Tuesday 20 November 2018

Where Will the Elevator Stop?


Baltic Dry Index. 1023 -08   Brent Crude 66.48

Stocks take an escalator up and an elevator down.

Wall Street Saying.

Since stocks are clearly in an elevator and have been for several weeks, the big questions are, where and when will the elevator stop?  Of lesser importance for now, is why? But if the elevator doesn’t stop soon, the answer will likely be the basement rather than the 11th floor, as a bear market will likely trigger massive year end fund redemptions, and massive money manger attempts to sell off losers to dress up the yearend holdings.

Happily for now, the USA is in holiday shortened Thanksgiving Day week, which ought to produce some short covering, or even for the very daring, an attempt at bottom fishing, aka trying to catch a falling knife.

But with US Vice President Pence, on behalf of his boss President Trump, having just given a “Glasgow kiss” to China at the weekend APEC meeting, a trade war U-turn by President Trump at the G-20 meeting in Argentina on November 30th seems unlikely. 

A very difficult 2019 lies directly ahead, with an increasing possibility of the next global recession arriving. More and more stock analysts are calling for President Trump to declare trade war victory, and start working to head off recession.

But is it already too late? Since starting his trade war against NATO, NAFTA and China, the price of most stocks, bonds, many commodities and all cryptocurrencies have all gone into the elevator, have we already destroyed too much global “wealth” to service the last decade’s explosion of debt?

Below the elevator still falling.

Clack clack clack clack clack clack.

Stock markets tumble on tech sell-off, dollar sags

November 20, 2018 / 12:55 AM
TOKYO (Reuters) - Asian stock markets skidded on Tuesday, extending sharp losses on Wall Street as technology firms bore the brunt of worries about slackening demand, while the dollar sagged after weak U.S. data further sapped confidence in the currency.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.9 percent.

The Shanghai Composite Index retreated 1 percent, Australian stocks lost 0.9 percent and tech-heavy South Korean shares dropped 0.8 percent.

In Seoul, Samsung Electronics fell 1.8 percent and SK Hynix Inc dropped 2.8 percent, while Japan’s Tokyo Electron was down 1.4 percent, Advantest lost 1.2 percent and Sony Corp shed 2.6 percent.
Japan’s Nikkei slipped 0.9 percent. Shares of Nissan Motor Co tumbled 4.3 percent after its 
Chairman Carlos Ghosn was arrested on Monday for alleged financial misconduct and will be fired from the board this week.

“By under-reporting his corporate salary, he basically deprived Nissan’s shareholders of opportunities to judge if the amount of his salary was appropriate,” said Toru Ibayashi, executive director of Wealth Management at UBS Securities Japan.”This incident will make investors review if Japanese corporate governance is working.”

U.S. stocks came under heavy selling on Monday, with Nasdaq tumbling 3 percent, as investors dumped Apple, internet and other technology shares. Conflicting signals between the United States and China on their trade dispute added to caution. [.N]
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Dow closes down nearly 400 points as tech losses batter stock market

Published: Nov 19, 2018 4:26 p.m. ET
Stocks retreated sharply lower Monday, with shares of technology and internet-related companies dragging the market lower. The main equity benchmarks saw losses accelerate in morning trade after a report showed home-builders’ confidence plummeted in November.

U.S. financial markets will be closed Thursday for the Thanksgiving Day holiday.

The tech-heavy Nasdaq Composite Index COMP, -3.03%   led the markets lower, closing down 219.4 points, or 3%, to 7,028.48. The Dow Jones Industrial Average DJIA, -1.56% tumbled 395.8 points, or 1.6%, to 25,017.44, and the S&P 500 index SPX, -1.66% retreated 45.5 points, or 1.7%, at 2,690.73
Last week, the Dow posted a weekly decline of 2.2%, the S&P 500 index declined by 1.6% while the Nasdaq shed 2.2%.

Investor anxiety, evidenced by last week’s declines, continued Monday, following a report on home-builder confidence that showed sector executives less upbeat than at any point in more than two years.

See: Home builder confidence tumbles the most since 2014 as headwinds catch up

Trade issues have been a key driver of volatility, as investors consider the possibility that U.S. tariff rates on a swath of Chinese goods could rise from 10% to 25% in January, as they will under current policy, absent a resolution. President Donald Trump and Chinese President Xi Jinping will meet in Buenos Aires later this month, a summit investors hope will lead to a new trade deal, or at least the delay in tariff hikes.

Trade concerns weighed on the technology sector in particular, as the supply chains of multinational tech firms rely heavily on U.S.-China trade flows.

Meanwhile, investors also keyed in on other political narratives, including Brexit and the Italian budget crisis, which have contributed to market volatility of late. British Prime Minister Theresa May is slated to take her plan to take the U.K. out of the European Union to Brussels after seemingly avoiding a leadership challenge — at least for now.

Italian and EU officials remain in a protracted deadlock over the Italian government’s budget plans, which Brussels said run afoul of the bloc’s rules, setting up a clash between the two that could prove disruptive to markets.
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Here's What Wall Street Hopes Will Stem the Sell-Off in Equities

By Vildana Hajric, Sarah Ponczek, and Elena Popina
Weeks have become months in measuring stock market pain. What can heal it? It’s easier to list the things that have failed.

Lines on charts didn’t work. A favorite boundary for bulls, the 200-day average in the S&P 500, is a distant memory. Earnings have come and gone -- they made things worse. Midterms? Nope. Falling yields? Haven’t helped. The decline showed no sign of abating Monday as the Nasdaq 100 fell 3.3 percent to the lowest since April.

Following are the views of seven money managers and strategists on what could conceivably put a brake on the selling. It starts with views held by virtually everyone, that a softening in Federal Reserve rhetoric or in Donald Trump trade bluster would be the fastest route to relief. Then it gets into some other ideas.

Trade War

Ryan Nauman, market strategist at Informa Financial Intelligence:

"No. 1 could be trade. At the G20 summit, if we get some good news out of there and maybe some optimism building on the trade front, that could potentially give us a boost. In order for the markets to get to the next level and break through this range we’re in, the trade issue will have to be resolved. And once that is -- if it is -- then markets will break through with some optimism."

Kristina Hooper, chief global market strategist at Invesco Ltd:

“This sell-off is largely driven by growing concerns over the trade situation and therefore it will take a positive development in trade to take pressure off markets. Now, that’s somewhat simplistic, since there is certainly concern over the slowdown that we are seeing globally but that slowdown is relatively modest. I believe it has been partially caused by concerns over trade and the economic policy uncertainty that comes with it. In my view, a positive trade development would likely be the easiest way to end this sell-off.”
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Chicago skyscraper elevator falls 84 floors; 6 occupants rescued after 3 hours

By Alexandra Klausner November 19, 2018 | 11:28am
An elevator in a Chicago skyscraper plummeted 84 floors with six terrified passengers inside — and it took three hours to rescue the victims, who were trapped with no food or water.

The riders — who included a pregnant woman, Northwestern law students, and tourists from Mexico — had hopped in the elevator after dining at the famed Signature Room in the John Hancock Center at 12:30 a.m. Friday, when hell broke loose.

“At the beginning, I believed we were going to die,” Jamie Montemayor, who was visiting Chicago from Mexico City, told CBS.

“We were going down and then I felt that we were falling down and then I heard a noise — clack clack clack clack clack clack.”
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In other news, the Danske Bank money laundering scandal grows and grows. But with to big to fail Deutsche Bank, Bank of America and JP Morgan now involved, will all involved get a slap on the wrist and a walk?

Poor banksters, they can resist anything except temptation.

With apologies to Oscar Wilde.

Danske whistleblower says big European bank handled $150 billion in payments

November 19, 2018 / 10:28 AM
COPENHAGEN (Reuters) - The whistleblower who revealed alleged money laundering involving Danske Bank (DANSKE.CO) said on Monday that a major European bank helped process up to $150 billion in suspicious payments, or nearly two-thirds of the transactions under scrutiny.

Howard Wilkinson, who was head of Danske Bank’s trading unit in the Baltics from 2007 to 2014, did not name the bank, but a source with direct knowledge of the case said he was referring to Deutsche Bank (DBKGn.DE), which was one of the lenders clearing dollar transactions for Danske’s Estonian branch.

A Deutsche Bank spokesman confirmed in a statement to Reuters the lender acted as a correspondent bank for Danske in Estonia.

“Our role was to process payments for Danske Bank. We terminated the relationship in 2015 after identifying suspicious activity,” the spokesman said.

Wilkinson said two U.S. banks were also involved in handling dollar payments for Danske in Estonia, without identifying them. Alongside Deutsche, JPMorgan (JPM.N) and Bank of America (BAC.N) cleared dollar transactions for Danske’s Estonian branch, sources have told Reuters.

JPMorgan ended the correspondent banking relationship with Danske in 2013 on grounds that transactions did not comply with anti-money laundering rules, according to a person familiar with the matter.

Bank of America declined to comment.

Authorities in Denmark, Estonia, Britain and the United States are investigating payments totalling 200 billion euros ($228.5 billion) made through Danske Bank’s tiny Estonian branch between 2007 and 2015 in a growing global scandal.

---- “No one really knows where this money went. All we know is that the last people to see it was these three large banks in the U.S. They were the last check, and when that failed, the money was into the global financial system,” Wilkinson said.

---- Wilkinson said that he had been offered cash by Danske Bank not to speak out, but had got a waiver last month allowing him to talk to some U.S. authorities, adding that he did not expect investigations into the “dirty money” to bear fruit.
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Finally, China 40 years on from Deng and 1978. Are Trump’s trade war hooligans about to wreck it all?

40 years of reform and opening up


If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.  

No crooks today, they’ll be back tomorrow, you just can’t keep them down. Today more sunspot news. Will it be a cold Northern Hemisphere winter in western Europe and North America? The opening signs seem, early, average, and perhaps long.

A SUNSPOT FROM THE NEXT SOLAR CYCLE:
November 19 2018

Over the weekend, a small sunspot materialized, then, hours later, vanished again. Such an occurrence is hardly unusual during solar minimum when sunspots are naturally small and short-lived. However, this ephemeral sunspot was noteworthy because its magnetic field was reversed. Here is a Nov. 17th magnetic map from NASA's Solar Dynamics Observatory with visible sunspots inset:

---- Sunspot AR2727 is a member of decaying Solar Cycle 24. Compare its magnetic polarity to that of the other, unnumbered sunspot. They are opposite. According to Hale's Law, this means they are from different solar cycles. The brief weekend sunspot appears to be a harbinger of Solar Cycle 25.

Solar cycles always mix together at their boundaries. Ephemeral sunspots from Sunspot 25 have already been reported on Dec. 20, 2016, and April 8, 2018. Now add Nov. 17, 2018 to list. The slow transition between Solar Cycle 24 and Solar Cycle 25 appears to be underway.

Arctic Oscillation and Polar Vortex Analysis and Forecasts

November 12, 2018
---- It seems to me that the models will likely struggle with the placement of the blocking in the North Atlantic.  This needs to be watched carefully with different scenarios possible based on the exact location of the blocking, but high latitude blocking on either side of the North Atlantic raises the risk of severe winter weather for both the Eastern US and northern Eurasia including Europe.

Near Term Conditions
1-5 day

The AO is currently negative (Figure 1), reflective of mostly positive geopotential height anomalies across the Arctic and mixed geopotential height anomalies across the mid-latitudes of the NH (Figure 2).  Geopotential height anomalies are slightly positive across Iceland and Greenland (Figure 2), however mostly positive geopotential height anomalies across the mid-latitudes of the North Atlantic are  contributing to a positive NAO.  During the week the NAO will trend to negative as positive geopotential heights slowly consolidate closer to Greenland.

---- Equatorial Pacific sea surface temperatures (SSTs) anomalies have continued to warm and have crossed the threshold into El Niño conditions (Figure 13), and the forecast is for likely weak to possibly moderate El Niño conditions for this winter.   Observed SSTs across the NH remain well above normal especially in the North Pacific though below normal SSTs exist regionally.  Well above normal SSTs in the northern North Pacific near Alaska are reminiscent of the "blob" winters  of 2013/14 and 2014/15 and could support mid-tropospheric ridging in the coming months. Cold SSTs south of Iceland and in the subtripcs of the North Atlantic with above normal SSTs in the mid-latitudes are supposed to favor a positive winter NAO.

---- Northern Hemisphere Snow Cover
Snow cover advance continues its climb out of the basement across Eurasia and now is near decadal means.  Snow cover advance could pick up more speed as cold temperatures start spreading to the west towards Europe this week. Above normal snow cover extent this past October, favors a strenghtened Siberian high, cold temperatures across northern Eurasia and a weakened polar vortex/negative AO this upcoming winter followed by cold temperatures across the continents of the NH.

The rate of North American snow cover advance continues at a blistering rate and remains near decadal highs.  With continued cold air across Canada and the Northern US, North America snow cover will likely continue further.   If snow and cold establish a foothold across Canada this fall, it could support an early start to winter across the Northern US.
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Thanksgiving's High Temperatures Could Be Among the Coldest on Record in Parts of the Northeast

By Chris Dolce 16 hours ago weather.com

·         An arctic air mass will engulf the Northeast late this week.
·         Temperatures in some cities on Thanksgiving Day could be among the coldest on record for the holiday.
·         Low temperatures will be 15 to 25 degrees below average.

High temperatures on Thanksgiving Day could rank among the coldest on record for some Northeast cities as early-season arctic air engulfs the region late this week.

A strong area of high pressure from the Arctic Circle will descend southward across Canada and into the Northeast, sending temperatures plummeting toward levels more common on New Year's Day, not Turkey Day.

For some Northeast cities, high temperatures on Thanksgiving could be close to the coldest on record no matter what day of the month the holiday was celebrated (e.g. Nov. 22, Nov. 24, Nov. 26, etc.).
New York City has only had three Thanksgivings dating to 1870 when the high temperature failed to rise out of the 20s, according to National Weather Service statistics. The coldest was a high of 26 degrees on Nov. 28, 1901.

While this year may not touch that record in the Big Apple, it could still be just the fourth time when the high on Thanksgiving is only in the 20s.

In southern New England, Boston could come within a couple of degrees of its coldest Thanksgiving high of 24 degrees, also set Nov. 28, 1901.
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Nothing is so admirable in politics as a short memory.

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?

The Short-Term Economics Of A Tesla-Powered Solar Home

November 18th, 2018 by Bob Borsh 

We went “live” with our solar installation on April 9, 2018. To recap, we’ve got 8.125 kW of generation capacity from our roof-mounted array of 25 panels, each capable of 320 watt gross output with a Powerwall 2 and a 240V Tesla car charging station.

Since it has primarily just been my wife and I in the house full time for the last several years, our average monthly electric bill has been approximately $100–110 based on usage of around 550–600 kWh per month. The house is located in West Woodstock, Vermont, proving full well that you don’t have to be in Arizona or California to have a successful solar generation system.

Green Mountain Power (GMP), our utility provider, is currently charging a flat rate of $0.17 per kWh. As part of our 10 year fixed credit net metering contract, we are paid $0.04 per kWh generated. That is every kWh generated by our array, whether it goes to charge our battery, power our home, or back to the grid. We were also charged $110 as an upfront cost from GMP to install our “Gross Solar Meter,” even though Tesla Energy did 99% of the work by installing the meter bucket and all associated wiring and the utility showed up for just about 10 minutes to install the meter.

---- I’ve included a few of our monthly utility bills on the bottom of this article for you to review. For the usage period of 4/25/2018 thru 10/26/2018, our total amount paid to GMP was $231.03. This reduces to an average monthly charge of $38.51. The lowest monthly bill was $18.80, the highest $69.32. During the same period, our total energy used was 7506 kWh, while our total solar generated was 5409 kWh.

Not bad, you say? But wait. It gets better. The spike in usage through those six months was due to the fact that I was charging our Model S every weekday night from Sunday through Thursday (at a minimum) — on average from 20% to 90%. My commute is 190 miles a day round trip. Yeah, I know. However, I refer you back to the first paragraph. We are in VERMONT! That’s the Green Mountain State. Also can be referred to as the No Industry State. Bring your trust fund, buy your second (or third, or fourth) home. But I digress.

Back to the economics lesson. So, our average monthly utility cost was reduced by approximately 60%, while our average monthly usage increased by a little more than 100%. Concurrently, I pretty much parked my 2013 Golf TDI for the same period. So, the approximate 22,800 miles driven commuting saved an average of $309.61 per month in diesel fuel costs. The basis for this calculation was an average fuel economy of 40 mpg for the Golf and an average local diesel cost of $3.259 per gallon. (That’s 22800/40 x $3.259.)
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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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