Friday 16 August 2019

Trump Wants Greenland. Why?


Baltic Dry Index. 2047 +97  Brent Crude 58.83  Spot Gold $1,522

Never ending Brexit now October 31st, maybe.  76 days away.
Nuclear Trump China Tariffs Now In Effect.
USA v EU trade war postponed to November, maybe.

“Fiat-money! Let the State 'create' money, and make the poor rich, and free them from the bonds of the capitalists! How foolish to forego the opportunity of making everybody rich, and consequently happy, that the State's right to create money gives it! How wrong to forego it simply because this would run counter to the interests of the rich! How wicked of the economists to assert that it is not within the power of the State to create wealth by means of the printing press!- You statesmen want to build railways, and complain of the low state of the exchequer? 

Well, then, do not beg loans from the capitalists and anxiously calculate whether your railways will bring in enough to enable you to pay interest and amortization on your debt. Create money, and help yourselves.”

Ludwig von Mises, The Theory of Money and Credit

President Trump, according to reports, is thinking about buying Greenland. The most northerly Trump casino and golf course perhaps? 24 hour golfing in the short summer season? More on that later.

We open with stock markets rallying again on hopium. This time it’s different, no, really it is. Don’t worry about bond markets or the global manufacturing recession, the central banksters have it all covered with negative interest rates, coming soon to the land of the free and the brave.

Buy more, there’s a greater fool out there, if only we can find him and with negative interest rates that’s only a matter of time.

Hollywood couldn’t make this sort of madness up. I think we all know the old ending though. We just don’t know how high gold and silver will go under fiat money revulsion.

Asia stocks take heart in stimulus speculation

August 16, 2019 / 1:42 AM
SYDNEY (Reuters) - Asian shares found some footing on Friday after a turbulent week as China hinted at more support for its economy, amid growing expectations of aggressive stimulus from all the major central banks.

Sentiment got a lift when China’s state planner said Beijing would roll out a plan to boost disposable income, though details were lacking. 

A bounce in U.S. and European stock futures also helped, with E-Minis for the S&P 500 up 0.55% and the EUROSTOXX 50 rising 0.5%.

MSCI’s broadest index of Asia-Pacific shares outside Japan responded by edging up 0.2%, though it was still down 1% for the week.

Japan’s Nikkei recouped early losses to be 0.09% firmer, while Shanghai blue chips rose 0.7%.

The Sino-U.S. trade dispute remained a drag after Beijing on Thursday vowed to counter the latest tariffs on $300 billion of Chinese goods.

U.S. President Donald Trump said on Thursday he believed China wanted to make a deal and that the dispute would be fairly short, despite it already lasting more than a year.

With no settlement in sight, investors have hedged against a global slowdown by buying bonds. Yields on 30-year debt hit an all-time low of 1.916% to be down 27 basis points for the week, the sharpest such decline since mid-2012.

That meant investors were willing to lend the government money for three decades for less than the overnight rate.

Such is the gloom that surprisingly strong U.S. retail sales came and went with no impact on the bond rally.

Analysts have cautioned that the current bond market is a different beast than in the past and might not be sending a true signal on recession.
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China vows countermeasures after new U.S. tariffs

Aug. 15, 2019 / 8:28 AM
Aug. 15 (UPI) -- The government in Beijing said Thursday it will retaliate for a new round of U.S. tariffs for Chinese exports to the United States, even though President Donald Trump withdrew some and delayed others.

Beijing said the new 10 percent tariffs go against a no-tariff agreement Trump and Chinese President Xi Jinping reached at the G20 summit in June. China's State Council Tariff Committee said the newly announced tariffs "seriously violate" that agreement.

Trump said some of the new tariffs will be delayed until December so retailers can import Christmas merchandise without worrying about extra tax. The postponed tariffs cover cellphones, laptop computers, video game consoles and toys. Other items were removed from the tariff completely.

The U.S. Trade Representative office said changes were made for the "health, safety, national security and other factors."

The threat of Chinese countermeasures influenced world markets Thursday, a day after the Dow shed more than 800 points in its worst trading day of the year -- and a downturn for Treasury bonds flashed possible signals, experts said, of an approaching recession.

"Retaliation by China means escalation in tensions, and diminishes the chances of a positive outcome in the near term," analyst Neil Wilson told Yahoo Finance. "Risks are still to the downside."
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https://www.upi.com/Top_News/World-News/2019/08/15/China-vows-countermeasures-after-new-US-tariffs/1141565868675/?ts_tn_int=8

WTO quarterly trade growth indicator drops from May

August 15, 2019 / 2:24 PM
GENEVA (Reuters) - The World Trade Organization (WTO) said on Thursday that its latest quarterly outlook indicator “suggests that below-trend expansion in merchandise trade will persist in the coming months”.

It showed growth in global goods trade likely to weaken, with a reading of 95.7. In its previous quarterly report in May, the WTO said that growth was likely to remain weak, with a reading of 96.3.
A score of below 100 in the indicator, a composite measure of seven drivers of trade, signals below-trend growth. 

International air freight, electronic components indices now show readings well below previous levels, while automobile production and sales, and agricultural raw materials seem to have bottomed out, the WTO said.

Exclusive: China set to deepen Argentine trade ties with bid for grains 'superhighway'

August 16, 2019 / 6:07 AM
BUENOS AIRES (Reuters) - Chinese state-owned construction giant CCCC is preparing a bid to dredge Argentina’s Parana River, the country’s main cargo superhighway that takes soy and corn from the Pampas farm belt to the shipping lanes of the south Atlantic and the world.

Representatives of China Communications Construction Co Ltd (1800.HK) and its Shanghai Dredging unit have met with Argentine government and local port officials to sound out the dredging concession, according to three people involved in the talks, which have not been previously reported.
CCCC is at the forefront of China’s push to lock in food supplies by investing in commodities transport hubs globally.

Dredging the Parana is the biggest logistics contract in Argentina. China is already the main buyer of Argentine soybeans while Chinese state-owned conglomerate Cofco has, through acquisitions, become the biggest agricultural commodities exporter operating in Argentina.

Shanghai Dredging’s interest in the Parana appears part of China’s broader effort to “invest across international agricultural supply chains to better control supply and pricing,” said Margaret Myers, head of the Asia-Latin America programme at the Inter-American Dialogue, a Washington-based think tank.

From 2005 through the first half of this year China invested about $579 billion internationally in the energy, power, transport and agricultural sectors, according to Washington-based American Enterprise Institute’s Chinese Global Investment Tracker, of which $71 billion went to South America.
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The recession question we should be asking isn't ‘when’ but ‘how bad?’

Joe Chidley: The triggers of previous downturns aren't entirely the same today, but there is one new near-to-bursting bubble

Last Updated August 15, 2019 7:00 AM EDT

It’s taken a while, but equity investors finally seem to get what bond investors have been signalling for months. Back in March, the yield curve for three-month and 10-year U.S. Treasuries inverted, meaning the three-month bills were yielding more than the 10-year notes, which isn’t the right way around if everything is hunky-dory in economics-land. But stock markets went on to have a pretty good April, a so-so May and then an even better June, as investors paid more attention to the Federal Reserve’s flip-flop than to the yellow light the three-month/10-year curve was flashing.

But on Wednesday, a more traditionally watched yield curve — the one between the two-year and 10-year Treasuries — also inverted. And so did the corresponding curve in the U.K. Add to that some dismal data from Germany and China and — well, oh yeah, the yield curve inversion mattered again.
Even Donald Trump’s promise to dial back his threatened tariffs on China — at least till Americans get their Christmas shopping out of the way — couldn’t stop the damage in stock markets. The S&P 500 and the Dow both dropped by about 2.7 per cent Wednesday. The S&P/TSX composite fell by about 1.7 per cent, propped up in part by investors plowing their cash into gold stocks, which is another indication of growing fears of a global downturn.

So the R-word is front and centre for equity investors. Are the worries warranted?

Well, on one level, of course they are. As the textbooks tell us, the two-year/10-year curve has inverted before every U.S. recession over the past 50 years. But the curve doesn’t tell us exactly when. Historically, recessions have occurred between 12 and 24 months after inversion. It might be the same this time, or it might not. The post-crisis yield curve has been generally flatter than in other recent periods, which means that a less dramatic shift in spreads can create an inversion. Perhaps those less dramatic shifts also undermine the curve’s storied accuracy.

Of course, unless the business cycle just doesn’t happen anymore (and maybe it doesn’t), we are always headed towards a recession, sometime. A more interesting question than when it will occur might be how it will play out.

It’s been more than a decade since the last big downturn, so maybe we don’t remember much what recessions look like. (Let’s leave aside Canada’s recession-that-wasn’t-a-recession in 2015.) It might well be different this time.

For one thing, a good part of today’s recession worries are driven by political uncertainty. We don’t know how much Trump’s trade war is already undermining business confidence or consumer spending, but if it gets worse, both will suffer. A hard Brexit — which is to say, a messy and painful Brexit — looks like it is just around the corner in the U.K., and it would send ripples throughout Europe. Germany’s second-quarter contraction was mild (-0.1 per cent), yet it could still easily tip into recession amid the slowdown in global trade and unknowable impact of the British malady.
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Finally, President Trump wants to buy Greenland. Presumably for America rather than for himself. What does he know about global warming that the rest of us don’t know? Given the massive annual subsidy Denmark has to provide to Greenland, at the right price Denmark might sell.

But why just limit it to America? Why not hold an open auction for the ice bound island? Maybe China or the Saudis might want it. Russia or the UAE? Norway’s sovereign wealth fund? Elon Musk?

President Trump Eyes a New Real-Estate Purchase: Greenland

In conversations with aides, the president has—with varying degrees of seriousness—floated the idea of the U.S. buying the autonomous Danish territory

By Vivian Salama, Rebecca Ballhaus, Andrew Restuccia and Michael C. Bender Updated Aug. 15, 2019 6:19 pm ET
WASHINGTON—President Trump made his name on the world’s most famous island. Now he wants to buy the world’s biggest.

The idea of the U.S. purchasing Greenland has captured the former real-estate developer’s imagination, according to people familiar with the discussions, who said Mr. Trump has, with varying degrees of seriousness, repeatedly expressed interest in buying the ice-covered autonomous Danish territory between the North Atlantic and Arctic oceans.

In meetings, at dinners and in passing conversations, Mr. Trump has asked advisers whether the U.S. can acquire Greenland, listened with interest when they discuss its abundant resources and geopolitical importance and, according to two of the people, has asked his White House counsel to look into the idea.

Some of his advisers have supported the concept, saying it was a good economic play, two of the people said, while others dismissed it as a fleeting fascination that will never come to fruition. It is also unclear how the U.S. would go about acquiring Greenland even if the effort were serious.

With a population of about 56,000, Greenland is a self-ruling part of the Kingdom of Denmark, and while its government decides on most domestic matters, foreign and security policy is handled by Copenhagen. Mr. Trump is scheduled to make his first visit to Denmark early next month, although the visit is unrelated, these people said.

The White House and State Department didn’t respond to a request for comment. Officials with Denmark’s Royal House and the Danish embassy in Washington didn’t immediately respond to requests for comment, nor did officials with Greenland’s representative office in Washington and Greenland’s prime minister’s office.

U.S. officials view Greenland as important to American national-security interests. A decades-old defense treaty between Denmark and the U.S. gives the U.S. military virtually unlimited rights in Greenland at America’s northernmost base, Thule Air Base. Located 750 miles north of the Arctic Circle, it includes a radar station that is part of a U.S. ballistic missile early-warning system. The base is also used by the U.S. Air Force Space Command and the North American Aerospace Defense Command.

The U.S. has sought to derail Chinese efforts to gain an economic foothold in Greenland. The Pentagon worked successfully in 2018 to block China from financing three airports on the island.
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https://www.wsj.com/articles/trump-eyes-a-new-real-estate-purchase-greenland-11565904223?mod=mhp

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith


Crooks and Scoundrels Corner.

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

Today General Electric. Is there smoke without fire or is there a fire in GE? Without seeing the report it’s impossible to say.

GE Is New Target of Madoff Whistleblower

Harry Markopolos releases report on GE’s accounting, claiming its cash situation is far worse than disclosed and GE needs to boost insurance reserves

By Thomas Gryta and Mark Maremont  Aug. 15, 2019 6:56 am ET
An accounting expert who raised red flags about Bernie Madoff ’s Ponzi scheme has a new target: General Electric Co. GE -3.42% 

In a research report posted online Thursday, Harry Markopolos alleges the struggling conglomerate has masked the depths of its problems, resulting in inaccurate and fraudulent financial filings with regulators. The report, which numbers more than 170 pages and was reviewed by The Wall Street Journal, is a mixture of detailed financial analysis and sweeping claims.

Mr. Markopolos said, in an interview ahead of the report’s release, his group found GE’s insurance unit will need to bolster its reserves by $18.5 billion in cash and faulted the way the company is accounting for its oil-and-gas business. All told, he said, the accounting problems amount to $38 billion, or 40% of the conglomerate’s market value.

“GE stands behind its financials. We operate to the highest level of integrity in our financial reporting and we have clearly laid out our financial obligations in great detail,” a GE spokeswoman said in an email before the report was published. “While we can’t comment on the detailed content of a report that we haven’t seen, the allegations we have heard are entirely false and misleading.”

Mr. Markopolos said he and his colleagues are working with an undisclosed hedge fund, which is betting GE’s share price will decline. Mr. Markopolos’s group gave the investor access to the research prior to publication and will receive a portion of any trading proceeds. He declined to identify the hedge fund. The group also is sharing its findings with securities regulators, hoping to collect a cash reward as part of a whistleblower program, Mr. Markopolos said.

The group’s research indicates that GE is short on working capital—a key measure of liquidity—and that its cash situation is far worse than disclosed in its regulatory filings.

GE said it hasn’t been contacted by Mr. Markopolos and that the group’s report was produced to help short sellers profit by creating volatility in GE’s shares. “We will not be distracted by this type of meritless, misguided and self-serving speculation and neither should anyone in the investor community,” the GE spokeswoman said.

The Boston-based investor-turned-investigator warned the Securities and Exchange Commission about the Madoff investment scheme years before it became public, but was ignored. In a more recent campaign, Mr. Markopolos helped expose a foreign-currency trading scandal at several banks. He has helped spawn a cash-for-tips whistleblower industry.

GE is already under investigation by the SEC and Justice Department for potential accounting issues that have come to light in the past two years related to its insurance holdings and problems in its power division. The company has denied accounting fraud in response to lawsuits and said it is cooperating with investigators. GE has said it is considering switching auditors after using KPMG LLP for more than a century.

The Markopolos group said it plans to present its report to the SEC and to meet with federal prosecutors and investigators about its findings. In the report, the group says some information will be given exclusively to law enforcement.
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Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

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?

How do atoms vibrate in graphene nanostructures?

Innovative new electron spectroscopy technique pushes the limits of nanospectroscopy for materials design

Date: August 12, 2019

Source: University of Vienna

Summary: Researchers have developed a method capable to measure all phonons existing in a nanostructured material. This is a breakthrough in the analysis of nanoscale functional materials and devices. 

In order to understand advanced materials like graphene nanostructures and optimize them for devices in nano-, opto- and quantum-technology it is crucial to understand how phonons -- the vibration of atoms in solids -- influence the materials' properties. Researchers from the University of Vienna, the Advanced Institute of Science and Technology in Japan, the company JEOL and La Sapienza University in Rome have developed a method capable to measure all phonons existing in a nanostructured material. This is a breakthrough in the analysis of nanoscale functional materials and devices. With this pilot experiment using graphene nanostructures these researchers have shown the uniqueness of their approach, which will be published in the latest issue of Nature.

Important thermal, mechanical, optoelectronic and transport characteristics of materials are ruled by phonons: the propagating atomic vibrational waves. It is then inferable that the determination of such extended atomic vibrations is crucial for the optimization of nanoelectronic devices. The current available techniques use optical methods as well as inelastic electron-, x-ray- and neutron scattering. Despite its scientific importance in the last decade, none of these methods has been able to determine all phonons of a freestanding monolayer of two dimensional (2D) materials such as graphene and their local variations within a graphene nanoribbon, which are in turn used as active elements in nano- and optoelectronics.

The new limits of nanospectroscopy

An international research team of leading experts in electron spectroscopy led by Thomas Pichler at the University of Vienna, theoretical spectroscopy led by Francesco Mauri at La Sapienza University in Rome and electron microscopy led by Kazu Suenaga at the AIST Tsukuba in Japan, together with the Japanese company JEOL have presented an original method applying it to graphene nanostructures as model: "high resolution electron spectroscopy inside an electron microscope with enough sensitivity to measure even an atomic monolayer." In this way they could for the first time determine all vibrational modes of freestanding graphene as well as the local extension of different vibrational modes in a graphene nanoribbon. This new method, which they called "large q mapping" opens entirely new possibilities to determine the spatial and momentum extension of phonons in all nanostructured as well as two dimensional advanced materials. These experiments push the limits of nanospectroscopy approaching the limits of Heisenbergs uncertainty principle and demonstrates new possibilities to study local vibration modes at the nanometer scale down to individual monolayers.

---- This study of "High q-Mapping Of Vibrations" in the electron microscope opens a new pathway of nanospectroscopy of all materials combining spatial and momentum resolved measurements. This has been the biggest challenge regarding the combination of microscopy and spectroscopy, since the spatial and momentum resolutions are compensated due to the limit of Heisenbergs uncertainty principle. "We believe that our methodology will boost vast research in material science and will push high resolution electron spectroscopy in electron microscopy to the next level, to be envisaged as a true table top synchrotron," says Thomas Pichler from the University of Vienna.
 
Another weekend and will Trump surprise everyone with a sudden bid on the island of Greenland? Of course he might get it a whole lot cheaper just by sending in 500 US Marines and a promise of US citizenship. 

The 56,000 or so Greenlanders might by now be really tired of all those long, cold, very dark winters. Miami and Florida winter trailer parks, probably beats heading out in the dark trying to hunt seals and dodge Polar Bears. Have a great weekend everyone.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."


Ludwig von Mises

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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