Baltic Dry Index. 1260 -07 Brent Crude 57.80
Don’t
Fight the Fed.
Wall
Street Adage.
Wall Street fought the Fed last week and Wall Street (and
President Trump) won! By Thursday the Fed members were signalling a reversal of
interest rate hikes was not only possible but probable, in response to the
collapse of Apple and the major stock indexes. By Friday morning, Chairman
Powell was eating crow, signalling a Powell Put, and generating a massive rally
on Wall Street.
Another victory for President Trump’s re-election
campaign. “Bubbles” Greenspan style, the Fed is back in the bubble business
again, although to this old dinosaur market follower, it’s dangerously late in
the game to be blowing new stock bubbles.
Below, Asia follows the Fed’s lead. What could possibly
go wrong.
To Infinity and Beyond.
Fed Chairman
Powell, with apologies to Buzz Lightyear.
Nikkei leaps amid broad gains for Asian markets
Asian markets were broadly higher on Monday after strong U.S. jobs data lifted indexes on Wall Street. All eyes were on trade talks in Beijing, where American and Chinese officials are trying to resolve a trade dispute that threatens to worsen an economic slowdown and put a drag on the global economyJapan’s benchmark, bouncing back from steep losses last week, started the day trading over 3% higher. By midday, the Nikkei 225 index NIK, +2.72% was up 2.8% after Prime Minister Shinzo Abe said Sunday the government would keep a close eye on risk as it plots out its economic policy. “Japan’s economic fundamentals are sound, but we’d like to guide policy with a close eye on the various risks,” he said, according to Reuters. Toyota shares 7203, +2.93% jumped 3% and Honda 7267, +3.69% surged 3.4%. SoftBank Group 9984, +4.23% rose more than 4% and Nintendo 7974, +5.26% gained more than 5%.
Hong Kong’s Hang Seng HSI, +0.67% climbed 0.7%, with Apple AAPL, +4.27% iPhone component makers AAC 2018, +2.09% and Sunny Optical 2382, +2.11% up more than 2% each following steep losses last week. Tech giant Tencent 0700, +1.74% rose 1.7%.
The Shanghai Composite index SHCOMP, +0.44% gained 0.4% and the smaller-cap Shenzhen Composite 399106, +1.27% rose 1.2%.
South Korea’s Kospi SEU, +1.15% gained 1.2% as Samsung 005930, +2.94% jumped 3%. Australia’s S&P-ASX 200 XJO, +1.11% added 1.2%. Shares also rallied in Taiwan Y9999, +2.00% and throughout Southeast Asia.
More
Stocks ride relief rally, Sino-U.S. trade a hurdle
January 6, 2019 / 11:54 PM
SYDNEY (Reuters) - Asian shares sped ahead
on Monday as a dovish turn by the Federal Reserve and startlingly strong U.S.
jobs data soothed some of the market’s worst fears about the global outlook.
Chinese stocks firmed after the country’s central bank announced an
easing in policy on Friday, with 100 basis points of cuts to bank reserve
requirements freeing up around $116 billion for new lending.
“This year we might reasonably expect to see as many as four 100 basis
point (reserve requirement ratio) cuts and, in the absence of capital outflow
pressures on the currency, quite possibly cuts to the benchmark one-year
lending rate as well,” said National Australia Bank head of FX strategy Ray
Attrill.
Chinese officials also meet their U.S. counterparts for trade
negotiations starting later Monday, the first face-to-face talks of the year.
U.S. President Donald Trump said on Sunday
that the talks were going very well and that weakness in the Chinese economy
gave Beijing a reason to work toward a deal.
---- Powell has another speech on Thursday
to expand on his thinking, while there are at least eight other Fed officials
scheduled to speak this week.
---- Analysts at Bank of America Merrill Lynch noted global equity markets had lost $19.9 trillion since January last year, and a record $84 billion had flowed out of stocks in just the past six weeks.
With 2,055 of 2,767 U.S. and global companies in a bear market, it might
be time to buy.
“Our Bull & Bear Indicator has fallen to an ‘extreme bear’ reading,
triggering the first ‘buy’ signal for risk assets since June 2016,” they wrote
in a note.
More
Well plenty could go
wrong according to Sven Henrich. "Sven Henrich
is founder and the lead market strategist of NorthmanTrader.com.
He has been a frequent contributor to CNBC and MarketWatch, and is well-known
for his technical, directional and macro analysis of global equity markets."
Stock-market investors, it’s time to hear the ugly truth
By Sven
Henrich Published: Jan 5, 2019 6:45 a.m. ET
The Federal Reserve is propping up the market — and here’s the evidence
For years critics of U.S. central-bank policy have been dismissed as
Negative Nellies, but the ugly truth is staring us in the face: Stock-market
advances remain a game of artificial liquidity and central-bank jawboning, not
organic growth. And now the jig is up.
As I’ve been saying for a long time: There is zero evidence that markets
can make or sustain new highs without some sort of intervention on the side of
central banks. None. Zero. Zilch.
And don’t think this is hyperbole on my part. I will, of course, present
evidence.
In March 2009 markets bottomed on the expansion of QE1 (quantitative
easing, part one), which was introduced following the initial announcement in
November 2008. Every major correction since then has been met with major
central-bank interventions: QE2, Twist, QE3 and so on.
When market tumbled in 2015 and 2016, global central banks embarked on
the largest combined intervention effort in history. The sum: More than $5
trillion between 2016 and 2017, giving us a grand total of over $15 trillion,
courtesy of the U.S. Federal Reserve, the European Central Bank and the Bank of
Japan:
When did global central-bank balance sheets peak? Early 2018. When did
global markets peak? January 2018.
And don’t think the Fed was not still active in the jawboning business
despite QE3 ending. After all, their official language remained “accommodative”
and their interest-rate increase schedule was the slowest in history, cautious
and tinkering so as not to upset the markets.
With tax cuts coming into the U.S. economy in early 2018, along with record buybacks, the markets at first ignored the beginning of QT (quantitative tightening), but then it all changed.
And guess what changed? Two things.
In September 2018, for the first time in 10 years, the U.S. central bank’s Federal Open Market Committee (FOMC) removed one little word from its policy stance: “accommodative.” And the Fed increased its QT program. When did U.S. markets peak? September 2018.
And with the sugar high of the tax cuts fading, it was too much. Add trade wars and global growth slowing, and it was more than markets could handle.
And so, yes, the timing was perfect and you can see it in the chart:
----The Fed likes to claim it is managing policy based on the economy, not on markets. But here’s the ugly truth on that: The economy these days is very much tied to market performance. Big drops in markets have an adverse impact on the economy, full stop. Hence, it is a fallacy to argue that one looks at one but not the other.
After all, tell me when the Fed ever raises rates during a massive
market correction? The answer: Never. It’s always the other way around.
As soon as markets drop, all plans for rate hikes and/or balance-sheet
reductions come to a sudden halt:
Recognizing the market’s newfound sensitivity to QT, the Fed was sure to react. After all, markets were sensitive to slowing growth in China, Apple’s AAPL, +4.27% warning this week and the renewed sell-off in markets as a result.
And what did we get Friday morning? The predictable jawbone: “[Fed Chairman Jerome] Powell signals he’s flexible on interest rates.”
More
https://www.marketwatch.com/story/stock-market-investors-its-time-to-hear-the-ugly-truth-2019-01-05
Japan's Abe says vigilant to global economic risks clouding recovery
January 6, 2019 / 1:22 AM
TOKYO (Reuters) - Japan’s
government will keep a close eye on looming risks to a global economic recovery
as it guides policy, Prime Minister Shinzo Abe said in an interview aired by
public broadcaster NHK on Sunday.
Signs of slowing global demand
and recent sharp rises in the yen currency have clouded the outlook for the
export-reliant economy, prompting verbal warnings from Tokyo policymakers over
the adverse impact of volatile market moves on growth.
“While the global economy is recovering gradually, there are various
risks to the outlook,” Abe said in the interview, recorded on Friday.
“Japan’s economic fundamentals are sound, but we’d like to guide policy
with a close eye on the various risks.”
Japan will also seek to mend Sino-U.S. trade frictions by promoting
global coordination as it chairs this year’s meeting of the Group of 20 major
economies, Abe said.
“As G20 chair, Japan hopes to play a leading role to foster global
cooperation ... to achieve stable, sustainable growth,” he said, adding that
both the United States and China must abide by World Trade Organization (WTO)
rules on trade.
Any further signs of weakness in Japan’s economy could heighten market
speculation that Abe might again delay a scheduled sales tax hike to 10 percent
from 8 percent in October.
More
Samsung Electronics braces for profit drop as China slowdown chips away at demand
January 6, 2019 / 11:06 PM
SEOUL (Reuters) - Samsung Electronics Co
Ltd is set to post its first drop in quarterly operating profit in two years as
slowing economic growth in China, a key market for the South Korean tech giant,
erodes demand for its products.
Bleak results from the world’s top maker of semiconductors and
smartphones would add to worries for investors, already on edge after Samsung’s
biggest rival Apple Inc this week took the rare step of cutting its sales
forecast on slowing iPhone demand in China.
Samsung, due to publish preliminary fourth-quarter results on Jan. 8, is
expected to see a 12 percent year-on-year drop in operating profit to 13.3
trillion won ($11.85 billion) for the period, I/B/E/S data from Refinitiv
shows.
More
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
John Kenneth Galbraith
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over
banksters and politicians.
No crooks again today. Today, as goes Western Australia
so goes the world’s trains? Pilotless planes next?
With new autonomous train, Australia is now home to the world’s largest robot
01.3.19
When
you hear that the world’s largest robot has gone live in Australia, your mind
might conjure up something like an anime-style giant mech. In fact, the
announcement comes from iron ore mining company Rio Tinto, which recently launched
its fully automated rail network: A series of mine-to-port trains able to
run completely free from human intervention. These AutoHaul trains travel an
approximately 800-kilometer return journey, taking 40 hours to complete,
including loading and dumping their cargo. The rail network is set up in the
Pilbara region of Western Australia.
But why turn this job over to machines to run? According to the company representative we contacted, there are several reasons. (And, no, immediately getting rid of employees isn’t one of them. Rio Tinto says that no layoffs are expected in 2019 as a result of the new train line.)
“We are already seeing cycle time improvements through consistent driving strategies and productivity benefits by removing the need for driver changeovers,” the spokesperson continued.
“There are also benefits to safety. It greatly reduces the 1.5 million kilometers of light vehicle travel by drivers who have had to travel to meet trains for changeovers. Other benefits include reduced risk at level crossings and automated responses by the train to speed restrictions and incidents.”
Trains are, of course, just one transportation technology currently experiencing a shakeup thanks to breakthroughs in fields like robotics and artificial intelligence. Self-driving cars are probably the best known of these, but there is also massive development in everything from autonomous boats to pilotless planes to, yes, flying cars on the horizon. One thing is for sure: The world of transportation in the 2020s is going to look very, very different from any previous point in history. We are cautiously excited to see what’s next.
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?
Artificial intelligence can detect Alzheimer’s in brain scans six years before a diagnosis
01.03.19
Artificial intelligence could one day change the lives of people facing an
Alzheimer’s diagnosis, according to a new study
by researchers at UC, San Francisco.“One of the difficulties with Alzheimer’s disease is that by the time all the clinical symptoms manifest and we can make a definitive diagnosis, too many neurons have died, making it essentially irreversible,” said Jae Ho Sohn, a resident in the school’s Department of Radiology and Biomedical Imaging and the study’s lead researcher, in a statement.
For the study, published in Radiology, Sohn and his team fed a common type of brain scans to a machine-learning algorithm, and it learned to diagnose early-stage Alzheimer’s disease about six years before a clinical diagnosis could be made. The AI’s diagnostic skills could give doctors a much-needed headstart on treating the degenerative disease.
Sohn and his team focused on PET scans that monitored glucose levels across the brain, because glucose is the primary source of fuel for brain cells. Once the cells become diseased, they eventually stop using glucose, making it an important level to track. However, the changes are subtle—at least to the human eye. “Human radiologists are really strong at identifying tiny focal finding like a brain tumor, but we struggle at detecting more slow, global changes,” Sohn said. “Given the strength of deep learning in this type of application, especially compared to humans, it seemed like a natural application.”
Sohn and his team trained the algorithm on PET scans from patients who were eventually diagnosed with either Alzheimer’s disease, mild cognitive impairment, or no disorder. The algorithm began to figure out how to predict Alzheimer’s disease. Eventually, it was able to correctly identify 92% of patients who developed Alzheimer’s disease in the first test set and 98% in the second test set, making correct predictions on average 75.8 months (for the math-impaired, that’s
While the algorithm isn’t quite ready for clinical use, it could eventually help doctors start treating patients much earlier.
https://www.fastcompany.com/90287723/artificial-intelligence-can-detect-alzheimers-in-brain-scans-six-years-before-a-diagnosis
“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."
John Kenneth Galbraith. The Great Crash: 1929.
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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