Baltic Dry Index. 1237 +34 Brent Crude 61.42
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
John
Kenneth Galbraith
In an ominous
development to the perma-bull stock pedlars and their ilk, the Dow Transports suffered
their worst ever crash yesterday, signalling developing trouble in the real US
economy in fly over land, the land between the shining seas of Wall Street,
Hollywood and Silly Con Valley.
A flattening US yield
curve, doubts over what President’s Xi and Trump actually agreed, more belligerent
Trump tariff tweets on Twitter, and a general feeling that the global economy
is already slowing, were enough to convince many stock investors that perhaps
cash is king this coming year-end after all. Without a Santa Claus rally to
save stocks and money manager bonuses, a tidal wave of stock fund year-end
redemptions comes next.
Below, a correction takes
on the appearance of something far more serious, and it’s nothing to do with
Brexit, Italy, Deutsche Bank, or Nissan. But first this last attempt at spin
from the perma-bull stock spin meisters. Coming soon, “sell? To whom sir?”
"It is hard to believe that a man is telling
the truth when
you know that you would lie if you were in his place."
H. L.
Mencken
China confident it can clinch U.S. trade pact as Trump demands 'real deal'
December 5, 2018 / 12:36 AM
SHANGHAI (Reuters) - China expressed
confidence on Wednesday that it can reach a trade deal with the United States,
despite fresh warnings from President Donald Trump that he would revert to more
tariffs if the two sides cannot resolve their differences.
The remarks by the Chinese Commerce Ministry follow a period of relative
quiet from Beijing after Trump and Chinese leader Xi Jinping reached a
temporary truce in their trade war at a meeting over dinner in Argentina on
Saturday.
In a brief statement on its website, the ministry said China would try
to work quickly to implement specific issues already agreed upon, as both sides
“actively promote the work of negotiations within 90 days in accordance with a
clear timetable and road map”.
“We are confident in implementation,” it said, calling the latest
bilateral talks “very successful”.
The threat of further escalation in the trade war between the world’s
two largest economies has loomed large over financial markets and the global
economy for much of the year, and investors initially greeted the ceasefire
with relief.
But the mood has quickly soured on scepticism that the two sides will be
able to reach a substantive deal on a host of highly divisive issues within the
90-day negotiating period that was agreed.
Failure would raise the specter of fresh U.S. tariff action and potential Chinese retaliation as early as March.
Global financial markets tumbled on Tuesday as doubts over what could realistically be accomplished in the tight negotiating window added to concerns about fading global growth.[MKTS/GLOB]
Major Chinese stock indexes .CSI300 .SSEC were down by close to 1 percent in morning trade on Wednesday.
Trump, via Twitter, held out the possibility of an extension of the three-month ceasefire but warned that tariffs would be back on the table if the talks failed to bear fruit.
“The negotiations with China have already started. Unless extended, they will end 90 days from the date of our wonderful and very warm dinner with President Xi in Argentina,” Trump tweeted.
---- “We are either going to have a REAL DEAL with China, or no deal at all - at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal - either now or into the future,” Trump wrote in a post within minutes of the Commerce Ministry statement.
Officials from the U.S. and a number of other major economies have often
criticized China for its slow approach to negotiations to open its markets and
not following through on commitments.
More
Stocks slide as falling U.S. yields, trade worries knock sentiment
December 5, 2018 / 1:01 AM
TOKYO (Reuters) - Asian stocks slid on
Wednesday, dragged down by Wall Street’s tumble as sharp declines in long-term
U.S. Treasury yields and resurgent trade concerns stoked investor worries about
global economic growth.
Global equities have been shaken as a flattening U.S. Treasury yield curve fans worries about a recession, and on growing doubts that Washington and Beijing will be able to clinch a substantive trade deal during a temporary cease-fire agreed at the weekend
.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 1.4 percent.
Hong Kong's Hang Seng .HSI retreated 1.5 percent and the Shanghai Composite Index .SSEC fell 1.2 percent.
Japan's Nikkei .N225 fell 0.9 percent and South Korea's KOSPI .KS11 shed 0.85 percent.
Australian stocks lost 1.3 percent, pressured by global losses. The mood further soured after data showed Australia's third-quarter growth fell short of expectations. The Australian dollar AUD=D4 was down 0.4 percent at $0.7311.
The Dow .DJI retreated 3.1 percent and the Nasdaq .IXIC sank 3.8 percent on Tuesday. U.S. financial shares .SPSY, which are particularly sensitive to bond market swings, dropped 4.4 percent. [.N]
---- Concerns about slowing U.S. growth have accelerated the flattening of the yield curve, a phenomenon in which longer-dated debt yields fall faster than their shorter-dated counterparts.
The spread between the two-year and 10-year Treasury yields was at its
flattest level in over a decade.
“The market decline in the U.S. overnight and the flattening of the
yield curve reflect that economic growth momentum is taking over as the primary
concern for investors, even as the latest ISM manufacturing data is holding up
well,” wrote Tai Hui, market strategist at J.P. Morgan Asset Management.
A flatter curve is seen as an indicator of a recession, with lower
longer-dated yields suggesting that the markets see economic weakness ahead.
More
Dow transports suffer biggest-ever point drop, led FedEx and UPS stock selloffs
By Tomi Kilgore
Published: Dec 4, 2018 4:16 p.m. ET
Skepticism and confusion over trade deal, flattening yield curve fuel growing concerns over economic slowdown
The Dow Jones Transportation Average tumbled to its biggest-ever point drop, fueled by growing fears of an economic slowdown.The Dow transports DJT, -4.39% tumbled 476.37 points, or 4.4%, with all 20 components closing lower. The previous biggest-ever point decline was 445.16 points on Oct. 10. At its intraday worst, the index was down as much as 565.23 points, or 5.2%.
Factors contributing to the selloff include increasing doubts over the significance of the U.S.-China trade war truce agreement, amid confusion and skepticism over exactly what the agreement entails.
Don’t miss: Trump Today: President acknowledges China talks could fail and threatens tariff increases in latest salvo.
In addition, a rapidly flattening Treasury yield curve fueled fears that recession was on the horizon, as an inverted yield curve — when yields on longer-dated Treasurys fall below yields of shorter-term Treasurys — has preceded previous recessions. Some parts of the curve are already inverted, as the 5-year yield is below the three-year yield. See Bond Report.
Many on Wall Street view the DJTA as a key economic indicator, because the index helps gauge how consumers and businesses are actually taking what companies are making.
---- Within the DJTA, the biggest drags
were the shares of UPS UPS, -7.37%
sank 7.4%, the biggest decline since January 2015, and FedEx FDX, -6.31%
tumbled 6.3% to suffer the deepest decline since March 2013. The stocks’
combined price declines shaved 140 points off the DJTA’s price.
More
Finally, does history
repeat? Well yes if you’re talking stocks, Wall Street and market rigging. Not
to worry though, if your investing time frame is 48 years according to the
perma-bull spinners, you might come out alright. "The
biggest winners always look expensive," he said. "In the early '70s
you had McDonald's trading at 85 times earnings and yes like everything else,
it got hit, it declined 70 percent to the lows, but it's up 1,200 percent from
the early '70s to today."
Lessons from the 'Nifty Fifty' in the 1970s could be applied to the FANG trade today
Published 2:27 PM ET Wed, 28 Nov
2018
Brutal sell-offs have taken down some of Wall Street's most highly prized stocks.
The FAANG stocks — Facebook, Apple, Amazon, Netflix and Google parent Alphabet – which had driven the markets to records earlier this year have plummeted in the past three months with four-fifths in bear market territory.
Michael Batnick, director of research at Ritholtz Wealth Management, said history could provide some valuable lessons for how to navigate the next wave of selling.
"We have these five stocks, the FAANG stocks, and we think about the narrow leadership there and we compare them to the 'Nifty Fifty' of the early '70s or the dot-com stocks of the late '90s," Batnick told CNBC's "Trading Nation" on Tuesday.
The "Nifty Fifty" was a group of large-cap stocks, such as McDonald's, Disney and Polaroid, prized in the early '70s for their high growth. However, their elevated valuations made them vulnerable to sharp sell-offs and underperformance through the 1980s.
"Obviously what you pay does matter," Batnick said,
using Cisco's run during the dot-com bubble top as
an example. "Cisco, which topped in March of 2000, that was trading at
over 200 times earnings. ... Over the next 18 years, the business earned $115
billion but all those gains were pulled back into the stock price."
Cisco remains 43 percent below its March 2000 record.
However, some high-growth, overvalued stocks might be worth it in the
long run, Batnick said.
"The biggest winners always look expensive," he said. "In
the early '70s you had McDonald's trading at 85 times earnings and yes like
everything else, it got hit, it declined 70 percent to the lows, but it's up
1,200 percent from the early '70s to today."
More
“It has
always been my experience that I never benefited much from a move if I did not
get in at somewhere near the beginning of that move.”
How to Trade In Stocks
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, trial by media. With the victim locked up under Japanese law and
unable to respond in the media, the prosecution leaks like a sieve against him.
I have no idea of the rights and wrongs of the case, but if the leaks are
correct, more fool Nissan and its board for not having proper internal
controls.
By Jason Clenfield and Yuki Hagiwara
Two weeks after Tokyo prosecutors arrested Carlos Ghosn for allegedly under-reporting his compensation, that question is still unanswered. What is certain is that Nissan Motor Co.’s own corporate governance rules gave unusual powers to its former chairman, a business celebrity who was given extraordinary deference for having once rescued the automaker from financial ruin. Those powers included near-total say over how much -- and how -- he was paid, according to Nissan’s own internal rules.
Several
people familiar with the
prosecutors’ investigation now say the probe appears to hinge on a relatively
arcane point of accounting -- whether retirement payments were properly booked.
Whether or not Ghosn broke Japan’s securities law by feeding the wrong numbers
to Nissan’s board and its accountants (at this point, the allegations are
unproven), corporate governance expert Jamie Allen says the deeper question is
how anyone could have gotten away with something like that.
“It all comes back to a lack of internal controls,” said Allen, head of the Hong Kong-based Asian Corporate Governance Association. “If the board genuinely didn’t know that the disclosure of his remuneration was inaccurate, that doesn’t say much for governance. And if they did know, they should take collective responsibility for the failure.”
Fights over pay have been a constant for Ghosn almost since the moment he took over in 1999 as chief operating officer of the then-troubled Japanese automaker. Early on, he caught flack for rewarding Nissan’s senior managers for performance instead of seniority.
Later,
in 2010, when Japan’s new rules on disclosure of executive compensation outed
him as the country’s top-paid boss, he caught flack again. The $10 million he
reportedly made that year might not have been out of line by Western standards,
but it rankled in Japan where the brash Franco-Brazilian executive was seen to
be taking home six times what Toyota Motor Corp.’s chairman made.
It now appears that even those numbers were understated. Ghosn’s salary had actually been much higher before public disclosure was required; to minimize criticism, a plan was devised to defer about half his annual pay until after retirement, keeping the numbers off the books, according to people familiar with the investigation.
Ghosn has denied any rules were broken around deferred compensation, people with direct knowledge of the case have said. His defense is that the amount of such pay wasn’t certain, and therefore it was appropriate to omit it from securities filings, they said. Ghosn hasn’t had an opportunity to respond in public because he’s held in detention, where Japanese law allows people to be kept for weeks without being charged.
Prosecutors were alerted to Ghosn’s alleged wrongdoing after a whistle-blowing tip from inside Nissan.
More
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 University of New South Wales (UNSW) in Sydney and China's Hangzhou Cables have formalized a major collaboration to begin large-scale manufacturing of graphene power cables, which promise to cut electricity costs and improve grid transmission. This is an advancement of the May 2016 engagement between the two.
The agreement, which will move the project into the second stage of development, was formalized at a ceremony to mark UNSW’s Torch Innovation Week, a showcase of Australian and Chinese partnerships. The joint venture between UNSW Sydney and Hangzhou Cables received an additional $3 million (around $2,160,000 USD) funding boost that will transfer laboratory research results into the industrial production of a graphene cable pilot line located in Hangzhou.
An initial 10-meter prototype of the cable technology, developed at the Kensington campus over the past two years, showed that graphene can be used to stop electricity leakage that happens with conventional power cable and grids, which could deliver significant savings in electricity and emissions. The technology was invented by a UNSW research team led by materials scientist Professor Sean Li.
The project is a flagship collaboration of the Torch Innovation Precinct at UNSW – an unprecedented partnership between UNSW-led research teams and Chinese businesses and industries with the capital and market access needed to translate Australian research into high-impact new products, processes and services.
Professor Brian Boyle, UNSW Deputy Vice-Chancellor, Enterprise, announced that according to the test results of the National Measurement Institute (NMI), graphene-copper composite wire developed in phase one of the project reduced resistivity by 3.8%, compared with that of the copper wire within the same area.
Professor Li said the "ultimate goal in phase two is to continue optimizing fabrication parameters to increase China’s grid transmission efficiency by 5%".
It was that said the successful commercialization and application of the
UNSW technology could save about 275 terawatt hours of power a year across
China alone – equivalent to Australia’s entire annual energy consumption.
"Signing the second phase of this project demonstrates the economic
and sustainable impacts our research efforts and global achievements with HCCL
in Hangzhou are making," said Professor Boyle.
Finally, an online treat from the
British Library and its French counterpart. Who needs the wealth and jobs
destroying EUSSR?
This curated selection explores medieval manuscripts that were digitised as part of The Polonsky Foundation England and France Project: Manuscripts from the British Library and the Bibliothèque nationale de France, 700–1200. Discover stunning highlights of illuminated manuscripts set in their cultural and historical context and explored in a range of articles.
All of the 800 manuscripts digitised in the project are included in full on the website France et Angleterre: manuscrits médiévaux entre 700 et 1200 where you can view manuscripts side by side, and find manuscripts by date, language, place of origin, author or subject.
More
“There
is only one side of the market and it is not the bull side or the bear side,
but the right side.”
The monthly Coppock Indicators finished November.
DJIA: 25,538 +157 Down. NASDAQ:
7,331 +205 Down. SP500: 2,760 +129 Down.
Though a strong attempt was made of Friday to dress
up the month-end figures to prevent November becoming a second down month in a
row, the Coppock Indicators still moved down suggesting that there’s still more
of the correction to come. But was the month-end dress up enough to prevent a
massive wave of year-end stock fund redemptions? Probably, after Presidents
Trump and Xi found a way to defer by 90 days the January 1st increase in US
tariffs. But beware the end of March 2019 redemptions if the US v China trade
talks fail.
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