says Trade War Escalation ‘Most Likely’ Outcome of Trump-Xi Dinner
By Karen Leigh“The first and in our view most likely is continuing on the current path of ‘escalation’ -- tariff rates rise to 25 percent on all imports currently under tariff, and tariffs are extended to remaining Chinese imports,” Goldman said in a note outlining three basic scenarios it sees for the meeting’s outcome. A close second was a “pause” in which existing tariffs remain in place “but the two sides agree to keep talking with escalation put on hold,” it said.
A deal involving a complete rollback of the current tariffs was
“unlikely in the near term,” Goldman said. It added that market participants
were “intensely focused on the leaders’ meeting as a potential inflection point
in the escalating economic tensions” between the U.S. and China.
Trump and Xi are preparing for their first face-to-face summit in more
than a year. The high-stakes encounter could be their last best chance to keep
the costly trade dispute from spiraling into a broader cold war amid a global
battle for influence. Their officials have been working on the contours of a
potential temporary truce, in which Trump would postpone levying further
tariffs on Beijing in exchange for concessions.
Read more: Trump-Xi Dinner Offers Chance to Avert Deeper U.S.-China Rift
Failure to reach a deal could see Chinese export growth weaken in the coming months, Goldman said. Chinese growth would also probably slow beginning in early 2019, although renminbi depreciation this year would likely mitigate the impact, it said.
Tariffs are also weighing on Chinese domestic demand, it said, increasing uncertainty and rattling confidence in the short term -- and potentially encouraging relocation of some production in the future.
https://www.bloomberg.com/news/articles/2018-11-30/goldman-says-escalation-most-likely-outcome-of-trump-xi-dinner?srnd=premium
Commentary: Risks for world economy, markets if U.S. yields hold above 3 pct
November 29, 2018 / 1:22 PM
LONDON (Reuters) - The outlook for U.S.
interest rates has shifted, as investors bet that recent cracks in the economy
and financial markets will force the Fed to slow or even halt its projected
path of rate increases next year.
All else being equal this should also be playing out in the bond market,
pushing down long-term yields and easing financial conditions, thereby helping
to limit the fallout from a weakening economy and fragile stock market.
Yes, yields have come down a bit, but not as much as you would expect,
thanks to a steady build up of factors that should push them the other way.
October was the worst month on Wall Street in seven years, the so-called
‘FAANG’ group of top five U.S. tech stocks lost almost $1 trillion in market
capitalisation, Apple skidded into a bear market, and some U.S. economic
indicators - namely the housing market - began to flash red.
If growth slows at this stage of the economic cycle, the chances of
recession rise and the Fed puts the brakes on, or maybe even reverses gear all
together. The all-knowing, all-seeing bond market should discount that, and
yields should fall.
---- Only one quarter point rate hike next year is fully discounted in money markets, compared with two a couple of months ago. But the 10-year yield remains above 3.00 percent, barely 20 basis points off its peak in early October just before the Wall Street lurch and “tech wreck”.
A growing risk for markets and the economy is that it holds that level
and starts trending higher again.
Emerging markets, which are most exposed to U.S. borrowing costs and the dollar, will be vulnerable. The stickiness of Treasury yields and the dollar hovering close its highest since June last year aren’t good signs.
Record supply, high hedging costs, the Fed unwinding its balance sheet and emerging markets potentially selling Treasuries to support their domestic currencies is a potent mix that could easily keep the 10-year yield above 3.00 pct, even if the historically long economic and market cycles roll over.
More
Finally, stock buybacks, a true American story. How to go
bust the American way. Only in America, as they say.
General Motors And General Electric Were Both Victimized By The Same Ponzi Scheme, And They Are Both Telling Us The U.S. Economy Is In HUGE Trouble
America’s
twin economic “generals” are both in very deep trouble. General Electric
was founded in 1892, and it was once one of the most powerful corporations on
the entire planet. But now it is drowning in so much debt that it may be
forced into bankruptcy. General Motors was founded in 1908, and at one
time it was the largest automaker that the world had ever seen. But now
it is closing a bunch of factories and laying off approximately 14,000 workers
as it anticipates disappointing sales and a slowing economy. If the U.S.
economy really was “booming”, both of these companies would probably be
thriving. But as you will see below, both of them have been victimized by
the exact same Ponzi scheme, and both firms are sending us very clear signals
that the U.S. economy is heading for troubled waters.
Whenever you hear the word “restructuring”, that is always a sign that things are not going well for a company.
And it turns out that GM’s “restructuring” is actually going to cost the firm 3.8 billion dollars…
----
Of course GM doesn’t have 3.8 billion dollars just lying around, and so they
are actually going to have to borrow money in order
to close these plants and lay off these workers.
-----
In addition to the elimination of about 6,000 factory jobs, GM will also be
cutting about 8,000 “white collar jobs”…
----
But if General Motors had been much wiser with their money, they wouldn’t have
had to initiate a “restructuring” so quickly.
Over the past four years, General Motors spent a staggering 13.9
billion dollars on stock buybacks.
GM executives were able to prop up the stock price for a while, but at
this point the stock is down about 10 percent from where it was four years ago.
---- These stock buybacks are a massive Ponzi scheme, and everyone that was involved in blowing such a giant mountain of cash at GM should be fired.
And now thousands of hard working Americans are going to lose their jobs, but it didn’t have to happen.
General Electric has also been victimized by the exact same Ponzi scheme, and at this point they are in a struggle for survival which they are probably going to lose.
On Monday the stock slid another couple of percent, and so far this year it is down a total of 58 percent…
In the end, GE is probably heading for total collapse.
But if GE had not blown 40 billion dollars on stock
buybacks in recent years, they would be in far, far better shape.
More
In economics, the majority is
always wrong.
John Kenneth Galbraith
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Yes, it’s the banksters again.
If it’s not nailed down, is there anything they won’t try to grab? Today, Japan
and Germany, but it’s the same alleged bad behaviour on all
continents except Antarctica.
Japan central banker mum on alleged involvement in Ghosn transaction
November 29, 2018 / 6:36 AM
FUKUOKA, Japan (Reuters) - A Bank of Japan board member declined on Thursday
to comment on a media report that she was involved in an alleged attempt by
former Nissan chairman Carlos Ghosn to shift personal investment losses to the
automaker during her time at a commercial bank.Japanese tabloid Shukan Bunshun reported on Thursday that as an executive at Shinsei Bank Ltd (8303.T), Takako Masai was involved in an alleged attempt by Ghosn to pass on 1.7 billion yen (11.7 million pounds) in personal derivatives-trading losses incurred during the 2008 financial crisis to Nissan. The suspected transaction was first reported by the Asahi newspaper on Tuesday.
“I’d like to refrain from commenting about individual transactions due
to my duty of confidentiality,” Masai told a news conference after meeting with
business executives in Fukuoka, southern Japan.
“I also cannot comment on individual transactions made by Shinsei Bank.”
The bank also declined to comment on the Shukan Bunshun report.
Quoting an unnamed former Shinsei Bank official, the tabloid said a team
of the bank’s officials including Masai sought to have Ghosn’s investment losses
passed on to the automaker on condition that he get approval from Nissan’s
board.
The attempt was later aborted after securities regulators inspected
Shinsei Bank and Nissan, and disapproved of the idea, the tabloid said.
Masai joined the BOJ in 2016 after serving as an executive at Shinsei
Bank from 2007.
Deutsche Bank raided over money-laundering probe
By Max
Bernhard Published: Nov 29,
2018 5:35 a.m. ET
German prosecutors and police searched Deutsche
Bank AG (DBK.XE) premises in and around Frankfurt on Thursday in relation to
suspicions that the bank helped clients set up offshore entities in tax havens
and failed to alert authorities to possible money laundering.
The investigation focuses on two Deutsche Bank
employees, as well as other unidentified company officials, the Frankfurt
public prosecutors' office said.
Deutsche Bank said it is fully cooperating with
authorities and will comment further when more details become available.
The prosecutors' office said that after federal
police analyzed the so-called "Offshore Leaks" and "Panama
Papers" reports of the International Consortium of Investigative
Journalists, "the suspicion arose that Deutsche Bank helped clients with
the establishment of so-called offshore entities in tax havens." Deutsche
Bank is also suspected of helping clients transfer funds from illegal
activities to German accounts, and failed to notify authorities of the
suspected money laundering, the prosecutors' office said.
More
The salary of the chief
executive of a large corporation is not a market award for achievement. It is
frequently in the nature of a warm personal gesture by the individual to
himself.
John Kenneth Galbraith
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?
Exxon Will Use Wind, Solar Power to Produce Crude Oil in Texas
By Chris Martin and Kevin Crowley
28 November 2018, 20:11 GMT Updated on 29 November 2018,
11:00 GMT
Exxon Mobil Corp. will use renewable energy to produce oil in West Texas.
Under 12-year agreements with Denmark’s Orsted A/S, Exxon will buy 500 megawatts of wind and solar power in the Permian Basin, the fastest growing U.S. oil field. It is the largest ever renewable power contract signed by an oil company, according to Bloomberg NEF. Terms weren’t disclosed.
“It will be interesting to see how the other oil majors respond,” Kyle Harrison, a BNEF analyst, said. “A purchase like this has historically been unprecedented.”
Exxon, which was sued by investors who alleged the company downplayed risks of global warming, is turning to clean energy as it becomes cheap enough to compete with fossil fuels. The wind and solar farms are being built in a region where electricity demand is soaring as oil production grows.
“We frequently evaluate opportunities to diversify
our power supply and ensure competitive costs,” Julie King, a spokeswoman for
the Irving, Texas-based oil producer, said in an email. The company denies
misleading investors about climate change.
Booming production in the Permian Basin is helping
Exxon offset declining output elsewhere in the world. But output in the region
has grown so fast that infrastructure including pipelines and power plants have
struggled to keep up.
One area of the Permian, called the Delaware Basin,
consumed the equivalent of 350 megawatts this summer, tripling its load from
2015. That’s enough to power about 280,000 U.S. homes. Providers say demand is
likely to triple again by 2022.
Half the power Exxon will buy will come from the Sage Draw wind farm, which Orsted plans to finish building in 2020, according to a slide from an investor presentation Wednesday. The rest will be from the Permian Solar farm, scheduled to be finished in 2021.
Texas already has the most wind power of any state, with more than 23 gigawatts. That’s triple the next biggest market, Oklahoma. Texas is the fifth largest solar market, with about 2.6 gigawatts. That’s forecast to double next year, according to Morningstar Inc.
Another weekend and the
final day of the
"Get a good
night's sleep and don't bug anybody without asking me."
Richard M. Nixon, 37th
US President. To re-election campaign
manager Clark MacGregor.
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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