Monday, 30 September 2019

A Volatile Week. October Arrives.

Baltic Dry Index. 1857 -106 Brent Crude 61.94 Spot Gold 1493

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

“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."

John Kenneth Galbraith. The Great Crash: 1929.

A difficult week ahead for markets, after today’s end of month, and end of quarter, attempts to dress up the final figures. Up next October, the traditional crash month for global stock markets.

China is about to take the rest of the week off to celebrate the 70th anniversary of the founding of communist China.

Japan’s manufacturing economy continues cooling.

Elsewhere events are likely to be dominated by political turmoil in Washington, District of Crooks.

Toss in a looming no deal Brexit now just 31 days away, maybe,  and add in a reported  major setback for Saudi forces attacking Yemen, and all in all we have probably a volatile and unpredictable trading week. 

Asian shares mostly flat, Japan hurt by Sino-U.S. tensions

September 30, 2019 / 1:48 AM
TOKYO/SINGAPORE (Reuters) - Asian stock markets, including China’s, were little changed on Monday, shrugging off news that the U.S. administration is considering delisting Chinese companies from U.S. stock exchanges.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.05% while China's Shanghai stock index .SSEC slipped 0.2%, barely responding to any of the concerns around the latest Sino-U.S. tensions that caused the Nasdaq index .IXIC to fall more than 1% on Friday.
Risk assets took a hit in U.S. trade on Friday following news the Trump administration is considering radical new financial pressure tactics on Beijing, including the possibility of delisting Chinese companies from U.S. stock exchanges. 

The report knocked Chinese shares listed on U.S. exchanges, with Alibaba Group Holding (BABA.N) falling 5.15% and (JD.O) 5.95% on Friday.

Worries such an escalation would hurt Japan the most however weighed on the Nikkei .N225, which shed 0.45%. U.S. stock futures ESc1 gained 0.44%, paring most of Friday's 0.53% fall in the index.

Trading in Chinese markets was quiet ahead of a long break. Chinese share markets will trade only on Monday this week ahead of the country’s National Day holiday, which runs until Oct. 7.

There were mixed signals from China’s manufacturing surveys on Monday, which showed sustained weakness in exports and surprising improvement in domestic consumption indicators, and a Chinese central bank statement briefly hinting at plans for more stimulative policies.

Japan's August factory output slips more than expected on slowing overseas demand

September 30, 2019 / 2:45 AM
TOKYO (Reuters) - Japan’s industrial output shrank more than expected in August in the latest warning that the economy and its manufacturers are facing intensifying pressure amid a bitter Sino-U.S. trade war.

Retail sales, however, expanded at a faster-than-expected pace, signalling strength in private spending ahead of October’s nationwide sales tax increase. 

Industrial output fell 1.2% in August, government data showed, dropping at a faster pace than a median market forecast for a 0.5% decline and almost completely reversing July’s 1.3% increase.

Output was weighed down by reduced production of iron and steel products, factory production 
equipment and cars, offsetting a gain in electronic parts and chemicals, the data showed.

Manufacturers surveyed by the trade ministry expect output to rise 1.9% in September, but fall 0.5% in October.

Monday’s output data paints a bleak picture for Japan’s export-reliant economy, underlining broadening stress across the manufacturing sector from slowing global growth, though service-sector activity remains firm as it is less at risk from weakness in global trade.

“The lack of export growth because of the global economic slowdown is having a major impact,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute. “The sales tax will be raised in October, so the deceleration of the economy will likely become stronger.”

Next, a warning from Saudi Arabia that in any war with Iran it’s the world economy that will be the big loser.

Oil prices climb as positive China factory data eases demand concerns

September 30, 2019 / 1:43 AM
SINGAPORE (Reuters) - Oil prices edged up on Monday after China’s factories unexpectedly ramped up production in September, easing concerns about demand at the world’s largest crude importer amid an ongoing trade war with the United States.

Brent crude LCOc1 futures rose 9 cents to $62 a barrel by 0300 GMT while U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 13 cents to $56.04 a barrel.

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for September expanded for a second straight month as Chinese factories ramped up production and new orders rose, beating market expectations.

“The Caixin data was a real surprise and should be positive for Asia’s markets today,” said Jeffrey Halley, OANDA senior analyst in Singapore.

He added that the data would need to post similar results over the next few months to point to a China oil demand growth recovery.

The country is the world’s second largest oil user.

Brent is set to rise 2.6% in September, its first monthly gain since June, with prices lifted by an unprecedented attack on Saudi’s oil facilities on Sept. 14 that reduced its production by half. WTI is set to rise 1.7% this month. .

World’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day, sources told Reuters last week although Saudi Aramco has yet to confirm it is fully back online.

“Most of this is already priced in when the Saudis said they were going to do it (resume production) fast,” said Avtar Sandu, a senior commodities manager at Phillip Futures in Singapore.

While Saudi Arabia is maintaining exports by using crude from inventories and spare production capacity, how much of it is actually restored could only be determined in the next few weeks, he added.

Still, geopolitical tensions in the Middle East simmered after Saudi Arabia’s crown prince warned in an interview broadcast on Sunday that oil prices could spike to “unimaginably high numbers” if the world does not come together to deter Iran, but said he would prefer a political solution to a military one.

This came a day after Yemen’s Houthi movement said it had carried out a major attack near the border with the southern Saudi region of Najran and captured many troops and vehicles, but there was no immediate confirmation from Saudi Arabian authorities.

Saudi prince says war with Iran would gut world economy

Issued on:
Saudi Arabia's crown prince said in an interview aired Sunday that war with Iran would devastate the global economy and he prefers a non-military solution to tensions with his regional rival.

"If the world does not take a strong and firm action to deter Iran, we will see further escalations that will threaten world interests," Prince Mohammed bin Salman told the CBS program "60 Minutes."
"Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven?t seen in our lifetimes," the prince said.

The prince said a war between Saudi Arabia and Iran would be catastrophic for the world economy.

"The region represents about 30 percent of the world?s energy supplies, about 20 percent of global trade passages, about four percent of the world GDP. Imagine all of these three things stop," he said.

"This means a total collapse of the global economy, and not just Saudi Arabia or the Middle East countries."

He said a September 14 attack on Saudi oil facilities, which his country and the US blamed on Iran, had been senseless.

"There is no strategic goal. Only a fool would attack five percent of global supplies. The only strategic goal is to prove that they are stupid and that is what they did," said the prince.

If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.

Crooks and Scoundrels Corner.

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

Today, Volkswagen again.  The diesel-gate scandal just rolls on and on seemingly forever.

Volkswagen faces first mammoth diesel lawsuit on home turf

Issued on:
Car behemoth Volkswagen will face a German court Monday, as hundreds of thousands of owners of manipulated diesel cars demand compensation four years after the country's largest post-war industrial scandal erupted.

The first hearing in what is likely to be a grinding, years-long trial opens at 10 am (0800 GMT) in Brunswick, around 30 kilometres (19 miles) from VW headquarters in the northern city of Wolfsburg.
Around 450,000 people have joined a first-of-its-kind grouped proceeding, introduced by lawmakers after the "dieselgate" emissions cheating scandal broke in 2015.

Consumer rights group VZBV, representing the plaintiffs, says the German carmaker deliberately harmed buyers by installing motor control software that allowed vehicles to pollute far more on the road than under lab conditions.

The trial is Germany's largest so far in the tentacular diesel scandal, which last week saw VW chief executive Herbert Diess charged with market manipulation over his role.

- 50 questions for judges -

In the mass lawsuit, the most important of around 50 questions for judges is whether Volkswagen "caused harm" by acting "dishonestly".

Klaus Mueller of VZBV said he is "convinced" the car firm did, while VW says "clients did not suffer harm".

"Hundreds of thousands of cars are used" on the roads without problem, VW lawyer Martine de Lind van Wijngaarden said.

Even if judges find in favour of plaintiffs, there will not be an immediate compensation payment.
Rather, every owner registered in the trial will have to claim individually.

VW thinks a final judgement could arrive in 2023 at the earliest, if the case is appealed all the way to the Federal Court of Justice.

Individual proceedings could then take at least another year -- in the court of first instance.

By then, the cars' market value could have eroded to a negligible amount, making a buyback cheaper for the firm.

To avoid such delays, the VZBV says it is "open" to an out-of-court settlement but "in that case, VW would have to pay a significant sum after all," Mueller told AFP.

Given the wide variety of cases under the group action umbrella, VW finds a mass settlement "hard to imagine".

In early July, judges noted in a preliminary opinion that some owners listed among the plaintiffs were living abroad.

That could mean German law does not apply to them.

Volkswagen said two percent of those listed live abroad and 10 percent are duplicate entries.

Alongside the grouped proceeding, 61,000 individual lawsuits have been filed in Germany, and some have already led to out-of-court settlements.

- 30 billion euros -

Since 2015, when Volkswagen admitted to manipulating 11 million vehicles worldwide to fool emissions tests, the scandal has cost the group over 30 billion euros ($33 billion) in fines, compensation and legal costs.

Most of that sum -- $22 billion -- has gone to the US, while in Germany VW has so far paid just 2.3 billion dollars spread across three fines.

Alongside car owners, investors are claiming damages for losses they suffered when the group's share price plummeted after it came clean.

And earlier this week, chief executive Herbert Diess and supervisory board chief Hans Dieter Poetsch were charged with market manipulation.

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?

Machu Picchu: Ancient Incan sanctuary intentionally built on faults

Date: September 23, 2019

Source: Geological Society of America

Summary: The ancient Incan sanctuary of Machu Picchu is considered one of humanity's greatest architectural achievements. Built in a remote Andean setting atop a narrow ridge high above a precipitous river canyon, the site is renowned for its perfect integration with the spectacular landscape. But the sanctuary's location has long puzzled scientists: Why did the Incas build their masterpiece in such an inaccessible place? 

The ancient Incan sanctuary of Machu Picchu is considered one of humanity's greatest architectural achievements. Built in a remote Andean setting atop a narrow ridge high above a precipitous river canyon, the site is renowned for its perfect integration with the spectacular landscape. But the sanctuary's location has long puzzled scientists: Why did the Incas build their masterpiece in such an inaccessible place? Research suggests the answer may be related to the geological faults that lie beneath the site.

On Monday, 23 Sept. 2019, at the GSA Annual meeting in Phoenix, Rualdo Menegat, a geologist at Brazil's Federal University of Rio Grande do Sul, will present the results of a detailed geoarchaeological analysis that suggests the Incas intentionally built Machu Picchu -- as well as some of their cities -- in locations where tectonic faults meet. "Machu Pichu's location is not a coincidence," says Menegat. "It would be impossible to build such a site in the high mountains if the substrate was not fractured."

Using a combination of satellite imagery and field measurements, Menegat mapped a dense web of intersecting fractures and faults beneath the UNESCO World Heritage Site. His analysis indicates these features vary widely in scale, from tiny fractures visible in individual stones to major, 175-kilometer-long lineaments that control the orientation of some of the region's river valleys.

Menegat found that these faults and fractures occur in several sets, some of which correspond to the major fault zones responsible for uplifting the Central Andes Mountains during the past eight million years. Because some of these faults are oriented northeast-southwest and others trend northwest-southeast, they collectively create an "X" shape where they intersect beneath Machu Picchu.

Menegat's mapping suggests that the sanctuary's urban sectors and the surrounding agricultural fields, as well as individual buildings and stairs, are all oriented along the trends of these major faults. "The layout clearly reflects the fracture matrix underlying the site," says Menegat. Other ancient Incan cities, including Ollantaytambo, Pisac, and Cusco, are also located at the intersection of faults, says Menegat. "Each is precisely the expression of the main directions of the site's geological faults."

Menegat's results indicate the underlying fault-and-fracture network is as integral to Machu Picchu's construction as its legendary stonework. This mortar-free masonry features stones so perfectly fitted together that it's impossible to slide a credit card between them. As master stoneworkers, the Incas took advantage of the abundant building materials in the fault zone, says Menegat. "The intense fracturing there predisposed the rocks to breaking along these same planes of weakness, which greatly reduced the energy needed to carve them."

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

The monthly Coppock Indicators finished August

DJIA: 26,403 +52 Down. NASDAQ: 7,963 +59 Down. SP500: 2,926 +53 unchanged.

An inconclusive month, but all three shows signs of weakening.