Monday, 14 January 2019

A Recession Looms. Bunker Time.


Baltic Dry Index. 1169 -20     Brent Crude 59.82

"We will not have any more crashes in our time."

John Maynard Keynes, 1927.

Don’t look now but is that a new global recession looming into view? Has Trump’s trade wars, plus central banks baby steps tightening, already sickened the goose that laid the golden eggs? This morning it’s increasingly looking like a real possibility.

Add in 25 percent US tariffs still proposed for activation on China on March 2, and Brexit kicking off on March 29, and a pretty bleak start to the year looks set to get bleaker yet.  Bunker time.

Below, the world’s number two economy is no longer firing on all cylinders. There’s a lot of black smoke pouring out of the EUSSR too.


John Kenneth Galbraith

Asian markets fall as China reports slowdown in exports

By Marketwatch and Associated Press  Published: Jan 13, 2019 11:53 p.m. ET
Shares were lower in Asia on Monday, extending the latest losses on Wall Street, as China reported a slowdown in exports.

Hong Kong’s Hang Seng index HSI, -1.41%   lost 1.4% while the Shanghai Composite SHCOMP, -0.50%   fell 0.6%. The Kospi SEU, -0.65%   in South Korea declined 0.7% and Australia’s S&P ASX 200 XJO, +0.02%   gave up 0.3%. Shares also fell in Taiwan Y9999, -0.70%   and Southeast Asia. Japan’s markets were closed for a holiday.

Among individual stocks, oil producer CNOOC 0883, -3.74%   and tech giant Tencent 0700, -2.72%   each fell in Hong Kong trading, chip maker SK Hynix 000660, -4.30%   tumbled in South Korea and Taiwan Semiconductor 2330, -1.59%   slipped in Taiwan.

China said Monday that its exports to the U.S. contracted in December although its overall trade surplus with the U.S. hit a record $323 billion in 2018. Exports to the U.S. rose 11.3% to $478.4 billion for the year despite punitive tariffs imposed by President Donald Trump in a fight over Chinese technology ambitions. The customs data showed imports of American goods rose just 0.7% over 2017, reflecting the impact of Beijing’s retaliatory tariffs and encouragement to importers to buy more from non-U.S. suppliers.
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China's exports shrink most in 2 years, raising risks for global economy

January 14, 2019 / 2:31 AM
BEIJING (Reuters) - China’s exports unexpectedly fell the most in two years in December and imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand.

Adding to policymakers’ worries, data on Monday also showed China posted its biggest trade surplus with the United States on record in 2018, which could prompt President Donald Trump to turn up the heat on Beijing in their cantankerous trade dispute. 

Softening demand in China is already being felt around the world, with slowing sales of goods ranging from iPhones to automobiles prompting profit warnings from the likes of Apple and Jaguar Land Rover.

The dismal December trade readings suggest China’s economy may have lost more momentum late in the year than earlier thought, despite a slew of growth boosting measures in recent months ranging from higher infrastructure spending to tax cuts.

Some analysts had already speculated that Beijing may have to speed up and intensify its policy easing and stimulus measures this year after factory activity shrank in December.

Exports in December unexpectedly fell 4.4 percent from a year earlier, with demand in most of its major markets weakening. Imports also saw a shock drop, falling 7.6 percent in their biggest decline since July 2016.

“Export growth dropped more than anticipated as global growth softened and the drag from U.S. tariffs intensified. Import growth also fell sharply in the face of cooling domestic demand. We expect both to remain weak in the coming quarters,” Capital Economics said in a note.

“Meanwhile, with policy easing unlikely to put a floor beneath domestic economic activity until the second half of this year, import growth is likely to remain subdued.”
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Automakers in China brace for another bumpy ride after tough 2018

January 14, 2019 / 3:16 AM / Updated an hour ago
BEIJING (Reuters) - Car makers in China are bracing for zero to tepid growth in sales this year, after a tough 2018 when the world’s top auto market probably contracted for the first time in about two decades, as slowing economic growth drags on demand.

Companies such as homegrown Geely (0175.HK) and Britain’s biggest automaker Jaguar Land Rover have in recent days flagged caution about China sales in 2019, hit also by Beijing’s trade war with the United States.

“We should notice the big uncertainties among macro economy and trade tensions, which hit the auto market in China last year and may happen again this year,” Yale Zhang, head of consultancy AutoForesight, told Reuters.

China’s top auto industry association expects the country to sell 28 million vehicles in 2019, steady versus 2018, while other government and industry bodies see a 0-2 percent growth.

China’s Association of Automobile Manufacturers (CAAM) is expected to announce later on Monday that the country’s car market contracted in 2018, the first time since the 1990s.

---- Automobile sales in China fell about 14 percent in November from a year ago, steepest in nearly seven years and the fifth straight decline in monthly numbers.
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Has Europe already entered recession?  Taking the top 5 economies, Germany, GB, France, Italy and Spain, industrial production fell in November in all five, following declines in October in all but France. For Germany, GB and Italy it was a third consecutive decline. With the ECB ending its life support and Brexit still to come, if the EU isn’t yet in a new recession it probably will be by Easter.

November Industrial Production.
Germany -1.9.  GB -1.5. France -1.3. Italy -1.6. Spain -2.6.

In US news will California’s PG&E file for bankruptcy later today?

CEO exits as PG&E faces fire liabilities, bankruptcy preparations

January 14, 2019 / 1:36 AM / Updated an hour ago
(Reuters) - PG&E Corp (PCG.N) Chief Executive Geisha Williams has stepped down, the company said on Sunday, as pressure from potentially crushing liabilities linked to catastrophic wildfires have pushed the California utility owner to the financial brink and prompted it to make bankruptcy preparations.

Williams, who took the helm of the provider of electricity and natural gas to millions of customers in March 2017, will be replaced by General Counsel John Simon on an interim basis, the company said. She also resigned from the boards of both PG&E and its utility subsidiary, Pacific Gas and Electric Co.

---- PG&E is reeling from the November Camp fire that began in the California mountain community of Paradise and swept through the town, eventually killing at least 86 people in the deadliest and most destructive blaze in state history.

The company faces widespread litigation, government investigations and liabilities that could potentially reach $30 billion, according to analyst estimates, when accounting for the carnage and damage from last year’s fire and blazes in 2017.

The company is under pressure from the California Public Utilities Commission to make operational changes. The power provider announced on Jan. 3 that it was reviewing its structural options and looking for new directors with safety experience.

The management shake-up comes as PG&E is in discussions with banks for a multibillion-dollar bankruptcy financing package to aid operations during bankruptcy proceedings and the company prepares to alert employees as soon as Monday to its preparations for a potential Chapter 11 court filing, people familiar with the matter said.

PG&E, which carries a hefty debt load of more than $18 billion, is expected to disclose soon a large financial charge related to liabilities resulting from the November blaze.
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Finally, with NATO allies like the USA, Turkey doesn’t need any enemies. Trump threatens Turkey with economic devastation. Does NATO have a future anymore? What happens if Turkey leaves NATO?

Trump warns Turkey of economic devastation if it hits Kurds

Washington (AFP) Date created :
President Donald Trump warned Turkey on Sunday of economic devastation if it attacks Kurdish forces in the wake of the US troop pullout from Syria, while also urging the Kurds not to "provoke" Ankara.

Trump took to Twitter to reveal some of his latest thoughts in the slow drip-drip of information being released by his administration after his shocking December announcement of the troop withdrawal.

His top diplomat Mike Pompeo is on a whirlwind regional tour aimed at reassuring allies amid rising tensions between the US and Turkey over the fate of Washington's Syrian Kurdish allies in the fight against the Islamic State group.

Pompeo also sought to reassure Washington's Kurdish allies in the fight against IS, who fear the departure of American troops would allow Turkey to attack them.

Turkey had reacted angrily to suggestions that Trump's plan to withdraw troops was conditional on the safety of the US-backed Kurdish fighters, seen by the Turkish government as terrorists.

"Will devastate Turkey economically if they hit Kurds," Trump tweeted, while pushing for the creation of a 20-mile (30-kilometer) "safe zone."

"Likewise, do not want the Kurds to provoke Turkey."

Trump did not detail who would create, enforce or pay for the safe zone, or where it would be located.

US-led operations against IS in Syria have been spearheaded on the ground by the Kurdish-dominated Syrian Democratic Forces (SDF).

Ankara sees the backbone of that alliance, the Kurdish People's Protection Units (YPG), as a terrorist group linked to the Kurdistan Worker's Party (PKK) which has fought a decades-long insurgency against the Turkish state.

On Saturday, more than 600 people were evacuated from the remaining IS holdout in eastern Syria, a monitor said, as US-backed fighters prepare for a final assault on the area.

"Starting the long overdue pullout from Syria while hitting the little remaining ISIS territorial caliphate hard, and from many directions. Will attack again from existing nearby base if it reforms," Trump said.

"Russia, Iran and Syria have been the biggest beneficiaries of the long term US policy of destroying ISIS in Syria - natural enemies. We also benefit but it is now time to bring our troops back home. Stop the ENDLESS WARS!"
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If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.

John Maynard Keynes

Crooks and Scoundrels Corner

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

Not the usual crooks today. Today the American War Party desperate to start World War Three. How much longer will these war mongers longing be denied?

White House Sought Options to Strike Iran

State and Pentagon officials were rattled by the request

Jan. 13, 2019 5:30 a.m. ET
WASHINGTON—On a warm night in early September, militants fired three mortars into Baghdad’s sprawling diplomatic quarter, home to the U.S. Embassy.

The shells—launched by a group aligned with Iran—landed in an open lot, harming no one. But they triggered unusual alarm in Washington, where President Trump’s national security team conducted a series of meetings to discuss a forceful American response.

As part of the talks, Mr. Trump’s National Security Council, led by John Bolton, asked the Pentagon to provide the White House with military options to strike Iran. The request, which hasn’t been previously reported, generated concern at the Pentagon and State Department, current and former U.S. officials say.

“It definitely rattled people,” said one former senior U.S. administration official. “People were shocked. It was mind-boggling how cavalier they were about hitting Iran.”

The Pentagon complied with the National Security Council’s request to develop options for striking Iran, the officials said. But it isn’t clear if the proposals were provided to the White House, whether Mr. Trump knew of the request or whether serious plans for a U.S. strike against Iran took shape at that time.

Garrett Marquis, a spokesman for the National Security Council, said the body “coordinates policy and provides the president with options to anticipate and respond to a variety of threats.”

“We continue to review the status of our personnel following attempted attacks on our embassy in Baghdad and our Basra consulate, and we will consider a full range of options to preserve their safety and our interests,” he said.

Mr. Bolton’s request reflects the administration’s more confrontational approach toward Tehran, one that he has pushed since taking up the post last April.

As national security adviser, Mr. Bolton is charged with providing a range of diplomatic, military and economic advice to the president.
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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?

Chemical synthesis of nanotubes

Nanometer-sized tubes made from simple benzene molecules

Date: January 10, 2019

Source: University of Tokyo

Summary: For the first time, researchers used benzene -- a common hydrocarbon -- to create a novel kind of molecular nanotube, which could lead to new nanocarbon-based semiconductor applications.

Researchers from the Department of Chemistry have been hard at work in their recently renovated lab in the University of Tokyo's Graduate School of Science. The pristine environment and smart layout affords them ample opportunities for exciting experiments. Professor Hiroyuki Isobe and colleagues share an appreciation for "beautiful" molecular structures and created something that is not only beautiful but is also a first for chemistry.

Their phenine nanotube (pNT) is beautiful to see for its pleasing symmetry and simplicity, which is a stark contrast to its complex means of coming into being. Chemical synthesis of nanotubes is notoriously difficult and challenging, even more so if you wish to delicately control the structures in question to provide unique properties and functions.

Typical carbon nanotubes are famous for their perfect graphite structures without defects, but they vary widely in length and diameter. Isobe and his team wanted a single type of nanotube, a novel form with controlled defects within its nanometer-sized cylindrical structure allowing for additional molecules to add properties and functions.

The researchers' novel process of synthesis starts with benzene, a hexagonal ring of six carbon atoms. They use reactions to combine six of these benzenes to make a larger hexagonal ring called a cyclo-meta-phenylene (CMP). Platinum atoms are then used which allow four CMPs to form an open-ended cube. When the platinum is removed, the cube springs into a thick circle and this is furnished with bridging molecules on both ends enabling the tube shape.

It sounds complicated, but amazingly, this complex process successfully bonds the benzenes in the right way over 90 percent of the time. The key also lies in the symmetry of the molecule, which simplifies the process to assemble as many as 40 benzenes. These benzenes, also called phenines, are used as panels to form the nanometer-sized cylinder. The result is a novel nanotube structure with intentional periodic defects. Theoretical investigations show these defects imbue the nanotube with semiconductor characters.
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The BBC, taxing poor people in Britain to pay astronomical sums to rich people, who then insult their beliefs and views.

The monthly Coppock Indicators finished December.

DJIA: 23,327 +115 Down. NASDAQ: 6,635 +152 Down. SP500: 2,507 +90 Down. 
Normally this would suggest more correction still to come, but with President Trump wanting to be judged by the performance of the stock market and his Treasury Secretary activating the Plunge Protection Team after the Christmas Eve Crash, will a politicised PPT cover the President’s back? [Yes] Probably the safest action here is fully paid up synthetic double options on most of the major indexes.

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