Baltic Dry Index. 1138 Brent Crude 63.29
Never ending Brexit now October 31,
maybe.
Trump’s Nuclear China Tariffs
Now In Effect.
USA v EU trade war postponed to
November, maybe.
USA v Mexico tariffs abandoned!
“I will build a great wall – and nobody builds walls
better than me, believe me – and I’ll build them very inexpensively. I will
build a great, great wall on our southern border, and I will make Mexico pay
for that wall. Mark my words.”
President Donald J. Trump.
Did Mexico kowtow to Donald Trump’s
America, or did Donald Trump do yet another U-turn? A little bit of both?
Who cares, some sanity finally returned to north
American politics, and the already slowing global economy just dodged a US bullet
into its foot. Mexico and the USA just avoided a shot into both feet.
President Trump will claim this scalp as
a big victory in his re-election campaign next year, but it comes at a very big
cost. Having negotiated a “new NAFTA” trade deal with Mexico and Canada last
year, President Trump threatened to reneg on it even before it went into
effect. What value an American trade deal or any other deals under President Trump?
President Trump is fast turning the USA and USA businesses into unreliable and
dangerous trade partners.
Below, a rare dose of sanity in
Washington D. C.
Trump calls off tariffs after Mexico vows to tighten borders
June 7, 2019 / 3:26 PM
WASHINGTON/MEXICO CITY (Reuters) - The
United States and Mexico struck a deal on Friday to avert a tariff war, with
Mexico agreeing to rapidly expand a controversial asylum program and deploy
security forces to stem the flow of illegal Central American migrants.
U.S.
President Donald Trump had threatened to impose 5% import tariffs on all
Mexican goods starting on Monday if Mexico did not commit to do more to tighten
its borders.
In a joint
declaration after three days of talks in Washington, both countries said Mexico
agreed to immediately expand along the entire border a program that sends
migrants seeking asylum in the United States to Mexico while they await
adjudication of their cases.
Trump said
Mexico had agreed to take strong measures to “reduce, or eliminate” illegal
immigration from Mexico.
However, the
deal fell short of a key U.S. demand that Mexico accept a “safe third country”
designation that would have forced it to permanently take in most Central
American asylum seekers.
“The Tariffs
scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby
indefinitely suspended,” Trump said in a tweet on Friday evening.
Frustrated
by a recent surge of migrants that has overwhelmed U.S. resources on its
southern border, Trump had used the threat of tariffs to pressure Mexico into
making concessions.
He has made
hard line efforts to reduce illegal immigration a cornerstone of his presidency
and it is certain to be a key issue in his re-election bid next year.
But business
groups and even some close Republican allies were unhappy with the prospect of
tariffs on the top U.S. trade partner, saying they would damage the economy.
Duties on
Mexico would also have left the United States fighting trade wars with two of
its three largest trading partners, and would further unnerve financial markets
already on edge about a global economic slowdown.
More
The good news over, the bad news was yet more signs of
a slowing global economy. And we still have a no deal Brexit, and a threatened
USA v EUSSR trade war to come.
U.S. job growth slows sharply in May; wage gains moderate
June 7, 2019 / 1:44 PM
WASHINGTON, June 7 - U.S. job growth
slowed sharply in May and wages rose less than expected, raising fears that a
loss of momentum in economic activity could be spreading to the labor market,
which could put pressure on the Federal Reserve to cut interest rates this
year.
The broad
cool-off in hiring reported by the Labor Department on Friday was even before a
recent escalation in trade tensions between the United States and two of its
major trading partners, China and Mexico. Analysts have warned the trade fights
could undermine the economy, which will celebrate 10 years of expansion next
month, the longest on record.
Adding a
sting to the closely watched employment report, the economy created far fewer
jobs in March and April than previously reported.
The economy
thus far has been largely resilient to the trade war with China. President
Donald Trump in early May slapped additional tariffs of up to 25% on $200
billion of Chinese goods, which prompted retaliation by Beijing.
---- “Today’s report makes a cut more likely, and supports our view that the trade tensions will ultimately slow growth enough for the Fed to respond in September and December with cuts,” said Joseph Song, an economist at Bank of America Merrill Lynch in New York.
Nonfarm
payrolls increased by 75,000 jobs last month, the government said in its
closely watched employment report, falling below the roughly 100,000 needed per
month to keep up with growth in the working-age population.
Economists
polled by Reuters had forecast payrolls rising by 185,000 jobs last month. Job
growth in March and April was revised down by 75,000.
---- The tepid employment report added to soft data on consumer spending, business investment, manufacturing and homes sales in suggesting the economy was losing momentum in the second quarter following a temporary boost from exports, inventory accumulation and defense spending.
Growth is cooling as the massive stimulus from last year’s tax cuts and spending increases fades.
The Atlanta
Fed is forecasting gross domestic product rising at a 1.5% annualized rate in
the second quarter. The economy grew at a 3.1% pace in the first quarter.
More
German industrial production falls sharply
By Max
Bernhard Published: June 7, 2019
3:17 a.m. ET
German
industrial production fell more sharply than expected in April, amid weak manufacturing
orders and business sentiment.
The Federal
Statistical Office said Friday that total industrial output--comprising output
in manufacturing, energy and construction--decreased 1.9% in April from the
month before.
The
drop--which follows two consecutive months of growth--was steeper than
economists' forecast of a 0.5% decline.
"Incoming
orders in the manufacturing sector have weakened since the turn of the year and
the business climate has continued to deteriorate," the German economics
ministry said. The construction industry, on the other hand, has reported
strong production growth since the beginning of the year and is still
experiencing a boom, it added.
Construction
output edged 0.2% higher in April from the month before, while manufacturing
output slipped 2.5%.
Compared
with April 2018, total industrial output fell 1.8%, taking account of calendar
effects.
In other news yesterday, the attack on US high-tech is
about to go global. The golden era of Facebook, Google, Amazon, is coming next
year to a long overdue end. But will
Donald Trump agree, or enforce it?
SocGen thinks it’s time to sell the USA and buy China.
G20 agrees to push ahead with rules on corporate tax targeting tech giants
June 8, 2019 / 3:19 AM
FUKUOKA, Japan (Reuters) - Group of 20
finance ministers agreed to push ahead on compiling common rules that will
close loopholes that global technology giants like Facebook use to reduce their
corporate tax burden.
Facebook,
Google, Amazon, and other large tech companies have come under criticism for
cutting their tax bills by booking profits in low-tax countries regardless of
the location of the end customer, practices seen by many as unfair.
The new
rules mean higher tax burdens for large multi-national firms, but will also
make it more difficult for countries like Ireland to attract foreign direct
investment with the promise of ultra-low corporate tax rates.
“It sounds
like we have a strong consensus,” U.S. Treasury Secretary Steven Mnuchin said
on Saturday at a two-day meeting of G20 finance ministers in the southern Japan
city of Fukuoka.
“So now we
need to just take the consensus across here and deal with technicalities of how
we turn this into an agreement.”
Mnuchin
spoke at a panel on global taxation at G20 after the French and British finance
ministers expressed sympathy with Mnuchin’s concerns that new tax rules do not
discriminate against particular firms.
Big internet
companies say they follow tax rules but have paid little tax in Europe,
typically by channeling sales via countries such as Ireland and Luxembourg,
which have light-touch tax regimes.
The G20’s
debate on changes to the tax code focus on two pillars that could be a double
whammy for some companies.
The first pillar is dividing up the rights
to tax a company where its goods or services are sold even if it does not have
a physical presence in that country.
---- Officials from major countries are expected to meet again twice this year to hammer out the finer details with the aim of finalizing an agreement next year.
Earlier this
year, countries and territories agreed a roadmap aimed at overhauling
international tax rules, which have been overtaken by development of digital
commerce.
More
SocGen says ditch U.S, buy China as trade tensions heat up
By Sunny
Oh Published: June 6, 2019 12:26
p.m. ET
The
U.S.-China spat over trade policy has sparked jitters in the stock-markets of
both countries, but U.S. equities will likely see the worst of it, analysts at
Société Générale say.
The impact
of the import tariffs on production costs and the disruption to global supply
lines, along with the fading impact of President Donald Trump’s 2017 tax cuts,
have resulted in signs of a slowdown in economic data, though the Federal
Reserve is unlikely to cut interest rates soon despite investors’ entreaties.
By contrast
China has loosened fiscal and monetary policy and may do so again, propping up
the prices of risky assets in the second biggest economy in the world, Société
Générale argued in a research note.
This year’s double digit recovery rally in U.S. stocks has faltered since Trump dealt a blow to a swift resolution to a U.S.-China trade deal in early May.
The S&P 500 index SPX, +0.61% is off around 4% from its all-time highs on April 30, while China’s benchmark CSI 300 index 000300, -0.90% has shed 8% in the past month.
“We are calling for some negative pressure on US equities in [the third-quarter], on a combination of the US-China trade war being reflected in the economic data and the anticipation of a Fed signalling effect,” said a team of Société Générale strategists led by Alain Bobozka.
They added any Fed rate cuts may not end up being as supportive of U.S. stocks as many hope in part because the central bank would only move to ease policy if economic data deteriorated sharply.
“Anticipation of the Fed pulling the dovish trigger will likely be on the back of worsening cyclical indicators and mounting risks of a slowdown morphing into a recession,” they said.
More
In man-made climate change news,
rebranded after the failure of man-made global warming, don’t become a
“heretic.” One consolation, at least he was only figuratively burned at the
stake.
In any great organization it is far, far safer to be wrong with the majority than to be right alone.
John Kenneth Galbraith.
Ross McKitrick: This scientist proved climate change isn’t causing extreme weather — so politicians attacked
And so, many scientists who have the facts and know the truth remain silent
June 7, 2019 6:28 AM EDT
This week in Vancouver, Prime Minister Trudeau said
the federal carbon tax, a key pillar in his government’s climate policy, will
help protect Canadians from extreme weather. “Extreme weather events are extraordinarily
expensive for Canadians, our communities and our economy,” he said, citing the
recent tornadoes in Ottawa and wildfires in Western Canada. “That’s why we need
to act.”While members of the media may nod along to such claims, the evidence paints a different story. Roger Pielke Jr. is a scientist at University of Colorado in Boulder who, up until a few years ago, did world-leading research on climate change and extreme weather. He found convincing evidence that climate change was not leading to higher rates of weather-related damages worldwide, once you correct for increasing population and wealth. He also helped convene major academic panels to survey the evidence and communicate the near-unanimous scientific consensus on this topic to policymakers. For his efforts, Pielke was subjected to a vicious, well-funded smear campaign backed by, among others, the Obama White House and leading Democratic congressmen, culminating in his decision in 2015 to quit the field.
A year ago, Pielke told the story to an audience at the University of Minnesota. His presentation was recently circulated on Twitter. With so much misinformation nowadays about supposed climate emergencies, it’s worth reviewing carefully.
Pielke’s public presentation begins with a recounting of his rise and fall in the field. As a young researcher in tropical storms and climate-related damages, he reached the pinnacle of the academic community and helped organize the so-called Hohenkammer Consensus Statement, named after the German town where 32 of the leading scientists in the field gathered in 2006 to sort out the evidence.
They concluded that trends toward rising climate damages were mainly due to increased population and economic activity in the path of storms, that it was not currently possible to determine the portion of damages attributable to greenhouse gases, and that they didn’t expect that situation to change in the near future.
More
Finally, Toyota sees an opportunity in electric
vehicles and better batteries. But will potential buyers really be impressed
with a 62 mile driving range?
Toyota pulls forward electrification plan, eyes solid-state battery next year
June 07, 2019 03:48
AM
TOKYO --
Toyota is ramping up electric vehicle deployment plans, pulling forward its
goal of selling 5.5 million electrified vehicles by five years and aiming to
develop a solid-state battery by next summer as it races to meet a "sudden
surge" of EV popularization.
Toyota now
aims to sell some 5.5 million traditional gasoline-electric hybrids, plug-in
hybrids, EVs and hydrogen fuel cell vehicles by 2025. Nearly 1 million of them
could be pure EVs.
Executive
Vice President Shigeki Terashi, Toyota's r&d chief, outlined the new
roadmap in a June 7 briefing about the company's EV plans. In December 2017,
the company had said it wanted to sell that many electrified vehicles by 2030,
five years later than the revised outlook.
Terashi
added that the company wants to unveil a solid-state battery for electrified
vehicles ahead of next year's Summer Olympics in Tokyo. The technology, which
promises lighter, more powerful and safer batteries, could be a breakthrough in
popularizing electric vehicles.
"Wanting
to make an effort is not enough. You really should be able to deliver,"
Terashi said.
"If
possible, by the time we have the Olympic games next year, we would like to
make sure that a solid-state battery can be unveiled to the public,"
Terashi said.
Indeed,
Terashi cited a "sudden surge" in their popularization for revising
the EV rollout.
"Progress
has surpassed the target," Terashi said. "We have entered a new
age."
Toyota is
ramping up its EV development plans, partly in response to increasingly
stringent emissions requirements in China and Europe. It plans to start making
EVs in China next year on its way to releasing as least 10 BEVs
(battery-powered models) worldwide by the early 2020s.
---- Earlier in the week, Toyota said had agreed with Subaru to jointly develop an all-electric platform for midsize and large vehicles and jointly develop an electric crossover.
That
vehicle, which will be sold separately under each brand, will debut in the
early 2020s with the U.S. as a main target market, a Toyota spokesman said.
Terashi said
Toyota is working with Suzuki and Daihatsu to jointly develop a compact EV.
The new
platform will underpin six variations in all -- a large SUV, a medium SUV, a
medium crossover, a medium minivan, a medium sedan and the compact.
More
“When Mexico sends its people, they’re
not sending the best. They’re not sending you, they’re sending people that have
lots of problems and they’re bringing those problems with us. They’re bringing
drugs. They’re bring crime. They’re rapists… And some, I assume, are good
people.”
President Donald J. Trump.
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. With some sanity returning in Washington, the relief rally will probably
continue, but with a slowing global economy and a recovery already with one
foot in the grave, to this old dinosaur market follower involved with markets
since 1968, it’s a classic exit rally.
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