Baltic Dry Index. 1122
+19 Brent
Crude 61.71
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
Tariffs Now In Effect.
USA v EU trade war postponed
to November, maybe.
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith
Faced with a stock
market decline in May, and a drop by the Nasdaq
into correction territory, the Trump Fed panicked yesterday and began talking
up interest rate cuts. Stock markets soared higher, exactly as the script
called for. “Don’t fight the Fed” is one of the strongest Wall Street maxims.
Well
the Fed Chairman has very few options. President Trump has already told the Fed
that their interest rate is too high, and has pressured the Fed into supporting
his re-election campaign. A Trump record he says is to be judged by the success
of the stock market moving higher. What were the Fedster’s thinking during the
May stock market selloff.
But
goosed higher stock prices in the face of an arriving recession, will likely
just provide a final exit rally. The Fed
will be cutting because of weakness, in large part brought forward by the
damage of all the trade wars, with another expected against the EUSSR before
year end.
Besides,
with a Fed funds rate of only two to two and a half percent, the Fed is
virtually out of ammo. To turn around a US recession it usually take about a
five percent rate cut. When the next recession hits the Fed is grossly under
armed. Weird policies come next. Little wonder gold is breaking out.
Below,
how the Fed talked stocks higher.
Nikkei leads Asian-market gains following Wall Street’s rally
By Marketwatch
and Associated
Press Published: June 4, 2019 11:13
p.m. ET
Stocks in Japan, Hong Kong bounce back on rising hopes of Fed rate cut
Asian markets advanced in early trading Wednesday following strong gains on Wall Street.The Dow Jones Industrial Average DJIA, +2.06% , S&P 500 SPX, +2.14% and Nasdaq Composite COMP, +2.65% all rose more than 2% on Tuesday, spurred by comments by Federal Reserve Chairman Jerome Powell that left the door open to an interest-rate cut.
While there was no major news on the U.S.-China trade front, Reuters reported U.S. Treasury Secretary Steve Mnuchin will meet with Yi Gang, governor of the People’s Bank of China, on the sidelines of the G-20 summit in Japan this weekend. It will be the first face-to-face meeting between high-level members of the two countries’ trade-negotiation teams since talks stalled in early May.
Japan’s
Nikkei NIK, +1.78%
jumped about 2%, while Hong Kong’s Hang Seng Index HSI, +0.72%
gained 0.8%. The Shanghai Composite SHCOMP, +0.63%
rose 0.2% while the smaller-cap Shenzhen Composite 399106, +0.47% was about flat.
South Korea’s Kospi 180721, +0.33% advanced 0.3%, and
Taiwan’s Taiex Y9999, +0.62% gained 0.6%.
Australia’s S&P/ASX 200 XJO, +0.54%
rose about 0.6%.
More
Dow rallies over 500 points after Powell seen to leave door open to rate cut
By Chris Matthews
and Mark
DeCambre Published: June 4, 2019 4:27 p.m. ET
Stocks closed sharply higher Tuesday, notching their best one-day
percentage gains since January, after remarks by Federal Reserve Chairman
Jerome Powell were seen by some investors as opening the door to a possible
rate cut.
Support was also tied to renewed hopes tensions between the U.S. and its
major trading partners would die down. Key indexes bounced back from a loss a
day earlier that saw the tech-heavy Nasdaq Composite fall into correction
territory on fears of heightened regulatory scrutiny of key companies.
---- Stocks extended gains after Powell told a monetary policy conference that the central bank was monitoring the economic outlook in the face of escalating trade tensions and other factors. The Fed would “act as appropriate” to sustain the economic expansion, Powell said.
Read: Powell says Fed watching impact of trade tensions on economic outlook
Powell’s remarks came after St. Louis Fed President James Bullard on Monday said rate cuts “may be warranted soon” amid the U.S.’s international trade disputes.
Also see: Powell signals it might be time to wave goodbye to the Fed’s ‘dot plot’
Analysts also pointed to remarks by China’s Commerce Ministry, which said “differences and frictions” should be resolved through talks, according to news reports.
More
Central Banks Are Poised to Act as World Economic Warnings Flash
By Enda Curran
Updated on 5 June 2019, 01:37 BST
Central banks are resuming their first-responder role as
the world economy runs into trouble even if they lack the firepower they once
had at their disposal.With Australia cutting interest rates on Tuesday for the first time in three years and India likely to follow on Thursday, monetary policy makers are again seeking to shore up weak growth and inflation.
Federal Reserve Chairman Jerome Powell signaled an openness to loosening if necessary. Former Treasury Secretary Lawrence Summers wrote on Twitter that the Fed should cut by 50 basis points over coming months, if not more, to ward off recession risks.
And European Central Bank officials are poised on Thursday to at the very least agree on generous terms for new long-term loans for banks.
The upshot is global monetary policy is turning looser just months after the Fed and many of its counterparts seemed intent on spending 2019 shifting away from the emergency settings of the past decade. An index by the Council on Foreign Relations shows monetary policy now at its easiest since 2014, while JPMorgan Chase & Co. reckons the average benchmark rate of developed nations will end this year looser than now, led by two Fed cuts.
That’s the outlook finance ministers and central bankers from the Group of 20
industrial and emerging economies face when they gather this week in the
Japanese city of Fukuoka.
“The mood regarding global growth is likely to be distinctly gloomier than at the last G-20 gathering,” said Matthew Goodman, a former White House official now at the Center for Strategic and International Studies. “This could put pressure on finance ministries and central banks in major economies to inject new stimulus.”
The World Bank lowered its 2019 growth forecast citing a slowdown in trade growth to the weakest since the financial crisis.
Worryingly, officials will convene in the knowledge that they have less ammunition and monetary policy is not as potent as it once was. Since the 2008 financial crisis, analysts at Bank of America calculate central banks cut rates more than 700 times and bought $12 trillion of financial assets.
The Fed has a current rate target range of 2.25% to 2.5%, which doesn’t
leave much room above zero given it cut by 500 basis points to fight the last
downturn.
And it, at least, has hiked -- the ECB and Bank of Japan never got to
reverse their crisis-era reductions and rates are stuck below zero.
More
Away from the Fed
goosing stocks for the Boss, it was more of the same news of rising trouble in
the global economy.
Caixin: China's service sector slowed in May
By MarketWatch
Published: June 4, 2019 11:33 p.m. ET
BEIJING--Activity in China's service sector slowed sharply in May, a
private gauge showed Wednesday, contrasting with an official data that was
unchanged from the previous month.
The Caixin China services purchasing managers' index slipped to 52.7 in
May from 54.5 in April, Caixin Media Co. and research firm Markit said. The
reading is the lowest in three months, but remained above 50 mark that
separates expansion of activity from a contraction.
Total new business received by service companies rose at a softer pace
in May due to a notable slowdown in new orders from overseas customers, Caixin
said.
The measure for business expectations continued to fall in May, despite
staying in expansionary territory, reflecting service providers' weakening
confidence in their future prospects, Caixin said.
----
China's official nonmanufacturing PMI, which includes the construction sector,
held steady at 54.3 in May, according to data released by the National Bureau
of Statistics last week.
‘Buckle up!’ When oil and gold trade like this, it usually spells doom for the market
By Shawn
Langlois Published: June 4, 2019
3:21 p.m. ET
Oil prices CL.1, -0.71%
are hovering
around bear-market levels amid concerns over slowing global growth and the
potential for tariffs to sap energy demand.Gold GC.1, +0.12% meanwhile, has been heading in the other direction. Some of the same factors keeping pressure on oil have led gold to a five-session winning streak that’s propped up prices to levels not seen in more than a year.
This combination of rising gold and falling crude — rare as to the extent of the divergence — has delivered to some nasty consequences for the broader market over the years, as you can see by this illustration:
---- “Only three other times in history precious metals surged while oil plunged! All of them happened during severe bear markets and recessions,” he posted on Twitter TWTR, +4.85% this week. “Buckle up, folks.”
Costa went on to explain to MarketWatch that the current macro setup looks a lot like the beginning of the selloff in the fourth quarter of 2018.
“Gold-to-oil ratio surging, copper prices getting annihilated, corporate spreads widening, and credit markets screaming recession ahead,” he said. “The Fed’s utterly dovish comments just add to this list. Rate-cuts when late in the business cycle have never been a bullish sign. It reaffirms the many bearish macro signals we have been pointing out. Economic conditions are weakening in the face of asset bubbles everywhere.”
---- “The stock market is susceptible to bouts of bullish sentiment,” he recently told MarketWatch. “There is a speculative force typical of late-cycle markets that is willing to shrug off deteriorating economic data and a dashed trade deal with China. Too many want to drive that momentum train just a little bit longer. They are not deterred by arguments of excessive valuations.”
More
Trump defies own party to push ahead with Mexican tariff threat
June 4, 2019 /
1:09 PM
LONDON/MEXICO
CITY (Reuters) - Defying increasing criticism from within his own party, U.S.
President Donald Trump said on Tuesday he would likely go ahead with new
tariffs on imports from Mexico to pressure it to clamp down on rising numbers
of migrants entering the United States.
Trump told a news conference in London he expected to impose 5% tariffs
on Mexican imports from Monday, citing the high number of mostly Central
American immigrants crossing the U.S. southern border with Mexico.
In a last-ditch attempt to find a resolution, a Mexican delegation
including Foreign Minister Marcelo Ebrard is set to take part in talks at the
White House on Wednesday afternoon, hosted by U.S. Vice President Mike Pence.
Trump will be in Europe to commemorate the anniversary of D-Day.
If the tariffs go ahead, the United States will be in a serious dispute
with two of its three top trading partners. U.S. relations with China have
worsened in the past month as Washington and Beijing have slapped additional
tariffs on each others’ imports.
Trump has threatened to increase the tariffs on Mexico to as high as 25%
later this year if the Mexican government does not do more to stop the
migrants.
The president warned Republicans in Congress not to block his efforts.
“I don’t think they will do that. I think if they do, it’s foolish,” he said.
But Republican senators warned that the White House may not have their
backing, with Senate Majority Leader Mitch McConnell saying there was “not much
support” among other Republicans for the tariffs. The threat has spooked global
markets and put the ratification of a three-way trade pact between the two
countries and Canada that took over a year to negotiate in doubt.
The tariffs have also been criticized by the U.S. Chamber of Commerce
and industry groups on concerns about increased costs for U.S. businesses and
consumers.
More
If
all else fails, immortality can always be assured by spectacular error.
John Kenneth
Galbraith.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, more on that not quite
so easy to win trade war. The Middle Kingdom squeezes back.
China warns its companies on U.S. travel, rebuffs trade criticism
June 4, 2019 /
10:18 AM
BEIJING/WASHINGTON
(Reuters) - China warned its companies operating in the United States on Tuesday
they could face harassment from U.S. law enforcement agencies, as it also
rebuffed U.S. criticism of a trade white paper as “singing the same old tune”.
Relations between the world’s two largest economies have nosedived in
recent months due to a bitter trade war, U.S. sanctions against Chinese
telecoms giant Huawei Technologies Co Ltd and U.S. support for Chinese-claimed
Taiwan.
Tensions rose sharply in May after U.S. President Donald Trump’s
administration accused China of having “reneged” on its previous promises to
make structural changes to its economic practices.
Washington later slapped additional tariffs of up to 25% on $200 billion
of Chinese goods, prompting Beijing to retaliate.
After having warned Chinese students and academics on Monday about risks
involved in studying in the United States, the government on Tuesday widened
its warning to include Chinese companies and tourists.
“In recent days, there have been incidents of gun violence, robberies
and thefts in the United States,” China’s Ministry of Culture and Tourism said.
“The department reminds Chinese tourists to fully evaluate the risks of
going to the United States, to understand the maintenance of public order of
their destination, the laws and regulations, and to conscientiously raise their
awareness of safety measures to ensure their safety.”
Chinese
companies and citizens in the United States should also be aware of harassment
from law enforcement agencies, China’s Foreign Ministry added.
---- China on Sunday issued a government policy paper on the U.S.-China trade dispute in which it asserted that the United States bore responsibility for setbacks in the talks, citing three instances in which Washington had backtracked on commitments made during the negotiations.
Chinese Foreign Ministry spokesman Geng Shuang told reporters that the
United States was “singing the same old tune”, and urged Washington to read
China’s white papers and stop telling itself it is infallible.
Chinese Vice Commerce Minister Wang Shouwen, a prominent member of
Beijing’s negotiating team, said in presenting the paper to the media that it
would be impossible for the United States to use “extreme pressure” to force
concessions from China.
Acrimonious rhetoric between Beijing and Washington has steadily
increased since talks broke down in early May over U.S. accusations that
Beijing had backtracked on commitments to codify in law changes to its
intellectual property and technology transfer practices to address U.S.
demands.
More
U.S. firms fret as China's FedEx probe, planned hit-list heightens trade frictions
June 4, 2019 /
11:16 AM
SHANGHAI (Reuters)
- The sudden deterioration in trade talks between the United States and China
last month has ratcheted up concerns among U.S. firms that the dispute could go
beyond tariffs and affect business in the long-term.
Business associations and consultants say they have been fielding a
growing number of inquiries from companies about how best to navigate the trade
dispute. They expect those calls to intensify after FedEx Corp over the weekend
became embroiled in U.S.-China frictions and an ongoing spat over Chinese tech
giant Huawei.
Further rattling nerves are Beijing’s plans to unveil an unprecedented
hit-list of “unreliable” foreign firms, groups and individuals that harm the
interests of Chinese companies. China’s commerce ministry announced the move on
Friday without singling out any country or company.
The US-China Business Council (USCBC), which represents roughly 200
American companies that do business in China, told Reuters on Monday that
anxiety among its members was on the rise, especially over the list.
“The key point for them is that there’s a great deal of uncertainty on
how the list will be implemented and what negative repercussions will be
brought about should a company be added to the list,” said its vice president
of China operations, Jacob Parker.
“At the moment many of our companies are wondering whether this is an
attempt by the Chinese government to increase their potential leverage in the
trade negotiations, or if it’s an actual effort to force companies into an
unenviable position of choosing between the two markets.”
---- “We have in the last three weeks fielded more calls from firms wondering about the political risk here than we probably have in the last 10 years,” said Ben Cavender, an analyst at China Market Research Group, whose clients have ranged from clothing retailers to chemical firms.
“Right now there’s a lot more concern that the situation regarding the
negotiations has become so unstable and so emotional, when or if there’s going
to be a resolution.”
It is unclear exactly how many U.S. companies do business with China,
but the American Chambers of Commerce (AmCham) in Beijing and Shanghai count
more than 2,000 member firms between them.
“This is a discouraging development,” said AmCham Shanghai President Ker
Gibbs. “We are concerned and have requested more information about the list. We
hope that both sides can refrain from this type of tit-for-tat behavior and get
back to the negotiating table.”
More
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?
Korean team designs graphene-based transparent flexible battery
June 4, 2019
Researchers at Daegu Gyeongbuk Institute of Science and
Technology (DGIST) have developed film-type, graphene-based multi-functional
transparent energy
devices.Senior researcher Changsoon Choi's team actively used single-layered graphene film as electrodes in order to develop transparent devices. By using a high-molecule nano-mat that contains a semisolid electrolyte, the research team increased transparency (maximum of 77.4%) to see landscape and letters clearly.
The research team designed a structure for self-charging electronic devices by inserting the energy storage panel inside the upper layer of power devices, and the energy conversion panel inside the lower panel. They also manufactured electronics with touch-sensing systems by adding a touch sensor right below the energy storage panel of the upper layer.
Senior researcher Changsoon Choi in the Smart Textile Research Group, the co-author of the paper, said, "We decided to start this research because we were amazed by transparent smartphones appearing in movies. While there is still a long way to go for commercialization due to high production costs, we will do our best to advance this technology further."
https://www.graphene-info.com/korean-team-designs-graphene-based-transparent-flexible-battery
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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