Baltic Dry Index. 1365 +12 Brent Crude 60.91
Stocks
take an escalator up and the elevator down.
Wall
Street Adage.
Has the Santa Claus
rally come early and already gone? With a horrible holiday shortened trading
last week of the month, have the perma-bulls already shot their bolt? It’s to
early to tell of course, but Asian, European and US developments are all adding
up to a very ugly 2019.
In fact, things are
so ugly in America, politics is starting to look like a repeat of the hounding
of Nixon 1973-1974. Not that Europe,
heading towards a no deal Brexit in March looks any more stable, It’s anyone’s
guess who collapses there first, Italy or Deutsche Bank.
But we open as usual
with Asian markets. Has Trump’s trade war already killed the Chinese golden
goose on which we all fed? With the ECB joining the Fed in baby step
tightening, was 2018 the top for most markets and stocks? Did Trump push the
button for the elevator?
Asian shares jolted by weak Chinese data, growth risks
December 14, 2018 / 12:58 AM
TOKYO (Reuters) - Asian shares tumbled on
Friday after China reported a set of weak data, fanning fresh worries of a
sharp slowdown in the world’s second-biggest economy and leaving investors
fretting over the wider impact of a yet unresolved Sino-U.S. trade dispute.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1.4 percent, while Japan's Nikkei .N225 dropped 2.1 percent.
Mainland China's benchmark Shanghai Composite .SSEC and the blue-chip CSI 300 .CSI300 declined 0.6 percent and 0.9 percent, respectively, and Hong Kong's Hang Seng .HSI tumbled 1.6 percent.
China’s November retail sales grew at the weakest pace since 2003 and industrial output rose the least in nearly three years as domestic demand softened further, underlining rising risks to the economy as Beijing works to defuse a trade dispute with the United States.
The Chinese yuan weaked 0.2 percent to 6.8910 per dolalr CNH=D4 in the offshore trade following the data.
More
China's consumers, factories take a beating as economic gloom deepens
December 14, 2018 / 2:05 AM / Updated 32
minutes ago
BEIJING (Reuters) - China’s November
retail sales grew at their weakest pace since 2003 and industrial output rose
the least in nearly three years as the economy lost further momentum, heaping
pressure on Beijing to defuse its trade dispute with the United States.
The world’s second-largest economy has been losing momentum in recent
quarters as a multi-year government campaign to curb shadow lending put
increasing financial strains on companies in a blow to production and
investment.
The stresses on broad activity have been compounded by a sharp
escalation in China’s trade row with the United States, which has threatened to
fracture global supply chains, chill investment, exports and growth.
The slowdown in Chinese industries and the trade tensions have started
to weigh on consumer sentiment, tapping the brakes on retail sales. Big-ticket
items have been the first to be hit, with auto sales declining since May.
Retail sales rose 8.1 percent in November from a year earlier, data from
the National Bureau of Statistics showed on Friday, below expectations for an
8.8 percent rise and the slowest since May 2003. In October, sales increased
8.6 percent.
Auto sales fell a sharp 10.0 percent from a year earlier, in line with
industry data showing sales dived 14 percent in November - the steepest drop in
nearly seven years.
Industrial output rose 5.4 percent year-on-year in November, missing
analysts’ estimates and matching the pace seen in January-February 2016.
Factory output had been expected to grow 5.9 percent, unchanged from October’s
pace.
---- With economic growth at its weakest since the global financial crisis, Chinese policymakers are ramping up spending, pushing banks to increase lending and cutting taxes to shore up businesses and ward off a more damaging slump.
The weaker November industrial output and retail sales growth numbers
showed that downward pressure on the economy is increasing, said Mao Shengyong,
spokesman at the statistics bureau.
More
Opinion: Here’s more evidence that stocks are now facing a bear market
By Mark
Hulbert Published: Dec 13, 2018 10:21 p.m. ET
The stock market’s late-September peak looks disturbingly like the beginning
of a bear market.That at least is the story being told by the U.S. market’s various sectors. Their relative returns during the third quarter of 2018 closely follow a pattern set prior to other bull market tops of the past 50 years.
At its late-November low, the S&P 500 SPX, -0.02% was more than 10% below its all-time high of 2,930.75, where it closed on Sep. 30. If we rely on the semi-official definition of a bear market as a drop of at least 20%, the stock market at that point was already halfway there.
It’s not a new idea, of course, that market sectors perform in
relatively predictable ways in the latter stages of a bull market. For this
column, I relied on data from Ned Davis Research, the quantitative research
firm. They calculated the average return of the S&P 500’s 10 sectors over
the last three months of each prior bull market top (back to the early 1970s).
This enables them to periodically look at how that historical ranking compares
with how the sectors are actually performing.
An example can make this process clearer. According to Ned Davis
Research, the health care sector was the second-best performer (on average)
over the three months prior to past bull market tops. Ominously, it was also
one of the best performers over the three months prior to the Sep. 30 market
top — in first place, as a matter of fact.
---- To be sure, as you can see
from the chart below, the correlation is not perfect. But it’s much closer than
random. Notice that the sectors at the top of the ranking for past
late-bull-market performance were also at the top in this year’s third quarter,
just as those at the bottom before remained at the bottom.
More
In other news, is the Trump trade war
already tipping the global economy into recession? Is it all downhill in 2019? As
the political war on Trump intensifies, are we repeating 1973-1974? The deep state
Clinton-Obamaites are determined to bring down President Trump at any price.
Remind me again how good 1973-1974 was for stocks.
Trump Inauguration Spending Under Criminal Investigation by Federal Prosecutors
Probe looking into whether committee misspent funds and top donors gave money in exchange for access to the administration
Dec. 13, 2018 4:27 p.m. ET
Federal prosecutors in Manhattan are investigating whether President Trump’s
2017 inaugural committee misspent some of the record
$107 million it raised from donations, people familiar with the matter
said.The criminal probe by the Manhattan U.S. attorney’s office, which is in its early stages, also is examining whether some of the committee’s top donors gave money in exchange for access to the incoming Trump administration, policy concessions or to influence official administration positions, some of the people said.
Giving money in exchange for political favors could run afoul of federal corruption laws. Diverting funds from the organization, which was registered as a nonprofit, could also violate federal law.
The investigation represents another potential legal threat to people who are or were in Mr. Trump’s orbit. Their business dealings and activities during and since the campaign have led to a number of indictments and guilty pleas. Many of the president’s biggest campaign backers were involved in the inaugural fund.
The investigation partly arises out of materials seized in the federal probe of former Trump lawyer Michael Cohen’s business dealings, according to people familiar with the matter.
In April raids of Mr. Cohen’s home, office and hotel room, Federal
Bureau of Investigation agents obtained a recorded conversation between Mr.
Cohen and Stephanie Winston Wolkoff, a former adviser to Melania Trump, who
worked on the inaugural events. In the recording, Ms. Wolkoff expressed concern
about how the inaugural committee was spending money, according to a person
familiar with the Cohen investigation.
The Wall Street Journal couldn’t determine when the conversation between
Mr. Cohen and Ms. Wolkoff took place, or why it was recorded. The recording is
now in the hands of federal prosecutors in Manhattan, a person familiar with
the matter said.
More
Populism and paralysis in the West
Pat Buchanan: By spring 2019, 'our politics will be even more poisonous than now'
Is it coincidence or contagion, this malady that seems to have suddenly induced paralysis in the leading nations of the West?
With lawyer-fixer Michael Cohen’s confession that he colluded with
Donald Trump in making hush money payoffs to Stormy Daniels and Karen McDougal,
America’s stage is set for a play that will run two years.
As Democrats test the waters for a presidential run by savaging Trump,
the establishment Trump detests and defeated in 2016 will use every weapon in
its considerable arsenal to break and bring him down, as it did half a century
ago to Richard Nixon.
By spring 2019, Americans will be unable to escape the vitriol on cable
and social media. And the outside world will see America again as a house
divided. Our politics will be even more poisonous than now, and it is not easy
to see what would bring our warring tribes together again.
Consider, then, the situation of our old ally Great Britain.
Prime Minister Theresa May was just forced to pledge that she would not
lead her party in the next election – to survive a no-confidence vote in
Parliament. A third of all Tory members voted to throw her out.
The no-confidence vote was called after May had to cancel a vote on the
Brexit plan she had negotiated with the EU, when it was evident that a
coalition of Tories and Labor would vote to kill her plan.
May has been humiliated. Yet her humiliation solves nothing. The clock
is running toward a March deadline for concluding a Brexit deal. And no plan
acceptable to both Parliament and the EU is on the table.
---- In France, after four Saturdays of anarchy, arson, looting and vandalism of her national monuments, President Emmanuel Macron capitulated to the rioters. He withdrew the fuel tax that triggered the uprisings. He agreed to have his government add $113 a month to those earning the minimum wage, and to let workers get overtime pay and Christmas bonuses tax-free, and to revoke higher social charges on modest pensions.
The cost of Macron’s retreat is estimated at $11 billion, 0.4 percent of
France’s GDP. Saturday will tell us if his appeasement bought peace.
The political collapse of Macron has been extraordinary.
In 2017, he won almost two-thirds of the national vote, and his La
Republique en Marche! won an absolute majority of the National Assembly.
Today, one poll puts Macron’s approval at 21 percent. The idea that he
can replace Angela Merkel as the recognized leader of the EU seems ridiculous.
As for Merkel herself, hailed as leader of the West in the time of
Trump, her party and coalition lost so much support in the recent election that
she stepped down as leader of the CDU and pledged not to run for another term
as chancellor.
Europe’s fourth-largest economy, Italy, is now led by a coalition of the populist-left Five Star Movement and populist-right Lega party. The coalition seeks greater freedom on spending than Brussels is willing to allow, and a halt to migration from across the Med.
With Poland and Hungary at odds with Brussels over alterations in their
political systems, the EU has never seemed less united.
more
more
Japan big manufacturers' business outlook cautious
By Megumi
Fujikawa Published: Dec 14, 2018
1:15 a.m. ET
TOKYO--Sentiment among Japan's large manufacturers was unchanged in the
three months to December, a central bank survey showed Friday, although they
were cautious about their business outlook.
The main index measuring large manufacturers' sentiment was at plus 19
in the October-December period, matching the level marked in the previous
September survey, according to the Bank of Japan's quarterly tankan survey.
The reading was higher than a forecast of plus 17 by economists polled
by data provider Quick. The index represents the percentage of companies saying
business conditions are favorable minus those saying conditions are
unfavorable.
But the tankan showed the headline index is expected to decline to 15 in
the next three months, indicating that businesses are cautious about their
outlook.
"An adverse wind from abroad is becoming stronger," said
Tsuyoshi Ueno, an economist at NLI Research Institute. "The escalating
U.S.-China trade dispute accelerates the deterioration in exports" from
Japan, he said, because the tensions would hurt overall demand from Chinese
businesses.
More
U.S. Farmers Rue China's Return to Soybean Market as ‘Drop in the Bucket’
By Mario Parker
"Let's
make sure that there is certainty during uncertain times in our economy."
President
George W. Bush
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
In Europe, with the days of
free money are ending, can Italy or Deutsche Bank survive?
ECB stops its printing presses even as growth concerns rise
December 12, 2018 / 11:10 PM
FRANKFURT (Reuters) - The European Central
Bank decided on Thursday to end its lavish asset purchase scheme but otherwise
kept policy broadly unchanged, promising protracted stimulus for an economy
struggling with an unexpected slowdown and political turmoil.
Having long flagged the end of quantitative easing, the ECB had little
choice but to stop the bond buys. But it is likely to take its time before
tightening policy any further given slower growth, a looming trade war, the prospect
of a hard Brexit and budget tensions in Italy and France.
That all leaves ECB President Mario Draghi with a delicate balancing
act: appearing confident enough to justify the end of the 2.6 trillion euro
(2.33 trillion pounds), four-year-long QE scheme, but sounding sufficiently
concerned to keep cool investor expectations about further policy tightening.
Hoping to reassure markets, the ECB repeated its promise that rates
would be kept at their current record lows at least through next summer and that
it would keep open-ended the time horizon for reinvesting cash from maturing
bonds.
“The Governing Council intends to continue reinvesting, in full, the
principal payments from maturing securities purchased under the APP for an
extended period of time past the date when it starts raising the key ECB
interest rates,” the ECB said, tweaking its previous guidance that
reinvestments would continue for an “extended period” after the end of bond
buys.
With Thursday’s decision, the ECB’s rate on bank overnight deposits,
currently its primary interest rate tool, remains at -0.40 percent, while the
main refinancing rate, which determines the cost of credit in the economy,
remains at 0.00 percent.
More
"We
shouldn't pour cold water on everything.
We, the eight or nine players in global investment banking, have a very
good future."
Deutsche
Bank, CEO Josef Ackermann. Davos, January 2007.
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?
5 Predictions for the Global Energy Storage Market in 2019
From our annual Energy Storage Summit, a recap of 2018 market trends and a look at key trends for next year.
Jeff St. JohnDecember 11, 2018
2018 has been a big, yet bumpy, year for the U.S. energy storage market.
We've seen huge increases in behind-the-meter installations in homes and
businesses, but also supply bottlenecks and policy uncertainties that
restrained larger-scale battery installations.
How are these trends likely to play out next year?
That’s the topic that Ravi Manghani, energy storage research director at
Wood Mackenzie Power & Renewables, took up in Tuesday’s opening
presentation at Greentech Media’s annual Energy Storage Summit in San
Francisco. Manghani sketched out the key developments of 2018, and made five
“bold and not-so-bold” predictions for what will be different in 2019.
The first is that utility-scale energy storage installations, after
seeing a drop in the first three quarters of 2018 compared to last year, will
pick up again next year. As Manghani noted, the front-of-meter battery market
is inherently a lumpy one, with one or two massive projects dominating annual
figures.
But there’s also been a policy issue holding up utility-scale storage this year, Manghani said. The uncertainty over how the nation’s grid operators are going to implement Federal Energy Regulatory Commission (FERC) Order 841, approved in February, has stalled projects. Order 841 broadly directs grid operators to create market mechanisms that accommodate batteries’ unique abilities to both charge and discharge from the grid, and ramp up and down at speeds that traditional generators can’t match. But the details of how each ISO and RTO plans to implement FERC’s requirements has been the subject of much debate in the energy industry, as we’ve noted in ongoing coverage of the various straw proposals coming out over the past few months.
With grid operators finally filing their official Order 841 compliance plans with FERC this month, the energy storage industry now has a much more complete picture of how each grid operator is planning to move forward. While the Energy Storage Association (ESA) does have complaints about these final plans, indicating there’s more debate ahead, opening up Order 841-mandated market changes this year is still expected to open a massive new set of opportunities to serve in wholesale energy and ancillary services markets.
----The second prediction for 2019 is bolder than the first — the observation that the record for solar-plus-storage deployments in 2018 will be broken yet again in 2019. That’s based on the forecast for falling solar and battery prices, combined with a continuation of the federal Investment Tax Credit for solar that can include the cost of batteries as part of the installation.
More
Another weekend and a dire weekend for
retailers on both sides of the Atlantic. For which department stores is this
their last Christmas? Who will be holding fire sale closing down sales in
January? Who will be blown away in Schumpeter’s (internet) Gale? Have a great weekend
everyone.
Creative destruction (German: schöpferische
Zerstörung), sometimes known as Schumpeter's gale, is a concept in economics
which since the 1950s has become most readily identified with the Austrian
economist Joseph Schumpeter[1]
who derived it from the work of Karl Marx
and popularized it as a theory of economic innovation and the business
cycle.
The monthly Coppock Indicators finished November.
DJIA: 25,538 +157 Down. NASDAQ:
7,331 +205 Down. SP500: 2,760 +129 Down.
All three slow indicators are
signalling more correction to come, although not necessarily ahead of the
year-end. However, if a tidal wave of stock fund redemptions hits in December,
2018 could end in a great rising wave of panic selling into a generally thin
markets trading year-end.
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