Baltic
Dry Index 852 -53
Brent Crude 60.40
Trump
25 percent tariffs 31 days away. Brexit 60
days away.
“The world is a place that’s gone from being flat to round to
crooked.”
Mad Magazine.
Add geopolitical war to our unstable world of trade wars, currency wars
and officially denied regime change in the Middle East. Add Venezuela to regime
change too, although that is now official policy in Washington DC.
Former bus driver, and for now still Venezuelan President Maduro, isn’t
likely to fare better than former CIA agent General Noriega, once President of
Panama, although that took a US invasion in the end. For now, Washington’s
hopes lie in cutting off Maduro’s source of foreign exchange.
Given that three million Venezuelans have already fled the collapsing
economy, there’s a pretty good chance it will work, and that Venezuela’s military
high command will switch sides in exchange for an amnesty. I suspect things
will happen pretty fast if it’s going to peacefully happen at all.
Of greater concern this morning is the new geopolitical front the USA is
opening up against China over Huawei. Officially of course, it’s just a run of
the mill “rule of law, legal action,” though few inside or outside of the USA
will see it that way. It’s all part of a
US led attempt to take down China’s Huawei and ZTE high tech companies now
starting to beat silicon valley at their own game.
For now both sides pretend that it won’t impact on the new trade war
talks about to start in Washington tomorrow.
We shall see. To this old dinosaur commodities trader and market watcher,
it’s time to hope for the best but plan for the worst. Plan for a new global
recession in 2019. The Baltic Dry Index seems to agree with me.
Asian markets fall amid worries that Huawei charges may hinder U.S.-China trade talks
Worrying Wall Street earnings also weigh on investors
Asian markets fell — though were last above session lows — on Tuesday after the U.S. Justice Department unsealed criminal charges against China’s Huawei, its subsidiaries and a top executive ahead of trade talks.Japan’s Nikkei 225 index NIK, -0.30% slipped 0.7% and the Kospi SEU, -0.22% in South Korea shed 0.2%. Hong Kong’s Hang Seng index HSI, -0.44% was 0.5% lower and the Shanghai Composite index SHCOMP, -0.29% fell 0.5%. Australia’s S&P ASX 200 XJO, -0.53% , reopening after a holiday, eased 0.4%. Stocks fell in Taiwan Y9999, -0.83% and Singapore STI, -0.55% but rose in Indonesia JAKIDX, -0.37% .
Among individual stocks, SoftBank Group 9984, +0.89% , Sony 6758, -0.69% and Nintendo 7974, +0.67% declined in Tokyo trading. Samsung 005930, +0.22% and steel maker Posco 005490, -0.93% slipped in South Korea. Casino operator Galaxy Entertainment 0027, +0.49% and Apple supplier AAC 2018, +0.63% rose in Hong Kong, while Geely Automobile 0175, -4.70% and oil producer CNOOC 0883, -2.61% fell. Taiwan Semiconductor 2330, -2.62% tumbled after reports that a chemical defect had damaged its production.
U.S. stocks fell Monday on signs that slowing Chinese growth was affecting corporate America. Caterpillar CAT, -9.13% , considered an economic bellwether, reported weaker-than-expected earnings for the fourth quarter of 2018. The company said it expects the growth of construction equipment sales in China to be flat this year. Chipmaker Nvidia NVDA, -13.82% slashed its fourth-quarter revenue estimate, citing slowing demand in China among other reasons. The S&P 500 index SPX, -0.78% lost 0.8% to 2,643.85. The Dow Jones Industrial Average DJIA, -0.84% was down 0.8% at 24,528.22 and the Nasdaq composite COMP, -1.11% gave up 1.1% to 7,085.68.
The U.S. criminal charges against Chinese tech giant Huawei allege that it violated U.S. sanctions by using a Hong Kong shell company to sell equipment in Iran. The company is also accused of stealing trade secrets, including technology behind a robotic device that T-Mobile TMUS, -1.26% used to test smartphones. Several of Huawei’s subsidiaries and its chief financial officer Meng Wanzhou were to also face criminal charges. Meng was arrested while changing flights in Canada last month. China has demanded her release and warned of retaliation against American and Canadian executives.
Treasury Secretary Steven Mnuchin said at a briefing Monday that President Donald Trump is set to meet Chinese Vice Premier Liu He in Washington. Negotiators from both countries are expected to sit down for two days of trade talks starting Wednesday. While a meeting with Trump may show that the U.S. is serious about striking a deal, charges against Huawei could cast a cloud over negotiations going forward.
Charges against Huawei “illustrate the risks attached to the U.S.-China relationship,” DBS Group Research strategists Philip Wee and Eugene Leow said in a commentary. “The actions by the DOJ show that it would not be enough for China to buy more U.S. goods. America wants China to make structural reforms especially on its intellectual property practices,” they added.
More
Huawei denies U.S. violations, ‘disappointed’ by criminal charges
By Associated
Press Published: Jan 28, 2019 11:57
p.m. ET
BEIJING — Chinese tech giant Huawei denied in a
statement Tuesday that it committed any of the violations cited in U.S.
indictments of company.
“The company denies that it or its subsidiary or
affiliate have committed any of the asserted violations of US law set forth in
each of the asserted violations,” the statement said.
---- The Justice Department unsealed criminal charges Monday against Huawei, a top company executive and several subsidiaries, alleging the company stole trade secrets, misled banks about its business and violated U.S. sanctions.
Read: U.S. announces set of indictments against Huawei ahead of trade talks with China
The sweeping indictments accuse the company of using extreme efforts to steal trade secrets from American businesses — including trying to take a piece of a robot from a T-Mobile lab.
As China, U.S. resume trade talks, few indications that a breakthrough is likely
WASHINGTON — Cabinet-level delegations from the
U.S. and China will resume trade negotiations here Wednesday, but early
indications are that the two sides remain sharply divided, suggesting a hard
slog ahead for a deal to be cut before a March 1 deadline.
The Chinese delegation, dozens strong and led by
Vice Premier Liu He, plans to offer a big increase in purchases of U.S. farm
products and energy, along with modest reforms in industrial policies, said
people in China who are closely following the talks. But Beijing will fight
U.S. demands for deep structural changes in the Chinese economy, these people
said. Those demands have included eliminating subsidies to favored industries,
as well as regulatory help and other aid to Chinese companies, especially
state-owned enterprises.
U.S. officials said a draft negotiating document
laying out terms has yet to be assembled. Treasury Secretary Steven Mnuchin
said on Monday he expects “significant progress” in this week’s talks, although
U.S. Commerce Secretary Wilbur Ross said on CNBC last week that the two sides
remain “miles and miles” apart.
“One hope [for the talks] is to get a draft
document on which two sides can negotiate an agreement,” said Hudson Institute
China scholar Michael Pillsbury, who consults with the Trump team. That outcome
is unlikely, he said, given the big gaps between the two sides.
In other China news, the next global recession gets closer with each
passing month.
More Chinese provinces cut growth targets this year as gloom spreads
January 29, 2019 / 3:26 AM
BEIJING (Reuters) - More Chinese provinces have cut
their annual growth targets in 2019 than the year before, a sign of deepening
pessimism among local governments amid weakening domestic demand and an
prolonged trade dispute with the United States.
The lower regional targets reinforce expectations
of a further slowdown in the world’s second-biggest economy this year, after
2018 gross domestic product expanded at its slowest pace in nearly three
decades.
Of China’s 31 provinces, regions and municipalities,
at least 23 cut their economic growth targets for this year, according to
provincial announcements this month. In 2018, 17 provinces set lower targets.
Shandong, China’s third-richest province, has yet
to announce its 2019 target.
Five provinces - Sichuan, Hebei, Guizhou, Gansu and
Hainan - kept their targets unchanged from last year. That compares with 12
provinces that maintained their targets in 2018.
Only one province - Hubei - raised its target,
encouraged by an emerging high-tech manufacturing sector.
More
“The U.N. is a place where governments opposed to free speech
demand to be heard.”
Mad Magazine.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over banksters and politicians.
Below, what the elite think, from Davos. Probably already moot thanks to
geopolitical war.
"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.
Opinion: Three things I learned in Davos, where the exuberance of 2018’s WEF gathering was among the no-shows
By Huw
van Steenis Published: Jan
28, 2019 10:57 a.m. ET
Artificial intelligence replaced blockchain as the big conversational topic, second only to U.S.-China trade, writes senior adviser to the governor of the Bank of England
The mood at Davos was the most uncertain in years. U.S.-China trade tensions, slowing global growth, the backlash against big tech, volatile markets and political standoffs are sowing seeds of doubt with investors and business leaders. It’s a long way from the heady exuberance of a year ago.Conversation the World Economic Forum’s annual gathering in the Swiss Alps was dominated not only by who was there but by who was not. Numerous political leaders stayed home. One investor argued we are seeing the biggest political and policy uncertainty since the 1970s.
Behind the scenes, I found three big themes with special relevance to finance:
1. How worried should we be about artificial intelligence?
AI has replaced blockchain as the big conversation for executives, second only to U.S.-China trade; there were 11 public sessions on AI, the most of any topic. Eighty-five percent of CEOs thought AI and machine learning from huge data sets would dramatically change their business over the next five years, according to a PwC report. But when asked if AI will displace more jobs than it creates, CEOs sat on the fence: 49% think yes, 41% no and 10% don’t know.----2. Will big tech beat big finance?
There has been a sea change in recent years at Davos on the perceived threat from new tech-enabled models to impact banks’ profits. Bankers — and some policy makers — worry that new entrants could undercut banks’ profits and leave banks exposed with expensive legacy costs.The battle between every startup and financial institution comes down to whether the former gets distribution before the incumbent gets innovation. The largest global banks at Davos are dramatically upping their game on digital transformation spending and cyber defences. Little wonder that many of the fintechs that haven’t yet got scale are now looking to partner instead of trying to be disrupters.
But the speed of growth and size of some of the new firms is giving bankers pause for thought. In China, leading platforms have already moved into banking and insurance at scale. Chinese payment firm Ant Financial just passed one billion customers — five times more than Citigroup C, -0.19% . It’s the threat from large platforms becoming more active in financial services that keeps the finance bosses at Davos on their toes.
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?
Innovative technique could pave way for new generation of flexible electronic components
Date: January 24, 2019
Source: University of Exeter
Summary: Researchers have developed an innovative
technique that could help create the next generation of everyday flexible
electronics.
A team of engineering experts have pioneered a new
way to ease production of van der Waals heterostructures with high-K
dielectrics- assemblies of atomically thin two-dimensional (2-D) crystalline
materials.
One such 2-D material is graphene, which comprises
of a honeycomb-shaped structure of carbon atoms just one atom thick.
While the advantages of van der Waals
heterostructures is well documented, their development has been restricted by
the complicated production methods.
Now, the research team has developed a new
technique that allows these structures to achieve suitable voltage scaling,
improved performance and the potential for new, added functionalities by
embedding a high-K oxide dielectric.
The research could pave the way for a new
generation of flexible fundamental electronic components.
The research is published in the journal Science
Advances.
Dr Freddie Withers, co-author of the paper and from
the University of Exeter said: "Our method to embed a laser writable
high-K dielectric into various van der Waals heterostructure devices without
damaging the neighbouring 2D monolayer materials opens doors for future
practical flexible van der Waals devices such as, field effect transistors,
memories, photodetectors and LED's which operate in the 1-2 Volt range"
The quest to develop microelectronic devices to
increasingly smaller size underpins the progress of the global semiconductor
industry -- a collection of companies that includes the tech and communication
giants Samsung and Toshiba -- has been stymied by quantum mechanical effects.
This means that as the thickness of conventional
insulators is reduced, the ease at which electrons can escape through the
films.
In order to continue scaling devices ever smaller,
researchers are looking at replacing conventional insulators with
high-dielectric-constant (high-k) oxides. However, commonly used high-k oxide
deposition methods are not directly compatible with 2D materials.
The latest research outlines a new method to embed
a multi-functional, nanoscaled high-K oxide, only a within van der Waals
devices without degrading the properties of the neighbouring 2D materials.
More
Cary Grant. To Catch A Thief.
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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