Baltic Dry Index. 1700
+151 Brent
Crude 63.35
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
“Finally,
from so little sleeping and so much reading, his brain dried up and he went
completely out of his mind.”
Don Quixote
Our world has gone
mad. Everyone wants in on trade war, even though everyone knows no one really
wins at trade war, the “winner” is just the one who loses least. And now
President Trump wants to ignite a nuclear currency war! If he gets his way,
gold will soar to new unprecedented dollar highs.
Below, America and
China to resume the dialog of the deaf next week, while Japan starts its own
trade war on South Korea. And we still have Brexit, and the main event, the USA
v EUSSR, to come.
How long till the
next stock market crash in unknowable, but my guess is in less than a year,
possibly very much sooner. Our world as we knew it, 1945 – 2005, is turning
upside down. And let’s not get started on the fad of the moment “climate
emergency” madness, and the folly of “a
carbon-less world.”
Below, stocks
gambling on things being so bad that there’s a forced 50 points cut by the Fed.
Insanity.
Asian shares hold near two-month highs before U.S. payrolls test
July 5, 2019 /
1:59 AM
SYDNEY (Reuters) -
Asian shares hovered near two-month highs on Friday as investors braced for
U.S. employment data, a key release that could stoke or temper market
expectations about aggressive policy easing by the Federal Reserve.
Trade across global markets was expected to remain subdued following the Independence Day holiday in the United States on Thursday and ahead of the non-farm payrolls report.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was set for its fifth straight weekly rise which took it to 534.40, the highest since early May. It was last at 532.82.
Japan's Nikkei .N225 was a tad weaker. Chinese shares were mixed with the blue-chip index .CSI300 up 0.2%. Australia and New Zealand shares were slightly higher as was Hong Kong's Hang Seng index .HSI.
E-Minis for the S&P500 ESc1 advanced about 0.1%.
World stocks and bonds have rallied since June on hopes global central banks will keep policy easy to support growth.
All eyes were now on U.S. non-farm payrolls, due later in the day, which is expected to have jumped by 160,000 in June compared with 75,000 in May.
“If payrolls were not to rebound this would be very significant,” said
Tapas Strickland, London-based markets strategist at National Australia Bank.
“A weaker than expected read would increase expectations of an emergency
50 basis points rate cut in July given that two soft payrolls are very rare
with the last being back in 2012,” he said.
More
Trump officials say U.S.-China trade talks to resume next week
July 3, 2019 /
7:37 PM
WASHINGTON (Reuters)
- Top representatives of the United States and China are organising a
resumption of talks for next week to try to resolve a year-long trade war
between the world’s two largest economies, Trump administration officials said
on Wednesday.
“Those talks will
continue in earnest this coming week,” White House Economic Adviser Larry
Kudlow told reporters in a briefing.
An official from the Office of the U.S. Trade Representative said later
that the two sides were in the process of scheduling a principal-level phone
call with Chinese officials for next week.
The principal negotiators on the U.S. side are U.S. Trade Representative
Robert Lighthizer and Treasury Secretary Steven Mnuchin, while China’s top
negotiator is Vice Premier Liu He
The two sides have been in communication by telephone since last
weekend, when U.S. President Donald Trump and Chinese President Xi Jinping
agreed to relaunch talks that had stalled in May.
Kudlow was unclear about the timeline for relaunching face-to-face
talks, saying that these would begin “soon” and that an announcement would be
forthcoming.
“I don’t know precisely when. They’re on the phone. They’re going to be
on the phone this coming week and they’ll be scheduling face-to-face meetings,”
he said.
More
China says existing U.S. tariffs must be removed for a trade deal
July 4, 2019 /
8:36 AM
BEIJING (Reuters) - Existing U.S. tariffs will have to be removed if
there is to be a trade deal between Beijing and Washington, China’s commerce
ministry said on Thursday.
The leaders of the two countries agreed last weekend to relaunch trade
talks that had stalled in May after U.S. officials accused China of pulling
back from commitments made in the text of a pact negotiators had said was
nearly finished.
Trade teams from both countries are in contact, commerce ministry
spokesman Gao Feng told a regular media briefing.
To get talks restarted, U.S. President Donald Trump had agreed not to
put tariffs on about $300 billion in additional Chinese imports and ease curbs
on Chinese tech giant Huawei.
The United States now has tariffs of 25% on $250 billion of Chinese
goods, ranging from furniture to semiconductors.
China welcomes the U.S. decision not to slap new tariffs on its goods,
Gao said, when asked how long the trade truce can last.
Trump says US should start manipulating the dollar
WASHINGTON (AP) — President Donald Trump on Wednesday accused China and
Europe of playing a “big currency manipulation game.” He said the United States
should match that effort, a move that directly contradicts official U.S. policy
not to manipulate the dollar’s value to gain trade advantages.
In a tweet, the president said if America doesn’t act, the country will
continue “being the dummies who sit back and politely watch as other countries
continue to play their games — as they have for so many years.”
Trump’s own Treasury Department in May found that no country meets the
criteria of being labeled a currency manipulator, although the report did put
China and eight other countries on a watch list.
A country manipulates its currency when it drives down the value to make
its exports cheaper and foreign imports more expensive.
As a candidate in 2016, Trump repeatedly charged that China was
manipulating its currency and as president he would immediately label China as
a currency manipulator.
However, after taking office, Trump’s Treasury Department has issued
five reports on the subject, required by law every six months. In each report
it said no country met the criteria to be labeled a currency manipulator.
Trump’s tweet seemed to have no impact in currency markets, a situation
that would likely change if Treasury Secretary Steven Mnuchin began threatening
to use currency manipulation to drive down the dollar’s value.
----A weaker
dollar would boost U.S. exports but could run the risk of causing foreign
investors who are helping to finance the federal government’s $22 trillion
national debt to move their investments elsewhere to avoid the risk of currency
depreciation lowering their returns.
South Korea says may retaliate against Japan high-tech export curbs
July 4, 2019 /
1:01 AM
SEOUL (Reuters) -
South Korea said on Thursday it may retaliate against Japan’s latest export
limits on high-tech materials, as a row over forced wartime labor threatened to
disrupt global supplies of memory chips and smartphones.
Samsung Electronics Co (005930.KS) and SK Hynix Inc (000660.KS) - the world’s top memory chipmakers, and suppliers to Apple (AAPL.O) and China’s Huawei Technologies - could face delays if the measures that took effect on Thursday drag on.
“Implementing corresponding measures against Japan cannot be ruled out,” Finance Minister Hong Nam-ki told South Korea radio. He said the trade row could cause “unfortunate damage to both Korean and Japanese economies”.
The dispute is the latest flashpoint in a quarrel over South Korean efforts to seek compensation for Japan’s use of forced wartime labor, which got fresh impetus from South Korean court rulings last year.
The curbs on exports of three materials used in South Korean chips and smartphone displays, which Japan had announced on Monday, will disrupt the global supply chain, South Korea’s trade minister said.
Japan accounts for
70%-90% of the production of the three materials, Japanese media have said,
making it difficult for South Korean chipmakers to find alternative sources of
supply.
“It will pose a huge uncertainty and threat to the global economy by shaking up the global supply chain,” Trade Minister Yoo Myung-hee told a meeting of industry groups on Thursday.
South Korea’s presidential office said on Thursday that it plans to actively seek diplomatic countermeasures, including complaining to the World Trade Organization (WTO) against the “retaliatory” export curbs.
“We will explain to major countries about the unfairness of Japan’s action, and the fact that this violates the principle of free trade,” Yoon Do-han, press secretary to the President, said in a statement.
Finance Minister Hong had said it would take a long time to get a WTO ruling on the dispute.
The row exploded late last year when South Korean court rulings ordered Japan’s Nippon Steel & Sumitomo Metal Corp (5401.T) and Mitsubishi Heavy Industries Ltd to pay hundreds of thousands of dollars to South Korean plaintiffs.
---- Both sides showed no signs of backing down in the trade dispute.
Kyodo News Agency reported on Tuesday that Japan was considering
expanding its export controls to more items bound for South Korea.
The leader of South Korea’s ruling Democratic Party, Lee Hae-chan, said:
“This fight is just in the beginning, not the end”.
More
Samsung Electronics warns profit could fall 50%
By MarketWatch
Published: July 5, 2019 1:10 a.m. ET
SEOUL-- Samsung Electronics Co. said it expects its second-quarter
operating profit to decline 56.3% from a year earlier as sluggish demand for
memory chips was exacerbated by the nagging U.S.-China trade dispute.
Samsung said it expects operating profit to fall to 6.5 trillion South
Korean won ($5.56 billion) from 14.87 trillion won a year earlier. Revenue is
expected to fall 4.2% to 56 trillion won. The company will report final results
later this month.
The Suwon, South Korea-based company's preliminary results exceeded
market expectations. Analysts expected an operating profit of 6.01 trillion won
and revenue of 54.6 trillion won for the quarter, according to S&P Global
Market Intelligence.
Analysts say the company benefited in the quarter from a
weaker-than-expected domestic currency and what the company described as a
"one-time gain related to the display business."
Leading up to Friday's preliminary earnings, some market watchers
expected a one-time bump in Samsung's display profits due to compensation fees
from Apple Inc., which uses Samsung's organic light-emitting diode, or OLED,
displays in some of its iPhones.
Some analysts expected that Apple would have to compensate Samsung for
failing to meet minimum order agreements because of poor iPhone sales.
It isn't clear whether such a fee was factored into the earnings
guidance released by Samsung on Friday and the company declined to comment.
More
“It is
one thing to write as poet and another to write as a historian: the poet can
recount or sing about things not as they were, but as they should have been,
and the historian must write about them not as they should have been, but as
they were, without adding or subtracting anything from the truth.”
Don
Quixote
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, the soaring Baltic Dry
(shipping) Index, (BDI.) Real, rig, or mirage or something in between?
Baltic Dry Index no longer reflects dry bulk shipping performance: Bimco
Posted 12 June
2019
The Baltic Dry Index (BDI) can no longer accurately reflect how the dry
bulk shipping market is performing, according to a latest analysis report by
Bimco.
“Bimco now believes that the BDI cannot be used as a proxy for the dry
bulk market as a whole, because of the weighting of the different ship types in
the index,” said Peter Sand, chief shipping analyst at Bimco.
Sand recalled that since 1 March 2018, the BDI was changed from an
equal-weight index for capesize, panamax, supramax and handysize to a weighting
of 40% on capesize and 30% on each of the panamax and supramax time charter
averages, and no longer including the handysize time charter average.
“Knowing profits from losses requires insight into real US dollar per
day earnings, which no index values can provide,” he said.
The BDI, issued daily by London-based Baltic Exchange, is widely
referred to around the world as a proxy for dry bulk shipping stocks,
indicating changes in the cost of transporting various raw materials such as
coal and steel by different sizes of dry bulk carriers.
During April 2019, the BDI was dominated by capesize shipping, which
pushed the index up by 50% on the back of a 239% increase in rates for capsizes
– from a very low level – whereas the three other segments only rose slightly
or decreased.
The 239% hike in capesize rates singlehandedly lifted the BDI from 674
points on 2 April to 1,011 points on 30 April, when panama rates only rose 6%
during the same period while supramax and handysize rates fell by 4% and 15%
respectively.
Even as the BDI has risen from a low of 595 points on 11 February this
year to 1,125 points on Monday, dry bulk shipping remains a struggling market
which is only hyped up by capesize volatility, Sand noted.
“Bimco sees fleet growth outstripping demand growth in 2019 and 2020,
making the near future look unappealing,” Sand said, adding that the estimated
fleet growth is around 3% for 2019 and 2020.
“On 1 May, the orderbook stands at 96m dwt (according to Clarksons).
It’s been unchanged at that level since February 2018, with around 100m dwt
scheduled for future delivery. This is bad news,” he said.
Chinese steel demand, on the other hand, is following a
downward-pointing trajectory due to the combined effect of overall slowdown in
China’s economic growth and trade tensions with key trading partners. In the
US, the Energy Information Administration (EIA) has forecast coking coal
exports to decline by 9m tonnes for 2019 and thermal coal exports to decrease
by 5m tonnes, due to lower demand for steel and European countries’ move away
from coal-fired power plants.
“Destiny guides our fortunes more favorably than we could have
expected. Look there, Sancho Panza, my friend, and see those thirty or so wild
giants, with whom I intend to do battle and kill each and all of them, so with
their stolen booty we can begin to enrich ourselves. This is noble, righteous
warfare, for it is wonderfully useful to God to have such an evil race wiped
from the face of the earth."
"What giants?" Asked Sancho Panza.
"The ones you can see over there," answered his master, "with the huge arms, some of which are very nearly two leagues long."
"Now look, your grace," said Sancho, "what you see over there aren't giants, but windmills, and what seems to be arms are just their sails, that go around in the wind and turn the millstone."
"Obviously," replied Don Quixote, "you don't know much about adventures.”
"What giants?" Asked Sancho Panza.
"The ones you can see over there," answered his master, "with the huge arms, some of which are very nearly two leagues long."
"Now look, your grace," said Sancho, "what you see over there aren't giants, but windmills, and what seems to be arms are just their sails, that go around in the wind and turn the millstone."
"Obviously," replied Don Quixote, "you don't know much about adventures.”
Don Quixote
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?
What Comes Next After Batteries Replace Gas Peakers?
Peaker replacement by battery storage has begun in California. Substituting bulk gas power is another matter entirely.
July 01, 2019
Battery storage is gaining a foothold in the California
peaker plant market previously served by fast-acting natural gas generators.Replacing gas peakers notches an early victory for the energy storage industry, but it is not sufficient to decarbonize the grid. Short-duration batteries have a physical limitation: They cannot deliver power indefinitely, and longer-duration options are rare at commercial scale.
That raises the question of what comes next as California, joined by a growing cohort of states, moves toward a legislative mandate of zero-carbon grid power by midcentury.
Nick Chaset grapples with that question as the CEO of East Bay Community Energy, a local organization empowered to source clean electricity for Alameda County, across the bay from San Francisco. His organization recently signed a contract to replace a decades-old jet-fuel-burning peaker in downtown Oakland with a 20-megawatt, 4-hour-duration lithium-ion battery plant.
Despite its smaller capacity and limited run time, that battery will
step in to provide local capacity in place of the fossil-fueled asset.
"Right now, there’s still tremendous opportunity for the
4-hour[-duration] investments, which we’re going to continue to make,"
Chaset said in an interview after the contract-signing ceremony. "What
you’ll see is, through 2030 probably, it’s storage, 4- and 6-hour batteries,
[that] gets you where you need [to be]."
After that, the path is less certain.
Peaker plants make easy targets for the clean energy industry. They act
as a form of physical insurance against blackouts, costing ratepayers hundreds
of millions of dollars even though they rarely participate in the grid. When
they do, they burn dirtier than other resources.
Solar and wind power cannot replace peakers, because they do not
dispatch on command. Batteries can, however, and they enjoy certain advantages
when it comes to siting in load pockets like urban areas where a new thermal
plant may not survive environmental permitting. Moreover, batteries can
participate in grid activities when they are not needed for peak power,
defraying their cost as a reliability asset.
What was once a theory articulated by aspirational storage developers
has now entered into practice.
---- Building out conventional storage, standalone or paired with solar plants, during the coming decade should get the state to its interim target of 60 percent renewable power by 2030, Chaset said.
"It’s the 2030 to 2040 timeframe where it’s a little bit more
challenging and we don’t necessarily have the right solution identified just
yet," Chaset explained. "Some would say maybe it’s pumped hydro.
Those are huge investments. Yes, there’s technological innovation happening,
but that’s mostly concrete and steel."
Pumped hydro is the largest source of grid storage currently, but its
growth is limited by its environmental impacts. That technology has been around
for decades and thus cannot expect the kinds of price declines that lithium-ion
batteries enjoy thanks to increasing scale of production and new research and
development.
As such, power providers have to keep assessing the state of long-duration
storage technologies that could work for their portfolios.
More
Another weekend and what will
the great twitter of Washington tweet? Who will be tweeted up and who twitted down?
What great new mischief will emerge from the District of Crooks? Have a great
weekend everyone, I doubt that we’ll be kept waiting long.
“When life itself seems lunatic, who knows where madness lies?
Perhaps to be too practical is madness. To surrender dreams — this may be
madness. Too much sanity may be madness — and maddest of all: to see life as it
is, and not as it should be!”
Don Quixote
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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