Baltic Dry Index. 974
+34 Brent
Crude 70.76
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
Tariffs Now In Effect.
USA v EU trade war 5
days away? No one optimistic.
“When you put tariffs on goods that people in the
United States consume every day, it's a consumption tax. So all the tariffs did
is they made products that Americans were going to buy more expensive. And in
fact we got the final trade data numbers ... And lo and behold [in 2018], we
hit an all-time record-high trade deficit globally, and with China."
Gary Cohn. President Trump's former
director of the National Economic Council.
President Trump’s 25
percent punitive tariffs against China went into effect around 5 am BST this
morning, and almost immediately China announced that they world take
unspecified counter measures.
Thankfully goods
already in shipment before the nuclear tariffs went into effect will still attract
only the lower rate of 10 percent, so there’s roughly still three weeks of shipping
time left before China’s exports to the USA start getting hit by the new
tariffs. Not so, if they’re travelling by airfreight.
In theory, both
parties could still use that time to reach a new trade agreement with the USA then
dropping the new punitive tariffs. But with President Trump already pursuing
the blame game, declaring that President Xi reneged on an agreed deal, I wouldn’t
put to much hope in sanity prevailing at the last minute.
Ironically, it’s the
pot calling the kettle black. In two short years, President Trump has reneged
on the Paris Climate Accord, NAFTA, the Iran nuclear deal, an arms limitation
agreement with Russia, walked out of a summit with North Korea, and unendorsed the
joint G-7 Charlevoix communique in Canada last June. With a track record like
that, China may well be disinclined to make any trade deal at all.
Below,
a worried world awaits today’s developments.
U.S. hikes tariffs on Chinese goods, China says to strike back
May 10, 2019 /
5:05 AM
WASHINGTON/BEIJING
(Reuters) - U.S. President Donald Trump’s tariff increase to 25 percent on $200
billion (153 billion pounds) worth of Chinese goods took effect on Friday, and
Beijing said it would strike back, ratcheting up tensions as the two sides
pursue last-ditch talks to try salvaging a trade deal.
China’s Commerce Ministry said it “deeply regrets” the U.S. decision,
adding that it would take necessary countermeasures, without elaborating.
The hike comes in the midst of two days of talks between top U.S. and
Chinese negotiators to try to rescue a faltering deal aimed at ending a
10-month trade war between the world’s two largest economies.
Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer
and U.S. Treasury Secretary Steven Mnuchin talked for 90 minutes on Thursday
and were expected to resume talks on Friday.
The Commerce Ministry said that negotiations were continuing, and that
it “hopes the United States can meet China halfway, make joint efforts, and
resolve the issue through cooperation and consultation”.
With no action from the Trump administration to reverse the increase,
U.S. Customs and Border Protection imposed the new 25 percent duty on affected
U.S.-bound cargoes leaving China after 12:01 a.m. EDT (0401 GMT) on Friday.
Goods in the more than 5,700 affected product categories that left
Chinese ports and airports before midnight will be subject to the original 10
percent duty rate, a CBP spokeswoman said.
The grace period was not applied to three previous rounds of tariffs
imposed last year on Chinese goods, which had much longer notice periods of at
least three weeks before the duties took effect.
Trump gave U.S. importers less than five days notice about his decision
to increase the rate on the $200 billion category of goods to 25 percent, which
now matches the rate on a prior $50 billion category of Chinese machinery and
technology goods.
The biggest Chinese import sector affected by the rate hike is a $20
billion-plus category of internet modems, routers and other data transmission
devices, followed by about $12 billion worth of printed circuit boards used in
a vast array of U.S.-made products.
Furniture, lighting products, auto parts, vacuum cleaners and building
materials are also high on the list of products subject to the higher duties.
Gary Shapiro, chief executive of the Consumer Technology Association
said the tariffs would be paid by American consumers and businesses, not China,
as Trump has claimed.
More
Here’s the hit U.S., Chinese and global economies could face as trade battle heats up
By William
Watts Published: May 9, 2019 7:42
p.m. ET
’Not even the bystanders’ stand to win in escalating trade war: Oxford Economics
The potentially imminent escalation of the U.S.-China trade fight — and the threat of further tit-for-tat measures — marks a significant risk to both countries and the world economy, analysts said.The Trump administration plans to more than double tariffs on $200 billion of Chinese imports and extend levies to other goods from the country early Friday. Beijing promises to retaliate.
Trump Today: President touts ‘beautiful letter’ from Chinese leader Xi
“No one wins trade wars, not even the bystanders,” wrote Gregory Daco, chief U.S. economist at Oxford Economics, a research firm, in a Thursday note.
Daco updated his outlook for the U.S., Chinese and global economies, estimating that the move to hike tariffs to 25% from 10% on half of U.S. imports from China — with China raising 8% tariffs on $60 billion of U.S. imports to 25% — would reduce U.S. gross domestic product by 0.3% in 2020, while curbing China’s output by 0.8% (see chart above).
See: The group losing faith in a quick China trade resolution? The farmers drained by lost exports
The
global reverberations would also be more significant, Daco wrote, with the
eurozone and Japan seeing losses of around 0.1% to 0.2%, with Singapore
suffering a 0.7% drag and global GDP being reduced by 0.3%, or $105 billion.
Oxford Economics estimates that the existing tariffs put in place since early last year, hitting around $360 billion of bilateral trade, will impose a drag of 0.1% on real U.S. gross domestic product growth this year, worth about $22 billion, or $175 per household. Chinese GDP will be curbed by 0.3%, according to the firm’s model.
Read: Trump’s trade fight with China hasn’t affected most Americans so far — here’s what could change that
More
China’s trade envoy says tariffs not the solution, hopes for ‘rational’ negotiations
By Associated Press
Published: May 9, 2019 11:45 p.m. ET
China’s chief envoy to high-stakes trade talks with Washington said he
came “with sincerity” and more tariff hikes is “not a solution to the problem.”
Vice Premier Liu He told Chinese state TV on Friday the talks aimed at
ending a tariff war over Beijing’s technology ambitions “have run into some problems.”
Liu told CCTV that “I came here with sincerity.”
He said he hoped to “engage in rational and candid exchanges” with
American negotiators.
The Trump administration planned to raise tariffs on $200 billion of
Chinese goods on Friday after American officials accused Beijing of
backtracking on earlier commitments.
“Of course, China believes raising tariffs in the current situation is
not a solution to the problem, but harmful to China, to the United States and
to the whole world,” Liu said.
“We should not hurt innocent people,” Liu
said. “So we hope to find an optimal way to solve this issue.”
More
In other news, more
sabre rattling for more war. Be careful what you wish for.
Exclusive: U.S. commander says he could send carrier into Strait of Hormuz despite Iran tensions
May 10, 2019 /
12:55 AM
WASHINGTON
(Reuters) - The commander overseeing U.S. naval forces in the Middle East told
Reuters on Thursday that American intelligence showing a threat from Iran will
not prevent him from sending an aircraft carrier through the vital Strait of
Hormuz, if needed.
Vice Admiral Jim Malloy, commander of the U.S. Navy’s Bahrain-based
Fifth Fleet, did not say whether he would send the USS Abraham Lincoln carrier
strike group into the strategic waterway off Iran, through which passes a fifth
of oil consumed globally.
The group, whose deployment to the Middle East was fast-tracked by
President Donald Trump’s administration as a warning to Iran, transited through
the Suez Canal into the Red Sea on Thursday and was now under Malloy’s command.
“If I need to bring it inside the strait, I will do so,” Malloy said in
an interview by phone. “I’m not restricted in any way, I’m not challenged in
any way, to operate her anywhere in the Middle East.”
Iran has dismissed the U.S. contention of a threat as “fake
intelligence.” Tensions have risen between Tehran and Washington since the
Trump administration withdrew a year ago from a 2015 international nuclear deal
with Iran and began ratcheting up sanctions to throttle the Islamic Republic’s
economy.
The
Pentagon said it expedited the Lincoln’s deployment and sent bombers to the
Middle East after U.S. intelligence signalled possible preparations by Tehran
to stage attacks against U.S. forces or interests. Malloy said the intelligence
was linked “with actual activity that we observed.”
More.
North Korea's Kim orders stronger strike power; U.S. seizes cargo ship
May 9, 2019 / 9:16
AM
SEOUL
(Reuters) - The leader of North Korea ordered its military to boost its strike
capability as he directed another missile firing, state media said on Friday,
as tensions grew over tests that appeared to show preparations for a new
advanced missile system.
The call for “full combat posture” by Kim Jong Un came while the United
States announced it had seized a large cargo ship for carrying an illegal
shipment of coal.
The increased tensions come amid a gridlock in dialogue after the second
summit between Kim and U.S. President Donald Trump collapsed over U.S. demands
for Pyongyang’s nuclear disarmament and Kim’s demands for relief from punishing
sanctions.
“(Kim) stressed the need to further increase the capability of the
defence units in the forefront area and on the western front to carry out
combat tasks and keep full combat posture to cope with any emergency,” KCNA
news agency reported.
He noted “genuine peace and security of the country are guaranteed only
by the strong physical force capable of defending its sovereignty,” KCNA said,
adding he “set forth important tasks for further increasing the strike
ability.”
The test of two short-range missiles on Thursday and the firing of a
series of projectiles on Saturday were the first missile launches by the North
since November 2017 when the North shot an intercontinental ballistic missile
(ICBM).
----
The latest tests were swiftly followed by U.S. test-launches
of the intercontinental ballistic missile Minuteman III over the Pacific and
the Trident II submarine-launched ballistic missile (SLBM) off Florida.
---- Washington has given no sign it will budge on the North’s demand to lift some sanctions as it announced on Thursday the seizure of a North Korean cargo vessel that it said was involved in the illicit shipping of coal.
The Justice Department said the 17,061-tonne Wise Honest is one of the
North’s largest cargo ships and it was first detained by Indonesia in April
2018 but is now in the possession of the United States. The announcement has no
connection with the North’s missile activities, a U.S. official said.
"Tariffs don't work. If anything, they hurt
the economy because if you're a typical American worker, you have a finite
amount of income to spend. If you have to spend more on the necessity products
that you need to live, you have less to spend on the services that you want to
buy. And you definitely don't have anything left over to save.”
Gary Cohn. President Trump's former
director of the National Economic Council.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, in the midst of a trade
war going nuclear, are we also on the brink of a hot war and an oil war at the
same time?
China and India seen as Europe's last hope to save Iran deal
May 9, 2019 / 3:55
PM
BRUSSELS/PARIS/BERLIN
(Reuters) - The European Union will defend the Iran nuclear accord despite
Tehran’s decision to backtrack on its commitments in response to U.S.
sanctions, diplomats believe, but European powers expect it to collapse without
a deal to sell Iranian oil to China or India.
Britain, France and Germany, which signed the 2015 deal along with the
United States, China and Russia, are determined to show they can compensate for
last year’s U.S. withdrawal from the accord, protect trade and still prevent
Tehran from developing a nuclear bomb.
But with Iran’s economy dependent on crude exports that are traded in
U.S. dollars, a promised European trade channel to bypass American sanctions
has proved complicated, is not yet operational, and may never be able to handle
oil sales.
“This situation now risks deteriorating, but it will be step by step and
not a collapse all in one go,” said a senior European diplomat. A French
diplomat talked of a “negative spiral” in which trade in food and medicines was
simply not enough, while another European envoy spoke of Iran’s “phased exit”
from the deal.
The Iran accord, one of the West’s biggest foreign policy achievements
until U.S. President Donald Trump pulled out in May 2018, lifted punishing
United Nations’ sanctions on Iran in return for Iranian compliance with the
deal.
Iran has met its terms but Trump withdrew because he believes the accord
did not curtail Tehran’s ballistic missile programme or address Iranian
involvement in Syria’s civil war, something Europeans argue the 2015 deal was
not designed to do.
By reimposing punitive sanctions, the United States says it aims to
dramatically weaken Iran’s clerical rulers and force Tehran to renegotiate a
broader arms control deal.
The European Union says that can still be done without tearing up the
nuclear accord, which put strict limits on Iranian enrichment.
Iranian President Hassan Rouhani warned on Wednesday that Tehran could
resume enrichment at a higher grade if the European powers, China and Russia
did not do more to circumvent U.S. sanctions on banking and energy to boost
trade.
European diplomats and officials reject any ultimatum and some believe
they still have time to save the deal. One senior EU official said it is too
early to consider European sanctions that can snap back in case of Iranian
non-compliance.
“Iran’s announcements are not a violation or a withdrawal of the nuclear
deal,” the senior EU official said. “It is for the International Atomic Energy
Agency to assess Iran’s compliance ... if Iran breaches the agreement, then we
would react.”
---- EU officials estimate Iran needs to sell about 1.5 million barrels a day to keep its economy afloat, but sales risk falling below 1 million a day, bringing hardship and potentially economic crisis to Iranians.
The EU’s special trade channel, known as INSTEX, was proposed by Russia
as a barter system for Iranian oil in exchange for European goods, but it may
not be operating before the end of June and its capability is limited.
“Instex isn’t the solution because it will only serve food and medicine
needs, not oil,” a second European diplomat said. “Anyway, the structure is not
completed.”
More
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?
World's fastest supercomputer will heat up race to the exascale era
Michael Irving 3 hours agoSupercomputers will take a huge leap forward when the "exascale" era kicks off in 2021 with the launch of Aurora. But now it looks like that world-leading machine will be usurped before it's even set up. The just announced Frontier system will boast the power of over 1.5 exaflops – that's one and a half billion billion floating point operations per second.
Frontier is being developed as part of the US Department of Energy's Exascale Computing Project, and will be built by Cray Inc. using AMD processors and housed at Oak Ridge National Laboratory (ORNL). Interestingly, Aurora is a product of almost the exact same collaboration, only substituting Intel for the innards.
In terms of processing power, an exaflop is one quintillion floating point operations per second. Getting supercomputers across that line and into the exascale generation is a milestone that computer scientists have been working towards ever since the petascale generation began in 2008.
Aurora was the first exascale supercomputer announced, but now it looks like it may not be the first to market, and it won't be the fastest. Where Aurora just slides in over the line at 1 exaflop, Frontier is set to leapfrog it, jumping to 1.5 exaflops. That makes it about 7.5 times faster than the world's current most powerful supercomputer, Summit, running at 200 petaflops or the equivalent of 0.2 exaflops.
Frontier will
be built with over 100 of Cray's new Shasta cabinets, each one crammed with
AMD's EPYC CPUs and Radeon Instinct GPUs, all custom-built for exascale
computing. With the help of advanced artificial intelligence, all this power
will be channeled into scientific endeavors that require huge amounts of
number-crunching, such as simulations and models of complex systems like the
weather, physics, sub-atomic structures and genomics.
"Frontier
will incorporate foundational new technologies from Cray and AMD that will
enable the new exascale era — characterized by data-intensive workloads and the
convergence of modeling, simulation, analytics, and AI for scientific
discovery, engineering and digital transformation," says Peter Ungaro,
president and CEO of Cray.
With two
years still to go before Frontier and Aurora launch, we expect this exascale
race is only going to heat up.
https://newatlas.com/frontier-exascale-fastest-supercomputer/59605/?utm_medium=email&utm_campaign=2019-05-09%20083320%20Other%20Daily%20Basic%202019-05-09%20083748%20Newly%20discovered%20jumping%20superbug%20gene%20threatens%20last-resort%20antibiotic&utm_content=2019-05-09%20083320%20Other%20Daily%20Basic%202019-05-09%20083748%20Newly%20discovered%20jumping%20superbug%20gene%20threatens%20last-resort%20antibiotic+CID_cc0e037adf7378b7e42f9d3e37405cce&utm_source=Campaign%20MonitorAnother weekend and a weekend of trade war refection, pause, uncertainty and commentary. Will the trade war talks reach an agreement? If not, how long before the serious US tariffs drag down the global economy? How long do stocks have left? Have a great weekend everyone.
"So we should try and make the
goods as cheap as possible. And we don't produce the goods in the United
States; we import the goods from other countries. And if we could produce the goods
as cheaply as other countries do, we would produce them in the United
States."
Gary Cohn. President
Trump's former director of the National Economic Council.
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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