Wednesday 13 March 2019

May Grounded Alongside Boeing. What Next?


Baltic Dry Index. 647 +02    Brent Crude 66.88

Car Crash Brexit 16 days away. Day 103 of the never-ending trade talks.

It is always the best policy to speak the truth, unless, of course, you are an exceptionally good liar.

Jerome K. Jerome.

With the car crash for the German auto industry just 16 days away, Her Majesty’s incompetent Government crashed to another historic defeat in Parliament last night, when Prime Minister May’s cosmetic and fake tweaks to her EU Brexit deal were seen through by MPs of all parties. Can an unpredictable General Election be more than a few weeks away? No Brexit : No Tories?

Of course, that’s unlikely to fix Britain’s EU exit, but it is the EU’s pigeons coming home to roost for the gross mistake they made in early 2016, when Dodgy Dave Cameron undertook his EU farewell tour, trying to get enough EU concessions to persuade GB voters to stay in the wealth and jobs destroying EUSSR.

Europe now is a 737 Max 8, flying on a wing and a prayer, that whatever happens with Brexit, dodgy pilots Juncker and Barnier, won’t crash the EUSSR into deep recession. But that’s not the way to bet.

Below, how yesterday’s Asian hopium and hype turned out to be all hopium and hype from the usual stock pedlars.

Asia shares stumble, sterling at mercy of yet another vote

March 13, 2019 / 12:26 AM
SYDNEY (Reuters) - Asian shares drifted lower on Wednesday as a risk-off mood settled on markets, while a frazzled pound awaited its fate ahead of yet another make-or-break parliamentary vote on Brexit.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.45 percent in slow trade.

Japan's Nikkei .N225 led the retreat with a fall of 1.2 percent as data showed domestic machinery orders fell in January at the fastest pace in four months.

Shanghai blue chips .CSI300 slipped 0.5 percent following two days of gains. E-Mini futures for the S&P 500 ESc1 were off 0.2 percent and spread betters pointed to opening losses for the main European bourses.

Risk appetites had soured after British lawmakers crushed Prime Minister Theresa May’s European Union divorce deal, forcing parliament to decide within days whether to back a no-deal Brexit or seek a last-minute delay.

Lawmakers voted against May’s amended Brexit deal by 391 to 242 as her last-minute talks with EU chiefs on Monday to assuage her critics’ concerns ultimately proved fruitless.

Parliament will vote later Wednesday on whether to leave the EU with no deal, and if that fails, a further vote on Thursday will decide whether to extend the Brexit deadline.

“The vote today seems certain to go against the government as well,” said David de Garis, a director of economics and market at National Australia Bank.

---- On Wall Street, Boeing Co (BA.N) shed another 6.1 percent for its biggest two-day drop since June 2009, as more countries grounded the company’s 737 MAX 8 planes following Sunday’s crash in Ethiopia, the second fatal crash in months.

The drop in Boeing pushed the Dow .DJI down 0.38 percent, even as the S&P 500 .SPX gained 0.30 percent and the Nasdaq .IXIC added 0.44 percent. [.N]

A soft U.S. inflation report for February burnished bonds while tarnishing the dollar. Annual consumer price inflation slowed to its lowest since September 2016 at 1.5 percent.

The data merely reinforced expectations the Federal Reserve will stay patient on rates and could even sound more dovish at its policy meeting next week.
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In other news, day 103 of the never-ending trade talk hype between China and America. Trade wars aren’t easy to win after all, it’s turned out. But is a bad deal, now better than no deal, mirroring Prime Minister May’s Brexit problem? China’s probably quite happy with a never-ending talks outcome, and President Trump now has masses of domestic troubles brewing.

Lighthizer says U.S.-China trade talks 'making headway' on key issues

Published: Mar 12, 2019 11:02 a.m. ET

U.S. Trade Representative Robert Lighthizer said Tuesday issues of technology transfer and intellectual-property theft are being "addressed with precision" in talks between the U.S. and China and that the two sides are "making headway." Testifying before the Senate Finance Committee, the U.S.'s trade negotiator told lawmakers any trade deal with China must be enforceable or President Donald Trump won't sign it. On Monday, White House press secretary Sarah Sanders said talks with China were ongoing but there was no date set yet for a summit meeting between Trump and Chinese President Xi Jinping.
  
In Boeing 737 Max 8 crash news, it was all downhill for Boeing outside of North America. With flight crews and passengers scared alike about flying on the Max 8, grounding the planes for now is probably the right PR move.

U.S., Canada keep 737 Max 8 in the air, and that’s about the only good news for Boeing

By Claudia Assis  Published: Mar 12, 2019 6:20 p.m. ET
Canadian aviation regulators have joined the U.S. in keeping Boeing Co.’s 737 Max jets in the air, at least for now, a spot of good news for the company as hundreds of its planes around the world have been grounded following the second fatal crash by that model in less than five months.

Transport Canada Civil Aviation said earlier Tuesday it was evaluating evidence and considering all potential actions, but has stopped short of grounding the planes as European, British, and several other countries’ aviation authorities and airlines have done. U.S. airlines, taking their cue from the FAA, have kept the plane in service.

Late Tuesday, FAA Commissioner Daniel Elwell issued a statement, saying: “Thus far, our review shows no systemic performance issues and provides no basis to order grounding the aircraft.”

The global groundings come after a Max 8 jetliner crashed in Ethiopia on Sunday, killing 157 people. In October, the same model was involved in a crash that killed 189 people in Indonesia in eerily similar circumstances.

See also: Boeing 737 Max’s world is getting smaller: These countries have grounded the jet

Shares of Boeing BA, -6.15%   have lost more than 11% in the past two sessions, their worst two-day losing streak since June 2009.

The stock, a Dow Jones Industrial Average DJIA, -0.38%   component, was the worst performer on the Dow and the second-worst performer in the S&P 500 index SPX, +0.30%   on Tuesday. It ended down 6.2%, to $375.41, its lowest close since Jan. 29.

Airline stocks, even shares of companies without exposure to the 737 Max, also fell Tuesday.

---- Up until Tuesday, there was no “peer agency” of the U.S. Federal Aviation Administration that had grounded the jet, said aviation expert Richard Aboulafia.

That changed after the British Civil Aviation Authority announced its suspension, citing lack of information so far from the investigation into the latest crash.

For years, the FAA “has lead the way,” said Aboulafia.
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Boeing 737 Max 8 pilots complained of suspected safety flaw months before Ethiopian Airlines crash

by Cary Aspinwall, Ariana Giorgi and Dom Difurio, Dallas Morning News, Updated: March 12, 2019- 6:33 PM

DALLAS — Pilots repeatedly voiced safety concerns about the Boeing 737 Max 8 to federal authorities, with one captain calling the flight manual “inadequate and almost criminally insufficient” several months before Sunday’s Ethiopian Airlines crash that killed 157 people, an investigation by the Dallas Morning News found.

The Morning News found at least five complaints about the Boeing model in a federal database where pilots can voluntarily report about aviation incidents without fear of repercussions.

The complaints are about the safety mechanism cited in preliminary reports for an October plane crash in Indonesia that killed 189.

The disclosures found by the Morning News reference problems with an autopilot system during takeoff and nose-down situations while trying to gain altitude during flights of Boeing 737 Max 8s. While records show these flights occurred during October and November, information regarding which airlines the pilots were flying for at the time is redacted from the database.
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Man Who Grounded Dreamliner Says FAA Should Ground 737, Too

The FAA is risking its reputation and public safety, says former U.S. Transportation Secretary Ray LaHood. He’s right.
By David Fickling

Finally, more on Deutschland Dodgy Dirty Diesels again, aka Volkswagen. They’re switching to electric vehicles ahead, ‘cos it’s better for the environment, honest it is, plus it allows them to lay-off workers and save moey.

“The reality is that building an electric car involves some 30 percent less effort than one powered by an internal combustion engine,” Chief Executive Herbert Diess explained at the company’s annual results press conference in Wolfsburg on Tuesday.

“That means we need to make job cuts,” he added.

VW accelerates electric push as core brand margin slips

March 12, 2019 / 6:10 AM
WOLFSBURG, Germany (Reuters) - Volkswagen said it will cut jobs as it launches almost 70 new electric models by 2028, accelerating its rollout of zero-emission cars as earnings revealed the operating margin at its core brand had taken a hit.

The profit margin at its core VW brand slipped to 3.8 percent last year, down from 4.2 percent, as higher investments into electric cars and challenges getting combustion-engined vehicles certified ate into profits, VW said.

The push into electromobility should help the VW brand to raise profits as it prepares to put a new electric vehicle into showrooms in 2020.

The VW brand has brought forward its target of achieving a return on sales of 6 percent to 2022, but this will also involve cutting jobs, the company said.

“The reality is that building an electric car involves some 30 percent less effort than one powered by an internal combustion engine,” Chief Executive Herbert Diess explained at the company’s annual results press conference in Wolfsburg on Tuesday.

“That means we need to make job cuts,” he added.

Volkswagen is switching its focus to electric cars after an emissions cheating scandal that cost it more than 27 billion euros and tainted its reputation.

Volkswagen released full earnings on Tuesday after pre-releasing some figures last month when it said its 2018 group operating profit came in at 13.92 billion euros ($15.8 billion), 0.7 percent higher than the prior year and below 14.53 billion euros forecast in a poll.

The carmaker’s Audi and Porsche brands made up the lion’s share of VW Group’s operating profit. Before special items, Audi’s operating profit accounted for 4.7 billion euros and Porsche’s 4.1 billion euros. Its VW brand delivered 3.2 billion euros in operating profit before special items, the carmaker said.

But Audi’s profitability slipped thanks to a 1.2 billion euros diesel-related charge and delays getting its vehicles to conform to a stricter emissions testing standard known as WLTP.

---- As a result of the electric cars model acceleration, Volkswagen expects to build 22 million cars on its electric vehicles platforms PPE and MEB by 2028, up from the carmaker’s previous estimate of 15 million cars.

Volkswagen stuck to its outlook, reiterating that it expects revenues to grow up to 5 percent, and to deliver an operating return on sales at group level of between 6.5 percent and 7.5 percent in 2019.

The operating loss at its Bentley brand fell to 288 million euros, from a profit of 55 million euros a year earlier, hit by delays ramping up production of the new Continental GT and exchange rate effects.

Let your boat of life be light, packed with only what you need - a homely home and simple pleasures, one or two friends, worth the name, someone to love and someone to love you, a cat, a dog, and a pipe or two, enough to eat and enough to wear, and a little more than enough to drink; for thirst is a dangerous thing.

Jerome K. Jerome. Three Men in a Boat.
 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, more on the cheating, freeloading, deadbeats of NATO. Exhibit One, M’Lud : Germany, the richest nation in Europe. The biggest freeloader of all. But President Trump seems to have noticed and wants his pound of flesh.

There's no such thing as a free lunch.

Milton Friedman

Germany not satisfied with readiness of submarines, some aircraft

March 11, 2019
BERLIN (Reuters) - Germany’s military remains dissatisfied with the combat readiness of its submarines and certain older aircraft, but a spate of reforms are starting to take hold, the military’s top uniformed officer told lawmakers on Monday.

However, in a letter accompanying the military’s annual readiness report, Inspector General Eberhard Zorn said the actual report would be kept classified for the first time for security reasons, a move criticised by opposition lawmakers.

“Apparently the readiness of the Bundeswehr is so bad that the public should not be allowed to know about it,” said Tobias Lindner, a Greens member who serves on the budget and defence committees.

He asked parliament to postpone consideration of the mandatory report - which can be seen only in a secure facility - until next week, instead of Wednesday, to give lawmakers more time to study its conclusions.

Zorn said the average readiness of the country’s nearly 10,000 weapons systems stood at about 70 percent in 2018, which meant Germany was able to fulfill its military obligations despite increasing responsibilities.

No overall comparison figure was available for 2017, but last year’s report revealed readiness rates of under 50 percent for specific weapons such as the ageing CH-53 heavy-lift helicopters and the Tornado fighter jets.

Zorn said this year’s report was more comprehensive and included details on five main weapons systems used by the cyber command, and eight arms critical for NATO’s high readiness task force, which Germany heads this year.

“The overall view allows such concrete conclusions about the current readiness of the Bundeswehr that knowledge by unauthorised individuals would harm the security interests of the Federal Republic of Germany,” he wrote.

Zorn said changes meant to boost availability of spare parts and cut maintenance times were producing results, at least in some areas.

None of Germany’s six U212A submarines were ready for operations for five months in the first half of 2018, although the number rose to three by the end of the year, he said.

The readiness levels of the CH-53 helicopter and Tornado fighter jets remained at the low levels seen in 2017, when an average 16 of 72 CH-53 helicopters were combat-ready, and 26 of 93 Tornado fighter jets.
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Germany asserts independence after U.S. warning on Huawei

March 12, 2019 / 1:25 PM
BERLIN (Reuters) - Germany will define its own security standards for a new 5G mobile network, Chancellor Angela Merkel said on Tuesday, after Washington said it would scale back data-sharing with Berlin if China’s Huawei was allowed to participate. 

Merkel’s conservatives chafed at what some saw as a threat by Washington, although Germany’s transatlantic coordinator emphasized that Berlin shared U.S. concerns about Huawei’s ability to meet high security standards for the new network.

The pushback is the latest incident in which U.S. Ambassador Richard Grenell has faced criticism for his handling of U.S.-German disagreements over trade, a 2015 Iran nuclear deal and the Russian-led Nord Stream 2 gas pipeline.

Grenell last week warned German Economy Minister Peter Altmaier in a letter that security concerns could throttle U.S. intelligence sharing with Berlin if Huawei got a role in Germany’s 5G next-generation mobile infrastructure.

Merkel told reporters the German government was keenly focused on security of digital networks, including the 5G mobile infrastructure, but Berlin would keep its own counsel.

“Security, particularly when it comes to the expansion of the 5G network, but also elsewhere in the digital area, is a very important concern for the German government, so we are defining our standards for ourselves,” Merkel said.

She said the German government would discuss its concerns with its partners in Europe, “as well as the appropriate offices in the United States.”
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“A clever person solves a problem. A wise person avoids it.”

Albert Einstein

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?

When semiconductors stick together, materials go quantum

A new study reveals how aligned layers of atomically thin semiconductors can yield an exotic new quantum material

Date: March 7, 2019

Source: DOE/Lawrence Berkeley National Laboratory

Summary: Researchers have developed a simple method that could turn ordinary semiconducting materials into quantum machines -- superthin devices marked by extraordinary electronic behavior that could help to revolutionize a number of industries aiming for energy-efficient electronic systems -- and provide a platform for exotic new physics.

A team of researchers led by the Department of Energy's Lawrence Berkeley National Laboratory (Berkeley Lab) has developed a simple method that could turn ordinary semiconducting materials into quantum machines -- superthin devices marked by extraordinary electronic behavior. Such an advancement could help to revolutionize a number of industries aiming for energy-efficient electronic systems -- and provide a platform for exotic new physics.

The study describing the method, which stacks together 2D layers of tungsten disulfide and tungsten diselenide to create an intricately patterned material, or superlattice, was published online recently in the journal Nature.

"This is an amazing discovery because we didn't think of these semiconducting materials as strongly interacting," said Feng Wang, a condensed matter physicist with Berkeley Lab's Materials Sciences Division and professor of physics at UC Berkeley. "Now this work has brought these seemingly ordinary semiconductors into the quantum materials space."

Two-dimensional (2D) materials, which are just one atom thick, are like nanosized building blocks that can be stacked arbitrarily to form tiny devices. When the lattices of two 2D materials are similar and well-aligned, a repeating pattern called a moiré superlattice can form.

For the past decade, researchers have been studying ways to combine different 2D materials, often starting with graphene -- a material known for its ability to efficiently conduct heat and electricity. 
Out of this body of work, other researchers had discovered that moiré superlattices formed with graphene exhibit exotic physics such as superconductivity when the layers are aligned at just the right angle.

The new study, led by Wang, used 2D samples of semiconducting materials -- tungsten disulfide and tungsten diselenide -- to show that the twist angle between layers provides a "tuning knob" to turn a 2D semiconducting system into an exotic quantum material with highly interacting electrons.

Entering a new realm of physics

Co-lead authors Chenhao Jin, a postdoctoral scholar, and Emma Regan, a graduate student researcher, both of whom work under Wang in the Ultrafast Nano-Optics Group at UC Berkeley, fabricated the tungsten disulfide and tungsten diselenide samples using a polymer-based technique to pick up and transfer flakes of the materials, each measuring just tens of microns in diameter, into a stack.
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“Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.”

Albert Einstein

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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