Baltic Dry Index. 790 +23 Brent Crude 71.97
Brexit October 31 (maybe.) Never-ending China trade war talks, day 141.
It is the maxim of every prudent master of a family, never to
attempt to make at home what it will cost him more to make than to buy...What
is prudence in the conduct of every private family, can scarce be folly in that
of a great kingdom.
Adam Smith. The Wealth of Nations 1776.
This
Easter weekend, some interesting reading, not that many actually read the LIR
at holiday weekends. A very happy, safe, enjoyable Easter to all.
That
Paris Fire. That Trump Russian Agent Report. That Chinese alleged backdoor in
Huawei. (I look forward to the CIA report on backdoors in similar US products.)
The stock market about to complete a massive long term head and shoulders. The
London Metal Exchange losing control of inventory.
Something’s
not right, but what? Has the Trump trade
war already killed the goose that laid the golden eggs? Like a Boeing 737 Max, is
it all nose down from here?
Notre-Dame’s Safety Planners Underestimated the Risk, With Devastating Results
By Katrin Bennhold and James Glanz April 19, 2019
PARIS — The architect who oversaw the design of the fire
safety system at Notre-Dame acknowledged that officials had misjudged how
quickly a flame would ignite and spread through the cathedral, resulting in a
much more devastating blaze than they had anticipated.
The system was based on the assumption that if the
cathedral ever caught fire, the ancient oak timbers in the attic would burn
slowly, leaving ample time to fight the flames, said Benjamin Mouton, the
architect who oversaw the fire protections.
Unlike at sensitive sites in the United States, the fire
alarms in Notre-Dame did not notify fire dispatchers right away. Instead, a
guard at the cathedral first had to climb a steep set of stairs to the attic —
a trip Mr. Mouton said would take a “fit” person six minutes.
Only after a blaze was discovered could the fire
department be notified and deployed. That means even a flawless response had a
built-in delay of about 20 minutes — from the moment the alarm sounded until
firefighters could arrive and climb to the attic with hundreds of pounds of
hoses and equipment to begin battling a fire.
Those delays turned out to be devastating.
“I was stunned by
the speed with which the oak in Notre-Dame burned,” Mr. Mouton said. “Oak that
old can’t burn like a match. It’s absolutely incomprehensible.”
But fire safety experts said that Mr. Mouton and his team
underestimated the risk — and that the fire response they designed was far too
slow to fight a blaze in time.
“It doesn’t make any sense,” said Jonathan Barnett, a fire
safety authority at Basic Expert in Australia. “Twenty minutes is a huge delay
before you get people involved. Once that heavy timber starts to burn, you
can’t put it out. So I have no idea why they built in this delay.”
François Chatillon, a senior architect involved in
numerous restorations of France’s historic monuments, also stressed that the
intense fire risk in the oak timbers underneath Notre-Dame’s lead roof was well
known.
Once lit, he said, “It is like throwing a match in a
matchbox, it’s impossible to put out.”
For him the surprise was not that Notre-Dame burned this
week, but “that it didn’t burn before.”
Mr. Mouton and his team were not solely responsible for
all the decisions made to secure a monument as precious as Notre-Dame. At a
minimum, their plans required approval up the chain at the Culture Ministry.
More
Robert Mueller Did Not Merely Reject the Trump-Russia Conspiracy Theories. He Obliterated Them.
The two-pronged conspiracy theory that has dominated U.S. political discourse for almost three years – that (1) Trump, his family and his campaign conspired or coordinated with Russia to interfere in the 2016 election, and (2) Trump is beholden to Russian President Vladimir Putin — was not merely rejected today by the final report of Special Counsel Robert Mueller. It was obliterated: in an undeniable and definitive manner.
The key fact is this: Mueller – contrary to weeks of false media claims – did not merely issue a narrow, cramped, legalistic finding that there was insufficient evidence to indict Trump associates for conspiring with Russia and then proving their guilt beyond a reasonable doubt. That would have been devastating enough to those who spent the last two years or more misleading people to believe that conspiracy convictions of Trump’s closest aides and family members were inevitable. But his mandate was much broader than that: to state what did or did not happen.
That’s precisely what he did: Mueller, in addition to concluding that evidence was insufficient to charge any American with crimes relating to Russian election interference, also stated emphatically in numerous instances that there was no evidence – not merely that there was insufficient evidence to obtain a criminal conviction – that key prongs of this three-year-old conspiracy theory actually happened. As Mueller himself put it: “in some instances, the report points out the absence of evidence or conflicts in the evidence about a particular fact or event.”
---- In sum, Democrats and their
supporters had the exact prosecutor they all agreed was the embodiment of
competence and integrity in Robert Mueller. He assembled a team of prosecutors
and investigators that countless media accounts heralded as the most
aggressive and adept in the nation. They had
subpoena power, the vast surveillance apparatus of the U.S. government at their
disposal, a demonstrated willingness to imprison anyone who lied to them, and
unlimited time and resources to dig up everything they could.
The result of all of that was that not a single American – whether with the Trump campaign or otherwise – was charged or indicted on the core question of whether there was any conspiracy or coordination with Russia over the election. No Americans were charged or even accused of being controlled by or working at the behest of the Russian government. None of the key White House aides at the center of the controversy who testified for hours and hours – including Donald Trump, Jr. or Jared Kushner – were charged with any crimes of any kind, not even perjury, obstruction of justice or lying to Congress.
These facts are fatal to the conspiracy theorists who have drowned U.S. discourse for almost three years with a dangerous and distracting fixation on a fictitious espionage thriller involved unhinged claims of sexual and financial blackmail, nefarious infiltration of the U.S. Government by familiar foreign villains, and election cheating that empowered an illegitimate President. They got the exact prosecutor and investigation that they wanted, yet he could not establish that any of this happened and, in many cases, established that it did not.
The anti-climactic ending of the Mueller investigation is particularly stunning given how broad Mueller’s investigative scope ended up being, extending far beyond the 2016 election into years worth of Trump’s alleged financial dealings with Russia (and, obviously, Manafort’s with Ukraine and Russia). There can simply be no credible claim that Mueller was, in any meaningful way, impeded by scope, resources or topic limitation from finding anything for which he searched.
---- As recently as one month ago, former CIA Director and current NBC News analyst John Brennan was confidently predicting that Mueller could not possibly close his investigation without first indicting a slew of Americans for criminally conspiring with Russia over the election, and specifically predicted that Trump’s family members would be included among those so charged:
More
U.S. intelligence says Huawei funded by Chinese state security: report
April 20, 2019 / 5:38 AM
(Reuters) - U.S. intelligence has accused
Huawei Technologies of being funded by Chinese state security, The Times said
on Saturday, adding to the list of allegations faced by the Chinese technology
company in the West
The CIA accused Huawei of receiving funding from China’s National Security Commission, the People’s Liberation Army and a third branch of the Chinese state intelligence network, the British newspaper reported, citing a source.
Earlier this year, U.S. intelligence shared its claims with other members of the Five Eyes intelligence-sharing group, which includes Britain, Australia, Canada and New Zealand, according to the report bit.ly/2KT7ztd.
Huawei dismissed the allegations in a statement cited by the newspaper.
“Huawei does not comment on unsubstantiated allegations backed up by zero evidence from anonymous sources,” a Huawei representative told The Times.
The company, the CIA and Chinese state security agencies did not respond immediately to requests for comment.
The
accusation comes at a time of trade tensions between Washington and Beijing and
amid concerns in the United States that Huawei’s equipment could be used for
espionage. The company has said the concerns are unfounded.
Authorities
in the United States are probing Huawei for alleged sanctions violations.
Meng
Wanzhou, Huawei’s chief financial officer and daughter of its founder, Ren
Zhengfei, was arrested in Canada in December at the request of the United
States on charges of bank and wire fraud in violation of U.S. sanctions against
Iran.
She denies
wrongdoing and her father has previously said the arrest was “politically
motivated”.
More
Opinion: Stocks are calm and volume has dried up — is this the ‘calm before the storm’?
By Simon
Maierhofer Published: Apr 19, 2019
7:53 p.m. ET
When volatility died down twice last year, stocks crashed
The U.S. stock market is calm. I dare to say that it’s suspiciously calm. But is this the calm before the storm?For the entire month of April, the S&P 500 Index SPX, +0.16% did not rise or fall more than 1% on any given day.
Also intriguing, since March 26, the S&P 500 gapped higher at the open 15 of 17 days. Those gaps account for 97.9 points worth of gains, but the S&P 500 is up only 87.79 points since.
That means during regular trading hours, the S&P 500 did nothing more than digest overnight gains, and actually gave back more than 10 points.
The CBOE Volatility Index VIX, -4.05% also has been drifting lower. In fact, it paints a fascinating and potentially ominous picture. Since June 2016, the VIX has gone through three distinct periods of contracting price.
The purple lines below outline those period of contraction (they look like a wedge). Twice before — in January and October 2018 — the VIX jolted out of its wedge. As the dashed red lines show, this caused severe losses for the S&P 500.
More Interesting charts.
https://www.marketwatch.com/story/stocks-are-calm-and-volume-has-dried-up-is-this-the-calm-before-the-storm-2019-04-19?mod=mw_theo_homepage
Finally,
this weekend, has the LME lost control of warehouse stocks? And if it has, what
does that mean for metal pricing next decade? Today tin, tomorrow copper? Will
London lose out to Shanghai?
Column: LME storage problems writ large in tiny tin market
April 18, 2019 / 2:44 PM
LONDON (Reuters) - Is the London Metal
Exchange’s (LME) physical storage function in danger of slipping into the
shadows?
That’s the
question at the heart of the LME’s latest public discussion paper on its
troublesome warehouse network.
It’s the
seepage of aluminium into cheaper off-market “shadow LME” storage that has
driven the debate.
But the LME
might also care to look at its tin contract, where the process appears to be
most advanced.
Exchange
stocks are desperately low. Time-spreads are in near permanent backwardation.
London tin
traders have learnt to navigate the contract’s liquidity gaps in terms of
physical settlement, although it’s getting harder judging by this week’s
events.
But if, as
the LME notes, “many market participants would welcome a higher-stock
environment” as a way of boosting both transparency and liquidity, it might be
worth asking someone in the tin industry.
Tin’s a
small market. Global usage in 2017 was 362,500 tonnes, most of it going into
semi-conductor soldering, chemicals and plating, according to the International
Tin Association.
But even
against that yardstick, LME-registered tin stocks of 955 tonnes are extremely
low, equivalent to just one day’s demand.
Depleted
stocks have been a long-running theme on the LME tin market. Exchange inventory
totalled 28,000 tonnes at the start of the decade but has since eroded almost
completely.
---- LME three-month tin has both boomed
and bust this decade, hitting a high of $33,600 per tonne in 2011 and a trough
of $13,085 in 2016. It has more recently tracked a broad $18,000-22,000
sideways range, last trading around $20,300.
LME stocks
have not told this fundamental story.
There’s no
reason to think they are doing so now.
There’s
always a way of “explaining” low LME tin stocks through a market prism such as
the notoriously erratic shipments from Indonesia, the world’s largest tin
exporter.
But the
8,000 tonnes of metal sitting in Shanghai Futures Exchange (ShFE) warehouses
tell you there’s no acute global tin shortage right now.
Tightness on
the LME, in other words, is primarily a function of the LME tin contract,
particularly its chronically low stocks.
The tin
industry, it seems, is not using the LME warehouse system to store its metal.
Stocks may be sitting in what the exchange calls “shadow LME” storage, paying
lower off-market rent but in or close to actual LME warehouses to facilitate
warranting if required.
An added
advantage of shadow warehousing is that premium brands of metal aren’t lost in
the LME’s daily warrant churn, whereby what you sell one day is not necessarily
what you get back the next.
More
By means of glasses, hotbeds, and hotwalls, very good grapes can
be raised in Scotland, and very good wine too can be made of them at about
thirty times the expense for which at least equally good can be brought from
foreign countries. Would it be a reasonable law to prohibit the importation of
all foreign wines, merely to encourage the making of claret and burgundy in
Scotland?
Adam Smith. The Wealth of Nations 1776.
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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