Baltic Dry Index. 790 Brent
Crude 74.29
Never ending Brexit
now October 31, maybe. Day 144 of the
never-ending USA v China trade talks. Everyone’s still “optimistic.”
John Kenneth Galbraith.
As crude oil continues higher due to threatened US sanctions
on Iranian oil starting next week, Asian stock markets are nervous but awaiting
a lead from Europe and later America. For most non energy companies, higher
energy costs either get passed on to the consumer or lower profits. Iran as
usual has threatened to close the Strait of Hormuz. Few expect them to try let
alone succeed.
But with Marketwatch reporting this morning that most
US companies are missing their revenue targets, that may well spell the end of
the road for many companies ability to engage in stock buyback programs in
2019. Stock buybacks have been the main driver of higher stock prices for many
months. Since getting out early beats getting carried out last, “sell in May,
go away,” might come a little early this year.
Asian markets slip as oil prices surge
By Marketwatch
and Associated
Press Published: Apr 22, 2019 11:45
p.m. ET
Asian markets were largely down in early trading Tuesday as
oil prices surged to nearly six-month highs after the U.S. said it would soon
impose sanctions on all buyers of Iranian oil.Japan’s Nikkei NIK, +0.00% was off 0.2%, while Hong Kong’s Hang Seng Index HSI, -0.08% was down about 0.1%. The Shanghai Composite SHCOMP, -0.35% slipped 0.8% and the smaller-cap Shenzhen Composite 399106, -0.87% dropped 1.4%. South Korea’s Kospi SEU, -0.02% was about flat, and benchmark indexes in Taiwan Y9999, +0.10% and Singapore STI, -0.06% pulled back slightly. Australia’s S&P/ASX 200 XJO, +0.80% gained 0.8%.
----There was no strong impetus for buying in Asia. Reports from a recent high-level meeting in China, which was chaired by President Xi Jinping, showed willingness to fine-tune monetary policy but raised questions about future government stimulus. Traders were waiting for a slew of U.S. earnings reports from big companies such as Twitter TWTR, -0.03% starting Tuesday.
Over on Wall Street, the spike in crude oil prices boosted energy stocks on an otherwise listless Monday.
More
Most companies are missing revenue targets, and that’s bad news for stock-market bulls
By Chris
Matthews Published: Apr 22, 2019
2:44 p.m. ET
Just 42% of companies have beat revenue estimates
They call it earnings season, but for investors this quarter, it may be revenue growth that is most important to watch.With 25% of S&P 500 SPX, +0.10% companies having reported earnings as of Thursday’s close, 73% have beaten earnings forecasts but just 42% of companies have surpassed revenue expectations, according to an analysis by Bank of America Merrill Lynch.
“One of the things we’ve noticed is that as the cycle has extended, the top line recovery has been oddly absent, whereas companies are getting really creative at manufacturing earnings-per-share growth from other areas,” Savita Subramanian, head of equity and quant strategy at Bank of America Merrill Lynch told MarketWatch.
During the current expansion, companies have shown the ability to
overcome less-than-stellar revenue growth by continuing to expand their profit
margins, Willie Delwich, investment strategist with R.W. Baird told
MarketWatch. “But we’re starting to see higher input costs, commodity costs and
wage growth, so you don’t have the margin flexibility that you had in the
past,” he said. “If we’re going to have a good quarter, revenue is going to
have to lead the way.”
In other words, the absence of more robust revenue growth could be
indicative of subdued demand, at the same time that corporations have reached
the limit of their ability to expand profit margins, or juice
earnings-per-share through corporate buybacks. These factors could spell
trouble for profit growth not just in the first quarter, but for the rest of
2019 as well.
More
In other news, trade wars might be easy to win, according
to President Trump, but there’s little sign that those winners will likely be
in the USA.
To survive trade battles, China manufacturers deploy every weapon they can
April 22, 2019 /
5:46 AM
GUANGZHOU, China (Reuters) - Manufacturers in China facing trade
barriers are deploying an array of moves to try to keep foreign customers -
giving discounts, tapping tax breaks, trimming workforces and, occasionally,
shifting production overseas to skirt tariffs.
Tit-for-tat tariffs from the China-United States trade war have been
costly for many. Adding to the strain on Chinese manufacturers have been
European Union duties on Chinese products ranging from electric bikes to solar
panels.
March brought some encouraging news for manufacturers. Industrial output
rose at its fastest rate since mid-2014 and exports rebounded more than
expected, while first-quarter growth was better than expected.
Still, some manufacturers who depend on U.S. sales are struggling. At
the Canton Fair in southern China this past week, they put on a brave face, but
feared they will need to take more measures to survive if Beijing and
Washington fail to seal a trade deal.
Botou Golden Integrity Roll Forming Machine Co lost some U.S. customers
when tariffs pushed up prices for its machines making light steel girders and
bars for building frames, according to Hope Ha, a saleswoman.
It now offers an 8 percent discount as a sweetener.
“We have to give discounts because they pay high tariffs,” said Ha.
Ball bearing maker Cixi Fushi Machinery Co gave long-term customers a
3-5 percent discount, according to representative Jane Wang.
---- California-based ACOPower has increased prices about 10-15 percent on some of its made-in-China, solar-powered refrigerators, said founder Jeffrey Tang.
“We have no choice,” he said. “We must increase the price.”
Tang says his portable fridges cannot be made affordably in other
countries. But if there’s no trade agreement, and tariffs rise, the equation
could change.
“Maybe I’ll just ship all the components to Vietnam to do the assembly.”
Aufine Tyre rented and filled a warehouse last year in California in
anticipation of anti-dumping duties, which were later imposed. In another move
to circumvent tariffs, it will soon open a plant in Thailand to make tires.
More
Toyota establishes research institute in China to study hydrogen, green technologies
April 21, 2019 /
6:16 PM
BEIJING (Reuters) - Japan’s Toyota Motor Corp said on Sunday it was
setting up a research institute in Beijing in partnership with Tsinghua
University to study car technology using hydrogen power and other green
technologies that could ease environmental problems in China.
The initiative, outlined by Toyota’s President and Chief Executive Akio
Toyoda in a speech at Tsinghua University, is part of the Japanese carmaker’s
efforts to share more technology with China as it seeks to expand its business
in the country by beefing up manufacturing capacity and distribution channels,
a source close to Toyota said.
The Tsinghua-Toyota Joint Research Institute will conduct research into
cars and new technology to solve environmental problems in China, including
reducing traffic accidents, Toyota said in a statement.
The institute will “cooperate in research not only related to cars for
Chinese consumers, but also in research related to active utilization of
hydrogen energy that can help solve China’s energy problems,” the company said.
The move dovetails with Toyota’s announcement this month that it would
offer carmakers and suppliers around the world free access to nearly 24,000
patents for electric vehicle technologies.
Executive Vice President Shigeki Terashi told Reuters earlier this month
that the automaker intended to become a tier 2 supplier of hybrid systems and
that it had already received enquiries from more than 50 companies.
More
Finally,
Samsung. When expensive toys go wrong.
Samsung delays China launch of foldable smartphone
April 22 (UPI) -- Smartphone maker Samsung has postponed the China launch of its new Galaxy Fold after reports of problems with the revolutionary folding display.The rollout of the $2,000 device was scheduled for Wednesday in Shanghai. A Samsung spokesperson confirmed the postponement. Samsung has not, however, changed the device's launch in select U.S. markets on Friday.
The screen on the device is foldable and offers a much larger display when unfolded. The phone has been in development for years and has been one of the industry's most anticipated items this year. The postponement comes after test users indicated that removing the protective film compromises the display.
Samsung advised users not to remove the protective film and said it was looking into the issue.
"We have received a few reports regarding the main display on the samples provided. We will thoroughly inspect these units in person to determine the cause of the matter," the company said.
John Kenneth Galbraith.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, it looks like trouble ahead. For the next 75 years in fact.
Having correctly identified the coming problem, the US Social Security
Administration trustees quickly passed finding a solution over to the
politicians. Raising taxes or reducing benefits as we head towards a
presidential election year? About as likely as snow in Miami in June.
Social Security costs will exceed revenues next year, analysis says
April 22 (UPI) -- The Social Security Administration's annual trustees report issued a stern warning Monday -- costs will exceed revenues next year for the first time in nearly 40 years.The trustees report said last year's $1.03 trillion in income barely exceed $1 trillion in expenses, and "both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing." Although costs have not exceeded expenses since 1982, the report predicts costs will be higher next year and throughout the 75-year projection period.
The 270-page report said combined resources of the SSA's Old-Age, Survivors, and Disability Insurance program "declines until reserves become depleted in 2035." It added, though, that the OASI Trust Fund for retirees has reserves to pay full benefits until 2034. It said the DI Trust Fund, paying benefits to disabled workers, is financially secure until 2052.
While the OASI program has over $2.8 trillion in reserves, it began depleting in 2018, with $831 billion in income and $853.5 billion in costs and expenditures.
The report specifically noted "the ratio of workers paying taxes to beneficiaries receiving benefits will decline as the baby-boom generation ages and is replaced at working ages with subsequent lower birthrate generations." It added the situation should stabilize by 2040 but annual costs will still grow faster than income, to a lesser degree, it said.
The report recommended only that correction of the shortfall is a legislative issue. A summary, signed by the trustees -- Treasury Secretary Steven Mnuchin, Health and Human Services Secretary Alex Azar, Labor Secretary Alexander Acosta and Acting Social Security Commissioner Nancy Berryhill -- advised that "lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible."
https://www.upi.com/Top_News/US/2019/04/22/Social-Security-costs-will-exceed-revenues-next-year-analysis-says/8421555955264/?mph=5
"In
economics, hope and faith coexist with great scientific pretension."
John Kenneth
Galbraith.
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?
How wind and solar became America's cheapest energy source
- The price of renewable energy has been dropping exponentially over the past decade—and shows no sign of reversing.
- In most of the U.S., it's now become cheaper to build a new solar or wind farm than to keep an existing coal plant running.
- Part of the reason is better technology—solar panels and wind turbines have gotten more effective at generating power
- Economies of scale help, too: "When renewables get cheaper, we buy more, and then they get even cheaper and we buy even more," one expert said.
But for many other groups, even green-minded ones, the higher price of clean electricity has caused soul-searching and hesitation. Early this year, the city government of Durango, Colo., stopped buying renewable power from its utility, saving $45,000 a year. The clean electricity had cost 40 percent extra.
Ten years later, nearly one-third of Colorado's electricity comes from renewable sources, the state's biggest utility is moving to entirely carbon-free energy, and its voters have elected a governor who promised to set the most aggressive clean-energy standard in the nation.
That story is mirrored in dozens of other states, where consumers have demanded cheap power and corporations have moved into clean-energy projects in droves. Behind this shift is not just increasing environmental awareness, but simple economics. The price of renewables has been dropping exponentially—and shows no sign of reversing.
Rapid price drops
In most of the U.S. today, it's cheaper to build a new solar or wind farm than to simply keep an existing coal plant running. Most of those cost decreases have happened just in the last 10 years, to the surprise of some energy analysts.Part of this is technological improvement—solar panels and wind turbines have gotten steadily more effective at generating power. But most of it is economies of scale, said Rushad Nanavatty, principal at the Business Renewables Center at the Rocky Mountain Institute, a sustainability think tank.
You
will find that the State is the kind of organization which, though it does big
things badly, does small things badly, too.
John Kenneth
Galbraith.
The monthly Coppock Indicators finished March
DJIA: 25,929 +54 Down. NASDAQ: 7,729 +94 Down.
SP500: 2,834
+53 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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