Baltic Dry Index. 1247 -13 Brent Crude 57.48
“If
you're not gonna pull the trigger, don't point the gun.”
James
Baker. United States Secretary of the Treasury under President Ronald Reagan,
and U.S. Secretary of State and White House Chief of Staff under President
George H. W. Bush.
Day two
of the USA v China trade fight talks in Beijing. Will it be deal, or no
deal? With deal, and the Federal Reserve covering President Trump’s back in the
stock market, we probably get the exit bubble in US stocks. With no deal but
further talks down the road, possibly after the Chinese New Year February 5th
to 19th, there’s very little time left before the current tariff
deadline of March 1.
But
will there be enough progress to extend the deadline by another 90 days? The
prospect of US tariffs on Chinese exports jumping to 25 percent on March 1,
followed almost immediately with a UK no deal Brexit on WTO terms on March 29,
is probably a shock to the global economy to great. The equivalent of playing Russian roulette
with all but one of the chambers loaded.
Below,
great expectations of a deal.
"Did he fire six shots or only
five?" Well to tell you the truth in all this excitement I kinda lost track myself. But being
this is a .44 Magnum, the most powerful handgun in the world and would blow
your head clean off, you've gotta
ask yourself one question: "Do I feel lucky?" Well, do ya, punk?
President Trump, with apologies to Dirty Harry.
Asian shares propped up by hopes for Sino-US trade deal, cautious Fed
January 8, 2019 / 12:49 AM
TOKYO (Reuters) - Most Asian shares were
propped up on Tuesday by hopes that Washington and Beijing may be inching
towards a trade deal and that U.S. Federal Reserve would halt its tightening if
economic growth slows further.
Japan's Nikkei .N225 rose 0.9 percent while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ticked up just 0.1 percent, though it was dragged down by falls in China .CSI300 and Taiwan .TWII.
On Wall Street, the S&P 500 .SPX gained 0.7 percent on Monday following 3.4 percent surge on Friday, with Amazon.com Inc (AMZN.O) and Netflix (NFLX.O) leading the rally.[.N]
Gains in tech names allayed some fears, sparked by Apple’s sales warnings last week, that the high-flying sector is starting to be hurt by the Sino-U.S. trade war.
“Market pessimism has been rolled back, partly helped by hopes as talks between China and the U.S. are underway. But many investors are still trying to play it safe and it is yet to be seen whether the recovery continues, or ends up as a short-term relief rally,” said Masanari Takada, cross-assets strategist at Nomura Securities.
---- Investor also continued to buy battered stocks in response to strong U.S. job data on Friday and comments by Fed Chairman Jerome Powell that he was aware of the risks and would be patient and flexible in policy decisions this year.
Powell’s comments have eased market concerns that the U.S. central bank
might ignore signs of an economic slowdown and stick to its script of two rate
hikes this year.
“Various concerns markets had earlier are receding for now. Still,
there’s no denying that U.S. earning momentum is slowing,” said Hirokazu
Kabeya, chief global strategist at Daiwa Securities.
More
U.S., China can reach trade deal 'we can live with' - U.S. Commerce secretary
January 7, 2019 / 7:46 AM
BEIJING/WASHINGTON (Reuters) - U.S. Commerce
Secretary Wilbur Ross predicted on Monday that Beijing and Washington could
reach a trade deal that “we can live with” as dozens of officials from the
world’s two largest economies resumed talks in a bid to end their trade
dispute.
Ross told CNBC the immediate trade issues would be easiest to tackle
while enforcement issues and structural reforms, such as intellectual property
rights and market access, would be more challenging to resolve.
“I think there’s a very good chance that we will get a reasonable
settlement that China can live with, that we can live with and that addresses
all of the key issues,” Ross said in an interview with CNBC.
China’s Foreign Ministry said Beijing had the “good faith” to work with
the United States to resolve trade frictions as Chinese officials met their
U.S. counterparts in Beijing for the first face-to-face talks since U.S.
President Donald Trump and Chinese President Xi Jinping agreed in December to a
90-day truce in a trade war that has roiled global markets.
After the first day of talks wrapped up, Chinese importers made their
third large purchase of U.S. soybeans in the past month, Chicago-based traders
said. But China has bought only around 5 million tonnes since purchases resumed
in December, less than 20 percent of the beans it bought a year earlier.
---- The two sides agreed to hold “positive and constructive” dialogue to resolve economic and trade disputes in accordance with the consensus reached by their respective leaders, Foreign Ministry spokesman Lu Kang told a regular news briefing.
“From the beginning we have believed that China-U.S. trade friction is
not a positive situation for either country or the world economy. China has the
good faith, on the basis of mutual respect and equality, to resolve the
bilateral trade frictions.”
----
“As for whether the Chinese economy is good or not, I have already explained
this. China’s development has ample tenacity and huge potential,” Lu said. “We have
firm confidence in the strong long-term fundamentals of the Chinese economy.”
More
China Can’t Meet ‘Draconian’ U.S. Demands, Says Ex-Goldman Exec
Bloomberg News
7 January 2019, 06:48 GMT
China has moved quickly to meet “reasonable demands” from the U.S. to help
end the ongoing trade
war but shouldn’t dismantle its governance model as some in U.S.
President Donald Trump’s administration want, former Goldman Sachs China
chairman Fred Hu said Monday.Lower taxes on automobile imports and a new law banning forced technology transfers were sincere efforts by Beijing to resolve a U.S.-China trade conflict that has roiled markets for almost a year, Hu said at an annual conference on Greater China organized by UBS Group AG. Hu, founder of the investment firm Primavera Capital Group, is also on the board of UBS
.
Trade officials from the two nations will meet in Beijing this week for the first face-to-face negotiations since the U.S. President Trump and Chinese President Xi Jinping agreed in December to a 90-day truce. The standoff has led to factories seeing orders slump in both countries. American farmers are hurting as is Apple Inc., while Chinese markets ended 2018 with the world’s worst stock rout.
While China has made taken some steps, it cannot and should not meet “aggressive and draconian” demands from some of the more hawkish Trump advisers such as dismantling the entire Chinese model of state-led capitalism, according to Hu. He added that instances of forced technology transfer were “very rare” in his multi-decade experience in advising overseas companies operating in the Asian country.
The Chinese style of state-led development
has proved effective in reducing poverty and building public infrastructure,
said Hu. “China has proven it can build infrastructure very quickly and there
are merits to this model,” he said. Meanwhile “the U.S. government can be shut
down over a wall.”
Factory Deflation Looms in China, Posing Risk to Global Prices
Bloomberg News
China’s producer prices are set to weaken on soft demand and lower
commodity costs, adding another headwind to policymakers already struggling
with trade tensions and a deteriorating growth outlook.
"Upstream prices fell much more significantly, which means
year-over-year producer-price inflation is likely to be lower than consumer
inflation for the first time in eight quarters and may enter negative territory
very soon," Song Yu, chief China economist at Beijing Gao Hua Securities
Co., Goldman Sachs Group Inc.’s mainland joint-venture partner, wrote in a
recent note.
December’s PPI index is estimated to slow
to 1.6 percent, the slowest pace since 2016, according to the median forecast
of economists ahead of data due Thursday. Jiang Chao from Haitong Securities
Co. says the turning point could come in January as steel and coal prices drop
and oil prices remain low.
Sliding factory prices will further erode
industrial profits, weakening China’s highly-indebted companies’ ability to
repay their loans. There’s also a clear link between China’s factory and export
prices, meaning the PPI slide could act as a drag on the global price outlook
too.
The country experienced a 4 1/2 year
streak of factory deflation from 2012 to 2016, compounding its debt problems
and adding to the world’s deflationary challenge. Lower factory prices increase
the real interest rate for related companies.
Finally, opinion censored from the
extreme left wing, Brussels Broadcasting Corporation, rabidly, pro-EUSSR news.
BBC: "the
propaganda arm of the EU."
Martin Durkin. Brexit Filmmaker.
Opinion: Britain should quit Europe and unilaterally declare free trade
By Peter
Morici Published: Jan 7, 2019
4:47 a.m. ET
The European Union is failing, and populism — ordinary folks are rebelling against the hubris of
elites — is rising.The EU’s primary antecedent, European Economic Community (1957), was structured to bring down barriers to trade — a customs union with antitrust enforcement powers to crack the cartelization of national markets by private and public actors — and permit workers and capital to move freely across borders.
It has since morphed into an expansive bureaucracy that dictates all manner of immigration, economic and social policies but has not attained the democratic institutions and fiscal powers necessary to manage a continental economy.
Free trade always has victims, but the EEC delivered dynamic growth from the consolidation of businesses across national boundaries. And just as international economic textbooks predict, the rising tide raised all boats. In recent decades, however, the EU’s expanded bureaucracy reach and single currency have not delivered enough growth.
----- The gilets jaunes riots inspired Macron to react like a man controlled by an alien force. Confronted by complaints that fuel taxes were crushing ordinary people, Macron lectured about the need to lower carbon emissions and reminded “when we change things, we shake up habits and people aren’t necessarily happy.”
Let them eat cake!
The EU bureaucracy is now cracking down on duly-elected national governments to
force Italy to adhere to the eurozone’s unworkable national budget rules,
Hungary to take down its border fence and stop enforcing its
national immigration laws, and Poland to block its efforts to make its judiciary
accountable to Polish values and not those of international civil society.
---- Unable to keep the U.K. in the EU, May would make it a colony.
Britons should read the Declaration of Independence, and get a new prime
minister — pronto!
The new leader could inform European Commission Jean-Claude Juncker and
all the other oligarchs of Europe’s ruling class that on March 29 — the date
the U.K. is scheduled to leave — his government will declare unilateral free
trade with Europe. It would continue to permit EU banks and professionals to do
business and work in the UK if the EU does the same.
Brussels can take it or leave it — remember the continent needs London’s
financial sector and U.K. markets as much as the U.K. industries needs theirs.
If the EU doesn’t comply, then London doesn’t pay the $50 billion divorce
settlement and makes a hard break.
The transition would be painful for Britain but Europe will still need
London’s financial sector to enable its follies — European banking would no
more move from London to Frankfort than American banking would move to
Charlotte if Manhattan became an independent country.
Anyway the future is in artificial intelligence and other such stuff
where the U.K. will do a lot better unchained from EU dysfunction.
Italy and others would follow and that would begin the process of
returning the EU to its original but more limited mission — free trade!
“The
Brexiteers outside looked from May to Merkel, and from Merkel to May and from May to Merkel again; but
already it was impossible to say which was which.”
With
apologies to George Orwell, Animal Farm.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over
banksters and politicians.
Today, that trade war. Be careful what you wish for.
Chinese tech investors flee Silicon Valley as Trump tightens scrutiny
January 7, 2019 / 6:09 AM
SAN
FRANCISCO (Reuters) - New Trump administration policies aimed at curbing
China’s access to American innovation have all but halted Chinese investment in
U.S. technology startups, as both investors and startup founders abandon deals
amid scrutiny from Washington.
Chinese venture funding in U.S. startups crested to a record $3 billion
last year, according to New York economic research firm Rhodium Group, spurred
by a rush of investors and tech companies scrambling to complete deals before a
new regulatory regime was approved in August.
Since then, Chinese venture funding in U.S. startups has slowed to a
trickle, Reuters interviews with more than 35 industry players show.
U.S. President Donald Trump signed new legislation expanding the
government’s ability to block foreign investment in U.S. companies, regardless
of the investor’s country of origin. But Trump has been particularly vocal
about stopping China from getting its hands on strategic U.S. technologies.
The new rules are still being finalised, but tech industry veterans said
the fallout has been swift.
“Deals involving Chinese companies and Chinese buyers and Chinese
investors have virtually stopped,” said attorney Nell O’Donnell, who has
represented U.S. tech companies in transactions with foreign buyers.
Lawyers who spoke to Reuters say they are feverishly rewriting deal
terms to help ensure investments get the stamp of approval from Washington.
Chinese investors, including big family offices, have walked away from
transactions and stopped taking meetings with U.S. startups. Some
entrepreneurs, meanwhile, are eschewing Chinese money, fearful of lengthy
government reviews that could sap their resources and momentum in an arena
where speed to market is critical.
Volley Labs, Inc, a San Francisco-based company that uses artificial intelligence to build corporate training materials, is playing it safe. It declined offers from Chinese investors last year after accepting cash from Beijing-based TAL Education Group (TAL.N) as part of a financing round in 2017.
“We decided for optical reasons it just wouldn’t make sense to expose ourselves further to investors coming from a country where there is now so much by way of trade tensions and IP tensions,” said Carson Kahn, Volley’s CEO.
A Silicon Valley venture capitalist told Reuters he is aware of at least ten deals, some involving companies in his own portfolio, that fell apart because they would need approval from the interagency group known as the Committee on Foreign Investment in the United States (CFIUS). He declined to be named for fear of bringing negative attention to his portfolio companies.
More
China Adds to Gold Reserves for First Time Since October 2016
By Ranjeetha Pakiam
7 January 2019, 10:38 GMT
After a hiatus of more than two years, China is adding to its gold
reserves again.
The People’s Bank of China increased holdings to 59.56 million ounces by
the end of December, or about 1,853 metric tons, from 59.24 million ounces
previously, according to data on the central bank’s website. They had been
unchanged since about 130,000 ounces were added in October 2016.
The world’s biggest producer and consumer boosted holdings of bullion in
a month marked by mounting concerns that China’s trade dispute with the U.S. is
threatening economic growth. Spot gold had its strongest month in almost two
years as those fears spurred gyrations in equities and the dollar and boosted demand
for the precious metal as a haven.
Speculation that the Federal Reserve may pause its interest rate hikes has given further strength to gold’s rally into the new year and assets in bullion-backed exchange-traded funds are at a seven-month high. Spot gold was trading 0.5 percent higher at $1,291.83 an ounce.
“It’s a bullish sign for gold,” Matthew Turner, a commodities strategist at Macquarie Group Ltd. in London, said by phone. “The reasons could be diversification, a wish to get away from the dollar, but it’s hard to be certain because we just don’t know enough about what their motivations are.”
The Asian nation has previously spent long periods without revealing increases in gold holdings. When the central bank announced a 57 percent jump in reserves to 53.3 million ounces in July 2015, it was the first update in six years.
----It’s not just China buying. Poland and
Hungary surprised the market in 2018 by adding to their gold holdings for the
first time in many years. Central banks were expected to increase
their purchases of gold in 2018 for the first time in five years as eastern
European and Asian countries seek to diversify their reserves, according to an
October projection by consultancy Metals Focus Ltd.
21st
century adage: Is that true, or did you hear it on the BBC?
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?
Turning Solar Energy Into Liquid Fuel
January 6th, 2019 by Nicolas Zart
Of
all the strange things we do as a race on this planet, refining and
over-complicating things are some of them. We’re never satisfied with letting
things be and often time favor extravagant conspiracy theories over reality.
After all, how would the opposing piston engine and the convoluted internal
combustion engine system have worked until now otherwise? Even though it has
brought us this far, we need to get rid of inefficiency for more effective
solar thermal energy storage systems.
The
thought of turning sunshine into liquid fuel might sound like a step back, but
hear me out. The solar thermal energy storage system I’m referencing uses a
liquid isomer to store and release solar energy. The discovery could lead to
more widespread use of solar energy throughout the world, according to the
researchers behind it.
One of the biggest energy problems for northern and southern countries is with the harvesting and storing of their vast solar energy. These countries have made great strides with hydro and thermal energy systems, but solar thermal energy storage is still a developing field. By using a cobalt-based catalyst, the energy is released as heat, much like how concentrated solar molten salt tanks work. This makes solar energy transportable and a contender for on-demand energy needs.
In a journal article released here, the team explains how it was able to release the heat in a macroscopic molecular solar thermal energy storage system, called MOST.
The system works using a solar thermal collector with a pipe that transports the fuel to be transformed into quadricyclane. It then flows into storage tanks and can be shipped anywhere. The site explains it as “a photoswitchable parent molecule that absorbs sunlight undergoes a chemical isomerization to a metastable high energy species.”
There
are more ways to store the sun’s energy than we can imagine, and all have their
pros and cons. By harvesting solar thermal energy and shipping anywhere
worldwide, energy needs can be met basically in any location on the planet —
and beyond. But this raises a question. It reminds me of the petroleum business
model — drilled in specific places and shunted throughout the world. We can
only hope that as solar thermal energy storage picks up international interest,
it will be as decentralized and removed as far away from concentrated interests
as possible.
FDR 1932.
GB Brexit 2019.
GB Brexit 2019.
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.
Hopefully a USA – China trade deal
reinvigorates the markets, but failure and 25 percent tariffs, is a market killer.
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