Baltic Dry Index. 1720
+8 Brent Crude
57.26 Spot Gold $1,505
Never ending Brexit
now October 31st, maybe. 83
days away.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
“Recession
is when your neighbor loses his job. Depression is when you lose yours. And
recovery is when Jimmy Carter loses his.”
Is the global economy
already in recession? If it’s not, it’s doing a very convincing job of faking
it. The official bean counters who call
such things, always call official recessions late, mostly due to the lagging
rear view mirror statistics, and a desire not to scare the already nervous
markets.
I suspect that the
trade wars have already pushed the global economy into mild recession, but that
with no end in sight to the USA v China trade war, probably now extending into
2020, with a no-deal Brexit to come and a USA v EU trade war due in the Autumn,
our mild global recession will deepen rapidly in the second half of 2019.
How deep will the
central banks go with cutting key interest rates. In an election year and
pushed by an ever more erratic and desperate President Trump, will the Fed
follow the ECB and japan into negative interest rates? My guess is yes, if the
global recession is deep enough.
Below, today’s wobbly
markets in the face of rising uncertainty.
Asian shares edge up, but renewed trade jitters cap gains
August 9, 2019 /
2:15 AM
TOKYO
(Reuters) - Asian shares on Friday caught the tail of a Wall Street rally aided
by China’s solid export figures and a stabilization in the yuan, but fresh
concerns about Sino-U.S. trade ties capped the region’s gains.
Weighing on risk appetite was a report from Bloomberg that Washington is
delaying a decision about licenses for U.S. firms to restart trade with Huawei
Technologies [HWT.UL].
That sent U.S. stock futures down as much as 0.6% in early Asian trade.
They were last 0.4% lower on the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.2%
higher but on track to lose 2.3% for the week.
Japan’s Nikkei average gained 0.6%, while Australian stocks added 0.2%
and South Korean shares climbed 1.1%.
Chinese stocks saw early gains evaporate. The benchmark Shanghai
Composite and the blue-chip CSI300 were down 0.4% and 0.6%, respectively, while
Hong Kong’s Hang Seng shed 0.2%.
On Wall Street on Thursday, the S&P 500 surged 1.9% - its largest
one-day gain in about two months- while the Dow and the Nasdaq also advanced
well more than 1%. [.N]
However, optimism was dented by the Bloomberg report, which added to
concerns that deterioration in U.S.-China relations could put additional strain
on an already fragile global economy.
“The news about Huawei triggered the rise in the yen,” said Junichi
Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo. “This
is a reminder that the U.S.-China trade dispute remains a risk, and this risk
is not receding.”
The yen strengthened as much as 0.4% against the dollar to 105.70 yen on
worries triggered by the report on Huawei.
More
China rare earths group supports counter-measures against U.S. 'bullying'
By Tom Daly, •August
7, 2019
BEIJING (Reuters) - China's rare earths association said it would
support Chinese counter-measures in the escalating trade row with the United
States, which it accused on Wednesday of "bullying".
The Association of China Rare Earth Industry issued a statement after a
special working meeting on Monday to discuss the "guidance" given by
Chinese President Xi Jinping during a visit to a rare earth plant in Jiangxi in
May.
Xi's visit stoked fears China would use its dominance over production of
rare earths, a group of 17 chemical elements prized for their use in consumer
electronics and military equipment, in the escalating trade war, although no
restrictions on supplies have so far been announced.
U.S. President Donald Trump said last week he would impose further
tariffs on another $300 billion of Chinese goods, although a previous lists
avoided rare earths, for which the United States relies heavily on China.
The Chinese association rarely comments on the trade war and made no
mention of export restrictions, but said all attendees at the meeting agreed
that U.S. tariffs on Chinese goods were aimed at suppressing China's
development and amounted to unilateralism, protectionism and "trade
bullying behavior."
"We express our firm opposition," it said, adding that Chinese
rare earth companies should actively expand overseas markets, as well as the
domestic market.
"The cost of tariffs imposed by the United States should be borne
by the U.S. market and consumers," the association said.
Column: Global economy is probably in recession
August 7, 2019 /
3:29 PM
LONDON (Reuters) -
The global economy is probably in recession, with most cyclical indicators
showing business activity is flat or falling.
Recessions become obvious only once they are well established given the lagging nature of most economic data.
And end-of-cycle recessions are usually impossible to distinguish from mid-cycle slowdowns until well after the slowdown has started.
The arrival of a recession is always controversial at the time and usually missed by most forecasters, as the leading business-cycle economist Victor Zarnowitz noted.
Policymakers are reluctant to announce a recession for fear of harming consumer and business confidence and worsening the downturn (“Business cycles: theory, history, indicators and forecasting”, Zarnowitz, 1992).
But almost all the main economic and industrial indicators that provide a reliable guide to the business cycle confirm the economy has already slowed severely.
Global manufacturing surveys, industrial output, new orders, business investment, construction activity, motor vehicle production and freight volumes are flat or down compared with a year earlier.
The most comprehensive numbers show manufacturing production and trade flows were essentially flat in May compared with a year before.
More recent data from purchasing surveys and industrial production indicates the slowdown worsened in June and July.
By most measures, the global economy is in the midst of the deepest slowdown since 2015, and in many cases since 2009.
Financial markets and commodity prices show a high probability the economy is in recession or will be soon.
---- Cyclical bellwethers such as Germany’s giant chemicals company BASF and U.S. heavy equipment maker Caterpillar have seen their shares fall sharply over the last year.
Oil prices have sunk more than 22% since the end of April, and are down
20% compared with August 2018, despite severe U.S. sanctions on oil exports
from Iran and Venezuela.
More
Global financial crisis, recession risks raised as US-China trade war tensions escalate over currency row
·
Former US Treasury Secretary Lawrence Summers
says world at the ‘most dangerous financial moment’ since the 2009 global
economy meltdown
·
Washington labelled China a ‘currency
manipulator’ after the yuan exchange rate dropped to its lowest rate for 11
years on Monday
Karen
Yeung Published: 7:51pm, 6 Aug, 2019
In other news Taiwan and China brace for a super
typhoon.
China issues 'red alert' as super typhoon approaches mainland
August 9, 2019 /
1:26 AM
SHANGHAI/TAIPEI
(Reuters) - China’s weather bureau issued a red alert early on Friday as super
typhoon Lekima approached Zhejiang province on the eastern coast, after forcing
flight cancellations in Taiwan and shutting markets and businesses on the
island.
The National Meteorological Center (NMC) said the typhoon, the strongest
since 2014, was expected to hit the mainland in early on Saturday and then turn
north. It has issued gale warnings for the Yangtze river delta region, which
includes Shanghai.
Taiwan has already cancelled flights and ordered markets and schools to
close on Friday as the typhoon heads northwest, cutting power to more than
40,000 homes and forcing the island’s high speed rail to suspend most of its
services.
The island’s authorities issued landslide warnings after an earthquake
of magnitude 6 struck its northeastern coast on Thursday, hours before the
typhoon approached, which was forecasted to bring rainfall of up to 900 mm (35
inches) in its northern mountains.
More than 300 flights to and from Taiwan have been cancelled and cruise
liners have been asked to delay their arrival in Shanghai.
Some trains from Shanghai have also suspended ticket sales over the
weekend, and Beijing also said it would cancel several trains heading to and
from typhoon-hit eastern regions in the Yangtze delta region.
Heavy rain and level-10 gales are expected to hit Shanghai on Friday and
continue until Sunday, with 16,000 suburban residents set to be evacuated, the
official Shanghai Daily reported.
The NMC warned that 24-hour rainfall levels across eastern China could
reach around 250-320 millimetres from Friday afternoon to Saturday afternoon.
Port authorities have already been ordered to take action, with ships set to be
diverted to Hong Kong to help prevent accidents and collisions.
More
Finally, with the US grain harvest already
underway, President Trump’s agri-states base is reeling from the latest round
of tit-for-tat US v China trade sanctions.
China's decision to cease all agricultural imports rocks U.S. farmers
Aug. 8, 2019 /
3:00 AM
EVANSVILLE, Ind., Aug. 8 (UPI) -- China's announcement this week that it
will cease importing all agricultural products from the United States sent
shock waves through the nation's already battered farming sector.
"It is kind of a disaster," said Will Rogers, a spokesman for
the American Farm Bureau Federation. "There is no commodity right now that
I can think of that is in good shape, no matter where you look."
"This is a serious violation of the meeting between the heads of state of China and the United States," the Ministry of Commerce said in a statement.
The news hit farming communities hard.
China had been the largest or second largest export market for American agriculture every year since 2008, according to the U.S. Department of Agriculture. That changed suddenly last summer when the nation began targeted U.S. farm goods with retaliatory tariffs. By the end of 2018, China had fallen to fifth place.
It was devastating decline, Rogers said. However, China still imported some $9.1 billion in agricultural goods from the U.S. that year.
"Now, we stand to lose all of what was a $9.1 billion market in 2018, which was down sharply from the $19.5 billion U.S. farmers exported to China in 2017," American Farm Bureau Federation President Zippy Duvall said in a statement.
The losses are rocking American farms, industry experts say.
"We're reaching the point of no return," said Brent Renner, an Iowa farmer who grows corn and soybeans. "Looking forward at this point, we're thinking, 'What are we doing? Why are we doing this?'"
---- Soybean growers like Bardole, who is the president-elect of the Iowa Soybean Association, were among are the hardest farming group hit in the trade dispute. Before it began, China was buying about 30 percent of America's soybeans. After tariffs all but closed off that market, those beans had nowhere to go.
"We have many farms with full or near full [grain] bins from last year," Rogers said. "Every last bushel produced in 2019 is adding to that glut."
But soy growers are not the only farmers suffering under the tariffs, Rogers said.
The National Milk Producers Federation estimates dairy producers lost $2.3 in revenue since the tariff escalation began. Almond exports dropped 33 percent, according to the Almond Alliance of California. And the National Pork Producers Council said its industry is being prevented "from fully capitalizing on a historic sales opportunity created by the outbreak of African swine fever in the world's largest pork-consuming nation."
---- Rogers quickly added that farmers have received "an impressive amount of aid" from the Trump administration. In 2018, the USDA distributed around $10 billion in tariff aid to farmers. This year, the agency said it will give out $14.5 billion.
That aid is welcome relief, Rogers said. But it does not make up for all the money farmers are losing. And even with it, many farms across the country remain in peril. Restoring trade with China is the only sustainable solution, he said.
More
“We must reject the
idea that every time a law's broken, society is guilty rather than the
lawbreaker. It is time to restore the American precept that each individual is
accountable for his actions.”
Ronald Reagan
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, Marketwatch provides some common sense on
that senseless trade war.
Opinion: Why America will be the biggest loser in the trade war
By Daniel
Gros Published: Aug 7, 2019 11:05
a.m. ET
BRUSSELS, Belgium (Project Syndicate) —
For a while at least, trade tensions between the United States and China seemed
to have settled into a “new normal.” After both countries imposed high tariffs
on a substantial proportion of each other’s goods, President Donald Trump
refrained from further escalation.But, following another inconclusive round of bilateral trade talks in Shanghai last week, Trump announced that the U.S. will impose 10% tariffs on a further $300 billion worth of Chinese goods, effective Sept. 1.
Now read: China trade fight seen dragging on through 2020
Should this new measure take effect, almost all U.S. imports from China will be subject to tariffs. (The U.S. already levies 25% tariffs on $250 billion worth of Chinese imports.) Although the U.S. has also imposed non-tariff barriers in its trade war with China, reciprocal tariffs are the most visible component of the dispute — and are likely to hurt America more than China.
Economic
analysis suggests that bilateral trade wars are unwinnable in an interconnected
world. By firing his latest tariff salvo against China, President Donald Trump
has further raised the stakes in an increasingly damaging dispute — and America
is likely to emerge as the bigger loser.
One way to compare the restrictiveness of countries’ trade policies is to look at their average tariff rates. For the U.S., this seems to paint a fairly reassuring picture. Before Trump took office, the average U.S. tariff rate on industrial imports was about 2%, somewhat lower than that of China.
Even under Trump, this figure has (so far) not increased that much. Imports from China account for about one-quarter of all U.S. imports, and the 25% tariff affects about one-half of imported Chinese goods. This implies that the average U.S. import tariff has increased by about three percentage points, to 5% or so, which does not appear excessive.
Average tariffs misleading
But the average tariff is a misleading indicator. Economic theory suggests that tariffs have disproportionately negative effects on the welfare of consumers and producers. A doubling of a tariff, for example, will lead to more than double the welfare loss. A 25% tariff on a limited share of trade is thus much more serious than an average tariff of 3%.Many countries have high import tariffs on a certain number of specific products, with a rate above 15% usually considered to be a “tariff peak.” But whereas these peaks apply to less than 1% of total imports for most industrialized countries, they cover a far larger share of U.S. imports.
Moreover, Trump’s tariffs discriminate against China: the 25% tariff is paid only by Chinese producers, not by their European, Latin American, or Asian competitors. Such a country-specific tariff is equivalent to levying a general tariff on all imports while providing a production subsidy for competing producers outside China – with this subsidy paid by U.S. consumers in the form of higher prices.
Because non-Chinese producers can raise their prices by up to 25% and still remain competitive in the U.S., prices for American consumers are likely to increase on a wide range of goods.
The indirect effect of Trump’s China tariffs on consumer prices is therefore likely to be much greater than the recent estimate of a direct impact of only 0.1%. These indirect harmful consequences of country-specific tariffs are the main reason why the “most favored nation” principle has long been a cornerstone of the global trading system.
Chinese haven’t lowered prices
Moreover, preliminary studies suggest that Chinese producers have not significantly lowered their prices as a result of Trump’s tariffs. And even if they did, the small gain to U.S. consumers from lower Chinese prices would likely be far outweighed by higher prices on competing imports diverted to the U.S. market by Trump’s country-specific tariffs.Although China previously imposed a reciprocal 25% tariff on many of its imports from the U.S., the negative impact on the Chinese economy is likely to be limited because U.S. goods account for less than one-tenth of China’s overall imports. Chinese retaliatory tariffs thus have a small impact on the Chinese economy.
And China has actually lowered tariffs on its imports from the rest of the world.
Moreover, a large share of China’s imports from the U.S. consists of agricultural commodities such as soybeans, which the country could easily import at a similar price from Brazil if necessary. The U.S. would then presumably export more soybeans to markets formerly served by Brazilian producers, including in Europe. (This would reduce America’s trade deficit with Europe and might ease U.S. pressure on the European Union in that regard.)
More
“We
don't have a trillion-dollar debt because we haven't taxed enough; we have a
trillion-dollar debt because we spend too much.”
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?
Due to a long
critical computer update and an already long LIR, no technology update today.
More next week.
Another weekend and a
weekend of worry ahead. What will President Trump tweet and against whom? Will
he play good cop or bad cop this weekend? Will China, South Korea or Japan,
step up their trade war game? By Monday we’ll know and it will likely drive the
action next week. Have a great weekend everyone.
“Freedom is never more than one generation away from extinction.
We didn't pass it to our children in the bloodstream. It must be fought for,
protected, and handed on for them to do the same, or one day we will spend our
sunset years telling our children and our children's children what it was once
like in the United States where men were free.”
The monthly Coppock Indicators finished July
DJIA: 26,864 +53 Up. NASDAQ: 8,175 +65 Down.
SP500: 2,980 +53 Up.
The S&P and Dow remain up, but in very unconvincing fashion. The NASDAQ remains down. Like the Fed, I would await a better data
driven signal.
No comments:
Post a Comment