Baltic Dry Index 1147 -84 Brent Crude 70.18
Louis
D. Brandeis
Did Trump’s Trade War
Hooligan’s tariffs just kill the golden goose of the global economy? The Baltic
Dry Index and the world’s crude oil markets seem to be telling us yes. If they’re right, get ready for a collapse into
massive bankruptcy across the US shale oil industry. Almost none of the shale
producers have positive cash flow, existing instead on rolling over increasing
mountains of debt to fund new production.
If Trump’s tariffs
have already killed the golden goose, a very ugly end to 2018 lies directly
ahead, with an even worse 2019 to come. What will OPEC do at this weekend’s
meeting?
The state can be and has often
been in the course of history the main source of mischief and disaster.
Ludwig von Mises
Dow ends 200 points lower as unravelling oil price shows ‘global economy in a tough spot’
By Mark
DeCambre and Chris
Matthews Published: Nov 9, 2018 4:33 p.m. ET
U.S. stocks finished Friday on a low note, halting a four-session rally,
after a selloff in oil prices, a hotter-than-expected reading on producer
prices, and uneasiness about the housing market resurrected fears of an
uncertain path for the economy here and abroad.The Dow Jones Industrial Average DJIA, -0.77% fell 201.92 points, or 0.8%, at 25,989.30, and the S&P 500 index SPX, -0.92% lost 25.82 points, or 0.9%, at 2,781.01, while the Nasdaq Composite Index COMP, -1.65% retreated 123.98 points, or 1.7%, at 7,406.90.
Each of the three major indexes, however, recovered from session lows, as the Dow had been down as much as 1.2%, the S&P as low as 1.5%, and the Nasdaq had dropped as much as 2.4%, intraday.
However, for the week, all three main benchmarks posted gains. The Dow registered an increase of 2.8%, the S&P 500 returned 2.1% over the past five sessions, while the Nasdaq eked out a 0.7% gain.
Chairman Jerome Powell’s Fed held benchmark rates at a range between 2% and 2.25% on Thursday afternoon, and said that the central bank “expects further gradual increases in the target range for the federal-funds rate.”
The policy-setting Federal Open Market Committee delivered no surprises to Wall Street investors.
However, investors will continue to wrestle with policy makers’ hopes to normalize interest rates after a decade of easy-money policies.
One clue to the Fed’s future behavior was a producer-price index reading released Friday morning, which showed input prices rising faster than economists were expecting, suggesting the risk of rising inflation, and an aggressive Fed response to curb it, could await investors in the coming months.
In addition, an unceasing decline in oil prices has raised questions about the health of the global economy in general, and the Chinese economy in particular.
Recent data indicate that auto sales in China dropped 12% in October to 2.38 million, from a year ago, and Chinese policy makers announced new bank lending rules in an attempt to manage concerns about its equity market and an economic slowdown.
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Oil just did something it hasn’t done in more than 30 years (hint: it isn’t good)
By Mark
DeCambre Published: Nov 9, 2018 5:31
p.m. ET
A jolt lower for oil since peaking in October has helped crude futures to
carve out a bearish record.That is even after U.S. benchmark oil on Thursday fell into bear-market territory, defined as a drop of at least 20% from a recent peak.
West Texas Intermediate crude for December delivery on the New York Mercantile Exchange CLZ8, -1.32% settled lower on Friday, marking its 10th consecutive decline and matching the longest skid for the contract since a similar stretch from July 18-July 31 1984, according to Dow Jones Market Data.
Bespoke Investment Group pegs the losing stretch as the longest skid since at least 1983 (see chart below), noting that “there has never been a streak of more than 9 straight days where crude oil traded down on the day.”
What’s
behind the downturn?
Rising
production and a softening in U.S. oil sanctions on Iran, that included waivers
for big crude importers like China, which helped to contribute to a whipsaw
lower for oil prices. Indeed, just five weeks ago, oil futures had put in their
highest prices in years. Lingering concerns about the global economy and
expectations for sluggish corporate earnings in the future also have added to
the downbeat mood in the oil industry.
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Oil's Rapid Run of Declines Kicks Up Pressure as OPEC Gathers
By Jessica Summers
Updated on 10 November 2018, 05:01 GMT
In technology news, a
big shock in the cobalt market. From an anticipated glut next year to scarcity.
Will 2018’s price collapse now reverse?
Katanga Export Halt Threatens Cobalt Supply Chain for Lithium-Ion Batteries
A radiation alert prevents world’s biggest cobalt mine from selling the metal.
November 09, 2018
The price of
cobalt, a key material for lithium-ion batteries, could skyrocket after the
output from a major mining project was halted this week.
The mining
giant Glencore said the export and sale of cobalt from the Kamoto project in
the Democratic Republic of Congo (DRC), owned by Glencore’s subsidiary Katanga
Mining, would be suspended until further notice after the metal was found to be
contaminated with uranium.
The
radiation levels in the cobalt hydroxide produced at Kamoto are not high enough
to pose a health hazard but do exceed the limit allowed for exports.
Analysts
expect the setback to reverse a downward trend in global cobalt pricing, as
Katanga was in the process of ramping up to become the biggest cobalt-producing
asset in the world.
Katanga’s
operations were put on hold in 2015, to build a whole-ore leaching facility,
but production restarted in March this year. Since then, Katanga has produced
6.5 kilotons of cobalt and production had been expected to top 11 kilotons by
the end of the year.
Annual
production was anticipated to rise to 34 kilotons of cobalt next year,
equivalent to 21 percent of Wood Mackenzie’s base-case mine supply forecast for
2019.
“Katanga was
the great savior to meet burgeoning demand from the EV battery sector,” said
Wood Mackenzie research director Gavin Montgomery and analyst Milan Thakor in a
note.
Although cobalt cannot be shipped from Kamoto, production “is expected to continue without reduction in the quantity produced,” said Katanga in a press note.
The company is carrying out surveys to identify the source of the uranium and exploring options to mitigate the impact of the sales suspension, it said. Katanga also said it was planning to build a $25 million ion exchange system to remove the uranium from the cobalt.
The ion exchange system is expected to be commissioned by the end of the second quarter of 2019, “subject to obtaining the necessary approvals,” Katanga said.
----Regardless of any delays, the existing suspension timescale will significantly tighten the market for cobalt intermediates over the near term, they said.
Other mining companies are expected to cover some of the shortfall, with ERG’s Metalkol project expected to add 14 kilotons a year of cobalt to the market and Pengxin Mining’s Shituru mine adding a further 3 kilotons per year.
But both of these will take some time to ramp up, Montgomery and Thakor observed. In the meantime, the analyst team predicts there will be a shortage of cobalt and a reversal in recent price reductions in the metal. Reuters said cobalt prices had fallen almost 40 percent in 2018.
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Finally, for our arithmetical amusement over the weekend,
while we await OPEC developments, the history of zero.
Black holes are
where God divided by zero.
Albert Einstein
The History of Zero
How was zero discovered?
Nils-Bertil Wallin November
19, 2002
From placeholder to the driver
of calculus, zero has crossed the greatest minds and most diverse borders since
it was born many centuries ago. Today, zero is perhaps the most pervasive
global symbol known. In the story of zero, something can be made out of
nothing.
Zero, zip, zilch - how often
has a question been answered by one of these words? Countless, no doubt. Yet
behind this seemingly simple answer conveying nothing lays the story of an idea
that took many centuries to develop, many countries to cross, and many minds to
comprehend. Understanding and working with zero is the basis of our world
today; without zero we would lack calculus, financial accounting, the ability
to make arithmetic computations quickly, and, especially in today’s connected
world, computers. The story of zero is the story of an idea that has aroused
the imagination of great minds across the globe.
When anyone thinks of one
hundred, two hundred, or seven thousand the image in his or her mind is of a
digit followed by a few zeros. The zero functions as a placeholder; that is,
three zeroes denotes that there are seven thousands, rather than only seven
hundreds. If we were missing one zero, that would drastically change the
amount. Just imagine having one zero erased (or added) to your salary!
Yet, the
number system we use today - Arabic, though it in fact came originally from
India - is relatively new. For centuries people marked quantities with a
variety of symbols and figures, although it was awkward to perform the simplest
arithmetic calculations with these number systems.
The Sumerians were the first
to develop a counting system to keep an account of their stock of goods -
cattle, horses, and donkeys, for example. The Sumerian system was positional;
that is, the placement of a particular symbol relative to others denoted its
value. The Sumerian system was handed down to the Akkadians around 2500 BC and
then to the Babylonians in 2000 BC. It was the Babylonians who first conceived
of a mark to signify that a number was absent from a column; just as 0 in 1025
signifies that there are no hundreds in that number. Although zero’s Babylonian
ancestor was a good start, it would still be centuries before the symbol as we
know it appeared.
The renowned mathematicians
among the Ancient Greeks, who learned the fundamentals of their math from the
Egyptians, did not have a name for zero, nor did their system feature a
placeholder as did the Babylonian. They may have pondered it, but there is no
conclusive evidence to say the symbol even existed in their language. It was
the Indians who began to understand zero both as a symbol and as an idea.
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Now this is not the end. It is
not even the beginning of the end. But it is, perhaps, the end of the
beginning.
Winston Churchill
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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