Baltic Dry Index. 689
-03 Brent
Crude 68.14
Car Crash Brexit now reset
11 days away. Day 122 of the
never-ending China trade talks.
“I
sometimes get the impression that many U.S. media outlets work according to a
principle which was common in the Soviet Union. Back then, people used to joke
that the newspaper Pravda [Truth] had no truth in it, and the Izvestia [News]
paper has no news in it. I get the impression that many U.S. media operate in
the same way.”
Russian Foreign Minister Lavrov. May 2017.
Today
we take another look at China, where very dubious government economic figures
make for divergent reporting and spin. Do we bet black or red?
Below,
compare and contrast Bloomberg with Reuters.
Stocks Gain, Yen Dips as China Eases Growth Worry: Markets Wrap
By Adam Haigh
Updated on 1 April 2019, 04:31 BST
Stocks in Asia climbed with U.S. equity futures and Treasuries slipped
as evidence of a pick-up in China’s manufacturing eased concerns about the
global economic slowdown.
Japanese and Chinese shares saw gains of about 2 percent and equities
rose in Hong Kong, Sydney and Seoul, building on the biggest quarterly rally
for Asian equities since 2012. Both of China’s key manufacturing PMIs for March
beat the highest estimate in Bloomberg surveys of economists, and indicated an
acceleration in activity in the world’s No. 2 economy. The yen declined.
Treasuries fell with Australian government bonds as the global rally in
sovereign debt shows further signs of steadying. U.S.-China trade talks will
resume when Vice Premier Liu He leads a delegation to Washington later this
week.
Global equities
are coming off the back of the best quarter since 2010 amid bets a move from
major central banks to offer more policy support will help prop up earnings
growth. The advance helped to recoup most of the losses from the fourth
quarter. Meanwhile, in the bond market, yields remain near multi-year lows amid
concern about the deterioration in global growth. The Chinese data went some
way to ease these worries prior to the release of monthly jobs data at the end
of the week in the U.S.
More
Unexpected bounce in China's factory activity, but Asia broadly weak
April 1, 2019 /
5:17 AM
HONG KONG
(Reuters) - Factory activity in China showed a slight, surprising recovery last
month, in a sign that stimulus injected into Asia’s growth engine may be
yielding results, but worries of a global slowdown persisted due to weakness
elsewhere in the region.
Even in China, growth in new domestic and export orders was marginal.
Factory activity in Japan, South Korea, Malaysia, and Taiwan shrank further,
adding to expectations of a dovish turn from central bankers in the region.
The U.S.-China tariff war and slowing Chinese demand after a campaign to
reduce financial risk-taking have caused broad damage, hurting everyone from
small firms in the supply chains of Chinese manufacturers to global tech
behemoths such as Apple and across the map from Australia to South Korea and
Japan.
Later on Monday, euro zone activity surveys were expected to show
contraction due to its own trade frictions with the United States, Brexit
uncertainty, and fallout from the U.S-China trade dispute.
The weak external environment is feeding back into the U.S. economy,
prompting the Federal Reserve to abruptly end its policy tightening last month
and causing the Treasury yield curve to briefly invert last week - a potential
signal of a looming recession.
----
“The PMI data ... is telling us that the stimulus measures
that have been put in place by the Chinese authorities since the middle of last
year are finally starting to have an impact,” said Khoon Goh, head of Asia
research at ANZ.
“Now, of course, this is just one month.
I’m expecting Asian central bankers to continue to be accommodative and some of
them to cut interest rates. There’s no doubt that overall growth still slowed.”
More
Up
next, Europe rolling over into recession and it’s got nothing to do with Brexit,
though a WTO Brexit will impact a lot of Italy’s exports to GB. Then again, the
EUSSR is shooting itself in both feet by forcing through a no deal Brexit, impacting
a whole slew of continental exports to departing GB.
Italy will not change fiscal stance as growth nears zero - Treasury minister
March 31, 2019 /
1:55 PM
MILAN (Reuters) -
Italy can’t afford fiscal expansion at a time when its economic growth is
heading to close to zero, Treasury Minister Giovanni Tria said on Sunday.
Tria said Italy
was in a phase of economic slowdown and could not consider introducing
restrictive measures. He was speaking at a conference in Florence, and his
remarks were carried on Italian radio stations.
“Certainly we don’t have the room for expansionary measures,” he then
added.
Rome targets a fiscal deficit of 2.04 percent of gross domestic product
this year, but with economic growth slowing many analysts expect a higher
figure unless new belt tightening measures are adopted.
The coalition government of the anti-establishment 5-Star Movement and
the right-wing League lowered the deficit target after a protracted tussle with
the European Commission.
Last Thursday Claudio Borghi, a leading member of the League party, said
the government could steeply raise the deficit next year to avoid hiking
value-added tax.
Tria said that with the German economy slowing, Italian manufacturing
exports had suffered as a consequence.
Italy’s economy has for years grown by an average one percentage point
less than the European average and “we are heading towards zero,” he said.
But the minister said nobody was asking the government to introduce
corrective measures to offset slowing growth and added that he ruled them out.
In February the European Commission said Italy was facing excessive
economic imbalances and the policies of its government were making matters
worse, posing a threat to other euro zone countries.
Finally,
bonds. A small step for China, but a giant leap (in the dark,) for the world?
Hopefully, this is not going to turn into a massive and costly April Fool’s joke.
Explainer: Why China's inclusion in global bond benchmarks matters
March 29, 2019 /
7:33 AM
HONG KONG
(Reuters) - China’s yuan-denominated onshore bonds will be begin to be included
in the Bloomberg Barclays Global Aggregate Index from Monday, and two other
competing indices are likely to soon follow suit.
Here’s why investors across the world are watching this closely:
WHICH INDEX PROVIDERS ARE ADDING CHINESE BONDS AND WHEN?
After years of anticipation, benchmark global bond indexes are finally incorporating China, drawing many investors - some for the first time - to this vast market.Bloomberg Barclays Global Aggregate Index on April 1 will begin adding Chinese government and policy bank bonds over 20 months. The inclusion will eventually take China’s weight in the index to 6.03 percent, Bloomberg said in January.
Chinese government bonds are also on a “watchlist” of bonds to join FTSE Russell’s World Government Bond Index (WGBI), with a review set to take place in September, the index provider has said.
China was put on a watchlist for the J.P. Morgan Emerging Markets Government Bond Index Global Diversified, the other major bond benchmark, in 2016. JP Morgan will survey investor feedback on inclusion at its annual meeting this summer, a bank spokeswoman said.
WHY NOW?
Analysts have long argued China’s bond market, the world’s third largest, is too big to ignore. But restrictions have prevented many investors from tapping Chinese bonds.China has over the years made access easier for foreign investors, most recently by launching the Bond Connect scheme in 2017, which allows investors to buy and sell onshore bonds via Hong Kong.
In the past year, authorities added two key capabilities: delivery versus payment and block trades, common features in financial markets elsewhere. Beijing also clarified how it will tax foreign investor gains from Chinese bonds.
---- HOW MUCH MONEY WILL IT BRING CHINA?
The Global Aggregate Index is tracked by an estimated $2.5 trillion of portfolio assets under management. A 6 percent weighting would therefore bring $150 billion to Chinese fixed income, according to HSBC and several other banks.But Goldman Sachs in February cut its inflows forecast to between $120 billion and $150 billion, noting 10 to 20 percent of investors may not be ready to track the index on day one due to operational difficulties and other concerns. Standard Chartered made a similar observation.
More
But
is this move wise? Can China’s figures be Trusted? Do China’s figures really
make sense? For who? Has a race for fees blinded Bloomberg Barclays?
Below,
another look at China’s dodgy figures. Chart 1 also starkly demonstrates the devastating
results of the Great Nixonian Error of fiat money.
Wednesday, December 19, 2018
Twas the night before Christmas.....
---- Bear
in mind that the most recent data (above) is the YE 2016 Data Set. I
would suspect that the data has been trending in a similar direction for the
past two years. i.e.) it looks much worse today.
Based on projected
Asset Growth Rates we may have somewhere north of US$370 Trillion of
Assets/Obligations on the world's books now, of which a significant chunk could
be a tad over valued and poised to default. Of course we won't get the
2018 numbers until the Spring of 2020, which is unfortunate. As always,
while the world's economists and politicians are relegated to looking in the
rear view mirror, stocks, bonds, debt, derivatives and currencies are being
priced in real time.
As you can see (above), I break the data/chart out into two sections, the first is what I call the "Old Money" and the other is what I lovingly refer to as "Fake Money". Old Money is described as that held by established, seasoned, open economies with highly developed transparent, banking, taxation, and monetary systems. Fake Money is best described as money held in jurisdictions where there is less transparency (perhaps a bit of chicanery) with financial asset location/creation and monetary policy, all having little to do with the underlying productivity of the related domestic economies. I've included China, the "usual suspect" Tax Havens (Caymans, Luxembourg, Switzerland, Hong Kong, et. al.) and "Other" (defined as everywhere else) as Fake Money.
As you can see (above), I break the data/chart out into two sections, the first is what I call the "Old Money" and the other is what I lovingly refer to as "Fake Money". Old Money is described as that held by established, seasoned, open economies with highly developed transparent, banking, taxation, and monetary systems. Fake Money is best described as money held in jurisdictions where there is less transparency (perhaps a bit of chicanery) with financial asset location/creation and monetary policy, all having little to do with the underlying productivity of the related domestic economies. I've included China, the "usual suspect" Tax Havens (Caymans, Luxembourg, Switzerland, Hong Kong, et. al.) and "Other" (defined as everywhere else) as Fake Money.
---- The "Old
Money"
- Since the financial crisis the "World" has created additional financial assets (obligations) of US$81 Trillion (31% increase).
- During the same period, Reported Global GDP has increased US$12.5 Trillion (19% Increase or about 2% at a compound rate) This figure is several US$ Trillion less if you adjust for China's PGDP overstatement.
- Financial Assets housed in the UK, France and Germany have actually declined by 17%. No wonder Paris is burning and Brexit is either happening or not based on the hourly headlines. btw - Do you own any Deutsche Bank stock?
- Financial Assets housed in the Developed "Old Money" jurisdictions (US, UK, Germany, France & Japan) have increased a modest US$12.5 Trillion (7.4% increase or a 1% compound increase)
- The "Old Money" increase, offsetting the decline in the UK, German and France Financial Assets primarily took place in the United States ($22.4 Trillion or a 33% increase) presumably due to "Reserve Currency" obligations (i.e. the Triffin requirement)
The "Fake Money"
- If you've been reading this blog, or any other economic journals, papers or publications for that matter, you won't be shocked to hear that there's a sizable group of us who believe that the Chinese Communist Party has been cooking their books on reported GDP, Debt Levels, Currency, financial statements, transactions, NPL's, Asset Values, SEC filings, etc. etc. and virtually every economic statistic they've published over the last few decades. Shocking....I know...but It's truly bordering on the absurd now. (Luckily this blog is blocked on the Mainland and the CCP probably isn't reading this, so there's little/no chance that I'll be included in the Wanzhou Meng prisoner exchange package....I hope...) Anyway.....
- The "Off Shore" money is comprised of financial assets housed in the Cayman Islands, Luxembourg, the Netherlands, Ireland, Hong Kong, Singapore and Switzerland. (US$51.7 Trillion) In 2016 "Off Shore" assets were approximately the equivalent of all financial assets housed in the UK, France and Germany combined. There is little/no "GDP" directly associated with these Assets. They are "Somebody else's money". But whose?
- The same holds true for "Other". i.e.) Every economy outside of the "Off Shore" Money, the US, China, Japan, the UK, France & Germany...the "rest of the World", houses the equivalent financial assets (US$57 Trillion). Again, this "Other" figure is about the same, in big round numbers, as that of the UK, France and Germany.
- Chinese domiciled financial assets increased from US$13.2 Trillion in 2008 to US$49.1 Trillion in 2016. A 257% increase, or at about a 20% compound rate. (again...not a typo)
- Even though the USD is currently the world's reserve currency, the currency of choice in most trade and global financial transactions, NEARLY ALL of the US$81 Trillion increase in Financial Assets took place in Fake Money jurisdictions.
During the same period (2008 to 2016) Global GDP grew at a compound
growth rate of just over 2%. An eyeballing of the figures would suggest
that the world didn't require an additional US$81 Trillion of financial assets
to create this meager growth. More likely, this relatively large increase
in Financial Assets (Generally $6 of assets per year for every $1 of GDP) was a
byproduct of capital misallocation, kicking the can down the road, as Central
Bankers attempted to stem the inevitable tide of defaults.
More, much, much,
more.
“The Capitalists will sell us the rope with which we will hang them.”
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
No crooks or scoundrels today. Today, more on that great US
March flood. While it’s far to soon to say what impact it will have on this
year’s crop plantings, early indications are not good. But can/will other
unaffected regions of the USA make up any difference?
Below, while a million acres sounds and is a lot of acres,
from memory the USA plants well over 100 million acres. Still this USA planting,
from now through July, wants close watching.
More than 1 million acres of U.S. cropland ravaged by floods
By P.J. Huffstutter
and Humeyra Pamuk March 31 2019
CHICAGO/COLUMBUS, Neb. (Reuters) - At least 1 million acres (405,000
hectares) of U.S. farmland were flooded after the "bomb cyclone"
storm left wide swaths of nine major grain producing states under water this
month, satellite data analyzed by Gro Intelligence for Reuters showed.
Farms from the Dakotas to Missouri and beyond have been under water
for a week or more, possibly impeding planting and damaging soil. The floods,
which came just weeks before planting season starts in the Midwest, will likely
reduce corn, wheat and soy production this year.
"There's thousands of acres that won't be able to be planted,"
Ryan Sonderup, 36, of Fullerton, Nebraska, who has been farming for 18 years,
said in a recent interview.
----Fields are strewn with everything from silt and sand to tires and some may not even be farmed this year. The water has also destroyed billions of dollars of old crops that were in storage, as well as damaging roads and railways.
Justin Mensik, a fifth-generation farmer of corn and soybeans in Morse
Bluff, Nebraska, said rebuilding roads was the first priority. Then farmers
would need to bring in fertilizer trucks and then test soil before seeding,
Mensik said.
More
Midwestern farmers devastated by uninsured flood losses
Updated March
29, 2019 at 11:37 AM
EVANSVILLE, Ind., March 29 (UPI) -- Hundreds of millions of dollars in
crops destroyed in Midwestern floods this month were not insured, farmers say.
And the losses could leave many without sufficient income to continue farming.
"This uninsured grain issue is really starting to affect
people," said Jeff Jorgenson, a western Iowa corn and soy grower whose
farm flooded when the Missouri River spilled over its banks March 12.
"It could end a farming career," he said, his voice was full
of emotion. "And that's all they want to do. You don't do this unless you
have a love for it."
Jorgenson was lucky, he said. The levee protecting his farm held long
enough for him to move his harvested corn and soybeans to higher ground. Most
of his neighbors were not so fortunate.
About 10 miles west of Jorgenson's farm, the Kellogg family lost at
least two grain bins full of corn -- and probably more. The water is still too
high for them to inspect their remaining bins. That corn was not insured.
"Personally, I'm a mess," Beth Kellogg said. "I'm a
wreck."
Like their neighbors, the Kelloggs purchase federally subsidized crop
insurance. But that insurance covers crops only while they are in the fields,
said Duane Voy, the director of the U.S. Department of Agriculture's Risk
Management Agency's office that covers Iowa, Minnesota and Wisconsin.
Farmers buy insurance that will pay them if they are unable to plant --
for example if a flood renders the ground too wet. Policies are available that
cover crops lost before harvest, such as from a drought. And some policies will
make up the revenue difference when farmers' yields are lower than expected.
But all coverage ends the moment a crop leaves the field.
Some property casualty insurance plans cover stored grain, Voy said.
Some flood insurance policies might also help. But those policies are not as
ubiquitous as crop insurance. This spring's flooding inundated areas that never
flooded before in collective memory, so many of the farmers impacted most
severely didn't carry coverage.
"It's
not cost-effective," Kellogg said. "It's flooded twice [at the farm]
in the last 150 years."
---- Compounding the disaster is historically low prices for commodity crops this year, which drove farmers to store more than normal. This was especially true for soybeans, for which the value has plummeted because of the trade war with China.
China usually buys around a third of all the soybeans grown in the
United States, but that nation placed high retaliatory tariffs on them last
summer, substantially reducing trade.
It's unclear how much crop the floods destroyed. Farmers and state
workers still are trying to grasp the extent of the damage. Early estimates
from Nebraska and Iowa (two of the hardest-hit states) put the total loss to
agricultural at over $1 billion. That number includes dead livestock, damaged
equipment and buildings, unplantable fields and lost crop stores.
Nebraska and Iowa estimate the total cost of the flooding is closer to
$3 billion, and both states expect that figure to rise as the flood waters
abate and more thorough inspections are done.
---- The March 12 flood inundated the "500-year flood plain," Hansen said. In many places, the water is not retreating. Snowmelt from upriver is keeping waters high. The National Weather Service predicts flooding to get worse in some areas in the coming weeks.
Farmers who have lost their 2018 crops are now staring at flooded fields
that may not dry out enough to plant this spring.
More
Battling tariffs, Iowa soy farmers visit China on trade mission
March 29, 2019 /
3:19 PM
EVANSVILLE, Ind., March 29 (UPI) -- Iowa soybean farmers organized a
trade mission to China this week in hopes of maintaining relationships with
their former buyers -- if and when a truce is reached by their respective
governments.
"As trade negotiations seem to be moving forward, it's very
important for us to meet with the Chinese importers and let them know we're
still here, we still have soybeans and we still want to sell them to you,"
said Tim Bardole, a soy grower from Rippey, Iowa, and president-elect of the
Iowa Soybean Association.
Though neither party can do anything until normal trade is restored
between the United States and China, trade team members said they quickly
learned that Chinese buyers are as eager for an end to the trade war as U.S. producers.
"It's definitely obvious with everyone we talk to that this is
high-level governments disputing," Bardole said. "It's not farmer
against processor over here. They know it has hurt us, and we know it has hurt
them, and we want a resolution as soon as possible for both our
countries."
More
“When a
country (USA) is losing many billions of dollars on trade with virtually every
country it does business with, trade wars are good, and easy to win. Example,
when we are down $100 billion with a certain country and they get cute, don’t
trade anymore-we win big. It’s easy!”
President
Trump March 2018.
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?
Engineering for high-speed devices
New research explores graphene-silicon devices for photonics applications
Date:
March 29, 2019
Source:
University of Delaware
Summary:
A research team from the University of Delaware has developed cutting-edge
technology for photonics devices that could enable faster communications
between phones and computers.
If you use a smartphone, laptop, or tablet, then you benefit from
research in photonics, the study of light. At the University of Delaware, a
team led by Tingyi Gu, an assistant professor of electrical and computer
engineering, is developing cutting-edge technology for photonics devices that
could enable faster communications between devices and thus, the people who use
them.
The research group recently engineered a silicon-graphene device that
can transmit radiofrequency waves in less than a picosecond at a sub-terahertz
bandwidth -- that's a lot of information, fast. Their work is described in a
new paper published in the journal ACS Applied Electronic Materials.
"In this work, we explored the bandwidth limitation of the
graphene-integrated silicon photonics for future optoelectronic
applications," said graduate student Dun Mao, the first author of the
paper.
Silicon is a naturally occurring, plentiful material commonly used as a
semiconductor in electronic devices. However, researchers have exhausted the
potential of devices with semiconductors made of silicon only. These devices
are limited by silicon's carrier mobility, the speed at which a charge moves
through the material, and indirect bandgap, which limits its ability to release
and absorb light.
Now, Gu's team is combining silicon with a material with more favorable
properties, the 2D material graphene. 2D materials get their name because they
are just a single layer of atoms. Compared to silicon, graphene has better
carrier mobility and direct bandgap and allows for faster electron transmission
and better electrical and optical properties. By combining silicon with graphene,
scientists may be able to continue utilize technologies that are already used
with silicon devices -- they would just work faster with the silicon-graphene
combination.
"Looking at the materials properties, can we do more than what
we're working with? That's what we want to figure out," said doctoral
student Thomas Kananen.
To combine silicon with graphene, the team used a method they developed
and described in a paper published in 2018 in npj 2D Materials and Application.
The team placed the graphene in a special place known as the p-i-n junction, an
interface between the materials. By placing the graphene at the p-i-n junction,
the team optimized the structure in a way that improves the responsivity and
speed of the device.
This method is robust and could be easily applied by other researchers.
This process takes place on a 12-inch wafer of thin material and utilizes
components that are smaller than a millimeter each. Some components were made
at a commercial foundry. Other work took place in UD's Nanofabrication
Facility, of which Matt Doty, associate professor of materials science and
engineering, is the director.
More
"On
the whole human beings want to be good, but not too good, and not quite all the
time.”
George
Orwell.
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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