Baltic Dry Index. 974
+34 Brent
Crude 70.80
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
Tariffs Now In Effect.
USA v EU trade war 2
days away? No one optimistic.
We must not let daylight in upon
the magic.
Walter Bagehot
This week it is all
likely to be about last week’s Great Failure. What happens next in the highly
integrated global economy? What happens next in the Chinese and US economies?
More importantly for President Trump, who has largely pinned his re-election
campaign to the fate of the US stock market, what happens over the next 18
months in US stocks?
It’s way to early to
say, of course, but the likelihood is for both the Chinese and US economies to
slow, probably enough to trigger the next global recession. It all depends now
on how and when China retaliates, and whether President Trump follows through
on his threatened attack on EU auto exports.
A trade war against
the already struggling EU economy, will drop it into recession.
Retaliation by
the EU against US exports will probably be enough to drop the US economy into
recession given the trade war against China.
None of this is good
for stocks in the stratosphere and the mountain of unrepayable debt run up
since 2008-2009.
When elephants fight
it’s best to get out of their way. Sell in May go away, looks the logical
choice for stocks in 2019. Maybe some sanity can return over the summer.
Asian stocks move lower Monday as markets react to failed U.S.-China trade talks in Washington
By Associated Press
Published: May 13, 2019 12:00 a.m. ET
BANGKOK (AP) — Shares were mostly lower in Asia on Monday
after trade talks between the U.S. and China wrapped up Friday without an
agreement.Shares dropped more than 1% in Shanghai, to 2,909.60. Japan’s Nikkei 225 index NIK, -0.55% lost 0.5% to 21,237.71 and the S&P ASX 200 SKJJF, -3.15% declined 0.3% to 6,289.70. South Korea’s Kospi SEU, -1.01% fell 0.7% to 2,093.46. Hong Kong’s markets were closed for a holiday. Shares fell in Taiwan and most of Southeast Asia.
China’s envoy to the trade talks, Vice Premier Liu He said before leaving Washington that Beijing would not compromise on matters of principle and that tariffs on Chinese exports to the U.S. should be lifted as a condition for striking a deal.
But Liu downplayed the level of tensions, saying China could cope with the challenges posed by the trade dispute.
President Donald Trump said on Twitter over the weekend that
“We are right where we want to be with China.” He accused China of “ripping
off” America.
The Trump administration said it was preparing to expand 25% tariffs to
another $300 billion worth of Chinese goods, or practically all imports from
China, after raising the import duty from 10%, with effect Friday.
The tariffs war has been hammering Chinese manufacturers and is an added
drag on growth for the region.
“The lack of resolution in the latest U.S.-China trade talks coupled
with continued provocative tweets from President Trump provides no relief for
risk sentiment as we look to another weak start to the week for Asia markets,”
Jingyi Pan of IG said in a commentary.
On Friday, a late-day rally spurred by upbeat comments by U.S. officials
pulled markets higher after an early slump triggered by the escalation in the
trade war.
More
China defiant toward U.S. on trade, Kudlow urges strong enforcement steps
May 12, 2019 /
2:56 PM
WASHINGTON/BEIJING
(Reuters) - The United States and China appeared at a deadlock over trade
negotiations on Sunday as Washington demanded promises of concrete changes to
Chinese law and Beijing said it would not swallow any “bitter fruit” that
harmed its interests.
The trade war between the world’s top two economies escalated on Friday,
with the United States hiking tariffs on $200 billion worth of Chinese goods
after President Donald Trump said Beijing “broke the deal” by reneging on
earlier commitments made during months of negotiations.
White House economic adviser Larry Kudlow told the “Fox News Sunday”
program that China needs to agree to “very strong” enforcement provisions for
an eventual deal and said the sticking point was Beijing’s reluctance to put
into law changes that had been agreed upon. Kudlow said the U.S. tariffs would
remain in place while negotiations continue.
Beijing remained defiant.
“At no time will China forfeit the country’s respect, and no one should
expect China to swallow bitter fruit that harms its core interests,” the
People’s Daily, a newspaper controlled by the Chinese ruling Communist Party,
said in a commentary on Monday.
It said Beijing was open to talks but would not yield on important
issues of principle.
China’s nationalist Global Times tabloid said in an editorial on Monday
that the country had no reasons to fear a trade war.
“The perception that China cannot bear it is a fantasy and misjudgment,”
the commentary said.
“If they weren’t being seriously provoked, the Chinese people would not
favor any trade war. However, once the country is strategically coerced,
nothing is unbearable for China in order to safeguard its sovereignty and
dignity as well as the long-term development rights of the Chinese people.”
On Sunday, Trump sought to portray the United States as being in an
advantageous position.
“We are right where we want to be with China,” Trump wrote on Twitter,
saying U.S. purchasers of Chinese goods could either buy them from domestic
manufacturers or from other nations.
Trump also repeated an erroneous statement that the United States would
be taking in “Tens of Billions of Dollars in Tariffs from China.”
More
Larry Kudlow contradicts President Trump on a critical aspect of the trade war
By Shawn
Langlois Published: May 12, 2019
8:56 p.m. ET
That’s White House economic adviser Larry Kudlow on Sunday offering a
“both sides” take in an interview on Fox News.
He was acknowledging that China, in fact, does not directly pay tariffs
on goods coming into the U.S., breaking with President Trump’s insistence that
it does.
Trump, who has argued that trade wars are “good and easy to win,”
suggested on Saturday that the U.S. was “collecting” tariffs from China:
Trump also addressed the issue in a press conference last week.
“Our country can take in $120 billion a year in tariffs, paid for mostly by China, by the way, not by us,” he said. “A lot of people try to steer it in a different direction. It’s really paid — ultimately, it’s paid for by — largely, by China.
Kudlow initially explained that China will suffer significant GDP losses as export markets are hit, while the impact to U.S. growth will be relatively insignificant, thanks to the “terrific” Trump economy.
But Fox host Chris Wallace pressed him on the issue.
“It’s not China that pays tariffs,” Wallace said. “It’s the American importers, the American companies that pay what, in effect, is a tax increase and oftentimes passes it on to U.S. consumers.”
While Kudlow conceded that “both sides” will feel the pinch of a trade war, he maintained that “this is a risk we should and can take without damaging our economy in any appreciable way.”
The
trade-war fears are again spilling over into the stock market, with futures on
the Dow Jones Industrial Average YMM9, -0.95%
and the S&P 500 ESM9, -1.02%
pointing to a rough start to the week.
More
Finally, after the Great Failure, via the Journal Trade War
Team Trump spins its side of the escalating USA v China trade war. Trade wars
apparently aren’t so easy to win after all, despite all the earlier spin.
Frustration, Miscalculation: Inside the U.S.-China Trade Impasse
The latest breakdown shows the two countries still haven’t found a way to negotiate effectively. ‘Sometimes you need to say “stop screwing me.”’
By Lingling Wei in Beijing and Vivian Salama, Michael C. Bender and Bob
Davis in Washington
May 12, 2019 4:18 p.m. ET
Mr. Kudlow suggested one possible way out. He stressed twice during the Fox News interview that the American and Chinese presidents expect to meet again at the next G-20 in Japan at the end of June.
Bridging the trade rift may ultimately depend on the personal chemistry between President Trump and President Xi and their willingness to push matters forward after months of negotiations that have been full of positive intentions but thwarted by miscalculations, accusations of backtracking and unfulfilled expectations.
At stake are the rules for global trade in a world order upended by China’s rapid rise, and both sides are keen to project an image of strength. The longer the dispute lingers, though, the greater the risk of economic fallout for both countries, along with prolonged uncertainty for global stock markets, which have whipsawed as expectations for a deal ebb and flow. The accelerating 2020 presidential campaign also promises to add a volatile new dynamic to the equation.
---- Throughout the negotiations, there have been tensions all along the way. U.S. officials complained in February that China was reneging on previously agreed items, the same dynamic that resurfaced in recent days.
“They were playing games with us,” said one senior U.S. trade official
of the talks in Washington three months ago. Mr. Kudlow told reporters at the
time that Mr. Lighthizer “read them the riot act.”
“The more heated moments have been in situations where we thought we had
something and suddenly there was some backsliding,” said one person involved in
the discussions on the U.S. side.
“We’ve expressed some pretty serious frustration at times,” this person
said. “It’s been a necessary ingredient to success. You can be nice to someone,
but sometimes you need to say ‘stop screwing me.’ ”
In early April, Mr. Mnuchin announced that negotiators had agreed on a
mechanism for enforcing the terms of their potential trade deal, suggesting one
of the key stumbling blocks toward an accord had been cleared, although Beijing
never agreed that the issue had been settled.
---- Skepticism grew in some U.S. quarters when China, in the U.S. view, started to renege on agreed-upon provisions in the days before last week’s talks began. Mr. Lighthizer in particular saw China “moving the goal posts” on certain details just as an agreement appeared within reach, according to White House officials.
Chinese negotiators let their U.S. counterparts know that they had
serious reservations with the text. The Chinese were no longer willing to
commit to changing laws covering intellectual property, forced technology
transfer, subsidies and other issues at the heart of the dispute. They also
objected to publication of all the details of the text, preferring a summary.
To the Chinese, this was a matter of honor: The U.S. should trust
Beijing to make the changes they said they would make, even if that meant
changing regulations rather than laws. Besides, the U.S. was being unfair in
refusing, upon the signing of a deal, to remove tariffs that had been assessed
in the yearlong fight, the Chinese believed.
“There is a real desire on our end to keep the tariffs on,” one White
House official said. “That is a sticking point.”
Another major area of conflict has been how to deal with what the U.S.
sees as Chinese recalcitrance on clamping down on the theft of U.S.
intellectual property, said people briefed on the talks. The U.S. initially had
sought to appeal to Mr. Xi’s nationalistic tendencies, arguing that if China
was as great as Mr. Xi portrayed it, why would it need to steal U.S.
technology?
The Trump administration believed it had an agreement that included a
satisfactory level of enforcement should the Chinese record not improve. “Not
tiger teeth, but real enough to make a deal,” one of the people tracking the
talks said.
Then Chinese officials said enforcement procedures would need to go
through Chinese law-enforcement channels and couldn’t be guaranteed at the
negotiating table, this person said, which U.S. officials didn’t view as a
credible option.
Morehttps://www.wsj.com/articles/frustration-miscalculation-inside-the-u-s-china-trade-impasse-11557692301
All the best stories in the world
are but one story in reality - the story of escape. It is the only thing which
interests us all and at all times, how to escape.
Walter Bagehot
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, more on that not quite so easy to win trade war with China. If
braggadocio won trade wars Trump would be in a league of his own, but in trade
wars it’s just useless hot air. Over the summer as US consumer prices start to
rise, consumption starts to fall, and retailers margins start to get squeezed,
braggadocio is likely to meet up with a harsh dose of reality.
China calls on U.S. to remove extra tariffs
May 11 (UPI) -- Chinese Vice Premier Liu He called for the United States to remove all tariffs on goods coming from the Asian super power during a trade negotiation in Washington, D.C.This news came as leaders of the world's two largest economies ended negotiations Friday without a trade deal in place.
The stalled negotiation came hours after President Donald Trump increased tariffs from 10 percent to 25 percent on Chinese goods worth $200 billion.
"China-U.S. relations are of great importance," Liu said, during a news conference. "Cooperation is the only right choice for the two sides, but it has to be based on principle."
Trump showed confidence in his decision to levy tariffs by tweeting: "Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch!"
Tariffs will make our Country MUCH STRONGER, not weaker. Just sit back and watch! In the meantime, China should not renegotiate deals with the U.S. at the last minute. This is not the Obama Administration, or the Administration of Sleepy Joe, who let China get away with "murder!"- Donald J. Trump (@realDonaldTrump) May 10, 2019
On Saturday, Trump theorized why negotiations broke off, tweeting: "I think that China felt they were being beaten so badly in the recent negotiation that they may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win -- in which case they would continue to rip-off the USA for $500 Billion a year."
And he followed it up with a tweet on how he expects to be re-elected.
....The only problem is that they know I am going to win (best economy & employment numbers in U.S. history, & much more), and the deal will become far worse for them if it has to be negotiated in my second term. Would be wise for them to act now, but love collecting BIG TARIFFS!
- Donald J. Trump (@realDonaldTrump) May
11, 2019
U.S. Trade Representative Robert Lighthizer said the Trump administration will announce a plan Monday to put tariffs on another $300 billion in Chinese imports. That would essentially put duties on all goods from China.
Trump believes tariffs would provide financial aid to the U.S. farming industry and other aspects of the economy harmed by the trade war between the two countries.
Liu dismissed claims that trade talks had broken down, saying, "Negotiations have not broken down."
He added, "It's normal to have hiccups during the negotiations. It's inevitable."
Liu said both sides will be negotiating again in Beijing to continue negotiations and that he is "optimistic" about the future outcome.
In a statement, Chinese officials said the country "deeply regrets that it will have to take necessary countermeasures." To date, the China hasn't retaliated against the United States for the tariffs.
https://www.upi.com/Top_News/World-News/2019/05/11/China-calls-on-US-to-remove-extra-tariffs/3091557607296/
Trump’s tariff war with China will hit TVs, dishwashers, toys, lithium batteries, iPhones — even Silly Putty
By Quentin
Fottrell Published: May 11, 2019
11:04 p.m. ET
President Trump’s tariffs could affect 23% of consumer goods, according to one estimate
There are some things parents can’t avoid buying.The U.S. increased tariffs on $200 billion of Chinese goods to 25% from 10% Friday, following three rounds of tariffs last year. They account for roughly 50% of all Chinese exports to the U.S. on everything from hats to toys. One estimate says the tariffs announced last year will cost consumers an average of $767 per year. The latest tariffs will add another $500 a year in costs for the average U.S. household, Katheryn Russ, an economics professor at the University of California at Davis, told NPR.
Many consumer goods manufacturers and retailers were taken aback by the news. “The tariff increase inflicts significant harm on U.S. industry, farmers and consumers,” Jacob Parker, vice president of the U.S.-China Business Council trade group, said in a statement. “It will decrease the competitiveness of American companies, reduce the efficiency of their global supply chains, and reverberate through the U.S. economy. Pure and simple, this is a tax on the American consumer.”
Increased tariffs on Chinese goods will hike prices for consumers goods. Millions of Americans will stick with their old washing machine and television and computer monitor, and refrain from buying new clothes and furniture (unless, of course, they’re buying a house). But they may have a harder time avoiding the shops for their kids’ birthdays and during the busy holiday season when children expect new electronics and toys. The tariff hike could increase the cost of Apple’s AAPL, -1.39% iPhone XS by $160, Morgan Stanley MS, -0.24% analyst Katy Huberty wrote.
Companies won’t immediately increase their prices, said Jon Gold, vice president of supply chain and customs policy at the National Retail Federation. “Retailers will try to endure as much of the costs as possible but 25%, they can’t absorb all of that,” he said. Products currently shipping to the U.S. for sale won’t see hiked prices, but some products may become more expensive in the summer, such as back-to-school items, he added.
The U.S.-China trade talks appeared to be making progress before this latest roadblock. However, Mitul Kotecha, an analyst at TD Securities TD, -0.16% said that Trump may feel “emboldened” by the strength of the U.S. economy and, for the most part, the equity markets. “We had thought that a trade deal between the U.S. and China was close to being agreed and markets had become rather sanguine about the issues,” he wrote. “Indeed, headlines over recent weeks had been encouraging.”
Consumers
may not agree. The Peterson Institute for International Economics said 23% of
Trump’s tariffs were placed on consumer goods. “Consumer goods made up only 1%
of the products of the first $50 billion of imports from China subject to his
announced tariffs,” the
institute said. “The explanation for this shift lies in
the fact that there are fewer and fewer such supply chain elements left to target.
Consumer products are much of the imports from China that were left.”
Retailers
have been working to mitigate any adverse impact from President Trump’s trade
war with China, but the latest move by Trump appears to have taken many of them
as a surprise, Christopher Prykull, an analyst at Goldman Sachs GS, +0.21% said in a
research note. “We also note that tariff risk had generally disappeared in our
conversations with investors, which could introduce some volatility in shares
of retailers more exposed.” Ultimately, Trump is also trying to strong-arm toy
companies like Mattel MAT, -1.47% to move
their production out of China.
More
Trump's vow to buy crops unlikely to help farmers hurt by trade war
May 10, 2019 /
2:05 PM
EVANSVILLE, Ind., May 10 (UPI) -- As America's agricultural commodity prices dropped further after
Friday's tariff escalation on $200 billion of Chinese goods, President Donald
Trump vowed to buy more domestic farm products for international
humanitarian aid."We will buy agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance," Trump said in a series of tweets Friday morning. "Our Farmers will do better, faster, and starving nations can be helped."
But agricultural experts were quick to point out that this tactic is
unlikely to help the agricultural sectors that are most impacted by the
enduring trade conflict.
Those commodities -- corn and soy -- are not used for human consumption.
America is the world's largest producer of corn and soybeans, but the vast majority of the varieties American farmers grow are processed into animal feeds, oils and ethanol.
"It's not as easy as people might think to buy a bunch of commodities and ship them somewhere," said Todd Hubbs, a clinical assistant professor of agricultural commodity markets at the University of Illinois. "This is not sweet corn. People don't eat it. It's high in starch and low in sugars and it doesn't taste good."
Trump did not mention any other kind of farm aid in the tweets. Agriculture Secretary Sonny Perdue and Vice President Mike Pence alluded to additional help this week, without details.
"You can be very confident that President Trump and I and our entire administration are going to look for ways to provide additional support to American farmers that would be impacted by the negotiations or uncertainty in our relationship with China," Pence told the farming news site Agri Pulse on Thursday. "And those discussions have already taken place."
On Friday morning, Perdue tweeted:
"Just spoke with [Trump] -- while China may backtrack, [Trump] is steadfast in his support for U.S. farmers and directed USDA to work on a plan quickly. [Trump] loves his farmers and will not let them down!"
Before Friday, Perdue had repeatedly said the USDA would not provide additional tariff aid to farmers in 2019 after the roughly $12 billion in trade aid it has already distributed.
Since the trade war between the United States and China began in July, the prices for America's soybeans and corn have dropped dramatically.
Soybeans were most affected because China was the United States' biggest soy importer -- by far. Roughly a third of all the soy grown in the United States was shipped to China. So, after the country placed a high retaliatory tariff on American soy, shipments to China all but stopped, sending prices plummeting and leaving large quantities of soy sitting in bins on farms across the Midwest with nowhere to go.
More
The whole history of civilization
is strewn with creeds and institutions which were invaluable at first, and
deadly afterwards.
Walter Bagehot
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?
Solar-powered hydrogen fuels a step closer
Researchers have used a graphite coating that makes perovskite solar cells waterproof
Date:
May 9, 2019
Source:
University of Bath
Summary:
A cheaper, cleaner and more sustainable way of making hydrogen fuel from water
using sunlight is step closer, thanks to new research.
A cheaper, cleaner and more sustainable way of making hydrogen fuel from
water using sunlight is step closer thanks to new research from the University
of Bath's Centre for Sustainable Chemical Technologies.
With the pressure on global leaders to reduce carbon emissions
significantly to solve a climate change emergency, there is an urgent need to
develop cleaner energy alternatives to burning fossil fuels. Hydrogen is a zero
carbon emission fuel alternative that can be used to power cars, producing only
water as a waste product.
It can be made by splitting water into hydrogen and oxygen, however the
process requires large amounts of electricity. Most electricity is made by
burning methane so researchers at the University of Bath are developing new
solar cells that use light energy directly to split water.
Most solar cells currently on the market are made of silicon, however
they are expensive to make and require a lot of very pure silicon to
manufacture. They are also quite thick and heavy, which limits their
applications.
Perovskite solar cells, using materials with the same 3D structure as
calcium titanium oxide, are cheaper to make, thinner and can be easily printed
onto surfaces. They also work in low light conditions and can produce a higher
voltage than silicon cells, meaning they could be used indoors to power devices
without the need to plug into the mains.
The downside is they are unstable in water which presents a huge
obstacle in their development and also limits their use for the direct
generation of clean hydrogen fuels.
The team of scientists and chemical engineers, from the University of
Bath's Centre for Sustainable Chemical Technologies, has solved this problem by
using a waterproof coating from graphite, the material used in pencil leads.
They tested the waterproofing by submerging the coated perovskite cells
in water and using the harvested solar energy to split water into hydrogen and
oxygen. The coated cells worked underwater for 30 hours -- ten hours longer
than the previous record.
After this period, the glue sandwiching the coat to the cells failed;
the scientists anticipate that using a stronger glue could stabilise the cells
for even longer.
Previously, alloys containing indium were used to protect the solar
cells for water splitting, however indium is a rare metal and is therefore
expensive and the mining process to obtain it is not sustainable.
The Bath team instead used commercially available graphite, which is
very cheap and much more sustainable than indium.
Dr Petra Cameron, Senior Lecturer in Chemistry, said: "Perovskite
solar cell technology could make solar energy much more affordable for people
and allow solar cells to be printed onto roof tiles. However at the moment they
are really unstable in water -- solar cells are not much use if they dissolve
in the rain!'
"We've developed a coating that could effectively waterproof the
cells for a range of applications. The most exciting thing about this is that
we used commercially available graphite, which is much cheaper and more
sustainable than the materials previously tried."
Perovskite solar cells produce a higher voltage than silicon based
cells, but still not enough needed to split water using solar cells alone. To
solve this challenge, the team is adding catalysts to reduce the energy
requirement needed to drive the reaction.
More
A severe though not unfriendly
critic of our institutions said that the cure for admiring the House of Lords
was to go and look at it.
Walter Bagehot
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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