Baltic Dry Index. 692
+02 Brent
Crude 68.14
Car Crash Brexit now reset
14 days away. Day 119 of the
never-ending China trade talks.
“One of the great things about books is sometimes there are some
fantastic pictures.”
It is Brexit Day, cancelled,
but not to worry, U.S. Treasury Secretary Steven Mnuchin said on Friday
he had a “productive working dinner” the previous night in Beijing. And on the strength
of that full stomach, hopium’s back in Asian stock markets. Shame about Brexit though, perhaps next
month?
Below, more on what for me looks
like a sucker’s rally. What could possibly go wrong?
“You work three jobs? Uniquely American, isn't it? I mean, that
is fantastic that you're doing that."
To a divorced mother of three, Omaha, Nebraska, Feb. 4, 2005”
To a divorced mother of three, Omaha, Nebraska, Feb. 4, 2005”
Asian stocks gain on hopes of progress in U.S.-China trade talks
March 29, 2019 /
12:59 AM
TOKYO (Reuters) -
Asian shares rose on Friday, led by a surge in Chinese equities, on hopes that
Washington and Beijing are making progress in trade talks, while global bond
yields moved higher after a prolonged slide on worries about the economic
outlook.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5
percent while Japan’s Nikkei added 1 percent.
The Shanghai Composite Index climbed more than 2 percent.
The mood in the markets was brighter after U.S. officials said China has
made proposals in trade talks with the United States on a range of issues that
go further than it has before, including on forced technology transfer.
U.S. Treasury Secretary Steven Mnuchin said on Friday he had a
“productive working dinner” the previous night in Beijing, kicking off a day of
talks aimed at resolving the bitter trade dispute between the world’s two
largest economies.
More
Kudlow Says U.S. Ready to Extend China Talks by Weeks or Months
By Sarah McGregor and Kevin Cirilli
Updated on 29 March 2019, 02:43 GMT
The Trump administration is prepared to keep negotiating with China for
weeks or even months to reach a trade deal that will ensure the world’s
second-largest economy improves market access and intellectual-property
policies for U.S. companies, a senior American official said.
“This is not time-dependent. This is policy- and enforcement-dependent,”
White House economic adviser Larry Kudlow said in a speech in Washington on
Thursday. “If it takes a few more weeks, or if it takes months, so be it. We
have to get a great deal, as the president says, that works for the United
States. That’s our principal interest.”
U.S. Trade Representative Robert Lighthizer and Treasury Secretary
Steven Mnuchin met with Chinese negotiators in Beijing for a working dinner on
Thursday. Mnuchin called the meeting “very productive” before heading out for a
full day of talks on Friday.
Mnuchin, Lighthizer and China’s trade czar, Vice Premier Liu He
exchanged pleasantries in front of reporters before commencing meetings at the
Diaoyutai state guesthouse.
The discussions will continue next week when Liu will travel to
Washington to meet with U.S. negotiators as well as President Donald Trump,
according to Kudlow.
This time, an inverted yield curve suggests the stock market has already peaked, some analysts say
By Chris
Matthews Published: Mar 28, 2019
3:34 p.m. ET
3 of past 7 recessions have seen stocks peak before recession takes hold
Slowing economic growth and an inverted yield curve has many investors worried about a potential recession in the next year or two, but also has them excited for the heady stock-market returns that have often been sandwiched between an inverted yield curve and the subsequent economic downturn.But some analysts and economists are warning that statistical averages can be misleading, and that there is reason to believe that the latest yield curve inversion signals returns for the rest of year will be tepid at best and that the stock-market top may already be in.
Oliver Jones, market economist for Capital Economics told MarketWatch that while it is sometimes the case that stocks continue to deliver strong returns for many months after a yield curve inversion—as they did in the lead-up to the 2007 stock-market peak—it is by no means the rule, and already weakening economic data suggests that equity investors won’t be so lucky this time around.
“We already see evidence of payroll growth slowing, retail stales beginning to weaken and less U.S. demand for imports, at the same time that we’re seeing signs of a corporate earnings slowdown,” Jones said, arguing that these weren’t traits the economy displayed at the time of the 2006 yield curve inversion.
An inverted yield curve is a situation where short-term interest rates sit at or above long-term rates, a dynamic in the government-debt market that can be a precursor to an impending recession, as it indicates investors believe that growth will be weak.
More
Former Morgan Stanley Asia chairman: Be prepared to dump stocks ‘very quickly’
By Shawn
Langlois Published: Mar 28, 2019
11:24 a.m. ET
When the dust
settles, there will be some realization that this is not a fundamental
breakthrough — that the conflict will be enduring. Take profits very quickly,
which would be my sense.’
That’s Stephen
Roach, Yale University senior fellow and former Morgan Stanley MS, +1.35%
Asia chairman, talking on CNBC’s “Trading Nation” this week about the
fallout from a U.S.-China trade deal.
A critic of the White House’s tariff strategy, Roach said he doesn’t see a resolution having any kind of meaningful impact on trade between the two countries. While China would likely agree to multiyear purchases for agriculture, soybeans and energy, he said doesn’t believe that will be enough to satisfy investors.
“The bulk of the progress will be on the bilateral trade front, which,
quite frankly, as an economist I find the least appealing because that’s really
a reflection of our own macroeconomic imbalances,” Roach said. “If we can
squeeze the Chinese piece, that’ll just send those goods to another higher cost
producer. So this is sort of a cosmetic deal, at best. But it’s a deal, and it’s
better than nothing.”
The tariffs aren’t the cause of China’s economic issues, he explained,
adding that he believes the country’s officials are injecting enough fiscal
stimulus to deal with the slowdown. So, while Roach does see a deal getting
hammered out next month, it won’t be because China feels it has to.
“I don’t think they’re in desperate shape,” he said. “The downside
pressures are transitory; they’ll be able to stabilize and then show some
gradual improvement.”
In commodities news,
a bubble, is a bubble, is a bubble, until it bursts. It’s what makes commodities
trading on leverage so lucrative (or not,) and such fun. Bring back the mid to
late 70s!
Rout Hammers Palladium After Slew of Bubble Warnings
By Ranjeetha Pakiam
Palladium is heading for the biggest weekly decline in more than three
years as investors’ focus turned to demand amid concerns over slowing global
growth, with the slump following repeated warnings that the metal’s recent
surge to record highs had propelled it into bubble territory.
The metal used in auto catalysts to curb emissions sank 12 percent this
week after hitting an all-time high on supply woes on March 21. The massive
rally, which saw prices almost double since August, spurred predictions a reversal
was inevitable, and hedge funds had cut bullish bets for a fourth week.
With the palladium
market expected to be in deficit for an eighth year, manufacturers of gasoline
vehicles have scrambled to get hold of supplies to meet stricter standards for
pollution control. Still, analysts surveyed by Bloomberg last
week saw the metal ending the year in the $1,300s an ounce, partly as shortages
are priced in and as car sales in key markets slow. As prices scaled new highs
in the first quarter, Saxo Bank A/S, Commerzbank AG and UBS Group AG were among
banks warning of the potential for substantial pullbacks.
“Much of
palladium’s doubling in price over the last eight months was driven by supply
concerns, and these are well-explored,” Michael McCarthy, chief market
strategist at CMC Markets Asia Pacific Pty, said in an email. “Naturally the
momentum attracted speculative as well as trade support. The ongoing
contraction in China car manufacturing and a recent string of weaker macro data
has shifted focus to the demand side of palladium markets, and at the moment
selling is begetting selling.”
Spot palladium
traded at $1,363.20 an ounce at 10:18 a.m. in Singapore, after dropping 7.3
percent Thursday and more than 5 percent the day before. It’s down 12 percent
in March, but still heading for a fourth quarterly gain after prices hit an
all-time high of $1,614.88 last week.
More
Finally today,
shipping. Brexit or Brino, a great
change is about to hit international shipping next year.
Column: Oil traders wait to assess impact of IMO regulations
March 27, 2019 /
3:09 PM
LONDON (Reuters) -
If oil traders and consumers are worried about the impact of new maritime fuel
regulations from the start of next year, they have not yet started to mark up
prices for low-sulphur middle distillate fuels.
Under new rules agreed by the International Maritime Organization (IMO),
ships will be forced to switch to using low-sulphur fuels rather than
high-sulphur residual fuel oil, or fit scrubbers to remove sulphur dioxide
emissions.
Refiners have been gearing up to increase the production of
IMO-compliant shipping fuels, and many ship owners have installed or plan to
fit scrubber units to enable them to continue using cheaper residual fuel oil.
There is considerable uncertainty about exactly how vessel owners will comply
with the new regulations and how much extra low-sulphur fuel the refiners will
manage to produce.
But the forthcoming regulations are expected to increase consumption of
middle distillates and cause that segment of the oil market to tighten significantly.
Ships will be competing for the same low-sulphur middle distillates used
as diesel, jet fuel and heating oil by road hauliers, railroads, airlines and
farmers as well as many homes, offices and factories.
As a result, some analysts are forecasting a severe shortage of middle
distillates, causing prices to spike, while others see a more limited impact.
The effect of the IMO regulations even merited its own section in the
U.S. government’s annual “Economic Report of the President” prepared by the Council
of Economic Advisors (CEA) and published earlier this month.
“Global bunker fuel represents about 5 percent of total oil demand” and
the report warned “fuel switching by ships in 2020 may cause significant
disruptions in specific product markets.”
The CEA predicted a shortage of 200,000-600,000 barrels per day in compliant fuels which “will likely trigger higher prices, though estimates of price shocks to fuels including diesel, gasoline and jet fuel vary substantially”.
So far, the forthcoming switch has had little impact on either hedge fund positioning or prices in the middle distillates markets.
More
“I'll be long gone before some
smart person ever figures out what happened inside this Oval Office."
George W. Bush Washington DC, 12 May, 2008
George W. Bush Washington DC, 12 May, 2008
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, has Trump declared economic war on NATO member
Turkey. From London, anyway, it looks like they have. How it all ends is
anyone’s guess, but it won’t end well for Asia Minor. Just what would NATO do
if Turkey left, leaving a giant hole in the Russia-China containment plan?
But is it only economic war on Turkey? Sweden? Deutsche
Bank? Europe?
On The Edge Of Collapse: Turkish Lira Plummets As Central Bank Burns Through A Third Of Reserves
by Tyler Durden Thu, 03/28/2019 - 07:22
The
Turkish lira resumed its plunge on Thursday following a sharp rebound on
Tuesday when Turkish authorities unleashed an unprecedented assault on lira
shorts, helping push the TRY briefly higher ahead of regional elections, after
a disappointing reading on the central bank's net FX reserves stoked fears that
the country was even closer to a full-blown currency crisis than investors had
feared, while local accounts continued to accumulate foreign currency after
overnight swaps on the Turkish Lira collapsed to just 40% from a historic high
around 1,338% on Tuesday.
After
nearly a week of chaos that one trader described as unprecedented in his two
decades in the market ("I've never
seen a move like this in the 21 years I've been watching the market"),
it appears President Erdogan has relented, and following a vocal outcry from
the international community which was effectively trapped in lira positions,
both long and short, after overnight swaps hit rates well above 1,000%, on
Tuesday the swap plunged as low as 18.5%, in line with recent historical prints,
and an indication that after doing everything in its power to squeeze shorts
(and longs) the central bank appears to have capitulated.
As we reported previously, bankers and analysts at large international
banks reported that Turkish lenders appeared unable or unwilling to provide
lira in exchange for currency this week, in an attempt to prevent short
selling. While Turkey’s banking association (TBB) on Wednesday night denied
claims that the country’s lenders had been limiting or halting sales of lira to
foreign banks, one London-based analyst told the FT on Tuesday that Turkish
banks told him they had been ordered “not to lend even a single lira to foreign
counterparties” That squeeze sent the cost of borrowing lira soaring for
foreign banks and hedge funds, although as shown above, it has since tumbled.
Meanwhile, the underlying pressures facing Turkey accelerated, and on
Thursday data showed another dizzying drop in Turkey's foreign exchange
reserves brought the total decline for the first three weeks of March to 45.1
billion lira, or about $10 billion. According to FT calculations, Turkey has
now burnt through at least a third of its foreign reserves this month in an
effort to stem a plunge in the lira ahead of local elections at the weekend,
putting the country on path to a full-blown currency and funding crisis. According
to the central bank, reserves now stood at about $24.7 billion, down from $28.5
billion a week earlier, a 13% drop in one week.
---- What is even more concerning than the collapse in reserves, however, is that even locals now appear to have lost faith in a currency which the government is forced to defend at any cost - literally - and on Thursday the Lira fell 5% to 5.5914 per dollar amid a sell-off that’s roiling the nation’s markets, as the very same measures designed to deter short-sellers from selling the currency before municipal elections on Sunday achieved the opposite outcome and spooked investors, both foreign and domestic.
According to a trader quoted by Bloomberg, Turkish investors bought
an estimated $3.5 billion worth so far this week as locals have bought at least
$1 billion a day. As a result, the latest central bank data reveals that Turkish
investors now hold a record $176 billion worth of hard currency after buying
around $25 billion since early September.
Meanwhile, as Erdogan has focused on the currency, other market
indicators are screaming full-blown crisis and on Thursday, Turkey’s five-year
credit default swaps widened for an eighth day to 462, the highest since
September, while the yield on the nation’s benchmark 10-year lira bond jumped
91bps to over 19%. As Bloomberg notes, the cost of protection on Turkish
sovereign notes has jumped above that for Iraq, Greece, Angola and Pakistan. Governments
with costlier CDS include Ukraine, Argentina and Lebanon... for now. The
turnaround in market perceptions for Turkey was especially striking because its
CDS had been calmly declining even as the economy sank into recession. It
wasn't until recent fears about the plunge in reserves, that the CDS rout
accelerated. If only assumes the historical correlation holds, the Turkish
Lira will soon tumble to about 6.00 vs the dollar.
More
Swedbank Fires CEO Minutes Before Start Of Annual Investor Meeting; Shares Halted
Thu, 03/28/2019 - 06:15
Talk about bad timing.
Shares of troubled Swedish lender Swedbank were halted in Stockholm a little over an hour before the bank's annual shareholder meeting was set to begin after sliding another 4% and dragging down the broader European banking sector, which led markets lower on Thursday.
Following initial reports that shareholders had been planning to confront CEO Birgitte Bonnesen at Thursday's meeting, the bank's board acquiesced to mounting investor fury and fired the CEO just minutes before the meeting was set to start over a snowballing €135 billion ($152 billion) money laundering scandal with ties to felonious former Trump campaign manager Paul Manafort and former Ukrainian President Viktor Yanukovich. The latest in a series of increasingly incriminating reports had been published by a Swedish news channel on Wednesday.
Before becoming CEO, Bonnesen had been in charge of the bank's operations in the Baltics, where many of the suspicious transactions, many of which involved the bank's dealings with Danske Bank's Estonian branch, occurred.
The board said Bonnesen was fired as several of the bank's major shareholders made clear that they would likely vote against her. CFO Anders Karlsson will temporarily fill in for Bonnesen, the board said. On Wednesday, Swedish police raided Swedbank over allegations of aggravated fraud.
Following reports that the bank may have lied to US authorities over money laundering tied to the Panama Papers scandal, the FT reported that the US is investigating the bank over "a number of money laundering issues", suggesting that Swedbank, Sweden's oldest lender, could face potentially hundreds of millions of dollars in fines.
More
Deutsche Shares Plunge As Bank Discusses Raising Up To 10 Billion For Commerzbank Deal
Thu, 03/28/2019 - 07:48
Deutsche Bank shares sank on Thursday after the Financial Times reported
that the troubled German lender had been discussing tapping equity markets to
raise as much as €10 billion ($11.2 billion) in what would be the bank's fifth
return to the equity well in under a decade. At the higher end of the range,
the raise - which would help facilitated a "merger of weakquals" with
fellow struggling German lender Commerzbank - would be equivalent to roughly
two-thirds of Deutsche's €16 billion market cap, and about 40% of the combined
market value of Deutsche and Commerzbank.
The news sent Deutsche's shares spiraling lower toward fresh all-time
lows.
More
“To
those of you who received honors, awards , and distinctions, I say, well done.
And to the C students I say, you, too, can be president of the United States.”
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 record low solar power price? 2.175¢/kWh in Idaho
Idaho Power has agreed to pay $21.75/MWh for 120 MW of solar power in a 20-year power purchase agreement with Jackpot Holdings. The solar facility will offset a soon-to-close coal plant in Nevada starting in 2022.
March 27, 2019 John Weaver
In a press release yesterday, Idaho Power announced that it has signed a 20-year power purchase agreement with Jackpot Holdings for a price of $2.175/MWh. The agreement allows for Idaho Power to purchase the solar plant at a later date, as well as to obtain electricity from a proposed expansion of the facility at a later date. The electricity is described as being a replacement for a soon-to-retire coal plant in Nevada.
The utility says that it will submit the proposal to the state’s Public Utilities Commission for approval in the coming days. It is then that we will learn whether this plant includes an escalator in the pricing, much like the the Sempra Renewables 250 MW Copper Mountain Project that put in an even lower starting bid — 2.155¢/kWh.
The current publicly known lowest prices for solar PPAs are 2.375¢/kWh by 8minutenergy in Nevada and 2.49¢/kWh for a project in Arizona, as well as a project in Austin that is stated as being below 2.5¢/kWh — but without publicly releasing all the details of the contract.
Concurrent with this announcement was that Idaho Power is aiming for 100% clean electricity by 2045. The company gets more than 46% of its electricity from hydroelectric sources already, and has entered into agreements to end participation in two coal plants and is exploring exiting a third, and final, coal plant.
Six years ago, more than 40% of the utility’s electricity came from coal.
One theory for how a group in a region with a lower solar irradiation value can set a record low price versus the likes of 8minutenergy and NextEra in Nevada, was hinted at in a recent pv magazine USA interview with 8minutenergy.
The project is being installed in a location with an existing transmission line that today is delivering electricity from the aforementioned closing coal fired plant in Nevada. Additionally, it was noted that the solar power plant could be expanded in the future, with Idaho Power having an option to purchase that electricity at a higher price. This suggests transmission or substation upgrades will be necessary to expand the facility
More
Another weekend, and
what should have been Brexit weekend, freedom weekend, the start of John Bull’s
next great big adventure. Instead we will have to content ourselves with what
is starting to look like the opening round of trade war team Trump’s attack on
European and Turkish banking. Have a great weekend everyone. With the clocks
springing forwards one hour, GB gets one hour closer to freedom.
“You
can fool some of the people all the time, and those are the ones you want to
concentrate on.”
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.
No comments:
Post a Comment