Friday, 24 May 2019

Huawei, Bargaining Chip or Threat?


Baltic Dry Index. 1068 +09   Brent Crude 68.55

Never ending Brexit now October 31st, maybe. 
Nuclear Trump Tariffs Now In Effect.
USA v EU trade war postponed to November, maybe.

Stocks take the escalator up, but the elevator down.

Wall Street Saying.

As we end the week, Asian markets and crude oil are tumbling on fears that Trump’s trade wars and technology wars may become permanent, or at least are here through next year’s US Presidential election. Nomura sees the USA v China trade war lasting through the US Presidential election.

I doubt that the trade wars and technology wars, can last that long without serious, probably irreparable, harm to the integrated global economy. Crude oil end users seem to suspect the same thing.  Has Trump already pushed the button for the elevator?

Below, poised for a long weekend rally, or a long weekend sell-off?

Fears of deeper U.S.-China trade war push Asian shares to four-month low

May 24, 2019 / 2:19 AM
Tokyo (Reuters) - Asian stocks stumbled to a four-month low on Friday and crude oil plunged on worries the U.S.-China trade spat was developing into a more entrenched strategic dispute between the world’s two largest economies, pushing investors to safe-haven assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.2 percent to a fresh four-month low, and was on track for a third straight weekly loss, down 1.0% so far on the week.

Chinese shares recovered slightly, with the benchmark Shanghai Composite up 0.2% and the blue-chip CSI 300 rising 0.3%, while Hong Kong’s Hang Seng added 0.2%.

Japan’s Nikkei average dropped 0.7%.

On Wall Street, the Dow Jones Industrial Average fell 1.1%, the S&P 500 lost 1.2% and the Nasdaq Composite dropped 1.6%, as traders dumped cyclical names on fears that the escalating U.S.-China trade war would stymie global economic growth.

---- The U.S. Commerce Department said on Thursday it was proposing a new rule to impose anti-subsidy duties on products from countries that undervalue their currencies against the dollar, another move that could slap higher tariffs on Chinese products.

China’s Commerce Ministry hit back on Thursday, with its spokesman saying the United States wants to continue trade talks, they should show sincerity and correct their wrong actions.”

Masanari Takada, cross-assets strategist at Nomura Securities in Tokyo, said the U.S.-China trade conflict “has not yet fully dented the global investor sentiment, so there is no panic-selling. But at the same time, the sentiment will likely remain weak.”

As flight-to-safety plays dominated global markets, the benchmark 10-year U.S. Treasury note yield hit 2.292%, the lowest level since mid-October 2017, with the key parts of the yield curve inverted. The yield last stood at 2.326 percent.
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Trade tensions could last well into the 2020 U.S. election campaign, says Nomura

By Barbara Kollmeyer  Published: May 23, 2019 8:34 a.m. ET
Shutting out trade-war noise, even for long-term investors, looks increasingly like a tall order.

That’s especially true as investors bailed out of global equities Thursday, and sought safe haven assets on the growing realization that the trade spat between the U.S. and China could stick around for a while. That shift in mind-set is at the heart of our call of the day, provided by banking giant Nomura.

“Altogether, the U.S.-China relationship has moved further off track over the past two weeks after a period of what appeared, on the surface, to be steady progress toward reaching an admittedly narrow agreement,” said a team of analysts at Nomura, led by Lewis Alexander, in a note to clients.

“We do not think the two sides will be able to get back to where they seemed to be in late April,” said the analysts, who now see a 65% chance that President Donald Trump will move ahead with 25% tariffs on $300 billion of Chinese products by the end of this year.

“The macroeconomic and financial market impact of the U.S.-China trade conflict thus far has been modest, lowering the threshold for implementing additional tariffs,” it said, adding that the urgency for a near-term deal seems to be fading as both sides dig into their respective positions.

Nomura doesn’t expect tariff escalations between now and June, when Trump and China President Xi Jinping are due to meet at a G20 gathering (Note, they warn the two may not even meet up). But neither do they see tensions easing off, predicting a final round of U.S. tariffs in the third quarter of this year, followed by China retaliation. The bank isn’t alone as JPMorgan Chase has also told its clients to brace for additional tariffs at the end of June.

“Without a clear way forward during an intensifying 2020 U.S. presidential election, we see a rising risk that tariffs will remain in effect through end-2020,” said Nomura.

Neil Wilson, chief market analyst at Markets.com, told clients Thursday that “risks to the downside are building and equity markets probably need to reprice to reflect the heightened risks from the deterioration in trade.”
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A pollution crackdown compounds slowdown woes in China's heartland

May 24, 2019 / 2:06 AM
ANYANG/SANGPO, China (Reuters) - For years, China’s industrial heartland has been cloaked in smog, its waterways choked with pollution pumped from enormous clusters of factories churning out the mountains of cement and steel needed to build the Chinese economy.

Aiming to tackle what has become a huge public health problem, the authorities have cracked down on polluting industries, targeting provinces like Henan, which has a population of 100 million people and hundreds of factory towns. 

According to interviews with factory and business owners, and consumers and workers across Henan, that crackdown - conducted with often heavy-handed local enforcement - is crippling the economies of towns and cities that depend on polluting industries.

Manufacturers across Henan have been particularly hard hit by the new environmental regulations, compounding the pressures the province faces from China’s slowing economy and a grinding trade war with the United States.

It also highlights the trade-off China faces between providing a healthier environment for its citizens and maintaining economic growth in a province whose climb from poverty has lagged that of coastal regions.

China does not provide statistics on the costs of the environmental crackdown, but it has said that short-term pain will lead to long-term growth through an economic “upgrade”.

---- It’s difficult to get a full picture of Henan’s economy from unreliable official figures, as it is for the whole country. Henan’s official growth rate was 7.6% in 2018, higher than the national rate and down 0.2 of a percentage point from 2017.

(Graphic: Henan's polluted industrial cities, tmsnrt.rs/2E8Nedx)

But the interviews conducted by Reuters across Henan suggest consumers are spending less, cities are struggling to retool their economies and the pollution crackdown is hurting businesses and employment.
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In very slightly better hi-tech trade war news, Huawei might have its own operating system up and running in China later this autumn. The international roll-out in the first half of 2020. Note, no jobs get created in the USA.

In not so good trade war news, Huawei, and Canada’s Vancouver hostage, may actually be a bargaining chip in the trade war after all, according to Trump.

Huawei's own OS system may be ready this year: report

Date created : 23/05/2019
Chinese telecom giant Huawei says it could roll out its own operating system for smartphones and laptops in China by the autumn after the United States blacklisted the company, a report said Thursday.

The international version of the system could be ready in the first or second quarter of 2020, said Richard Yu, the head of Huawei's consumer business, told US channel CNBC.

The company was dealt a blow this week with Google's decision to partially cut off Huawei devices from its Android OS following a US order banning the sale or transfer of American technology to the firm.

"Today, Huawei, we are still committed to Microsoft Windows and Google Android," Richard Yu, head of Huawei's consumer business, told CNBC. "But if we cannot use that, Huawei will prepare the plan B to use our own OS."

The Global Times, a Chinese state-run daily, reported on Monday that the platform -- named "HongMeng" -- was undergoing trials and will gradually replace the Android system.

"We don't want to do this but we will forced to do that because of the US government. I think the US, this kind of thing, will also not only be bad news for us, but also bad news for the US companies because we support" US businesses, Yu told CNBC. "We don't want to do this but we have no other solution, no other choice."

The US Commerce Department, which added Huawei and 68 of its affiliates to an "entity list" last week, on Monday announced a 90-day reprieve, allowing some services to continue.

Trump says 'dangerous' Huawei could be included in U.S.-China trade deal

May 23, 2019 / 8:38 AM
WASHINGTON/BEIJING (Reuters) - President Donald Trump said on Thursday U.S. complaints against Huawei Technologies Co Ltd might be resolved within the framework of a U.S.-China trade deal, while at the same time calling the Chinese telecommunications giant “very dangerous.”

Washington last week effectively banned U.S. firms from doing business with Huawei, the world’s largest telecoms network gear maker, citing national security concerns.

“You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous,” Trump said in remarks at the White House. “If we made a deal, I could imagine Huawei being possibly included in some form or some part of it.”

Trump predicted a swift end to the trade war with China, although no high-level talks have been scheduled between the two countries since the last round of negotiations ended in Washington two weeks ago.

Shares of S&P technology and industrial companies, bellwethers of trade sentiment, fell more than 2% on Thursday as the market slumped in a sign the conflict was being seen as a battle not just over trade but also about who controls global technology.

Earlier on Thursday, U.S. Secretary of State Mike Pompeo accused the chief executive of Huawei, Ren Zhengfei, of lying about his company’s lack of ties to the Beijing government, which he said represented a security risk.

“The company is deeply tied not only to China but to the Chinese Communist Party. And that connectivity, the existence of those connections puts American information that crosses those networks at risk,” he said.
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Huawei, the US ban, and links to Chinese spying explained

May 22 2019
On May 15, 2019, US President Donald Trump declared a national emergency, signing an executive order banning US companies and government agencies from utilizing telecommunications equipment that pose a risk to national security. While the initial announcement did not mention Huawei by name, members of congress didn't hesitate to reference the massive Chinese company directly.

Soon after Trump's announcement the US Commerce Department added Huawei to what is referred to as the Entity List. Covering everything from businesses to individuals, placement on the list essentially bans an entity from doing business in the United States. There is little doubt the initial executive order was primarily geared at restricting Huawei's ability to do business in the United States.

Within days of the government action, the repercussions for Huawei began to hit hard. Google quickly ended its business dealings with the Chinese company, meaning Huawei would have no early access to the Android ecosystem, ultimately locking its smartphones out of the Google Play Store and apps like Gmail and Maps. Intel, Broadcom and Qualcomm all reportedly ceased business with Huawei, cutting off the supply of hardware fundamental to several of the company's major products.

These dramatic events were the culmination of years of suspicion surrounding Huawei's ties to the Chinese government. For well over a decade the company has been accused by governments around the world of working with Chinese national spy agencies. But what evidence is there to back up these serious claims, and what are the repercussions of this new US Huawei ban?

----Over the last decade these spying allegations have consistently hounded Huawei, however, no clear evidence has ever been presented to prove there are backdoors or surveillance spyware installed on any Huawei devices. An expansive 18-month security review from US government agencies was reported to have concluded in 2012 that there was no evidence Huawei was working with the Chinese government to spy on US citizens.

Experts working on the US government review at the time suggested that, while no singular "smoking gun" could be found proving Huawei equipment had been compromised, its systems were "riddled with holes." These coding errors and vulnerabilities were found to make some of Huawei's equipment more open to being hacked, however, no one could establish whether these were simple software mistakes or explicit backdoors left open for espionage reasons.

----Although currently there has been no clear evidence showing Huawei equipment contains security "backdoors" allowing Chinese government access, rumors still swirl that evidence may exist. Just over the last month several stories have appeared suggesting the truth is out there. One story alleged the CIA has proof Huawei received funding from Chinese state security agencies, while another revealed the Dutch intelligence agency AVID has discovered an elusive Huawei backdoor in a major local telecom firm. However, both stories are still very much unverified, and so far every significant investigation into Huawei's association with Chinese intelligence has found no explicit evidence to solidify the years of allegations.

It is also difficult to separate this latest major US move from its ongoing trade war with China. Last year Huawei overtook Apple to become the second-largest smartphone manufacturer in the world. This happened alongside the company revealing it was stepping out of the general US consumer tech market. So while a US Huawei ban is not particularly relevant to the company's global market share in smartphones, laptops and telecommunications equipment, it may affect the its ability to produce that tech for its international market.
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https://newatlas.com/huawei-ban-us-what-spy-evidence-exists/59772/?utm_medium=email&utm_campaign=2019-05-23%20082907%20Other%20Daily%20Basic%202019-05-23%20083335%20Huawei%20the%20US%20ban%20and%20links%20to%20Chinese%20spying%20explained&utm_content=2019-05-23%20082907%20Other%20Daily%20Basic%202019-05-23%20083335%20Huawei%20the%20US%20ban%20and%20links%20to%20Chinese%20spying%20explained+CID_b8d69d5654cc1435163c09fca3cb4bf6&utm_source=Campaign%20Monitor&utm_term=Huawei%20the%20US%20ban%20and%20links%20to%20Chinese%20spying%20explained

"Our country is in serious trouble. We don't have victories any more. We used to have victories but [now] we don't have them. When was the last time anybody saw us beating, let's say, China, in a trade deal? They kill us. I beat China all the time. All the time."

Donald J. Trump. Campaign launch rally, 15/6/15

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, Trade War Team Trump is about to make most of the world’s CCTV security cameras start going blind. Another unintended consequence of Trump’s trade war hooligans in Washington, District of Crooks, but great for crooks and louts everywhere. Washington, check-in all brains at the City Limit.

Hikvision faces Trump ban: Chinese security giant is behind more than one million UK CCTV cameras

More than one million surveillance cameras in the UK - including at airports and in NHS trusts - were built by a Chinese company the US is considering blacklisting over security fears.

Hikvision is one of the biggest suppliers of CCTV cameras in the world. Estimates suggest there are more than 1.3m of the company's cameras installed throughout the UK, thought to make up as much as a quarter of all CCTV cameras in the country.

According to freedom of information requests, councils in Nottingham and Hertfordshire, police forces, airports, and NHS Trusts such as the Royal Cornwall Hospitals and the North East Ambulance Service, have all deployed the tech around their sites
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You know, when you put out policy, like a 14-point plan? A lot of times in the first hour of negotiation, that 14-point plan goes astray, but you may end up with a better deal. That's the way it works. That's the way really life works. When I do a deal, I don't say, "Oh, here's 14 points." I got out and do it. I don't sit down and talk about 14 points.

Donald J. Trump. Iowa State Fair August 15 2015

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?

Octopus-inspired wearable sensor

Date: May 22, 2019

Source: American Chemical Society

Summary: Wearable electronics that adhere to skin are an emerging trend in health sensor technology for their ability to monitor a variety of human activities, from heart rate to step count. But finding the best way to stick a device to the body has been a challenge. Now, a team of researchers reports the development of a graphene-based adhesive biosensor inspired by octopus 'suckers.' 

Wearable electronics that adhere to skin are an emerging trend in health sensor technology for their ability to monitor a variety of human activities, from heart rate to step count. But finding the best way to stick a device to the body has been a challenge. Now, a team of researchers reports the development of a graphene-based adhesive biosensor inspired by octopus "suckers." They report their findings in ACS Applied Materials & Interfaces.

For a wearable sensor to be truly effective, it must be flexible and adhere fully to both wet and dry skin but still remain comfortable for the user. Thus, the choice of substrate, the material that the sensing compounds rest upon, is crucial. Woven yarn is a popular substrate, but it sometimes doesn't fully contact the skin, especially if that skin is hairy. Typical yarns and threads are also vulnerable to wet environments. Adhesives can lose their grip underwater, and in dry environments they can be so sticky that they can be painful when peeled off. To overcome these challenges, Changhyun Pang, Changsoon Choi and colleagues worked to develop a low-cost, graphene-based sensor with a yarn-like substrate that uses octopus-like suckers to adhere to skin.

The researchers coated an elastic polyurethane and polyester fabric with graphene oxide and soaked in L-ascorbic acid to aid in conductivity while still retaining its strength and stretch. From there, they added a coating of a graphene and poly(dimethylsiloxane) (PDMS) film to form a conductive path from the fabric to the skin. Finally, they etched tiny, octopus-like patterns on the film. The sensor could detect a wide range of pressures and motions in both wet and dry environments. The device also could monitor an array of human activities, including electrocardiogram signals, pulse and speech patterns, demonstrating its potential use in medical applications, the researchers say.

Another weekend, and a bank holiday weekend in America and GB. The Monaco GP, the Indy 500 weekend, and the Formula-E GP race in Berlin too. We are spoiled for choice. The last two days of voting for the next European Parliament, with the (dismal) results expected late on Sunday night.

In the District of Crooks, what other technology warfare blunders can Trade War Team Trump Hooligans think up? Have a great weekend everyone.

Whenever you get the urge to trade commodities futures, go and lie down until the urge passes.

Wall Street Adage.

The monthly Coppock Indicators finished April

 DJIA: 26,593 +51 Down. NASDAQ: 8,095 +89 Down. SP500: 2,946 +55 Up. 

The S&P has reversed to up largely as a result of the Fed falling into line with President Trump’s demands, 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 still fully paid up synthetic double options on most of the major indexes. This could all go very wrong very fast.

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