Baltic Dry Index. 1928
+63 Brent
Crude 66.54
Never ending Brexit
now October 31st, maybe.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Interest
rates are the most important prices in the economy, according to Nobel laureate
F.A. Hayek, because they reflect the collective time preference of individuals
to consume either now or later. Accordingly, interest rates co-ordinate
allocation of capital across the economy by signalling to businesses whether
they should invest. Distortions in interest rates can cause “clusters of
errors” in which large swathes of businesses unwittingly miscalculate at the
same time.
The big disconnect
rolls on. Stock markets are waiting near the top on earnings and a Fed rate cut
at month-end due to rising global recession fears. If you think that there’s a
recession coming, and I do, stocks are the last place to be near the top.
In trade war news,
that other trade war between Japan and South Korea is starting to turn ugly.
Trump sees China’s
slowdown as giving him the edge in his trade war.
The Institute of International Finance (IIF) thinks all the cheap money will end in tears. And the whole stock market world is gambling on even cheaper money from the Fed. The smart thing to do to old dinosaur trader and market follower since 1968, is to use rallies to exit stocks. It’s never wrong to get back into cash.
Below a lazy summer Tuesday in mid July.
Asian markets little changed as investors await earnings reports
By Associated Press
and Marketwatch
Published: July 15,
2019 11:04 p.m. ET
Asian shares were little changed and mixed in quiet trading
Tuesday amid a lack of fresh market-moving news as investors looked ahead to
earnings season and Wall Street again closed at record highs.On the trade front, U.S. Treasury Secretary Steve Mnuchin said Monday that he and U.S. Trade Representative Robert Lighthizer may travel to China soon for renewed trade negotiations if phone talks with Chinese officials this week are successful, Bloomberg News reported.
The Reserve Bank of Australia on Tuesday released minutes of their July meeting, which indicated a willingness to cut interest rates — which are already at historic lows — further if necessary. “Members judged that a further reduction in the level of interest rates would support the necessary growth in employment and incomes, and promote stronger overall economic conditions, which would in turn support a gradual increase in underlying inflation,” the RBA said in its minutes.
---- Wall Street had a wobbly day of trading with gains that were enough to nudge them further into record territory.
The S&P 500 SPX, +0.02% rose 0.53 points, or less than 0.1%, to 3,014.30 after drifting between a gain of 0.1% and a loss of 0.2% earlier in the day. The Dow Jones Industrial Average DJIA, +0.10% gained 27.13, or 0.1%, to 27,359.16, and the Nasdaq composite COMP, +0.17% added 14.04, or 0.2%, to 8,258.19.
U.S. stocks have jumped since early June on increasing expectations that the Federal Reserve will cut interest rates to help the economy, and investors are virtually certain that it will happen at the next Fed meeting at the end of this month. The only question, investors say, is how deeply the Fed will cut when it lowers rates for the first time in a decade.
More
Japan trade minister blasts South Korea for 'mistaken' explanation after bilateral meeting
July 16, 2019 /
5:18 AM
TOKYO (Reuters) - Japanese Trade Minister Hiroshige Seko said on Tuesday
it was “regrettable” that the South Korean government had made what he said was
an erroneous explanation after the two sides sat down for a working-level
meeting over Japan’s export controls.
The feud between the two deepened over the weekend when they contested
accounts of a frosty meeting last week on the dispute, which could threaten
global supplies of microchips and smartphone displays.
Tokyo lodged a protest against Seoul, saying it had broken an agreement
on what the two sides would disclose from the Friday discussions on Japan’s
curbs of exports to Korea of some materials used to make high-tech equipment, a
Japanese trade ministry official said at the weekend.
Japan’s Ministry of Economy, Trade and Industry (METI) also disputed a
Korean official’s statement that Seoul had asked Japan on Friday to withdraw
the restrictions.
But a Korean trade ministry official shot back that Seoul had “clearly
demanded Japan withdraw its trade restrictions at yesterday’s meeting, and
there should be no disagreement over that matter with Japan.”
He told Reuters the two sides had discussed what they would disclose but
that there was no agreement.
At a regular briefing on Tuesday, Seko disputed that claim, saying the
officials had spent about an hour towards the end of the five-hour meeting to
discuss and agree on what to disclose to media.
Japan recently tightened restrictions on the export of three materials
used in high-tech equipment, citing what it has called “inadequate management”
of sensitive items exported to South Korea, as well as a lack of consultations
about export controls.
But the dispute also appears to be rooted in a decades-old wartime
disagreement. It comes amid deep frustration in Japan over what Tokyo sees as
Seoul’s failure to act in response to a South Korean court ruling ordering a
Japanese company to compensate former forced labourers from the Second World
War.
More
Trump sees slowing Chinese growth pressuring Beijing on trade
July 15, 2019 /
12:20 PM
WASHINGTON
(Reuters) - U.S. President Donald Trump on Monday pointed to slowing economic
growth in China amid restarted trade talks, saying U.S. tariffs were having “a
major effect” and warning that “possibly much more” were to come.
Growth data released earlier on Monday showed the world’s second-largest
economy had slowed to 6.2% in the second quarter, its weakest pace in at least
27 years amid ongoing trade pressure from the United States.
“This is why China wants to make a deal with the U.S., and wishes it had
not broken the original deal in the first place,” Trump tweeted.
Trump and his administration are seeking to push China to make a trade
pact after talks broke down in May. Trump and Chinese President Xi Jinping
agreed to restart negotiations at their meeting at the G20 last month.
U.S. and Chinese negotiators spoke by phone last week, and in-person
talks are expected soon in Beijing, U.S. officials have said.
Cheap money sparks borrowing binge that could end in tears
Emerging market debt hits record high while Canada among biggest borrowers in developed nations
July 15, 2019 9:15 AM EDT
LONDON — Falling interest rates have fuelled a fresh borrowing bonanza
in the first quarter of 2019 with emerging market debt soaring to record highs
and the global debt stock bulging by US$3 trillion, an Institute of
International Finance (IIF) report showed.
Debt owed by governments, companies, financial institutions and
households across developing economies soared to US$69.1 trillion or 216 per
cent of gross domestic product from US$68.9 trillion a year earlier.
Debt-to-GDP ratios had risen at the fastest pace in Chile, Korea, Brazil, South
Africa, Pakistan and China over the past year, the IIF found.
“The persistent economy-wide increase in EM borrowing continues to feed
into higher contingent liabilities for many sovereigns,” IIF deputy director
Emre Tiftik wrote in a note.
“Growing reliance on short-term debt leaves many emerging markets
exposed to sudden shifts in global risk appetite,” Tiftik said, adding some
US$3 trillion of emerging market bonds and syndicated loans are coming due
through end-2020 – a third of which were U.S. dollar denominated.
Across developed markets, the first quarter increase was chiefly driven
by a buildup in government debt, which added US$1 trillion. Finland, Canada and
Japan have seen the biggest increase in debt-to-GDP ratios over the past year
while some Euro area economies, notably the Netherlands, Ireland and Portugal,
have continued with deleveraging.
Major central banks such as the U.S. Federal Reserve and the European
Central Bank have turned increasingly dovish in recent weeks and are expected
to provide fresh stimulus in a bid to shore up economic momentum which is
overshadowed by a cloud of protracted trade wars.
The prospect of ongoing cheap borrowing costs also saw the overall
global debt stock jump by US$3 trillion to US$246.5 trillion – or 320% of GDP –
just US$2 trillion shy of the all-time high reached in the first quarter of
last year.
More
Hayek
observed that interest rate stimulus interfered with economic calculations,
causing managers to invest in projects that would not otherwise have appeared
profitable. Losses can subsequently materialise as customer demand fails to
meet forecasts that were, in retrospect, optimistic. Long-term projects are
highly sensitive to interest rates and are therefore more susceptible to such
distortions. Pension obligations and long-term, capital-intensive projects are
at high risk of miscalculation based on artificially low rates.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, what’s wrong with this? Answer: no trial, evidence, finding of
facts, and independent verdict.
“I don’t see why the Chinese
would feel unhappy about it because we are not taking back money for what they
have done,” he (Prime Minister Mahathir) said.
I’ll bet that he’s wrong.
Malaysia seized $240 million from Chinese company over pipeline project - PM Mahathir
July 15, 2019 /
12:53 PM
KUALA LUMPUR
(Reuters) - Malaysia seized more than 1 billion ringgit ($243.5 million) from a
bank account of state-owned China Petroleum Pipeline Engineering (CPP) over
incomplete pipeline projects, Prime Minister Mahathir Mohamad said on Monday.
The seizure comes nearly a year after Malaysia suspended two pipeline
projects, valued at $2.3 billion, on which CPP was the lead contractor. CPP is
a unit of state energy giant China National Petroleum Corp.
“I understand that money for 80% of the pipeline was paid, but the work
completed was only 13%,” Mahathir told reporters. “So the government is
entitled to get back the money, since the project was cancelled.”
His comments followed a report on Saturday from Singapore-based Straits
Times, which said that Malaysia had seized the funds from CPP’s account at HSBC
Malaysia.
HSBC declined to comment, citing client confidentiality.
CPP did not reply to requests for comment over the weekend and on
Monday.
In 2016 CPP won a contract from the government of former prime minister
Najib Razak to build a 600km petroleum pipeline along the west coast of
peninsular Malaysia and a 662km gas pipeline in Sabah, the Malaysian state on
Borneo island.
Both projects were suspended by Mahathir in July last year after he
defeated Najib in the 2018 national election.
Mahathir had vowed to renegotiate or cancel what he calls “unfair”
Chinese projects authorised by Najib, straining ties with Malaysia’s biggest
trading partner.
Malaysia and China this year agreed to resume a multibillion-dollar rail
project after shaving off nearly a third of its cost to 44 billion ringgit.
Mahathir on Monday said he was not concerned about a fallout with China
for seizing money from a state-owned Chinese firm.
“I don’t see why the Chinese would feel unhappy about it because we are
not taking back money for what they have done,” he said.
Hayek
observed that “clusters of errors” tended to happen after monetary stimulus
sparked an investment boom. When boom turned to bust he urged quick recognition
of losses to free capital trapped in bad investments so markets could redeploy
it to better uses. Any further rounds of monetary stimulus to cushion the bust would
only prolong the inevitable adjustment and distort economic calculation anew.
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?
Engineers develop chip that converts wasted heat to usable energy
Date:
July 10, 2019
Source:
University of Utah
Summary:
Mechanical engineers have discovered a way to produce more electricity from
heat than thought possible by creating a silicon chip, also known as a
'device,' that converts more thermal radiation into electricity. This could
lead to devices such as laptop computers and cellphones with much longer
battery life and solar panels that are much more efficient at converting radiant
heat to energy.
It's estimated that as much as two-thirds of energy consumed in the U.S.
each year is wasted as heat.
Take for example, car engines, laptop computers,
cell phones, even refrigerators, that heat up with overuse.
Imagine if you could capture the heat they generate and turn it into
more energy.
University of Utah mechanical engineering associate professor Mathieu
Francoeur has discovered a way to produce more electricity from heat than
thought possible by creating a silicon chip, also known as a
"device," that converts more thermal radiation into electricity. His
findings were published in the paper, A Near-Field Radiative Heat Transfer
Device, in the newest issue of Nature Nanotechnology.
Researchers have previously determined that there is a theoretical
"blackbody limit" to how much energy can be produced from thermal
radiation (heat). But Francoeur and his team have demonstrated that they can go
well beyond the blackbody limit and produce more energy if they create a device
that uses two silicon surfaces very close together. The team produced a
5mm-by-5mm chip (about the size of an eraser head) of two silicon wafers with a
nanoscopic gap between them only 100 nanometers thick, or a thousandth the
thickness of a human hair. While the chip was in a vacuum, they heated one
surface and cooled another surface, which created a heat flux that can generate
electricity. The concept of creating energy in this manner is not unique, but
Francoeur and his team have discovered a way to fit the two silicon surfaces
uniformly close together at a microscopic scale without touching each other.
The closer they are to each other, the more electricity they can generate.
"Nobody can emit more radiation than the blackbody limit," he
said. "But when we go to the nanoscale, you can."
In the future, Francoeur envisions that such technology could be used to
not only cool down portable devices like laptops and smartphones but also to
channel that heat into more battery life, possibly as much as 50% more. A
laptop with a six-hour charge could jump to nine hours, for example.
The
chips could be used to improve the efficiency of solar panels by increasing the
amount of electricity from the sun's heat or in automobiles to take the heat
from the engine to help power the electrical systems. They could also be
designed to fit in implantable medical devices such as a pacemaker that would
not require replaceable batteries.
More
A large Bank is exactly the place where a
vain and shallow person in authority, if he be a man of gravity and method, as
such men often are, may do infinite evil in no long time, and before he is
detected. If he is lucky enough to begin at a time of expansion in trade, he is
nearly sure not to be found out till the time of contraction has arrived, and then
very large figures will be required to reckon the evil he has done.
Walter Bagehot. Lombard Street. 1873
Walter Bagehot. Lombard Street. 1873
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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