Baltic Dry Index. 1258
+19 Brent
Crude 64.32
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Buy the
rumour, sell the fact.
Wall
Street Adage.
Global stock markets seem
to be nervously stalled, awaiting the outcome of the coming G-20 meeting in
Japan, and the outcome of the critical meeting between President Xi and the
unpredictable President Trump. Will it
be buy the pre-meeting, sell the meeting?
Well covered in
yesterday’s LIR update, there’s little more to add today, except that yesterday
President Trump opined again that he has full power to sack Fed Chairman
Powell, but that he won’t do it. This being President “U-turn on a dime” Trump,
we should probably add “for now.”
Below, today’s Asian
update. US farm woes continue and spread deeper into the US farm economy. The EUSSR staggers on towards a clean no-deal
Brexit, an Italian parallel currency undermining the Euro, and US trade war tariffs
on French wine and German autos, among other tariffs, perhaps coming in
November. As central banks get ready to cut, gold takes off for the sky.
Stocks suffer trade jitters, dollar braced for more Fed talk
June 25, 2019 / 1:44
AM
SYDNEY (Reuters) -
Asian shares were hamstrung by trade worries Tuesday as expectations of more
dovish talk from the Federal Reserve pushed down Treasury yields and the
dollar, while propelling gold prices to six-year peaks.
Investors are waiting anxiously to see if anything comes of Sino-U.S.
trade talks later this week, though sentiment was not helped by reports U.S.
President Donald Trump would be content with “any outcome”.
Trump is slated to meet one-on-one with at least eight world leaders at
the G20 summit in Osaka, including China’s President Xi Jinping and Russian
President Vladimir Putin.
Chinese investors seemed none too hopeful as Shanghai blue chips slipped
1.8%. That led MSCI’s broadest index of Asia-Pacific shares outside Japan down
0.4%.
Japan’s Nikkei dipped 0.2%, while E-Mini futures for the S&P 500
edged down 0.18%.
Wall Street had been just as cautious with the Dow ending Monday up
0.03%, while the S&P 500 lost 0.17% and the Nasdaq 0.32%
There are no less than five Fed policy makers speaking on Tuesday,
including Chair Jerome Powell, and markets assume they will stick with the
recent dovish message.
“It’s always possible the chair could walk back some of the
market’s dovish interpretation of last week’s FOMC meeting...but we suspect he
will reinforce the message laid out last week,” said Kevin Cummins, a senior
U.S. economist at NatWest Markets.
“By the end of July, we believe the Fed will have seen enough to decide
that action to counter downside economic risks and low inflation/inflation
expectations is warranted, and so we look for a 25 basis point rate cut at the
next FOMC meeting.”
Markets are running well ahead of that. Futures are fully priced for a
quarter-point easing and imply a real chance of a half-point move.
---- GOLD SOARS
Yields on 10-year Treasuries have dived 120 basis points since November and, at 2.01%, are almost back to where they were before Trump was elected in late 2016.The speed and scale of the latest decline has seen the dollar fall for four sessions in a row against a basket of other currencies to stand at a three-month low of 95.937.
“USD DXY now looks likely to break through the March low of 95.76 and below there 95.0,” said Tapas Strickland, a markets strategist at NAB.
----
The pullback in the dollar combined with lower yields globally
has put a fire under gold, which touched a six-year top. The metal is up 12%
since early May at $1,1425.02 an ounce, with the next target the 2013 top of
$1,433.
More
Farm Deluge Starts to Seep Into America’s Fragile Rural Economy
By Mario Parker,Denitsa Tsekova, and Michael Hirtzer
24 June 2019, 00:00 BST Updated on 24 June 2019,
14:00 BST
From 100 feet up in the air, Indiana crop duster Robert
Sneberger gets a better view than most of how cornfields are faring. This
season, the picture is bleak.Instead of the stretching green stalks he normally sees at this time of year, there’s water. The wettest year in memory has stalled planting and stunted crops in the U.S. Midwest at a time when farmers are already struggling with low prices and a trade war with China.
But they’re not alone. The communities they live in and the businesses that supply them with seeds, fertilizer, equipment and services are struggling as credit conditions steadily deteriorate in a fragile rural economy. At Burrus Seed in Arenzville, Illinois, employees spend as much time trying to lift farmers’ spirits as they do selling to them, according to the owner.
“If we experienced a year like this, I don’t remember it,” said Todd Burrus, whose family has run the company since 1935. “When the farm economy is tough, it’s going to be tough for all the suppliers.”
Another Illinois seed business owner, Kurt Barman, says he’s trying not to curtail employee hours even as customers are returning product because they aren’t able to plant. “All of the seeds are coming back, so that’s lost revenue for us,” he said.
Read More: Unending Rain Is Sparking Unusual Changes in U.S. Crop Estimates
The wet weather is presenting farmers with other purchasing dilemmas. Growers are weighing whether to trade up to the latest technology to protect crops and businesses, or use prior versions, according to Mark Patrick, chief financial officer of agro-chemical giant Syngenta AG.
“Couple that with less acres, you’ve got a very acute pressure going on at the moment,” Patrick said in an interview with Bloomberg Television.
The fertilizer business is already feeling the effects. Midwest urea premiums have been running at more than double normal levels. While that’s good news for suppliers, the reason behind the price surge isn’t.
With the Mississippi River closed for much of the past month, the regular flow of crop-nutrient shipments has been disrupted with barges stacked up waiting to move, according to Alexis Maxwell, research director for Bloomberg Green Markets.
Deerfield, Illinois-based CF Industries Holdings Inc. produces urea locally, while Nutrien Ltd. has urea it can bring in from the Canadian Prairies. Overseas providers have been the ones suffering as they try and get their product to the Midwest.
Read More: Corn ‘Train Wreck’ Worse Than Forecast, U.S. Farmers Warn
The deluge is just the latest blow to the farm economy. Even the $28 billion in promised tariff aid may not be enough to rescue rural America from the onslaught of bad news.
There’s been a steady deterioration in agricultural credit conditions, the Kansas City Federal Reserve said in its May report. Farmer sentiment has plunged to levels not seen since October 2016, the month before Donald Trump’s election victory, a Purdue University/CME Group index showed this month. Net farm income last year was about half of the $123 billion earned in 2013.
The stalled planting this year only works to exacerbate fragility in rural areas, Curt Hudnutt, head of North American rural banking for Rabobank. “If you want to liken it to the 2008 recession from a housing perspective, it’s similar to that and it’s really vulnerable to any disruptions,’’ he said.
More
Opinion: These 3 high-wire European risks could send the U.S. economy into recession
By Desmond
Lachman Published: June 24, 2019
11:41 p.m. ET
A clear sign that global bond markets are highly concerned
about the European economic outlook is that a record US$5 trillion, or around
half, of all European government bonds now offer negative interest rates. A
clear sign that markets are concerned that Europe’s troubles could lead to a
U.S. economic recession is that U.S. long-term interest rates are significantly
below U.S. short-term interest rates. In the past, this so-called U.S.
yield-curve inversion has consistently proved to be a highly reliable indicator
of an impending economic recession and oftentimes an early warning of a sharp
decline in the S&P 500 index SPX, -0.17% .To be sure, bond markets and the world’s central banks are generally sensitive to economic risks. However, what seems to have them now on high alert is that this time around there are an unusually large number of such risks, especially in Europe, that have a high chance of materializing. They are also concerned that if these risks were to materialize, they would have the potential to destabilize both the U.S. and the global economies.
Among
the more immediate of these risks is that the United Kingdom, the world’s
fifth-largest economy, could crash out of the European Union without a deal on
Oct. 31. Both the Bank of England and the International Monetary Fund are
warning that such an occurrence would most probably result in a 5% decline in
the U.K. economy in the year immediately following its European exit.
Considering how large a trade partner the U.K. for Europe, a hard Brexit would
be bound to have significant spillover effects to a European economy that is
already on the cusp of a recession.
----
A more serious, albeit less imminent, threat to the global economy is the risk
of a new Italian sovereign debt crisis that would pose an existential threat to
the euro’s survival. Italy would be very much more difficult to save than
Greece, given that its economy is around 10 times the size of Greece’s. Having
the world’s third-largest bond market, a serious Italian economic crisis is
bound to reach our shores in much the same way as our 2008 Lehman crisis
impacted the rest of the world.
Heightening the risk of an Italian debt crisis is the reckless policy path on which its populist government is embarked. At a time that the country is already saddled with Europe’s second-highest ratio of public debt to GDP, behind only Greece, the Italian government is insisting on the introduction of a large unfunded tax cut that would raise its budget deficit to around 5% of GDP.
It is also not helping matters that the Italian government is seriously floating the idea of issuing small-denominated bonds (dubbed Mini-BOTs, after the Italian term for Treasury bonds) that would have the same denominations as euro notes and that could be used to pay future tax liabilities. The introduction of such a parallel currency, which very well could occur if Matteo Salvini, now deputy prime minister, were to become prime minister, would be bound to undermine investor confidence in Italy’s commitment to continued euro membership.
More
"In
economics, hope and faith coexist with great scientific pretension."
John Kenneth
Galbraith.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, technology companies again. Just who is spying on whom, and why?
“Remember, when you connect with another
computer, you're connecting to every computer that computer has connected to.”
Hackers hit global telcos in espionage campaign - cyber research firm
June 25, 2019 /
5:11 AM
TEL AVIV (Reuters)
- Hackers have broken into the systems of more than a dozen global telecoms
companies and taken large amounts of personal and corporate data, researchers
from a cyber security company said on Tuesday, identifying links to previous
Chinese cyber-espionage campaigns.
Investigators at U.S.-Israeli cyber security firm Cybereason said the
attackers compromised companies in more than 30 countries and aimed to gather
information on individuals in government, law-enforcement and politics.
The hackers also used tools linked to other attacks attributed to
Beijing by the United States and its Western allies, said Lior Div, chief
executive of Cybereason.
“For this level of sophistication it’s not a criminal group. It is a
government that has capabilities that can do this kind of attack,” he told
Reuters.
China has repeatedly denied involvement in any hacking activity.
Cybereason declined to name the companies affected or the countries they
operate in, but people familiar with Chinese hacking operations said Beijing
was increasingly targeting telcos in Western Europe.
More
China says FedEx should offer a proper explanation on Huawei
June 24, 2019 /
8:50 AM
BEIJING (Reuters) - China’s foreign ministry said on Monday that FedEx
Corp should offer a proper explanation, after the firm apologised for refusing
to ship a Huawei Technologies phone sent from Britain to the United States.
Ministry spokesman Geng Shuang made the comment at a daily news briefing
in Beijing.
FedEx had apologised saying it was an “operational error” after PC
Magazine, an American computer magazine, said on Friday FedEx refused to ship
the phone.
UK’s approach to Huawei is flawed, warns Ericsson’s US boss
Niklas Heuveldop says it makes no sense to
shut Chinese group out of parts of 5G network
Kiran
Stacey in Washington June 24 2019
The UK’s likely plan to shut Huawei out of parts of its 5G networks makes little technical sense, according to the head of Ericsson’s US business, who warned that countries should choose either to allow companies complete access or none at all.
Niklas Heuveldop,
chief executive of Ericsson North America, said in an interview that any plan
to allow a company such as Huawei to supply equipment to “noncore” parts of 5G
networks but not the “core” misunderstands how the network will work.
Ericsson is one of
Huawei’s biggest competitors, and stands to benefit should the Chinese company
be shut out of big western markets — something Mr Heuveldop said he was not
advocating.
The US has been
pushing allies for months to bar the Chinese company entirely from their 5G
networks, warning that its telecoms equipment could be used by Beijing for
spying. The UK’s refusal to back such a position has become one of the most
sensitive issues in the relationship between the UK and the US.
Leaked reports
from the UK National Security Council last month suggested the government was
set to recommend allowing Huawei to provide equipment to “noncore” parts of the
network, though a final decision is likely to rest with Theresa May’s successor
as prime minister.
British officials argue they can mitigate any risk posed by Huawei by allowing it only to supply equipment that carries signals to and from mobile phones, rather than the more central parts of the network that handle much larger amounts of data.
British officials argue they can mitigate any risk posed by Huawei by allowing it only to supply equipment that carries signals to and from mobile phones, rather than the more central parts of the network that handle much larger amounts of data.
In an interview,
however, Mr Heuveldop agreed with US intelligence agencies that such a split
approach is unlikely to work. Mr Heuveldop said that one premise of 5G was that
core capabilities would be placed at the “very far edge” of the network.
“The whole idea of
having instant feedback [and] no latency for augmented-reality applications
depends on having a core network functionality highly distributed in your
network.”
Asked whether it
made sense for countries to try to distinguish between core and noncore parts
of the network, he said: “Not really . . . I don’t understand that. You need to
make up your mind. What’s the problem you are trying to solve?”
Mr Heuveldop’s comments add to the technical
but heated debate over how risky it will be to allow Huawei access to any part
of 5G networks.
more
Google's Chrome Web Browser "Has Become Spy Software"
by Tyler Durden Mon, 06/24/2019 - 04:15
Google's Chrome is essentially spy
software according to Washington
Post tech columnist Geoffrey Fowler, who spent a week
analyzing the popular browser and concluded that it "looks a lot like
surveillance software." Fowler has since switched to Mozilla's Firefox because of its default privacy settings, and says that it was easier than one might imagine.
My tests of Chrome vs. Firefox unearthed a personal data caper of absurd proportions. In a week of Web surfing on my desktop, I discovered 11,189 requests for tracker “cookies” that Chrome would have ushered right onto my computer but were automatically blocked by Firefox. These little files are the hooks that data firms, including Google itself, use to follow what websites you visit so they can build profiles of your interests, income and personality.
Chrome welcomed trackers even at websites you would think would be private. I watched Aetna and the Federal Student Aid website set cookies for Facebook and Google. They surreptitiously told the data giants every time I pulled up the insurance and loan service’s log-in pages.
And that’s not the half of it.
Look in the upper right corner of your Chrome browser. See a picture or a name in the circle? If so, you’re logged in to the browser, and Google might be tapping into your Web activity to target ads. Don’t recall signing in? I didn’t, either. Chrome recently started doing that automatically when you use Gmail. -Washington Post
Meanwhile, Chrome is even worse when it comes to mobile devices
- reporting the precise location of Android users unless location
sharing is turned off, in which case it will send out your rough
coordinates.
More
We have some
material on spying by a major government on the tech industry. Industrial
espionage.
Julian Assange
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?
No technology update
today. Today, one day late we commemorate the onset of the Berlin Blockade by
Stain’s Soviet Union, and how the United States and Great Britain, supported by
others, overcame it.
Berlin Blockade
The Berlin Blockade (24 June 1948 – 12 May 1949) was one of the first major international crises of the Cold War. During the multinational occupation of post–World War II Germany, the Soviet Union blocked the Western Allies' railway, road, and canal access to the sectors of Berlin under Western control. The Soviets offered to drop the blockade if the Western Allies withdrew the newly introduced Deutsche Mark from West Berlin.The Western Allies organised the Berlin airlift (26 June 1948–30 September 1949) to carry supplies to the people of West Berlin, a difficult feat given the size of the city's population.[1][2] Aircrews from the United States Air Force, the Royal Air Force, the French Air Force,[3] the Royal Canadian Air Force, the Royal Australian Air Force, the Royal New Zealand Air Force, and the South African Air Force[4]:338 flew over 200,000 sorties in one year, providing to the West Berliners up to 12,941 tons of necessities in a day, such as fuel and food, with the original plan being to lift 3,475 tons of supplies. However, by the end of the airlift, that number was often met twofold.[5] The Soviets did not disrupt the airlift for fear this might lead to open conflict, even though they far outnumbered the allies in Germany and especially Berlin.[6] [7]
The first blockade runners were RAF flights made in support of British military personal stationed in the city. The UK-US then began a joint operation in support of the entire city. By the spring of 1949, the airlift was clearly succeeding, and by April it was delivering more cargo than had previously been transported into the city by rail. On 12 May 1949, the USSR lifted the blockade of West Berlin, although for a time the U.S., U.K and France continued to supply the city by air anyway because they were worried that the Soviets were simply going to resume the blockade and were only trying to disrupt western supply lines. The Berlin Blockade served to highlight the competing ideological and economic visions for postwar Europe and was the first major multinational skirmish of the cold war.
----On 25 March 1948, the Soviets issued orders restricting Western military and passenger traffic between the American, British and French occupation zones and Berlin.[20] These new measures began on 1 April along with an announcement that no cargo could leave Berlin by rail without the permission of the Soviet commander. Each train and truck was to be searched by the Soviet authorities.[20] On 2 April, General Clay ordered a halt to all military trains and required that supplies to the military garrison be transported by air, in what was dubbed the "Little Lift".[20]
The Soviets eased their restrictions on Allied military trains on 10 April 1948, but continued periodically to interrupt rail and road traffic during the next 75 days, while the United States continued supplying its military forces by using cargo aircraft.[23] Some 20 flights a day continued through June, building up stocks of food against future Soviet actions,[24] so that by the time the blockade began at the end of June, at least 18 days' supply per major food type, and in some types, much more, had been stockpiled that provided time to build up the ensuing airlift.[25]
At the same time, Soviet military aircraft began to violate West Berlin airspace and would harass, or what the military called "buzz", flights in and out of West Berlin.[26] On 5 April, a Soviet Air Force Yakovlev Yak-3 fighter collided with a British European Airways Vickers Viking 1B airliner near RAF Gatow airfield, killing all aboard both aircraft. The Gatow air disaster exacerbated tensions between the Soviets and the other allied powers.[27][28][29] Internal Soviet reports in April stated that "Our control and restrictive measures have dealt a strong blow to the prestige of the Americans and British in Germany" and that the Americans have "admitted" that the idea of an airlift would be too expensive.[30]
On 9 April, Soviet officials demanded that American military personnel maintaining communication equipment in the Eastern zone must withdraw, thus preventing the use of navigation beacons to mark air routes.[23] On 20 April, the Soviets demanded that all barges obtain clearance before entering the Soviet zone.[31]
----The day after the 18 June 1948 announcement of the new Deutsche Mark, Soviet guards halted all passenger trains and traffic on the autobahn to Berlin, delayed Western and German freight shipments and required that all water transport secure special Soviet permission.[32] On 21 June, the day the Deutsche Mark was introduced, the Soviet military halted a United States military supply train to Berlin and sent it back to western Germany.[32] On 22 June, the Soviets announced that they would introduce a new currency in their zone.[36]
That same day, a Soviet representative told the other three occupying powers that "We are warning both you and the population of Berlin that we shall apply economic and administrative sanctions that will lead to the circulation in Berlin exclusively of the currency of the Soviet occupation zone."[36]
The Soviets launched a massive propaganda campaign condemning Britain, the United States and France by radio, newspaper and loudspeaker.[36] The Soviets conducted well-advertised military maneuvers just outside the city. Rumors of a potential occupation by Soviet troops spread quickly. German communists demonstrated, rioted and attacked pro-West German leaders attending meetings for the municipal government in the Soviet sector.[36]
On 24 June, the Soviets severed land and water connections between the non-Soviet zones and Berlin.[36] That same day, they halted all rail and barge traffic in and out of Berlin.[36] The West answered by introducing a counter-blockade, stopping all rail traffic into East Germany from the British and US zones. Over the following months this counter-blockade would have a damaging impact on East Germany, as the drying up of coal and steel shipments seriously hindered industrial development in the Soviet zone.[37][38] On 25 June, the Soviets stopped supplying food to the civilian population in the non-Soviet sectors of Berlin.[36] Motor traffic from Berlin to the western zones was permitted, but this required a 23-kilometre (14 mi) detour to a ferry crossing because of alleged "repairs" to a bridge.[36] They also cut off the electricity relied on by Berlin, using their control over the generating plants in the Soviet zone.[33]
Surface traffic from non-Soviet zones to Berlin was blockaded, leaving open only the air corridors.
----At the time, West Berlin had 36 days' worth of food, and 45 days' worth of coal. Militarily, the Americans and British were greatly outnumbered because of the postwar scaling back of their armies. The United States, like other western countries, had disbanded most of its troops and was largely inferior in the European theatre.[39] The entire United States Army had been reduced to 552,000 men by February 1948.[40] Military forces in the western sectors of Berlin numbered only 8,973 Americans, 7,606 British and 6,100 French.[41] Of the 98,000 American troops in West Germany in March 1948, only 31,000 were combat forces, and only one reserve division was immediately available in the United States.[42] Soviet military forces in the Soviet sector that surrounded Berlin totaled 1.5 million.[43] The two United States regiments in Berlin could have provided little resistance against a Soviet attack.[44]
More
https://en.wikipedia.org/wiki/Berlin_Blockade
If
all else fails, immortality can always be assured by spectacular error.
John Kenneth
Galbraith.
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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