Baltic Dry Index. 1777
+18 Brent
Crude 67.24
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Don’t
fight the Fed.
Wall
Street Adage.
It looks like it’s
time to place a bet on President Trump getting re-elected in 2020. Yesterday
the Powell Fed signalled clearly that they are firmly committed to President
Trump’s campaign for lower interest rates, higher stock prices and President
Trump’s re-election in November 2020.
With the Fed in his
pocket, all the more so when his next two appointees join the board, how can
President Trump lose? Will the Fed follow the ECB’s lead from ZIRP to NIRP in
2020? If they do, how high will gold and
silver go?
Below, will the Fed
cut by more than a quarter point at the end of the month? A cowed Chairman
Powell seemed to open that option again.
Asia stocks gain, dollar droops as Fed chair sets stage for rate cut
July 11, 2019 /
1:33 AM
In an appearance before his congressional overseers on
Wednesday, Powell confirmed that the U.S. economy is still under threat from
disappointing factory activity, tame inflation and a simmering trade war. Powell said the central bank stands ready to “act as appropriate”.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.8%, while Japan's Nikkei .N225 added 0.4%.
The Shanghai Composite Index .SSEC advanced 0.8%, South Korea's KOSPI .KS11 climbed 1% and Australian stocks edged up 0.3%.
For a graphic on the Asian stock markets, click tmsnrt.rs/2zpUAr4
U.S. stocks ended higher on Wednesday and the S&P 500 .SPX briefly crossed the 3,000-point mark for the first time following Powell's remarks.
“The markets had hoped for Powell to express dovish views and they got
what they wanted,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui
DS Asset Management.
“The focus going forward is U.S. data, such as tonight’s CPI, and
whether the economy warrants a 50 basis point rate cut this month.”
A strong June U.S. jobs report released earlier this month had curbed
market expectations that the Fed could lower rates by 50 basis points (bps),
and the markets had viewed a 25 bps cut as a more likely option.
But the Fed chair’s cautious stance on the world’s largest economy
helped revive some bets on heftier easing at its next policy meeting on July
30-31.
The chance of a 50 bps cut rose to 27.6% from 3.3% on Tuesday, according
to CME Group’s FedWatch tool.
Minutes from the Fed’ last meeting in mid-June, however, showed some
policymakers felt there was not yet a strong case for easing.
More
Fed’s Bullard expects a total of a half-point ‘insurance’ rate cut by year end, largely owed to trade jitters
By Rachel
Koning Beals Published: July 10,
2019 6:05 p.m. ET
Expect known dove St. Louis Federal Reserve President James
Bullard to again vote for a quarter-point interest-rate cut when the central
bank meets at month’s end, a move he’s signaled in recent interviews and again
on Wednesday.And Bullard is likely to push for one additional quarter-point reduction by the end of the year, assuming economic conditions don’t change much, he said at an appearance at Washington University in St. Louis.
Bullard in June dissented from the Fed decision to hold rates steady and was in favor of a quarter-point rate cut then. He said in an interview with Bloomberg around that time that he thought a quarter-point cut would be a wise “insurance” move. But Bullard said he didn’t see the need for a half-point cut in one action.
Such “insurance” against signs of trade-related global growth slowing is still needed, although he doesn’t like to “pre-judge a meeting too much,” Bullard said Wednesday. Also important, according to Bullard, is “recentering” inflation expectations as the economy has continued to churn with inflation trending below the Fed’s 2% target. The Fed next meets July 30-31.
“The global picture more generally is impacting my decision-making,” said Bullard. “European data has been disappointing during the second half of 2018 and first half of 2019... Germany has been affected by global trade war, in particular.”
More
In other news,
will China’s stumble push the global economy into a new recession, no matter
what the Trump Fed does? Did Trade War Team Trump finally kill the goose that
laid golden eggs? Falling auto sales and rising debt defaults suggest an Asian recession
is at hand.
No Turnaround in Sight for China Car Sales
June decline was the 12th in a row as the market suffers its first protracted slowdown after decades of growth
U.S. makers— Ford Motor Co. F -0.59% , General Motors Co. GM -0.39% and Fiat Chrysler Automobiles FCAU -0.57% NV’s Jeep unit—are among those struggling most, all charting their worst first half in several years.
Chinese auto sales in June were down
9.6% from a year earlier, to 2.06 million vehicles. For January-June, they were
off 12.4% to 12.32 million, the weakest in four years, the government-backed
China Association of Automobile Manufacturers said Wednesday.
“We call on the government to
implement policies aimed at boosting consumption as soon as possible,” the
association said.
Sales in the 12 months through June
were down 11.3%, to 26.29 million vehicles, the lowest July-June sales since
2015-16.
Electric-vehicle sales remained
strong in the first half—up 50% to 617,000, or 5% of national auto sales.
Analysts had previously expected a
rebound in the middle of 2019, but some now say it won’t arrive soon. Dealers
desperate to shift inventory—including older models that couldn’t
be sold after July 1 due to new emission standards—shook a market
grappling with weak consumer confidence, said Jing Yang, director of corporate
research at Fitch Ratings.
More
Risks aside, Trump's team sees China trade stance as strength in 2020
July 11, 2019 /
6:06 AM
Trump and Chinese President Xi Jinping agreed in Japan last month to
another truce in the year-long trade war between the world’s two largest
economies, thanks largely to Trump’s promise not to impose new tariffs on
Chinese goods and to ease restrictions on technology company Huawei
Technologies Co Ltd [HWT.UL].
The agreement in Osaka kick-started talks that had been stalled since
May. Chinese and U.S. negotiators spoke by phone on Tuesday and are discussing
a face-to-face meeting in the future.
But no deadline has been set for the process to conclude, leaving the
possibility of a protracted negotiation that lasts well into next year and
Trump’s re-election fight.
“I think you’re into 2020 before there’s any resolution to this,” said
Steve Bannon, Trump’s former chief White House strategist, who has advocated
for a tough stance against Beijing.
---- The United States wants China to change what it considers unfair trade practices including intellectual property theft, forced technology transfer by U.S. companies to their Chinese counterparts, support for state-owned enterprises and currency manipulation.
Trump has imposed 25% tariffs on $250 billion of Chinese goods and has
pledged only to accept a deal with Beijing that includes structural reforms to
the way China does business.
Beijing’s retaliatory tariffs last year on imports of U.S. agricultural
goods have struck a blow at U.S. farmers, a constituency that helped propel
Trump to victory in 2016.
But Trump’s
bashing of China as a presidential candidate in 2016 delighted his crowds, and
he is likely to highlight his tariff policy as a sign of toughness in 2020.
More
Next, it’s Atlantic
hurricane season, which includes the Caribbean and Gulf of Mexico where storms often
start early in the season. Though this storm isn’t forecast to become a
hurricane, the oil companies aren’t taking any reckless chances.
That’s probably wise
since we’re at or passing the sunspot cycle minimum, and some studies have
shown an increased hurricane correlation at solar cycle minimums.
Oil majors evacuate U.S. Gulf platform staff before storm
July 9, 2019 /
10:59 PM
HOUSTON (Reuters)
- Major U.S. oil producers on Tuesday began evacuating and shutting in
production at their deepwater Gulf of Mexico platforms in advance of a tropical
disturbance expected to become a storm this week.
A tropical
depression is expected to form late on Wednesday or Thursday, according to the
National Hurricane Center, and move westward across the northern Gulf of
Mexico, home to dozens of oil- and gas-producing facilities.
Chevron Corp, Royal Dutch Shell Plc, BP Plc and BHP Group Ltd are
removing staff from 15 offshore energy platforms, according to company
statements. Exxon Mobil Corp is “closely monitoring” the disturbance to
determine if its facilities may be affected, a spokeswoman said.
U.S. crude futures rose 90 cents, or 1.5%, to $58.73 in early Wednesday
trade in Asia after an industry group reported that U.S. stockpiles fell for a
fourth week in a row.
Chevron is evacuating and initiating production curbs at five platforms,
Big Foot, Blind Faith, Genesis, Tahiti and Petronius platforms, spokeswoman
Veronica Flores-Paniagua said.
The U.S. oil major is also removing non-essential staff from a sixth
facility, the Jack/St. Malo, as a precaution.
Shell said it evacuated non-essential staff on the Appomattox, Mars,
Olympus and Ursa platforms and reduced oil production by about 2,535 barrels
per day (bpd) on its Mars and Olympus platforms. It expects minimal impacts to
operations.
More
Finally, more on that
Baltic Dry (shipping) Index. For now, no longer a useful way of following the
health of the global economy.
Dry freight rates to ride high on ship fuel refits -Cargill
July 9, 2019 /
4:04 PM
LONDON, July 9 (Reuters) - With the world’s largest dry cargo ships
coming out of service for refits to comply with tougher rules on emissions,
charter rates are expected to remain strong, a top Cargill executive said,
after posting 7-fold gains already this year.
“There are a lot of ships - especially on the capesizes - that will go
into scrubber fitting which basically means they will be out of service for at
least 25 days each to do so,” Jan Dieleman, president of trading firm Cargill’s
ocean transportation business, told Reuters.
“If you add it all up, in a very short period of time you take actually
quite some supply out of the market.”
Ship owners must cut emissions by reducing the sulphur content in fuel
to 0.5% from 3.5% under the rules, which are set by the United Nations’
International Maritime Organization (IMO).
To comply, ship owners can use low-sulphur fuel, opt for other, more
expensive clean fuels such as liquefied natural gas, or install exhaust gas
cleaning systems known as scrubbers.
Dieleman said some ships had already been taken out of service to be
fitted with scrubbers and the pace will pick up in the third and fourth quarter
of this year before the regulations come into effect on January 1, 2020.
Having hit lows under $3,500 a day earlier this year, earnings for
capesize ships already stand at more than $26,000 a day, buoyed in part by
demand for iron ore.
Cargill, the largest privately held U.S. company, charters over 600
ships at any one time. More than 90 percent of them are dry bulk ships -
including the largest capesize class - and are used for carrying commodities
such as iron ore, coal and grain.
---- The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities including grains, is now over 1,700 points, having tripled since February.
Dry bulk shipping has struggled with bouts of muted demand and a supply
glut in recent years. Tighter financing options and looming IMO regulations on
greenhouse emissions have made ship owners more cautious on ordering new
vessels.
More
Lenin
is said to have declared that the best way to destroy the capitalist system was
to debauch the currency…..
Lenin was certainly right. There is no
subtler, no surer means of overturning the existing basis of society than to
debauch the currency. The process engages all the hidden forces of economic law
on the side of destruction, and it does it in a manner which not one man in a
million is able to diagnose.
John Maynard Keynes.
Crooks
and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, a warning on recession from the Merrill Lynch economist who
called 2007-2009 right even as old Mother Merrill foolishly ignored him and
went bust.
David Rosenberg: Signs of a looming U.S. recession are building, if you look beneath the surface
The stock market ceased to be an economic indicator a long time ago
July 9, 2019 2:46 PM EDT
I still hear “where’s the U.S. recession?” I keep
responding with “you’re not scratching the surface.”What is that old refrain about if it walks like duck and quacks like a duck, then guess what it is? Look at the updated year-over-year trends in these high-frequency economic indicators (and you can decide if it’s a duck):
• Container port shipments (Long Beach): -16.6 per cent
• Global semiconductor sales: -14.6 per cent
• Intermodal railroad traffic: -7.4 per cent
• Coal production: -6.3 per cent
• Cass freight shipping index: -6.0 per cent
• Lumber production: -5.6 per cent
• Electricity output: -3.7 per cent
• Railway carloadings: -3.5 per cent
• Corrugated paper production: -3.3 per cent
My vote is with the duck. But make no mistake, the equity market was begging for a horrible U.S. nonfarm payroll report on Friday (it got a slight upside surprise instead) because that would have solidified expectations for a 50 basis point rate cut at the end of the month.
The stock market has ceased to be an economic indicator a long time ago
— it is now an asset class that has become addicted to policy stimulus. Look at
what happened a month ago when we got that woeful employment report for May —
the S&P 500 jumped more than one per cent and the Dow leapt 263 points.
Look at the monthly real GDP data and there has been no growth at all since
February and yet the S&P 500 has rallied 17 per cent. That’s all you have
to know — we are in a phase where “bad news is good news” and where the bullish
case for equities is all about the Fed (and its overseas counterparts).
Meanwhile, two of our major macro themes for 2019 are gaining more
credence with each passing day — these being the inevitable unwind of the
unsustainable corporate debt bubble and the commensurate pullback in business
capital spending. The global market for leveraged loans is now a massive US$2.2
trillion and Moody’s estimates that 80 per cent of this debt is ranked as
“covenant lite,” which makes a mockery of the 25 per cent share prior to the
2008 financial crisis.
More
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?
Cooling/heating window film captures and releases solar energy
Ben Coxworth July 8th, 2019A couple of years ago we heard about the MOlecular Solar Thermal (MOST) system, in which solar energy is stored in a liquid medium, then later released as heat. Now, the technology has been applied to a clear film that could be applied to the inside of windows in energy-efficient buildings.
Developed at Sweden's Chalmers University, the MOST film incorporates a norbornadiene–quadricyclane molecule. This causes the transparent polymer film to take on an orangey-yellow color when not being directly exposed to sunlight.
Once the sun rises in the morning and its rays strike the material, however, much of the sunlight's solar energy is absorbed by the molecule. More specifically, the molecule captures some of the incoming photons, causing it to isomerize – this means that it temporarily becomes another type of molecule, with exactly the same atoms but in a different arrangement.
As a result, the film not only turns completely colorless, but it also keeps much of the solar heat from getting into the room. The interior of the building thus stays cooler than it would otherwise, reducing the need to run the air conditioning.
In the evening, though – once the sun's rays are no longer hitting the film – the molecule reverts to its previous form, releasing the stored energy into the room as heat for up to eight hours. This reduces the need for the building's heating system to kick in.
The scientists are now working on both bringing down the price of the molecule, and increasing its concentration within the film. It is believed that these goals should be achieved in relatively short order, with a commercially-available window-retrofitting product soon to follow.
The research, which is being led by Prof. Kasper Moth-Poulsen, is described in a paper that was recently published in the journal Advanced Science.
https://newatlas.com/most-solar-window-film/60477/
Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.
Mark Twain.
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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