Tuesday 30 July 2019

Trade War Talks Resume. The Cowed Fed Meets.


Baltic Dry Index. 1922 -15   Brent Crude 64.04

Never ending Brexit now October 31st, maybe.  93 days away.
Nuclear Trump China Tariffs Now In Effect.
USA v EU trade war postponed to November, maybe.

Thu, 07.30.1863

Lincoln issues Eye-For-Eye order

On this date in 1863, President Abraham Lincoln issued what was called an "eye-for-eye" order, warning the Confederacy that Union soldiers would shoot a rebel prisoner for every black prisoner shot. It also would condemn a rebel prisoner to a life of hard labor for every Black prisoner sold into slavery.

It is day one of the resumed trade war talks between America and China. Day one of the Trump cowed Fed meeting in Washington, District of Crooks.

There are low expectations on the trade war talks in Shanghai. High expectations that the greatly cowed Fed will cut their key interest rate tomorrow by 25 basis points, possibly even by a half of a percent.

Poking President Trump in the eye by doing nothing is highly improbable. It would likely trigger a 10 percent sell-off in US stock markets. President Trump has staked his re-election prospects to the fate of US stock markets.

In the trade war talks, talk is cheap. China will probably promise to buy some more agricultural goods and possibly some US pork to replace some lost Chinese pork due to the swine flu epidemic. The USA promise to ease up on their technology war against Huawei.

Meanwhile, in the real world, the manufacturing and exports recession grows. Real estate sales are now dropping in to many key leading markets around the world. Like it or not, our global economy has caught a cold, and we still have a clean no-deal Brexit to come, plus a USA v EUSSR trade war against German cars and French wines. Savvy Americans will be stocking up on quality French wines now. Mercs and Beamers not so much.

Below, yet another day in the summer silly season, as we await tomorrow’s action from the Trump Fed.

Asia stocks gain ahead of Fed, pound pressured by fresh Brexit pain

July 30, 2019 / 2:23 AM
TOKYO (Reuters) - Asian stocks gained on Tuesday as equity investors prepared for an expected U.S. interest rate cut this week while the pound retreated to a 28-month low as heightened concerns about a no-deal Brexit gripped currency markets.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.35%.
The Shanghai Composite Index .SSEC rose 0.7%. 

Australian stocks climbed as much as 0.7% to touch a record high, supported by buoyant mining shares and adding to the previous day’s tech-driven gains.
Japan's Nikkei .N225 was up 0.7%, showing little reaction after the Bank of Japan left monetary policy unchanged as expected on Tuesday.

The BOJ added it would ease “without hesitation” if the economy loses momentum for achieving the central bank’s 2% inflation target.

The U.S. Federal Reserve begins a two-day policy meeting later on Tuesday, at which it is widely expected to lower interest rates by 25 basis points. If implemented, it would be the central bank’s first rate cut in a decade.

Prospective monetary easing by the Fed has been a key factor behind the recent bull run by global equities, particularly U.S. stocks, which have notched up record highs over the past month.
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U.S., China move trade talks to Shanghai amid deal pessimism

July 28, 2019 / 11:09 PM
BEIJING/WASHINGTON (Reuters) - U.S. and Chinese trade negotiators shift to Shanghai this week for their first in-person talks since a G20 truce last month, a change of scenery for two sides struggling to resolve deep differences on how to end a year-long trade war.

Expectations for progress during the two-day Shanghai meeting are low, so officials and businesses are hoping Washington and Beijing can at least detail commitments for “goodwill” gestures and clear the path for future negotiations. 

These include Chinese purchases of U.S. farm commodities and the United States allowing firms to resume some sales to China’s tech giant Huawei Technologies.

President Donald Trump said on Friday that he thinks China may not want to sign a trade deal until after the 2020 election in the hope that they could then negotiate more favourable terms with a different U.S. president.

“I think probably China will say “Let’s wait,” Trump told reporters at the White House. “Let’s wait and see if one of these people who gives the United States away, let’s see if one of them could get elected.”

For more than a year, the world’s two largest economies have slapped billions of dollars of tariffs on each other’s imports, disrupting global supply chains and shaking financial markets in their dispute over China’s “state capitalism” mode of doing business with the world.

Trump and Chinese President Xi Jinping agreed at last month’s G20 summit in Osaka, Japan, to restart trade talks that stalled in May, after Washington accused Beijing of reneging on major portions of a draft agreement — a collapse in the talks that prompted a steep U.S. tariff hike on $200 billion of Chinese goods.

Trump said after the Osaka meeting that he would not impose new tariffs on a final $300 billion of Chinese imports and would ease some U.S. restrictions on Huawei if China agreed to make purchases of U.S. agricultural products.
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As trade war bites, China's factories set for third month of shrinking activity - Reuters poll

July 30, 2019 / 5:49 AM
BEIJING (Reuters) - Factory activity in China is expected to have contracted for the third month in a row in July, a Reuters poll showed, underlining the intensifying strains on the world’s second-biggest economy from a protracted trade war with the United States.

The official Purchasing Managers’ Index (PMI) for July is set to have edged up to 49.6 from June’s reading of 49.4, according to the median forecasts of 34 economists. That still left it below the 50-point mark that separates expansion from contraction on a monthly basis. 

Another month of weak manufacturing activity is likely to fuel expectations for Beijing to add to a flurry of support measures put in place over the past year, especially as the Sino-U.S. trade war drags on and becomes costlier.

“A cooling property market, suppressed by official policy, and a slowing global economy have further knocked China’s manufacturing sector last month,” said Nie Wen, economist at Hwabao Trust.

China observers have said that Beijing’s recent growth-boosting measures will take time to filter through to the broader economy, and many analysts are of the view that further stimulus is needed to prevent a deeper downturn and to help stabilise growth.

Growth in Asia’s powerhouse economy slowed to a 27-year low in the second quarter, showing just why policymakers from India to Australia to Europe and the United States are worrying about the China-effect on global output.

Sluggish demand at home and abroad has led to a months-long spell of depressed activity for China’s manufacturers, and a sharp U.S. tariff hike announced in May threatens to crush already-thin profit margins.

Some manufactures have cut this year’s sales target as clients delay purchase orders in a wait-and-see approach, while others have already relocated their production capacity to neighbouring countries to avoid the tariff hit.

Profits earned by China’s industrial firms contracted in June after briefly gaining the previous month. Earnings at these big firms have been softening since the second half of 2018 due to the broadening economic pressures, with many putting off business decisions and scaling back manufacturing investment.

The official PMI and its sister survey on the services sector will be released on Wednesday, the second day of U.S. and Chinese trade negotiators’ meeting in Shanghai for their first in-person talks since a G20 truce last month.
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Finally, the USA is back to deficits don’t matter again, ready to borrow and spend itself into prosperity, and this is under the Republicans. Just wait until Democrat Socialists get into the White House. They’ll probably sell off what’s left of the USA’s gold holdings to China and Russia.

Federal Borrowing Soars as Deficit Fear Fades

The Treasury expects to sell over $1 trillion in debt this year; issue has little traction in 2020 race

By Kate Davidson Updated July 29, 2019 7:24 pm ET
WASHINGTON—Borrowing by the federal government is set to top $1 trillion for the second year in a row as higher spending outpaces revenue growth and concern about budget deficits wanes in Washington and on Wall Street.

The Treasury Department said Monday it expects to issue $814 billion in net marketable debt in the second half of this calendar year, bringing total debt issuance to $1.23 trillion in 2019. That would represent a slight decline from borrowing in 2018, when the Treasury issued $1.34 trillion in debt—more than twice as much as the $546 billion it issued in 2017.

The budget gap for the fiscal year that ends Sept. 30 is on course to exceed $1 trillion, following the 2017 tax cuts that constrained federal revenue and a previous two-year budget deal that raised spending nearly $300 billion above spending caps Congress enacted in 2011.

The new budget agreement congressional leaders announced last week effectively pushed the issue of government spending off until after the 2020 election.

Concerns about rising deficits and debt have been absent from the presidential campaign trail, in contrast to previous election cycles.

The tea party rose to prominence amid a budget austerity drive that consumed Washington in the early part of the decade, leading to the 2011 deal in Congress to impose spending caps. Worries about rising borrowing costs in the early 1990s led to sweeping bipartisan budget deals during the George H.W. Bush and Clinton administrations, putting the budget in the black for the first time since 1969.

But political support for taming deficits faded in recent years, with Republicans supporting higher deficits in exchange for tax cuts and Democrats pushing for more spending on domestic programs.

The current bipartisan budget agreement, set for approval by the Senate this week, would boost federal outlays and suspend the government’s borrowing limit for two years, adding further to annual deficits into the future. It would lift spending $44 billion above fiscal year 2019 levels, or 3.5%, not including emergency war funding or one-time funding for the 2020 census.

Without a new deal, automatic spending cuts would have reduced discretionary spending—the part of the budget Congress can adjust each year—by 10% in 2020, weighing on economic growth.

The agreement removes a key source of economic uncertainty heading into the presidential election year, though economists said the modest spending lift is unlikely to translate into higher growth.

The deficit as a share of the economy is set to more than double over the coming decades, due in part to higher spending on Social Security and Medicare.
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“Other inflationists realize very well that an increase in the quantity of money reduces the purchasing power of the monetary unit. But they endeavour to secure inflation none-the-less, because of its effect on the value of money; they want depreciation, because they want to favour debtors at the expense of creditors and because they want to encourage exportation and make importation difficult.”

Ludwig von Mises, The Theory of Money and Credit

Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

Yes, it’s the banksters again. They can resist anything except temptation, it seems. Why do they still have banking licences?

JPMorgan, UBS Among Banks Facing $1 Billion FX-Rigging Suit

By Kaye Wiggins
July 29, 2019, 8:35 AM GMT+1 Updated on July 29, 2019, 9:48 AM GMT+1
JPMorgan Chase & Co. and UBS Group AG are among five banks being sued over allegations of foreign-exchange rigging in a class-action lawsuit seeking more than 1 billion pounds ($1.2 billion).
Barclays Plc, Citigroup Inc. and Royal Bank of Scotland Group Plc are the other three targets of the U.K. suit that will say pension funds, asset managers, hedge funds and corporations lost out because of market manipulation between 2007 and 2013 and should be compensated.

The lawsuit centers on collusion on foreign-exchange trading strategies, for which the European Commission fined Barclays, RBS, Citigroup, JPMorgan and Mitsubishi UFJ Financial Group, Inc. a total of 1.07 billion euros ($1.2 billion) in May. UBS escaped a fine because it was the first to tell regulators about the collusion. Mitsubishi UFJ isn’t being sued in the civil case.

Traders ran two cartels on online chatrooms, the European regulator said. Many of them knew each other, calling one chatroom “Essex Express n’ the Jimmy” because all of the traders but one met on a commuter train from Essex to London. Other names for rooms were the “Three Way Banana Split” and “Semi Grumpy Old Men.”

It’s the latest development in a case that’s already triggered regulatory probes around the world, and billions of dollars in fines as well as $2.3 billion in settlements in the U.S. last year. JPMorgan and UBS declined to comment. The other banks didn’t immediately reply to calls or emails seeking comment.

“The message is really clear -- we want markets to work fairly,” said Michael O’Higgins, a pension fund chair who’s spearheading the U.K. suit. “People involved in markets will argue the case for free markets. They’ve got to make sure they’re fair as well as free.”

The case was filed in the Competition Appeal Tribunal in London on Monday by Scott+Scott Europe, a spokesman for the law firm said. Its U.S. arm Scott+Scott Attorneys at Law LLP led the class action that ended with $2.3 billion in settlements.

O’Higgins, who chairs the Local Pensions Partnership, a U.K. public sector pension fund, and the Channel Islands Competition & Regulatory Authorities, said that on a conservative estimate the banks may have to pay out 1 billion pounds if he wins. The lawsuit could take three to five years, he said, and thousands of institutional investors could be in line for payouts if it succeeds.
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“The people of the United States are more prosperous…because their government embarked later than other governments…upon the policy of obstructing business”

Ludwig von Mises

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?

Does one size does fit all? A new model for organic semiconductors

Date: July 24, 2019

Source: Osaka University

Summary: A team including researchers has used a single rubrene crystal to investigate the room temperature behavior of organic single crystals, and in so doing have dispelled previously-held assumptions based on inorganic semiconductor behavior. It is hoped that these insights into the specific behavior of organic conducting materials will accelerate the development of flexible conducting devices with high functionality.

Organic materials that can conduct charge have the potential to be used in a vast array of exciting applications, including flexible electronic devices and low-cost solar cells. However, to date, only organic light emitting diodes (OLEDs) have made a commercial impact owing to gaps in the understanding of organic semiconductors that have limited improvements to charge carrier mobility. 
Now an international team including researchers from Osaka University has demonstrated the mechanism of charge mobility in an organic single crystal. Their findings are published in Scientific Reports.

In an effort to improve the charge carrier mobility in organic crystals, significant attention has been focused on understanding how the electronic structure of organic single crystals allows for the movement of charge. Analyzing highly ordered single crystals instead of samples that contain many defects and disorders gives the most accurate picture of how the charge carriers move in the organic material.

The researchers analyzed a single crystal of rubrene, which, owing to its high charge mobility, is one of the most promising conducting organic material. However, despite the popularity of rubrene, its electronic structure is not well understood. They found that theory-based conclusions reached in previous work were inaccurate because of molecular vibrations at room temperature that are a consequence of the flexibility of the material.

"We have demonstrated a new mechanism that is not observed for traditional inorganic semiconductor materials," study corresponding author Kazuyuki Sakamoto explains. "Inorganic semiconductors such as silicon, which are widely used in electronics, are generally hard, inflexible materials; therefore, certain assumptions made for these materials do not translate to organic conducting materials that are more flexible."

The successful preparation of an ultra-high-quality single rubrene crystal sample allowed experiments to be carried out that provided a definitive comparison with previous data. The experiments highlighted the limitations of previous assumptions and revealed the influence of other factors such as electron diffraction and molecular vibrations.

"By reliably demonstrating the room temperature behavior of an organic conducting material and reframing the thinking behind previous conclusions that have been drawn, we have provided a much clearer basis for research going forward," Professor Sakamoto explains. "We hope that this insight will accelerate the development of flexible conducting devices with a wide range of exciting functions."

July 30, 1914 - Austrian warships bombard Belgrade, capital of Serbia, from the River Danube.

July 31, 1914 - Reacting to the Austrian attack on Serbia, Russia begins full mobilization of its troops. Germany demands that it stop.

August 1, 1914 - Germany declares war on Russia.

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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