Thursday 9 May 2019

USA v China - Do You Bet Black Or Red?


Baltic Dry Index. 940 +04   Brent Crude 69.79

Never ending Brexit now October 31st, maybe. 
Day 160 of the never-ending USA v China trade talks. Trump Tariffs Midnight!
USA v EU trade war 6 days away? No one optimistic.

“They're funny things, Accidents. You never have them till you're having them.”

Trump, with apologies to A.A. Milne, The House at Trump Corner.

Well we are less than one day away from Trump’s trade war with China going nuclear. At least according To President Trump. At 12:01 AM tomorrow, according to Trump, US tariffs on China jump from 10 percent to 25 percent and get imposed on an additional 325 billion of Chinese goods exported to the USA. China says if it happens they will retaliate.

So today, do we bet on red in stocks that it happens, or black in stocks that somehow it doesn’t happen?  I don’t know either, all I know is that this is no way to be running a global economy that’s already dangerously near stall speed. But if I chose to bet on 50:50 outcomes, I’d be betting on red. Recession by year end if 25 percent nuclear tariffs happen.

So what could possibly go wrong? Accidents are funny things. You never have them till you’re having them, to misquote someone at Boeing or somewhere.

U.S. Stock Futures Drop After Trump Says China ‘Broke the Deal’

By Jackie Edwards and Min Jeong Lee
Updated on 9 May 2019, 05:09 BST

U.S. stock-index futures slid after President Donald Trump said China “broke the deal” that he was negotiating on trade, days after he threatened to raise tariffs on billions of dollars in Chinese imports.
Futures contracts on the S&P 500 expiring in June fell as much as 0.7% after Trump made comments on trade talks at a campaign rally Wednesday in Panama City Beach, Florida. Dow Jones Industrial Average contracts also dropped as much as 0.7%, while those on the Nasdaq 100 fell 0.8%.

Trump’s latest comments further clouded the outlook for negotiations that were already strained by U.S. plans to lift tariffs on $200 billion of Chinese goods to 25% from 10% and China’s threats of retaliation. The president noted that top Chinese trade negotiator Liu He was traveling to Washington for further talks. “They come in tomorrow and whatever happens, don’t worry about it. It will work out. It always does,” he said.

U.S. stocks have had a volatile trading week with three straight days of losses as tensions between the world’s two largest economies escalated. The S&P 500 whipsawed and eventually closed 0.2% lower Wednesday in a headline-driven market amid the conflicting messages on trade talks. The three-day decline of 2.3% puts the market on course for its worst week since the Christmas Eve meltdown.
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Asia shares sink to six-week low as clock ticks toward U.S. tariff hike on Chinese goods

May 9, 2019 / 2:33 AM
SYDNEY (Reuters) - Asian shares fell to six-week lows on Thursday as tensions rose ahead of last ditch U.S.-China trade talks which could sharply alter the direction of the global economy.

Investors were on tenterhooks as they waited to see if Chinese Vice Premier Liu He can salvage a trade deal during two days of negotiations in Washington on Thursday and Friday, after U.S. officials said Beijing had backtracked on earlier commitments. 

An agreement could avert a sharp increase in U.S. tariffs on Chinese goods that President Donald Trump has threatened to impose on Friday, which Beijing has threatened to retaliate against in what would be major escalations in the countries’ bruising trade war.

“If Trump’s threat becomes reality, it will be a game changer for the global economy. This is the worst-case scenario we modeled last year that resulted in recession conditions in the United States, a rapid reduction of growth in China, and slower global trade,” said Steve Cochrane, chief APAC economist at Moody’s Analytics in Singapore.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1 percent to its lowest level since March 28.

Stocks extended earlier losses in Asian trade after U.S. President Donald Trump told a rally of supporters that China had “broke the deal” and would be paying for it.

Chinese shares tumbled further and were a hair away from 2-1/2-month lows marked on Wednesday. The benchmark Shanghai Composite slid 1.1 percent and the blue-chip CSI 300 fell 1.5 percent. Hong Kong’s Hang Seng was down 1.6 percent.

Japan’s Nikkei average shed 1.2 percent to a five-week low, while South Korea’s KOSPI fell 1.1 percent and the Australian benchmark added 0.4 percent.

Trump has threatened to raise tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports at 12:01 a.m. ET (0401GMT) on Friday. Beijing has vowed to retaliate, without giving details.
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Trump’s comments apparently emboldened China to take harder line on trade talks

By Lingling Wei and Bob Davis  Published: May 8, 2019 10:02 p.m. ET

Trump’s attacks on Fed chief Powell interpreted as weakness

The new hard line taken by China in trade talks — surprising the White House and threatening to derail negotiations — came after Beijing interpreted recent statements and actions by President Trump as a sign the U.S. was ready to make concessions, said people familiar with the thinking of the Chinese side.

High-level negotiations are scheduled to resume Thursday in Washington, but the expectations and the stakes have changed significantly. A week ago, the assumption was that negotiators would be closing the deal. Now, they are trying to keep it from collapsing.

Read: Trump on trade talks with China: ‘They broke the deal’

The hardened battle lines were prompted by Beijing’s decision to take a more aggressive stance in negotiations, according to the people following the talks. They said Beijing was emboldened by the perception that the U.S. was ready to compromise. In particular, these people said, Trump’s hectoring of Federal Reserve Chairman Jerome Powell to cut interest rates was seen in Beijing as evidence that the president thought the U.S. economy was more fragile than he claimed.

Beijing was further encouraged by Trump’s frequent claim of friendship with Chinese President Xi Jinping and by Trump’s praise for Chinese Vice Premier Liu He for pledging to buy more U.S. soybeans.
An expanded version of this report appears on WSJ.com.

In other lesser news, more USA Iran sanctions, banksters, more unicorns disappear, Canada’s Huawei’s hostage. Can war with Iran be far away? Is Trump following FDR’s game-plan with Japan?

U.S. targets Iran's metals for sanctions, Tehran relaxes nuclear deal compliance

May 8, 2019 / 7:12 AM
WASHINGTON/LONDON (Reuters) - U.S. President Donald Trump on Wednesday imposed new sanctions on Iran, targeting revenue from its exports of industrial metals, the latest salvo in tensions between Washington and Tehran over a 2015 international accord curbing the Islamic Republic’s nuclear programme.

Iran had announced hours earlier that it was relaxing some restrictions on its nuclear programme, steps that stopped short of violating the deal with world powers for now, but threatening more action if countries do not shield it from U.S. sanctions.

An executive order issued by Trump covers Iran’s iron, steel, aluminium, and copper sectors, the government’s largest non-petroleum-related sources of export revenue and 10 percent of its export economy, a White House statement said.

“Tehran can expect further actions unless it fundamentally alters its conduct,” Trump said.

The administration says the nuclear deal, negotiated by Trump’s predecessor Barack Obama, was flawed as it is not permanent, does not address Iran’s ballistic missile programme and does not punish it for waging proxy wars in the Middle East.
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Ten former Danske Bank executives charged over Estonia case: Berlingske

May 8, 2019 / 1:27 PM
COPENHAGEN (Reuters) - Danish prosecutors have charged 10 former executives of Danske Bank over their suspected involvement in one of the world’s biggest money laundering scandals, newspaper Berlingske reported on Wednesday citing unnamed sources. 

Former chief executive Thomas Borgen, who stepped down last October, was among the 10 persons charged, Berlingske said.

Danske Bank is under investigation regarding some 200 billion euros ($224 billion) in suspicious transactions that passed through its Estonian branch between 2007 and 2015.

The Danish state prosecutor for economic crime declined to comment.

More than $40 million in bitcoin stolen in hack of world’s biggest cryptocurrency exchange

By Steven Russolillo  Published: May 8, 2019 3:45 a.m. ET
The theft offers another example of the vulnerability facing cryptocurrencies and the venues where investors trade them. Yet the price of bitcoin BTCUSD, -0.49%  and other digital currencies barely budged after the robbery was disclosed Wednesday morning in Asia.

Binance said it discovered Tuesday that 7,000 bitcoins were stolen from a single wallet, amounting to roughly 2% of the company’s total bitcoin holdings.

Hackers used phishing, viruses and other techniques, the company said. Binance said they had obtained information about multiple users, including two-factor authentication codes. Industry participants said they believed it was the first major breach at Binance.
An expanded version of this story can be found at WSJ.com

Huawei CFO to seek extradition stay citing Trump comments

May 8, 2019 / 12:11 PM
VANCOUVER/NEW YORK (Reuters) - Huawei’s chief financial officer intends to seek a stay of extradition proceedings in part based on statements by President Donald Trump about the case, which her lawyers say disqualifies the United States from pursuing the matter in Canada.

CFO Meng Wanzhou, 47, the daughter of Huawei Technologies Co Ltd’s billionaire founder, Ren Zhengfei, was arrested at Vancouver’s airport in December on a U.S. warrant and is fighting extradition on charges that she conspired to defraud global banks about Huawei’s relationship with a company operating in Iran.

After the arrest, Trump told Reuters he would intervene in the U.S. case against Meng if it would help close a trade deal with China.

Meng’s defence lawyers said in a document presented to the British Columbia Supreme Court on Wednesday that they intend to apply for the stay of the extradition proceedings based on abuses that go beyond Trump’s comments.

The lawyers also claim Meng was unlawfully detained, searched and interrogated at the airport, with her arrest delayed under the guise of a routine immigration check.

In addition, Meng’s counsel argued there is no evidence she misrepresented to a bank Huawei’s relationship with a company operating in Iran called Skycom, thereby putting the bank at risk of violating U.S. sanctions law, or that the bank relied on her statements to its detriment.

The lawyers claim the bank understood the relationship between Huawei and Skycom.
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“Trump explained about the Necessary Trade Wars. He had explained this to Xi and Juncker once before and had been waiting for a chance to do it again, because it is a thing you can easily explain twice before anybody knows what you are talking about.”

With apologies to A.A. Milne, The House at Trump Corner

Crooks and Scoundrels Corner

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

Today, President Trump trashes another international accord. Hopefully not a precedent if China ever becomes top dog later this century.

“It was a drowsy summer afternoon, and the Forest was full of gentle sounds, which all 
seemed to be saying to Trump, 'Don't listen to anyone, listen to Trump.' So he got in a comfortable position for not listening to anyone”

With apologies to A.A. Milne, The House at Trump Corner

U.S. sinks Arctic accord due to climate change differences: diplomats

May 7, 2019 / 11:49 AM
ROVANIEMI, Finland (Reuters) - The United States has refused to sign an agreement on challenges in the Arctic due to discrepancies over climate change wording, diplomats said on Tuesday, jeopardising cooperation in the polar region at the sharp edge of global warming.

With Arctic temperatures rising at twice the rate of the rest of the globe, the melting ice is creating potential new shipping lanes and has opened much of the world’s last untapped reserves of oil and gas to commercial exploitation .

A meeting of eight nations bordering the Arctic in Rovaniemi in Finland on Tuesday was supposed to frame a two-year agenda to balance the challenge of global warming with sustainable development of mineral wealth.

But sources with knowledge of the discussions said the United States balked at signing a final declaration as it disagreed with wording that climate change was a serious threat to the Arctic.

It was the first time a declaration had been cancelled since the Arctic Council was formed in 1996.
Instead, in a brief statement, ministers from the United States, Canada, Russia, Finland, Norway, Denmark, Sweden and Iceland repeated their commitment to sustainable development and the protection of the Arctic environment.

Except for the United States, other nations had wanted to go further, participants said.

“A majority of us regarded climate change as a fundamental challenge facing the Arctic and acknowledged the urgent need to take mitigation and adaptation actions and to strengthen resilience,” talks chair and Finnish Foreign Minister Timo Soini said in a statement.

---- A senior U.S. State Department official denied Washington had again dragged its heels over global environmental action.

“There were several different versions of the declaration going around. The U.S. was ready to sign,” said the official, who spoke to reporters on condition of anonymity.

The idea for “a simpler, positive, unified, collective message” had come from Russia and Canada, he added.

Scientists believe the Arctic contains around 13 percent of the world’s undiscovered reserves of oil and 30 percent of its reserves of natural gas as well as huge deposits of minerals such as zinc, iron and rare earth metals.

Harvesting them remains expensive, but melting ice is making that more feasible, as well as affecting the world’s weather, and the Arctic’s wildlife and indigenous residents.
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“That's right. You'll like Xi. He flew past a day or two ago and noticed me. He didn't actually say anything, mind you, but he knew it was me. Very friendly of him. Encouraging."

May and Juncker shuffled about a little and said, "Well, good-bye, Trump" as lingeringly as they could, but they had a long way to go, and wanted to be getting on.

"Good-bye," said Trump. "Mind you don't get blown away, in a trade war little Juncker. You'd be missed. People would say `Where's little Juncker been blown to?' -- really wanting to know. Well, good-bye. And thank you for happening to pass me.”
With apologies to A.A. Milne, The House at Trump Corner

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?

India mulls new solar tender with focus on factories

India is considering a new solar that doesn’t include a requirement to also generate electricity, sources said.

Updated: May 07, 2019, 05.46 PM IST
by Anindya Upadhyay

India is considering a new tender to develop solar power equipment manufacturing that doesn’t include a requirement to also generate electricity, a move aimed at sparking investor interest, according to people with knowledge of the plan.

In addition to separating manufacturing of solar cells and modules from generation, the government may also offer some form of financial aid, said the people, asking not to be identified as the information isn’t public.

There has been little interest from solar equipment makers in the previous manufacturing tenders, a hurdle to Prime Minister Narendra Modi’s ambitious plans of building 100 gigawatts of solar power capacity by 2022.
India has been struggling to spur its nascent domestic manufacturing industry, which the government estimates can currently only meet just 15 per cent of the country’s annual needs. The South Asian nation has been seeking to boost its capabilities through both manufacturing tenders as well as a safeguard duty on cheaper Chinese imports.
A tender issued in May 2018 was downsized and delayed multiple times, before being scrapped due to poor investor interest. It was replaced by a smaller version in January, for which the bidding deadline has been extended three times. The latest deadline, May 14, is expected to be extended again, the people said.
Anand Kumar, secretary at the Ministry of New and Renewable Energy, declined to comment on either the extension of the deadline or the possible new tender.

India’s efforts to develop its own solar equipment industry will be challenged by both domestic policies and overseas competition, according to BloombergNEF analyst Rohit Gadre.
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“And out floated Trump.
"Trump!" cried everybody.
Looking very calm, very dignified, with his legs in the air, came Trump from beneath the bridge.
"It's Trump!" cried May terribly excited.
"Is that so?" said Trump, getting caught up by a little eddy, and turning slowly round three times. "I wondered."
"I didn't know you were playing," said May.
"I'm not," said Trump.
"Trump, what are you doing there?" said Powell.
"I'll give you three guesses, Powell. Digging holes in the ground? Wrong. Leaping from branch to branch of a young oak-tree? Wrong. Waiting for somebody to help me out of this trade war? Right. Give Powell time, and he'll always get the answer."
"But, Trump," said Powell in distress, "what can we--I mean, how shall we--do you think if we--"
"Yes," said Trump. "One of those would be just the thing. Thank you, Powell.”

With apologies to A.A. Milne, The House at Pooh Corner

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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