Baltic Dry Index. 1141
+19 Brent
Crude 60.74
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
USA v
Mexico tariffs 4 days away.
“Those who don't know history are destined to repeat it.”
Edmund Burke.
While US stock
markets continue in deep denial of reality, churning away in irrational exuberance,
the reality is a slowing global economy has dropped the oil market back into
bear market territory, the USA v China trade war gets uglier by the day, and we
are 4 days away from the USA imposing 5 percent tariffs on all Mexican exports
to the USA.
This is a time to be
exiting stocks and getting fast into cash, safe haven bonds, and gold. Mexican
tariffs will toss a hand grenade into the US and Mexican economies alike. At 5
percent they are disruptive and a major drag on profit margins. At Trump’s
threatened25 percent by October, they are inflationary, trade disruptive, and
unemployment generating. If 25 percent tariffs happen, blame them on the cause
of the next recession. And we still have Brexit and the USA v EUSSR trade war
to come.
Below, Asian markets
pause in disbelief at next week’s coming disruption.
Asia shares muted, trade risk offsets rate hopes
June 6, 2019 /
1:33 AM
SYDNEY (Reuters) -
Asian markets were in a mixed mood on Thursday as fears the U.S. trade tussle
with Mexico would further depress global growth, warred with wagers central
banks would have to respond with fresh stimulus.
MSCI’s broadest index of Asia-Pacific shares outside Japan was all but
flat in very thin trade. Japan’s Nikkei edged up 0.27% and Shanghai’s blue
chips eased 0.2%.
E-Mini futures for the S&P 500 were unchanged, while FTSE futures
added 0.2%.
Sentiment soured after a meeting between U.S. and Mexican officials
ended with scant sign of progress.
“Immigration discussions at the White House with representatives of
Mexico have ended for the day. Progress is being made, but not nearly enough!”
Trump said in a tweet on Wednesday evening. Talks will resume on Thursday.
Mexican markets were dealt an additional blow when ratings agency Fitch
downgraded the country’s credit rating to BBB, while Moody’s changed its
outlook to negative from stable.
All of which saw the dollar jump 0.9% against a beleaguered Mexican
peso.
“We think the markets discount President Trump’s threats on both trade
and immigration issues at their own peril,” said Libby Cantrill, head of public
policy at PIMCO.
“We estimate the recently implemented higher tariffs on Chinese products
will cost the U.S. economy around 0.3 percentage points of GDP, and the Mexican
tariff hikes, if they reach the full 25%, could double our estimate.”
Wall Street had still ended Wednesday in the black, but only because
investors reckoned the Federal Reserve would have to cut rates as insurance
against a slowdown.
More
Trump Says ‘Not Nearly Enough’ Progress in Talks With Mexico
By Josh Wingrove, Justin Sink, and Anna Edgerton
5 June 2019, 23:24 BST Updated on 6 June 2019, 00:13 BST
·
·
Tariffs could hit on Monday if Trump carries out
threat
President Donald Trump said “not nearly enough” progress was made in talks with Mexico to mitigate the flow of undocumented migrants and illegal drugs, raising the likelihood that the U.S. will follow through with tariffs next week.
U.S. and Mexican officials wrapped up discussions on Wednesday at the
White House and Trump said talks are set to resume Thursday.
More
Oil just fell into a bear market — here’s why
By Myra
P. Saefong Published: June 5, 2019
3:31 p.m. ET
U.S. crude benchmark settles 22% below its most recent highs in April
U.S. benchmark West Texas Intermediate crude oil entered a bear market on Wednesday, and it doesn’t look set to exit it any time soon.“A combination of rising U.S. inventories, trade war concerns and economic fears are trumping the supply-side factors that encouraged us to reach a high of $66 in late April,” said Matt Smith, director of commodity research at ClipperData.
“Broader economic sentiment has turned south in the last month or so, and crude has been tagging along for the move lower in equities—further juiced by the U.S. inventory build,” he said.
On Wednesday, front-month July WTI crude CLN19, +0.23% fell $1.80, or 3.4%, to settle at $51.68 a barrel on the New York Mercantile Exchange. It settled 22% below its most recent high of $66.30 on April 23. Entry into a bear market is defined by a drop of 20% or more in prices from the most recent high. It would take a 20% rise from the current bear market low to put crude back into a bull market.
The average bear market for crude oil lasts 60 trading days, according to Dow Jones Market Data. The last bear market, which oil exited on Jan. 9 of this year, lasted 40 trading days.
The sharp drop Wednesday followed data from the Energy Information Administration, which revealed a weekly U.S. crude supply climb of 6.8 million barrels, the largest in five weeks. That took domestic crude inventories, excluding those in the Strategic Petroleum Reserve, to 483.3 million barrels — the highest since July 2017.
“The stock build was tremendous on its own and well exceeded expectations due to a steep increase in imports and a rise in production to a new weekly record high,” Marshall Steeves, energy markets analyst at Informa Economics, told MarketWatch. That rise was “propelled primarily by shale increases out of the Permian but also by higher offshore output.”
----
Taking a look at the bigger picture for oil, however,
“prolonged trade tensions are hindering the outlook for global demand growth,
with no end apparently in sight for the U.S.-China negotiations and now with
tariffs about to be introduced on Mexican imports,” Steeves said. “That has
been a factor for some time now, but I think traders were expecting a quicker
resolution.” Concerns over a slowdown in the global economy has fed
expectations for weaker energy demand.
Elsewhere, the rest of the world continues planning for a less US
centric world. Ever so slowly and reluctantly, global trade is being forced to
de-dollarise. Where this ends is anyone’s guess, but it probably ends in slower
global growth, reduced profit margins due to higher costs, less overall wealth,
and higher background unemployment. At its worst, it ends in war.
Below, US policy forces the greater part of Eur-Asia into a deeper
alliance. America’s nightmare of a viable Eur-Asian economic and military
threat gets closer to reality. What on earth are they thinking in the District
of Crooks?
Putin and Xi hail ‘unprecedented’ ties as US relations sour
Published Wed, Jun 5 2019 4:37 AM EDT
Russia and China appear to be intent on strengthening their alliance and
fostering deeper cooperation in the face of increased political and economic
hostility from the U.S.
The bid to strengthen bilateral ties continues this week as Chinese
President Xi Jinping is in Russia Wednesday for the start of a three-day state
visit and top-level talks with Putin.
Welcoming Xi to the Kremlin on Wednesday, Putin said ties between Russia
and China stood at “an unprecedented level.” Xi echoed that sentiment by saying
that the countries’ relations had withstood “trials and tribulations” over the
years and were now better than ever.
----The meeting of the two prominent global powers comes as Russia’s relations with the U.S. are at a low ebb amid continuing sanctions on the country, and China’s relationship with the U.S. is fraught with trade war tensions.
Their traditional economic models — for Russia the export of energy products and for China the export of goods — looks increasingly uncertain. Both Putin and Xi have vowed to fight protectionist policies, an accusation leveled at their U.S. counterpart. Remarking on the trade relationship, Xi told RIA Novosti this week that trade between the two nations is “especially valuable given the current complex environment of sluggish global trade and investment and surging protectionism in the world.”
The international economic forum in St. Petersburg may be one way that Putin and Russia look to showcase the country’s potential, but it has already developed strong ties to China. Russia is a partner nation in Chinese economic initiatives such as the Belt and Road infrastructure project and their cooperation in the energy sector has also increased. The partners have also been promoting settlements in ruble and yuan in an attempt to reduce a reliance on the U.S. dollar and other Western currencies, due to Washington’s sanctions on Russia and trade pressures on Beijing.
China has become one of Russia’s largest trading partners and in 2018, the trade turnover between Russia and China increased by 27.1% from the previous year to $107 billion, according to Russia’s Ministry of Economic Development, and trade figures released already for this year show that number increasing.
The chief executive of the Russian Export Center, Andrey Slepnev, said in November that the $100 billion or so worth of mutual Russia-China trade could double in the years ahead. Crude oil, coal, fertilizers and frozen fish are some of the more substantial exports Russia makes to China, according to trade data from the Observatory of Economic Complexity.
More
In weather news, no early
Atlantic hurricanes yet, but that doesn’t mean much of the southeast USA hasn’t
got problems. And that’s likely to back up problems further up the Mississippi
basin. Keep watching grain planting statistics.
Tropical downpours to unleash 12 inches over flood-weary south-central U.S.
June 5, 2019 /
4:14 PM
The combination of
a slow-moving non-tropical storm and a weak tropical disturbance loaded with
moisture will unleash torrential rain and raise new concerns for flooding over
the south-central United States into this weekend.
Moisture was
already streaming northward from the upper Texas coast to Mississippi during
Wednesday morning and will continue for several days over part of the lower
Mississippi Valley.
Hourly rainfall of 1 to 3 inches can occur with daily rainfall averaging
3 to 5 inches.
However, there is the potential for some areas of the Interstate 10 and
20 corridors to receive a foot or more of rain from the multiple-day event that
may last through the weekend.
---- To complicate matters, heavy rainfall over the Central states and melting snow from the Rockies has created a surge of water from the Missouri and Arkansas rivers that is emptying into the Mississippi River and flowing southward.
Over the lower part of the Mississippi Valley, this surge of water may
occur at nearly the same time that heavy rain falls.
The combination thereof could result in record-challenging high water on
the lower Mississippi River, especially where the water levels are not
mitigated by spillways toward the middle and into the latter part of June.
Official forecast
levels from Wednesday could be underdone over part of the Southern states along
the Mississippi and other rivers depending on how far inland torrential rain
occurs.
More
Finally, so you
really want an electric vehicle. Better buy a crane and a large water tank as
well, just in case home charging gets tricky.
Motor Mouth: Tesla is (literally) going up in flames
Firefighters are submerging burning Teslas for up to a week to quell intractable fires
June 5 2019
---- Now, to be sure, as the Silicon Valley giant is wont to protest, car fires are hardly new, gasoline being not exactly a fire retardant, and the internal combustion engine often producing its own fair share of fireballs.
Neither is a safe situation. Neither is likely to leave much of a vehicle after the conflagration is over. And, other than the uniqueness of an electric vehicle going up in flames, neither should be, save for the Internet’s insatiable need for pyrotechnics – that should be read “sensationalism” this time – particularly newsworthy.
What is new, what should be considered truly frightening, however, is the incredible difficulty fire crews are having in extinguishing some of these Tesla fires and, more alarming, the lengths they need to go to prevent said batteries from re-igniting.
On June 1, for instance, a Model S in Belgium caught fire while charging at a hotel Supercharger station. Firefighters, after a protracted battle, were able to extinguish the flames. OK, nothing new about a recharging incident or that battery fires can take some time to extinguish.
What happened next, however, was startling, at least to Yours Truly. After they were satisfied the initial inferno was sufficiently snuffed, the local fire department hoisted up the smouldering Model S and then submerged it in a container filled with water, the Antwerp authorities noting that Tesla batteries can continue to generate dangerous levels of heat for days after the initial fire has been extinguished.
---- Whether this means fire departments everywhere will have to be equipped with special Tesla tanks and cranes to lift two-ton Model Xes into their portable bathtubs remains to be seen, but certainly the Mountain View, Calif., fire department might welcome such an upgrade. In March of last year, a Model X that caught fire after a fatal accident near the scenic town re-ignited days after the initial crash. In fact, according to Mountain View’s fire chief, Juan Diaz, it reignited six days later, “the temperature inside those cells increasing to the point of ignition” nearly a week after the original flames had been quenched.
Indeed, fire departments are getting—let’s call it “a little cautious” about dealing with the lithium-ion in electric vehicles. In one case near Landeck, Austria, no fewer than 35 firefighters and five trucks fought a relatively small Tesla fire. Another California Model S, this one only three months old, spontaneously combusted after being towed to a local tire repair shop and, even after being doused with 2,000 gallons — about three to five times the amount needed to put out gasoline-fed car fires — it re-ignited no less than three times.
More
"Any
nation which gives up its freedom in pursuit of economic advantage deserves to
lose both."
Thomas Jefferson, US President 1801-1809.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today,
the EUSSR again. Forget Brexit. In the wealth and jobs destroying EUSSR it’s
all against all again as paymaster Germany slows. Brexit now, before this
European comedy turns into tragedy. When GB stops contributing, all the rest
will have to come up with the missing billions, estimated at 16 to 18 billion
Pounds a year.
Services sector provides growth momentum for cooling German economy - PMI
June 5, 2019 /
9:14 AM
BERLIN, June 5
(Reuters) - Activity in Germany’s services sector grew at a slower pace in May,
a survey showed on Wednesday, a sign that domestic demand is still providing
growth impetus for Europe’s largest economy as manufacturing shrinks.
Markit’s final Purchasing Managers’ Index (PMI) for services fell
slightly, to 55.4 from April’s seven-month high reading of 55.7. The figure was
higher than a flash reading of 55.0 and was well above the 50.0 mark that
separates growth from contraction.
But business expectations among services providers fell to a five-month
low, reflecting growing concerns about a slowdown.
A sister survey on Monday showed that activity in the export-dependent
manufacturing sector decreased slightly in May on declining new orders and a
sharp fall in employment.
The fall to 44.3 brought the manufacturing PMI close to its lowest level
since 2012.
This resulted in the composite index rising to a three-month high of
52.6, a reading which Markit economist Phil Smith said pointed to the German
economy growing at a modest pace.
“The German labour market continues to lose momentum. While the service
sector employment picture still looks bright, increasing efforts by
manufacturers to trim capacity means the surveys together show jobs growth
running at its weakest in three years,” said Smith.
In its 10th year of growth, the German economy is expected to expand by
a modest 0.5% this year, the government projects, after calendar-adjusted
growth rates of 2.5% in 2017 and 1.5% in 2018.
More
Italy revives ‘alternative currency’ proposal
Parliamentary vote emboldens Rome’s
Eurosceptics, fuelling ‘Italexit’ chatter
Prominent
members of deputy prime minister Matteo Salvini’s ruling League party have
floated the proposal — which was endorsed by a vote in the Italian parliament
last week. But how would it work, and how likely is it to happen? What is this
parallel currency idea?
The
Italian government should issue debt in small denominations that can change
hands as a medium of exchange — that, at least, is the view of key advisers to
Mr Salvini.
Claudio
Borghi, one of the League’s most influential economic advisers, has championed
the idea, as has Alberto Bagnai, president of the finance committee in Rome’s
Senate. Mr Borghi, who has been strongly critical of Italy’s membership of the
single currency, is president of the budget committee in the lower house of
Italy’s parliament.
The
proposal involves creating a new type of Treasury bill — dubbed mini-bills of
Treasury (mini-BOTs) — which could be used by the government to pay the arrears
it owes to commercial businesses, and by citizens to pay their taxes, Mr Borghi
has suggested.
Thus
it would have the scope to grow into what would in effect be a parallel
domestic currency, separate from Italy’s official currency, the euro.
Although
there are no detailed proposals, Tommaso Monacelli, professor of economics at
Bocconi University, said that mini-BOTs could range from €1 to €50 in face
value, and have no interest rate or maturity date.
Mr
Salvini did not tap Mr Borghi and Mr Bagnai for ministerial positions that
would give them any power to implement their radical ideas, but their rise to
legislative posts has given them a platform to set out their policy proposals.
The League, which governs in coalition with the leftwing Five Star Movement, included mini-BOTs in its election manifesto last year, and the coalition agreement also mentions them.
The
idea received wider attention last week when markets took fright after the
Italian parliament passed a vote calling on the government to consider using
mini-BOTs as a way of paying its debts to suppliers.
----
Claudio Borghi, one of the League’s most influential economic advisers, has championed
the idea, as has Alberto Bagnai, president of the finance committee in Rome’s
Senate. Mr Borghi, who has been strongly critical of Italy’s membership of the
single currency, is president of the budget committee in the lower house of
Italy’s parliament.
The
proposal involves creating a new type of Treasury bill — dubbed mini-bills of
Treasury (mini-BOTs) — which could be used by the government to pay the arrears
it owes to commercial businesses, and by citizens to pay their taxes, Mr Borghi
has suggested.
Thus it would have the scope to grow into what
would in effect be a parallel domestic currency, separate from Italy’s official
currency, the euro.
----
The introduction of what could in effect constitute a parallel domestic
currency would undermine Italy’s membership of the euro, Marcello Messori,
director of the school of European political economy at Luiss University, said:
“The issue of mini-BOTs is a way to facilitate the creation of a double
monetary circulation.”
Riccardo
Puglisi, an economist at the University of Pavia, said the proposal was “a way
to facilitate the exit of Italy from the eurozone”.
That
would leave Italy in breach of European treaties, some argue.
More
German Bundesbank comes clean on euro default risks after Italy's 'parallel currency' decree
Greece calls on Germany to negotiate over war reparations
June 4, 2019 /
7:30 PM
ATHENS (Reuters) - Greece has sent a diplomatic note to Germany urging
it to discuss Athens’ claim for war reparations, the foreign ministry said on
Tuesday.
The Greek parliament voted in April to launch a diplomatic campaign to
press Germany to cough up billions of euros in damages for the Nazi occupation
of the country in World War Two, an issue Berlin says was settled long ago.
Germany has in the past apologised for Nazi-era crimes but has not been
willing to reopen talks on reparations.
“The Greek government invites the German government to a negotiation for
the practical satisfaction of these demands, which are of particular importance
to the Greek people, as a moral and material issue,” the ministry said.
Greece’s ambassador to Berlin delivered the note to the German foreign
ministry on Tuesday, it added.
Greece suffered hugely under Nazi German rule and the emotive
reparations issue resurfaced during its debt crisis, which erupted in 2010.
Many Greeks blame Germany for the painful austerity measures imposed in
return for billions of euros in bailout loans.
A Greek parliamentary committee in 2016 put the total cost of
reparations at more than 300 billion euros, though the recent parliamentary
decision mentioned no figure.
The leftist government’s move, which comes ahead of a snap national
election next month, may further strain ties with Germany.
EU prepares the ground for disciplinary procedure over Italy debt
June 5, 2019 /
11:32 AM
BRUSSELS
(Reuters) - The European Commission concluded on Wednesday that Italy is in
breach of EU fiscal rules because of its growing debt, a situation that
justifies the launch of a disciplinary procedure.
The move paves the way for the actual opening of the proceedings next
month, but Brussels insisted that the process could be blocked if Rome made
sufficient fiscal commitments.
Italy averted the same procedure in December after a last-minute deal
with the Commission in which Rome committed to a lower deficit this year - but
Italian government officials now seem less prone to compromise after EU
Parliament elections in May gave co-ruling far-right League a resounding win.
“To be clear, today we are not opening a procedure,” the EU commissioner
for the euro Valdis Dombrovskis told a news conference, noting that other steps
would need to be taken before the formal beginning of the process.
European Union states would have to back the Commission’s assessment
that a procedure is warranted in the next two weeks. After that, Brussels could
recommend to start the procedure, a step that could come before a meeting of EU
finance ministers in early July. This is the expected timeline:.
---- If started, the procedure could lead to unprecedented financial sanctions. Although fines remain unlikely, the fiscal fight with Brussels exposes Rome to increased market pressure.
Italian sovereign bond prices and bank stocks fell after the Commission
issued its opinion on Wednesday.
Italian banks were down nearly 1.8% to a day low by 1039 GMT following
the news, while the yield on 10-year government bonds rose five basis points to
hit the day’s high at 2.575%.
Italy's public debt, the second highest in the EU in proportion to output after Greece's, rose from 131.4% of gross domestic product (GDP) in 2017 to 132.2% in 2018 and the Commission estimates that it will go up to 133.7% this year and to 135.2% in 2020, in breach of EU rules that say it should go down. Here an overview of public debt in EU states: here
The International Monetary Fund identified Italy’s debt as a major risk to the euro zone economy, along with global trade strains and a hard Brexit, an EU document showed, anticipating a report the IMF will present next week.
More
“Europe
exemplifies a situation unfavourable to a common currency. It is composed of
separate nations, speaking different languages, with different customs, and
having citizens feeling far greater loyalty and attachment to their own country
than to a common market or to the idea of Europe".
Professor Milton Friedman, The Times 19 November
1997.
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?
Harvard breakthrough shows stem cells can be genetically edited in the body
Michael Irving June 5 2019We owe our long lives to stem cells, which are nestled deep inside certain tissues in the body and constantly replace old cells. In recent years scientists have been able to correct genetic diseases by removing these stem cells, editing their genomes and then implanting them back into the patient, but that adds complications. Now, new research led by Harvard scientists has successfully edited the genes of stem cells while still in the body.
When it comes to treating genetic diseases, it can be kind of like cleaning
up pollution in a river. If you just pick up litter downstream, the river will
only get dirty again unless you tackle the problem further upstream. In the
same way, treating diseased cells won't help much if you don't address the stem
cells, which will quickly replace the healthy cells with new diseased ones.
Currently, fixing stem cells involves removing them from their hideouts
deep inside the body, then genetically altering them and putting them back into
the patient. There are a lot of potential failure points in that complicated
procedure: the stem cells can die in the culture dish, the patient's immune
system can reject them once transplanted, or they can just fail to fire back
up.
---- Building on previous work, the team loaded gene-editing machinery onto different types of adeno-associated viruses (AAVs). These viruses can get into mammal cells, and have been altered so as not to cause disease but instead deliver a payload of gene-editing machinery.
In tests on mice, the researchers used the AAVs to get the CRISPR
gene-editing system into different types of skin, blood and muscle stem and
progenitor cells. To make it very clear whether the system worked or not, the
stem cells were edited to activate "reporter" genes, which would glow
a fluorescent red.
And the technique worked. The researchers found that up to 60 percent of
the stem cells in skeletal muscle glowed red, indicating they'd been edited, as
well as up to 27 percent of skin progenitor cells and 38 percent of stem cells
in bone marrow.
----
The team says this breakthrough could lead to new treatments for genetic
diseases, particularly those like muscular dystrophy which hinge on tissue
regeneration.
Morehttps://newatlas.com/stem-cells-edited-in-body/59991/?utm_medium=email&utm_campaign=2019-06-05%20083006%20Other%20Daily%20Basic%202019-06-05%20083736%20Harvard%20breakthrough%20shows%20stem%20cells%20can%20be%20genetically%20edited%20in%20the%20body&utm_content=2019-06-05%20083006%20Other%20Daily%20Basic%202019-06-05%20083736%20Harvard%20breakthrough%20shows%20stem%20cells%20can%20be%20genetically%20edited%20in%20the%20body+CID_44aeb84b5765749a97bc4cafe9c87050&utm_source=Campaign%20Monitor&utm_term=Harvard%20breakthrough%20shows%20stem%20cells%20can%20be%20genetically%20edited%20in%20the%20body
“If
the BBC, extreme left wing, champagne socialist troughers could manage to get
themselves thought of as humble, competent people on a level with dentists,
that would be splendid.”
With
apologies to John Maynard Keynes.
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. What
happens next to stocks largely depends on whether President Trump goes through
with his insane attack on Mexico’s economy. The US and Mexican economies are so
inter-dependent, President Trump is proposing to attack a sizable section of
the US economy itself. Not just economic madness, MADNESS!
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