Baltic Dry Index. 1354
+14 Brent
Crude 66.31
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
John Kenneth Galbraith
President Trump at
his weekend meeting with President Xi, ordered the punch bowl back out again,
but there are growing doubts that the Fed won’t spike it at their upcoming
meeting at the end of the month, or if they do, it will only be a splash, not a
large slug of juice.
Below, it’s all about
blowing stock market bubbles now, to get President Trump a second term.
Distorting, if not destroying the real economy of making or growing things, and
retailing them to consumers. The Basel based Bank for International
Settlements, the central banksters bank, is close to despair.
Below, onward and
upward in our latest stock market bubble in the Great Nixonian Error of fiat
money. What could possibly go wrong?
Asian markets gain as U.S., China agree to go back to the negotiating table
Published: June 30,
2019 11:29 p.m. ET
Asian markets gained in early trading Monday, after the
U.S. and China over the weekend agreed to a timeout in their tariff war and
agreed to resume trade negotiations.After meeting with China’s President Xi Jinping on Saturday at the G-20 summit in Japan, President Donald Trump said that current tariffs would remain in place, but new ones would be placed on hold for the “time being.” Trump said his talks went “even better than expected” and that “we’re going to work with China where we left off.” Despite his optimism, the U.S. and China remain entrenched in their positions, and it is unclear how long it may take to reach a final agreement. The two sides haven’t met for formal negotiations since talks broke off in early May.
Japan’s Nikkei NIK, +2.00% rose 1.8%. The Shanghai Composite SHCOMP, +1.88% gained 2.1% and the smaller-cap Shenzhen Composite 399106, +2.93% surged 2.9%. South Korea’s Kospi 180721, -0.07% was about flat, while benchmark indexes in Taiwan Y9999, +1.58% , Singapore STI, +1.26% and Indonesia JAKIDX, +0.32% advanced. Australia’s S&P/ASX 200 XJO, +0.40% gained 0.5%. Hong Kong’s market was closed for a holiday.
“After spending the better part of two months in trade war purgatory and
with G-20 done and dusted, risk markets have responded to Saturday’s events in
a reveller tone,” Stephen Innes, managing partner at Vanguard Markets, said in
a note Monday. “Indeed, investors heaved a massive, but exhausted, sigh of
relief.”
“The biggest question on everyone’s mind is will any armistice stick or
will history repeat, and trade war gridlock set in?” he added.
More
Stocks relieved at trade truce, bonds step back
July 1, 2019 /
12:01 AM
SYDNEY (Reuters) -
Stocks rallied and bonds retreated in Asia on Monday as a thaw in the Sino-U.S.
trade dispute averted one threat to the global economy, leading investors to
pare wagers on aggressive policy easing by the major central banks.
The dollar firmed modestly on the safe-haven yen as Treasury yields rose and futures reined in bets for a half-point rate cut from the U.S. Federal Reserve this month.
“The Trump-Xi G20 meeting looks to be a modest win for China and a positive for risk assets short term, but well within the range of expected outcomes,” said Westpac economist Richard Franulovich.
“Fed cut expectations are likely to see a sustained trimming, though more so for their meeting on July 31 than over the next year,” he added. “A 50 basis point rate cut seems very unlikely.”
The initial reaction was one of relief that new tariffs were avoided and Japan's Nikkei .N225 climbed 1.6% to a two-month top. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.4%.
---- Treasury futures TYc1 slid 10 ticks as yields on 10-year notes edged up 3 basis points to 2.03%.
Fed funds dropped over 5 ticks as the market scaled back the probability
of a half-point rate cut this month to around 13%, from nearer 50% a week ago.
China agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table.
Still, no deadline was set for a deal and much damage has already been done, with two surveys of Chinese manufacturing out over the weekend showing a contraction in activity.
The official Purchasing Managers’ Index (PMI) held at 49.4 in June, just missing forecasts, while the Caixin/Markit PMI dropped to 49.4, the worst reading since January.
Surveys from Japan and South Korea showed similar slowdowns.
“Although a worst case outcome has been averted, the threat of tariffs remains and it is unlikely the truce gives much confidence to firms’ investment and hiring decisions,” said Tapas Strickland, a director of economics at NAB.
More
https://uk.reuters.com/article/uk-global-markets/stocks-relieved-at-trade-truce-bonds-step-back-idUKKCN1TV105
But in the real world far from the latest stock market
bubble, a fast slowing global economy is the real problem.
China warns of long road ahead for deal with U.S. after ice-breaking talks
June 30, 2019 /
3:26 AM
BEIJING/OSAKA
(Reuters) - China and the United States will face a long road before they can
reach a deal to end their bitter trade war, with more fights ahead likely,
Chinese state media said after the two countries’ presidents held ice-breaking
talks in Japan.
The world’s two largest economies are in the midst of a bitter trade
war, which has seen them level increasingly severe tariffs on each other’s
imports.
In a sign of significant progress in relations on Saturday, Chinese
President Xi Jinping and U.S. President Donald Trump, on the sidelines of the
G20 summit in Osaka, agreed to a ceasefire and a return to talks.
However, the official China Daily, an English-language daily often used
by Beijing to put its message out to the rest of the world, warned while there
was now a greater likelihood of reaching an agreement, there’s no guarantee
there would be one.
“Even though Washington agreed to postpone levying additional tariffs on
Chinese goods to make way for negotiations, and Trump even hinted at putting
off decisions on Huawei until the end of negotiations, things are still very
much up in the air,” it said in an editorial late Saturday.
“Agreement on 90 percent of the issues has proved not to be enough, and
with the remaining 10 percent where their fundamental differences reside, it is
not going to be easy to reach a 100-percent consensus, since at this point,
they remain widely apart even on the conceptual level.”
---- The Chinese government’s top diplomat, State Councillor Wang Yi, in a lengthy statement about G20 released by the Foreign Ministry following the delegation’s return to Beijing, said the Xi-Trump meeting had sent a “positive signal” to the world.
Though problems between the two countries remain, China is confident as
long as they both follow the consensus reached by their leaders they can
resolve their problems on the basis of mutual respect, Wang said in the
statement released late Saturday.
Trump’s comments on Huawei, made at a more than hour-long news
conference in Osaka following his sit-down with Xi, generated only a cautious
welcome from China. The word “Huawei” was not mentioned at all in the top
diplomat’s appraisal of G20.
More
China's June factory activity contracts more than expected
June 30, 2019 /
2:34 AM
BEIJING (Reuters)
- China’s factory activity shrank more than expected in June, an official
survey showed on Sunday, highlighting the need for more economic stimulus as
U.S. trade tariffs ramped up pressure on the world’s second-largest economy.
The weak manufacturing readings are likely to cast a shadow over the
apparent progress U.S. and Chinese leaders made in Japan over the weekend in
restarting their troubled talks over tariffs amid a costly trade war.
The indicators will also spark concerns about stalling growth in China
and the risk of a global recession, despite slightly better-than-expected
export and industrial profits data in May.
The official Purchasing Managers’ Index (PMI) stood at 49.4 in June,
unchanged from the previous month and below the 50-point mark that separates
growth from contraction on a monthly basis.
Analysts polled by Reuters
predicted a reading of 49.5.
Many economists still expect the economy to face strong headwinds in the
coming months as domestic demand falters and external risks rise.
In June, China’s factory output growth
slowed, with the subindex falling to 51.3 from 51.7 in May while the
contraction in total new orders accelerated to 49.6 from 49.8.
Export orders extended their decline with the sub-index falling to 46.3
from May’s 46.5, suggesting a further weakening in global demand.
While China’s exporters are feeling the pinch, Sunday’s data showed
import orders also worsened, reflecting softening demand at home despite a
flurry of growth-supporting measures rolled out earlier this year.
More
China's official nonmanufacturing PMI slows
Published: July 1,
2019 12:51 a.m. ET
BEIJING -- China's official nonmanufacturing purchasing managers index,
a measure of activity outside factory gates, edged down to 54.2 in June from
54.3 in May, the National Bureau of Statistics said Sunday.
A reading above 50 indicates an expansion, while a figure below that
level indicates a contraction.
The subindex measuring business activities for the service sector was a
tick down to 53.4 from 53.5, while the subindex measuring construction
activities edged up to 58.7 from 58.6. The new orders subindex for the entire
nonmanufacturing sector rose to 51.5 in June from 50.3 in May.
The government's policy measures to kick start investment projects
boosted new orders for the construction sector, said Cai Jin, an analyst with
China Federation of Logistics & Purchasing, which issues the data together
with the statistics bureau.
The nonmanufacturing PMI covers services such as retail, aviation and
software as well as the real-estate and construction sectors. The data are
based on replies to monthly questionnaires sent to purchasing executives at
4,000 companies in 37 nonmanufacturing sectors.
The official June manufacturing PMI, also released on Sunday, was
unchanged at 49.4 in June.
Finally, the BIS is
worried, very worried about global growth. Shouldn’t we be too?
It's Time to Fire Up All Engines to Boost World Growth, BIS Says
By Catherine Bosley and Anna Andrianova
·
·
Ultra-low interest rates mean central-bank room
is now limited
Governments must step in to boost their economies and redress policy imbalances that have forced central banks to use up most of their firepower, according to the Bank for International Settlements.
The Switzerland-based BIS, which promotes cooperation among the world’s
monetary officials, used its annual economic report to urge politicians to
“ignite all engines” to overcome a global soft patch.
They should make
structural reforms and strengthen fiscal and macroprudential measures, instead
of relying on ever-lower interest rates in a debt-fueled growth model that
risks turbulence ahead.
“The continuation of easy monetary conditions can support the economy,
but make normalization more difficult, in particular through the impact on debt
and the financial system,” the BIS said. “The narrow normalization path has
become narrower.”
U.S.-led protectionism has dented economic confidence and slowed growth,
forcing central banks to prepare to ease policy again even if they haven’t yet
returned to their pre-crisis settings. The Federal Reserve and the European
Central Bank are expected to cut interest rates this year, while nations
including Australia, Russia, India and Chile have already started.
----The BIS has long called for higher interest rates to prevent asset-price bubbles, but it says regaining the monetary space to do so has been harder than expected. The ECB and the Swiss National Bank still have record-low rates, below zero, and now inflation expectations in developed nations have plummeted.
Lackluster bank profitability due, in part to non-performing loans as
well as negative rates, could exacerbate a downturn, the BIS said. A particular
area of concern is corporate debt, after a “remarkable” growth in leveraged
loans.
“Hard
as it is politically, it is essential to revive the flagging efforts to
implement policies designed to boost growth,” the BIS said. “Monetary policy
can no longer be the main engine.”
Banks Exposed to Possible Leveraged-Loan Market Tumult, BIS Says
By Thomas BeardsworthLenders could be vulnerable if they’ve extended credit lines to leveraged borrowers, rely on fees from collateralized loan obligation managers or struggled to rebuild capital reserves since the last crisis, analysts at Basel-based BIS said in a report published on Sunday.
CLOs, which slice up pools of loans into securities of varying risks, are attracting scrutiny from regulators because they’ve soared in popularity since their senior tranches survived the last crisis unscathed. Japanese lenders account for about 60% of the direct bank ownership of CLO tranches, BIS said, while lenders including Deutsche Bank AG are also buying the safest tranches to boost returns on their spare cash.
“The concentration of exposures in a small number of banks may result in pockets of vulnerability,” BIS analyst wrote. “In general, banks are likely to face lower losses from direct securitization exposures and should be in a better position to manage them than in the 2006–07 subprime crisis.”
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
Today, the EUSSR, of which GB is still a prisoner, readies for Trade War
Team Trump. If TWTT attack German Mercs and French wines, the EUSSR is ready
and willing to fight back with unspecified trade measures. Jeeps and California
wines?
EU Commissioner on the U.S.-China Trade War 'Our List of Countermeasures Is Ready'
In an interview, European Trade
Commissioner Cecilia Malmström discusses what the tariff dispute between the
United States and China means for European companies and consumers and why
President Trump's strategy could end with the "law of the jungle."
Interview Conducted By Peter
Müller and Christian
Reiermann June 26, 2019 05:27 PM
Malmström: Yes. But if you are alluding to the trade dispute between the U.S. and China, then this saying doesn't fit. A trade war between the two countries doesn't remain without consequences for Europe: Products get more expensive, markets react nervously and companies postpone investments. There's no reason for us to be happy.
DER SPIEGEL: Why doesn't the EU join forces with U.S. President Donald Trump against China?
Malmström: With regard to China, we see many things in the same way as the U.S. does. We are defending ourselves against state-subsidized companies buying up our most creative companies, we are fighting against intellectual property theft and for greater transparency. We are working closely with the U.S. and Japan on this, for example when it comes to better monitoring Chinese investments in our countries.
DER SPIEGEL: But you don't want to join Trump in his threats of punitive tariffs?
Malmström: These aren't our methods. The EU is a community based on the rule of
law, and we abide by international rules. Trump, on the other hand, is using
the threat of massive tariffs to assert political goals. We expressly do not
share this approach. China is an economic rival for us, but not a political
enemy.
DER SPIEGEL: Nevertheless, the EU's approach to the Chinese has also become clearer
recently -- at the EU-China summit in April, for example. Is it helping you
that the Chinese don't want to risk a second front in the trade war?
Malmström: We want to cooperate with China in environmental protection and in
business. But we are not abandoning our demands in terms of human rights or in
any other area. We want Chinese investment, but we will not naively stand by
and watch China buy up key European industries.
----DER SPIEGEL: The U.S. used to go into battle with tanks, but now it's with punitive tariffs. Is the EU prepared for that kind of confrontation?
Malmström: President Trump apparently prefers this strategy, but it would end up as
the law of the jungle without the World Trade Organization (WTO). His approach
is creating great uncertainty on the markets. In addition, some of Trump's
measures, such as the U.S.'s punitive tariffs on steel and aluminum from the
EU, violate WTO rules.
----DER SPIEGEL: In Trump's world, Europe isn't a friend -- it is also a foe. If Trump reaches an agreement with Chinese President Xi Jinping on the trade dispute at this week's G-20 summit in Japan, will the EU be his next target?
Malmström: An American president who sees Europe as an opponent -- we all still
have to learn how to deal with this situation. We've often had problems with
the U.S., but at the core, the trans-Atlantic friendship was unbreakable. That
appears to be different under Trump, which is disturbing to many Europeans.
DER SPIEGEL: You've been negotiating with Washington for months. Can you predict
whether Trump will impose punitive tariffs on European cars in November?
Malmström: So far, there has been no sign of this happening. In any case, we do not
share President Trump's view that the export of European cars is a threat to
American national security. Some 420,000 jobs in the U.S. are dependent on
Europe's auto industry. If Trump goes through with his threat, we're prepared.
Our list of countermeasures is ready. But we are still talking -- about a free
trade agreement and the harmonization of industrial standards.
“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."
John Kenneth Galbraith. The Great Crash: 1929.
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?
Utrafast magnetism: Electron-phonon interactions examined at BESSY II
Date:
June 28, 2019
Source:
Helmholtz-Zentrum Berlin für Materialien und Energie
Summary:
How fast can a magnet switch its orientation and what are the microscopic
mechanisms at play? These questions are of first importance for the development
of data storage and computer chips.
Now, an HZB team at BESSY II has for the
first time been able to experimentally assess the principal microscopic process
of ultra-fast magnetism. The methodology developed for this purpose can also be
used to investigate interactions between spins and lattice oscillations in
graphene, superconductors or other (quantum) materials.
Interactions between electrons and phonons are regarded as the
microscopic driving force behind ultrafast magnetization or demagnetization
processes (spin-flips). However, it was not possible until now to observe such
ultrafast processes in detail due to the absence of suitable methods.
Now, a team headed by Prof. Alexander Föhlisch has developed an original
method to determine experimentally for the first time the electron-phonon
driven spin-flip scattering rate in two model systems: ferromagnetic Nickel and
nonmagnetic copper.
They used X-ray emission spectroscopy (XES) at BESSY II to do this.
X-rays excited core electrons in the samples (Ni or Cu) to create the so-called
core-holes, which were then filled by the decay of valence electrons. This
decay results in the emission of light, which can then be detected and
analyzed. The samples were measured at different temperatures to observe the
effects of lattice vibrations (phonons) increasing from room temperature to 900
degrees Celsius.
As the temperature increased, ferromagnetic nickel showed a strong decrease
in emissions. This observation fits well with the theoretical simulation of
processes in the electronic band structure of nickel after excitations: by
increasing the temperature and thus, the phonon population, the rate of
scattering between electrons and phonons increases. Scattered electrons are no
more available for decay, which results in a waning of the light emission. As
expected, in the case of diamagnetic copper, the lattice vibrations had hardly
any influence on the measured emissions.
"We believe that our article is of high interest not only to
specialists in the fields of magnetism, electronic properties of solids and
X-ray emission spectroscopy, but also to a broader readership curious about the
latest developments in this dynamic field of research," says Dr. Régis
Decker, first author and postdoctoral scientist in the Föhlisch team. The
method can also be used for the analysis of ultrafast spin flip processes in
novel quantum materials such as graphene, superconductors or topological insulators
"In
economics, hope and faith coexist with great scientific pretension."
John Kenneth
Galbraith.
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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