Wednesday 23 January 2019

Is Trump Making Recession Inevitable?


Baltic Dry Index. 1036 -56     Brent Crude 61.88  

Trump 25 percent tariffs 37 days away.  Brexit 66 days away.

Nothing is so admirable in politics as a short memory.

John Kenneth Galbraith.

Is Trade War Team Trump making recession inevitable? From London this morning, to this old dinosaur it looks like recession probably is inevitable.  Trump’s trade war hooligans are playing Russian roulette with the global economy. Trump’s over reaching DOJ is playing Russian roulette with China over Canada’s hapless Huawei pawn.

Normally it’s the Fed and some of the other central banksters who trigger the next recession. This time round, it looks to me like it will be Washington’s politicians. Keep a sharp eye on the sinking Baltic Dry Index.

Below, a dismal start to a dismal day. (Well my car is covered in snow this morning, as are many of the local roads.)

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

Trump won't soften hardline on China to make trade deal: advisers

January 23, 2019 / 1:07 AM
WASHINGTON (Reuters) - As much as U.S. President Donald Trump wants to boost markets through a trade pact with China, he will not soften his position that Beijing must make real structural reforms, including how it handles intellectual property, to reach a deal, advisers say.

Offering to buy more American goods is unlikely by itself to overcome an issue that has bedeviled talks between the two countries. Those talks are set to continue when Chinese Vice Premier Liu He visits Washington at the end of January. 

The United States accuses China of stealing intellectual property and forcing American companies to share technology when they do business in China. Beijing denies the accusations.

With a March 1 deadline approaching to reach an agreement or risk an escalation of tariffs on another $200 billion worth of Chinese goods, the two sides are still far apart on key, structural elements critical for a deal, according to sources familiar with the talks.

“We’re not yet in a position where our concerns have been addressed sufficiently,” one U.S. official said, speaking on condition of anonymity. The official said the Trump team, led by hardline U.S. Trade Representative Robert Lighthizer, was focused on such structural issues as well as trade imbalances.

White House economic adviser Larry Kudlow told Reuters that forced technology transfers, IP theft and ownership restrictions remained a top priority for Trump.

“The president’s said many times how crucial that is, and he’s not going to back down,” Kudlow said.
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Asian stocks pause amid worries over growth and trade

January 23, 2019 / 1:23 AM
TOKYO (Reuters) - Asian stocks took a breather on Wednesday, with mounting signs of slowing global growth and concerns over a yet-unresolved Sino-U.S. trade dispute putting the brakes on investor appetite for risk assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was mostly unchanged, stalling after climbing to a seven-week high on Monday.

The Shanghai Composite Index .SSEC was last up 0.1 percent, having flitted in and out of the red.
Australian stocks were a shade lower and Japan's Nikkei .N225 nudged up 0.2 percent.

On Wall Street, the S&P 500 .SPX, the Nasdaq .IXIC and the Dow .DJI all posted their biggest one-day percentage drops since Jan. 3 on Tuesday.

---- But putting a dent on sentiment again was a report by the Financial Times that the Trump administration had rejected an offer from China for preparatory trade talks this week ahead of high-level negotiations scheduled for next week.

White House economic adviser Larry Kudlow denied the report, helping U.S. equities pare some losses though the fresh concerns about U.S.-China relations kept share prices in check.

Data published over the last 24 hours all pointed to a rough year ahead for the world economy.

U.S. home sales tumbled 6.4 percent in December, falling short of the weakest forecast, to their lowest in three years. Compared with a year earlier, they were down more than 10 percent for the first time since 2011.

House price increases slowed sharply, adding to evidence of a further loss of momentum in the housing market.

Canadian factory sales and wholesale trade both slumped more than expected in November, while in Germany a survey by the ZEW research institute showed morale among German investors improved slightly in January, but their assessment of the economy’s current condition deteriorated to a four-year low.
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BOJ cuts inflation view, keeps stimulus as risks to economy heighten

January 23, 2019 / 3:12 AM
TOKYO (Reuters) - The Bank of Japan cut its inflation forecasts on Wednesday and warned of rising risks to the economy from faltering global demand, further pushing back policymakers’ years-long efforts to foster durable growth.

As widely expected, the BOJ retained its ultra-easy monetary settings at its policy review, leaving Japan some way off from exiting a sweeping stimulus program begun in 2013. 

The central bank also maintained its view that Japan’s economy, the world’s third largest, will continue to expand at a modest pace. Yet the rising pressure on global growth from a trade war between the United States and China - Japan’s biggest trading partners - has many analysts wary about the outlook.

---- The BOJ warned the domestic economy faces risks on several fronts, including protectionism, Brexit and U.S. economic policy.

“Such downside risks concerning overseas economies are likely to be heightening recently, and it also is necessary to pay close attention to their impact on firms’ and households’ sentiment in Japan,” it said.

A Reuters poll of economists showed those external factors have increased the chances of Japan sliding into a recession this coming fiscal year starting in April, making it ever so harder for the BOJ to reach its 2 percent inflation target.

Moreover, the International Monetary Fund (IMF) trimmed its global growth forecasts and a survey showed increasing pessimism among business chiefs amid the trade tensions.
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How a corporate debt pileup could intensify the global economic slowdown

By Sunny Oh  Published: Jan 22, 2019 12:15 p.m. ET
As worries rise over the outlook for global growth, excessive debt levels are drawing the eyes of nervous investors worried that more countries will struggle to shoulder their debts.

Adam Slater, lead economist for Oxford Economics, says the risks from the growing buildup of credit across the globe is worse than in previous years, with the dangers chiefly emanating from corporations that took advantage of low interest rates to borrow heavily. 

“Overall, credit vulnerabilities look greater than when we last looked in 2017; the corporate credit channel in particular could worsen a global economic slowdown,” he said, in a Monday note.

---- The one-two punch of a slower economy and tightening financial conditions could result in a feedback loop as companies dependent on credit cut back on spending or even fall into bankruptcy, dampening growth further.

“An intensification of the recent growth slowdown and further drops in asset prices…could also trigger a negative ‘financial accelerator’ effect with higher debt defaults, tighter bank lending conditions and more cautious behavior by firms,” said Slater.

According to his analysis, the primary contributor to the rising tide of global debt was corporate lending growth in countries like China, France and Canada, and not so much from households. Global household debt levels have remained relatively stable since 2008.
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Finally, when the elites and deep state thwart democracy. The decline and fall of the west.

When Democracy Fails to Deliver

“Those who make peaceful revolution impossible … make violent revolution inevitable,” said John F. Kennedy.

In 2016, the U.S. and Britain were both witness to peaceful revolutions.

The British voted 52-48 to sever ties to the European Union, restore their full sovereignty, declare independence and go their own way in the world. Trade and immigration policy would henceforth be decided by a parliament elected by the people, not by bureaucrats in Brussels.

“Brexit” it was called. And British defiance stunned global elites.

Two and a half years later, Britain is still inside the EU, and no one seems to know when or whether the divorce will take place — a victory of London and European elites over the expressed will of the British people.

Appalled by the Brexit vote, these elites played a waiting game, broadcasting warnings of what could happen, to panic the British public into reconsidering and reversing its democratic decision.

Losing candidates and losing parties accept defeat and yield power.

Establishments have agendas they do not regard as subject to electoral repudiation or repeal. Defeated, they use their non-electoral powers to prevent unwanted policies from ever being implemented.

Call it limited democracy.

In 2016, Donald J. Trump was elected president when a spirit of rebellion against America’s failed elites roiled both parties. Both the Trump campaign and the Ted Cruz campaign, which ran second in the Republican race, offered anti-establishment ideas. So, too, did the Bernie Sanders campaign in the Democratic primaries.

Trump’s defining agenda was basically this:

He would build a wall across the Mexican border to halt the flood of illegal migrants. He would extricate us from the half dozen Middle East wars into which Bush II and Obama had plunged us.

He would abrogate the trade deals that had seen imports from NAFTA nations, China, the EU and Japan replace goods made in the USA. He would halt the shuttering of tens of thousands of U.S. factories and the hemorrhaging of millions of manufacturing jobs.

He would call off the new cold war with Russia.

Halfway through this presidential term, where are we?

Part of the U.S. government has been shut down for a month. The wall has not been built and may never be. President Trump’s decision to pull 2,000 U.S. troops out of Syria has met massive resistance from our foreign policy establishment. Trump is being pushed to confront Russia from the Baltic to the Black Sea and to trash the intermediate-range nuclear missile treaty that Ronald Reagan negotiated with Mikhail Gorbachev.

And we are being pushed toward a new Mideast war with Iran.

This was the establishment’s agenda, not Trump’s.

We have lately learned that after Trump fired FBI Director James Comey, a cabal inside the FBI initiated a counterintelligence investigation to discover if Trump was a conscious agent of a Kremlin conspiracy.
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"In economics, hope and faith coexist with great scientific pretension."

John Kenneth Galbraith.

Crooks and Scoundrels Corner

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

Today, the dodgy EUSSR again. Remember when the EUSSR sold horsemeat as EU beef. Buy Aberdeen Angus get Belgian Dobbin.  Today some follow up. This is the same EU that won’t allow in US washed chicken. Slap on 25 percent tariffs on German motors and watch how fast US chicken becomes available in Europe’s Aldis and Lidls.

Below, the trial starts only 5 years too late. Deutsche Bank in trouble again.

Four on trial in Paris over horsemeat scandal

Date created : 21/01/2019 - 16:45
Four people went on trial in Paris on Monday over a 2013 meat scandal in Europe that saw millions of meals withdrawn from supermarket shelves after they were found to contain horse instead of beef.

Two former executives from a meat processing company in the south of France, as well as two meat traders from the Netherlands, face a range of serious fraud charges which could see them sentenced to up to ten years in jail.

Supermarkets across Europe pulled millions of suspect food products like frozen lasagne and meatballs from their shelves in 2013 in a scandal that deepened wariness about the meat industry and food safety on the continent.

The four men are accused of helping organise the sale of 500 tonnes of horsemeat in 2012-2013 to a subsidiary of Comigel, a French company whose frozen meals were sold to 28 different companies in 13 European countries.

The alleged racket saw cheap horsemeat from Belgium, Romania and Canada imported into France and then labelled incorrectly as beef, with the meat processing company Spanghero and the Dutch middlemen pocketing the profits.

The former managing director of Spanghero, Jacques Poujol, as well as the manager of its factory in the region of Occitanie, Patrice Monguillon, are on trial in Paris.

They appeared Monday for the start of hearings alongside Dutch meat trader Hendricus Windmeijer, while the fourth accused, Johannes Fasen, was not in court.

Both Dutchmen have convictions for a similar fraud in 2012 in their home country.

Hearings are expected to run until February 13.

Fed to Probe Deutsche Bank Over Suspicious Danske Cash

By Jesse Hamilton and Sonali Basak
·        


Regulator is said to scrutinize German lender’s U.S. business
·         Billions flowed from an Estonian outpost through New York

The Federal Reserve is examining how Deutsche Bank AG handled billions of dollars in suspicious transactions from Denmark’s leading lender, according to people familiar with the matter, further intensifying what could be one of the biggest money-laundering scandals ever.
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Jean-Claude Juncker. Failed former Luxembourg P.M., serial liar, president of the European Commission. 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?

First raft of EV batteries hits the end of the road. Here’s where they go to ‘die’

Used EV batteries provide fewer kilometres of driving per charge and require more frequent plug-ins, but that doesn't mean they're toast

January 18, 2019 1:27 PM EST

EV batteries don’t ride off into the sunset when they’re done, they go to the corner store and chill.
That’s one of the second revenue streams developed for the first raft of batteries now hitting the end of their operational cycle — 10 years in an electric or hybrid car and four years in a more heavily used bus or taxi,

Used EV batteries typically provide fewer kilometres of driving per charge and require more frequent plug-ins, but still retain 50 to 70 percent capacity.

In less demanding applications, that residual capacity spells another seven to 10 years of productive use.

So, rather than trash used batteries — China, in fact, expressly forbade the practice in August — or recycle them for raw materials such as cobalt, automakers and other companies have begun to pursue a second revenue stream from the same product.

The batteries are stripped from an auto chassis and broken down into smaller modules to be repackaged and reused.

For example, Toyota is installing end-of-life batteries from vehicles such as the Prius hybrid outside 7-Eleven stores in Japan in 2019.

When solar panels generate power in excess of store demand, the batteries charge; when there is a shortage, the batteries help run the soda coolers and other appliances in the stores.
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The BBC, taxing poor people in Britain to pay astronomical sums to rich people, who then insult their Brexit 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.
Hopefully a USA – China trade deal reinvigorates the markets, but failure and 25 percent tariffs, is a market killer.

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