Baltic Dry Index. 683
-06 Brent
Crude 68.18
Car Crash Brexit now reset
16 days away. Day 117 of the
never-ending China trade talks.
“Europe
exemplifies a situation unfavourable to a common currency. It is composed of
separate nations, speaking different languages, with different customs, and
having citizens feeling far greater loyalty and attachment to their own country
than to a common market or to the idea of Europe".
Professor Milton Friedman, The Times 19 November
1997.
With US v China trade
talks set to resume tomorrow, and nearly all new global economy figures showing
a slowing global economy, our global markets are uneasily churning and burning
through cash and drifting to what?
The trade talks are
always going well but without a conclusion, but President Trump says that even
with a big win for team Trump’s trade hooligans, he may need to keep China
tariffs for month or even years to make sure that China complies and doesn’t
cheat. China has no reason to sign up to
such a one sided, 19th century style, trade treaty.
In Europe, France is
joining Italy in the self imposed debtor’s prison, while a no deal Brexit is
now just over two weeks away. A no deal Brexit, or even Mrs May’s BRINO deal, Brexit In Name Only, will drop the EUSSR deep
into recession, and set off another European banking crisis. Worse, Europe’s un
next in line of fire for Trump’s next trade war against German autos.
From London it still
looks like we are all too willingly drifting towards disaster.
Below, the summer
doldrums seem to have arrived early.
Asian shares lose steam on U.S. recession fears; kiwi dives on RBNZ signal
March 27, 2019 /
1:18 AM
TOKYO (Reuters) -
Asian shares slipped on Wednesday, giving up small gains made the previous day
as investors tried to come to terms with a sharp shift in U.S. bond markets and
the implications for the world’s top economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1
percent while Japan’s Nikkei average lost 0.6 percent.
Chinese stocks bucked the trend, with the benchmark Shanghai Composite
rebounding 0.6 percent, the blue-chip CSI 300 climbing 1.1 percent, and Hong
Kong’s Hang Seng advancing 0.5 percent.
Wall Street’s main indexes tallied solid gains on Tuesday but finished
below their session highs in a reflection of the underlying concerns about the
economic outlook.
The S&P 500 gained 0.72 percent while the Nasdaq Composite added
0.71 percent.
The 10-year U.S. Treasuries yield inched to as high as 2.432 percent
from Monday’s 15-month low of 2.377 percent, though the yield curve remained
inverted, with three-month bills yielding 2.461 percent, more than 10-year
bonds.
The inversion spooked many investors as this phenomenon has preceded
every U.S. recession over the past 50 years, triggering a dramatic selloff in
stock markets globally late last week and a stampede into longer-dated U.S.
government debt.
“While the markets now got out of the extreme nervousness about the U.S.
yield curve, there is no denying that U.S. data has been soft of late, hardly
dispelling worries about the outlook,” said Hirokazu Kabeya, chief global
strategist at Daiwa Securities.
The silver lining for stock bulls is that in the past, it has usually
taken many months before the United States slipped into recession after the
curve was first inverted.
More
China's industrial profit sinks to start the year
By MarketWatch Published: Mar 26,
2019 11:10 p.m. ET
BEIJING--Earnings at China's large industrial firms dropped sharply in
the first two months of the year, as lower factory-gate prices and slower sales
ate into profits, official data showed Wednesday.
China's industrial profits tumbled 14% in the January to February
period, extending a 1.9% decrease in December, according to data released by
the National Bureau of Statistics.
Factory-gate prices in automobile, oil refining, steel and chemical all
declined in the two month period from a year ago, dropping between 0.4% and
2.5%, dragging on profits of these sectors, the statistics bureau said. The
combined decrease in profit shaved the headline profit growth by 14.2
percentage points, it said.
The government releases combined economic data for the months of January
and February as the timing of the Lunar New Year holiday shifts every year.
Stripping the impact of the Lunar New Year holidays, total profits came in
largely the same as last year, said Zhu Hong, an economist with the statistics
bureau.
More
China’s Yuan Is Now in the Driver’s Seat
The currency is no longer just reacting to events in the rest of the world. Also, interest-rate expectations and more Brexit follies.By John Authers
We
have all learned to pay attention to the Chinese currency. Although it’s still
closely managed, with capital flowing in and out far less easily than it
does into other currencies, it’s clear that the exchange rate between the yuan
and the U.S. dollar sets the terms of trade between the world’s two biggest
economies. However, the yuan is largely seen as a derivative of the
strength of the dollar, then massaged by the Chinese authorities, whose
decisions are understood to have effects elsewhere.
But what if the arrow of causation points the other way? In other words,
is the Chinese currency now sufficiently responsive to the rest of the world
that we can treat it as a driver of events elsewhere, and not just an
effect? Mansoor Mohi-uddin, the veteran foreign-exchange analyst who’s now the
chief macro strategist for NatWest Markets, made that argument to me this week.
It makes sense.
We have to proceed with caution here. China’s currency doesn’t reflect
market forces in the way many others do. If you crave tight correlations, you
won’t find them. But Mohi-uddin suggests looking at the broad turning points
for the yuan against the dollar and comparing them with the turning points for
the euro-dollar exchange rate. Here is the result of that exercise (with the
euro inverted for clarity):
----
He argues that since the U.S. trade deficit in goods is about $900 billion, and
China accounts for about half the shortfall, moves in the yuan “tell us in real
time whether the U.S. can fund its deficit with China at current exchange
rates.” If the dollar strengthens, that signals the U.S. will be able to
attract enough capital to finance its deficit. If it weakens, the U.S. will
have trouble financing its deficit with the rest of the world.
Now
look at the turning points since the shock yuan devaluation of 2015,
which, among other things, ushered in a new era of flexibility for Chinese
capital flows. The People’s Bank of China announced in May 2017 its
countercyclical buffer, which was a signal that it wanted the yuan to
strengthen while also making it easier for foreigners to buy bonds. This
coincided with a turning point for the euro, which enjoyed a strong rally
against the dollar for much of 2017. That weak dollar was, in turn, a crucial
driver of the strong and stable returns that world markets generated that year.
More
Italy Still Is Europe’s Debt King, But France Gets Closer
By Lorenzo Totaro and Giovanni Salzano
26 March 2019, 08:37 GMT
Italy remained the holder of Europe’s biggest
public-debt burden in 2018 even after France’s rose to almost match it.
France’s debt reached 2.3153 trillion euros ($2.62 trillion), just 1.4 billion
euros below its southern neighbor’s. Italy’s debt as a ratio of economic output
-- 132.1 percent of GDP -- is also the second-biggest in the euro region after
Greece, and still much higher than France’s 98.4 percent.
More
In Boeing 737 Max news, it never rains but it pours. On the better news side, at least it didn’t crash.
Southwest Boeing 737 Max Makes Emergency Landing After Engine Trouble
By Mary Schlangenstein and Alan Levin
Updated on 26 March 2019, 21:55 GMT
A Southwest Airlines Co. 737 Max aircraft being flown to
storage after a U.S. grounding order was forced to return to a Florida airport
Tuesday because of an engine problem, the carrier said.The fault on the Boeing Co. jetliner had “absolutely no relation” to the flight-control issue that prompted U.S. regulators to ground all 737 Max aircraft on March 13, said Brandy King, a spokeswoman for Southwest. The engine “performance issue” occurred shortly after the plane left Orlando International Airport at about 2:50 p.m., she said.
The crew of Southwest Flight 8701 declared an emergency shortly after
takeoff and landed safely in Orlando, said the Federal Aviation Administration,
which is investigating the incident. The Max aircraft was being flown to a
storage area in Victorville, California, and only the pilots were on board,
Southwest said. The plane was taken to a maintenance hangar after landing.
The FAA grounding allows for airlines to fly 737 Max aircraft that don’t
have passengers, and Southwest is gradually shifting its 34 Max jets to
Victorville. Boeing and FAA test pilots are also allowed to make flights to
demonstrate the software fixes being developed for the planes.
More
Gulf Arabs, Iran reject U.S. recognition of Golan Heights as Israeli
March 26, 2019 /
3:46 AM
DUBAI (Reuters) -
U.S. President Donald Trump’s decision to recognise Israel’s sovereignty over
the Golan Heights united Washington’s Gulf Arab allies and regional foe Iran in
condemnation on Tuesday.
Saudi Arabia, the United Arab Emirates, Bahrain, Qatar and Kuwait
criticised Monday’s move to recognise Israel’s 1981 annexation and said the
territory was occupied Arab land. Riyadh and Abu Dhabi said it was an
impediment to peace.
Iran echoed the comments, describing Trump’s decision as unprecedented
this century.
“No one could imagine that a person in America comes and gives land of a
nation to another occupying country, against international laws and
conventions,” President Hassan Rouhani was quoted as saying by state news
agency IRNA.
Trump, with visiting Israeli Prime Minister Benjamin Netanyahu looking
over his shoulder during a visit to Washington, signed a proclamation on Monday
officially granting U.S. recognition of the Golan Heights as Israeli territory.
Israel captured the Golan Heights from Syria in a 1967 war and annexed
it in 1981, in a move the U.N. Security Council declared unlawful.
“It will have significant negative effects on the peace process in the
Middle East and the security and stability of the region,” said a statement on
Saudi state news agency SPA.
It described the declaration as a clear violation of the United Nations
Charter and of international law.
More
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail
Gorbachev
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, the trade war in technology gets hotter. As America targets
Huawei, China targets Apple.
Bahrain to use Huawei in 5G rollout despite U.S. warnings
March 26, 2019 / 11:57 AM
DUBAI
(Reuters) - Bahrain, headquarters of the U.S. Navy’s Fifth Fleet, plans to roll
out a commercial 5G mobile network by June, partly using Huawei technology
despite the United States’ concerns the Chinese telecom giant’s equipment could
be used for spying.
Washington has
warned countries against using Chinese technology, saying Huawei could be used
by Beijing to spy on the West. China has rejected the accusations.
VIVA Bahrain, a
subsidiary of Saudi Arabian state-controlled telecom STC, last month signed an
agreement to use Huawei products in its 5G network, one of several Gulf
telecoms firms working with the Chinese company.
“We have no
concern at this stage as long as this technology is meeting our standards,”
Bahrain’s Telecommunications Minister Kamal bin Ahmed Mohammed told Reuters on
Tuesday when asked about U.S. concerns over Huawei technology.
The U.S.
embassy in Bahrain did not immediately respond to a request for comment.
The U.S. Fifth
Fleet uses its base in Bahrain, a Western-allied island state off the Saudi
coast, to patrol several important shipping lanes, including near Iran.
Bahrain expects
to be one of the first countries to make 5G available nationwide, Mohammed
said, although he cautioned it would depend on handset and equipment
availability.
Early movers
like the United States, China, Japan and South Korea are just starting to roll
out their 5G networks, but other regions, such as Europe, still years away and
the first 5G phones are only likely to be released in the second half of this
year.
Bahrain’s state
controlled operator Batelco is working with Sweden’s Ericsson on its 5G
network, while the country’s third telecom Zain Bahrain is yet to announce a
technology provider.
No
foreign company is restricted by the government from providing equipment for
Bahrain’s 5G network, Mohammed said, adding that the mobile operators chose who
they worked with.
More
Chinese smartphone firms jazz up products, seize turf in home market from Apple
March
22, 2019 / 4:27 AM
SHANGHAI
(Reuters) - Smartphone retailers in China say it’s a tough sell of late with
consumers reluctant to upgrade, put off by chill economic winds.
Even so
domestic brands led by Huawei have made big strides, wooing consumers with
top-notch hardware and innovative features as they move upmarket in the
$500-$800 price range. The result: a loss of share in a key segment for Apple
Inc and fresh price cuts for iPhones by Chinese retailers.
“Of those
people who are upgrading, there are many switching from Apple to Chinese brands
but very few switching from Chinese brands to Apple,” said Jiang Ning, who
manages a Xiaomi store in the northern province of Shandong.
Huawei
Technologies Co Ltd, Xiaomi Corp, Oppo and Vivo once sought to grab share in
the world’s biggest smartphone market with value-for-money devices, but
consumer demand for better phones has prompted strategic rethinks.
More
China's Huawei sees little impact on sales from U.S. broadside
March
26, 2019 / 11:12 AM /
SHENZHEN/HONG
KONG (Reuters) - The U.S. campaign against China’s Huawei is having little
impact on the company’s sales and it is unlikely many countries will follow the
United States in banning Huawei from building next-generation mobile networks,
its rotating Chairman Eric Xu said.
“Recently we
are seeing a large number of countries making their own decisions,” Xu said
during an interview at Huawei Technologies’ headquarters in Shenzhen.
While Australia
has banned Huawei from 5G networks over security concerns, European Union
countries such as Germany and France have indicated they are likely to ignore
the U.S. call to shut out the telecoms giant.
“Maybe it’s
only Australia,” Xu told Reuters reporters after a tour of the campus.
Xu
affirmed that Huawei’s revenue jumped 36 percent over the first two months of
2019 and was set for a 15 percent annual spike to $125 billion (94.5 billion
pounds), underlining strength in its smartphone business and sales of computing
and communications networks.
Huawei has been
facing mounting scrutiny, led by the United States, amid worries its equipment
could be used by Beijing for spying. The company, however, says the concerns
are unfounded.
Xu said he does
not expect the United States to intensify its attack on the company by barring
sales of U.S. components to Huawei, a move that almost put its compatriot ZTE
Corp out of business last year before U.S. President Donald Trump lifted the
ban.
Huawei is the
world’s third-largest buyer of computer chips, many of which come from U.S.
companies, and a sales ban would be disruptive to the global tech industry, Xu
said.
More
A permanent Governor of the
Bank of England [your central bank here] would be one of the greatest men in
England. He would be a little 'monarch' in the City; he would be far greater
than the 'Lord Mayor.' He would be the personal embodiment of the Bank of
England; he would be constantly clothed with an almost indefinite prestige.
Everybody in business would bow down before him and try to stand well with him,
for he might in a panic be able to save almost anyone he liked, and to ruin
almost anyone he liked. A day might come when his favour might mean prosperity,
and his distrust might mean ruin. A position with so much real power and so
much apparent dignity would be intensely coveted.
Walter Bagehot. Lombard Street.
1873.
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?
New Wind and Solar Power Is Cheaper Than Existing Coal in Much of the U.S., Analysis Finds
Coal-fired power plants in the Southeast and Ohio Valley stand out. In all, 74% of coal plants cost more to run than building new wind or solar, analysts found.
By Dan Gearino Mar 25, 2019
Not a single coal-fired power plant along the Ohio River will be able to compete on price with new wind and solar power by 2025, according to a new report by energy analysts.The same is true for every coal plant in a swath of the South that includes the Carolinas, Georgia, Alabama and Mississippi. They're part of the 86 percent of coal plants nationwide that are projected to be on the losing end of this cost comparison, the analysis found.
The findings are part of a report issued Monday by Energy Innovation and Vibrant Clean Energy that shows where the shifting economics of electricity generation may force utilities and regulators to ask difficult questions about what to do with assets that are losing their value.
The report takes a point that has been well-established by other studies—that coal power, in addition to contributing to air pollution and climate change, is often a money-loser—and shows how it applies at the state level and plant level when compared with local wind and solar power capacity.
“My big takeaway is the breadth and universality of this trend across the continental U.S. and the speed with which things are changing," said Mike O'Boyle, a co-author of the report and director of energy policy for Energy Innovation, a research firm focused on clean energy.
The report is not saying that all of those coal plants could or should be immediately replaced by renewable sources. That kind of transition requires careful planning to make sure that the electricity system has the resources it needs. It also doesn't consider the role of competition from natural gas.
The key point is a simpler one: Building new wind and solar power capacity locally, defined as within 35 miles for the report, is often less expensive than people in those markets realize, and this is indicative of a price trend that is making coal less competitive.
This shift shows how market forces are helping the country move away from fossil fuels. At the same time, coal interests have been trying to obscure or cast doubt on this trend, while seeking more government subsidies to slow their industry's decline.
More
https://insideclimatenews.org/news/25032019/coal-energy-costs-analysis-wind-solar-power-cheaper-ohio-valley-southeast-colorado
A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.
Walter Bagehot. Lombard Street. 1873
The monthly Coppock Indicators finished February
DJIA: 25,916 +68 Down. NASDAQ: 7,533 +109 Down.
SP500:
2,784 +62 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.
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