Baltic Dry Index. 730 +53 Brent Crude 67.16
Recession is when a
neighbor loses his job. Depression is when you lose yours.
Harry S. Truman
With
Brexit maybe just 13 days away, recession fears are still rising globally. The
latest worries now come from the USA, where the Atlanta Fed think the USA
economy is only growing by 0.4 percent. While the NY Fed has the figure at 1.5
percent, that’s down from 2.4 percent just six weeks ago.
A
trade war deal between the USA and China, plus an end to the Brexit uncertainty
in the recession flirting EUSSR, would go a long way to boosting confidence.
But the world economy may have already tipped into a new recession thanks to
the trade and currency wars.
A China
deal and a positive Brexit, might only be enough to make the recession shallow
and short. No deal and a Brexit that tips Europe into a deep recession, and the
next recession will likely be deep and long. A global debt default crises lies
down that road.
Below,
can anyone stop the drift into the next recession? Certainly not the politicians
in suicidal Europe.
“Recession is when your neighbor loses his job. Depression is
when you lose yours. And recovery is when Jimmy Carter loses his.”
Opinion: U.S. corporate leaders are getting worried about a recession
By Brett
Arends Published: Mar 15, 2019 3:09
p.m. ET
Top U.S. business leaders are “bracing for a recession,”
and many are already starting to slash costs to prepare their companies for a
downturn ahead.So says the research firm Gartner, after a study of all the recent fourth-quarter corporate results announcements, and the transcripts of business leaders’ earnings calls with Wall Street analysts.
The news comes just days after employers nationwide stunned Wall Street with dismal jobs-growth numbers for the month of February.
Meanwhile the Atlanta branch of the Federal Reserve, which tracks national economic numbers in real time, warns that the U.S. economy is already in danger of stalling.
“Many of the world’s largest companies are starting to behave as if they are in a recession,” said Tim Raiswell, vice president of Gartner’s finance practice, in a published statement. “A significant number of leading firms are taking a recessionary stance and making preparations to capitalize on a downturn rather than be a casualty of one.”
Raiswell said that U.S. executives were still offering a “broadly positive” outlook for the economy. But more and more are talking about a possible “downturn” or “recession,” and have announced efficiency measures to cut costs.
That can’t be a positive development for a jobs market that generated just 20,000 new nonfarm jobs in February, a number far below economists’ consensus forecast.
Bank executives have sounded the alarm about the rise in risky consumer lending by nonbank providers, Gartner found.
And corporate leaders across the board are worried about the turmoil in Washington and a sharp slowdown in the Chinese economy, which is now the world’s biggest by some measures.
---- Wall Street economists think the economy is still on track to grow by about 1.5% this quarter. The New York Federal Reserve broadly agrees — although it has slashed that figure from the much healthier 2.4% predicted just six weeks ago.
But the Atlanta Fed, looking at the latest economic data, puts the figure at just 0.4% — barely above stalling speed. It believes that domestic private investment actually fell in the quarter, by somewhere between 2.4% and 2.9% in real terms.
Li Keqiang says decoupling from US ‘not realistic’, denies China would ask tech firms to spy
·
Premier refutes spying suggestion, saying it is
‘not how China behaves’ and that Beijing would never require Chinese companies
to do so
·
He says ‘the whole world would like to see’
resolution to tariff war with mutually beneficial outcomes
Sarah
Zheng Published: 6:12pm, 15 Mar, 2019 Updated: 11:16pm, 15 Mar, 2019
Premier Li Keqiang on Friday said economic
decoupling from the United States was “not realistic”, while refuting claims
that Beijing would ever require Chinese tech companies to spy on foreign governments
or individuals.
During a news
conference in Beijing at the end of the annual legislative meetings, Li
admitted relations between China and the US had recently seen “twists and
turns”, particularly over trade, but said he hoped ongoing negotiations to
resolve the tariff war would deliver mutually beneficial outcomes.
“I believe that result is also what the
whole world would like to see,” he said. “As two large economies, China and the
US have become closely entwined through years of growing their relationship and
years of cooperation. It is neither realistic nor possible to decouple the two
economies.”
---- But as trade tensions have played
out, Washington’s hawks have pushed for a “decoupling” between the two
economies or at least a “partial decoupling” in the hi-tech sphere.
Li on Friday also rejected the claim that Beijing
had or would mandate Chinese tech companies to assist in spying on foreign
governments or individuals, a key concern for countries considering using
hi-tech equipment from China in sensitive sectors.
The premier
initially sidestepped a question about Chinese technology spying, but later
made a point to go back and “very explicitly respond” to it after taking a
separate question about China’s economic reform.
“Let me tell you explicitly that this is
not consistent with Chinese law. This is not how China behaves,” Li said. “We
did not do that, and we will not do that in the future.”
More
China steps up efforts to develop military technology to challenge US dominance
·
Country is pumping more resources into
developing state-of-the-art equipment ranging from guns to warplanes, according
to armaments specialists
·
Drive comes as armed forces prepare for show of
strength at parade to mark 70th anniversary of founding of the People’s
Republic
Kristin Huang Published:
11:00pm, 14 Mar, 2019
China is
stepping up its efforts to develop new weaponry ranging from guns to fighter
jets to challenge US dominance, according to Chinese military officials.
The effort
is in line with Beijing’s drive to modernise its military and improve combat
readiness as the armed forces prepare for a high-profile show of strength later
this year in a parade to mark the 70th anniversary of the founding of the
People’s Republic.
“We are now
more focused on boosting indigenous research and development capabilities in
all possible ways, especially precision,” Huang Xueying, a member of the
Chinese People’s Political Consultative Conference said on the sidelines of the
legislative gathering in Beijing.
“Although
Chinese guns have improved materials, lifespans and reliability, China lacks
the processing capability that can produce high-quality guns,” said Huang, a
firearms specialist with the People’s Liberation Army.
China is
also working to improve the
engines of its fighter planes as it seeks to develop stealth aircraft that
can compete with the best in the world.
“The air force mainly copied other
countries’ warplanes in the past, because we relied too much on foreign
technology, but now we are putting more effort into research and development,”
said Tang Changhong, another CPPCC member and the chief designer of the Y-20, a
large military transport aircraft.
---- Even though China has developed
advanced fighter jets, it has yet to develop reliable engines for its warplanes
that can compete with those built by the Americans and Russians.
Critics say
the country has yet to master the high-precision metallurgy needed to build
components needed for the engines to operate at extreme temperatures for long
periods.
Chinese-developed
engines are reputed to have operating cycles lasting only hundreds of hours,
while Western systems can operate for thousands of hours.
As a result
some of China’s most advanced warplanes still rely on engines imported from
Russia or developed with Moscow’s help.
Last month
the official state news agency Xinhua reported that the Academy of Military
Science, the top research body for the Chinese military, was stepping up the
pace of its research and development.
More
Huawei
has its own operating system -- in case Apple, Android access is cut off
The
Chinese phone maker has been at the center of recent controversy between the
United States and China.
March 15, 2019 / 12:34 PM
March 15 (UPI) -- Controversial Chinese phone maker Huawei said it's developing its own operating system in case access to Apple or Android software is cut off in the future.
Richard Yu Chengdong, Huawei's consumer group chief, said Thursday the tech company has already developed a proprietary operating system for Huawei devices -- although its cellphones now use Google's Android technology. He said the new system would be used by Huawei computers and cellphones if China-U.S. trade tensions -- or more conflict between Huawei and the U.S. government -- prevent the company from using U.S.-developed software in the future.
Apple's iOS and Android are presently the two dominant systems in worldwide smartphone use.
"We have prepared our own operating system," he told Germany's Die Welt. "Should it ever happen that we can no longer use these [U.S.] systems, we would be prepared. That's our plan
B.
But of course we prefer to work with the ecosystems of Google and Microsoft."
Huawei began building its alternative to Android's operating system last year after a U.S. investigation of Huawei and fellow Chinese phone maker ZTE. Authorities said ZTE violated U.S. sanctions against Iran and North Korea, which led to a ban on the sale of U.S. parts and software to ZTE.
Huawei is currently banned from entering the U.S. cellphone market, and last week announced a lawsuit that seeks to dismiss a ban on selling products to agencies in the United States.
"We don't expect to use [the backup
systems], and to be honest, we don't want to use them," a Huawei
spokesperson said. "We fully support our [U.S.] operating systems. We love
using them and our customers love using them. Android and Windows will always
remain our first choices."
In Boeing news, what did Boeing know and when did they know it. Why and how did America’s FAA certify the 737 Max?
I’ve heard there’s
going to be a recession. I’ve decided not to participate.
Walt Disney
Airlines fear long grounding of Boeing 737 MAX jets after Ethiopian crash
March 15, 2019 / 5:20 AM
PARIS/ADDIS ABABA (Reuters) - The
grounding of Boeing’s 737 MAX jets after the crash in Ethiopia has had no
immediate financial impact on airlines using the planes, but it will get
painful for the industry the longer they do not fly, companies and analysts
said on Friday.
Ethiopian
Airlines Flight 302 crashed soon after take-off from Addis Ababa last weekend,
killing 157 people, the second such calamity involving Boeing’s flagship new
model after a jet came down off Indonesia in October with 189 people on board.
Investigators
in France on Friday examined the black boxes of the jet that crashed in
Ethiopia as the global airline industry waited to see if the cause was similar
to the disaster in Indonesia.
---- Air Canada and United Airlines on Friday became the first major carriers in North America to warn of negative financial implications to business as a consequence of the grounding of the Boeing planes.
Canada’s
biggest carrier Air Canada suspended its 2019 financial forecasts, while United
Airlines, the No. 3 U.S. carrier, said it would see an adverse effect on its
operations if the jets remained grounded heading into the peak summer travel
season.
U.S. bank
Citi said it expected the grounding to eat into the profits of Southwest
Airlines, which operates the world’s biggest 737 MAX fleet, causing a plane
shortage for the carrier and likely passenger compensation costs.
For airlines
that over-ordered the 737 MAX, the grounding could provide an excuse to delay
or cancel purchases, analysts said, though others are scrambling to adjust
business plans that bet heavily on the fuel-efficient, longer-range jets.
In both
crashes, pilots asked to return minutes into flight.
“It looks
like the Lion Air, because the flight only lasted for six minutes,” Ethiopian
Airlines Chief Executive Tewolde Gebremariam told state Chinese state news
agency Xinhua on Friday. “There is clear similarity between our crash and the
Lion Air crash.”
Reuters was
not able to reach Tewolde for comment. A link between the two accidents makes
blame more likely to lie with Boeing and less likely with the airline.
Parallels
between the twin disasters have frightened travelers worldwide and wiped
billions of dollars off Boeing stock.
More
How the Bizarre Economics of Airplanes Raises the Stakes of the Boeing Fallout
Strange things can happen when a business is based on millions
of people flying around in $100 million metal boxes that can take a year to
build.
Joe PinskerMar
14, 2019
On Wednesday, the U.S. government ordered
the grounding of Boeing’s 737 Max airplanes, following similar mandates in
the preceding days by dozens of countries after a crash of one such plane in
Ethiopia. The hundreds
of 737 Max planes previously in service worldwide are all
currently grounded.In many other industries, when a product has a flaw, companies can rely on a range of workarounds, such as other suppliers who can rise to fill the need, or other products that can be subbed in quickly. But because of the airline industry’s peculiarities—from the importance of airlines’ in-advance flight-traffic projections to the extraordinary cost of a single plane—this temporary ban could have far-reaching, hard-to-contain effects.
The grounding will likely hurt Boeing,
whose shares are down after the Ethiopian Airlines crash and whose sales might
take a hit. It will likely hurt airlines, which now have fewer seats with which
to shuttle customers around the country and the world. And it will likely hurt
passengers, who might have to adjust their schedule and, in some cases, their
spending. But most notable is the scale of it all: Depending on the duration of
the grounding, it could cost all involved parties billions of dollars.
Start with Boeing. The price of the company’s stock fell more than 10 percent, which represented nearly $30 billion of the company’s market value, in the days after the crash. One of investors’ worries is that the reputation of the 737 Max—which was also involved in a crash last fall in Indonesia—is now tarnished to the point that it will hurt demand for the plane. This is no small concern: The 737 Max, a jet that costs more than $100 million, is Boeing’s all-time best-selling aircraft, and the company is lined up to sell several thousand more. If airlines cancel their orders, Boeing would stand to lose billions of dollars. (The company did not respond to an interview request.)
Volodymyr Bilotkach, an economist at Newcastle University and the author of The Economics of Airlines, says that if cancellations do materialize, Boeing likely doesn’t have a great Plan B, but neither does anyone else. The airplane-building industry, he says, is an “effective duopoly,” meaning it’s dominated by two suppliers: “There is no way Airbus”—the other half of the duopoly—“will be able to come to the rescue, as that manufacturer’s order book is also not empty.” Indeed, one analyst who follows Boeing closely told Bloomberg earlier this week that his firm didn’t see “meaningful long-term risk” for the company. (Bilotkach says it’s possible that instead of taking their business elsewhere, some airlines might opt for older Boeing-made models with safer records.)
Airlines—Boeing’s customers—are not in a great position either. The primary challenge in the industry, says Clifford Winston, an economist at the nonpartisan Brookings Institution, is how far in advance airlines have to decide how large their fleet should be at any given time. “A plane takes a long time to make,” he says—sometimes a year or longer, and even buying used planes can take a while. Airlines’ task, in essence, is to guess how many people want to go from, say, Nashville to Denver on this day next year, and then buy a bunch of elaborate, $100 million metal contraptions accordingly.
Because airlines’ fleets are assembled according to long-term projections, they might have trouble adapting quickly to events that hurt demand, such as recessions or terrorist attacks.“That’s when they lose a ton of money,” Winston says.
Grounding a certain model of plane, while it affects the supply of (not the demand for) seats, can have a similar effect. Planes are such a big investment that once an airline buys one, it wants to put it to use as much as possible, which means, Winston says, “it’s not like they have a bunch lying around” for situations like this. Basically, airlines are now stuck making the most of what they already have.
Southwest Airlines, for example, is grounding its 34 Max 8 planes, which it says accounts for fewer than 5 percent of its daily flights, and relying on “every available aircraft in our fleet” to carry out its operations. Fewer than 5 percent might seem small, but it can interfere with the delicate capacity-demand calculus that airlines perform months or years in advance. Because the duration of the grounding is unknown, it’s hard to say exactly what damage it will do, but Winston estimates that if the 737 Max planes stay out of service for months, the losses to the industry and passengers “could run in the billions of dollars.” If the grounding ends much sooner, the losses will probably be much smaller. (Southwest told me that it doesn’t comment on financial estimates outside its official earnings updates.)
More
https://www.theatlantic.com/business/archive/2019/03/737-max-8-grounding-boeing-value/584947/
Finally,
with malice aforethought. VW, the fraud that keeps on giving.
U.S. SEC sues Volkswagen, ex-CEO over alleged emissions fraud on investors
March 15, 2019 / 4:54 AM
WASHINGTON/FRANKFURT (Reuters) - The U.S.
Securities and Exchange Commission (SEC) is suing Volkswagen (VW) and its
former chief executive Martin Winterkorn over the German automaker’s diesel emissions
scandal, alleging a “massive fraud” on U.S. investors.
VW was
caught using illegal software to cheat U.S. pollution tests in 2015, triggering
a global backlash against diesel that and has so far cost it 29 billion euros
(£24.78 billion).
Regulators
and investors argue VW should have informed them sooner about the scope of the
scandal, while VW says it was not clear it would face billions of dollars in
fines and penalties as others had paid out much lower sums for similar
offences.
The SEC said
in its civil complaint on Thursday that from April 2014 to May 2015, VW issued
more than $13 billion in bonds and asset-backed securities in U.S. markets at a
time when senior executives knew that more than 500,000 U.S. diesel vehicles
grossly exceeded legal vehicle emissions limits.
VW “reaped
hundreds of millions of dollars in benefit by issuing the securities at more
attractive rates for the company,” the SEC said, adding it “repeatedly lied to
and misled United States investors, consumers, and regulators as part of an
illegal scheme to sell its purportedly ‘clean diesel’ cars and billions of
dollars of corporate bonds and other securities in the United States.”
The suit
filed in San Francisco seeks to bar Winterkorn from serving as an officer or
director of a public U.S. company and recover “ill-gotten gains” along with
civil penalties and interest.
More
Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.
Cary Grant. To Catch A Thief.
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.
Finally, a Vivaldi treat for the highbrow. Viewed 5.3 million times in less than 3 years.
https://www.youtube.com/watch?v=kkJC8p48g6g
Sileant zephyri,
rigeant prata,
unda amata,
frondes, flores non satientur.
Mortuo flumine,
proprio lumine
luna et sol etiam priventur.
Finally, a Vivaldi treat for the highbrow. Viewed 5.3 million times in less than 3 years.
https://www.youtube.com/watch?v=kkJC8p48g6g
Sileant zephyri,
rigeant prata,
unda amata,
frondes, flores non satientur.
Mortuo flumine,
proprio lumine
luna et sol etiam priventur.
Let the winds be hushed,
let the fields freeze,
the flowers and leaves will not
be drenched with the water they
love.
With the river dead
even the moon and the sun
will be
deprived of their own light.
https://lyricstranslate.com/en/rv-638-filiae-mestae-jerusalem-mournful-daughters-jerusalem.html
Let the winds be hushed (Largo)
Let the winds be hushed,
let the fields freeze,
the flowers and leaves will not
be drenched with the water they love.
With the river dead
even the moon and the sun
will be deprived of their own light.
https://lyricstranslate.com/en/rv-638-filiae-mestae-jerusalem-mournful-daughters-jerusalem.html
Let the winds be hushed (Largo)
Let the winds be hushed,
let the fields freeze,
the flowers and leaves will not
be drenched with the water they love.
With the river dead
even the moon and the sun
will be deprived of their own light. Let the winds be rendered numb,
Let the fields freeze over,
Let the longed-for rains
Water not the leaves and flowers.
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