Baltic Dry Index. 1105
-20 Brent
Crude 61.35
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
This is the way things are,
and the Game has been so successful that, like everything, it will get more and
more successful until it stops being successful.
George
Goodman, aka Adam Smith, The Money Game. 1968.
President Trump wants
a lower dollar, a tougher line on China and Europe, hundreds of changes in
China’s laws, and most of all a large interest rate cut by the clueless Federal
Reserve.
In response, the
influential South China Morning Post reports that China now thinks that no deal
is better than a bad deal.
While no one expects
the Fed to cut their key interest rate at next week’s meeting, President Trump
and the markets clearly expect the Fed to comply and cut in July. If as
anticipated by some, they cut by a large amount, a sharply lower dollar lies
directly ahead. Add a new currency war to the global economy’s problems.
Add in a gold rally
too. If this is how US policy is made in a pre-election year, what can we
expect after President Trumps kicks off his re-election campaign next month.
To this old dinosaur
market follower, it will now take a miracle for the global economy to avoid a
new recession,
Below, storm clouds
continue to build and get blacker.
Asia shares wary of Trump, wait on U.S. inflation
June 12, 2019 /
1:37 AM
SYDNEY (Reuters) -
Asian share markets were in a wary mood on Wednesday as the White House took a
tough line on trade talks with China, while a looming reading on U.S. inflation
could shuffle the odds for an early cut in interest rates there.
Data on Chinese inflation showed the annual pace picked up to a 15-month
high of 2.7%, but only because surging pork prices pushed up the cost of food.
Excluding food, inflation rose only 1.6% and suggested there was plenty of
scope for more stimulus.
Market moves were modest, with MSCI’s broadest index of Asia-Pacific
shares outside Japan off 0.38% after two days of gains.
Japan’s Nikkei dithered either side of flat, while Shanghai blue chips
eased 0.5% following a 3% jump the day before. E-Mini futures for the S&P
500 hardly budged.
President Donald Trump said on Tuesday he was holding up a trade deal
with China and had no interest in moving ahead unless Beijing agrees to four or
five “major points” which he did not specify.
He also took aim at the Federal Reserve, saying interest rates were “way
too high” and the central bank had “no clue”.
Fed policymakers will meet on June 18-19 against the backdrop of rising
trade tensions, slowing U.S. growth and a sharp step-down in hiring in May that
have led markets to price in at least two rate cuts by the end of 2019.
Futures imply around an 80% chance of an easing as soon as July.
That might change depending on what U.S. consumer price data show later
in the session. Headline inflation is seen slowing a touch to 1.9%, with core
steady at 2.1%.
All the uncertainty around trade saw Wall Street break a six-day winning
streak to end flat on Tuesday. The Dow eased a tiny 0.05%, while the S&P
500 lost 0.03% and the Nasdaq 0.01%.
More
US accused of undermining trade talks by demanding ‘hundreds’ of changes to Chinese law
·
State Council adviser Shi Yinhong says America’s
insistence on strong intellectual property protections is asking too much of
Beijing
·
Chinese officials have started to think ‘no deal
is better than a bad deal’ as the gap between the two side
Published: 6:40pm, 11 Jun, 2019 Updated: 11:35pm, 11 Jun, 2019
The United States has been accused of demanding “enormous, even
hundreds” of changes to Chinese laws to protect intellectual property, according
to a Chinese government adviser, who said it was a key factor in the collapse
of the trade talks.
Shi Yinhong, a prominent international relations scholar from Renmin
University, said the gap between the two sides was widening as Washington
demanded a strong enforcement mechanism while Beijing wanted more leeway.
He said China could only agree to a “relatively weak enforcement
mechanism” without too much scrutiny and there should not be automatic
penalties for violating the agreement.
Shi, who is also an adviser to the State Council, the country’s cabinet,
was speaking on the sidelines of a security conference in Hong Kong.
He continued: “From early May, China began to think that no deal might
be better than a bad deal, and right now China and the US have fundamentally
contradictory attitudes as to what would be a good deal.
“Slowly
it has become a zero-sum game where neither party can accept something the
other side would deem a good deal.”
Earlier this year both sides had been hopeful of reaching an agreement
to end their tariff tit for tat. As the South China Morning Post
reported last week,
the Chinese side had been preparing to sign a memorandum of
understanding back in February, but were taken aback when US President
Donald Trump suddenly demanded a more binding contact.
Shi said the gap between the two sides on technical aspects of the
agreement widened as negotiations advanced, with the US presenting the Chinese
with a list of hundreds of intellectual property infringements that it wanted
to be addressed.
“The US demanded that China change a number of laws. It wasn’t one or
two, it was enormous, maybe hundreds … Beijing just cannot make that many
changes,” he said.
At the same time, it wanted to keep tariffs in place on Chinese goods to
keep up the pressure on Beijing.
More
U.S. companies warn Trump's tariffs could hit results
June 11, 2019 /
1:26 PM
(Reuters) - A host of U.S. consumer companies have warned that costs
related to tariffs on goods imported from China would weigh on their results.
The United States increased tariffs on $200 billion worth of Chinese
goods to 25% from 10% in May.
President Donald Trump has also threatened an additional round of
tariffs on $300 billion worth of goods that would cover nearly everything
imported from China to the United States.
BEST BUY CO INC: “The impact of tariffs at 25% (proposed to be enacted)
will result in price increases and will be felt by U.S. consumers,” CEO Hubert
Joly said.
HOME DEPOT INC: If the latest round of tariffs hold, it would increase
annual cost of goods sold by $1 billion, on top of a $1 billion hit that the
home improvement chain has taken from tariffs imposed in 2018.
The impact from new tariffs would still be manageable as it would make
up less than 1% of total sales, said Edward Decker, executive vice president of
merchandising.
J.C. PENNEY CO INC: “We do anticipate a more meaningful impact on both
our private and national brands if the potential fourth tranche of tariffs does
go into effect,” CEO Jill Soltau said.
---- WALMART INC: “Higher tariffs will lead to higher prices for customers,” CFO Brett Biggs told Reuters in an interview last week. He said the company, known for lower prices, will try to minimize the effect of the levies on the company and its customers.
MACY’S INC: “The increase of the third tranche from 10% to 25% on May 10
does have some impact, particularly on our furniture business. However, the
team anticipates that this can be mitigated,” CEO Jeffrey Gennette told
investors on a conference call on Wednesday.
“It’s too early to comment on what we think that’s going to mean in
terms of potential price increases and what categories are going to be more
affected than others,” he said.
More
Exclusive: Top Japanese chip gear firm to honour U.S. blacklist of Chinese firms - executive
June 11, 2019 /
7:20 AM
TOKYO (Reuters) -
Japan’s Tokyo Electron, the world’s No.3 supplier of semiconductor
manufacturing equipment, will not supply to Chinese clients blacklisted by
Washington, a senior company executive told Reuters.
The decision shows how Washington’s effort to bar sales of technology to
Chinese firms, including Huawei Technologies, is ensnaring non-American firms
that are not obliged to follow U.S. law.
China, which is locked in a crippling trade war with the United States,
is pushing to build its semiconductor industry to reduce its reliance on U.S.,
Japanese and European suppliers for chip-making machinery.
“We would not do businesses with Chinese clients with whom Applied
Materials and Lam Research are barred from doing businesses,” the executive
said, referring to the top U.S. chip equipment firms.
“It’s crucial for us that the U.S. government and industry see us as a fair
company,” he said, citing Tokyo Electron’s long U.S. partnership since the
1960s, when it started off as an importer of U.S. equipment.
He did not want to be named given the sensitivity of the matter. Applied
Materials and Lam Research declined to comment.
Another major Japanese chip equipment supplier is also considering
halting shipments to blacklisted Chinese firms, a person familiar with the
matter said.
---- The Tokyo Electron executive did not specify the names of the Chinese clients, but state-backed memory chipmaker Fujian Jinhua Integrated Circuit Co is currently on a list of entities that cannot buy technology goods from U.S. firms.
Fujian Jinhua did not respond to an emailed request for comment. A
handful of other Chinese companies and research institutions are on a ‘red
list’ that U.S. companies have been advised to avoid.
Huawei’s chip arm, HiSilicon, is a so-called fabless company focusing on
chip design and thus is not normally a buyer of chip-manufacturing gear. But
Huawei also faces major risks from non-U.S. suppliers adhering to the U.S.
blacklist.
British chip designer ARM, owned by Japan’s SoftBank, has halted
relations with Huawei, potentially crippling the Chinese company’s ability to
make new chips for its future smartphones.
But Taiwan Semiconductor Manufacturing Co, global leader in chip
production and maker of many Huawei chips, has said it would continue to be a
supplier to Huawei.
---- Making chips involves numerous processes that require different types of equipment. Each market segment is typically dominated by just a few players.
Tokyo Electron controls nearly 90% of the market for microchip coaters
and developers. It competes directly with Applied Materials and Lam Research in
some segments.
Beijing has been investing heavily to grow domestic chip equipment
suppliers as part of an effort to achieve its goal of producing 70% of the
semiconductors it uses by 2025.
But industry sources say technologies at those suppliers are still far
behind, leaving China dependent on imported equipment.
---- Today, only 16% of the semiconductors used in China are produced in-country, half of which are made by Chinese firms, according to the Center for Strategic and International Studies, a Washington-based think tank.
But aggressive investments by local chipmakers and foreign players like
Samsung Electronics made China the world’s No.2 market for chip equipment last
year.
Many chip equipment manufacturers are forecasting substantial profit
drops this year as the China-U.S. trade war dampens demand for chips and chip
equipment globally.
China says will respond if U.S. escalates trade tension
June 11, 2019 /
8:32 AM
BEIJING (Reuters)
- China will respond firmly if the United States insists on escalating trade
tensions, the foreign ministry said on Tuesday after U.S. President Donald
Trump said further tariffs were ready to kick in if no deal was reached at
June’s G20 summit.
Trump has repeatedly said he is getting ready to meet Chinese President
Xi Jinping at the Osaka summit at the end of June, but China has not confirmed
it.
Trump said last week he would decide after the meeting of the leaders of
the world’s largest economies whether to carry out a threat to impose tariffs
on at least $300 billion in Chinese goods.
On Monday, Trump said he was ready to impose another round of punitive
tariffs on Chinese imports if he cannot make progress in trade talks with Xi in
Osaka.
Chinese Foreign Ministry spokesman Geng Shuang again would not be drawn
on confirming a Xi-Trump meeting at G20, saying information would be released
once it was available to the ministry.
“China does not want to fight a trade war, but we are not afraid of fighting
a trade war,” he said, adding China’s door was open to talks based on equality.
“If the United States only wants to escalate trade frictions, we will
resolutely respond and fight to the end.”
More
China launches survey of rare earth resources - paper
June 11, 2019 /
11:20 AM
BEIJING (Reuters) - China launched a survey of rare earth resources in
seven regions on Monday, the China Securities Journal reported on Tuesday, amid
speculation Beijing may curb exports of the materials to the United States.
The newspaper, controlled by the official Xinhua News Agency, said
China’s state planner National Development and Reform Commission, industry
ministry and the natural resources ministry began the survey in areas including
Inner Mongolia and Jiangxi province.
Local authorities in the surveyed regions must provide specific data and
cases on major issues in protecting, developing and applying the resources,
according to the official newspaper.
Beijing also asked these provinces to share thoughts and suggestions on
how to improve the supply security of strategic mining resources like rare
earths.
The ministries could not immediately be reached for comment outside
normal business hours.
The campaign, mainly directed by the country’s state planner, might lead
to a reduction of rare earth output and push up prices, as Beijing is expected
to crack down on illegal mining and trade of the critical elements, said the
newspaper, citing an unidentified industry insider.
Chinese rare earth prices are set to climb further beyond multi-year
highs hit following a flurry of state media reports that Beijing could
weaponise its supply-dominance of the prized minerals in its trade war with
Washington.
China accounted for 80% of rare earths, a group of 17 chemical elements
used in high-technology consumer electronics and military equipment, imported
by the United States from 2014 to 2017.
China is home to at least 85% of the world’s capacity to process rare
earth ores into material manufacturers can use, according to research firm
Adamas Intelligence.
"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, “big brother,” aka in this case as Amazon, is watching you. Don’t
step out of line.
Amazon embraces U.S. government business, despite occasional controversy
June 11, 2019 /
4:44 AM
SCOTTSDALE, Ariz (Reuters) - The head of Amazon.com Inc’s cloud
computing division on Monday said the company would work with any government
agency that followed the law, in contrast with rival Microsoft Corp, which has
touted its rejection of controversial sales.
“We will serve the federal government, and they will have to use the
technology responsibly,” Andy Jassy, CEO of Amazon Web Services, said at the
2019 Code Conference after being asked if the company worked with U.S.
Immigration and Customs Enforcement. “Any government department that’s
following the law, we will serve them.”
However, Jassy said he hopes that the federal regulators “hurry up”,
adding that “otherwise, you’ll have 50 different laws in 50 different states.”
In the past year, Amazon has found itself at the center of a growing
debate over the use of facial recognition by governments, with critics warning
of false matches and arrests and proponents arguing it keeps the public safe.
Jassy acknowledged that the issue around facial recognition technology
was a “real one”, but said “just because technology could be misused, doesn’t
mean you should ban or condemn it.”
Law enforcement in Oregon and Florida have used Amazon’s face and image
ID service, known as Rekognition.
Amazon’s approach has differed somewhat from Microsoft’s. While the
Windows creator had defended a recent $480 million hardware contract to supply
the U.S. Army, it held off from selling facial recognition when it believed
human rights would be at risk.
Microsoft President Brad Smith said earlier this year that the company
had rejected a California law enforcement agency’s request to install the
technology in officers’ body cameras and cars, fearing that would lead to
innocent women and minorities being disproportionately held for questioning.
Artificial intelligence tools are often trained largely on images of
white men.
"Any
nation which gives up its freedom in pursuit of economic advantage deserves to
lose both."
Thomas Jefferson, US President 1801-1809.
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?
Spanish solar plant unveiled
Natalie Sauer 11th June 2019
Spanish utility giant Ibedrola has laid out
a plan to build Europe’s largest solar power plant in the country.
Ibedrola is currently consulting the environment ministry over building a 590-megawatt solar farm in the Western region of Extramadurra, it said in a statement.
With a €300 million investment planned, the so-called Francisco Pizzarro plant will supply energy to 375,000 people every year and employ up to 1000 people in the process of construction, the company said.
The announcement comes amid increasingly competitive renewables prices and a favourable political atmosphere.
Falling costs
Since becoming minister for the ecological transition almost exactly one year ago Teresa Ribera has introduced climate legislation aiming to achieve 100 percent renewables by 2050.
In early October, Ribera scrapped the so-called “sun tax” – an unpopular levy on solar power affecting individuals and small businesses.
The government has also pledged to install between 6,000 and 7,000MW of renewable power every year until 2030.
Sergio de Otto, head of the Renewables Foundation told Climate Home News: “It’s clear that policies led by Teresa Ribera have given investors more confidence to throw themselves into projects like the one that Ibedrola has announced."
De Otto said costs for building renewable energy were falling “spectacularly”.
Extra growth
De Otto continued: “From our perspective, it is necessary that we – citizens and small businesses – lead the energy transition to 100 percent renewables by 2050, but we also understand the need for large solar plants produced by companies.
"We believe that in future these great installations will coexist with an extraordinary growth in small-scale renewables production. These are therefore two complementary models”
https://theecologist.org/2019/jun/11/spanish-solar-plant-unveiled
A
permanent Governor of the Bank of England [your central bank here] would be one
of the greatest men in England [your nation here.] He would be a little
'monarch' in the City; he would be far greater than the 'Lord Mayor.' He would
be the personal embodiment of the Bank of England; he would be constantly
clothed with an almost indefinite prestige. Everybody in business would
bow down before him and try to stand well with him, for he might in a panic be
able to save almost anyone he liked, and to ruin almost anyone he liked. A day
might come when his favour might mean prosperity, and his distrust might mean
ruin. A position with so much real power and so much apparent dignity would be
intensely coveted.
Walter
Bagehot. Lombard Street. 1873.
The monthly Coppock Indicators finished May
DJIA: 24,815 +49 Down. NASDAQ: 7,453 +71 Down.
SP500: 2,752 +46 Down.
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