Baltic Dry Index. 1759
+34 Brent
Crude 64.78
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
The
opening up of new markets, foreign or domestic, and the organizational
development from the craft shop to such concerns as U.S. Steel illustrate the
same process of industrial mutation—if I may use that biological term—that
incessantly revolutionizes the economic structure from within, incessantly
destroying the old one, incessantly creating a new one. This process of
Creative Destruction is the essential fact about capitalism.
Joseph
Schumpeter.
Today, our global
stock markets fate hangs on whether an elderly bankster in Washington toes
President Trump’s line on lower interest rates, or does his own thing and
suggests that the Fed will be data driven. My guess is he will keep his head firmly
below the parapet and fall in behind President Trump.
Not that signalling a
quarter point interest rate cut at month end is really likely to make global
stocks any more attractive. The trade wars have gone on for too long, and are
now really starting to impact the global economy in a serious way. Though insulated better than
most, the US economy will roll over as the global economy slumps.
But will President
Trump take a Fed fold as a sign he can go ahead with his suggestion it’s time to
start a competitive devaluation of the US dollar? A similar move at the Plaza Accord in September 1985,
eventually led up to Black Monday, October 19, 1987, after the Louvre Accord February
1987, attempting to end dollar devaluation misfired badly.
Below, our mad, mad,
mad, bad, world.
Nothing is so admirable in politics as a short memory.
John Kenneth Galbraith.
Asia shares cautious in case Powell closes rate door
July 10, 2019 /
1:34 AM
SYDNEY (Reuters) -
Asian shares turned mixed on Wednesday while rising Treasury yields lifted the
dollar as markets wondered if the world’s most powerful central banker would
confirm or confound expectations for U.S. policy easing this month.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.4%, after three sessions of losses.
South Korea .KS11 edged up 0.4%, but Japan's Nikkei .N225 lagged with a loss of 0.2%. E-Mini futures for the S&P 500 ESc1 dithered either side of flat in very slow trade.
Chinese blue chips .CSI300 barely budged as data showed inflation remained stubbornly subdued despite a spike in pork prices.
A worrying lack of inflation globally is one reason investors are counting on Federal Reserve Chairman Jerome Powell to sound suitably dovish when testifying to Congress on Wednesday.
Futures <0> are still fully priced for a 25-basis-point cut at
the Fed’s July 30-31 meeting, but have abandoned wagers on a half-point move.
They had implied a 25% probability of an aggressive cut before Friday’s upbeat
jobs report.
“We still think the odds favour a 25 bps “insurance” cut,” said Kevin
Cummins, a senior U.S. economist at NatWest Markets.
“The Fed’s consideration of rate cuts is not only about growth but also
about inflation, which remains well below target, and inflation expectations,
which were breaking to the downside before the Fed signalled the likelihood of
cuts.”
Overnight, Atlanta Fed bank president Raphael Bostic let nothing out of
the bag by saying the central bank was debating the risks and benefits of
letting the U.S. economy run “a little hotter.”
More
China factory price inflation slips as trade war pressure grows
Date created :
Factory prices in China were unchanged in June from a year ago, data
showed Wednesday, reviving the prospect of deflation as the US trade war hits
the crucial manufacturing sector.
At the same time consumer prices managed to meet expectations but the
main support came from a surge in food prices owing to the impact of African
swine fever on pork supplies and severe weather hitting fresh fruits.
The producer price index (PPI) -- an important barometer of the
industrial sector that measures the cost of goods at the factory gate -- came
in at zero in June, down from a 0.6 percent rise in May, the National Bureau of
Statistics said.
The reading is the weakest since August 2016, and fell short of the 0.3
percent forecast in a Bloomberg News survey.
A slowdown in factory gate inflation reflects sluggish demand, while a
turn to deflation could dent corporate profits and drag on the world's number
two economy, which in turn could lead to a drop in prices globally.
"The tepid inflation signals are an unambiguous sign of current and
looming economic problems facing China as a direct result of trade frictions
with the US," said Stephen Innes, managing partner at Vanguard Markets.
The reading is the latest indication that the long-running trade war
with Washington is denting the factory sector, with figures earlier this month
showing activity was contracting as demand for China's goods slows.
Trade discussions between China and the US resumed Tuesday as top
negotiators held phone talks seeking to patch up the trade rift hurting the
world's top two economies.
More
South Korea raises Japan trade dispute at WTO
July 9, 2019 /
1:23 PM
July 9 (UPI) -- South Korea is introducing a bilateral trade dispute
with Japan as an urgent item for the agenda of the World Trade Organization's
Council on Trade in Goods.
Seoul's foreign ministry said Tuesday the issue began to be raised with
the WTO in Geneva on Monday to "explain the South Korean position."
The Japanese government had said last week it would tighten export
regulations because Seoul supports compensation for Korean forced laborers
recruited during World War II.
South Korea is also expected to raise Japan trade issues at the General
Council meeting of the WTO, to be held July 23-24, according to Yonhap.
A South Korean diplomatic source told the news agency the government does not expect the WTO to produce an agreed outcome. Raising the trade dispute at the WTO will help raise awareness of the issue on the international stage, the source said.
Japan could be planning a response to South Korean moves at the WTO.
Kyodo news agency reported Tokyo is planning to tell the international organization the country is not in violation of any WTO agreements, because the restricted items are subject to military security.
Japan is also seeking the removal of South Korea from its "white list" of preferred trading partners. Trade Minister Hiroshige Seko had said the move would not run afoul of WTO principles.
Boeing reports no new orders for 737 Max amid grounding
July 9, 2019 /
2:23 PM
July 9 (UPI) -- Boeing on Tuesday said it received orders for 13 commercial jets
during its second quarter, a 95 percent drop compared to the same time period
last year after the global grounding of its 737 Max aircraft.Of those 13 orders, none was for a 737 Max. June was the third straight month of no new orders for the model. Boeing received a letter of intent from International Airlines Group for the purchase of 200 737 Max aircraft earlier this month.
Countries and airlines began grounding the aircraft model in March after investigators determined a link between two 737 Max crashes that left 346 people dead.
Boeing said it delivered 239 aircraft during the first two quarters of the year, a 37 percent drop compared to the first six months of 2018.
Boeing's flagging sales could make Airbus, its direct competitor in single-aisle aircraft, the world's largest airplane manufacturer, CNBC reported.
On Sunday, Saudi airline flyadeal canceled a $5.9 billion order with Boeing for 737 Max plans and made a deal for 30 Airbus A320neo airplanes.
"This order will result in flyadeal operating an all-Airbus A320 fleet in the future," the airline said.
Boeing 737 Max aircraft will remain grounded until the company completes a software fix that addresses issues with its Maneuvering Characteristics Augmentation System, which was linked to the crashes in Indonesia last October and Ethiopia in March.
More
Plaza Accord Definition
Reviewed by Marshall Hargrave
Updated May 23, 2019
The Plaza Accord is a 1985 agreement among the G-5 nations—France, Germany, the United States, the United Kingdom, and Japan—to manipulate exchange rates by depreciating the U.S. dollar relative to the Japanese yen and the German Deutsche mark.
Also known as the Plaza Agreement, the intention of the Plaza Accord was to correct trade imbalances between the U.S. and Germany and the U.S. and Japan, but it only corrected the trade balance with the former.
more
Finally, more on the
European laughing-stock known as Deutsche Bank. Don’t worry the Chairman’s
doing just fine, even if no one’s laughing except Chairman Achleitner. While it
would be nice to think that DB succumbed to “Schumpeter’s Gale,” the reality is
that the bank died of greed, booking derivatives profits up front and paying
out massive bonuses on risky bets that went disastrously wrong.
Teflon Paul: The one job cut Deutsche Bank hasn’t made
German group's chair Paul Achleitner has survived to see his investment banking empire crumble (again)
By David Wighton Updated: July 9,
2019 9:25 am GMT
What does it take to get sacked as chair of Deutsche Bank these days?
The comprehensive failure of the strategy you have pursued for the last seven years? No, not a problem.
The slump in the value of the bank to below the €20bn you raised from shareholders? Don’t worry about it.
The hiring and firing of a string of chief executives? Could happen to anyone.
The embarrassing collapse of merger talks with German rival Commerzbank? That’s fine. Carry on.
We don’t yet know the names of the 18,000 people who will lose their jobs as a result of Deutsche’s radical restructuring. But we do know the name of someone who won’t lose his job: Paul Achleitner.
Yet if anyone should bear responsibility for the parlous state that Deutsche finds itself in, it is not the thousands of blameless staff due to be axed but the man who has sat at the head of the bank’s board for the last seven years.
Throughout that period Achleitner has insisted that Deutsche can and must remain a full-service global investment bank competing head-to-head with the Wall Street giants. In the face of the investment bank’s dismal performance he has resisted pressure to make deeper cuts, including from John Cryan, who was sacked as chief executive last year after a disagreement about the scale of restructuring.
READ ‘I wasn’t offered a package’: Deutsche Bank’s London cuts begin
Since the former Goldman Sachs banker became chair in 2012, Deutsche has announced round after round of reorganisation. But the cost reductions never lived up to expectations and the performance failed to improve. Some critics said it was because Achleitner never really wanted to shrink the investment bank.
Yet here is Achleitner presiding over the sort of radical surgery that many observers said should have been carried out years ago. Why the U-turn? The spin is that Deutsche can now afford to ditch its hugely loss-making equities trading business because the world has changed. It is now possible, says Deutsche, to underwrite equity issues (a business Deutsche is retaining) without being big in equities sales and trading. Yet it is far from clear why Deutsche couldn’t have done away with equity trading or, like some smaller banks, put it into a joint venture, years ago.
More
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
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, the dialog of the deaf. America and China start talking at each
other again. Mutual assured destruction lies ahead.
U.S., China to relaunch talks with little changed since deal fell apart
July 9, 2019 /
6:08 AM
WASHINGTON/NEW
YORK (Reuters) - The United States and China are set to relaunch trade talks
this week after a two-month hiatus, but a year after their trade war began
there is little sign their differences have narrowed.
After meeting with Chinese President Xi Jinping in Japan just in late
June, U.S. President Donald Trump agreed to suspend a new round of tariffs on
$300 billion worth of imported Chinese consumer goods while the two sides
resumed negotiations.
Trump said then that China would restart large purchases of U.S.
agricultural commodities, and the United States would ease some export
restrictions on Chinese telecom equipment giant Huawei Technologies [HWT.UL].
But sources familiar with the talks and China trade watchers in
Washington say the summit did little to clear the path for top negotiators to
resolve an impasse that caused trade deal talks to break down in early May.
A U.S. official said last week the discussions were expected to resume
with a phone call between U.S. Trade Representative Robert Lighthizer, Chinese
Vice Premier Liu He and Treasury Secretary Steven Mnuchin.
A USTR spokesman said the call was expected this week, but gave no
further details.
The United States is demanding that China make sweeping policy changes
to better protect American intellectual property, end the forced transfer and
theft of trade secrets and curb massive state industrial subsidies. At stake,
U.S. officials say, is dominance of the high-tech industries of the future,
from artificial intelligence to aerospace.
“We’ve had a change in atmospherics,” said Derek Scissors, a China
expert at the American Enterprise Institute, a business-oriented Washington
think tank. “While this is great for markets, the administration has not said
one specific thing about how we’re unstuck.”
Scissors, who has at times consulted with Trump administration
officials, said that both sides got what they wanted out of the summit — a
lowering of the temperature and the avoidance of new tariffs that would have
been painful for both sides.
“The pressure for one side to give into the other is diffused right now.
I expect this to drag out for months,” Scissors added.
Washington and Beijing appear to have
different ideas of what the two leaders agreed in Osaka.
Three sources familiar with the state of negotiations say that the
Chinese side did not make firm commitments to immediately purchase agricultural
commodities.
One of the sources said Trump raised the issue of agricultural purchases
twice during the meeting, but Xi only agreed to consider purchases in the
context of a broader final agreement.
Other than a small purchase of American rice by a private Chinese firm,
no purchases have materialized. Chinese officials and state media accounts in
the past week have emphasized that any deal, including agricultural purchases,
is dependent on removal of U.S. tariffs.
“The Chinese have been clear they didn’t promise anything,” said one
source familiar with the talks.
“The idea they would give up their main leverage before getting anything
doesn’t make sense. I could see them buying some pork and buying some soybeans,
but it’s still going to be pennies.”
More
If
economists could manage to get themselves thought of as humble, competent
people on a level with dentists, that would be splendid.
John
Maynard Keynes
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?
Producing graphene from carbon dioxide
Direct synthesis of technological material graphene from greenhouse gas carbon dioxide
Date:
July 8, 2019
Source:
Karlsruher Institut für Technologie (KIT)
Summary:
The general public knows the chemical compound of carbon dioxide as a
greenhouse gas in the atmosphere and because of its global-warming effect.
However, carbon dioxide can also be a useful raw material for chemical
reactions. A working group has now reported on this unusual application. They
are using carbon dioxide as a raw material to produce graphene, a technological
material which is currently the subject of intense study.
The general public knows the chemical compound of carbon dioxide as a
greenhouse gas in the atmosphere and because of its global-warming effect.
However, carbon dioxide can also be a useful raw material for chemical
reactions. A working group at Karlsruhe Institute of Technology (KIT) has now
reported on this unusual application in the ChemSusChem journal. They
are using carbon dioxide as a raw material to produce graphene, a technological
material which is currently the subject of intense study.
The combustion of fossil fuels such as coal and oil produces energy for
electricity, heat and mobility, but it also leads to an increase of the amount
of carbon dioxide in the atmosphere and therefore to global warming. Cutting
this causal chain is what motivates scientists to search for alternative energy
sources but also for alternative uses of carbon dioxide. One possibility could
be to see carbon dioxide as an inexpensive raw material for the synthesis of
valuable materials, feeding it back into the reusability cycle -- maybe even in
a profitable way.
An example can be found in nature. During photosynthesis in the leaves
of plants, the combination of light, water and carbon dioxide creates biomass,
closing the natural material cycle. In this process, it is the job of the
metal-based enzyme RuBisCo to absorb the carbon dioxide from the air and make
it usable for the further chemical reactions in the plant. Inspired by this
metal enzyme-based natural conversion, researchers at KIT are now presenting a
process in which the greenhouse gas carbon dioxide together with hydrogen gas
is converted directly into graphene at temperatures of up to 1000 degrees
Celsius with the help of specially prepared, catalytically active metal
surfaces.
----
Several working groups at KIT have collaborated to present a method in the ChemSusChem
journal for separating graphene from carbon dioxide and hydrogen by means of a
metal catalyst. "If the metal surface exhibits the correct ratio of copper
and palladium, the conversion of carbon dioxide to graphene will take place
directly in a simple one-step process," explains the head of the study,
Professor Mario Ruben, from the Molekulare Materialien working group at the
Institute of Nanotechnology (INT) and the Institute for Inorganic Chemistry
(AOC) at KIT. In further experiments the researchers were even able to produce
graphene several layers thick, which could be interesting for possible
applications in batteries, electronic components or filter materials. The
working group's next research goal is to form functioning electronic components
from the graphene thus obtained. Carbon materials such as graphene and magnetic
molecules could be the building blocks for future quantum computers, which
enable ultra-fast and energy-efficient calculations but are not based on the binary
logic of today's computers.
https://www.sciencedaily.com/releases/2019/07/190708122340.htm?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+sciencedaily%2Fmatter_energy%2Fgraphene+%28Graphene+News+--+ScienceDaily%29True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
Ludwig von Mises.
The monthly Coppock Indicators finished June
DJIA: 26,600 +51 Up. NASDAQ: 8,006 +70 Down.
SP500: 2,942 +50 Up.
The S&P has reversed again to up after only one month. The Dow has
reversed to up, while the NASDAQ remains down. On to next
month’s numbers for clarification.
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