Baltic Dry Index. 2059
-08 Brent
Crude 60.31 Spot Gold $1,503
Never ending Brexit
now October 31st, maybe. 71
days away.
Nuclear Trump
China Tariffs Now In Effect.
USA v EU trade war
postponed to November, maybe.
Never believe
anything in politics until it has been officially denied.
Count Otto von
Bismarck
From God’s lips to our ears, well Trump’s
lips anyway, “we are very far from recession.”
Thus reassured, Asian investors sat on their wallets, pondering on a different
Reuters report that “President
Donald Trump showed no signs of backing down in his tussle with China,
declaring on Tuesday a confrontation was necessary even if it caused short-term
harm to the U.S. economy.”
Elsewhere, the Japan v South
Korea trade war deepened with new food radiation checks, the USA v Japan trade
talks are going nowhere unless the US side make more concessions, and much to
the relief of Queen Margrethe II of
Denmark, in a sulk over not being able to buy Greenland, President Trump
has cancelled his visit to Denmark.
Below, the world
awaits what wonders the Federal Reserve last meeting minutes hold.
Caution grips Asian shares before Fed minutes, seminar
August 21, 2019 /
1:57 AM
SYDNEY (Reuters) -
Asian shares flatlined on Wednesday as worries about global recession and
endless trade wars vied with hopes for a lot more monetary and fiscal stimulus
to keep growth going.
Much depends on what the Federal Reserve does with U.S. interest rates,
making markets hyper-sensitive to the minutes - due later on Wednesday - of its
last meeting.
Traders are also awaiting the central bank’s annual Jackson Hole seminar
later this week and a Group of Seven summit this weekend for clues on what
additional steps policymakers will take to boost economic growth.
Morgan Stanley economist Ellen Zentner advised clients to watch for the
use of the word “somewhat” when Fed Chair Powell describes further policy
adjustments.
“Acknowledgment that downside risks have increased with no
characterization of ‘somewhat’ could be taken as confirmation that it is likely
the Fed makes a larger cut in September,” Zentner wrote in a note.
Futures <0> are fully priced for a quarter-point cut in rates
next month, and over 100 basis points of easing by the end of next year.
With so much riding on the Fed, investors were understandably cautious.
MSCI’s broadest index of Asia-Pacific shares outside Japan dithered either side
of flat after three straight days of gains.
Japan’s Nikkei slipped 0.4%, while Shanghai blue chips lost -0.1%.
Faring a bit better were E-Mini futures for the S&P 500, which added 0.25%,
while EUROSTOXX 50 futures edged up 0.1%.
President Donald Trump showed no signs of backing down in his tussle
with China, declaring on Tuesday a confrontation was necessary even if it
caused short-term harm to the U.S. economy.
His strongly-worded remarks came hours before his government announced
approval of an $8 billion sale of Lockheed Martin F-16 fighter jets to Taiwan,
a move sure to draw Beijing’s ire and further dim prospects for a quick trade
deal.
Political turmoil in Hong Kong, Britain and Italy has also heightened
uncertainties for investors. The prospect of new elections in Italy after the
resignation of Prime Minister Giuseppe Conte added to jitters, sending Italian
sovereign bond yields sliding.
More
Trump Weighs Options to Spur the Economy
President says indexing capital-gains taxes to inflation is among the measures considered
Updated Aug. 21,
2019 12:04 am ET
WASHINGTON—President Trump said he is considering measures
to bolster the economy, including a possible reduction in capital-gains taxes,
and continued to press the Federal Reserve to cut interest rates even as he
played down warning
signs of a possible slowdown.“We’re looking at various tax reductions,” Mr. Trump told reporters at the White House on Tuesday. “But I’m looking at that all the time anyway.” He added: “We’re very far from a recession.”
With stock and bond markets signaling in recent weeks that a threat of a downturn from overseas is spreading to the U.S., Mr. Trump said his administration was exploring lowering capital-gains taxes by indexing gains to inflation, which he suggested he could do through regulatory action rather than through Congress. Such a move would likely face immediate court challenges.
Navigating a possible economic downturn would be a particularly thorny issue for Mr. Trump, who has made economic growth under his tenure a central selling point for his 2020 campaign. Administration and campaign aides have privately expressed concern that a slowing economy could complicate his re-election bid, which they already believe will be a tough fight.
Mr. Trump and his advisers on Tuesday said any proposals weren’t a direct response to concerns about a recession, and White House discussions may not lead to any new policies. The president and his aides have frequently said they are considering new economic measures, including suggesting new tax cuts ahead of the 2018 elections. No such measures have come to fruition since tax cuts the president signed into law in December 2017.
It isn’t clear a capital-gains tax cut would bolster the economy. An
analysis by the Tax Policy Center, a nonpartisan Washington research group run
by a former Obama administration official, found that a lower capital-gains tax
rate doesn’t substantially spur economic growth.
Under current law, investors pay taxes on their nominal capital gains,
meaning that someone who in 1990 bought $100,000 of stock that is now worth $1
million would pay taxes on $900,000 in capital gains, even though some of that
gain is due to inflation.
Allowing taxpayers to adjust their cost basis for inflation might
encourage people to sell long-held assets. But it would also reduce taxes by
about $100 billion over a decade, according to the Penn-Wharton Budget Model,
with most of the benefits going to high-income households.
Lawrence Kudlow, a top White House
economic adviser, has
long supported the idea of indexing, as have other conservatives who say it
would lift stocks and encourage households to invest more. Treasury Secretary
Steven Mnuchin so far hasn’t embraced unilaterally indexing capital-gains
taxes, administration officials said. Mr. Trump hasn’t issued any directives,
and the Treasury Department hasn’t proposed any changes.
More
Trump cancels Denmark trip after being spurned over his interest in buying Greenland
By Associated Press
Published: Aug 20, 2019 10:01 p.m. ET
WASHINGTON — Two days after he said buying Greenland wasn’t a top
priority, President Donald Trump canceled an upcoming trip to Denmark, which
owns the mostly frozen island, after its prime minister dismissed the idea.
Prime Minister Mette Frederiksen had called Trump’s musing about buying
the Danish territory “an absurd discussion” after the former real estate
mogul-turned-president began to talk up the idea.
Trump said Sunday that he was interested in such a deal for strategic purposes,
but said a purchase was not a priority at this time. “It’s not No. 1 on the
burner,” he told reporters.
Trump even joked about his proposal as it came in for ridicule, tweeting
a doctored photo of a glistening Trump skyscraper looming over a small village
in the Arctic territory.
“I promise not to do this to Greenland,” he joked Monday.
But on Tuesday, Trump abruptly canceled the visit, also by tweet.
Just a few hours earlier, the U.S. ambassador to Denmark tweeted that it
was “ready for the POTUS @realDonaldTrump visit!” using an acronym for
“President of the United States” along with Trump’s Twitter handle.
Trump wrote: “Denmark is a very special country with incredible people,
but based on Prime Minister Mette Frederiksen’s comments, that she would have
no interest in discussing the purchase of Greenland, I will be postponing our
meeting scheduled in two weeks for another time.”
He added: “The Prime Minister was able to save a great deal of expense
and effort for both the United States and Denmark by being so direct. I thank
her for that and look forward to rescheduling sometime in the future!”
White House spokesman Judd Deere said later that the visit to Denmark
has been canceled.
The White House announced in late July that Trump had accepted an
invitation to visit Denmark’s Queen Margrethe and participate in a series of
meetings, including with Frederiksen and business leaders.
The trip, set to begin at the end of August, includes a stop in Poland
to commemorate the 80th anniversary of the start of World War II.
Trump is expected to go ahead with the Warsaw visit.
Japan, U.S. ministers meet for trade talks as hopes for early deal fade
August 21, 2019
/ 6:15 AM
TOKYO (Reuters)
- Japan and the United States will seek to narrow gaps on trade when their top
negotiators meet this week, but hopes for a deal in September are fading as
both sides fail to make concessions on agriculture and automobiles, sources
say.
Japanese Economy Minister Toshimitsu Motegi and U.S. Trade
Representative Robert Lighthizer will hold two-day talks in Washington D.C.
from Wednesday, which will be their second meeting this month.
The talks aim to lay the groundwork for a possible meeting between Japanese Prime Minister
Shinzo Abe and U.S. President Donald Trump on the sidelines of a Group of Seven summit later this month in France, where the
two could discuss trade.
As separate trade talks with China and Europe have made little headway,
Trump is keen to clinch an early deal with Japan that would open up its
politically sensitive agriculture sector, as well as curbing Japan’s U.S.-bound
auto exports.
Japan also hopes for a timely deal to avoid being slapped with up to 25% tariffs on
automobile exports to the United States. Trump threatened to do so on national
security grounds in May, but put
off imposing the duties by six months.
During previous round of talks, Motegi and Lighthizer had agreed to aim
for a broad deal by the time Abe and Trump are scheduled to meet on the
sidelines of a U.N. General Assembly meeting in New York in late September.
But progress towards reaching a deal has been slow, Japanese government
officials with knowledge of the negotiations say.
“It will be a very tough negotiation,” said one of the officials, who
spoke on condition of anonymity due to the sensitivity of the matter.
“If there is to be an ‘agreement’ we need to have something we can
formally announce, which is tough,” said another Japanese official, adding that
it will be difficult to agree on a deal in September unless Washington makes
more concessions.
More
South Korea to increase radiation testing of Japanese food
August 21, 2019
/ 5:08 AM
SEOUL (Reuters)
- South Korea said on Wednesday it will double the radiation testing of some
Japanese food exports due to potential contamination from the tsunami-damaged
Fukushima nuclear plant.
Relations between the two U.S. allies are at their worst in years, with
a trade row rooted in a decades-old dispute over compensation for South Koreans
forced to work during Japan’s wartime occupation of the Korean Peninsula.
South Korea has stepped up demands this month for a Japanese response to
concerns food produced in the Fukushima area and nearby sea could be
contaminated by radiation from the Fukushima Daiichi nuclear power plant that
was severely damaged by the 2011 tsunami.
South Korea’s Ministry of Food and Drug Safety (MFDS) said on Wednesday
that it will double the frequency of testing of any food products with a
history of being returned in the past five years after trace amounts of
radiation were detected.
“As public concerns about radioactive contamination have been rising
recently, we are planning a more thorough inspection starting August 23,” said
Lee Seoung-yong, director-general at MFDS.
The affected food imports from Japan will be relatively minimal, as only
about two tonnes are returned out of about 190,000 tonnes of total Japanese
food imports annually, Lee said.
An official at Japan’s Ministry of Agriculture, Forestry and Fisheries
said Japanese food products were safe and the increased radiation testing was
unnecessary.
---- The 2020 Tokyo Olympics organizers said on Tuesday that South Korea’s National Olympic Committee had sent a letter expressing concern at the possibility of produce grown in Fukushima prefecture being served to athletes in the Olympic village.
South Korea’s Ministry of Foreign Affairs on Monday summoned the economy
minister from the Japanese embassy in Seoul over media reports and
international environmental groups’ claims that Japan plans to release
contaminated water from the Fukushima plant into the ocean.
More
Finally, Tesla again.
Does Tesla have a solar problem?
Walmart sues Tesla for negligence after repeated solar system fires
August 20, 2019 /
9:34 PM
(Reuters) -
Walmart Inc on Tuesday sued Tesla Inc, accusing it of “widespread negligence”
that led to repeated fires of its solar systems and asking a court to force
Tesla to remove solar panels from more than 240 of its U.S. stores.
Solar energy systems installed and maintained by the electric car maker
were responsible for fires at seven locations, with dozens showing hazardous
problems such as loose wiring and “hot spots” on panels, according to court
papers filed in New York State Supreme Court.
Tesla did not respond to a request for comment.
The lawsuit accuses Tesla of having untrained workers putting up shoddy
installations and showing “utter incompetence or callousness, or both,” court
papers said.
The lawsuit is the latest blow to Tesla’s struggling solar business,
which it acquired through its $2.6 billion purchase of SolarCity in 2016.
Quarterly installations have plummeted more than 85 percent since the deal, as
Tesla has cut its solar panel sales force and ended a distribution deal with Home
Depot Inc .
The fires destroyed significant amounts of store merchandise and
required substantial repairs, totaling millions of dollars in losses, Walmart
said in the lawsuit.
In addition, inspections of the retailer’s other Tesla-owned solar
installations “displayed troubling problems that were indicative of widespread
negligence,” the lawsuit said.
As of November 2018, at least seven Walmart stores, including in Denton,
Maryland and Beavercreek, Ohio, had experienced fires due to Tesla’s solar
systems, according to the lawsuit. One of the fires happened months after the
system was de-energized, Walmart said.
The suit argues that inadequate inspections by Tesla have created a
safety hazard for Walmart customers and employees.
More
"We
finished the year, and we reported that we had $17 billion of cash sitting at
the bank's parent company as a liquidity cushion. As the year has gone on, that
liquidity cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns, March 12, 2008.
Bust March 16, 2008.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, Morgan Stanley’s Chief US Equity Strategist pores over the
chicken entrails and doesn’t like what he sees. Mr. Wilson goes off President Trump's message. Wasn't Dennis supposed to be the one who always got things wrong?
Stocks could fall another 8% as ‘Trump put’ and ‘Fed put’ expire, says Morgan Stanley’s Mike Wilson
By Chris
Matthews Published: Aug 19, 2019
12:10 p.m. ET
Mike Wilson, chief U.S. equity strategist at Morgan
Stanley, has had impeccable timing of late.In a July 29 note, as the S&P 500 index SPX, +1.21% sat near its record closing high of 3,025.86, Wilson argued that equity markets were stretched to their limits, and S&P would fail to break significantly above 3,000, unable to overcome an area that’s provided stiff resistance since last year.
The S&P, Dow Jones Industrial Average DJIA, +0.96% and Nasdaq Composite Index COMP, +1.35% have subsequently pulled back 5.5%, 3.5% and 5.2%, respectively with the S&P sitting at 2888.68, comfortably below 3,000.
“The market is preparing for a bad outcome,” Wilson told MarketWatch in an interview.
Wilson believes that his fellow strategists will increasingly come to admit this, as they realize that neither the Federal Reserve nor the White House can be the savior to markets that many investors hoped. He said that the “Fed Put” and the “Trump Put” are no longer relevant.
In real life, a put is an option that gives the holder the right but not the obligation to sell the underlying instrument at a set price by a certain time — a potentially valuable hedge if a bullish position goes south. The Fed put and the Trump put refer to the notion that either the central bank or the White House would be quick to implement policy actions aimed at arresting a steep market decline.
“The Fed put basically expired when they cut rates,” he said. “The hope of Fed cuts has been propping up the markets all year, but rate cuts aren’t good for the market if you’re going into recession.”
He explained that stock markets typically react well after the Fed pauses a rate cycle — as they have during the first seven months of the year. “But when the Fed starts cutting rates after a pause, the market doesn’t like it because things have deteriorated and a pause isn’t good enough.”
Wilson takes the inversion of various yield curves seriously, but said the most important to look at is the inversion of the yield on the 10-year U.S. Treasury Note TMUBMUSD10Y, -1.58% and the fed-funds rate. The 10-year yield fell below the fed-funds rate in May and the spread between the two has become increasingly negative since.
“The market will remain volatile until the Fed gets ahead” of the trend of tumbling rates, he said, but that looks increasingly unlikely given the depth of the inversion.
Investors have also been hoping that the Trump administration would come to the market’s rescue, by spurring a rebound in global growth. However, “It’s pretty clear that the likelihood of a deal has gone down dramatically,” he said. “Investors were focused on the Fed, took their eye off the ball and didn’t notice that the trade rhetoric deteriorated greatly in July,” culminating in the president’s decision to impose yet another round of tariffs beginning Sept. 1, which triggered the market’s month-to-date selloff.
“In some ways you could argue that the trade put is gone too,” he said.
More
https://www.marketwatch.com/story/the-fed-trump-puts-have-expired-says-morgan-stanleys-mike-wilson-leaving-stocks-vulnerable-to-another-8-decline-2019-08-19?mod=mw_theo_homepage
If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too.
Lloyd
Blankfein’s CEO Goldman Sachs, threat 2008. “Mr. Goldman Sacks.”
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?
Stronger graphene oxide 'paper' made with weaker units
Counterintuitive discovery is likely applicable to other 2D materials
Date:
August 15, 2019
Source:
Northwestern University
Summary:
A counterintuitive discovery will help engineers make stronger materials.
Want to make a super strong material from nano-scale building blocks?
Start with the highest quality building blocks, right?
Wrong -- at least when working with "flakes" of graphene oxide
(GO).
A new study from Northwestern University researchers shows that better
GO "paper" can be made by mixing strong, solid GO flakes with weak,
porous GO flakes. The finding will aid the production of higher quality GO
materials, and it sheds light on a general problem in materials engineering:
how to build a nano-scale material into a macroscopic material without losing
its desirable properties.
"To put it in human terms, collaboration is very important,"
said Jiaxing Huang, Northwestern Engineering professor of materials science and
engineering, who led the study. "Excellent players can still make a bad
team if they don't work well together. Here, we add some seemingly weaker
players and they strengthen the whole team."
The research was a four-way collaboration. In addition to Huang's, three
other groups participated, led by Horacio Espinosa, professor of mechanical
engineering at the McCormick School of Engineering; SonBinh Nguyen, professor
of chemistry at Northwestern; and Tae Hee Han, a former postdoc researcher at
the University who's now a professor of organic and nano engineering at Hanyang
University, South Korea.
The study was published today in Nature Communications.
High-tech paper
GO is a derivative of graphite that can be used to make the
two-dimensional, super material graphene. Since GO is easier to make,
scientists study it as a model material. It generally comes as a dispersion of
tiny flakes in water. From one end to the other, each flake is smaller than the
width of a human hair and only one nanometer thick.
When a solution of GO flakes is poured onto a filter and the water
removed, a thin "paper" is formed, usually a few inches in diameter
with a thickness less than or equal to 40 micrometers. Intermolecular forces
hold the flakes together, nothing more.
Strength from weakness
Scientists can make strong GO in single layers but layering the flakes
into a paper form doesn't work too well. While testing the effect of holes on
the strength of GO flakes, Huang and his collaborators discovered a solution.
Using a mixture of ammonia and hydrogen peroxide, the researchers
chemically "etched" holes in the GO flakes. Flakes left soaking for
one to three hours were drastically weaker than un-etched flakes. After five
hours of soaking, flakes became so weak they couldn't be measured.
Then, the team found something surprising: Paper made from the weakened
flakes was stronger than expected. At the single layer level, one-hour-etched
porous flakes, for example, were 70 percent weaker than solid flakes, but paper
made from those flakes was only 10 percent weaker than paper made from solid
flakes.
Things got even more interesting when the team mixed solid and porous
flakes together, Huang said. Instead of weakening the paper made solely from
solid flakes, the addition of 10 or 25 percent of the weakest flakes
strengthened it by about 95 and 70 percent, respectively
----"Weak flakes warp to fill in those voids, which improves the distribution of forces throughout the material," Huang said. "It's a reminder that the strength of individual units is only part of the equation; effective connection and stress distribution is equally important."
This finding will be directly applicable to other two-dimensional
materials, like graphene, Huang said, and will also lead to the design of
higher quality GO products. He hopes to test it out on GO fibers next.
The Office of Naval Research (ONRN000141612838) supported this work.
George Orwell.
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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