Baltic
Dry Index 797 -55
Brent Crude 61.46
Trump
25 percent tariffs 30 days away. Brexit 59
days away.
The mystery of government is not how Washington works but how to
make it stop.
P. J. O’ Rourke.
Today, it’s all about waiting for the Fed’s action
or inaction on interest rates and their explanation of why they’re not in
President Trump’s pocket. Plus watching the oil market for any sign that Venezuela’s
oil exports will take a big drop from US sanctions.
Of interest too, the start of the latest high-level
trade talks between China and the USA, intended to head off Trump’s punitive 25
percent tariffs scheduled for the start of March. All will be focused on
how each side spins the outcome of day one. Judging by the rapidly sinking
Baltic Dry Index, the shipping industry sees a new recession at hand, probably due
to the increasing slowdown in China’s economy.
Below, Asia is nervously higher, but why play a 50:50
bet?
Asian markets mostly higher ahead of Fed meeting, latest trade talks
Asian markets mostly rose Wednesday as traders awaited a Federal Reserve policy meeting and U.S.-China talks, though Japan’s benchmark declined.Japan’s Nikkei 225 index NIK, -0.39% retreated 0.3% while South Korea’s Kospi SEU, +0.48% climbed 0.5%. Hong Kong’s Hang Seng index HSI, +0.04% gained 0.2%. while the Shanghai Composite index SHCOMP, -0.17% edged up 0.1%. Australia’s S&P ASX 200 XJO, +0.21% was about flat. Stocks rose in Southeast Asia and Taiwan Y9999, -0.06% .
----U.S. indexes reflected a mixed draw of corporate earnings on Tuesday. 3M MMM, +1.94% , the maker of Post-it notes, industrial coatings and ceramics, posted upbeat fourth quarter results. Harley-Davidson HOG, -5.05% reported a drop in sales. Apple AAPL, -1.04% announced better-than-expected earnings, and its shares surged 5.7% to $163.50 in after-hours trading. The S&P 500 index SPX, -0.15% retreated 0.1% to 2,640.00 while the Dow Jones Industrial Average DJIA, +0.21% was up 0.2% at 24,579.96. The Nasdaq composite COMP, -0.81% shed 0.8% to 7,028.29.
All eyes are on a Federal Open Market Committee meeting ending Wednesday. Although the Fed is expected to leave its short-term interest rate unchanged, the nuances of a press conference by Chairman Jerome Powell will be closely watched.
American and Chinese officials will begin two days of trade talks in Washington. President Donald Trump will reportedly meet Chinese Vice Premier Liu He in an attempt to move negotiations forward. But the Justice Department’s charges against Chinese tech giant Huawei, its subsidiaries and a top company executive may be a hurdle. China has urged U.S. authorities to end what it called an “unreasonable crackdown” against Huawei, which has been accused of stealing technology and violating sanctions on Iran.
“Asia’s markets are trading quietly sideways this morning, and we would expect that to be the theme of the day as the event-risk needle swings much higher from tonight in North America,” Jeffrey Halley of Oanda said in a market commentary.
More
U.S., China face deep trade, IP differences in high-level talks
January 30, 2019 / 2:01 AM
WASHINGTON (Reuters) - The United States and China
launch a critical round of trade talks on Wednesday amid deep differences over
U.S. demands for structural economic reforms from Beijing that will make it
difficult to reach a deal before a March 2 U.S. tariff hike.
The two sides will meet next door to the White
House in the highest-level talks since U.S. President Donald Trump and Chinese
President Xi Jinping agreed a 90-day truce in their trade war in December.
People familiar with the talks and trade experts
watching them say that, so far, there has been little indication that Chinese
officials are willing to address core U.S. demands to protect American
intellectual property rights and end policies that Washington says force U.S.
companies to transfer technology to Chinese firms.
The U.S. complaints, along with accusations of
Chinese cyber theft of U.S. trade secrets and a systematic campaign to acquire
U.S. technology firms, were used by the Trump administration to justify
punitive U.S. tariffs on $250 billion worth of Chinese imports.
Trump has threatened to raise tariffs on $200
billion to 25 percent from 10 percent on March 2 if an agreement cannot be
reached. He has also threatened new tariffs on the remainder of Chinese goods
shipped to the United States.
“Clearly on the structural concerns, on forced
technology transfer, there remains a significant gap if not a wide chasm
between the two sides,” a person familiar with the talks told Reuters.
Chinese officials deny that their policies coerce
technology transfers. They have emphasized steps already taken, including
reduced automotive tariffs and a draft foreign investment law that improves
access for foreign firms and promises to outlaw “administrative means to force
the transfer of technology.”
More
Opinion: The slump in global trade is a bigger threat than markets imagine
By Stephen
S. Roach Published: Jan 29,
2019 8:16 a.m. ET
An already weakened trade cycle could spark a surprisingly swift deterioration in the global economy
NEW HAVEN, Conn. (Project Syndicate) — As the trade cycle turns, so goes the global economy.But there is a new twist. With growth in global trade sharply diminished since the 2008-2009 global financial crisis, an upsurge of protectionism and disrupted global supply chains is all the more problematic. There is a distinct possibility that a turn in an already weakened trade cycle could spark a surprisingly swift deterioration in the global economy.
Early hints of just such an outcome are evident in the January update of the International Monetary Fund’s World Economic Outlook. While the IMF has revised downward its 2019 forecast of world gross domestic product growth by 0.2 percentage points (from 3.7% to 3.5%), it has made just a fractional reduction to its projection of 4% global trade growth.
This is certainly puzzling. In a climate of increased tariffs between the U.S. and China, with threats of more to come, and given Brexit-related risks to eurozone trade, there is good reason to look for more significant downward revisions to the global trade outlook.
This would be especially problematic, given that the world economy’s support from global trade is already on shaky ground. Following a crisis-induced plunge of 10.4% in the volume of global trade in 2009 — a modern-day record — recovery has been muted. After a brief two-year rebound in 2010-2011, world trade growth averaged just 3.6% from 2012 to 2018 — about half the 7.1% average annual pace in the 20 years before the crisis.
To be sure, the slowdown in world trade may be traceable to the global economy’s relatively weak post-crisis recovery. But the ratio of growth in global trade relative to growth in world output — an indicator that normalizes for different recovery trajectories — says otherwise.
In the two prior expansions — 1985-1990 and 2002-2007 — this ratio averaged 1.6: in other words, once the cyclical noise of post-recession rebounds subsided, growth of global trade was about 60% faster than growth in world GDP. By contrast, in the current expansion, that ratio has averaged just 1.0 over the comparable 2012-2018 period, with global trade having slowed to a pace only equal to the growth of world output.
Debate rages about why growth in global trade has slowed so sharply in recent years. Extensive research published by the IMF in late 2016 attributed the slowdown largely to subdued business capital spending, finding only small effects from protectionism.
Yet the world has changed a lot in the subsequent two years. While the capital spending shortfall persists — despite a temporary increase from large corporate tax cuts in countries like the United States — there has been a marked increase in protectionism, with attendant pressures on global supply chains.
As a result, a rethinking of the IMF findings is in order.
More
Finally, some
better news. Is a cure for cancer actually in sight? An Israeli team think that
they’re close.
A cure for cancer? Israeli scientists say they think they found one
“We believe we will offer in a year's time a complete cure for cancer."
A small team of Israeli scientists think they might
have found the first complete cure for cancer.
“We believe we will offer in a year’s time a complete cure for cancer,” said Dan Aridor, of a new treatment being developed by his company, Accelerated Evolution Biotechnologies Ltd. (AEBi), which was founded in 2000 in the ITEK incubator in the Weizmann Science Park. AEBi developed the SoAP platform, which provides functional leads to very difficult targets.
“We believe we will offer in a year’s time a complete cure for cancer,” said Dan Aridor, of a new treatment being developed by his company, Accelerated Evolution Biotechnologies Ltd. (AEBi), which was founded in 2000 in the ITEK incubator in the Weizmann Science Park. AEBi developed the SoAP platform, which provides functional leads to very difficult targets.
“Our cancer cure will be effective from day one, will
last a duration of a few weeks and will have no or minimal side-effects at a
much lower cost than most other treatments on the market,” Aridor said. “Our
solution will be both generic and personal.”
It sounds
fantastical, especially considering that an estimated 18.1 million new cancer
cases are diagnosed worldwide each year, according to reports by the
International Agency for Research on Cancer. Further, every sixth death in the
world is due to cancer, making it the second leading cause of death (second
only to cardiovascular disease).
Aridor, chairman of the board of AEBi and CEO Dr. Ilan Morad, say their treatment, which they call MuTaTo (multi-target toxin) is essentially on the scale of a cancer antibiotic – a disruption technology of the highest order.
The potentially game-changing anti-cancer drug is based on SoAP technology, which belongs to the phage display group of technologies. It involves the introduction of DNA coding for a protein, such as an antibody, into a bacteriophage – a virus that infects bacteria. That protein is then displayed on the surface of the phage. Researchers can use these protein-displaying phages to screen for interactions with other proteins, DNA sequences and small molecules.
In 2018, a team of scientists won the Nobel Prize for their work on phage display in the directed evolution of new proteins – in particular, for the production of antibody therapeutics.
AEBi is doing something similar but with peptides, compounds of two or more amino acids linked in a chain. According to Morad, peptides have several advantages over antibodies, including that they are smaller, cheaper, and easier to produce and regulate.
Aridor, chairman of the board of AEBi and CEO Dr. Ilan Morad, say their treatment, which they call MuTaTo (multi-target toxin) is essentially on the scale of a cancer antibiotic – a disruption technology of the highest order.
The potentially game-changing anti-cancer drug is based on SoAP technology, which belongs to the phage display group of technologies. It involves the introduction of DNA coding for a protein, such as an antibody, into a bacteriophage – a virus that infects bacteria. That protein is then displayed on the surface of the phage. Researchers can use these protein-displaying phages to screen for interactions with other proteins, DNA sequences and small molecules.
In 2018, a team of scientists won the Nobel Prize for their work on phage display in the directed evolution of new proteins – in particular, for the production of antibody therapeutics.
AEBi is doing something similar but with peptides, compounds of two or more amino acids linked in a chain. According to Morad, peptides have several advantages over antibodies, including that they are smaller, cheaper, and easier to produce and regulate.
More
Your money does not cause my poverty. Refusal to believe this is
at the bottom of most bad economic thinking.
P. J. O’ Rourke.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled over banksters and politicians.
Today, seriously bent Italy and the totally doubled
over, wealth and jobs destroying EUSSR.
The Italians have had two thousand years to fix up the Forum and
just look at the place.
P. J. O’ Rourke.
Italy's credit crunch deepens as recession stalks Europe
Ambrose
Evans-Pritchard28
January 2019 • 9:20pm
Italy risks sliding into a recessionary vortex after corporate lending
slumped by 5.5pc in December, raising the odds of a fresh debt crisis in
2019 without a shift in policy by the eurozone authorities.Data from the European Central Bank on Monday shows that total loans to non-financial companies in Italy have been contracting at an accelerating pace since the insurgent Lega-Five Star coalition took power in June. This has metastasized into an incipient credit crunch over the last two months.
Italian lenders are now being forced to rein in credit as the ECB imposes draconian capital requirements when the country is already in a technical recession, and in the midst of a serious economic slowdown across the eurozone.
Paola Savona, the Europe minister and ‘shadow’ economic tsar, said the pro-cyclical demands of the ECB are pushing Italy into a vicious circle.
“If you make the banks raise capital in a downturn,
you greatly complicate the problem,” he said. “It is totally unacceptable to
allow another recession to happen, especially when it stems from abroad,
because we have instruments to fight it."
Lorenzo Codogno, the former chief economist of the
Italian treasury and now at LC Macro Advisors, said the economy is “entering a
self-defeating loop of negative growth”, with rising deficits and debt ratios.
He warned that the economy is likely to contract by
a further 0.2pc this year, with perilous effects on the country’s knife-edged
debt dynamics.
He said: “I always thought that Italy was one
recession away from a full-fledged crisis, as it did not adequately address
fiscal and structural issues in the past. Here we are now, with a crisis that
looks almost unavoidable."
Mr Codogno said the banks are under huge pressure.
The downturn is tightening the noose on their non-performing loans, and now the
ECB has told them that they must provision fully for all of these bad debts.
“There isn’t enough capital in the Italian banking
system to cover this so the ECB is basically saying that the whole sector is
bankrupt,” he said.
Italian lenders cannot access the capital markets at viable cost, and most are shut out entirely. Unicredit had to pay Pimco a rate of 7.83pc to raise a $3bn bond in November.
Rome’s interim deal with the European Commission over the Italian budget may have averted a dangerous political showdown for now but nothing is resolved.
More
https://www.telegraph.co.uk/business/2019/01/28/italys-credit-crunch-deepens-recession-stalks-europe/?WT.mc_id=e_DM933246&WT.tsrc=email&etype=Edi_Cit_New_AEM_Daily&utm_source=email&utm_medium=Edi_Cit_New_AEM_Daily_2019_01_29&utm_campaign=DM933246
Italy is not technically part of the Third World, but no one has
told the Italians.
P. J. O’ Rourke.
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?
Florida Power & Light’s solar output exceeds 1,000 MW
Florida Power & Light’s (FPL) solar power plants now generate more than 1,000 MW of solar energy. FPL, an energy utility, has 14 solar plants in commercial operation and four more that are near completion. Jan. 25 marked the day the combined energy generation from FPL’s universal solar portfolio reached its highest-ever total.
“FPL is in the midst of one of largest solar
expansions in the history of the U.S. We generated 10 times more solar energy
last year than we did in 2016, and we’re investing billions of dollars to
advance solar affordably for our customers. Crossing the 1,000-MW mark is a
symbolic milestone of our commitment, and we look forward to achieving many
more milestones like this in the future,” said Eric Silagy, president and CEO
of FPL.
The company announced that it would expand its
long-standing clean energy commitment with a “30-by-30” plan to install 30
million more solar panels across Florida by 2030. The plan will result in
approximately 11,000 MW of installed solar capacity by 2030.
Electricity-hungry Cameroon boosts solar energy in push for rural power
January 28, 2019 / 10:19 AM
MFOU, Cameroon (Thomson Reuters Foundation) -
Adrienne Ngonou’s 25-seat restaurant used to open from 8 am to 5 pm, shutting
it doors as the sun began to go down. But these days it’s open until 11 pm -
and her profits have tripled.
“We now sell both during the day and late in the
night because of the constant electricity supply,” she said. “Two years ago,
this was not possible.”
Ngonou’s new power source is a government-provided
solar array that supplies power to about 300 homes, businesses and other
institutions in Mfou, a town of about 10,000 people east of Yaounde, Cameroon’s
capital.
Earlier the area relied in part on grid power,
which has been unreliable as more erratic rainfall and droughts linked to
climate change hit the county’s hydropower dams, which supply the majority of
its energy.
But the $13,000 battery-backed solar grid,
installed in 2017, has given the area it serves 24-hour reliable power - and is
now being replicated in other power-hungry parts of Cameroon, as the government
tries to plug a stubborn energy gap and shore up its energy system against
climate change, officials say.
Mfou’s solar system was part of a deal between
Cameroon’s government and China’s Huawei telecommunications company, which also
installs solar installations, to supply solar energy to more than 160 villages,
largely in rural areas, they say.
---- Energy expansion plans for Cameroon have focused largely on fossil fuel plants and hydropower expansion, mostly funded by China.
But now Cameroon’s President Paul Biya “has thrown
his hefty political weight in support of renewable energy and this has brought
a new stimulating perspective,” Martine Akame Mesumbe, director of gas
exploitation at the Ministry of Water and Energy, told the Thomson Reuters
Foundation.
The government hopes to boost Cameroon’s electricity
access in rural areas as part of its “Vision 2035” development plan, aimed at
expanding the economy and slashing poverty to 10 percent.
More
Industrialization came to England but has since left.
P. J. O’Rourke
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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