Baltic Dry Index. 1340
+23 Brent
Crude 66.20
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Without a good
team, you will never be the best. In boxing, you have to work with the best
coach, the best lawyer, the best manager, the best doctor. Exactly the same
principle applies in politics.
Vitali Klitschko
Ding, ding, ding, it’s
on. The G-20 brawl starts. Who will emerge winner and who loser? Will there be
any winners at all? With global manufacturing already in recession led by
autos, this is probably the last chance saloon for avoiding a new global
recession.
The main event comes
tomorrow when President’s Xi and Trump take to the ring. Will it be compromise
and prosperity or will it be a slugfest and recession? According to President
Trump himself, there will only be one winner and that will be him.
In Asia stock markets
went into caution mode as the spin meister sparring got underway.
Below, seconds out,
session One.
Asian markets slip as G-20 meeting kicks off in Japan
By Marketwatch
and Associated
Press
Published: June 27,
2019 11:55 p.m. ET
Asian markets retreated in early trading Friday, as the
G-20 summit kicked off in Japan.President Donald Trump met with the leaders of Japan, Germany and India on the sidelines of the G-20 meeting in Osaka, Japan, and said he was optimistic about making trade deals with all three of those countries. Trump was scheduled to meet with Russia’s Vladimir Putin later in the day, and with China’s Xi Jinping on Saturday, and hopes are high that the meeting with Xi will produce a cease-fire in the trade war.
But analysts caution any new truce at the Group of 20 meeting of major economies in Japan is likely to be temporary because negotiators face the same disagreements that caused talks to break down in May.
“We have watched this movie before: China and the U.S. talk, leaks from policymakers on both sides encourage speculation we are close to a deal, things fall apart,” said Hannah Anderson of J.P. Morgan Asset Management in a report.
---- This weekend marks the first face-to-face meeting between Trump and Xi since the American president said he was preparing to target the $300 billion in Chinese imports that he hasn’t already hit with tariffs, extending them to everything China ships to the United States.
The two sides are in a stalemate after 11 rounds of talks that failed to
overcome U.S. concerns over China’s acquisition of American technology and its
massive trade surplus. China denies forcing U.S. companies to hand over trade
secrets and says the surplus is much smaller than it appears once the trade in
services and the value extracted by U.S. companies are taken into account.
Despite worries over trade, investors have mostly pushed stocks higher
this month as the Federal Reserve raised expectations that it is prepared to
cut interest rates if needed to shield the economy should the damage from the
costly trade conflict worsen.
More
At G-20, EU leader blasts Putin for saying liberal democracy is ‘obsolete’
By Associated Press
Published: June 27, 2019 11:38 p.m. ET
OSAKA, Japan — World leaders attending a Group of 20 summit in Japan are
clashing over the values that have served for decades as the foundation of
their cooperation.
European Union President Donald Tusk on Friday blasted Russian President
Vladimir Putin for suggesting in an interview with the newspaper Financial
Times that liberalism was “obsolete.”
In a statement to reporters, Tusk said, “We are here as Europeans also
to firmly and unequivocally defend and promote liberal democracy.”
He said, “What I find really obsolete are: authoritarianism, personality
cults, the rule of oligarchs. Even if sometimes they may seem effective.”
As U.S. President Donald Trump, Chinese President Xi Jinping, Putin and
other leaders met on the sidelines of the summit, Tusk told reporters that such
comments suggest a belief that “freedoms are obsolete, that the rule of law is
obsolete and that human rights are obsolete.”
Putin told the Financial Times that “the liberal idea has become
obsolete. It has come into conflict with the interests of the overwhelming
majority of the population.”
He praised Trump for his efforts to try to stop the flow of migrants and
drugs from Mexico and said that liberalism “presupposes that nothing needs to
be done. That migrants can kill, plunder and rape with impunity because their
rights as migrants have to be protected.”
The G-20 leaders are meeting at a time of profound tensions over trade,
globalization and Iran’s collapsing nuclear deal.
While prospects for detente in the trade war between the U.S. and China
are in the spotlight, many participating are calling for a broader perspective
in tackling global crises.
---- U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross accompanied Trump to Osaka.
But a Chinese foreign ministry spokesman in Beijing said China intends
to defend itself against further U.S. moves to penalize it over trade friction.
China often has sought to gain support for defending global trade agreements
against Trump’s “America First” stance in gatherings like the G-20.
Threats by Trump to impose more tariffs on Chinese exports “won’t work
on us because the Chinese people don’t believe in heresy and are not afraid of
pressure,” Geng Shuang said.
Trump has at times found himself at odds with other leaders in such
international events, particularly on issues such as Iran, climate change and
trade.
Abe has sought to make the Osaka summit a landmark for progress on
environmental issues, including climate change. French President Emmanuel
Macron reinforced that message on Wednesday during a state visit to Tokyo,
where he described climate change as a “red line” issue for endorsing a G-20
communique.
More
Trump talks trade at G20, China's Xi warns against protectionism
June 28, 2019 /
1:27 AM
OSAKA
(Reuters) - U.S. President Donald Trump made clear on Friday that trade was his
top priority at a summit of leaders of Group of 20 nations, as China’s Xi
Jinping warned against rising protectionism and India, Japan and Russia
defended multilateral trade rules.
Trump, who is holding a series of meetings on the sidelines with world
leaders, including Japan’s Shinzo Abe and India’s Narendra Modi, said he saw
U.S. trade prospects improving, days after criticising the U.S.-Japan security
treaty and demanding that New Delhi withdraw retaliatory tariffs.
“I think we’re going to have some very big things to announce. Very big
trade deal. We’re doing some very big things with India in terms of trade, in
terms of manufacturing,” Trump said at the start of talks with the Indian prime
minister.
---- Washington has pressed its allies to shun Huawei in their fifth generation, or 5G, networks on security grounds, and has also suggested it could be a factor in a trade deal with Xi.
“We actually sell Huawei many of its parts,” Trump said at his meeting
with Modi. “So we’re going to be discussing that and also how India fits in.
And we’ll be discussing Huawei.”
---- European Commission President Jean-Claude Junker flagged the shadow cast by the U.S.-China trade feud.
“The trade relations between China and the United States are difficult,
they are contributing to the slowdown of the global economy,” he told a news
conference.
Xi also warned about the protectionist steps he said some developed
countries were taking.
“All this is destroying the global trade
order... This also impacts common interests of our countries, overshadows the
peace and stability world wide,” Xi told a gathering of leaders of the BRICS
grouping of nations on the sidelines of the G20 meet.
More
U.S. urges Cambodia to probe China-owned economic zone on tariff dodging
June 28, 2019 /
5:14 AM
PHNOM PENH
(Reuters) - The United States on Friday urged Cambodia to investigate a
Chinese-owned special economic zone after uncovering efforts by firms operating
there to evade duties on products destined for export to the United States.
The Sihanoukville Special Economic Zone (SSEZ), west of the Cambodian
capital, Phnom Penh, has denied U.S. accusations that it allowed companies to
trans-ship goods through the zone, saying an internal investigation had found
no such activity.
“The United States will aggressively pursue allegations of duty evasion
and utilise all available legal tools, to deter violators of U.S. customs and
trade laws,” embassy spokeswoman Emily Zeeberg said in a statement emailed to
Reuters.
Such tools could include civil and criminal penalties or other
enforcement actions, she added.
---- The SSEZ did not respond to a Reuters request for comment.
A spokesman for Cambodia’s commerce ministry, Seng Thai, declined to
comment and referred to a June 23 government statement that denied the allegations
as “baseless”, and added that the operating procedure in such zones was clear.
Since 2017, there have been two cases of companies operating from the
SSEZ having been found importing transshipped goods, such as the chemical
glycine and steel pipe-fittings, and charged anti-dumping duties, the embassy
added in its statement.
More
Trump threatens Vietnam, which has been benefiting from U.S. tariffs on China
By Steve
Goldstein Published: June 26, 2019 7:44 p.m. ET
One of the critiques of the Trump administration’s tariff policy on
China is that while it raises the cost of doing business in one low-cost
country, it just pushes multinationals to do business in another.
Some evidence has emerged that companies have taken business elsewhere
after the 25% tariffs imposed on $200 billion of Chinese goods. According to
data from UBS, the first $50 billion of Chinese goods subject to the 25% tariff
rate saw a 30% nose dive in exports, and the market share of Chinese exports
saw the biggest decline in years.
While the Chinese market share of U.S.
imports between October and March dropped by 1.7 percentage points, Mexico’s
rose by a half point, and Vietnam’s gained by almost the same, according to the
UBS data.
“Well, a lot of companies are moving to Vietnam, but Vietnam takes
advantage of us even worse than China,” Trump said.
According to the U.S. Trade Representative, the U.S. imported $47.8
billion of Vietnamese goods and services last year, while it exported $10.5
billion’s worth.
Asked bluntly if he wants to “tariff” Vietnam, Trump did not say no.
“Well, we’re in discussions with Vietnam. Vietnam is almost the single
worst – much smaller than China, much, but it’s almost the single worst abuser
of everybody,” eliciting a “wow” from his interviewer.
Trump did acknowledge that Vietnam was a large buyer of West Virginian
coal, “which makes me happy.”
more
U.S. companies fear falling profit margins as trade tensions, deflationary forces persist
By Chris
Matthews and Sunny
Oh Published: June 26, 2019 3:36
p.m. ET
A growing number of large U.S. companies are concerned
about falling profit margins which could spell trouble for stock market
valuations, analysts and investors say. During the past three months, 25 companies in the S&P 500 index SPX, -0.12% have discussed ‘margin pressure’ in conference calls with analysts, up from 16 in the three months prior, according to FactSet. The latest example was a Tuesday-evening analyst call with FedEx Corp. FDX, +2.53% even though management refuted a report in the Wall Street Journal that it was offering significant discounts in an effort to win over shippers from rival United Parcel Service Inc. UPS, +2.92%
FedEx Chief Marketing Officer Brie Carere admitted that the rising popularity of shoppers buying small and inexpensive items online is putting pressure on how much money the company can make per item shipped.
E-commerce has done much to empower the consumer to keep a lid on prices, but new tariffs on exports to the U.S. is another cause for concern. “You are starting to see companies cite tariffs more and more for not being able to maintain pricing power,” Craig Birk, chief investment officer at Personal Capital told MarketWatch. “There’s no doubt that they’re having an impact now.”
James Meyer, chief investment officer at Tower Bridge Advisors pointed to home builder Lennar Corp. LEN, -1.39% as one such firm that has recently bemoaned the effects of tariffs on its bottom line, in a Wednesday research note.
In a post-earnings conference call on Tuesday, Lennar estimated tariffs on China had raised the cost of a new home’s construction by $500. Shares of the home builder were down more than 7% this week, even after its second-quarter profits beat analysts’ expectations.
More broadly, according to a recent survey of investors by RBC Capital Markets, 49% said they expect S&P 500 index SPX, -0.12% company margins to contract over the next 12 months, while 40% said they would flatten. Just 10% believe they will increase.
More
https://www.marketwatch.com/story/us-companies-fear-falling-profit-margins-as-trade-tensions-deflationary-forces-persist-2019-06-26?mod=mw_theo_homepage
You must not fight
too often with one enemy, or you will teach him all your art of war.
Napoleon Bonaparte
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, that easy to win trade war again. So far, no winners. Maybe next
year or the year after?
Why the US-China Tariff Standoff Hurts American Companies More
26 Jun 2019|by Danielle Kost
US exporters have been slashing the
prices of goods they sell to China to offset higher trade costs, but Chinese
exporters are passing those costs to American companies, research by Alberto F. Cavallo
says.
"We are the 'piggy bank' that everyone
wants to take advantage of," President Donald Trump told his 61 million Twitter followers in May, days after he hiked tariffs on
$200 billion worth of Chinese goods. "NO MORE!""
But preliminary research by Harvard Business School's Alberto F. Cavallo suggests that American companies—and more recently, consumers—are bearing the brunt of the trade war with China, whose government has been retaliating with its own import tax increases. US exporters, particularly farmers selling commodities in competitive global markets, have had to significantly cut their prices, while Chinese exporters have not reduced the prices of the goods they sell to US importers.
"This nearly complete pass-through of tariffs to the total price paid by importers suggests the tariff incidence has fallen largely on the US,” Cavallo and his research colleagues said in the working paper, Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy (pdf).
The US-China trade tensions, which have been roiling global stock markets, will likely dominate conversations when leaders from Group of 20 nations gather on Friday for a two-day meeting in Osaka, Japan. Trump said on Twitter last week that he would have an "extended meeting" with President Xi Jinping of China at the summit, a welcome development for rattled investors and other world leaders.
Cavallo's research offers more urgency for the US to resume the negotiations that broke down in May. He teamed with prominent economists to study price data from June 2018—the month before the trade war began—to early 2019. Their work combines import and export prices at the US border, collected by the Bureau of Labor Statistics, with retail prices collected by the Billion Prices Project at Harvard Business School. They found:
·
US importers are bearing most of the
tariff increase. The pre-tariff import price of a Chinese item with a
10 percent levy only fell by 0.6 percent even 10 months after the trade
war began, leaving American companies to pick up the remaining 9.4 percent of
the increase post-tariff.
·
US exporters dropped their prices to
compete. During the two years leading up to Trump's first round of
tariffs, export prices on affected goods had been growing by 4 percent a year,
roughly double the rate of unaffected items. That trend ended in July, when
prices of goods affected by the retaliation tariffs started falling by 5
percent, on average.
·
US retailers partially absorbed the
tariffs. In-progress analyses of retail prices show more heterogeneity,
with some retailers passing higher import costs to consumers of some goods,
such as washing machines, while accepting lower profit margins for other
products, such as those from China. Overall, Cavallo and his colleagues found
little difference between the impact on prices of affected and unaffected
goods. While the research is preliminary, the comparison indicates that many
retailers are softening the blow for consumers—at least, for now.
Large American companies are unlikely to buckle under the weight of tariffs. In fact, a National Bureau of Economic Research study released in March suggested that companies unaffected by higher import taxes were raising their prices anyway to take advantage of consumers' willingness to pay more. And companies including Walmart and Home Depot have said they would eventually pass higher trade costs to customers.
While Trump has stood by his tariff strategy—calling the taxes a “beautiful thing”—executives' patience for the levies is wearing thin. Earlier this month, leaders from more than 600 companies and trade groups shared their frustrations in a letter to Trump as part of the “Tariffs Hurt the Heartland” advocacy campaign.
More
Strategy without tactics is the slowest route
to victory. Tactics without strategy is the noise before defeat.
Sun Tzu
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?
Visible light from 2D lead halide perovskites explained
Work resolves mystery and offers new path for light-emitting and other devices
Date:
June 24, 2019
Source:
University of Houston
Summary: Electrical engineers have reported solving a lingering question about how a two-dimensional crystal composed of cesium, lead and bromine emitted a strong green light, opening the door to designing better light-emitting and diagnostic devices.
Researchers drew attention three years ago when they reported that a two-dimensional perovskite -- a material with a specific crystal structure -- composed of cesium, lead and bromine emitted a strong green light. Crystals that produce light on the green spectrum are desirable because green light, while valuable in itself, can also be relatively easily converted to other forms that emit blue or red light, making it especially important for optical applications ranging from light-emitting devices to sensitive diagnostic tools.
But there was no agreement about how the crystal, CsPB2Br5, produced the green photoluminescence. Several theories emerged, without a definitive answer.
Now, however, researchers from the United States, Mexico and China, led by an electrical engineer from the University of Houston, have reported in the journal Advanced Materials they have used sophisticated optical and high-pressure diamond anvil cell techniques to determine not only the mechanism for the light emission but also how to replicate it.
---- "Now that the mechanism for emitting this light is understood, it can be replicated," said Jiming Bao, associate professor of electrical and computer engineering at UH and corresponding author on the paper. "Both crystals have the same chemical composition, much like diamond versus graphite, but they have very different optical and electronic properties. People will be able to integrate the two materials to make better devices."
Potential applications range from solar cells to LED lighting and other electronic devices.
More
Another weekend and an important one too. Will it be trade war peace at the G-20 and back to the road to prosperity? Or will it be yet more trade war and the road to perdition? Come Sunday we should know. Have a great weekend everyone.
June 28 1914 Franz Ferdinand, Archduke of Austria and his wife Sophie were assassinated in Sarajevo by young Serb nationalist Gavrilo Princip at 10.45, the casus belli of WWI. The beginning of the end of Empires.
To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.
Sun Tzu
The monthly Coppock Indicators finished May
DJIA: 24,815 +49 Down. NASDAQ: 7,453 +71 Down.
SP500: 2,752 +46 Down.
The S&P has reversed again to down after only one month. Time for
the Fed to step in again to buy stocks.
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