Baltic Dry Index. 1385 +13 Brent Crude 59.89
EUSSR: In return for
these few glass beads and this mirror, you will leave the island of Manhattan
forever, but pay us 39 billion for the privilege and allow us to hunt and fish
wherever we want. Dithering May: where do I sign?
While a Canadian
court dithers over whether to grant Huawei’s CFO bail, the first collateral
damage seems to be the British Columbia lumber industry.
“The government of British Columbia on Sunday said it would reschedule a
forestry trade mission to China.”
Probably a wise move if they want spend Christmas
in Canada should the court in BC deny bail.
For now, China is strictly playing by Canada’s legal
rules, waiting to see how Canada extricates itself from the impossible position
President Trump has placed it in. With no respect at all by Trump for Prime Minister Trudeau, there’s more than
a suspicion that the choice of Canada to spring America’s trap was deliberate.
But two can play at legal ploys with unfortunate pawns.
China has many obscure laws and regulations to trip up the unwary. Carlos Ghosn
may just be the first outlier of a new trend for executives in 2019.
Below, nervous
markets remain nervous. Santa’s coming a little late this year it seems,
despite helpful leaks from the US Fed.
China stocks make tentative gains on trade news as Japan’s Nikkei falters in Asia
By MarketWatch
Published: Dec 10, 2018 10:59 p.m. ET
Chinese stock benchmarks have started higher amid a mixed start for Asia,
with mainland equities perhaps helped by the latest trade headlines. The U.S. and China started the latest round of trade talks late Monday with a phone call involving Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He.
The Wall Street Journal reported that the three senior officials discussed Chinese purchases of agricultural products and changes to fundamental Chinese economic policies during the phone call, said people familiar with the conversation. They didn’t provide further details to the Journal.
The Shanghai Composite SHCOMP, +0.23% is up 0.1% and the Shenzhen 399106, +0.59% Composite 0.4% after that benchmark lagged others in China yesterday. Financials lead the gains, while drug makers have stabilizes after their recent slump.
But most blue chips, due to their higher correlation with the macroeconomic climate, may still be clouded by slowing economic growth, says Soochow Securities. It expects techs to be one of the limited bright spots in 2019 for Chinese stocks.
Nomura analysts recommend investors be wary in China. “We believe the markets are putting too much hope on the speed, scale, scope and efficiency of Beijing’s stimulus measures, and that they may be unprepared for a significantly worse slowdown in Q2.”
“Like those who were overly bearish on China several years ago, we caution that those who are overly bullish may be proven similarly mistaken,” the investment bank said.
More
Dow roars back from 500-point decline as stocks close higher
By Sue Chang
and Chris
Matthews Published: Dec 10, 2018 4:33 p.m. ET
Stocks closed higher Monday as major indexes bounced back from earlier
losses as renewed confidence in the strength of the U.S. economy offset
lingering worries over the U.S.-China trade dispute. The Dow Jones Industrial Average DJIA, +0.14% rose 34.31 points, or 0.1%, to end at 24,423.26, while the S&P 500 SPX, +0.18% gained 4.64 points, or 0.2%, to 2,637.72. The Nasdaq Composite Index COMP, +0.74% advanced 51.27 points, or 0.7%, to close at 7,020.52.
At session lows, the Dow had lost more than 500 points, while the S&P had shed 50 points and the Nasdaq had been down 81 points. The S&P 500 closed 1.9% above its intraday low, its biggest such bounce since Feb. 6; the Dow closed 2.1% above its session low for its biggest intraday, upside reversal since April 4, according to Dow Jones Market Data.
Concerns over global growth as well as trade woes overshadowed the market in early going after latest data showing a sharp slowdown in Chinese export growth reinforced fears that the best of the current bull market is behind us.
However, the belief that the U.S. economy, at least, could continue to grow at a healthy pace into next year and beyond neutralized some of the worst jitters, in part due to comments from influential banks such as J.P. Morgan and Goldman Sachs that fears about U.S. economic growth are overblown.
Their views are supported by several indicators, including the ISM survey which shows resilient demand. The Labor Department also said U.S. job openings rose to 7.08 million in October, from 6.96 million a month earlier.
But trade worries have also been getting in the way of traditional end-of-year gains. China’s Vice Foreign Minister Le Yucheng summoned the U.S. ambassador on Sunday to insist the U.S. withdraw its arrest warrant on Huawei’s chief financial officer Meng Wanzhou, who was detained on Dec. 1 in Canada.
More
U.S., China Executives Grow Wary on Travel After Huawei Arrest
Bloomberg News 11 December 2018, 03:45 GMT
Executives from both China and the U.S. are becoming increasingly wary
of traveling after Huawei’s chief financial officer was arrested this month in
Canada.
The Dec. 1 arrest of Meng Wanzhou, chief financial officer of Huawei
Technologies Co., has Chinese business people worried they could be next while
Americans are growing concerned about retaliation. Meng has been detained at
the request of the U.S. on charges of bank fraud related to violations of
American sanctions on Iran, and a bail hearing is ongoing.
“I
can understand why executives might be worried in response to having arrested
the Huawei executive,” said William Zarit, chairman of the American Chamber of
Commerce in China and senior counselor at The Cohen Group, a consulting firm.
“Some executives that might be traveling to China feel like China might invoke
some kind of regulation or unwritten regulation and might retaliate.”
Meng’s arrest as she switched planes in Canada is also causing Chinese
executives to reconsider business travel to the U.S. Zhang Ruimin, chairman and
chief executive officer of household appliance maker Haier Group, said that
firms are concerned in particular because the U.S. and Canada haven’t provided
clear reasons for Meng’s detention.
“It has created a shadow in everyone’s hearts,” Zhang, one of China’s
best-known corporate titans, said in an interview in Qingdao on Monday.
----Still, multinational companies have become more nervous about sending executives to Beijing since the arrest, according to a Hong Kong-based risk consultant whose firm has seen an increase in inquiries about the risk of travel to China in the past week. The consultant didn’t want to be identified because the topic is politically sensitive.
The government of British Columbia on Sunday said it would reschedule a
forestry trade mission to China.
There is reason to be concerned. The People’s Daily, the official voice of the ruling Communist Party, warned on Dec. 9 that Canada would face a “much heavier price” if it didn’t immediately release Meng. Then, over the weekend, the foreign ministry warned of more actions after it summoned both the U.S. and Canadian ambassadors.
Besides any investigations into Iranian sanctions, Chinese executives must also be concerned about a renewed U.S. effort to clamp down on economic espionage. The Justice Department last month announced an initiative to bring more charges against Chinese entities that engage in stealing trade secrets.
Technology firms in particular are on the front lines of the trade
tensions between the world’s two biggest economies. Companies including Cisco
Systems Inc. and Apple Inc. trade with, manufacture in and buy components from
China, with executives traveling regularly between the two regions.
China has previously arrested leaders of multinationals based in other
countries. In 2010, Rio Tinto Group executive Stern Hu was sent to prison in
China for stealing trade secrets and taking bribes. In 2014, a court in China
sentenced Mark Reilly, formerly the company’s top executive in the country, to
three years in prison, though it suspended the sentence, the official Xinhua
News Agency reported.
More
But finally, 2018 may
be as good as it gets for US stocks. With trade wars slowing Asia and Europe
and the Trump tax cut effect rapidly passing in the US economy, plus a new
Democrat war on Trump opening in Washington next month, 2019 is likely to be
stormy for stocks everywhere. If China retaliates against US high tech stocks
over ZTE and Huawei, as seems likely, Nasdaq stocks will likely lead all stocks
lower.
The next worry for U.S. stocks: shrinking profit forecasts
December 10, 2018 / 12:03 PM
NEW
YORK (Reuters) - The growing ranks of stock market Eeyores now have another
reason to stay glum: Next year’s profit picture is darkening fast.
Corporate earnings forecasts are eroding as the tailwind from the tax cut fades and as investors worry the U.S.-China trade dispute could upend global commerce more than it already has.
Even after the second correction of the year for the benchmark S&P 500 .SPX stock index, many investors wonder whether share prices adequately reflect risks of slower profit growth.
Emblematic of the recent turbulence, last week the S&P 500 slid 4.6 percent. The previous week it notched its biggest weekly gain in nearly seven years.
Wall Street analysts have slammed the brakes on estimates for profit growth for S&P 500 companies, which had accelerated for much of the year. Two months ago, 2019 profit growth was pegged at 10.2 percent; it is now seen at 8.2 percent, and growing ranks of doubters reckon growth could slow to half that rate or less.
“It may be more in the line of 3 to 4 percent,” said Paul Nolte,
portfolio manager at Kingsview Asset Management in Chicago, adding the market
has yet to price that in.
“The risk to that estimate is the downside. Right now, the equity market
is focused more on trade than they are earnings.”
Morgan Stanley’s outlook warned of more than a 50 percent chance of a
“modest earnings recession,” or two quarters of year-over-year profit declines.
That last occurred when earnings declined for four straight quarters starting
in the third quarter of 2015.
In recent weeks, top strategists at RBC Capital Markets, BNP Paribas and
Bank of America Merrill Lynch have forecast 2019 earnings per share growth
below the rate compiled by Refinitiv, an aggregate of estimates from analysts
covering individual companies.
Among
the deepest profit downgrades have been for the technology and communications
sectors that had carried the market higher through the latest stages of the
bull market.
More
Elsewhere, no deal is better than a 585 page bad deal, to the
UK parliament. In what had been obvious to all except Her Majesty’s Government
and the out of touch Brussels Eurocrats, HMG was headed for disaster if this
deal was presented for a vote in Parliament, and very probably a new general election
in late January or early February. Brussels, like President Trump with Huawei,
seems to have outsmarted itself. With a little luck, GB will soon have a new competent
Prime Minister who believes in Brexit, and not some 21st century
version of Lord North.
Brexit in turmoil as May pulls vote to seek changes to EU divorce
December 10, 2018 / 9:35 AM
LONDON
(Reuters) - British Prime Minister Theresa May on Monday postponed a
parliamentary vote on her Brexit deal to seek more concessions but the European
Union refused to renegotiate and lawmakers doubted her chances of winning big
changes.
May’s abrupt move less than 30 hours before parliament was to vote opens
up a range of possibilities from a Brexit without a deal, a last-minute
agreement or another EU referendum.
Admitting she faced defeat on Britain’s potentially biggest political
and economic shift since World War Two, May was laughed at by some lawmakers
when she said there was broad support for key aspects of her deal reached with
the EU last month.
The EU reacted coolly, with European Council President Donald Tusk
saying it was ready to discuss how to smooth ratification, but that neither the
withdrawal agreement nor the Irish backstop would be renegotiated.
“As time is running out, we will also discuss our preparedness for a
no-deal scenario,” Tusk said. Brexit will be discussed at a previously
scheduled EU summit on Dec. 13-14.
May will first meet Dutch Prime Minister Mark Rutte and German
Chancellor Angela Merkel on Tuesday.
The vote postponement marks what many lawmakers cast as the collapse of
May’s two-year attempt to forge compromise under which the United Kingdom would
exit the EU while staying closely within its orbit.
The EU’s 27 other members, with a combined economic might six times that
of the United Kingdom, appeared unlikely to countenance substantive changes
which could convince her domestic opponents.
A costly British exit without a negotiated accord looks increasingly
likely, French European Affairs Minister Nathalie Loiseau said following May’s
decision.
More
“There
are arguments for remaining in the EU and there are arguments for leaving the
EU. But there is no case whatever for giving up the benefits of remaining
without obtaining the benefits of leaving.”
Mervyn King. Governor of the Bank of England 2003 – 2013.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over.
Today, justice Japan style.
First the verdict via the media then the trial. I wonder when this will catch
on in America? Is this to become a new trend in 2019?
Ghosn, Nissan formally charged in financial misconduct scandal
December 10, 2018 / 1:58 AM
TOKYO (Reuters) - Tokyo prosecutors
indicted ousted Nissan Motor chairman Carlos Ghosn for under-reporting his
income and also officially charged the automaker, making the firm culpable for
the financial misconduct scandal that has shocked the industry.
Ghosn was arrested on Nov. 19 on suspicion of conspiring to understate
his compensation by about half of the actual 10 billion yen (69.1 million
pounds) over five years from 2010.
He has been held in a Tokyo jail since then for questioning, but had not
been officially charged until now. Prosecutors re-arrested him on Monday on
fresh allegations of understating his income for three more years through March
2018.
Nissan, which fired Ghosn as chairman days after his arrest, has said
the misconduct was masterminded by the once-celebrated executive with the help
of former Representative Director Greg Kelly, who was also indicted for the
first time on Monday.
Ghosn and Kelly have not made any statement through their lawyers, but
Japanese media reported that they have denied the allegations. Calls to Ghosn’s
lawyer, Motonari Otsuru, at his office went unanswered.
Nissan, indicted for filing false financial statements, said it takes
the charge seriously.
---- Japan’s securities watchdog, the Securities and Exchange Surveillance Commission (SESC), said the crime carried a fine of up to 700 million yen.
Analysts and legal experts say it will be difficult for Nissan and its
Chief Executive Hiroto Saikawa to avoid blame, regardless of whether other
executives knew about Ghosn’s misconduct or that the company lacked internal
controls.
“It becomes difficult to overlook Saikawa’s role in all of this. That
becomes the main focus now,” prominent lawyer and former prosecutor Nobuo
Gohara said.
Ghosn, if convicted, faces up to 10 years in prison and/or 10 million yen in fines under the Financial Instruments and Exchange Act.
Ghosn’s arrest marks a dramatic fall for a leader once hailed for rescuing Nissan from the brink of bankruptcy.
The once-feted executive has been treated like others in detention, held in a small chilly room. Authorities have limited his opportunities to shower and shave, according to a person familiar with the matter.
Asked about criticism that Japanese prosecutors often try to force
confessions from suspects, deputy prosecutor at the Tokyo District Public
Prosecutors Office, Shin Kukimoto, said no such method was being used with
Ghosn and Kelly.
“Questioning is by no means being conducted in a way that forces
confession,” he told a news conference. “It’s my understanding that both of
them are being treated appropriately at the Tokyo Detention Center.”
More
Jean-Claude
Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of
Finance Ministers. Confessed liar. European Commission President. Scotch
connoisseur.
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?
New traffic rules in 'Graphene City'
Topological control of electrons means future electronic roadways are now possible
Date:
December 7, 2018
Source:
Penn State
Summary:
In the drive to find new ways to extend electronics beyond the use of silicon,
physicists are experimenting with other properties of electrons, beyond charge.
Physicists now describe a way to manipulate electrons based on their energy in
relation to momentum -- called 'valley degree of freedom.'
In the drive to find new ways to extend electronics beyond the use of silicon,
physicists are experimenting with other properties of electrons, beyond charge.
In work published today (Dec 7) in the journal Science, a team led by
Penn State professor of physics Jun Zhu describes a way to manipulate electrons
based on their energy in relation to momentum -- called "valley degree of
freedom."
"Imagine you are in a world where electrons are colored -- red or
blue," Zhu said, "and the roads that electrons travel on are also
colored red or blue. Electrons are only allowed to travel on roads of the same
color, so that a blue electron would have to turn into a red electron to travel
on the red road."
Two years ago, Zhu's team showed that they could build color-coded,
two-way roads in a material called bilayer graphene. Because of their
color-coding, these roads are topological. In the current study, the
researchers made a four-way intersection where the color-coding of the roads is
switched on the other side. Therefore, you have a situation where a blue car
traveling northbound comes to this intersection and discovers that on the other
side of the intersection northbound roads are colored red. If the electron
cannot change color, it is forbidden from traveling onward.
These roads are actually electron waveguides created by gates defined
with extreme precision using state-of-the-art electron beam lithography. The
colors are actually the valley index of the cars, and the color-coding of the
roads is controlled by the topology of the waveguides, analogous to the
left-driving and right-driving rules of different countries. Changing the color
of the cars requires "inter-valley scattering," which is minimized in
the experiment to enable the traffic control to work.
"What we have achieved here is a topological valley valve, which
uses a new mechanism to control electron flow," Zhu said. "This is
part of a fledging field of electronics called valleytronics. In our
experiment, controlling the topology -- the valley-momentum locking of the
electrons -- is what made it work."
In the study, the researchers asked where would the metaphorical blue
car go if it could not travel onward?
"It will have to turn either left or right," said lead author
Jing Li, Zhu's former doctoral student, now a director's postdoctoral fellow at
Los Alamos National Lab.
"We have additional ways of controlling the turning traffic -- by
moving the lane incrementally closer to a right or left turn, the percentage of
electrons/cars turning right or left can be smoothly tuned to be 60 percent one
way, 40 percent the other, or any other combination of percentages."
This controlled partition is called a "beam splitter," which
is common for light but not easily accomplished with electrons. Zhu and Li said
they are excited about this control they have achieved for their color-coded
roadways, as it enables more advanced experiments down the road.
"The creation of the device requires many steps and fairly
complicated e-beam lithography," Li said. "Thankfully, Penn State's
state-of-the art nanofabrication facility as well as a team of professional
support staff enabled us to do all this."
The next challenge for Zhu's team will be to try to build their devices
to operate at room temperature rather than at the very cold temperatures they
currently need. It is doable, Zhu believes, but challenging.
"The approach we took to make this device is scalable," Zhu
said. "If large-area bilayer graphene and hexagonal boron nitride become
available, we can potentially make a city of topological roads and shuttle
electrons to places they need to go, all without resistance. That would be very
cool."
Jean-Claude
Juncker. Failed former Luxembourg P.M., serial liar, president of the European
Commission. Scotch
connoisseur.
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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