Baltic Dry Index. 726 -02 Brent Crude 71.55
“Why, sometimes I've believed as many as six impossible things
before breakfast.”
Donald Trump, with apologies to Alice.
This
weekend, more on the Massive Great Disconnect between global economic reality
and the fantasy going on in global stock markets. Compare and contrast below.
We
all know how this disconnect ends, just not when or what eventually triggers
the ending, but it doesn’t end well for most, and probably doesn’t end well for
President Trump’s re-election chances having declared judge him by what happens
to the US stock market.
When
this bubble blows up, he thinks, the Fed and the People’s Bank of China, will do
a repeat of 2008-2009. All will be well again. I doubt that either can repeat
2008-2009 since the debt mountain is far higher, interest rates far lower, and
the disconnect between reality and fantasy, never greater.
But
even if they could, it would take far longer than happened back then, and that
was the slowest, weakest, recovery built on trillions and trillions of new,
created out of nothing, “cash.”
As I
look around planet Earth, I see nothing but rising trouble, made greatly worse
by all the trade wars, attempted regime changes, botched politics, and a
rapidly slowing global economy. Having stocks in the stratosphere makes no
sense. A fall back to earth lies ahead, probably this year not next.
“If I had a world of my own, everything would be nonsense.
Nothing would be what it is, because everything would be what it isn't. And
contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You
see?”
Jerome Powell,
with apologies to Alice.
Wall Street’s ‘fear index’ tumbles to 6-month low as stock market nears records
By Mark
DeCambre Published: Apr 12, 2019
5:38 p.m. ET
Vix touches intraday low on Friday at 11.95, representing a 67% tumble since its late-December peak
The Cboe Volatility Index touched its
lowest level in six months on Friday as U.S. stock indexes surged, finishing
near record territory, and raising some concerns that investors may be getting
complacent.
Read: The ‘volatility cavalry’ is coming for the stock market, other assets, according to this chart
The VIX itself, which uses S&P 500 options to measure trader expectations for volatility over the coming 30-day period and is often referred to as a guide to the level of investor fear, has declined by 67% after spiking above 36 back in December amid a brutal selloff at the end of 2018.
However, stocks have U-turned higher, with the VIX, which tends to move inversely to stocks, turning south. Gains for the market have been supported by an apparent reversal in policy by the Federal Reserve, which said a weakening global economy was giving it reason to pause interest-rate increases that had been seen as tightening financial conditions and roiling stock benchmarks. The tone was seen as an about-face from the Fed’s hawkishly received December meeting when it delivered its fourth rate increase of 2018, representing the ninth increase in borrowing costs for markets since the end of 2015.
More
Chill in global economy prompts G20 call for trade truce
April 12, 2019 / 6:22 PM
WASHINGTON (Reuters) - The risk that
global economic growth could slow more than expected spurred a call on Friday
from top finance officials for countries to overcome trade differences and opt
for multilateral cooperation and “timely policy action.”
Policymakers
from the Group of 20 industrialized countries are worried that the weakness
evident in key economies could spread, especially if elevated trade tensions,
such as those between the United States and China, escalate further.
“The balance
of risks remains skewed to the downside,” Japanese Finance Minister Taro Aso
said at a news conference following a meeting of G20 finance ministers and
central bankers. “We recognize the risk that growth prospects might deteriorate
if weakening in key economies feed into each other.”
Aso’s
remarks dovetail with those of other officials gathered in Washington for the
spring meetings of the World Bank and International Monetary Fund, many of whom
fret that self-inflicted wounds from protectionist trade policies are to blame
for the weakness. The week’s proceedings kicked off with another downgrade of
global growth estimates from the IMF.
Bank of
Japan Governor Haruhiko Kuroda emphasized the need for countries to take steps
to foster a more dynamic global economy.
“There was a
shared understanding among the G20 members that each country needs to take
timely policy action,” Kuroda said at the news conference.
As the chair
country of this year’s G20 proceedings, Japan wants to deepen talks on global
imbalances - an effort to divert Washington’s attention from bilateral trade
imbalances and stave off U.S. pressure to negotiate two-way trade deals.
German
Finance Minister Olaf Scholz, speaking at an event on the sidelines of the
meetings in Washington, said the rules-based order of multilateralism is
increasingly under threat and leaders must uphold international cooperation.
Scholz
called on the United States to overcome trade differences with Europe, which
erupted again this week when U.S. President Donald Trump threatened to impose
tariffs on $11 billion worth of European Union products, including commercial
aircraft.
More
ECB model suggests euro zone growth could slow further - sources
April 12, 2019 / 7:24 PM
WASHINGTON (Reuters) - An internal
European Central Bank model indicates the euro zone’s economic growth could
slow further in the second quarter, suggesting the projected recovery may be
delayed even further, two sources familiar with the discussion said on Friday.
The ECB’s
nowcasting model, presented to policymakers at Wednesday’s Governing Council
meeting, indicated quarterly growth was just above 0.2 percent in the first
three months of the year and may be somewhat weaker in the second quarter, the
sources, who asked not to be named, told Reuters.
With euro
zone growth slowing sharply, the ECB has already backtracked on plans to raise
interest rates this year and has instead agreed to provide even more stimulus,
hoping to prop up confidence while the bloc goes through its soft patch.
But the
weakness may last longer than thought even just a few weeks ago, underpinning
ECB President Mario Draghi’s generally dovish tone, the sources said, as global
finance leaders gathered in Washington for the International Monetary Fund and
World Bank spring meetings.
“We’ve seen
nothing in the data that would suggest any sort of positive surprise,” a third
source said. “Actually, the March projections already look somewhat
optimistic.”
But the
sources added that the nowcasting model, which looks at a wide array of recent
indicators, is prone to big swings and is not necessarily accurate so early
into a quarter.
An ECB
spokesman declined to comment.
More
EU prepares tariffs on €20 billion of US goods over Airbus-Boeing row — reports
A list of retaliatory EU tariffs on US imports will reportedly
be published next Wednesday. The EU accuses the US of providing illegal state
aid to Boeing, and the US accuses the EU of doing the same for Airbus.
Date 13.04.2019
The European
Commission intends to publish a draft list of retaliatory tariffs on some
€20 billion ($22.6 billion) worth of US imports next Wednesday, EU diplomats
told multiple news agencies late Friday. The report came as French Finance
Minister Bruno Le Maire and his US counterpart Steven Mnuchin met in
Washington.
In a
trans-Atlantic row before the World Trade Organization (WTO) that has dragged
on for 14 years, the US and EU accuse each other of illegally subsidizing their
respective aviation giants, Boeing and Airbus.
Le Maire
pleaded for an "amicable solution" during a news conference on the
sidelines of IMF and World Bank meetings, but warned that Europe was
"ready to respond" if hit by "unjustifiable" US sanctions.
Earlier this week, US President Donald
Trump threatened the EU over Airbus and US trade authorities said they were drafting
a list of EU products to be targeted when imported into the United States.
More
Auto tariff war would hurt more than U.S.-China fight - IMF chief economist
April 12, 2019 / 12:35 AM
WASHINGTON
(Reuters) - A new trade war sparked by U.S. automotive tariffs has the
potential to do much more damage to global economic growth than the U.S.-China
trade conflict has done, International Monetary Fund chief economist Gita
Gopinath said on Thursday.
Gopinath
told Reuters in an interview that such a conflict would affect exports from
many more countries and impose retaliatory duties on U.S. goods from numerous
trading partners.
“We are
concerned about what auto tariffs would do to the global economy at a time when
we are more in the recovery phase,” Gopinath said on the sidelines of the IMF
and World Bank annual meetings in Washington.
Should trade
conflicts spill over into the automotive sector, it would also disrupt larger
parts of global manufacturing supply chains, she said.
“So that
would actually be far more costly for the world economy than just the
U.S.-China trade tensions that we had,” said Gopinath, an Indian-born, Harvard
University professor.
U.S. President
Donald Trump has threatened to levy tariffs of some 25 percent on imported
vehicles and auto parts on national security grounds, invoking a 1962 trade law
aimed at safeguarding the Cold War-era military industrial base.
Trump has
openly admitted that he is using the threat of auto tariffs to draw trading
partners including Japan and the European Union into trade negotiations. But he
also has recently threatened to impose car duties on Mexico unless it improves
security at the U.S. border.
The Commerce
Department has submitted recommendations of its “Section 232” study into
whether automotive imports constitute a threat to national security to the
White House but has not revealed its contents. Under the Section 232 provision,
Trump has until about May 17 to act on any automotive tariff recommendations
contained in the report.
Should he
impose tariffs, they would hit hard in the second half of 2019, about the time
when the IMF is predicting a rebound in global growth due to a pause in
interest rate hikes by the Federal Reserve and other major central banks.
According to
the IMF’s World Economic Outlook released on Tuesday, the growth rebound is set
to continue into 2020, but the Fund has warned that the outlook was
“precarious” and vulnerable to numerous risks.
More
Opinion: A tragedy is unfolding in the stock market that should worry both bulls and bears
By Sven
Henrich Published: Apr 11, 2019 3:39
p.m. ET
When this rally runs out of steam, the ensuing crash could topple the economy
In the U.S.
stock market, it’s all going to end badly. Even some ardent bulls will freely
admit to it.
The question is how, when and where.
Frankly, a
tragedy is unfolding, and discerning eyes can see it. Since the December lows,
the stock market has taken the scripted route higher, salivating at the
prospect of dovish central bankers once again levitating asset prices higher.
It’s a Pavlovian response learned over the past 10 years. Record corporate
buybacks keep flushing through the market, and cheap-money days are here again
as yields have dropped markedly since their peak last fall.
But
investors may sooner or later learn the hard way that this sudden capitulation
by central bankers is not a positive sign, but rather a sign of desperation.
Fact is,
central banks are hopelessly trapped:
The
capitulation is as complete as it is global, and 10 years after the financial
crisis, there is not a single central bank on the planet that has an exit plan.
As this week’s Federal Reserve minutes again highlighted: No interest-rate
increases in 2019 while the tech sector is making a new all-time high.
What an
absurdity — a slowing economy ignored by the market as cheap money dominates.
So great is
the fear of falling markets and a slowing economy that the grand central bank
experiment has ended in utter failure. But at least the Fed tried for a little
bit before capitulating. The enormity of the central bank failure is perhaps
best encapsulated by the state of the European Central Bank (ECB) under
President Mario Draghi:
Yet, in their desperation, central banks may have set a combustion process in motion that they can’t stop, one that may bring about even more ghastly consequences than the market troubles they sought to avert in the first place.
It’s a blow-off topping scenario driven by several factors: All-in dovish central banks, a renewed desperate hunt for yield, FOMO, a U.S.-China trade deal, record buybacks, trillion-dollar deficits ($1.1 trillion for 2019, to be exact, and rising) and a White House administration preoccupied with managing stock market levels with the expressed goal to keep prices elevated for the 2020 U.S. election.
Trump’s dangerous game
The latter point is not lost on Wall Street. This is from Morgan Stanley’s chief global strategist of investment management: Trump’s dangerous obsession with the markets.“Mr. Trump’s willingness to bend policy to please the markets is now clear — and it’s risky. In recent years, the stock markets have grown larger than the economy, and they are now big enough to take the economy down with them when they deflate.” (My emphasis.)
And this is
how you end up with the loosest financial conditions in 25 years, 3.8%
unemployment and a Fed too scared to raise rates with the lowest fed funds rate
on record during, and while on, the verge of the longest economic expansion
cycle in history. Well done.
The
steepness and relentless nature of this rally has left many people confounded,
even though it is not inconsistent with the concept of a bear market rally.
I’ve written extensively about this.
But because
so many people and funds are left behind, the case can be made that a
psychological capitulation could add further fuel to the fire.
More
In
other news, state backed hackers, but whose? Recycling polystyrene takes a step
closer.
“Why it's simply impassible!
Juncker: Why, don't you mean impossible?
Trump: No, I do mean impassible. (chuckles) Nothing's impossible!”
Juncker: Why, don't you mean impossible?
Trump: No, I do mean impassible. (chuckles) Nothing's impossible!”
With apologies to Alice.
Mysterious Hackers Hid Their Swiss Army Spyware for 5 Years
Author: Andy
GreenbergAndy Greenberg 04.09.19
It's not
every day that security researchers discover a new state-sponsored hacking
group. Even rarer is the emergence of one whose spyware has 80 distinct
components, capable of strange and unique cyberespionage tricks—and who's kept
those tricks under wraps for more than five years.
In a talk at
the Kaspersky Security Analyst Summit in Singapore Wednesday, Kaspersky
security researcher Alexey Shulmin revealed the security firm's discovery of a
new spyware framework—an adaptable, modular piece of software with a range of
plugins for distinct espionage tasks—that it's calling TajMahal. The TajMahal
framework's 80 modules, Shulmin says, comprise not only the typical keylogging and
screengrabbing features of spyware, but also never-before-seen and obscure
tricks. It can intercept documents in a printer queue, and keep track of
"files of interest," automatically stealing them if a USB drive is
inserted into the infected machine. And that unique spyware toolkit, Kaspersky
says, bears none of the fingerprints of any known nation-state hacker group.
"Such a
large set of modules tells us that this APT is extremely complex," Shulmin
wrote in an email interview ahead of his talk, using the industry jargon—short
for advanced persistent threat—to refer to a sophisticated hackers who maintain
long-term and stealthy access to victim networks. "TajMahal is an
extremely rare, technically advanced and sophisticated framework, which includes
a number of interesting features we have not previously seen in any other APT
activity. Coupled with the fact that this APT has a completely new code
base—there are no code similarities with other known APTs and malware—we
consider TajMahal to be special and intriguing."
Kaspersky
says it first detected the TajMahal spyware framework last fall, on only a
single victim's network: The embassy of a Central Asian country whose
nationality and location Kaspersky declines to name. But given the software's
sophistication, Shulmin says TajMahal has likely been deployed elsewhere.
"It seems highly unlikely that such a huge investment would be undertaken
for only one victim," he writes. "This suggests that there are either
further victims not yet identified, or additional versions of this malware in
the wild, or possibly both."
Those
initial findings may indicate a very cautious and discreet state-sponsored
intelligence-gathering operation, says Jake Williams, a former member of the
National Security Agency's elite Tailored Access Operations hacking group.
"The extensibility of it requires a large developer team," Williams
notes. He points out also that the ability to avoid detection and the single
known victim suggest extreme care in targeting, stealth, and operation
security. "There's all kinds of stuff here that screams opsec and very
regimented tasking."
Shulmin says
Kaspersky hasn't yet been able to connect TajMahal, named for a file the
spyware uses to move stolen data off a victim's machine, to any known hacker
groups with the usual methods of code-matching, shared infrastructure, or
familiar techniques. Its Central Asian target doesn't exactly provide any easy
clues as to the hackers' identities either, given the vagueness of that
description and the countries with sophisticated hacker teams with Central
Asian interests, including China, Iran, Russia and the US.
More
INEOS STYROLUTION
First batch
of PS from recycled styrene / Next step to take process to industrial-scale
Ineos Styrolution (Frankfurt / Germany; www.ineos-styrolution.com) has produced polystyrene from
recycled styrene feedstock, an achievement it describes as a “significant
milestone” in proving that PS is recyclable. A series of experimental runs at
Ineos Styrolution’s plant in Antwerp / Belgium yielded a lab-scale quantity of
GPPS from 100% recycled styrene monomer that was produced by depolymerising
post-consumer polystyrene waste.
A company spokesperson told Plasteurope.com that the SM came from Pyrowave's (Oakville, Ontario / Canada; www.pyrowave.com) "catalytic microwave depolymerisation" (CMD) technology. Ineos Styrolution has been collaborating with Pyrowave for about one and a half years – see Plasteurope.com of 06.12.2017.
According to the Frankfurt-based company, the tests, which were done in collaboration with commercial partners and universities, resulted in the production of PS with the same properties as that produced from new styrene monomers. “Due to its relatively clean decomposition into its building blocks, PS is almost designed to be recycled,” said Michiel Verswyvel, Ineos Styrolution’s global R&D expert. “Within our global project team we are working to make this a stable process on a commercial level, by learning for example more about purity requirements of the feedstock material.” Rob Buntinx, president of Europe, Middle East and Africa (EMEA) at Ineos Styrolution, added that the company was now looking forward to scaling the process to an industrial level.
A company spokesperson told Plasteurope.com that the SM came from Pyrowave's (Oakville, Ontario / Canada; www.pyrowave.com) "catalytic microwave depolymerisation" (CMD) technology. Ineos Styrolution has been collaborating with Pyrowave for about one and a half years – see Plasteurope.com of 06.12.2017.
According to the Frankfurt-based company, the tests, which were done in collaboration with commercial partners and universities, resulted in the production of PS with the same properties as that produced from new styrene monomers. “Due to its relatively clean decomposition into its building blocks, PS is almost designed to be recycled,” said Michiel Verswyvel, Ineos Styrolution’s global R&D expert. “Within our global project team we are working to make this a stable process on a commercial level, by learning for example more about purity requirements of the feedstock material.” Rob Buntinx, president of Europe, Middle East and Africa (EMEA) at Ineos Styrolution, added that the company was now looking forward to scaling the process to an industrial level.
Published on 12.04.2019
“When we were
little,” the Mock Turtle went on at last, more calmly, though still sobbing a
little now and then,” we went to school in the sea. The master was an old
Turtle—we used to call him Tortoise—”
“Why did you call
him Tortoise, if he wasn’t one?” asked Trump.
“We called him Tortoise because he taught us,” said the Mock Turtle angrily. “Really you are very dull!”
With apologies to Lewis Carroll and Alice
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.
No comments:
Post a Comment