Baltic
Dry Index 939 -43 Brent Crude 61.83
Trump
25 percent tariffs 35 days away. Brexit 64
days away.
Democracy is the art and science of running the
circus from the monkey cage.
H. L. Mencken
In
stockland, it’s still buy, buy, buy! But is it?
There is a growing disconnect between reality in the slowing global
economy and stock prices. Even with the Fed in President Trump’s pocket, will
the Powell Put really be there when it all goes horribly wrong?
Below,
Asia pins its hopes on a new tech boom,
Asian markets rise, riding tech stocks’ wave
Asian shares were mostly higher Friday after a moderate rise on Wall Street.Japan’s benchmark Nikkei 225 NIK, +1.03% rose 1%. Australia’s S&P/ASX 200 XJO, +0.68% added 0.7% in early trading, while South Korea’s Kospi SEU, +1.50% was up 0.9%. Hong Kong’s Hang Seng HSI, +1.41% gained 1.3%, while the Shanghai Composite SHCOMP, +0.89% edged up 0.4%.
----“Our view remains that shares will do better this year thanks to much improved valuations, likely policy support and a stabilization and improvement in global growth. But after a huge rebound since the December lows shares are vulnerable to a short term pull back/re-test of December lows in the face of a long worry list,” said Shane Oliver, chief economist at AMP Capital.
Earlier, the S&P 500 index SPX, +0.14% rose 3.63 points, or 0.1%, to 2,642.33. The benchmark U.S. index is up 12.4% over the last month, but it has slipped 1.1% this week. The Dow Jones Industrial Average DJIA, -0.09% dipped 22.38 points, or 0.1%, to 24,553.24. About two-thirds of the stocks on the New York Stock Exchange closed with gains, but major stock indexes didn’t move much. Positive earnings from chip makers the previous day helped fuel gains, but disappointing earnings from Intel INTC, +3.80% and Western Digital WDC, +6.70% on Thursday sent chip stocks down after hours.
More
Back
in the real world, yet more reasons to treat 2019 stock rallies as exit rallies.
Euro zone business growth dries up in January as new orders shrivel
January 24, 2019 / 11:42 AM
LONDON (Reuters) - Business growth in the euro zone
all but stalled at the start of 2019 as consumer uncertainty, trade tensions
and political woes meant incoming new work fell for the first time in over four
years, a survey found.
The
slowdown has spread across both the services and manufacturing industries, with
factory activity in Germany, the bloc’s powerhouse, also contracting for the
first time in more than four years.
Thursday’s
euro zone survey will make disappointing reading for policymakers at the
European Central Bank who have only just drawn a line under their more than 2.6
trillion euro (2.26 trillion pounds) asset purchase programme that was supposed
to support growth.
----When
asked, only 36 of 65 economists polled said they were confident the ECB would
be able to raise interest rates at all before the next downturn.
IHS
Markit’s Flash Composite Purchasing Managers’ Index sank to 50.7, its weakest
since July 2013, from a final December reading of 51.1, below even the most
pessimistic forecast in a Reuters poll where the median expectation was for a
modest rise to 51.4.
That was
only just above the 50 mark that separates growth from contraction and IHS
Markit said the PMI pointed to first quarter economic growth of fractionally
below 0.1 percent. Last week’s Reuters poll forecast a 0.4 percent expansion.
“Today’s
euro area PMIs confirm the weakness seen last year extended into 2019. Hopes of
a quick rebound in economic activity are unrealistic and the ECB may soon be
forced to consider new stimulus measures,” said Jan von Gerich at Nordea.
More
Chip results augur more tech gloom as slowing China weighs
January 24, 2019 / 9:08 AM
BEIJING/SEOUL (Reuters) - Somber results from
chipmakers SK Hynix Inc (000660.KS)
and Texas Instruments Inc (TXN.O),
on the heels of warnings from tech behemoths Samsung and Apple, indicate more
gloom for the sector as China’s economy slows to its weakest in decades.
A raft of earnings, analyst notes and market commentary in recent weeks have confirmed that a slowdown in the world’s No.2 economy, exacerbated by its crippling trade war with the United States, will continue to squeeze sales and profits at technology companies, at least in the first half of the year.
Chinese woes led to South Korea’s SK Hynix turning in its first quarterly profit decline in two years. The world’s No.2 memory chipmaker, which depends on China for more than a third of its revenue, also said it plans to spend 40 percent less on buying chip equipment this year.
Texas Instruments (TI), supplier of touchscreen controllers, power-management chips and a control device for Apple’s (AAPL.O) iPhones and iPads, reported a better-than-expected quarterly profit, but its revenue missed estimates.
The
Dallas-based company said demand in China was weaker than other regions,
especially for smartphones, including demand from Chinese smartphone makers.
“We are
seeing signs from our customers and the channel that this weakness is primarily
from increased caution due to trade tensions,” Dave Pahl, head of TI’s investor
relations, said.
“We
assume that this weakness is a combination of lower local end-demand as well as
reduced exports, but we do not have the visibility to distinguish between the
two.”
Market
data indicates shipments in China, the world’s largest smartphone market, fell
about 12 percent last year as consumers held on to their older devices.
Economic
growth in the country, which has generated nearly a third of global growth in
recent years, slowed to its weakest in nearly three decades in 2018 and is
expected to ease further this year.
Smartphone
shipments will further dip 3 percent in 2019 to below 400 million for the first
time in five years, market research firm Canalys estimates.
More
Apple dismisses over 200 staff from autonomous vehicle group - CNBC
January 24, 2019 / 6:58 AM
(Reuters) - Apple Inc has dismissed more than 200
employees from its autonomous vehicle group, Project Titan, CNBC reported on
Thursday, citing people familiar with the matter.
The dismissals are seen, internally, as anticipated
restructuring under the relatively new leadership of Project Titan, CNBC said.
“As the team focuses their work on several key
areas for 2019, some groups are being moved to projects in other parts of the
company, where they will support machine learning and other initiatives, across
all of Apple,” the company said in a statement.
However, Apple didn’t confirm or deny the layoffs.
Last year, the iPhone maker hired Doug Field, an
Apple veteran and a Tesla engineering vice president, to lead the Project Titan
team alongside Bob Mansfield.
Global shipping rates slump in latest sign of economic slowdown
January 25, 2019 / 5:09 AM
SINGAPORE (Reuters) - Freight rates for dry-bulk and
container ships, carriers of most of the world’s raw materials and finished
goods, have plunged over the last six months in the latest sign the global
economy is slowing significantly.
The Baltic Dry Index, measure of ship transport
costs for materials like iron ore and coal, has fallen by 47 percent since
mid-2018, when a trade dispute between the United States and China resulted in
the world’s two biggest economies slapping import tariffs on each other’s
goods.
Dry-bulk commodities are taken as a leading
economic indicator, because they are used in core industrial sectors like
steelmaking and power generation, and analysts say the recent declines in
activity point to a serious economic slowdown.
“Signs that the U.S. and China remain well apart in
trade talks continued to weigh on sentiment in commodity markets,” ANZ bank
said in a note on Friday.
This was after U.S. Commerce Secretary Wilbur Ross
said on Thursday the United States and China were “miles and miles” from
resolving their issues.
“The global economy and dry-bulk shipping market
are showing us very real signs of distress,” said Jeffrey Landsberg, managing
director of commodity consultancy Commodore Research.
“While dry-bulk rates often face at least some
pressure during the early stages of a year, the magnitude of the declines being
seen lately have been very rare,” he said.
More
‘Nobody knows anything’: the world economy goes Hollywood
Are markets, instead of being predictive, becoming increasingly reactive and simply extrapolating recent events?
By Anatole Kaletsky January 24,
2019 Updated: 7:10 a.m. GMT
In the film industry, the richest and most experienced studios and producers spend vast amounts of time and money on audience research, but still have no idea if their latest creations will turn out to be hits or flops.
So why be surprised if the same is true of financial markets – or, for that matter, of commodity prices, policymaking, and corporate performance?
Why be shocked if the world’s richest company admits, as Apple did after Christmas, that it has no idea how many iPhones it will sell in China?
Or if the world’s best-informed energy traders predict a global supply shortage that will boost oil prices above $100, just when a supply glut sends the market tumbling to $50? Or if the US president doesn’t know if he hates or loves global trade?
Or if stock markets predict a global economic boom when bond markets predict recession and then both reverse suddenly, contradicting each other in the opposite direction?
At this time last year, economic expectations were almost universally optimistic. Every region of the world appeared to be simultaneously booming for the first time since the 2008 financial crisis.
Central bankers were confident that they could safely start to withdraw their extraordinary monetary stimulus, and stock-market investors were almost unanimously bullish.
Yet 2018 turned into the worst year for investors since the financial crisis, forcing central bankers to begin backing away from their plans to normalise monetary policy, economists to downgrade their growth forecasts, and many businesses to prepare for recession in 2019 or 2020.
What went wrong? Economic data were only slightly weaker than expected in the second half of 2018. The World Bank, for example, has reduced its estimates of global growth in 2018 and 2019 by just 0.1 percentage points, to 3% and 2.9%, respectively, since its June outlook.
The main cause for concern has been the behaviour of financial markets. Many economists saw the simultaneous plunge in long-term interest rates and equity prices in December as an indicator of recession: either investors “know something” awful that is not yet evident in the statistics, or declining market sentiment would become a self-fulfilling prophecy by causing businesses or consumers to cut back.
----So what events, apart from market volatility, would cause a recession or severe global slowdown? A popular answer is simply the passage of time. The global economic expansion that began in 2009 has already lasted almost ten years. If a US recession does not occur by 2020, the country will have experienced the longest uninterrupted expansion in its history.
There is nothing in economic theory or historical
experience to suggest that expansions die of old age, or that recessions happen
spontaneously. But expansions do become more vulnerable to diseases of old age:
high interest rates, rising energy prices, accelerating inflation, or banking
crises that are triggered when unsustainably high property prices suddenly
collapse.
And if none of these economic mishaps occurs,
eventually political leaders can become recklessly overconfident, leading to
wars, trade conflicts, or gross budgetary mismanagement.
More
For every complex problem there is an answer that
is clear, simple, and wrong.
H. L.
Mencken
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over banksters and politicians.
Today, the more things change the more
they stay the same. Who knew, (other than native Americans and Wall Street
stock promoters,) that America was founded on theft.
Sky Views: 200 years ago, the US stole technology. Now, history is repeating itself
Thursday 24 January 2019 10:30, UK
It was a
time of technological marvels. New machines were upending centuries-old ways of
working, transforming the very fabric of daily life.
Politics
was changing, too. Across the world, a new order was emerging, in which weight
of arms was no longer the determining factor. A new military and economic force
had intervened - ideas, crystallised in technology.
In
Britain, the centre of this 18th-century Industrial Revolution, the strategic
value of the new science was very clear. The British treated industrial
knowledge as a state secret, even going so far as to ban mechanics from
emigrating in case they took their techniques to rival nations.
For Britain's former colonial subjects in the new US,
this was a problem. Without the latest science, how could they hope to compete?
Enter
Alexander Hamilton, America's first ever treasury secretary, who proposed a
simple solution: break the law and steal the technology.
Putting
the full weight of the treasury behind the effort, Hamilton sent spies to
observe British industry. He granted passage and patents to immigrating British
mechanics. As his biographer Ron Chernow writes, during Hamilton's tenure as
treasury secretary "the US government condoned something that, in modern
phraseology, could be termed industrial espionage".
In his musical about Hamilton's life, Lin-Manuel
Miranda presents "the ten-dollar founding father" as the ultimate
self-made man, inventing America even as he invented himself. In reality,
Hamilton borrowed from everyone around him - and, when he could not borrow, he
stole. He founded a nation of entrepreneurs with a series of ingenious thefts.
Now, over
200 years later, history is repeating itself. Only, this time, the US is the
superpower having its technological secrets stolen.
According
to the FBI and the State Department, Chinese hackers are stealing the keys to
the second Industrial Revolution. In December last year, the two agencies
accused the Chinese government of directing a systematic campaign of
"economic espionage" against the US and its allies, burglarising its
intellectual property on a massive scale.
FBI
Director Christopher Wray told a news conference: "China's goal, simply
put, is to replace the US as the world's leading superpower - and they're
breaking the law to get there… they want what we have so they can get the upper
hand on us."
In one
sense, this simply shows how little has changed. Nations steal from each other
- what's new about that? Yet something is different about this latest wave of
thefts, beyond the tools used to perpetrate them. Like so many other industries
before it, state conflict is succumbing to digital disruption.
More
It is inaccurate to say that I hate everything. I
am strongly in favor of common sense, common honesty, and common decency. This
makes me forever ineligible for public office.
H. L. Mencken
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?
2D magnetism reaches a new milestone
Date: January 22, 2019
Source: Institute for Basic Science
Summary: Researchers have reported the first
experimental observation of a XY-type antiferromagnetic material, whose
magnetic order becomes unstable when it is reduced to one-atom thickness. These
findings are consistent with theoretical predictions dating back to the 1970s.
Researchers
at the Center for Correlated Electron Systems, within the Institute for Basic
Science (IBS) in South Korea, in collaboration with Sogang University and Seoul
National University, reported the first experimental observation of a XY-type
antiferromagnetic material, whose magnetic order becomes unstable when it is
reduced to one-atom thickness. Published in Nature Communications, these
findings are consistent with theoretical predictions dating back to the 1970s.
Dimensionality
in physics is an important concept that determines the nature of matter. The
discovery of graphene opened the doors of the 2D world: a place where being
one-atom or two-atom thick makes a difference. Since then, several scientists
became interested in experimenting with 2D materials, including magnetic
materials.
Magnetic
materials are characterized by their spin behavior. Spins can be aligned
parallel or antiparallel to each other, resulting in ferromagnets or
antiferromagnets, respectively. Beyond that, all class of materials can, in
principle, belong to three different models according to some fundamental
understanding of physics: Ising, XY or Heisenberg. The XY model explains the
behavior of materials whose spins move only on a plane consisting of the x and
y axis.
Spin
behavior can dramatically change upon slicing down the magnet to its thinnest
level, as 2D materials are more sensitive to temperature fluctuations, which
can destroy the pattern of well-aligned spins. Almost 50 years ago, John M.
Kosterlitz and David J. Thouless, and Vadim Berezinskii independently,
described theoretically that 2D XY models do not undergo a normal magnetic
phase transition at low temperatures, but a very unusual form, later called BKT
transition. They realized that quantum fluctuations of individual spins are
much more disruptive in the 2D world than in the 3D one, which can lead to
spins taking a vortex pattern. Kosterlitz and Thouless were awarded the Nobel
Prize in Physics in 2016.
More
Another
weekend and no end in sight to the slowing global economy, Brexit, and the
partial US government shutdown. I wonder
if it’s time to buy more over priced stocks? Have a great weekend everyone.
On some great and glorious day the plain folks of
the land will reach their heart's desire at last, and the White House will be
adorned by a downright moron.
H. L. Mencken
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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