Baltic Dry Index. 2061
+02 Brent
Crude 60.08 Spot Gold $1,500
Never ending Brexit
now October 31st, maybe. 70
days away.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
“This
is no time for ease and comfort. It is time to dare and endure.”
Sir
Winston Churchill.
Following the release
of the Federal Reserve minutes yesterday, which implied that their last
interest rate cut might be a one off rate cut, Asian stock markets ran out of “dare”
this morning, everything now depends on Chairman Powell’s upcoming speech at
the Fed’s Jackson Hole Junket in Wyoming.
Adding to the need
for caution, the estimated gigantic size of this and next year’s US Federal
Budget deficits, and this despite relief from near record low interest rates.
If a new recession is underway or about to hit, both estimates will be gross
under estimates. President Trump deepened his sulk over not being allowed to buy
Greenland.
Below, everyone
including President Trump, waiting on Chairman Powell in something of a Jackson
hole. What will Trump tweet after Powell’s keynote speech?
Asia shares sit still, await clarity on Fed policy
August 22, 2019 /
1:31 AM
SYDNEY (Reuters) -
Asian shares went flat on Thursday as uncertainty over the outlook for both
U.S. interest rates and the chance of global fiscal stimulus sucked the life
out of markets.
Moves were miniscule, with MSCI’s broadest index of Asia-Pacific shares
outside Japan off 0.2% in very light volumes.
Japan’s Nikkei added 0.1%, as did Shanghai blue chips. E-Mini futures
for the S&P 500 dipped 0.04%, while EUROSTOXX 50 futures eased 0.09%.
Wall Street had been saved by surprisingly upbeat results from
retailers, which sent Target Corp surging 20% and Lowe’s Cos Inc up 10%
The Dow ended Wednesday up 0.93%, while the S&P 500 rose 0.82% and
the Nasdaq 0.90%.
Less welcome were minutes of the Federal Reserve’s July meeting, which
showed policymakers deeply divided over whether to cut interest rates, but
united in wanting to signal they were not on a preset path to more easing.
Indeed, while a “couple” of Fed members favored a deeper cut of half a
point, “several” favored no change at all.
That reluctance did not seem to gel with the market’s aggressive pricing
for more than 100 basis points of easing by the end of 2020.
Treasuries were sold in response and two-year yields were left at 1.58%,
compared with last week’s low of 1.467%.
“The key message from the Fed minutes is that the 25 basis-point cut in
July was just a calibration, a mid cycle adjustment and not the start of a new
easing cycle,” said Rodrigo Catril, a senior FX strategist at National
Australia Bank.
Hopes for U.S. fiscal stimulus also got a knock when President Donald
Trump reversed course and said he was not looking at cutting payroll taxes.
More
Federal budget deficit to exceed $1 trillion next fiscal year, CBO says
By Associated Press
Published: Aug 21, 2019 9:19 p.m. ET
WASHINGTON — The federal budget deficit is expected to balloon to more than
$1 trillion in the next fiscal year under the first projections taking into
account the big budget deal that President Donald Trump and Congress reached
this summer, the Congressional Budget Office reported Wednesday.
The return of $1 trillion annual deficits comes despite Trump’s vow when
running for office that he would not just balance the budget but pay down the
entire national debt.
“The nation’s fiscal outlook is challenging,” said Phillip Swagel,
director of the nonpartisan CBO. “Federal debt, which is already high by
historical standards, is on an unsustainable course.”
The office upped this year’s deficit projection by $63 billion and the
cumulative deficit projection for the next decade by $809 billion. The higher
deficit projections come even as the CBO reduced its estimate for interest
rates, which lowers borrowing costs, and as it raised projections for economic
growth in the near term.
The number crunchers at CBO projected that the deficit for the current
fiscal year will come to $960 billion. In the next fiscal year, which begins
Oct. 1, it will exceed $1 trillion.
More
Trump calls Danish PM's rebuff of Greenland idea 'nasty' as trip cancellation stuns Danes
August 21, 2019 /
5:01 PM
WASHINGTON/COPENHAGEN
(Reuters) - President Donald Trump declared Danish Prime Minister Mette
Frederiksen’s dismissal of his idea to buy Greenland “nasty” and an affront to
the United States on Wednesday, a day after shocking Danes by cancelling a
Copenhagen visit over the rebuff.
Danes voiced disbelief at Trump’s decision to forgo the trip, although
Frederiksen said she believed relations with the United States, a NATO ally,
would not be affected.
Trump, who built his career as a businessman dealing in real estate, had
mused openly in recent days about a U.S. purchase of Greenland, an autonomous
Danish territory rich in natural resources, raising eyebrows in Europe and in
the United States.
Former Danish Prime Minister Lars Lokke Rasmussen called it “an April
Fool’s Day joke” and Frederiksen called the idea “absurd.”
The latter comment set off Trump, who often becomes riled up by
criticism, real or perceived. He announced the cancellation of his planned Sept
2-3 trip to Denmark in a tweet late on Tuesday.
“I thought that the prime minister’s statement ... was nasty. I thought
it was an inappropriate statement. All she had to do is say: ‘No, we wouldn’t
be interested,’” Trump told reporters at the White House on Wednesday. “She’s
not talking to me. She’s talking to the United States of America. You don’t
talk to the United States that way, at least under me.”
----
Trump’s decision elicited condemnation, outrage and mockery
alike among Danish opposition leaders and the public.
“So (Trump) has cancelled his visit to Denmark because there was no
interest in discussing selling Greenland. Is this some sort of joke? Deeply
insulting to the people of Greenland and Denmark,” tweeted former Prime
Minister Helle Thorning Schmidt.
“Total chaos with @realDonaldTrump and cancellation of state visit to
Denmark. It has gone from a big opportunity for strengthened dialogue between
allies to a diplomatic crisis,” said former Foreign Minister Kristian Jensen of
the Liberal Party.
---- “(Trump’s cancellation) is very, very shocking, when it is about a very close ally and a good friend,” said Soren Espersen of the hard-right Danish People’s Party.
He said Trump had effectively snubbed Queen Margrethe, Denmark’s head of
state. Trump and U.S. first lady Melania Trump were formally invited to Denmark
by the queen in July.
More
Next, can the wealth
and jobs destroying EUSSR actually avoid a new recession, given Germany, Italy,
and a upcoming no-deal Brexit? From London I’d bet the other way.
Slowdown in machinery exports points to weakening German economy
August 21, 2019
/ 2:24 PM
BERLIN (Reuters) - Trade conflicts and a weakening global economy have
hit growth in Germany’s export-reliant machine-building sector, data showed on
Wednesday, adding to signs that Europe’s largest economy could slip into a
recession.
Exports grew by just 0.9% to 89.2 billion euros (£81.5 billion) in the
first half of the year, according to figures released by industry association
VDMA, as growth in the first quarter was all but wiped out by a contraction in
the second.
“The uncertainty triggered by the trade conflict between the United
States and China in particular, as well as the lack of prospects for an
agreement on Brexit, are hurting our export-focused sector,” said Ralph
Wiechers, chief economist at VDMA.
Machine exports grew by 3.8% in the first quarter and fell by 1.8% in
the three months that followed.
The German economy contracted by 0.1% in the second quarter, prompting
calls for Finance Minister Olaf Scholz to ditch the country’s balanced budget
rules and draft a stimulus package.
The VDMA data, which the association said is based on figures from the
Federal Statistics Office, showed exports to the United States had risen by
7.8% in the first six half, accounting for more than 11% of total output. But
demand from China rose by just 0.6%.
Increased external risks fuel German business uncertainty: ministry
August 21, 2019
/ 11:42 PM
BERLIN (Reuters) - The German economy is facing increased headwinds from
abroad and this is fuelling business uncertainty, the finance ministry said on
Thursday, adding that the so far robust labor market is showing first signs of
cooling.
Export-oriented manufacturers in Europe’s largest economy are suffering
from weaker foreign demand, growing trade tensions and uncertainty over Brexit.
“External risks have increased significantly and are fuelling business
uncertainty,” the finance ministry said in its monthly report, adding that
early indicators pointed to a sustained slowdown in the industrial sector.
Record-high employment, inflation-busting pay hikes and low borrowing
costs have supported Germany’s domestic economy so far, with household spending
and construction providing a certain buffer against external shocks.
“The labor market situation is still favorable, but employment growth is
slowing,” the ministry cautioned. Forward-looking indicators were pointing to a
further slowdown in employment growth, especially in manufacturing.
The economy contracted by 0.1% quarter-on-quarter from April to June.
The Bundesbank warned on Monday that overall economic output could have
continued to shrink over the summer, raising the specter of a technical
recession.
More
Switzerland Has a New Way to Impose World’s Lowest Interest Rate
By Catherine Bosley and Richard Jones
August 21, 2019, 5:01 AM GMT+1
The Swiss National Bank has a new way of enforcing the
world’s lowest interest rate.With the franc near a two-year high against the euro, the SNB’s decade-old battle against an overly strong currency is back in focus. There’s evidence it’s been intervening again and analysts are increasingly betting that it will soon follow with a rate cut.
That would be the first change to the SNB’s new benchmark interest rate, introduced in June as a successor to one based on scandal-plagued Libor. Here’s a look inside the central bank’s machine room:
Below Zero
The SNB is one of five central banks with negative rates
Why the change?
The SNB’s dumping of Libor is part of a global overhaul of benchmarks in the wake of a high-profile manipulation scandal that led to huge fines for banks and jail time for some traders. While Libor’s end date has been set for 2021, the SNB is switching now due to its three-year inflation forecast horizon. That allows all its projections to be based on a single rate.What’s the new rate based on?
It’s a system similar to the U.S. Federal Reserve and the Bank of England. The new benchmark targets the very short end of the yield curve. That’s effectively the Swiss Average Rate Overnight, or SARON, which is based on secured transactions between financial institutions. SARON is Libor’s designated replacement for pricing loans and mortgages and is administered by stock market operator SIX.More
https://www.bloomberg.com/news/articles/2019-08-21/switzerland-has-a-new-way-to-impose-world-s-lowest-interest-rate?srnd=premium-europe
Finally, Asia again. Banks in Hong Kong condemn the violence and plead for harmony. But is anyone listening on either side? In Beijing it’s viewed as yet another US stirred up colour revolution. To much of the Hong Kong public viewed as a last ditch attempt at preserving their freedoms. How long Beijing will tolerate the unrest is an open question, but the unrest is damaging the economy and driving awaytourism.
Banks in Hong Kong condemn violence, urge restoration of 'harmony'
August 22, 2019 /
4:27 AM
HONG KONG
(Reuters) - Some of Hong Kong’s biggest banks published full-page newspaper
advertisements on Thursday calling for the preservation of law and order in the
Chinese territory and condemning violence, as weeks of pro-democracy protests
show no sign of abating.
HSBC, Standard Chartered and Bank of East Asia, which published the
advertisements in major newspapers in the Asian financial hub, all urged the
restoration of social order.
Thousands of Hong Kong residents held an anti-government protest on
Wednesday at a suburban subway station where demonstrators were attacked by a
mob of white-shirted men last month. Protesters at the subway station on
Wednesday were angry that nobody has yet been prosecuted for that violence.
The standoff stopped short of recent intense clashes with police, who
refrained from using tear gas or attempting to storm protesters’ lines. Only
one rock was seen hitting a police shield and most protesters headed home
before midnight.
Anger erupted in June over a now-suspended bill that would allow
criminal suspects in Hong Kong to be extradited to mainland China for trial but
have since grown into one of the biggest populist challenges faced by Chinese
President Xi Jinping since he took power in 2012.
More
“If you have ten thousand regulations you destroy all respect for the law.”
Sir Winston Churchill.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today commodities. Are the industrial metals signalling a coming
recession or a recession that’s already started?
Column: Tiny tin market sounds a recessionary warning note
August 20, 2019
/ 1:25 PM
LONDON (Reuters) -
Fears of a global recession are rising.
Industrial metals such as copper are struggling to make any price
headway as funds take an increasingly negative view of where the global
manufacturing economy is heading.
The tiny tin market seems to be already trading as if recession were a
reality.
London Metal Exchange (LME) tin lurched sharply lower at the beginning
of July and has kept falling ever since, touching a fresh three-year low of
$16,255 per tonne on Monday.
That’s lower than the Global Financial Crisis sell-off in 2009 and the
price is now approaching the decade’s lows seen over the 2015-2016 metallic
bear market.
Core demand weakness is coming from the semiconductor sector, where
cyclical downturn is exacerbated by the current trade tensions between Japan
and South Korea.
In textbook commodity market fashion, the price slump appears to have
wrong-footed producers, at least one of which has been boosting output
significantly.
The slide in the tin price has been accompanied by rising LME warehouse
stocks, which have rebuilt from just 740 tonnes at the start of May to a
current 6,175 tonnes.
The increase in inventory has taken place from an extremely low starting
point and was initially spurred by another of the LME tin contract’s periodic
spread contractions.
The cash-to-three-months spread flexed out to $340-per tonne
backwardation at one stage in May, the high cash premium sucking metal into the
LME warehouse system.
However, the inflows have continued even as the spread tightness has
dissipated. That spread closed Monday valued at a marginal backwardation of
just $5 per tonne but stocks jumped again this week on the back of 1,620 tonnes
being warranted at Singapore and Malaysia’s Port Klang.
What might have been viewed as a one-off stocks reaction to LME
tightness is starting to look more problematically structural.
Nor has there been any obvious linkage with the two main sources of
refined tin in the Western market.
Indonesian exports were actually down by 13%, or almost 6,000 tonnes, in the first seven months of this year.
Net exports from China have increased but only by just over 2,000 tonnes in the first half of 2019.
Tin’s problem right now is rooted in demand weakness.
Although commonly associated with packaging, tinplate actually accounts
for only around 14% of global usage, according to the International Tin
Association.
By some margin the largest end-use for tin is soldering in
semiconductors, representing around 47% of global usage.
It’s a sector that is currently facing its own headwinds.
More
"Some
see private enterprise as a predatory target to be shot, others as a cow to be
milked, but few are those who see it as a sturdy horse pulling the wagon."
Sir
Winston Churchill.
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?
Heat shield just 10 atoms thick to protect electronic devices
Atomically thin heat shields could be up to 50,000 times thinner than current insulating materials in cell phones and laptops
Date:
August 19, 2019
Source:
Stanford University
Summary:
Atomically thin materials could create heat-shields for cell phones or laptops
that would protect people and temperature-sensitive components and make future
electronic gadgets even more compact.
Excess heat given off by smartphones, laptops and other electronic
devices can be annoying, but beyond that it contributes to malfunctions and, in
extreme cases, can even cause lithium batteries to explode.
To guard against such ills, engineers often insert glass, plastic or
even layers of air as insulation to prevent heat-generating components like
microprocessors from causing damage or discomforting users.
Now, Stanford researchers have shown that a few layers of atomically
thin materials, stacked like sheets of paper atop hot spots, can provide the
same insulation as a sheet of glass 100 times thicker. In the near term, thinner
heat shields will enable engineers to make electronic devices even more compact
than those we have today, said Eric Pop, professor of electrical engineering
and senior author of a paper published Aug. 16 in Science Advances.
"We're looking at the heat in electronic devices in an entirely new
way," Pop said.
Detecting sound as heat
The heat we feel from smartphones or laptops is actually an inaudible
form of high-frequency sound. If that seems crazy, consider the underlying
physics. Electricity flows through wires as a stream of electrons. As these
electrons move, they collide with the atoms of the materials through which they
pass. With each such collision an electron causes an atom to vibrate, and the
more current flows, the more collisions occur, until electrons are beating on
atoms like so many hammers on so many bells -- except that this cacophony of
vibrations moves through the solid material at frequencies far above the
threshold of hearing, generating energy that we feel as heat.
Thinking about heat as a form of sound inspired the Stanford researchers
to borrow some principles from the physical world. From his days as a radio DJ
at Stanford's KZSU 90.1 FM, Pop knew that music recording studios are quiet
thanks to thick glass windows that block the exterior sound. A similar
principle applies to the heat shields in today's electronics. If better
insulation were their only concern, the researchers could simply borrow the
music studio principle and thicken their heat barriers. But that would
frustrate efforts to make electronics thinner. Their solution was to borrow a
trick from homeowners, who install multi-paned windows -- usually, layers of
air between sheets of glass with varying thickness -- to make interiors warmer
and quieter.
"We adapted that idea by creating an insulator that used several
layers of atomically thin materials instead of a thick mass of glass,"
said postdoctoral scholar Sam Vaziri, the lead author on the paper.
Atomically thin materials are a relatively recent discovery. It was only
15 years ago that scientists were able to isolate some materials into such thin
layers. The first example discovered was graphene, which is a single layer of
carbon atoms and, ever since it was found, scientists have been looking for,
and experimenting with, other sheet-like materials. The Stanford team used a
layer of graphene and three other sheet-like materials -- each three atoms
thick -- to create a four-layered insulator just 10 atoms deep. Despite its
thinness, the insulator is effective because the atomic heat vibrations are
dampened and lose much of their energy as they pass through each layer.
More
"We contend that for a nation to tax
itself into prosperity is like a man standing in a bucket and trying to lift
himself up by the handle."
Sir Winston Churchill.
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.
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