Baltic Dry Index. 689 -01 Brent Crude 68.39
Brexit 13 days away (maybe.) Never-ending China trade war talks, day 130.
“Dreams do come true, if only we wish hard enough. You can have
anything in life if you will sacrifice everything else for it.”
Peter Pan
This
weekend something a little different. Two long, but must read, master class articles,
for our future next decade.
But
first this. Who knew trade wars were so easy for outsiders to win?
U.S. and China Got Into a Trade War and Mexico Won
America’s imports from Mexico surge the most in seven years as Trump’s policies shift supply chainsBy Matthew Townsend and Eric Martin
27 March 2019, 10:00 GMT
The Trump Administration’s trade war with China has turned out to be a windfall for
another country the president frequently berates: Mexico.Consider Fuling Global Inc., a Chinese maker of plastic utensils that developed a lucrative business making paper cups and straws for U.S. restaurants. But President Trump upended all that with tariffs on $250 billion worth of Chinese imports, including paper products. So the company found an alternative, opening a $4 million factory in Monterrey, Mexico, that will soon begin shipping millions of paper straws across the border.
“We had to look for other ways to do business,'” said Fuling Chief Financial Officer Gilbert Lee. The move means the Wenling, China-based company will avoid the tariffs and make up for pricier Mexican labor with lower shipping costs. “Mexico is a very logical and advantageous location for us.”
Fuling isn’t alone. Mexico has seen big gains in shipments to the U.S. in categories where competing Chinese goods were hit with tariffs, everything from poster board to air conditioner parts. In all, U.S. imports of goods from Mexico surged 10 percent to almost $350 billion last year, the fastest growth in seven years. That helped widen America’s trade deficit with Mexico by 15 percent to more than $80 billion. Meanwhile, the growth in shipments from China slowed by about a third.
Mexico’s bonanza underscores the difficulty in trying to win a trade war where companies can shift production or find new sources to avoid tariffs. Despite Trump’s vow to reduce it, the U.S. trade deficit for goods globally hit a record $891 billion last year as tax cuts boosted demand for imports and retaliatory tariffs weighed on American exports. Given Trump’s early attacks on Mexico for taking U.S. jobs, it’s an ironic turn to observers such as factory consultant Alan Russell.
“It’s a case of unintended consequences,” said Russell, chief executive officer of Tecma Group, an El Paso, Texas firm that helps companies open and run factories in Mexico. Interest has never been this high in his 35 years in the industry, he says. “Any company manufacturing in China has had a wake-up call.”
Much of the shift in companies sourcing from Mexico instead of China centers on low value-added items where substitution is easier, according to Jorge Guajardo, a former Mexican ambassador to China. For example, Taskmaster Components has for almost 20 years imported large wheels and tires from China, and assembled them for companies making trailers and recreational vehicles. But tariffs on many of those products pushed the Mount Pleasant, Texas-based company to go hunting for new sourcing. That list now includes Mexico, where it wants to invest in a factory. The U.S. isn’t being considered because Taskmaster hasn’t found a willing partner among the few remaining American manufacturers.
More
https://www.bloomberg.com/news/articles/2019-03-27/who-is-winning-trump-s-trade-war-with-china-so-far-it-s-mexico?utm_campaign=news&utm_medium=bd&utm_source=applenews
Now
back to the future. A realistic view of global energy and global finance.
“All the world is made of faith, and trust, and pixie dust.”
Peter Pan
REPORT | March 2019
THE “NEW ENERGY ECONOMY: AN EXERCISE IN MAGICAL THINKING
Mark P. Mills is a senior fellow at the
Manhattan Institute and a faculty fellow at Northwestern University’s McCormick
School of Engineering and Applied Science, where he co-directs an Institute on
Manufacturing Science and Innovation. He is also a strategic partner with
Cottonwood Venture Partners (an energy-tech venture fund). Previously, Mills
cofounded Digital Power Capital, a boutique venture fund, and was chairman and
CTO of ICx Technologies, helping take it public in 2007. Mills is a regular
contributor to Forbes.com and is author of Work in the Age of Robots (2018).
He
is also coauthor of The Bottomless Well: The Twilight of Fuel, the Virtue of
Waste, and Why We Will Never Run Out of Energy (2005). His articles have been
published in the Wall Street Journal, USA Today, and Real Clear. Mills has
appeared as a guest on CNN, Fox, NBC, PBS, and The Daily Show with Jon Stewart.
In 2016, Mills was named “Energy Writer of the Year” by the American Energy
Society.Earlier, Mills was a technology advisor for Bank of America Securities
and coauthor of the Huber-Mills Digital Power Report, a tech investment
newsletter. He has testified before Congress and briefed numerous state
public-service commissions and legislators. Mills served in the White House
Science Office under President Reagan and subsequently provided science and
technology policy counsel to numerous private-sector firms, the Department of
Energy, and U.S. research laboratories.Early in his career, Mills was an
experimental physicist and development engineer at Bell Northern Research
(Canada’s Bell Labs) and at the RCA David Sarnoff Research Center on
microprocessors, fiber optics, missile guidance, earning several patents for
his work. He holds a degree in physics from Queen’s University in Ontario,
Canada.
---- Executive
Summary, A movement has been growing for decades to replace hydrocarbons, which
collectively supply 84% of the world’s energy. It began with the fear that we
were running out of oil.
That fear has since migrated to the belief that,
because of climate change and other environmental concerns, society can no
longer tolerate burning oil, natural gas, and coal—all of which have turned out
to be abundant.
So far, wind, solar, and batteries—the favored alternatives to
hydrocarbons—provide about 2% of the world’s energy and 3% of America’s.
Nonetheless, a bold new claim has gained popularity: that we’re on the cusp of
a tech-driven energy revolution that not only can, but inevitably will, rapidly
replace all hydrocarbons.
This “new energy economy” rests on the belief—a centerpiece
of the Green New Deal and other similar proposals both here and in Europe—that
the technologies of wind and solar power and battery storage are undergoing the
kind of disruption experienced in computing and communications, dramatically
lowering costs and increasing efficiency. But this core analogy glosses over
profound differences, grounded in physics, between systems that produce energy
and those that produce information.
In the world of people, cars, planes, and
factories, increases in consumption, speed, or carrying capacity cause hardware
to expand, not shrink. The energy needed to move a ton of people, heat a ton of
steel or silicon, or grow a ton of food is determined by properties of nature
whose boundaries are set by laws of gravity, inertia, friction, mass, and
thermodynamics—not clever software.
This paper highlights the physics of energy
to illustrate why there is no possibility that the world is undergoing—or can
undergo—a near-term transition to a “new energy economy.”
More. Much, much more.
A Modest Proposal....
TO: Don @realDonaldTrump , Mike @VP, Mitch @McConnellPress, Kevin @GOPLeader, Chuck @SenSchumer, Nancy @SpeakerPelosi,
Steny @LeaderHoyer, Lindsey @LindseyGrahamSC, Alexndria @AOC,
Sherrod @SenSherrodBrown , Bernie @SenSanders, Rob @senrobportman,
Steve @stevenmnuchin1, Jay @federalreserve
I hope you all are well. As you of course know, after close of business on Friday, Bob finally delivered his long awaited report to our Attorney General. I'm sure we're all looking forward to reading Bill's abbreviated "nothing to see here" presumably partisan summary of same. Don, I'm also grateful that you've supported the idea of making the full report public, so we can all finally move on. America is grateful. Whether the report indicates we need wholesale regime change/resignations/indictments or a tacit understanding that there is no "there" there, I think we can all agree that we need to make whatever decisions we need to make expeditiously so we can all get this behind us as soon as is practical.
Anyway, even though this report will probably be consuming much your time, and although, I'm sure, difficult for you, I'd like you, for the moment, to set it aside and move on to a different, dare I say, much more important topic.
We have work to do. We have to save the Western Financial System.
As always, for those of you following my work, you'll know that the really important concepts are in RED below. Feel free to skim past my humorous, anecdotal banter if you are pressed for time.
As you know, we Americans have been following your careers (and the careers of your predecessors) closely for quite some time now. I think we can all agree that your collective progress, in no particular order, on Health Care, Taxation, Education, Environment, Infrastructure, 2nd Amendment issues, Drugs, Immigration, Banking/Financial/Market Reform, Trade, Monetary Policy, Consumer Protection, etc. etc. etc. has indeed been, well, remarkable. We appreciate your effort.
To be direct, what's also remarkable, is that in an effort to remain in office, you have all come to believe that through your collective efforts and carefully crafted public relations campaigns, you have been able to appeal to our darkest, most destructive, visceral emotions and fears, convincing roughly half of the American electorate (based on any poll of your choosing) that you and your counterparts on the other side of the aisle are all to be despised and vilified with a passion heretofore unimaginable, by roughly one half of the electorate or the other. This is an incredible, unthinkable, yet effective achievement and quite a prolific legacy indeed. You should all be proud.
Steny @LeaderHoyer, Lindsey @LindseyGrahamSC, Alexndria @AOC,
Sherrod @SenSherrodBrown , Bernie @SenSanders, Rob @senrobportman,
Steve @stevenmnuchin1, Jay @federalreserve
I hope you all are well. As you of course know, after close of business on Friday, Bob finally delivered his long awaited report to our Attorney General. I'm sure we're all looking forward to reading Bill's abbreviated "nothing to see here" presumably partisan summary of same. Don, I'm also grateful that you've supported the idea of making the full report public, so we can all finally move on. America is grateful. Whether the report indicates we need wholesale regime change/resignations/indictments or a tacit understanding that there is no "there" there, I think we can all agree that we need to make whatever decisions we need to make expeditiously so we can all get this behind us as soon as is practical.
Anyway, even though this report will probably be consuming much your time, and although, I'm sure, difficult for you, I'd like you, for the moment, to set it aside and move on to a different, dare I say, much more important topic.
We have work to do. We have to save the Western Financial System.
As always, for those of you following my work, you'll know that the really important concepts are in RED below. Feel free to skim past my humorous, anecdotal banter if you are pressed for time.
As you know, we Americans have been following your careers (and the careers of your predecessors) closely for quite some time now. I think we can all agree that your collective progress, in no particular order, on Health Care, Taxation, Education, Environment, Infrastructure, 2nd Amendment issues, Drugs, Immigration, Banking/Financial/Market Reform, Trade, Monetary Policy, Consumer Protection, etc. etc. etc. has indeed been, well, remarkable. We appreciate your effort.
To be direct, what's also remarkable, is that in an effort to remain in office, you have all come to believe that through your collective efforts and carefully crafted public relations campaigns, you have been able to appeal to our darkest, most destructive, visceral emotions and fears, convincing roughly half of the American electorate (based on any poll of your choosing) that you and your counterparts on the other side of the aisle are all to be despised and vilified with a passion heretofore unimaginable, by roughly one half of the electorate or the other. This is an incredible, unthinkable, yet effective achievement and quite a prolific legacy indeed. You should all be proud.
---- At any other time in history, my
reaction to your antics would have been, "Geezzz.....what a mess....but
that's Ok.....we've got a strong democracy and another election on the
way....American voters are good hearted and wise...we'll find some reasonable
people to put in office and we'll get through this..."
Unfortunately, today, delay and "waiting" for the next election is no longer an option. We are quickly running out of time. Unless you folks are incredible poker players and you are somehow feverishly working together as a cohesive unit behind the scenes to implement workable versions of the policies I'm going to discuss below, the American dream as we've known it, is doomed to extinction.
That said, I feel compelled, as an American citizen, to speak up. I'm trying to help you. I'm trying to help you save Western Civilization.
The Threat to Western Civilization
If you have indeed been following my work, and I know some of you (or your staffs) have been (Google Analytics is a wonderful thing), you are at least suspicious that I might actually be on the right track. I'll refer you to four recent posts (Below) which you might find informative, but if you already believe that the following thesis (in RED) may indeed be accurate, or at least merit further investigation, there's no need to rehash the concepts here. I'd refer you to Jay, Steve and their teams, as they have a much greater/better resource/data-set than I have access to.
Dalio's Big Debt Crisis....the FSB Report and Financial War Games....
Keeping is Simple....China has $50.1 Trillion of Brand New Financial Assets
Twas the Night Before Christmas....
When will Xi Click the "Sell Button"
I'll also cite two excellent and extremely wonkish BIS working papers, written, of course, using generally unintelligible economic jargon (Below) which also reference what we're discussing today.
Triffin: dilemma or myth?
FX swaps and forwards: missing global debt?
Again, no need to wade through these two working papers if you don't have time, I understand you folks are busy. I'll try to sum both of them up in a sentence or two. The "Triffin" paper discusses the history of monetary policy, debating the legitimacy of Bob Triffin's "Dilemma", that America at some point will be unable to supply enough "safe" dollar assets and reserve currency to satisfy the global demand for same. Referenced and described in the "Missing Global Debt" paper, as of 2017 there are at least US$21.4 Trillion (both Balance Sheet and Off-Balance Sheet) of known, non-bank dollar debt lurking outside of the United States. (i.e. out of the FED's purview) That amount is growing rapidly. The looming question is whether the FED, when subjected to demands for Eurodollars (and now clandestinely, and more appropriately, "Chinadollars"....as a point of reference, I believe I'm actually coining the phrase "Chinadollars" in this post, since most economists don't believe or understand that they actually exist) could effectively backstop a dollar shortage.
Unfortunately, today, delay and "waiting" for the next election is no longer an option. We are quickly running out of time. Unless you folks are incredible poker players and you are somehow feverishly working together as a cohesive unit behind the scenes to implement workable versions of the policies I'm going to discuss below, the American dream as we've known it, is doomed to extinction.
That said, I feel compelled, as an American citizen, to speak up. I'm trying to help you. I'm trying to help you save Western Civilization.
The Threat to Western Civilization
If you have indeed been following my work, and I know some of you (or your staffs) have been (Google Analytics is a wonderful thing), you are at least suspicious that I might actually be on the right track. I'll refer you to four recent posts (Below) which you might find informative, but if you already believe that the following thesis (in RED) may indeed be accurate, or at least merit further investigation, there's no need to rehash the concepts here. I'd refer you to Jay, Steve and their teams, as they have a much greater/better resource/data-set than I have access to.
Dalio's Big Debt Crisis....the FSB Report and Financial War Games....
Keeping is Simple....China has $50.1 Trillion of Brand New Financial Assets
Twas the Night Before Christmas....
When will Xi Click the "Sell Button"
I'll also cite two excellent and extremely wonkish BIS working papers, written, of course, using generally unintelligible economic jargon (Below) which also reference what we're discussing today.
Triffin: dilemma or myth?
FX swaps and forwards: missing global debt?
Again, no need to wade through these two working papers if you don't have time, I understand you folks are busy. I'll try to sum both of them up in a sentence or two. The "Triffin" paper discusses the history of monetary policy, debating the legitimacy of Bob Triffin's "Dilemma", that America at some point will be unable to supply enough "safe" dollar assets and reserve currency to satisfy the global demand for same. Referenced and described in the "Missing Global Debt" paper, as of 2017 there are at least US$21.4 Trillion (both Balance Sheet and Off-Balance Sheet) of known, non-bank dollar debt lurking outside of the United States. (i.e. out of the FED's purview) That amount is growing rapidly. The looming question is whether the FED, when subjected to demands for Eurodollars (and now clandestinely, and more appropriately, "Chinadollars"....as a point of reference, I believe I'm actually coining the phrase "Chinadollars" in this post, since most economists don't believe or understand that they actually exist) could effectively backstop a dollar shortage.
More. Much, much more.
A MODEST PROPOSAL
For preventing the children of poor people in Ireland, from being a burden on their parents or country, and for making them beneficial to the publick.
by Dr. Jonathan Swift 1729The monthly Coppock Indicators finished March
DJIA: 25,929
+54 Down. NASDAQ: 7,729 +94 Down. SP500: 2,834 +53 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 the Fed’s Plunge Protection Team now officially part of
President Trump’s re-election team, probably the safest action here is fully
paid up synthetic double options on most of the major indexes.
