Baltic Dry Index. 1446
+65 Brent
Crude 62.61
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Since the global
financial crisis and recession of 2007-2009, criticism of the economics
profession has intensified. The failure of all but a few professional
economists to forecast the episode - the aftereffects of which still linger -
has led many to question whether the economics profession contributes anything
significant to society.
Robert J. Shiller
It is the day before
America drops everything to celebrate its Independence Day. Markets are usually subdued and are likely to
remain so on Friday.
If not already in a
new global recession, there are signs everywhere outside of America of an
economic slowdown. A slowdown only likely to be aggravated by all of the Trump
trade wars.
Yesterday President
Trump announced his new picks to become Federal Reserve governors. Packing the
board with easy money members. The dollar slid, gold soared, and the currency
race to the bottom is back on again.
How and when all this
ends is unknowable, but my guess is in a new recession by year-end or early
next year. Brexit, and a new Trump trade war against Europe starting later this
year should be the icing on the cake.
To this old dinosaur
market follower, that makes the current stock rally the final exit rally before
a harsh reality in the real economy takes over in global stock markets.
In a booming real
economy, autos and real estate are red hot. They tend to drive a prosperous boom.
Neither are booming or red hot despite ZIRP and NIRP policies. My guess is that
stocks are already living on borrowed time.
Below, a relief rally
running out of relief.
Asian markets fall as trade-deal uncertainty returns
By Marketwatch
and Associated
Press Published: July 2, 2019 11:50 p.m. ET
Asian markets retreated in early trading Wednesday, as the
afterglow of last weekend’s trade-truce announcement gave way to uncertainty
that a deal will actually be made anytime soon.Peter Navarro, President Donald Trump’s top trade adviser, said Tuesday that talks between the U.S. and China were headed in a “very good direction,” but a lack of concrete details and both sides’ hardened positions make the chances for a trade deal little better than they were before Trump’s meeting with China’s President Xi Jinping. While Trump said Monday that some talks had “already begun,” high-level negotiations have not been held since early May, and none are scheduled.
Tuesday night, Trump said he intends to nominate Judy Shelton and Christopher Waller to two vacant spots on the Federal Reserve’s Board of Governors. That could give Trump more allies in his efforts to persuade the Fed to cut interest rates; Shelton has publicly argued for cutting rates, and Waller has been a deputy to St. Louis Fed President James Bullard, who pushed for a rate cut at the Fed’s last meeting.
Japan’s Nikkei NIK, -0.64% slipped 0.7% and Hong Kong’s Hang Seng Index HSI, -0.18% edged down 0.2%. The Shanghai Composite SHCOMP, -0.70% fell 0.8%, as did the smaller-cap Shenzhen Composite 399106, -0.63% . South Korea’s Kospi 180721, -0.95% dropped 0.8%, and benchmark indexes in Taiwan Y9999, -1.07% , Singapore STI, -0.37% and Indonesia JAKIDX, -0.58% all declined. Australia’s S&P/ASX 200 XJO, +0.54% was one of the region’s outliers, rising 0.4%.
----Trading was subdued ahead of the Independence Day holiday Thursday in the U.S., where markets will close early on Wednesday.
On Wall Street, stocks shook off an early wobble to eke out small gains Tuesday, nudging the S&P 500 index to an all-time high for the second straight day.
Traders are waiting to see what will come from the latest truce in the U.S.-China trade war. They’re also looking ahead to a key government jobs report due out Friday, among other potential market-moving developments in the next few weeks.
More
Caixin: China's services growth slowed in June
By MarketWatch
Published: July 2, 2019 11:24 p.m. ET
BEIJING--Growth of activity in China's service sector continued to slow
in June, a private gauge showed Wednesday, in line with official data that
showed a slight deceleration from the previous month.
The Caixin China services purchasing managers' index slipped to 52.0 in
June from 52.7 in May, Caixin Media Co. and research firm Markit said. The
reading is the lowest in four months, but remained above the 50 mark that
separates expansion of activity from contraction.
Total new business received by service companies rebounded and was
higher than levels seen for most of last year, thanks to government's fiscal
policy that encourages spending, said Caixin. But new export orders returned to
contraction territory, pointing to subdued foreign demand.
The subindex of employment in the service sector fell further in June,
but remained in positive territory, suggesting that the capacity for service
providers to absorb labor weakened.
"Overall, China's economy came under greater pressure in June. The conflict between China and the U.S. impacted business confidence rather heavily," said Zhengsheng Zhong, director or of Macroeconomic Analysis at CEBM Group, in a statement accompanying the data.
More
South Korea cuts growth, inflation forecasts
By Kwanwoo
Jun Published: July 2, 2019 11:45 p.m. ET
South Korea's government has cut its economic-growth and inflation
forecasts for this year.
Asia's fourth-largest economy is expected to grow 2.4% to 2.5% in
2019--slower than the 2.6%-2.7% expansion projected in December, the Ministry
of Economy and Finance said in a semiannual outlook released Wednesday.
The ministry also lowered its inflation outlook, expecting consumer
prices to rise 0.9% this year--a softer pace than its earlier projection of
1.6%.
The downward revision indicates Korea's export-led economy is losing
steam amid U.S.-China trade tensions and the recent slowdown in the global tech
industry.
Last year, the Korean economy expanded 2.7% and inflation averaged 1.5%.
More
Opinion: The trade war is over — and the winner is China, writes Howard Gold
By Howard Gold Published: July 2, 2019 7:22 a.m. ET
The great U.S.-China trade war is all over but the shouting.
In a meeting on the sidelines of the G-20 summit in Osaka, Japan,
President Donald Trump and Chinese President Xi Jinping agreed to resume trade
talks that had broken down in May.
Trump will lift some restrictions on Huawei Technologies Co. Ltd.’s
ability to do business with U.S. companies and will postpone tariffs he
threatened to impose on an additional $300 billion annually in Chinese imports.
In exchange, Xi agreed China will buy more U.S. agricultural products. Details
will be spelled out later.
This deal — the second time President Trump gave in to China’s demands
and ended restrictions on a major Chinese technology company that had been
accused of threatening U.S. national interests — effectively marks the end of
Trump’s trade war with China.
Why? Because it
shows the president won’t go to the wall to fundamentally change the U.S.’s
trade relationship with the world’s second-biggest economy. The Chinese
president has clearly calculated his American counterpart is unwilling to do
anything that would threaten his support among key constituencies, like
farmers, as the 2020 election looms. (President Trump also has backed down big
time from his bellicose talk on North Korea and now appears ready to tacitly
accept Pyongyang as a nuclear power.)
That means, I believe, that the current tariffs will continue but no new ones will be imposed. China will buy more U.S. agricultural products — although some U.S. farmers will find other countries already have muscled them out of the Chinese market. We may well see a bigger deal in coming months, which the Dealmaker-in-Chief will undoubtedly proclaim a great victory, cheered on by his hard-core supporters
But China will not rein in its state-owned enterprises. It will not curtail its Made in China 2025 initiatives in cutting-edge technologies like robotics, electric vehicles and artificial intelligence. Global supply chains will remain largely intact and thousands of manufacturing jobs will not flow back to U.S. shores. China under President for Life Xi will continue to become the most advanced surveillance state the world has ever seen, and it will keep hundreds of thousands of Uighur Muslims from Xinjiang in “re-education” camps for as long as it wishes.
---- “To be blunt about it, I think the Chinese will see the United States as having blinked a bit,” former Australian Prime Minister Kevin Rudd told CNBC’s “Squawk Box” Monday morning. “I think the takeout message from Osaka will be…President Trump really wants a deal,” the China expert and fluent Mandarin speaker concluded.
More
Roubini lives up to ‘Dr Doom’ alias with global recession call
Tuesday, 2 Jul 2019 3:18 PM MYT
HONG KONG: The U.S.-China trade war and a spike in oil prices from geopolitical tensions have the potential to push the world into recession next year, according to renowned doomsayer Nouriel Roubini.
"It’s a scary time for the global economy,” the head of Roubini Macro Associates, sometimes known as "Dr. Doom,” said in an interview with Bloomberg TV.
He said he
expects a recessionary shock to materialize next year.HONG KONG: The U.S.-China trade war and a spike in oil prices from geopolitical tensions have the potential to push the world into recession next year, according to renowned doomsayer Nouriel Roubini.
"It’s a scary time for the global economy,” the head of Roubini Macro Associates, sometimes known as "Dr. Doom,” said in an interview with Bloomberg TV.
Equities by contrast are telegraphing confidence that central banks will support the economy as U.S. and Chinese negotiators resume trade talks.
The rub for Roubini is that monetary policy makers’ ability to respond to shocks is impaired, with benchmark interest rates still at historically low -- and in some cases negative -- levels.
High levels of debt will also pose a constraint, he said.Optimism will likely collapse "like in every other recession,” he said. Further unconventional monetary policy is likely to be needed, he added.
On the trade front, deglobalization looms as countries around the world have to choose which country to align with -- the U.S. or China -- once the bilateral negotiations collapse, Roubini said.
"This divorce is going to get ugly compared to the divorce between
the U.S. and the Soviet Union.”
On top of that, an oil-price shock coming from Iran tensions would raise the prospect of 1970s-style stagflation as a rise in crude prices coincides with slower growth, Roubini said.
Speaking at a blockchain summit in Taipei, Roubini reiterated his skepticism toward cryptocurrencies such as Bitcoin.
"There’s massive, massive amounts of price manipulation” in cryptocurrency trading, he said in remarks at the conference.
On top of that, an oil-price shock coming from Iran tensions would raise the prospect of 1970s-style stagflation as a rise in crude prices coincides with slower growth, Roubini said.
Speaking at a blockchain summit in Taipei, Roubini reiterated his skepticism toward cryptocurrencies such as Bitcoin.
"There’s massive, massive amounts of price manipulation” in cryptocurrency trading, he said in remarks at the conference.
As for blockchain, "it’s the most overhyped technology ever, it’s nothing better than a glorified spreadsheet,” Roubini said. "Nobody’s using it, and nobody’s ever going to use it.” - Bloomberg
https://www.thestar.com.my/business/business-news/2019/07/02/roubini-lives-up-to-dr-doom-alias-with-global-recession-call/
In China anything
less than 6% growth is a recession meaning that it also causes financial
problems and it's disruptive and it's a problem.
Ray Dalio
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today Huawei again. Either it is or isn’t a security threat. President
Trump faces both ways on the issue while the NY Times (almost) suggests it isn’t.
What Trump’s Huawei Reversal Means for the Future of 5G
Huawei is the top threat to American dominance in wireless
technology. And the U.S. is woefully, even disgracefully, behind.
In an impromptu question-and-answer session late last month
at the White House, President Trump was asked about the nation’s efforts to
block Huawei, the Chinese telecommunications company, from doing business in
the United States and with our allies around the globe.
“Huawei is something that is very dangerous,” Mr. Trump
said. Then, almost in the same breath, he added: “It’s possible that Huawei
would be included in a trade deal. If we made a deal, I can imagine Huawei
being included in some form or some part of a trade deal.”
Over the weekend in Japan, Mr. Trump appeared to choose
trade over national security, suspending the ban on United States companies’
supplying equipment to Huawei as he hopes to reach a trade deal with
President Xi Jinping of China. Without providing any details, he declared
that American companies could sell to Huawei without creating a “great,
national emergency problem.”
He said this even as own secretary of state, Mike Pompeo,
spent the past several months traveling the world warning our allies that
Huawei is a profoundly dangerous security threat and instructing them to freeze
out the company.
Senator Marco Rubio, Republican of Florida, used Twitter to call Mr.
Trump’s reversal “a catastrophic mistake” that “will destroy the credibility of
his administration’s warnings about the threat posed by the company, no one
will ever again take them seriously.” (Mr. Trump followed the same playbook
with ZTE earlier this year, banning it and then reversing the ban to placate
the Chinese.)
While Mr. Trump may view Huawei as both “dangerous” and a pawn in the
trade war, the truth is it may be something else entirely.
Huawei is the most significant long-term competitive threat
to the United States’ dominance of the future of wireless technology. And the
United States is woefully — even disgracefully — behind.
No matter what the United States does to hobble Huawei —
and Mr. Trump’s latest stance will only hasten its rise — it will not alter a
fundamental problem that clouds the conversation: The United States needs a
meaningful strategy to lead the world in next-generation wireless technology —
a kind of Manhattan Project for the future of connectivity.
Don’t take my word for it.
In April, amid the frenzy over the report from Robert S.
Mueller III, the special counsel investigating Russian election interference, another alarming government report was issued — and largely
overlooked.
It was written by the Defense Innovation Board, a group of business
leaders and academics that advises the Defense Department. And it was a
scathing indictment of the country’s 5G efforts.
“The leader of 5G stands to gain hundreds of billions of dollars in
revenue over the next decade, with widespread job creation across the wireless
technology sector,” wrote the board, a who’s-who of the tech world that
includes the former Alphabet chairman Eric Schmidt, the LinkedIn founder Reid
Hoffman and Walter Isaacson, the author and a former chief executive of the
Aspen Institute.
“The country that owns 5G will own many of these innovations and set the
standards for the rest of the world,” the board wrote.
It added in no uncertain terms: “That country is currently not likely to
be the United States.”
It is no wonder. No American company makes the devices that transmit
high-speed wireless signals. Huawei is the clear leader in the field; the
Swedish company Ericsson is a distant second; and the Finnish company Nokia is
third.
More
It's a recession
when your neighbor loses his job; it's a depression when you lose yours.
Harry S Truman
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?
Brazil posts new world record low price for solar power
02 July 2019
A new world record low price for solar power generation has
been achieved in Brazil, where the government's latest renewables auction saw
contracts for six solar PV projects awarded at an average of just 1.65 cents
per kilowatt hour.Brazil's regulator Agencia Nacional de Energía Eléctrica (ANEEL) announced the latest auction results on Friday, confirming a total of 401.6MW of electricity capacity has been contracted across 15 projects with supply slated to start in January 2023. The successful bids include five hydroelectric plants, one biomass thermal facility, and three wind farms.
But it was the prices achieved for the six solar successful PV project bids, amounting to 211MW in total, which sparked interest from around the world. The bids cut below the 2c/kWh mark for the first time anywere in the world, as the remarkable and rapid decline in solar technology costs continues.
It is only two years since solar PV contract prices fell below 3c/kWh for the first time for projects in the Middle East and North Africa region - a global record at the time.
Recent
research by the International Renewable Energy Agency estimated solar and
onshore wind are already the cheapest sources of energy available in many parts
of the world, and both sectors are widely expected to deliver further cost
reductions in the coming years.
Michael Liebreich, founder of Bloomberg New Energy Finance, hailed the record solar price as "the cheapest power from any technology ever, anywhere in the world, in the history of the planet (assuming it is confirmed subsidy-free)".
The average price of winning solar bids in the auction was 75.6 per cent
below the auction price cap, said ANEEL, which estimated that together all the
renewables projects securing contracts would create around 4,500 jobs.
Assaad Razzouk, CEO of renewables firm Sindicatum, said the record low
price for solar generation was posted at 67.48 Brazilian reais per megawatt
hour, the equivalent to US$17.5/MWh, which is around half the price of solar
contracts awarded by the country's government in 2017.
More
Up until the
Depression, recession had a moral character: it was supposed to purge the body
economic of the greed and excess that attends a business expansion.
James Buchan
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.
Nice post.Keep sharing. Thanks for sharing.
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