Baltic Dry Index. 1865 +49 Brent Crude 66.72
Never ending Brexit now October 31,
maybe.
Trump’s Nuclear China Tariffs
Now In Effect.
USA v EU trade war postponed to November,
maybe.
This
is the way things are, and the Game has been so successful that, like
everything, it will get more and more successful until it stops being
successful.
George Goodman, aka Adam Smith, The Money Game. 1968
The Great Disconnect between soaring stock
markets and the economic reality of the real world has never been greater nor
more dangerous. That it all ends badly is a given, unless President Trump suddenly
does another U-turn on his trade wars, but that would probably sink his chance
for re-election next year and is highly unlikely unless he was planning not to run.
Worse, President Trump has now started
talking up adopting a policy of deliberate competitive devaluation of the
dollar, the only effective world reserve currency.
If the Federal Reserve Bank and the US
Treasury were to actually start implementing such a disaster, a massive
international race into gold and silver would ensue, while setting off turmoil
in global contracts to be settled in dollars. It would likely lead to the end
of the Great Nixonian Error of fiat money, August 15, 1971. It would
incentivise the rest of the world to ditch the dollar reserve standard and come
up with something better.
This weekend, continuing global
slowdown, an upcoming testy G-7 meeting, and an end to man-made global warming,
though don’t expect the fanatics to change course.
Below, the RMS Titanic speeds up.
Icebergs dead ahead.
China's June exports, imports fall as trade war takes heavier toll
July 12, 2019 / 9:30 AM
BEIJING (Reuters) - China’s exports fell
in June as the United States ramped up trade pressure, while imports shrank
more than expected, pointing to further weakness in the world’s second-largest
economy and slackening global growth.
The gloomy
trade readings added to a string of recent downbeat economic data which have
fuelled expectations that Beijing needs to announce more stimulus measures soon
to ward off a sharper slowdown.
China is
expected to report on Monday that growth in the second quarter was the weakest
in at least 27 years.
Other data
released on Friday showed new bank loans rose to a three-month high in June as
policymakers sought to keep ample funds in the financial system, though the
tally was less than analysts had expected.
“Overall,
imports and exports are declining quarter by quarter, and weak foreign demand
will be the biggest challenge in the second half of this year,” said Zhang Yi,
chief economist at Zhonghai Shengrong Capital Management in Beijing.
---- China’s manufacturers are struggling with sluggish demand at home and abroad, and a sharp U.S. tariff hike announced in May threatens to crush already-thin profit margins. An official June survey showed factories were shedding jobs at the fastest pace since the global crisis, a major worry for Beijing.
June exports
fell 1.3% from a year earlier, not as much as the 2% drop analysts had expected
but reversing a surprise gain in May when shippers rushed to beat more U.S.
tariffs, customs data showed.
Imports fell
7.3%, a sharper drop than the 4.5% expected and following a 8.5% contraction in
May, suggesting domestic demand remains tepid despite a flurry of growth
measures since last year.
More
Warning Shot to World Economy as Singapore Slumps, China Exports Drop
By Enda Curran
July 12, 2019, 1:02 AM GMT+1 Updated on July 12, 2019,
10:09 AM GMT+1
·
Singapore’s trade-reliant economy contracts
annualized 3.4%
·
China exports decline 1.3%, imports plunge 7.3%,
data shows
An unexpected contraction in Singapore’s economy and a slump in China’s exports sent a warning shot to the world economy as simmering trade tensions wilt business confidence and activity.
Gross domestic product in export-reliant Singapore shrank an annualized 3.4% in the second quarter from the previous three months, the biggest decline since 2012. China trade figures showed exports fell 1.3% in June from a year ago and imports shrank a more-than-expected 7.3%.
Like South Korea’s economy -- which already contracted in the first quarter -- Singapore is often held up as a bellwether for global demand given its heavy reliance on foreign trade. China’s quarterly GDP numbers on Monday are expected to show a clear weakening in the economy.
“Singapore is the canary in the coal mine, being very open and sensitive to trade,” said Chua Hak Bin, an economist at Maybank Kim Eng Research Pte in Singapore. The data “points to the risk of a deepening slowdown for the rest of Asia.”
More
Visco says ECB will need to act if euro zone economy doesn't pick up
July 12, 2019 / 10:50 AM
In a keynote
speech in Milan, the Bank of Italy Governor said that “in the coming weeks the
ECB will continue to assess how to adjust the instruments at its disposal” in
the face of weak growth and low inflation expectations.
His words
may fuel expectations that the bank will ease policy at its next meeting on
July 25 or in September.
Visco said
the Italian economy will grow just 0.1% this year, marginally below the
government’s 0.2% official forecast, and expand by an average of slightly below
1% in each of the following two years.
The euro
zone’s third largest economy eked out growth of 0.1% in the first quarter,
emerging from a shallow recession in the second half of last year. National
statistics institute ISTAT has warned the second quarter may show another
contraction.
Visco
welcomed the recent fall in Italian borrowing costs and urged the
anti-austerity government to adopt “prudent” budget deficit targets for coming
years to consolidate the trend.
Italian bond
yields fell this month to their lowest since 2016, thanks to a deal with the
European Commission which averted a clash over Rome’s public finances, and to
expectations the ECB will retain its ultra-dovish stance under its incoming
president, Christine Lagarde.
However,
doubts remain over 2020, when the government needs to find 23 billion euros
(£20.6 billion) to just to avert a scheduled increase in sales tax, and must
also finance promised cuts in income tax.
More
Six major risks facing the markets (and what to do about them)
I’m asked constantly what the risks
are to the macro and market outlook. From my lens, they are vast and varied and
none are to the upside. In that sense, it was interesting to see U.S. Federal
Reserve chairman Jay Powell focus exclusively on some of these in this week’s
congressional testimony, followed up by Stephen Poloz who did very much the
same. One can legitimately wonder if they had compared notes ahead of time.
- Escalating trade tensions – I’m already concerned over the contraction in global trade flows and disruptions to global supply chains. We have a U.S. President who doesn’t understand that trade deficits equate to capital account surplus, and who lacks an appreciation of what that means and how the United States benefits from being the world’s reserve currency. We have a tentative trade truce now, but Beijing has already said all bets are off until all tariffs are removed. And Donald Trump likes to call himself the “Tariff Man.” I see little chance of resolution. And keep an eye on this tech trade war under way between Japan and South Korea.
- Iran’s breach of its enrichment caps – this is a big deal geopolitically.
- Will the Fed cut rates and then disappoint by signalling that this is just an “insurance” cut? This is a big risk – moving too slow at a time when the inflation data are so muted.
- A no-deal Brexit is a major concern – so is the uncertainty over who will lead the Conservatives. The Oct. 31 deadline is not that far away.
- Mr. Powell gets fired or demoted – people tend to forget that the President can take swipes all he wants, but Mr. Powell is just one vote. A powerful one, to be sure, but it’s still one vote on the Federal Open Market Committee. What if the whole committee decides to resign? What if Mr. Trump’s son-in-law and senior adviser Jared Kushner becomes the next Fed chairman, or worse – White House economic adviser Larry Kudlow? This is a serious risk. And that economist Arthur Laffer could compare monetary and fiscal policy – as he did this week when he suggested the Federal Reserve should be controlled by Congress and the President – is absolutely incredible. It’s like comparing a cactus to a hot dog. Gold will surge if anything happens on this front, but Mr. Trump will get the weak dollar he so desperately covets.
- The 2020 election – this is not going to get resolved for another 16 months and while the President remains wildly popular among his base, his approval rating is a dismal 40 per cent. And this is coming off the peak of the economic expansion and stock market, and the low in the unemployment rate. Meanwhile, the only reason we have such a wide field of Democratic candidates is because they each smell a huge opportunity. Yet, the vast majority are left-of-centre and the leading centrist is seen as too old and gaffe-prone to make the cut.
Never mind the trade frictions with
China, if you are a U.S. business today all you see are these Democrats
threatening to roll back at least some of the corporate tax cuts. So, what do
you do? Wait and see what happens, which means cash gets built up on the
balance sheet instead of being deployed into the real economy. The surge in the
NFIB uncertainty index in June, and commensurate pullback in capital spending
and business expansion plans, spoke volumes in that respect.
The best advice I can give is to be
liquid, defensive and yield sensitive with an eye toward selling strength in
equities and buying the dips in bonds.
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-six-major-risks-facing-the-markets-and-what-to-do-about-them/Take Five: G7 - deep in the Woods?
July 12, 2019 / 2:35 PM
LONDON (Reuters) - In July 1944 as World War Two raged, finance
chiefs from the world’s main trading nations met in Bretton Woods, New
Hampshire.
That
agreement, signed July 22, was one of the first global monetary policy and
currency agreements - re-establishing a gold standard for exchange rates,
backing away from competitive devaluations and setting up the International
Monetary Fund to bridge balance of payments gaps.
But as the
Bretton Woods pact turns 75, that spirit of cooperation, whether on exchange
rates or trade, is waning. Trade protectionism is on the rise, nationalism and
unilateralism is championed by U.S. President Donald Trump - who says the rest
of the world is stealing from the United States via competitive currency
devaluations against the dollar.
And so the
July 17-18 meeting of G7 finance ministers and central bankers in the French
town of Chantilly could well be a fraught one. Taking place at the same time as
IMF and World Bank heads join ECB officials in Paris to commemorate Bretton
Woods, G7 discussions will focus less on the past and more on how to resolve
pressing problems such as the world economy, Sino-U.S. trade tensions, fair
exchange rates between the major economies, U.S. anger over France’s plan to
tax tech firms such as Google, and Trump’s threat to slap levies on European
autos.
Other issues
on the table include tax havens, cyber security and Facebook’s proposed new
coin Libra that has enlivened the debate about regulation of cryptocurrencies.
2/UNDER PRESSURE
China’s economy and businesses are showing more visible signs of pain from the trade war, as recent data on producer prices and exports revealed. Monday’s GDP data, no matter how well-massaged, could show quarterly growth at its weakest in three decades and raise doubts over a government aim to keep 2019 growth in the 6-6.5% range.
More
https://uk.reuters.com/article/uk-global-markets-themes/take-five-g7-deep-in-the-woods-idUKKCN1U71QZ
In other news, what man-made global
warming?
Bombshell Claim: Scientists Find "Man-made Climate Change Doesn't Exist In Practice"
Thu, 07/11/2019 - 18:30
A new scientific study could bust wide open deeply
flawed fundamental assumptions underlying controversial climate
legislation and initiatives such as the Green New Deal, namely, the degree to
which 'climate change' is driven by natural phenomena vs. man-made issues
measured as carbon footprint. Scientists in Finland found
"practically no anthropogenic [man-made] climate
change" after a series of studies. “During the last hundred years the temperature increased about 0.1°C because of carbon dioxide. The human contribution was about 0.01°C”, the Finnish researchers bluntly state in one among a series of papers.
This has been collaborated by a team at Kobe University in Japan, which has furthered the Finnish researchers' theory: "New evidence suggests that high-energy particles from space known as galactic cosmic rays affect the Earth's climate by increasing cloud cover, causing an 'umbrella effect'," the just published study has found, a summary of which has been released in the journal Science Daily. The findings are hugely significant given this 'umbrella effect' — an entirely natural occurrence — could be the prime driver of climate warming, and not man-made factors.
The scientists involved in the study are most concerned with the fact that current climate models driving the political side of debate, most notably the Intergovernmental Panel on Climate Change's (IPCC) climate sensitivity scale, fail to incorporate this crucial and potentially central variable of increased cloud cover.
"The Intergovernmental Panel on Climate Change (IPCC) has discussed the impact of cloud cover on climate in their evaluations, but this phenomenon has never been considered in climate predictions due to the insufficient physical understanding of it," comments Professor Hyodo in Science Daily. "This study provides an opportunity to rethink the impact of clouds on climate. When galactic cosmic rays increase, so do low clouds, and when cosmic rays decrease clouds do as well, so climate warming may be caused by an opposite-umbrella effect."
In their related paper, aptly titled, “No experimental evidence for the significant anthropogenic [man-made] climate change”, the Finnish scientists find that low cloud cover "practically" controls global temperatures but that “only a small part” of the increased carbon dioxide concentration is anthropogenic, or caused by human activity.
The following is a key bombshell section in one of the studies conducted by Finland's Turku University team:
We have
proven that the GCM-models used in IPCC report AR5 cannot compute correctly the
natural component included in the observed global temperature. The reason is
that the models fail to derive the influences of low cloud cover fraction on
the global temperature. A too small natural component results in a too large
portion for the contribution of the greenhouse gases like carbon dioxide.
That is why 6 J. KAUPPINEN AND P. MALMI IPCC represents the climate sensitivity
more than one order of magnitude larger than our sensitivity 0.24°C. Because
the anthropogenic portion in the increased CO2 is less than 10 %, we have
practically no anthropogenic climate change. The low clouds control mainly the
global temperature.
This raises
urgent questions and central contradictions regarding current models which
politicians and environmental groups across the globe are using to push radical
economic changes on their countries' populations.
Conclusions from both the Japanese and Finnish studies strongly suggest, for example, that Rep. Alexandria Ocasio-Cortez's "drastic measures to cut carbon emissions" which would ultimately require radical legislation changes to "remake the U.S. economy" would not only potentially bankrupt everyone but simply wouldn't even work, at least according to the new Finnish research team findings.
To put AOC's "drastic measures" in perspective — based entirely on the fundamental assumption of the monumental and disastrous impact of human activity on the climate — consider the following conclusions from the Finnish studies:
“During the last hundred years the temperature increased about 0.1°C because of carbon dioxide. The human contribution was about 0.01°C.”
Which leads the scientists to state further:
“Because the anthropogenic portion in the increased carbon dioxide is less than 10 percent, we have practically no anthropogenic climate change,” the researchers concluded.
More
New: This weekend’s musical diversion.
The very under-appreciated Heinichen. Compare his horns use to last week-end’s
Vivaldi.
J.D. HEINICHEN: «Flavio Crispo» [Act II:
Sinfonia], Il Gusto Barocco
https://www.youtube.com/watch?v=HrROrVrYjDM
https://www.youtube.com/watch?v=HrROrVrYjDM
NOT even a decade ago, everybody
believed. Events did seem under control. Inflation would creep, not gallop; the
New Economics would fine-tune the economy; productivity would increase; wars
would be fought, but not by us—we were the mediators, understanding but tough;
problems would be articulated, and that articulation was half the solution; we
would begin upon the solutions. Kennedy rhetoric: let us begin; let the word go
forth; let us never negotiate from fear, nor fear to negotiate; let anybody
call upon us. Confident, ambitious, optimistic, even naïve—the very best of the
American tradition. Hail Columbia, happy land.
Then, one thing and another, the John
Philip Sousa music faded a bit. Could rational men make events behave
rationally? Maybe they couldn’t.
George Goodman, aka Adam
Smith, Supermoney, 1972.
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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