Baltic Dry Index. 2130
+66 Brent
Crude 63.11
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Jimmy Carter used
to walk off the airplane carrying his own luggage. Do you remember that? I
don't want my president carrying - I want the freaking Marines to be carrying
his luggage, and they want to carry his luggage.
Donald Trump
With the Trump cowed Fedster’s
talking up interest rate cuts, and President Trump talking up deliberate
competitive dollar devaluation, the price of gold is soaring, fearing a return,
if implemented, to the currency chaos of the President Carter days.
Back then, by
randomly pulling and pushing on the levers of power, switching sides of his
hair parting, boycotting the Olympics, retreating to Camp David and firing his
Cabinet only to reappoint them, the dollar slumped and gold soared.
With President Trump’s
re-election campaign to run between now and November 2020, dollar holders are
starting to worry. The fiat dollar is the only effective global reserve
currency, a deliberate competitive dollar devaluation, is playing Russian
roulette with the global financial system.
Deliberate competitive
devaluation, incentivises contracts outside of the USA, to be settled in other
mechanisms, probably local currencies, basket of currencies, possibly even gold
and silver. Are we about to return to the era of Carter Chaos?
Below, the Fed
deliberately gooses stocks for President Trump.
Asia stocks firm as Fed props up rate cut expectations
July 19, 2019 /
2:18 AM
TOKYO (Reuters) -
Asian stocks advanced on Friday after a top Federal Reserve official cemented
expectations of a U.S. interest rate cut later this month, fuelling appetite
for riskier assets and keeping a cap on the dollar.
New York Fed President John Williams said on Thursday that policymakers
could not wait for economic disaster to hit before adding stimulus, in a speech
read as a strong argument in favour of quick monetary action.
In oil markets, crude surged after the United States said its navy destroyed
an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude
flows, raising concerns about supply disruptions out of the region.
The comments by Williams made it a virtual certainty the Fed would cut
interest rates by 25 basis points at its July 30-31 policy meeting and also
fuelled expectations of an even deeper 50 basis point reduction.
Financial markets quickly reacted, with Fed fund rate futures
<0> at one point pricing in almost 70 percent chance of a 50 bp cut
at the month-end meeting. The odds eased to around 40 percent after the New
York Fed clarified that Williams’ speech was not about immediate policy
direction.
Wall Street shares shook off a sluggish start and moved higher overnight
thanks to Williams’ dovish comments.
The Shanghai Composite Index .SSEC and Hong Kong's Hang Seng .HSI were both up 1%.
Australian stocks added 0.7%, South Korea's KOSPI .KS11 rose 1% and Japan's Nikkei .N225 advanced 1.65%.
More
Next, with President
Trump talking up competitive dollar devaluation and the Fedster’s talking up interest
rate cuts, the price of gold is soaring as a hedge. But we haven’t seen
anything yet if President Trump is foolish enough to implement deliberate
dollar devaluation. We’d go all the way back to the Carter Chaos.
Currency intervention: Here’s how the U.S. could move to weaken the dollar
By William
Watts Published: July 17, 2019 4:06 p.m. ET
Currency traders are contemplating the “I”-word.While still seen as a long shot — Goldman Sachs described it last week as a “low but rising risk” — a growing number of analysts are warning that President Donald Trump’s longstanding frustration with the U.S. dollar’s DXY, +0.03% relative strength versus major rivals could eventually lead to U.S. government to intervene in the currency market in an effort to weaken the greenback.
Read: Goldman sees ‘low but rising risk’ Trump will intervene to weaken U.S. dollar
Last week, Bloomberg News reported that Trump has asked aides to look for ways to weaken the dollar and asked about the currency in job interviews with the candidates he’s selected for seats on the Federal Reserve’s board.
Here’s a guide to how intervention works and what it would mean for the market.
What is intervention?
Intervention occurs when a central bank buys or sells its own currency in an effort to influence the exchange rate.A government might take action to halt a precipitous slide or a sharp runup in its currency following a shock. It could also act in concert with or on behalf of other countries in an effort to stabilize a particular currency. In fact, the last time the U.S. intervened in the currency market was in March 2011, as part of a coordinated effort by the Group of Seven nations to arrest a surge in the Japanese yen following a devastating earthquake and tsunami.
Utilizing their massive reserves, central banks can get their way, at least in the short term. A credible threat — explicit or implied — to intervene around a certain level can often hold sway, particularly if underlying fundamentals and other factors stand in the central bank’s favor.
But even central banks can be overwhelmed by the market if fundamentals are out of line with goals. The Bank of England pulled out all the stops on “Black Wednesday” in 1992 in a futile effort to keep the British pound trading within the bands set by the European exchange rate mechanism, wasting billions of pounds of reserves.
Why is intervention so rare?
Intervention is hardly novel. In fact, as the Goldman Sachs chart below illustrates, until around the mid-1990s, it was relatively common for the U.S. and other major developed countries to wade into markets in an effort to signal a desired exchange rate.But unilateral intervention has long been out of favor, with the U.S. and other members of the Group of 20 in June reaffirming a previous commitment to refrain from competitive devaluations and to not target exchange rates for competitive purposes.
How is it conducted?
According to the New York Fed, the foreign currencies used to intervene by the U.S. usually come equally from Federal Reserve holdings and the Treasury’s Exchange Stabilization Fund. Those holding consist of euros and Japanese yen.The New York Fed’s trading desk does the buying and selling, often dealing simultaneously with several large interbank dealers in the spot market. The New York Fed, in a 2007 note, observed that it historically hasn’t engaged in the forward market or other derivative transactions.
The process is also meant to be transparent, the New York Fed says, with the U.S. Treasury secretary typically confirming the move while the Fed is conducting the operation or shortly thereafter. After all, authorities are attempting to send market participants a message, so there’s little incentive for them to cover their tracks.
More
In other news, in America it’s July and it’s too hot. But
relief is on the way, maybe. Will this help or hurt US agriculture?
Northeast, Midwest to blister in the sun as hottest weather in years grips region
July 18, 2019
While the Midwestern and Northeastern United States will continue to
swelter in dangerous heat and high humidity into this weekend, an upcoming
pattern flip is in store that will allow cooler and less humid air to push
southward from Canada.
AccuWeather estimates that more than 87 million Americans live in an
area where a daily record-high temperature could be set on Saturday.
The summer scorcher will throttle up into this weekend with daily record
highs in the 90s to near 100 F on the bubble and AccuWeather RealFeel®
Temperatures forecast to spike near 110 in some urban areas for several hours
during the late morning and afternoon.
Temperatures around 100 F are possible in the cities of Washington, D.C,
Baltimore, Philadelphia, New York City, Boston, Chicago, and St. Louis, to name
a few.
At this level, the hot July months of the
past in 2012, 2011, 1991, 1980 and 1930 will be rivaled. Forecast temperatures
are 10-15 degrees above average even for the middle of summer.
However, near-100-degree temperatures with high humidity is significantly
different than that of the typically low humidity locations of the Southwest.
Both areas are dangerous in the heat, but with the combination of vast
paved areas and heavy population, the health risk is significantly higher for
more people in the humid regions.
For a time, it may feel just as hot in Washington, D.C., as Death
Valley, California. While the actual temperature may be higher in Death Valley,
when compared to the nation's capital, humidity levels near the Chesapeake Bay
will be substantially higher than that of the deserts.
For example, dew point temperatures will range from the teens to the
lower 30s in the deserts, but will be in the 70s to the lower 80s near the
Chesapeake Bay. The dew point is the temperature that the air becomes saturated
with water vapor when the air is cooled. When this happens, the relative
humidity reaches 100 percent.
Temperatures in many of the major cities may
struggle to drop below 80 at night which then allows the heat to build at an
even faster pace the next day. Nighttime humidity levels can be significantly
higher than the afternoon as a result.
More
Finally, in EUSSR news, Germany starts playing with fire
or lack of it. Populism at its worst.
Does renewables pioneer Germany risk running out of power?
July 18, 2019 /
6:38 AM
FRANKFURT
(Reuters) - Germany, a poster child for responsible energy, is renouncing
nuclear and coal. The problem is, say many power producers and grid operators,
it may struggle to keep the lights on.
The country, the biggest electricity market in the European Union, is
abandoning nuclear power by 2022 due to safety concerns compounded by the
Fukushima disaster and phasing out coal plants over
the next 19 years to combat
climate change.
In the next three years alone conventional energy capacity is expected
to fall by a fifth, leaving it short of the country’s peak power demand. There
is disagreement over whether there will be sufficient reliable capacity to
preclude the possibility of outages, which could hammer the operations of industrial
companies.
The Berlin government, in a report issued this month, said the situation
was secure, and shortfalls could be offset by better energy efficiency, a
steadily rising supply of solar and wind power as well as electricity imports.
Others are not as confident, including many utilities, network
operators, manufacturing companies and analysts.
Katharina Reiche, chief executive of the VKU association of local
utilities, many of which face falling profitability as plants close, said the
government’s strategy was risky because it had not stress-tested all scenarios.
She characterized the plan as “walking a tightrope without a safety net”.
Utilities and grid firms say if the weather is unfavorable for lengthy
periods, green power supply can be negligible, while storage is still largely
non-existent. Capacity aside, the network to transport renewable power from
north to south is also years and thousands of kilometers behind schedule, they
add.
More
In 1976, Jimmy
Carter - peanut farmer; carried his own suitcase, imagine that - somewhat
tapped America's durable but shallow reservoir of populism. By 1980,
ordinariness in high office had lost its allure.
George Will
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Move over falling US and global auto sales, Trump’s trade war with China
seems about to backfire in a massive way. What if Beijing orders Chinese buyers
to sell?
Led by the Chinese, foreigners are buying 31% fewer American homes
By Jacob Passy Published: July 17, 2019 3:32 p.m. ET
Foreigners are far less eager to purchase American real
estate, and the current political climate may prevent these sales from
rebounding.Foreign buyers made $77.9 billion in residential purchases between April 2018 and March 2019, which represents a 36% drop from the previous year, according to data from the National Association of Realtors. The number of purchases also decreased by 31% to 183,100 purchases.
Once again, the Chinese were the biggest foreign buyers of American
homes. Chinese buyers accounted for $13.4 billion in real-estate purchases, or
roughly 17% of all sales to foreign buyers. Canadian buyers were the second
largest amount of real-estate deals in dollar volume at $8 billion.
Despite representing nearly a fifth of all real-estate sales to foreign
buyers, Chinese demand shrank dramatically from the previous year. In 2018,
Chinese buyers accounted for $30.4 billion in home sales.
The ongoing trade dispute between the Trump administration and China could cause the situation to become even more dire, experts warn. Long before the current trade war, the Chinese government had been creating hurdles for its citizens who wanted to invest abroad.
The country started restricting outbound investments in 2016, allowing residents to take only the equivalent of $50,000 out of the country, as a means of propping up the country’s currency. This not only made it more difficult to purchase real estate in America, but prompted some Chinese investors to sell their U.S. assets.
If the two countries don’t reach a settlement soon, the outlook for real estate may worsen. “The Chinese government could place stricter capital controls about taking money out of China and buying in America,” Lawrence Yun, chief economist at the National Association of Realtors, told MarketWatch.
The current political climate is just one factor affecting foreign buyers’ appetite for U.S. real-estate. In China, authorities have placed tighter regulations on commercial bank lending, which has limited economic growth.
In the U.S., the supply of homes for sale remains very tight across many housing markets, particularly along the West Coast. As a result, home prices remain at historic highs in most parts of the country — when coupled with the relative strength of the dollar, buying an American home is a costlier proposition for foreign buyers.
If the foreign pullback from the U.S. real-estate market continues, American home sellers could suffer. Chinese buyers play a major role in housing markets along the West Coast and in college towns, Yun said. The lack of interest from foreign buyers, who typically enter competitive all-cash offers, could force sellers to make more concessions or cut their list prices in the months to come.
Mikhail Gorbachev
was the Jimmy Carter of the Communist bloc. The Russians hate him.
P. J. O'Rourke
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?
A graphene superconductor that plays more than one tune
Date:
July 17, 2019
Source:
DOE/Lawrence Berkeley National Laboratory
Summary:
Researchers have developed a graphene device that's thinner than a human hair
but has a depth of special traits. It easily switches from a superconducting
material that conducts electricity without losing any energy, to an insulator
that resists the flow of electric current, and back again to a superconductor
-- all with a simple flip of a switch.
Researchers at the U.S. Department of Energy's Lawrence Berkeley
National Laboratory (Berkeley Lab) have developed a graphene device that's
thinner than a human hair but has a depth of special traits. It easily switches
from a superconducting material that conducts electricity without losing any
energy, to an insulator that resists the flow of electric current, and back
again to a superconductor -- all with a simple flip of a switch. Their findings
were reported today in the journal Nature.
"Usually, when someone wants to study how electrons interact with
each other in a superconducting quantum phase versus an insulating phase, they
would need to look at different materials. With our system, you can study both
the superconductivity phase and the insulating phase in one place," said
Guorui Chen, the study's lead author and a postdoctoral researcher in the lab
of Feng Wang, who led the study. Wang, a faculty scientist in Berkeley Lab's
Materials Sciences Division, is also a UC Berkeley physics professor.
The graphene device is composed of three atomically thin (2D) layers of
graphene. When sandwiched between 2D layers of boron nitride, it forms a
repeating pattern called a moiré superlattice. The material could help other
scientists understand the complicated mechanics behind a phenomenon known as
high-temperature superconductivity, where a material can conduct electricity
without resistance at temperatures higher than expected, though still hundreds
of degrees below freezing.
In a previous study, the researchers reported observing the properties
of a Mott insulator in a device made of trilayer graphene. A Mott insulator is
a class of material that somehow stops conducting electricity at hundreds of
degrees below freezing despite classical theory predicting electrical
conductivity. But it has long been believed that a Mott insulator can become
superconductive by adding more electrons or positive charges to make it
superconductive, Chen explained.
----The multitasking device offers scientists a tiny, versatile playground for studying the exquisite interplay between atoms and electrons in exotic new superconducting materials with potential use in quantum computers -- computers that store and manipulate information in qubits, which are typically subatomic particles such as electrons or photons -- as well as new Mott insulator materials that could one day make tiny 2D Mott transistors for microelectronics a reality.
"This result was very exciting for us. We never imagined that the
graphene/boron nitride device would do so well," Chen said. "You can
study almost everything with it, from single particles to superconductivity.
It's the best system I know of for studying new kinds of physics," Chen
said.
This study was supported by the Center for Novel Pathways to Quantum
Coherence in Materials (NPQC), an Energy Frontier Research Center led by
Berkeley Lab and funded by the DOE Office of Science. NPQC brings together
researchers at Berkeley Lab, Argonne National Laboratory, Columbia University,
and UC Santa Barbara to study how quantum coherence underlies unexpected
phenomena in new materials such as trilayer graphene, with an eye toward future
uses in quantum information science and technology.
Another weekend
and a very hot one for much of North America and parts of Europe. Will it be a
hot one for President Trump tweets too? Have a great weekend everyone.
In the last 100
years only Presidents George H.W. Bush, Jimmy Carter and Gerald Ford lost their
bids for reelection. President Lyndon Johnson did not run for a second term.
Juan Williams
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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