Baltic Dry Index. 674
-11 Brent
Crude 69.71
Car Crash Brexit now reset
09 days away. Day 124 of the
never-ending China trade talks.
If
all else fails, immortality can always be assured by spectacular error.
John Kenneth
Galbraith.
Never
mind that the Baltic Dry Index is sinking again, that Brent crude oil is
flirting with breaking 70 dollars a barrel, or that the never-ending USA v
China trade talks are getting hyped yet again for the millionth time, Asian
stock investors are back to all news is good news again, with the added bonus
than no fresh bad news is good news too.
The
logic being, that with the Fed firmly in President Trump’s re-election camp,
and President Trump firmly nailed to the fate of the US stock market, the Fed and
team Trump will do everything possible between now and November 2020 to move US
stock prices higher. What could possibly go wrong, especially now that
President Trump has been exonerated?
Below
Asia lives the Trumpian dream. A rude awakening lies ahead in summer, I suspect,
by the end of April if President Trump foolishly follows through on his
reckless threat to close the US border with Mexico.
Asian shares scale seven-month highs; oil nears $70 on tight supply
April 3, 2019 /
2:17 AM
SHANGHAI (Reuters)
- Asian shares rose to seven-month highs on Wednesday as investors lapped up
signs of progress in U.S.-China trade talks and brisk economic data, while oil
approached the key $70 per barrel mark.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5
percent around 0310 GMT, after earlier touching its highest level since late
August.
The index has risen nearly 3 percent since Thursday following reports of
progress in trade talks between the United States and China, as well as
reassuring factory activity data from China and the U.S.
The run of gains for stock markets worldwide has also pushed MSCI’s key
gauge of global equities to a six-month high. The global index was up 0.2
percent on Wednesday morning.
Hopes for a deal to end the trade war between the world’s two largest
economies were fanned by fresh comments from White House economic adviser Larry
Kudlow that Washington expects “to make more headway” in talks this week.
Even so, analysts struggled to point to a clear catalyst for the
extended rally in equities.
“I think there’s a tendency for markets at times to just want to be
positive unless you hit them repeatedly, and not just with bad news, but with
new bad news,” said Rob Carnell, chief economist and head of Asia-Pacific
research at ING in Singapore.
“There’s been an awful lot of bad news priced in. So perhaps the absence
of new negatives are enough to allow for a small sense of positivity to creep
in,” he said.
Australian shares were up 0.5 percent, and Japan’s Nikkei stock index
added 0.8 percent. Chinese blue-chips were flat, while Hong Kong’s Hang Seng
index added 0.7 percent.
More
U.S. economy grew a slower 2.2% in the fourth quarter, new GDP figures show
By Jeffry
Bartash Published: Mar 28, 2019 3:03
p.m. ET
The numbers: The
economy grew somewhat slower in the final three months of 2018 than it
originally appeared, largely because of softer consumer spending and a weaker
climate for business investment that’s likely to depress growth in the first
quarter as well.
Gross domestic product, the official scorecard for the economy, expanded at a 2.2% annual pace in the fourth quarter, the government said Thursday. GDP was marked down from an initial 2.6% estimate.
What’s more, adjusted pretax corporate profits fell slightly in the
fourth quarter, marking the first decline in almost two years.
Even after the downward revision, however, GDP for all of 2018 was left
at 2.9%. That matched 2015 for the best performance since the Great Recession a
decade ago.
What happened: Consumer spending was lowered to 2.5% from 2.8%, mainly because
purchases of recreational vehicles were not as strong as initially reported.
The increase in business fixed investment,
meanwhile, was trimmed to 3.1% from 3.9%. The government lowered its estimate
of spending on software and other forms of intellectual property.
More
Asian economic growth hurt by U.S.-China trade tensions, report finds
By Associated Press
Published: Apr 2, 2019 10:30 p.m. ET
BANGKOK — Trade tensions between China and the United States are putting
a drag on economies in the region, with growth likely to continue to slow in
the coming two years, the Asian Development Bank says in a report released
Wednesday.
The Manila, Philippines-based regional lender’s latest economic outlook
forecasts that growth in developing Asia will slow slightly to 5.7% this year
and 5.6% in 2020. In 2017 growth was at 6.2%.
“The main risk to the outlook is still the ongoing trade conflict, as
heightened trade policy uncertainty can negatively affect investment and
manufacturing activity,” it said. “A sharper slowdown in the advanced economies
or the PRC (People’s Republic of China) is another risk.”
The annual update comes as China and the U.S. prepare for another round
of talks, this week in Washington, aimed at resolving their dispute over
China’s industrial policies and acquisition of technology.
After the dispute escalated in mid-2018, with both sides imposing
billions of dollars’ worth of tariffs on each other’s products, world trade
weakened, contracting nearly 2% in January from a year earlier, the report
shows.
---- The Asian Development Bank forecasts that growth in major economies will slip to 1.9% in 2019 and 1.6% in 2020 from 2.2% last year. The U.S. economy is forecast to expand at a 2.4% annual rate this year, slowing from 2.9% in 2018, and to decelerate to 1.9% growth in 2020. Japan’s growth will remain flat at 0.8% this year, it estimates, and fall to 0.6% next year.
The bank expects growth in the area using the euro to fall to 1.5% in
2019 and 2020 from 1.8% in 2018.
More
Here’s what the U.S. buys and sells from Mexico
By Jeffry
Bartash Published: Apr 2, 2019 4:50
p.m. ET
---- The
stuttering U.S. economy could suffer a savage blow, business leaders and
economists say, if
President Trump acts on his threat to shut the Mexican border to block a
rising tide of migrants.Households would face immediate repercussions, they say, in the form of higher prices for groceries and other key consumer staples. And businesses could suddenly confront shortages of key parts and materials, especially in the auto industry.
“Obviously it would not be very good for the U.S. economy that’s already downshifting,” said Sal Guatieri, director of economist research at BMO Capital Markets.
“The auto industry would face serious disruption. About one-third of
imported auto parts come from Mexico,” he said. “A lot of fruits and vegetables
are also imported from Mexico. Prices would likely skyrocket.”
The economies of the U.S. and Mexico have become inextricably
intertwined in the quarter of a century since the North American Free Trade
Agreement deal was signed in 1994.
The two countries exchanged a whopping $612 billion in goods last year,
making Mexico the third largest trading partner after Canada and China. More
than $1.5 billion in products cross the border between the two countries every
day.
Although Mexico is popularly known as the main U.S. source for avocados
and tequila, the huge amount of products it sends to its northern neighbor each
year touch almost every major segment of America’s economy.
The U.S. imports enormous quantities of autos and parts, computer
equipment, oil and gas, appliances and plastic and rubber products — not to
mention fruits and vegetables such as tomatoes, berries and melons.
Mexican imports in 2018 hit a record $347 billion, most of which entered
by truck or train at key junctures along the nearly 2,000-mile long border.
Every day thousands of trucks and rail cars cross from one country to the
other.
Trump acknowledged that a border freeze could hurt. ““Sure, it’s going
to have a negative impact on the economy,” he told reporters at the White
House. “But security is what is most important.”
More
In Boeing 737 Max crash news, the
planes are still grounded, Boeing’s software fix is apparently delayed, and the
Ethiopian Airlines pilots followed Boeing’s own emergency procedures, but still
crashed. In it’s present form, is the 737 Max simply unflyable in an emergency?
Ethiopian Airlines pilots followed Boeing's emergency procedures before crash: WSJ
April 3, 2019 /
5:23 AM
SINGAPORE/ADDIS ABABA (Reuters) - The pilots of an Ethiopian Airlines
737 MAX jet that crashed last month had initially followed Boeing Co’s
emergency procedures but they still failed to regain control of the plane, the
Wall Street Journal reported on Wednesday.
The crash killed
all 157 people on board and led to a global grounding of 737 MAX jets
Boeing had issued guidelines to pilots about shutting off an automated
anti-stall system in the wake of a deadly crash in Indonesia less than five
months earlier.
The Wall Street Journal report, citing unidentified people briefed on
the matter, said the pilots had initially shut off the anti-stall system called
MCAS that was pushing the airplane’s nose down shortly after it took off from
Addis Ababa.
The pilots then cranked a manual wheel in an attempt to stabilize the
plane, the report said, but they eventually decided to restore power to the
usual electric trim on their control yokes, likely because the manual attempt
didn’t achieve the desired results.
Returning the electric power reactivated MCAS and allowed it to continue
its strong downward commands, the newspaper said.
A preliminary report into the crash has not yet been released by
Ethiopian investigators.
Musie Yehyies said there were no plans to publish the report on
Wednesday. The report is expected within 30 days of the March 10 disaster under
international rules governing crash investigations.
Boeing did not respond to a request for comment outside regular U.S.
working hours.
The planemaker said on Monday it planned to submit a proposed software
enhancement package to MCAS in the “coming weeks”, having previously said it
would deliver the fix for U.S. approval by last week.
Faulty 737 Sensor in Lion Air Crash Linked to U.S. Repairer
By Alan Levin and Harry Suhartono
Updated on 3 April 2019, 03:57 BST
A faulty sensor on a Lion Air 737 Max that’s been linked to the jetliner’s deadly crash last October and a harrowing ride the previous day was repaired in a U.S. aircraft maintenance facility before the tragedy, according to investigative documents.
Accident investigators in Indonesia, home of Lion Air, and the U.S., where Boeing Co., the plane’s manufacturer, is based, have been examining the work that a Florida repair shop previously performed on the so-called angle-of-attack sensor, according to briefing documents prepared for Indonesia’s parliament.
Erroneous signals from that sensor triggered the repeated nose-down movements on the Oct. 29 flight that pilots struggled with until the jet plunged into the Java Sea, killing all 189 people aboard, according to a preliminary accident report by Indonesian investigators.
The Lion Air crash and a similar one about five months later involving an Ethiopian Airlines 737 Max together prompted the grounding of Boeing’s best-selling jet March 13 and touched off a global rebellion against U.S. aviation regulators. Investigators have focused on the sensor’s role in the two disasters.
Documents obtained by Bloomberg show the repair station XTRA Aerospace Inc. in Miramar, Florida, had worked on the sensor. It was later installed on the Lion Air plane on Oct. 28 in Bali, after pilots had reported problems with instruments displaying speed and altitude. There’s no indication the Florida shop did maintenance on the Ethiopian jet’s device.
More
Finally,
the World Trade Organisation. Sometime international cooperation is best.
WTO slashes 2019 global trade growth projection to lowest in 3 years
Bryce Baschuk, Bloomberg
The World Trade Organisation slashed its global trade growth projection
for 2019 to the lowest level in three years, citing the impact of rising
commercial tensions and tariffs.
World merchandise trade growth will slow to 2.6% this year and 3% next
year, after notching 3% in 2018, the WTO said in a report published Tuesday.
In September, the WTO said trade would increase by 3.9% in 2018 and 3.7%
in 2019.
The reduced forecast for 2019 marks the second consecutive year the WTO
has pared back expectations and broadly reflects similar readings from the
World Bank and the International Monetary Fund.
“With trade tensions running high, no one should be surprised by this
outlook,” WTO Director-General Roberto Azevedo said in statement in Geneva. “It
is increasingly urgent that we resolve tensions and focus on charting a
positive path forward for global trade which responds to the real challenges in
today’s economy.”
The revised figures provide an important gauge of the stakes involved in
President Donald Trump’s economic fight with China nearly a year after the
initial salvos of the trade war were fired.
The report comes as Chinese Vice Premier Liu He visits Washington to
continue talks aimed at ending the US-China tensions.
---The OECD cut its 2019 global forecast last month and said a materialisation of risks related to protectionism could mean even weaker growth. The IMF, which will update its outlook next week, downgraded its view in January, when it also warned that threats were on the increase.
The WTO report cited various risks to trade growth including new tariffs
and retaliatory measures affecting widely traded goods.
The WTO said volatility in financial markets and tighter monetary
conditions also weighed on global trade growth rates.
GDP growth will slow from 2.9% in 2018 to 2.6% in 2019 and 2020, the
report said, citing a consensus estimate from industry surveys.
The WTO said the worst case scenario of a global trade war would lead to
a reduction in world GDP in 2022 of about 2% and a reduction in global trade of
about 17% compared to baseline projections.
Under the WTO’s worst case scenario, international cooperation on
tariffs breaks down completely and all countries set tariffs unilaterally.
"In
economics, hope and faith coexist with great scientific pretension."
John Kenneth
Galbraith.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, this time it’s different in China. This time we can believe their
scripted figures, right?
Things are seldom what they seem,
(in China)
Skim milk masquerades as cream; (in China)
Highlows pass as patent leathers;
(in China)
Jackdaws strut in peacock's
feathers. (in China.)
H.M.S Pinafore, Gilbert & Sullivan.
With apologies.
China’s Data Rebound May Be Causing Investors to Celebrate Prematurely
April 1, 2019 at 11:42 a.m. ET By Reshma Kapadia
China’s manufacturing
activity hit a six-month high in March, cheering investors who had been
worried about a global economic slump. But much like how a first weekend of
great warm spring weather can give way to disappointment with a temperature
drop, optimism about the improving health of the global economy could be
premature.The back story. After the Federal Reserve stepped back from rate increases, investors have been on high alert for a recession. The inversion of the yield curve heightened those fears, keeping investors on the lookout for any data points that show an accelerating global economic slump. China’s PMI data was the next data point many were awaiting.
What’s new. China’s official purchasing managers index showed a recovery in factory activity, including new orders and production—and the strength was confirmed by a rebound in the private gauge of factory activity into expansionary territory. China’s PMI got back into expansion territory, with a reading of 50.5. Most fund managers and strategists have expected China to see a recovery in the second-half after the raft of stimulus China has implemented to put guardrails around its economic slowdown. The iShares MSCI Emerging Markets ETF (EEM) is up 1.2% at $43.45.
But there is reason to not get too carried away. The Bank of Japan’s quarterly tankan survey of manufacturing activity and outlook was disappointing while South Korea’s exports and imports were weaker than expected, writes Marc Chandler, chief market strategist at Bannockburn Global Forex in a note on Monday. Also worrying to those looking at the health of the global economy: Europe’s PMI disappointed. So far, the recovery in China doesn’t seem to be spreading yet to the rest of the world.
“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."
John Kenneth Galbraith. The Great Crash: 1929.
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?
Physics: Behavior of 'trapped' electrons in a one-dimensional world observed in the lab
Date:
April 1, 2019
Source:
University of Cologne
Summary:
Physicists directly observe the separation of spin and charge as predicted by
the Tomonaga-Luttinger liquid theory for the first time.
A team of physicists at the University of Cologne has, for the first
time, seen a particularly exotic behaviour of electrons on an atomic scale.
Electrons normally move almost freely through three-dimensional space. However,
when they are forced to move in only one dimension -- i.e. in a chain of atoms
-- they begin to act rather strangely. The Tomonaga-Luttinger liquid theory
predicted this decades ago. In the lab, however, this phenomenon has so far
only been shown indirectly. An international research team led by Professor Dr
Thomas Michely at the University of Cologne's Institute of Physics II has now
produced one-dimensional wires, allowing them to witness the behaviour of
trapped electrons in 1D with the scanning tunnelling microscope. They report on
their discovery in the journal Physical Review X.
'In 1950, Japanese physicist and later Nobel laureate Shin'ichiro
Tomonaga imagined what electrons would do in a metal reduced to one dimension,
that is, a chain of single atoms', said Michely. 'The remarkable consequences
that ensue when electrons can no longer avoid each other are particularly
fascinating for us physicists. In a real 3D crystal, their interaction is
rather weak because they are quite free to move around in such an
"open" system. In 1D, however, the electrons simply cannot avoid each
other and begin to interact strongly.'
Electrons normally carry a 'spin' -- a quantum mechanical angular
momentum -- and a charge. However, in 1D they stop behaving like normal
electrons due to their strong interaction. Instead, they divide into two types
of quasi-particles that have either spin or charge. Here electrons are better
described as two independent waves: a spin density wave and a charge density
wave. This phenomenon is called spin-charge separation and is the crux of the
Tomonaga-Luttinger liquid theory, named after Tomonaga who first formulated it
in 1950 and the American theoretical physicist Joaquin Mazdak Luttinger who
developed the theory further.
To be able to see this spin-charge separation locally for the first
time, the researchers from Cologne trapped the so-called Tomonaga-Luttinger
liquid in wire of finite length, essentially locking it in a cage. Due to the
wire's finite length, standing electron waves with discrete energies are
formed, as required by quantum mechanics. With this trick, it is now possible
to explore the limits of Luttinger and Tomonaga's theories with a precision
unfathomable at their time.
----To their complete surprise, the scientists discovered two sets of standing waves in the wire, while for 'normal' independent electrons only one set would have been expected. The key to explaining the phenomenon came from the theoretical physicists around Professor Dr Achim Rosch, also University of Cologne: the two sets of standing waves represent the spin density and the charge density waves, as Tomonaga and Luttinger predicted half a century ago.
The scientists are now planning to investigate the behaviour of the
electrons in one-dimensional cages even more closely. To test the limits of the
Tomonaga-Luttinger liquid theory, they want to conduct new experiments at
temperatures more than ten times lower (0.3 Kelvin) and in an improved 'cage'.
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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