Baltic Dry Index. 1239 +45 Brent Crude 65.20
Never ending Brexit now October 31,
maybe.
Trump’s Nuclear China Tariffs
Now In Effect.
USA v EU trade war postponed to
November, maybe.
“If
you're not gonna pull the trigger, don't point the gun.”
James Baker. United States Secretary of the Treasury under
President Ronald Reagan, and U.S. Secretary of State and White House Chief of
Staff under President George H. W. Bush.
So officially, in response to Iran
shooting down a 220 million dollar super drone, President Trump marched his
troops up the hill and then marched them down again, supposedly out of concern
for Iranian casualties.
What they make of that in Tehran, Moscow
or Beijing, is hard to say. What they make of that in Washington D.C., is a puzzle
too. But with President Trump due for “an extended” meeting with China’s
President Xi at the end of next week to discuss Trump’s trade war on China, it
probably looks like weakness to President Xi.
A new war averted for now, next week’s market
action will all be about spinning the Trump – Xi meeting into dressing up
stocks for the coming end of the first half of 2019.
But will the erratic and
unpredictable Trump dare to walk out on President Xi? Will he use the occasion
to chastise Iran to cow Xi? Hopefully not, but under the unpredictable Trump
presidency, anything seems possible.
Below, stocks paused yesterday, even as Minneapolis
Fed President Kashkari was calling for a half percent interest rate cut. Another red flag that the current stock rally
is an exit rally.
Stocks close lower on the day but Dow on track for best June since 1938
By Sue Chang
and Mark
DeCambre Published: June 21, 2019
5:24 p.m. ET
- S&P 500 retreats after notching its first record since April
- Minneapolis Fed President Kashkari advocates for a 50-basis point interest-rate cut
- June Flash manufacturing PMIs were the worst since September 2009; services were the worst since 2016
Friday was also quadruple witching day—the simultaneous expiration of single-stock options and single-stock futures as well as index options and index futures which is often associated with volatile markets or higher trading volumes.
The S&P 500 index SPX, -0.13% fell 3.72 points, or 0.1%, to 2,950.46, a day after the large-cap index finished at a record. The Dow Jones Industrial Average DJIA, -0.13% lost 34.04 points, or 0.1%, to 26,719.13. The blue-chip index had at one point in the session moved above its closing high set on Oct. 3. The Nasdaq Composite Index COMP, -0.24% shed 19.63 points, or 0.2%, to 8,031.71.
All three main benchmarks are also up for a third week in a row with the S&P 500 gaining 2.2%, the Dow climbing 2.4%, and the Nasdaq adding 3%, according to FactSet.
More
China state media urges U.S. to drop win-at-all-costs trade stance
June 22, 2019 / 4:44 AM
SHANGHAI
(Reuters) - Instead of waging a trade war with China, the United States should
drop its win-at-all-costs mentality and consider the interests of its own
people as well as the global community, the official People’s Daily said an
editorial on Saturday.
The Chinese
Communist Party’s newspaper urged the United States to cancel all tariffs on
Chinese goods, saying the only way to resolve trade issues was through “equal
dialogue”.
Hopes that
the two sides can rekindle negotiations were raised in the run-up to a meeting
next week between President Xi Jinping and U.S. President Donald Trump in
Japan, where they will both attend a Group of 20 summit.
The Office
of the U.S. Trade Representative is holding seven days of hearings from
manufacturers and other businesses likely to be affected by a new round of
tariffs on $300 billion worth of Chinese imports proposed by U.S. President
Donald Trump.
The People’s
Daily said all previous hearings had shown “overwhelming” opposition to tariff
increases from all walks of life, but it had made no difference.
“It seems
that some people in the United States are waving the tariff stick in order to
strengthen their so-called ‘industrial competitive advantage’,” it said.
“They do not
consider public opinion, do not consider national conditions, and do not take
the international economic order into account. They just want the renown as
‘winners’ but cannot understand the fact that they basically cannot win.”
The U.S.
National Retail Federation (NRF) said on Friday that the proposed tariff
extension on Chinese goods, including cellphones and computers, could cost U.S.
consumers an additional $12.2 billion each year.
Opinion: Stocks are now offering the best selling opportunity in 10 years, thanks to the Fed
By Sven
Henrich Published: June 20, 2019
12:17 p.m. ET
They’re right. It is different this time. It’s worse. Much, much worse. What is? Everything, in terms of preparedness for the next U.S. recession.
Debt is higher than ever, be it corporate debt, government debt or global central banks’ balance sheets. Limited ammunition to deal with a new recession, wealth inequality, the social divisions and political extremes, and now trillion-dollar deficits — everything points to a more fragile system. On paper, low interest rates keep it all afloat, but the context is as ugly as it gets.
Here we are, with the great collapse unfolding in front of us. With Wednesday’s Federal Open Market Committee statement, we continued to witness an utter capitulation to market realities that are forcing central banks to commence new easing cycles. No, this is not a temporary rate-cut event they are promising; it’s a new cycle. The Federal Reserve offered a three-rate-cut outlook, which is precisely what markets had been pricing in. The Fed is bowing before market demands. Give us drugs. Yes, whatever you want, you got it.
The response: An overnight collapse in yields on 10-year U.S. Treasury notes TMUBMUSD10Y, +0.29% to below 2%, the lowest reading since the U.S. presidential election in 2016.
It was all nonsense:
---- The glorious growth stories everybody told, the tax cuts that were supposed to bring greatness — all bunk. Instead we’re now stuck with massive government deficits, collapsing yields and a renewed TINA (“there is no alternative”) effect as money doesn’t know where to go except to stocks, chasing whatever they need to chase.
Or, if you
don’t want to chase, you can lend money and pay people to borrow from you. It’s
all the rage:
Over $12
trillion of negative-yielding debt floating around. Quite the recovery.
But be clear
— the bond market is screaming “a recession is coming,” even though none of
this is based on fundamentals:
---- Why is it going viral? Because it’s true. We’re at 3.6% unemployment with a 105% debt-to-GDP ratio, and the Fed is signaling three rate cuts. The track record is clear: It’s not good news for the economy and ultimately not good news for stocks either.
If you are
arguing that rate cuts are good for stocks, you’re willfully ignoring this:
---- Yet with eyes wide open, we may see a combustion scenario, with complete panic as central banks throw free money around, with the same idiocy that has structurally produced nothing over the past 10 years.
Pouring
money into stocks on the premise of yet more cheap money may set up a valley of
tears.
Therefore, we may be looking at the biggest selling opportunity in a
decade:
---- Cutting rates again is making wealth inequality even greater, is again punishing savers, is again pushing wealth toward asset-class holders and again encouraging more debt accumulation. In short: Make the bubble even bigger.
Let’s do it
all again, except it’s different this time. It’s worse. Much, much worse.
But no
central banker will ever admit it.
More
Finally, more on that alleged “climate emergency,”
and a repeat on why, no matter how much we tax and spend, we will never get
carbon neutral.
Ross McKitrick: Apocalyptic rhetoric about extreme weather keeps ramping up. But experts say there’s no emergency
Clip out this column, keep it close at hand, and quote from the experts when the occasion arises
On June 7, I published an op-ed on this page telling the story of Roger Pielke Jr., a U.S. climate expert whose research on climate change and extreme weather didn’t support many of the alarmist slogans on the subject. Despite his findings being squarely in the mainstream of his academic specialty, for stating them publicly Pielke Jr. was vilified, bullied and eventually harassed into quitting the field.Conservative MP Lisa Raitt tweeted a link to my article. As if to prove the point of the story, the climate mob quickly vilified, bullied and harassed her into deleting her tweet.
I wrote Lisa an open letter, hoping she would notice the pattern. Legions of self-appointed “fact checkers” readily ignore even the most deranged exaggerations by politicians if they serve the cause of alarmism but will pile on aggressively and relentlessly against any efforts to bring evidence into the discussion.
But let us not be deterred. The evidence is in the relevant sections of the past Intergovernmental Panel on Climate Change Assessment Report, which I will now quote at length. Read these paragraphs and ask yourself if the word “emergency” applies. Ask yourself if it sounds anything like what you have been repeatedly told by our environment minister and the prime minister, who speak so often about these things.
Flooding: “In summary, there continues to be a lack of evidence and thus low confidence regarding the sign of trend in the magnitude and/or frequency of floods on a global scale.” (p. 214)
To which they added, in their 2012 report on the subject, “In the United States and Canada during the 20th century and in the early 21st century, there is no compelling evidence for climate-driven changes in the magnitude or frequency of floods.” (p. 176)
Droughts: “In summary, the current assessment concludes that there is not enough evidence at present to suggest more than low confidence in a global-scale observed trend in drought or dryness (lack of rainfall) since the middle of the 20th century, owing to lack of direct observations, geographical inconsistencies in the trends, and dependencies of inferred trends on the index choice.” (p. 215)
The case against a climate 'emergency' is in the reports.
The report goes on to point out that there is a decreasing trend in droughts in central North America.
Precipitation: “In summary, confidence in precipitation change averaged over global land areas is low for the years prior to 1950 and medium afterwards because of insufficient data, particularly in the earlier part of the record. Available globally incomplete records show mixed and non-significant long-term trends in reported global mean changes. Further, when virtually all the land area is filled in using a reconstruction method, the resulting time series shows less change in land-based precipitation since 1900.” (p. 202 )
Extreme precipitation: “(It) is likely that since 1951 there have been statistically significant increases in the number of heavy precipitation events (e.g., above the 95th percentile) in more regions than there have been statistically significant decreases, but there are strong regional and subregional variations in the trends. In particular, many regions present statistically non-significant or negative trends, and, where seasonal changes have been assessed, there are also variations between seasons.” (pp. 213-14)
Additionally, Environment Canada continues to maintain that “the observational record has not yet shown evidence of consistent changes in short-duration precipitation extremes across (Canada).”
Here is what the IPCC said about tornado trends in its 2012 report: “There is low confidence in observed trends in small-scale phenomena such as tornadoes and hail because of data inhomogeneities and inadequacies in monitoring systems.” (p. 151). They went on to say they don’t know if there is a connection with greenhouse gases because some changes could increase conditions conducive to tornado formation and others could decrease them.
And there’s more. Read the presentation by Roger Pielke Jr. that started this whole episode. Hurricane intensity and landfalls, hurricane-related flooding and tropical cyclones all fail to exhibit significant trends. Weather-related damages are growing because population and wealth are growing, but it hasn’t been attributed to climate change.
More
The “New Energy Economy”: An Exercise in Magical Thinking
March 2019.
Executive SummaryA movement has been
growing for decades to replace hydrocarbons, which collectively supply 84% of
the world’s energy. It began with the fear that we were running out of oil.
That fear has since migrated to the belief that, because of climate change and
other environmental concerns, society can no longer tolerate burning oil,
natural gas, and coal—all of which have turned out to be abundant.
So far, wind, solar, and batteries—the
favored alternatives to hydrocarbons—provide about 2% of the world’s energy and
3% of America’s. Nonetheless, a bold new claim has gained popularity: that
we’re on the cusp of a tech-driven energy revolution that not only can, but
inevitably will, rapidly replace all hydrocarbons.
This “new energy economy” rests on the
belief—a centerpiece of the Green New Deal and other similar proposals both
here and in Europe—that the technologies of wind and solar power and battery
storage are undergoing the kind of disruption experienced in computing and
communications, dramatically lowering costs and increasing efficiency. But this
core analogy glosses over profound differences, grounded in physics, between
systems that produce energy and those that produce information.
In the world of people, cars, planes, and
factories, increases in consumption, speed, or carrying capacity cause hardware
to expand, not shrink. The energy needed to move a ton of people, heat a ton of
steel or silicon, or grow a ton of food is determined by properties of nature
whose boundaries are set by laws of gravity, inertia, friction, mass, and
thermodynamics—not clever software.
This paper highlights the physics of
energy to illustrate why there is no possibility that the world is
undergoing—or can undergo—a near-term transition to a “new energy economy.”
Among the reasons: Scientists have yet to
discover, and entrepreneurs have yet to invent, anything as remarkable as
hydrocarbons in terms of the combination of low-cost, high-energy density,
stability, safety, and portability. In practical terms, this means that
spending $1 million on utility-scale wind turbines, or solar panels will each,
over 30 years of operation, produce about 50 million kilowatt-hours (kWh)—while
an equivalent $1 million spent on a shale rig produces enough natural gas over
30 years to generate over 300 million kWh.
Solar technologies have improved greatly
and will continue to become cheaper and more efficient. But the era of 10-fold
gains is over. The physics boundary for silicon photovoltaic (PV) cells, the
Shockley-Queisser Limit, is a maximum conversion of 34% of photons into
electrons; the best commercial PV technology today exceeds 26%.
More
Terence Corcoran: Why the global fossil-fuel phase-out is a fantasy akin to time travel
To produce the power needed to offset fossil fuels, Canada would have to build two and a half $13-billion hydro dams every year
June 21, 2019 1:59 PM EDT
Oh, the grand old Duke of
York,
He had ten thousand men;
He marched them up to the top of the hill,
And he marched them down again.
When they were up, they were up,
And when they were down, they were down,
And when they were only halfway up,
They were neither up nor down
He had ten thousand men;
He marched them up to the top of the hill,
And he marched them down again.
When they were up, they were up,
And when they were down, they were down,
And when they were only halfway up,
They were neither up nor down
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 a little longer, but with a slowing global economy and a recovery
already about to become the longest on record, to this old dinosaur market
follower involved with markets since 1968, it’s a classic exit rally. And this
assumes Trump doesn’t start a new middle east war.
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