Baltic Dry Index. 1788 -24 Brent Crude 61.89
Never ending Brexit now October 31,
maybe. 89 days away.
Trump’s Nuclear China Tariffs
Now In Effect.
USA v EU trade war postponed to
November, maybe.
Gold is money. Everything else is credit.
J. P. Morgan
An increasingly erratic President Trump,
as if such a thing is possible, is turning the world’s supply chains upside
down, adding drag to an already near or in recession, global manufacturing economy.
The latest new trade war between Japan and South Korea, threatens to greatly
add to Asia’s growing exports slowdown.
To this old dinosaur market watcher, at
best we are on the cusp of a new global recession, at worst we have already
entered into a new global recession, one that can only be made deeper for
longer from all the trade wars, and enormously aggravated by the vast mountains
of unrepayable debt accumulated since the Great Recession of 2008-2009.
Brexit or not on October 31, Europe
seems already headed into recession, one that will be made far worse by
Brussels insistence on a clean no-deal Brexit. When President Trump imposes his
tariffs on French wines and German cars, round about November or December, the
rump-EUSSR is likely to be existentially tested next year. Pity the poor Euro
holders facing deeper and wider negative interest rates.
But to this old dinosaur following
markets since 1968, the manufacturing recession and an EU recession will
eventually drag the US economy into recession too. In an election year in 2020,
that will lead the Fed into the grave error of trying negative interest rates
for the first time in its history, in an ever more desperate attempt to head off
deflation and restart the US economy. It will not work out well for the global fiat
dollar economy. Not for nothing are the central banks re-accumulating physical
gold holdings again.
I would like to think that a new
recession can be avoided if only the world came to its senses and dropped all
the trade wars, and Brussels relented on a no-deal Brexit, but I think it’s
probably too late for that to prevent a new global recession. At best it would
merely delay it by a few months, at worst it would make no difference at all.
But there’s no sign of anyone willing to
drop the trade wars, no-deal Brexit, nor of the central banks not all pursuing covert
competitive devaluation policies. The race to the bottom.
Below, dismal reading for a dismal
global economy.
There is no honest man —
not one — that can resist the attraction of gold!
Aristophanes
China vows fight against Trump's latest tariffs as stocks sink
August 1, 2019 / 6:02 PM
BEIJING/WASHINGTON (Reuters) - China on
Friday vowed to fight back against U.S. President Donald Trump’s abrupt
decision to slap 10% tariffs on the remaining $300 billion in Chinese imports,
a move that ended a month-long trade truce.
China’s new
ambassador to the United Nations, Zhang Jun, said Beijing would take “necessary
countermeasures” to protect its rights and bluntly described Trump’s move as
“an irrational, irresponsible act.”
“China’s
position is very clear that if U.S. wishes to talk, then we will talk, if they
want to fight, then we will fight,” Zhang told reporters in New York, also
signalling that trade tensions could hurt cooperation between the countries on
dealing with North Korea.
Trump said
China had to do a lot in order to turn things around in the trade talks and
repeated an earlier threat to substantially increase tariffs if they failed to
do so.
“We can’t
just go and make an even deal with China. We have to go and make a better deal
with China,” Trump told reporters at the White House.
The U.S.
president stunned financial markets on Thursday by saying he plans to levy the
additional duties starting Sept. 1, marking a sudden end to a truce in a
year-long trade war between the world’s two biggest economies that has slowed
global growth and disrupted supply chains.
More
Trump's tariffs jolt global stocks, spark rush to safer assets
August 2, 2019 / 12:59 AM
TOKYO (Reuters) - Global stocks took a
beating on Friday, with investors piling into safe-haven assets but oil prices
recouped some losses after U.S. President Donald Trump said he would slap a 10%
tariff on the remaining $300 billion of Chinese imports starting Sept. 1.
---- Trump’s announcement, which came a
day after U.S. and Chinese negotiators concluded a meeting in Shanghai without
significant signs of progress, marks an end to a truce in the trade war struck
in June and could further disrupt global supply chains.
“And the market was also relieved by signs of recovery in the semi-conductor sector. But now investors and companies will have to revise their scenarios.”
Indeed, the tech-heavy Taiwan's Taiex .TWII slid 1.7% and South Korea's KOSPI .KS11 lost as much as 1.5% to hit a fresh seven-month low, after Tokyo approved a plan to remove Seoul from a list of its trusted trading partners, known as a "white list."
China’s state media quickly denounced Trump’s new tariffs, with the editor in chief of the Global Times saying on Friday that a trade deal between the United States and China was now “further away.”
The war of words appeared to escalate after U.S. Secretary of State Mike Pompeo said “decades of bad behaviour” from China had hampered free trade and prompted tariffs and other action from Washington.
The proposed levies triggered a stampede for safe-haven assets, including U.S. bonds, gold and the yen, while the Chinese yuan and the Australian dollar hit multi-month lows.
More
As trade row with Japan heats up, South Korea vows not to be ‘defeated again’
Date created : 02/08/2019 - 11:46Latest
update : 02/08/2019 - 11:55
South Korea fired back at Japan over a deepening trade
dispute on Friday, pledging it would not be “defeated again” by its neighbour,
laying bare decades-old animosity at the root of a row over fast-track export
status.
During a rare live television broadcast of his cabinet meeting, South Korean President Moon Jae-in threatened countermeasures after Japan’s cabinet approved the removal of South Korea’s fast-track export status from Aug. 28.
Cutting South Korea from a so-called “white list” of favoured export destinations mean more paperwork, on-site inspections for some Japanese exporters to obtain permits, potentially slowing down exports of a wide range of goods that could be used to produce weapons.
Relations between the two U.S. allies began to deteriorate late last year following a row over compensation for wartime forced labourers during Japan’s occupation, but the language used by President Moon was the starkest yet.
“We won’t be defeated by Japan again,” Moon told his cabinet, pointedly invoking South Korea’s difficult history with Japan, which colonised the Korean peninsula before World War Two.
He described Japan as a “selfish nuisance” for disrupting global supply chains, and aired suspicions over its motive for hobbling a rival economy.
As part of its countermeasures, South Korea will remove Japan from its own “white list” of favoured trade countries and speed up the filing of a complaint to the World Trade Organisation over Japan’s export controls, Finance Minister Hong Nam-ki said.
Earlier in Tokyo, Japanese Industry Minister Hiroshige Seko told a briefing that the cabinet had taken the decision for national security reasons, and it was not intended to harm bilateral relations.
South Korean officials have held a different perspective, particularly since last month, when Japan tightened curbs on exports to South Korea of three high-tech materials needed to make memory chips and display panels, threatening the global supply of chips.
---- The rift is the latest example of how a decades-old disagreement has undermined relations between the two U.S. allies, at a time when Washington wants them working closely together on North Korea. It is also awkward economically, as both export driven economies are facing sliding demand from China.
Tokyo has
been frustrated by what it calls a lack of action by Seoul after South Korea’s
top court ruled last year that a Japanese steelmaker should compensate former
forced labourers.
South Korea
would be the first country to be removed from Japan’s white list, which
currently has 27 countries including Germany, Britain and the United States.
More
South Korean boycott of Japan grows ahead of crucial trade decision
Aug. 1, 2019 / 8:26 AM
SEOUL, Aug.
1 (UPI) -- As a trade spat with Japan threatens to intensify, South Koreans are
striking back with a movement to boycott Japanese products that is growing in
scale and organization.
Consumer
boycotts began after Japan placed export restrictions on key materials used in
semiconductors and digital displays at the beginning of July, threatening to
disrupt South Korea's crucial high-tech manufacturing industry. The
restrictions are seen by many as retaliation for an ongoing dispute over forced
labor during Japan's 1910-45 colonial occupation of South Korea.
South Korean
consumers have responded by cutting purchases of everything from Japanese beer
to luxury cars to travel to Japan.
"I've
stopped buying Asahi," Pang Ju-il, an NGO worker in Seoul, said during a
rally outside the Japanese Embassy on Wednesday. "It was my favorite beer.
But we need to replace Japanese products with Korean ones. We aren't shopping
at any Japanese stores either. It is the only thing we can do and we hope this
will change Japan's policy."
---- A survey released by pollster Realmeter Korea on Thursday found that support for the boycott movement has been steadily growing, with almost 65 percent of Koreans taking part, up from 48 percent earlier in the month.
Since the export restrictions decision, anti-Japanese protests have been regularly held near the Japanese Embassy and in central Seoul, with weekend rallies drawing thousands of participants. A major march is being organized ahead of the Aug. 15 National Liberation Day, a holiday that commemorates the end of Japanese occupation.
"We could not participate in the movement for independence but we can take part in the Japan boycott," read one sign that a protester was carrying Wednesday.
Around 23,000 retail outlets had joined the boycott as of mid-July, according to local media reports, with many convenience stores removing Japanese products from their shelves. Japanese beer brands Asahi and Kirin have voluntarily pulled their TV advertising in South Korea, and stores that are not participating in the boycott report plummeting sales.
"Some foreigners are still buying Japanese beer, but Koreans have stopped entirely," said one convenience store manager in downtown Seoul. "And we have stopped including Japanese products in sales and promotions."
The travel industry is also feeling the brunt of the boycott. South Koreans accounted for 24 percent of all foreign tourists to Japan in 2018, second only to China, according to data from the Japan National Tourism Organization.
---- The boycott movement is growing in visibility online as well. The hashtag #BoycottJapan is spreading across Twitter and Instagram and has begun drawing celebrity endorsements. Actress Lee Si-young posted her support on Instagram last week with a note saying that she was changing her Japanese-made table tennis equipment for Korean brands.
A website called NoNo Japan compiles information about Japanese products and suggests Korean replacements for everything from sneakers to electronics to instant noodles. A related smartphone app even allows users to scan the bar code of an item to find its country of origin.
More
Finally,
gold. China’s push for more gold. Now getting an additional push from all of
the not so easy to win trade wars, an increasingly erratic President Trump, and
President Trump’s wish to devalue the dollar.
Gold would have value if
for no other reason than that it enables a citizen to fashion his financial
escape from the state.
William F. Rickenbacker
Driving China’s gold market
Madame Wu Xiaoling is Chairwoman of the Board of the PBC School of Finance, Tsinghua University and former Deputy Governor of the People’s Bank of China. Widely recognised for her contribution to China’s financial and economic growth, Madame Wu believes that gold has a crucial role to play in China’s continuing development and the internationalisation of the RMB.
Gold is widely acknowledged as a safe-haven asset, which is highly liquid, carries no counterparty risk and comes into its own during periods of uncertainty. Gold is often uncorrelated to other assets too – when equities and bonds fall in value, the gold price tends to rise.Today, against a backdrop of rising economic and geopolitical uncertainty, there is growing interest in gold as an asset class, particularly after a decade-long bull market in equities. Interest has been further piqued by trends within the central bank community. First, the banks have adopted a more doveish stance on interest rates; second, they have been buying gold in greater quantities than at any time since 1971.
“The gold price is influenced by interest rates and the US dollar. When the dollar weakens, gold rises and vice versa. As an important component of financial markets, the gold market has some influence on the transmission of monetary policy as well. The rise and fall of the ratio of gold in central banks’ asset portfolios also have an impact on market expectations and interest rates, thus affecting the asset allocation of market players,” says Madame Wu.
“Research has shown that the real interest rate has a significant impact on the price of gold. As real interest rates fall, gold’s safe-haven qualities come to the fore. Therefore, in an economic environment fraught with uncertainty, discussions around the role of gold can have genuine, practical implications,” she adds.
Such
discussions are particularly relevant in China. China’s gold market has already
made huge strides since the Shanghai Gold Exchange opened its doors in 2002.
Today, it is the largest physical spot market in the world, with a reputation
for transparency and accountability. But Madame Wu believes that certain
significant changes need to be made for China’s gold market to fulfil its
potential.
“The
restrictions on the allocation of gold in asset portfolios by insurance
companies, social security funds, pension funds and other institutions should
be eased at the right time, to introduce more long-term funds to China’s gold
market. And we should continue to increase the breadth and depth of the gold
market, diversify gold risk management products, and increase the proportion of
long-term institutional investors. This would create a more dynamic and
resilient onshore gold market,” she suggests.
Madame Wu
also believes that China should change its stance on the export of gold. Today,
China is the biggest consumer and producer of gold but there is no gold export
quota. Madame Wu suggests that two-way opening of China’s gold market will
expand its international influence.
“New York
and London are the financial centres of the world, and the New York gold
futures market and London gold spot market are the pricing centres of gold, and
they also affect the gold price. Expanding financial openness is an important
part of China’s all-round opening up in the new era.
And the introduction of a
quota system for gold exports in line with the current quota system for imports
will make the two-way flow of gold smoother. China’s gold market is one way,
with import quotas and no export quota. A two-way opening of its gold market
could attract more overseas long-term institutional investors to participate in
the Shanghai Gold Exchange international board, enrich the trading varieties
with different maturities, and improve product liquidity, which could expand
the international influence of China’s gold market,” she says.
Gold and the RMB
There are broader issues too. Over the years, the liberalisation of China’s gold market has supported the internationalisation of the RMB. This trend has been particularly evident since the Shanghai Gold Exchange launched its international arm in 2016, allowing foreign investors to use convertible foreign currencies and offshore RMB to participate in China’s gold market.Further internationalisation of the RMB will promote growth in China and help the country to overcome current and future challenges. Madame Wu is confident that gold can play an integral part in this process.
“The further liberalisation of the gold market in China, especially the market denominated in RMB, is a crucial step in the internationalisation of the RMB. We need to further liberalise the gold market in China, so as to support the internationalisation of our currency and expand our international influence,” she explains.
More
https://www.gold.org/goldhub/research/gold-investor/driving-chinas-gold-market
We have gold because we cannot trust governments.
Herbert Hoover
New: This weekend’s musical diversion. Antonio
Caldara, a much borrowed, though unattributed, composer.
A. CALDARA: Sinfonia in C major, La Serenissima
Gold and silver, like
other commodities, have an intrinsic value, which is not arbitrary, but is
dependent on their scarcity, the quantity of labour bestowed in procuring them,
and the value of the capital employed in the mines which produce them.
David Ricardo
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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