Baltic Dry Index. 985
Fri. Brent
Crude 71.21
Never ending Brexit
now October 31, maybe.
Day 158 of the
never-ending USA v China trade talks. Trump Tariffs
Friday!
USA v EU trade war 8
days away? No one optimistic.
Never argue with stupid people, they will drag you down to their
level and then beat you with experience.
Mark Twain.
With punitive trade
tariffs on China just three days away, our global stock markets are deep in
denial and hoping that all will be well. President Trump won’t actually dare
impose them on China, or that President Xi will blink first and capitulate to President
Trump thereby, stopping the punitive tariffs.
As a strategy, it’s a
little like betting on a 65 to 1 horse to win the Kentucky Derby. While it
might win it won’t win often, and probably not without some outside help.
I suspect that we are
merely at the end of the beginning, not at the beginning of the end, to quote
someone or other, who was also often stubbornly wrong. I suspect we are at the
end of the tiny gentlemanly phase of the trade war tariffs, and are now about
to go all in on a no holds barred tariff trade war in which there will in the end
be no winners, just a collection of greater and lesser losers, with the largest
losers everywhere likely to be consumers forced into paying higher prices.
“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."
John Kenneth Galbraith. The Great Crash: 1929.
Asian shares off five-week low, remain fragile on renewed U.S.-China trade worries
May 7, 2019 / 2:33
AM
SYDNEY (Reuters) -
Asian shares staggered up from five-week lows on Tuesday but remained fragile
after U.S. President Donald Trump’s latest threat to raise tariffs on Chinese
goods shocked financial markets and fuelled worries that trade talks may be
derailed.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5
percent, erasing earlier losses. It tumbled 2 percent on Monday after Trump
unexpectedly jacked up pressure on Beijing in the midst of trade negotiations.
Chinese shares rose after their worst drop in more than three years on
Monday. The benchmark Shanghai Composite advanced 0.6 percent, while the
blue-chip CSI 300 climbed 1.0 percent. Hong Kong’s Hang Seng was up 0.7
percent.
Japan’s Nikkei shed 0.8 percent, taking a delayed hit as the country’s
financial markets opened after a 10-day break to mark the ascension of a new
emperor.
U.S. stock futures for the S&P 500 declined as much as 0.8 percent
in Asian trading hours on Tuesday as top U.S. trade officials said China had
backtracked on commitments in trade talks.
---- Yasuo
Sakuma, chief investment officer at Libra Investments in Tokyo said believed
stocks have entered a new downtrend, as investors had growing doubts over
whether the United States and China would cut a deal on trade any time soon.
“Investors had been too complacent since the beginning of this year. Now
it’s time for ‘sell in May and go away,’” he said.
Still, some investors are holding out hope that the tariff threats are a
negotiating tactic.
U.S. Trade Representative Robert Lighthizer said he expected top Chinese
negotiator Vice Premier Liu He would lead a delegation coming from Beijing for
talks in Washington on Thursday and Friday.
“Markets are still not sure (whether Trump will go ahead with the tariff
hikes,) and far from a panicky situation. We have to see how the talks will
unfold this week,” said Naoki Iwami, fixed income chief investment officer at
Whiz Partners in Tokyo.
More
China reneged on trade commitments, sparking Trump tariff hike - U.S.
May 6, 2019 /
10:01 AM
WASHINGTON
(Reuters) - China backtracked on substantial commitments it made during trade
talks with the United States, prompting President Donald Trump to impose
additional tariffs on Chinese goods slated to go into effect on Friday, top
U.S. trade officials said on Monday.
The swift deterioration in negotiations between the world’s two largest
economies hit global financial markets as investors faced the prospect of an
escalation rather than an end to a 10-month-old trade war.
Trump tweeted on Sunday that he would raise tariffs on $200 billion
(£152.65 billion) worth of Chinese goods to 25 percent from 10 percent by the
end of the week, and would “soon” target the remaining Chinese imports with
tariffs, sending stocks and oil prices lower on Monday.
U.S. Trade Representative Robert Lighthizer, who has been an advocate
for tough structural changes in China, said Beijing had reneged on commitments
it had made previously that would have changed the agreement substantially.
“Over the course of the last week or so we have seen ... an erosion in
commitments by China,” Lighthizer told reporters. “That in our view is
unacceptable.”
Chinese Vice Premier Liu He is expected to be in Washington on Thursday
and Friday of this week for further talks.
“We’re not breaking off talks at this point. But for now ... come Friday
there will be tariffs in place,” Lighthizer said.
More
U.S. to impose tariffs on Mexican tomatoes as new pact remains elusive
May 7, 2019 / 5:10
AM
MEXICO CITY
(Reuters) - The United States will impose a 17.5 percent tariff on Mexican
tomato imports starting on Tuesday, as the two countries were unable to renew a
2013 agreement that suspended a U.S. anti-dumping investigation, a Mexican
official said on Monday.
The U.S. Commerce Department said in early February that the United
States would resume an anti-dumping investigation into Mexican tomatoes,
withdrawing from a so-called suspension agreement that halted the anti-dumping
case as long as Mexican producers sold their tomatoes above a pre-determined
price. U.S. growers and lawmakers say that deal has failed.
At the time, Commerce said it was giving the re quired 90-day notice
before terminating the six-year-old agreement.
“As of tomorrow a tariff of 17.5 percent will be applied on the value of
the product ... Mexican exporters will be affected, it’s going to affect their
financial flows but that is going to be directly transferred to U.S.
consumers,” said Mexican Deputy Economy Minister Luz Maria de la Mora.
She added that the U.S. measures will remain in place until a new
suspension agreement is reached.
“We’re very disappointed but the good news is that negotiations
continue, looking for a solution. And we hope that in the coming weeks we can
in fact reach an agreement,” said de la Mora.
Mexico exports around $2 billion (1.5 billion pounds) worth of tomatoes
to the United States annually, according to de la Mora.
More
Trump Is Tweeting His Way Into a Trade War. Again.
There’s just something about China that keeps the president coming back.By Mark Gongloff
America’s on-again, off-again, on-again, off-again trade war with China appeared to be on again as of Sunday, when Trump tweeted his frustration with the pace of trade talks and threatened to ramp up tariffs. One key pillar of this year’s massive market rally has been a belief the U.S. and China will end trade tensions quickly and painlessly, so Trump’s tweets triggered a sell-off in risky assets. Shuli Ren writes that, after an initial swoon, markets will return to relative normalcy; which is already turning out to be prescient, as U.S. stock indexes recovered most of their losses by the end of trading today. America’s markets are more resilient than China’s, as shown by a flood of hot IPOs, Shuli writes. China’s economy, on the other hand, is still a hot mess.
Make
no mistake, though: A trade war would be bad for America. Trump claims his
tariffs would only punish China, but in reality they hammer U.S.
consumers first, David Fickling writes, because
it’s far easier for retailers to simply raise prices here than to reshuffle
global supply chains.
So why does Trump keep going back to this poisoned well? Karl
W. Smith suggests his behavior could be
consistent with a “bilateralist” theory of trade, which aims
to break the grip of protectionist special interests – though it’s unclear
whether Trump has actually thought it through that much. Maybe he’ll tweet
about it.
More
With Trump threatening to tighten the trade screws, here’s a look at what tariffs have done so far
By Steve
Goldstein Published: May 6, 2019
3:02 p.m. ET
President Donald Trump’s weekend tweets threatening additional tariffs
brings new emphasis to the issue of how his administration’s imposition of
these extra levies has impacted American finances.
There are two main sources of additional U.S. tariff revenue: the
tariffs levied on Chinese goods and those on steel and aluminum products from a
variety of countries. According to the Trade Partnership, a Washington,
D.C.–based consulting firm, the Chinese goods and steel and aluminum tariffs
represent 11% of all U.S. imports.
Trump said the tariffs were “partially responsible for our great
economic results.”
It’s true that tariff revenue has, in fact, soared. From about $3.5
billion per month, that revenue has spiked to as much as $6.6 billion. Even
after a drop at the beginning of the year on weakened Chinese activity, tariff
revenue stands at about $5 billion per month.
As the chart shows, however, that increased tariff revenue doesn’t
really amount to much of anything in proportion to the federal budget deficit,
which has generally gotten worse as tariff revenue started to increase. That’s
because of the impact of the Tax Cuts and Jobs Act, which slashed corporate
income-tax receipts, as well as growing spending, particularly on defense.
But what about the impact on the broader economy? In the last three
quarters, where tariff revenue has shot higher, U.S. gross domestic product has
grown by an average of 2.9%.
That’s good — very good, in fact — and offers evidence that tariffs on
their own, at least set at existing levels, shouldn’t derail the U.S. economy.
But to say that they’ve helped is, to put it mildly, a stretch. The net
contribution from trade over the last three quarters has, on average, been
negative. Analysts at Oxford Economics say that U.S. economic performance has “been
restrained, not facilitated, by tariffs,” noting that exports to China have
fallen more sharply, down 21% in the first two months of the year, than exports
from China have dropped, which was by 12%.
Recent business sentiment has soured, as
well. The Institute
for Supply Management’s manufacturing purchasing managers index fell in April
to the lowest level since Trump was elected, and a services gauge also
fell to multiyear lows.
More
Denial ain't just a river in
Egypt.
Mark Twain
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, that easy to win trade
war might be bad for China and America, but it’s looking pretty good for
Vietnam.
Warren Buffett says trade war would be 'bad for the whole world'
May 6, 2019 /
12:29 PM
(Reuters) - Warren
Buffett said on Monday that a trade war between the United States and China
would be “bad for the whole world.”
Buffett spoke after U.S. President Donald Trump tweeted on Sunday that
he will raise tariffs on $200 billion of Chinese imports to 25 percent from 10
percent beginning on Friday, and “shortly” slap a 25 percent tariff on $325
billion of Chinese goods that have not been taxed.
Major stock markets fell worldwide on Monday in response to the president’s
tweet, which was a “rational” response, Buffett said on CNBC television.
His conglomerate Berkshire Hathaway Inc owns or invests in many
companies that do business in China, including Apple Inc in which it has a more
than $50 billion stake.
“If we actually have a trade war it will be bad for the whole world,”
Buffett said. “With some people in negotiations, the best technique is to act
half-crazy.”
A full-scale trade war “would be bad for everything Berkshire owns,”
Buffett added, though the probability it might happen is low.
Buffett said tough talk ahead of negotiations was understandable, but
that it was ineffective to “shake your fist first and then shake your finger
later on.” He added that Trump’s threat raises the stakes for Chinese leader Xi
Jinping.
“You’re talking about two personalities who are very much used to
getting their way in politics, and talking about how they will be perceived in
their own country in terms of their behaviour,” he said. “It gets very
complicated.”
Buffett said the trade dispute has already had an effect on Berkshire’s
BNSF railroad.
Last week, Jim Weber, the chief executive officer of Berkshire’s Brooks
Running unit, said in an interview that his company was ending most of its shoe
production in China and moving it to Vietnam because of tariff concerns.
More
Nothing is so admirable in politics as a short memory.
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?
What happens when schools go solar? Overlooked benefits
Research examines overlooked benefits of solar panels on US campuses
Date:
May 2, 2019
Source:
Stanford's School of Earth, Energy & Environmental Sciences
Summary:
Rooftop solar projects at schools could reduce harmful air pollution, help the
environment and enhance student learning while cutting electricity costs, a new
study finds. Overall, the energy switch could deliver benefits valued at $4
billion.
Sunshine splashing onto school rooftops and campuses across the country
is an undertapped resource
that could help shrink electricity bills, new
research suggests.
The study, published in the April issue of the peer-reviewed journal Environmental
Research Letters, shows taking advantage of all viable space for solar
panels could allow schools to meet up to 75 percent of their electricity needs
and reduce the education sector's carbon footprint by as much as 28 percent.
At the same time, solar panels could help schools unplug from grids fed
by natural gas and coal power plants that produce particulate matter, sulfur
dioxide and nitrogen oxides -- air pollutants that can contribute to smog and
acid rain as well as serious health consequences including heart attacks and reduced
lung function. "This is an action we can take that benefits the
environment and human health in a real, meaningful way," said Stanford
behavioral scientist Gabrielle Wong-Parodi, an author of the study.
New solar projects may easily slip down the list of priorities in a time
of widespread protests by teachers calling for increased school funding,
smaller class sizes and higher wages. But the U.S. Department of Energy
estimates K-12 school spend more than $6 billion per year on energy, and energy
costs in many districts are second only to salaries. In the higher education
sector, yearly energy costs add up to more than $14 billion.
The current paper suggests investments in the right solar projects --
with the right incentives from states -- could free up much-needed money in
schools' budgets. "Schools are paying for electricity anyway," said
Wong-Parodi, an assistant professor of Earth system science at Stanford's
School of Earth, Energy & Environmental Sciences (Stanford Earth). "This
is a way, in some cases, that they can reduce their costs. If there's a rebate
or a subsidy, it can happen more quickly."
Educational institutions account for approximately 11 percent of energy
consumption by U.S. buildings and 4 percent of the nation's carbon emissions. But
while the potential for solar panels on homes and businesses has been widely
studied, previous research has largely skipped over school buildings.
The new estimates are based on data for 132,592 schools, including more
than 99,700 public and 25,700 private K-12 schools, as well as nearly 7,100
colleges and universities. The researchers began by estimating the rooftop area
available for solar panels at each institution, the hourly electricity output
given the amount of sunshine at the site and the hourly electricity demand of
each institution.
Not surprisingly, the study finds three large, sunny states -- Texas,
California and Florida -- have the greatest potential for generating
electricity from solar panels on school rooftops, with nearly 90 percent of
institutions having at least some roof space suitable for installations.
Meanwhile, residents in midwestern states including Wisconsin and Ohio stand to
see the biggest reductions in key air pollutants -- and costs associated with
addressing related health effects -- if schools switch from the grid to solar
power.
More
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.
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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