Baltic Dry Index. 1066 -02 Brent Crude 68.69
Never ending Brexit now October 31,
maybe.
Trump’s Nuclear Tariffs Now In
Effect.
USA v EU trade war postponed to
November, maybe.
What, me worry.
Mad Magazine.
While it’s not
possible to attribute all of the growing weakness in the US economy to the effect
of Trump’s trade wars, the probability is that the trade wars are having a
dragging effect, and with last weekend’s increase in US China tariffs from 10
percent to 25 percent, the probability is that this dragging effect on the US
economy will only grow worse across the summer.
Up until now,
the US economy was the only major economy not suffering from a slowdown. Europe
is a basket cases and most of the Asian economies are now slowing. If the US
economy joins the rest of the world in slowing, the next global recession will
only be a few months away, depending on how much the US economy slows, and what
happens in the EUSSR economy after Great Britain escapes, no later than October
31.
Below, as spring
turns into summer.
Wealth,
in even the most improbable cases, manages to convey the aspect of
intelligence.
John
Kenneth Galbraith
Weak U.S. manufacturing underscores slowing economic growth
May 24, 2019 / 2:19 PM
WASHINGTON (Reuters) - New orders for
U.S.-made capital goods fell more than expected in April, further evidence that
the economy was slowing after a growth spurt in the first quarter that was
driven by exports and a buildup of inventories.
The report
from the Commerce Department on Friday also showed orders for these goods were
not as strong as previously thought in March and shipments were weak over the
last two months, indicating that manufacturing was fast losing ground.
The sector,
which accounts for about 12% of the economy, is being squeezed by businesses
placing fewer orders while working off stockpiles of unsold goods in
warehouses. The inventory overhang is concentrated in the automotive sector,
which is experiencing slow sales. Boeing’s move to cut production of its
troubled 737 MAX aircraft is also hurting manufacturing.
The loss of
momentum came even before a recent escalation in the trade war between the
United States and China, leading economists to expect demand for capital goods
to remain soft.
The renewed
trade tensions between Washington and Beijing have roiled the U.S. stock
market. Data on Thursday showed a measure of factory activity hit an almost
10-year low in May.
“We can’t
sugar-coat today’s news,” said Chris Rupkey, chief economist at MUFG in New
York. “Business investment is absolutely critical for the economy to move
forward and investment is normally the swing factor that pumps up growth or
pulls out the support from the economy.”
Orders for
non-defense capital goods excluding aircraft, a closely watched proxy for
business spending plans, dropped 0.9% last month as demand softened almost
across the board. These so-called core capital goods orders rose 0.3% in March
instead of 1.0% as previously reported.
Economists
polled by Reuters had forecast core capital goods orders falling 0.3% in April.
---- The economy grew at a 3.2% annualized rate in the first quarter, but the downward revision to March core capital goods shipments suggests business spending on equipment was even weaker than initially estimated during the quarter. That could result in the January-March GDP growth estimate being trimmed when the government publishes its revision next week.
JPMorgan on
Friday cut its second-quarter growth estimate to a 1.0% rate from a 2.25% pace.
Growth is mostly slowing as last year’s massive stimulus from the Trump
administration’s tax cuts and spending increases fades.
More
China accuses U.S. officials of misleading public on trade war
May 24, 2019 / 8:00 PM
BEIJING (Reuters) - China on Friday
accused U.S. officials of lying to the public about their trade war, as rising
tensions between the world’s two largest economies kept financial markets in a
state of unease.
Talks to end
the trade dispute collapsed earlier this month, with the two sides in a
stalemate over U.S. demands that China change its policies to address a number
of key U.S. grievances, including theft of intellectual property and subsidies
for state enterprises.
Washington
has slapped higher tariffs on $200 billion (157.36 billion pounds)in Chinese
goods, prompting Beijing to retaliate, and effectively banned U.S. firms from
doing business with Huawei Technologies Co Ltd, the world’s largest telecom
network gear maker.
“Domestically
in the United States there are more and more doubts about the trade war the
U.S. side has provoked with China, the market turmoil caused by the technology
war and blocked industrial cooperation,” Chinese Foreign Ministry spokesman Lu
Kang said.
U.S.
officials “fabricate lies to try to mislead the American people, and now they
are trying to incite ideological opposition,” he said, when asked about U.S.
Secretary of State Mike Pompeo’s recent criticism of Huawei.
In an
interview with CNBC on Thursday, Pompeo said Huawei was connected to the
Chinese government, dismissing Huawei chief executive Ren Zhengfei’s assertions
that his company would never share user secrets.
---- U.S. President Donald Trump said on Thursday that U.S. complaints against Huawei might be resolved within the framework of a U.S.-China trade deal, while at the same time calling the Chinese company “very dangerous.”
Lu said he
did not know what Trump was talking about.
“Frankly,
I’m actually not sure what the specific meaning of the U.S. leader, the U.S.
side, saying this is,” he said.
---- With no further talks between Washington and Beijing scheduled, investors are nervously eyeing the prospect of an escalation in the tit-for-tat tariffs the two countries have slapped on each other’s products.
The seeds of
the current impasse were sowed when Chinese officials sought major changes to
the draft text of a deal that the Trump administration says had been largely
agreed.
Trump, who
has embraced protectionism as part of an “America First” agenda, has threatened
to slap tariffs of up to 25% on an additional list of Chinese imports worth
about $300 billion.
Meanwhile,
China’s move to impose higher tariffs on a revised $60 billion list of U.S.
goods is set to go into effect on June 1.
More
Trump predicts 'fast' trade deal with China
May 24, 2019
WASHINGTON
(Reuters) - U.S. President Donald Trump on Thursday predicted a swift end to
the ongoing 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.
“It’s
happening, it’s happening fast and I think things probably are going to happen
with China fast because I cannot imagine that they can be thrilled with
thousands of companies leaving their shores for other places,” Trump said
during remarks at the White House, providing no evidence of such an exodus.
Trump also
said he will meet with China’s President Xi Jinping when they attend the G20
meeting next month in Japan.
Both
countries have blamed each other for the breakdown in talks, which were
intended to end trade tensions between the world’s two largest economies marked
by tit-for-tat tariffs.
Trump made
the remarks during a free-wheeling news conference after touting a plan rolled
out by his administration to provide the country’s farmers with an aid package
to combat the effects of the trade war, which have hit them particularly hard.
More
Finally, more
on that worrying US agriculture weather.
Record-breaking floods inundate parts of Central US
May 24, 2019
Evacuations are underway as flooding is impacting areas across Oklahoma, Kansas, Arkansas, Missouri, Illinois and parts of Nebraska and Iowa.The U.S. Army Corps of Engineers is warning Arkansans about the possibility of historic flooding along the Arkansas River. Officials in Tulsa, Oklahoma are also urging residents to remain vigilant and heed all warnings.
One fatality has been reported as a result of the flooding when a driver attempted to cross a flooded roadway in Perkins, Oklahoma, emergency management officials said.
According to AccuWeather Meteorologist Kristina Pydynowski, there are rainfall estimates of over 8 inches in the last seven days across northeastern Oklahoma, southwestern Missouri and southeastern Kansas.
"So far this month, nearly 10 inches of rain has soaked Tulsa, Oklahoma. The city averages nearly 6 inches for the entire month," Pydynowski said.
More
Rounds of severe weather to exacerbate flooding on Plains this holiday weekend
May 24, 2019
The corridor from western Texas to northern Missouri and Iowa will remain in the midst of a seemingly endless risk for severe weather and flooding downpours this Memorial Day holiday weekend.Severe thunderstorms and downpours will continue to increase through Friday evening.
Communities from western Texas to eastern Kansas and northern Missouri will face flash flooding and/or thunderstorms capable of unleashing damaging winds, large hail and isolated tornadoes.
The risk of severe weather will also extend to central and northern Illinois.
---- The severe weather danger will gradually wane overnight, but clusters of heavy rain and thunderstorms may linger longer and worsen or trigger new flooding.
Much to the
dismay of those with festivities planned, the holiday weekend will bring no
reprieve from the violent weather.
Mississippi Floodway May Be Opened for Just 3rd Time in History
By Brian K. Sullivan | May 23, 2019
A major barrier that keeps the Mississippi River in its
current path may be opened for just the third time in its history, potentially
flooding a large part of rural Louisiana and affecting refineries in the
region.
Rising river levels could force the Army Corps of Engineers to divert water by opening the Morganza Floodway — a long dam-like structure that is designed to redirect 600,000 cubic feet per second of water to take pressure off the Mississippi. The river has been high or flooding since last October, engorged by huge rainfalls that have slowed crop planting in the Great Plains and the upper Midwest.
---- While the river is flooding, it’s not as severe as in 2011 — the last time Morganza was opened. Levels on the river are a little less than two feet below its 2011 record crest just upstream from the Morganza barrier. In February, the Bonnet Carre Spillway was opened to help alleviate flood risks in New Orleans, about 28 miles downstream.
The Morganza
spillway is located about 45 miles (72 kilometers) northwest of Baton Rouge,
and if opened, will send water into the rural area between the Atchafalaya and
Mississippi Rivers in central Louisiana.
The
Mississippi between New Orleans and Baton Rouge is lined with refineries,
chemical plants and grain elevators. The high water has caused shipping delays
on the river that is a main route for grain, chemicals, coal and oil. Earlier
this year, traffic through Vicksburg was shut down and at various times locks
and dams along the waterway have been shut.
Southeast faces record hot temperatures over Memorial Day weekend
May 24, 2019 / 12:41 PM
Temperatures approaching the century mark amid the
hottest weather yet this year will challenge records in many places that date
back to the late 1800s and early 1900s Friday into at least Memorial Day.
Temperatures
are forecast to approach the century mark as areas from Alabama and Tennessee
to Georgia, northern and central Florida, the Carolinas and parts of Virginia
endure their hottest weather yet this season.
"In
what has been a warmer-than-normal May to date across the Southeast,
temperatures will take a notable turn upwards through the end of the week and
into Memorial Day weekend," AccuWeather Long-Range Meteorologist Max Vido
said.
After an
already sizzling day on Thursday, the heat will intensify throughout the
Southeast on Friday with the heat wave holding firm through at least Memorial
Day.
"A cold
front will put the brakes on the soaring heat on Saturday from Richmond,
Virginia, to Raleigh and Charlotte, North Carolina," according to
AccuWeather Senior Meteorologist Kristina Pydynowski, "but the heat will
come soaring back in these areas on Sunday."
Cities such
as Montgomery, Ala.; Atlanta and Augusta, Ga.; Pensacola, Tallahassee and
Jacksonville, Fla.; Columbia, S.C.; Charlotte and Raleigh, N.C.; and Richmond,
Va., will experience highs in the middle and upper 90s to lower 100s.
"Most
high temperature records across the region stand in the 90s, so these cities
are expected to consistently challenge records during the heat wave," Vido
said.
---- AccuWeather meteorologists anticipate the intense heat to last beyond Memorial Day.
If the ridge of high pressure responsible for the heat breaks down by the end of May, AccuWeather meteorologists are concerned that the window can open for potential tropical development in the Gulf of Mexico later next week.
New tariff relief for farmers could increase backup of unsellable soy
May 24, 2019 / 5:22 PM
EVANSVILLE,
Ind., May 24 (UPI) -- Agricultural economists fear the Trump administration's
new tariff relief program will encourage farmers to plant more soybeans this
spring that cannot be sold.
The 2019
Market Facilitation Program promises to pay farmers $14.5 billion to offset
losses incurred during the China trade war. Commodity crop producers -- like
soy growers -- will be paid based on the number of acres they plant.
"The
way it works is, that payment encourages planting," said Gary Schnitkey, a
professor of agricultural and consumer economics at the University of Illinois.
The problem
with that, Schnitkey said, is if China still is not buying those beans come
fall harvest time, many will remain stored on farms -- unsold.
A record
amount of soybeans already is stored on farms across the United States this
year. China was buying around 30 percent of America's crop before that
government slapped a high retaliatory tariff -- a tax paid by importers -- on
U.S. beans last summer, making them too expensive for Chinese importers to buy.
There is now
a huge surplus of American beans, which has driven the price to its lowest in
more than a decade. And if more beans are planted this spring, that surplus
will continue to grow, which could force the price down get more - and make it
all the more difficult to recover.
"Short-term,
stair-stepped subsidies are a poor remedy for trade," the Iowa Soybean
Association said in a statement. "They stimulate production but not sales
and therefore do little to undo the long-term log jam caused by not selling
soybeans to destinations like China.
More
Have a great weekend.
It
is a far, far better thing to have a firm anchor in nonsense than to put out on
the troubled seas of thought.
John
Kenneth Galbraith
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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