A Perfect Storm? 80 Years Ago Today.

Baltic Dry Index. 2442 +64   Brent Crude 58.64  Spot Gold 1524

Never ending Brexit now October 31, maybe. 58 days away.

Trump’s Nuclear China Tariffs Now In Effect.

USA v EU trade war postponed to November, maybe.

With hurricane Dorian stalled over the northern Bahamas, our thoughts and prayers are with the people of the Bahamas this morning.

We open today with positive spin on stocks from Reuters Asia. Still, when have Reuters or Bloomberg ever said ”get out now, it’s time to sell.”

Right now, stocks seem headed into a perfect storm of a slowing global economy, a manufacturing recession, a never-ending trade war, a deepening currency war, expanding negative interest rates in Europe, a Brexit crisis, an US east coast hurricane threat, and a rapidly growing Hong Kong crisis. Oh, and a new trade war between Japan and South Korea

To this old dinosaur market trader, with typical British understatement, these are not ideal conditions to be staying long, let alone adding to risk.

Asia stocks dented by trade war, Brexit showdown paralyzes pound

September 3, 2019 / 2:00 AM

TOKYO (Reuters) - Global stocks faced headwinds on Tuesday, stymied by U.S.-China trade frictions while the British pound flirted with 2 1/2-year lows as Prime Minister Boris Johnson indicated he could call an election to block lawmakers’ efforts to avert a no-deal Brexit.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.3% while Japan's Nikkei .N225 rose by 0.1%.

China's mainland shares .CSI300 were fractionally lower while Hong Kong's benchmark edged up 0.1% .HSI.

The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday and China began imposing new duties on U.S. crude oil, the latest escalation in their trade war.

Although U.S. President Donald Trump has said both sides would still meet for talks later this month, tensions have shown little sign of abating.

China said on Monday it lodged a complaint against the United States at the World Trade Organization over U.S. import duties, trashing the latest tariff actions as violating the consensus reached by leaders of China and the United States in a meeting in Osaka.

“We have so many problems around the world, starting from the U.S.-China trade war and Brexit. But investors appear to be getting used to be exposed to them,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management

“No one really thinks Washington and Beijing will solve the issues. But as long as the U.S. economy keeps going, stock prices will have limited downside,” he said.

U.S. manufacturing survey by the Institute for Supply Management (ISM) due at 1400 GMT Tuesday is a major focus for investors.

Although U.S. manufacturing activity has been slowing in recent months, the ISM’s index has so far stayed above 50, pointing to growth in the sector.

More

https://uk.reuters.com/article/us-global-markets/asia-stocks-dented-by-trade-war-brexit-showdown-paralyzes-pound-idUKKCN1VO01L

U.S. stock futures weaken as tariffs go into effect

By Steve Goldstein Published: Sept 2, 2019 12:34 p.m. ET

U.S. stock futures weakened on a holiday Monday as tariffs on Chinese goods went into effect.

With stock exchanges closed for Labor Day, futures on the S&P 500 ES00, -0.61%  fell 0.7% to 2903.75, while futures on the Dow Jones Industrial Average YM00, -0.64%  dropped 199 points, or 0.8%, to 26207.

Tariffs of 15% on $112 billion of Chinese goods went into effect on Sunday, as did retaliatory 
Chinese tariffs on U.S. products like crude-oil imports.

“While there were few hopes that U.S. President Trump would cancel the tariffs in a last-minute change of heart, investors were nevertheless steering clear of risk assets on the first trading day of the month amid worries that the latest hike in duties would be more damaging than previous ones,” said Raffi Boyadjian of XM Investment Research in London.

A report from Bloomberg News that the two sides are struggling to agree on what to discuss in trade talks added to the pressure.

Economists from UBS say the trade war is impacting the global economy.

“Despite headlines that go back and forth, two facts have become more and more clear over time. First, the trend is toward escalation, not de-escalation. Second, the cost of the uncertainty accumulates as time goes on without resolution, weighing on both the domestic and global economies,” they said in a note to clients.
More
https://www.marketwatch.com/story/us-stock-futures-weaken-as-tariffs-go-into-effect-2019-09-02?mod=mw_theo_homepage
      

In Hong Kong news, is China about to act?

Young traitors to ruin themselves

Source:Global Times Published: 2019/9/2 22:08:40

Two young leaders of violent protests in Hong Kong, Joshua Wong Chi-fung and Alex Chow Yong-kang, published an article in The New York Times on Saturday, urging US legislators to vote on the Hong Kong Human Rights and Democracy Act of 2019, which would "give the president of the United States the power to penalize Chinese officials who interfere in Hong Kong affairs."

They are proactively seeking refuge with their US master, calling the "resistance movement" in Hong Kong "a critical frontline battle against the authoritarian Chinese Communist Party in Beijing."

Rioters like Wong are the new generation of traitors. They are frenziedly staking Hong Kong's future on a final bet for the interests of their small group. But be it street violence, blocking the airport, vandalizing the Hong Kong Legislative Council building or insulting the Chinese national flag and emblem, the framework of the "one country, two systems" principle has not been shaken at all. 

Therefore, like all traitors in history, they are clinging tightly to external forces and treat the latter as their way out.

The Hong Kong Human Rights and Democracy Act was introduced by US senators in June 2019, requiring the US secretary of state to "annually certify to Congress… whether Hong Kong is sufficiently autonomous to justify special treatment by the United States for bilateral agreements and programs" including whether Hong Kong can retain the status of a "separate customs territory," and entitling the US government to impose sanctions on Chinese officials who "violate" relevant regulations.

It is a hegemonic bill that can be used to maliciously interfere in China's internal affairs. They believe China-US relations will be impacted once the act is adopted and implemented.

Under the existing US-Hong Kong Policy Act, a 1992 act enacted by the US Congress, US preferential treatment for Hong Kong in economic, trade and finance are by no means a gift. Such treatment is beneficial to Hong Kong as well as the Chinese mainland, but also favors the US and many parties' interests.

Once the US withdraws its special treatment, the development of Hong Kong and the Chinese mainland will be affected to some extent, but China, which includes the Hong Kong Special Administrative Region (SAR), has the ability to adjust. China's destiny is not in the hands of the US. There is no room for the US to manipulate China's fate.

The US cannot even win the trade war with China. Being traitors apparently comes with less benefits but higher risks.

Wong and Chow asked the US to sanction their home city, Hong Kong. Whatever their reasons are, such villainy will be punished. The traitors showed the US their determination to be "martyrs." 

More

http://www.globaltimes.cn/content/1163457.shtml

Hong Kong leader denies Beijing won't let her resign

September 3, 2019 / 3:40 AM

HONG KONG (Reuters) - Hong Kong leader Carrie Lam said on Tuesday she has never asked the Chinese government to let her resign to end the city’s political crisis, responding to a Reuters report about a voice recording of her saying she would step down if she could.

Hundreds of thousands of people have taken to the streets since mid-June in protests at a now-suspended extradition bill which would see people sent to mainland China for trial in Communist Party controlled courts. 

Lam told business leaders last week that she had caused “unforgivable havoc” by introducing the extradition bill and that if she had a choice then she would apologise and resign, according to a leaked audio recording.

Lam told a televised news conference on Tuesday that she had never considered asking to resign and that Beijing believed her government could solve the three-months long crisis without mainland China’s intervention.

“I have not even contemplated discussing a resignation to the central people’s government. The choice of resigning, it’s my own choice,” Lam said.

“I told myself repeatedly in the last three months that I and my team should stay on to help Hong Kong ... That’s why I said that I have not given myself the choice to take an easier path and that is to leave.”

Lam added that she was disappointed that comments made in a private meeting, where she had been sharing the “journey of my heart”, had been leaked.

More

https://uk.reuters.com/article/uk-hongkong-protests-lam/hong-kong-leader-denies-beijing-wont-let-her-resign-idUKKCN1VO04R?il=0

Xinhua warns 'end is coming' for Hong Kong protesters

Chinese state media blasts West for attempting to 'kidnap' the city

MITSURU OBE, Nikkei staff writer September 02, 2019 11:16 JST

TOKYO -- China issued a stern warning to Hong Kong protesters as well as the West on Sunday, reiterating that it will not tolerate any attempt to undermine Chinese sovereignty over the city.

"The end is coming for those attempting to disrupt Hong Kong and antagonize China," stated a commentary piece published by the state's Xinhua News Agency.

The strongly worded message was directed at "the rioters and their behind-the-scene supporters" -- which can be taken as an accusation of Western meddling. It said that "their attempt to 'kidnap Hong Kong' and press the central authorities is just a delusion," adding, "No concession should be expected concerning such principle issues."

The warning came as thousands of people blocked roads and public transport links to Hong Kong's airport. The demonstrations, which started in response to a proposed bill that would have allowed extradition to the mainland, have morphed into a broader rejection of Beijing's growing control over the semiautonomous city.

The commentary said three lines must not be crossed: no one should harm Chinese sovereignty, challenge the power of the central authorities or use Hong Kong to infiltrate and undermine the mainland.

More

https://asia.nikkei.com/Spotlight/Hong-Kong-protests/Xinhua-warns-end-is-coming-for-Hong-Kong-protesters

Next, more dodgy statistics from the UN climate IPCC. The “science,”  far from settled, is more like propaganda.

A Famine of Fact at U.N. Climate Panel

The IPCC sounds an alarm about food production, but another U.N. agency’s data show it’s a false one.

By James Taylor Aug. 30, 2019 5:42 pm ET

“Climate change . . . has adversely impacted food security and terrestrial ecosystems as well as contributed to desertification and land degradation in many regions,” the report asserts. “Warming compounded by drying has caused yield declines in parts of Southern Europe. Based on indigenous and local knowledge, climate change is affecting food security in drylands, particularly those in Africa, and high mountain regions of Asia and South America.”

At the same time, the U.N. Food and Agriculture Organization reports that new records were set for global corn, wheat and rice production five years running through 2017, the most recent year for which data are available. How is that possible?

The IPCC report parses words and engages in semantic tricks to give readers a false impression of declining global crop production. Note the reference to declining yields in “parts” of Southern Europe. The report doesn’t mention that yields are increasing in Southern Europe as a whole. What sense does it make to blame declining yields in a small portion of the world on global warming without crediting global warming for global gains?

The IPCC claims that “indigenous and local knowledge”—as distinct from objectively quantifiable data—supports its claim of declining food production in “drylands” of Africa, Asia and South America. Yet data show crop yields are increasing throughout all three continents and in almost all the nations characterized by drylands.

Environmental activist groups, bureaucrats, socialists looking to transform Western society, and biased journalists continue to make climate claims that have no basis in fact. They hope a constant drumbeat of authoritative-sounding falsehoods will convince you we’re in a crisis only they can solve.

https://www.wsj.com/articles/a-famine-of-fact-at-u-n-climate-panel-11567201352?mod=mhp

Finally, India, and UK and Ireland, yet more signs of a growing global manufacturing recession.

India manufacturing PMI dipped to 15-month low

By Saurabh Chaturvedi  Published: Sept 2, 2019 3:15 a.m. ET

India's manufacturing activity eased in August with the Purchasing Managers' Index hitting a 15-month low, in the latest sign of ongoing weakness in the economy.

The purchasing managers index for August fell to 51.4 from 52.5 in July, IHS Markit said in a statement on Monday. A PMI reading above 50 indicates expansion while a reading below that points to contraction in activity.

The PMI reading comes after data Friday showed India's economic growth slowed to a six-year low in the fiscal first quarter.

The gross domestic product growth at Asia's third-largest economy slipped to a weaker-than-expected 5.0% in the three months through June compared with a year earlier.

Last month saw "an undesirable combination of slowing economic growth and greater cost inflationary pressures in the Indian manufacturing industry," IHS Markit principal economist Pollyanna de Lima said.

There was drop in input buying activity that reflected a mixture of intentional reductions in stocks and shortages of available finance, she said.

"Until manufacturers are willing to loosen the purse strings, it's difficult to foresee a meaningful rebound in production growth on the horizon," she said.

https://www.marketwatch.com/story/india-manufacturing-pmi-dipped-to-15-month-low-2019-09-02?mod=mw_latestnews

British manufacturing PMI drops to seven-year low in August

By Steve Goldstein Published: Sept 2, 2019 4:34 a.m. ET

The IHS Markit/CIPS U.K. manufacturing PMI fell in August to a seven-year low of 47.4, down from 48 in July. Econommists polled by FactSet expected a 48.3 reading. Any reading under 50 indicates contracting conditions. 

"The high levels of economic and political uncertainty pervasive across domestic and global markets continued to weigh heavily on the performance of UK manufacturing during August. Output volumes fell as intakes of new work contracted at the fastest pace for over seven years, while business optimism dropped to a series-record low," IHS Markit said.

https://www.marketwatch.com/story/british-manufacturing-pmi-drops-to-seven-year-low-in-august-2019-09-02?mod=mw_latestnews

Irish manufacturing activity shrinks for third straight month - PMI

September 2, 2019 / 1:34 AM

DUBLIN (Reuters) - Irish factory activity shrank for the third successive month in August and at a similar pace to July as a global manufacturing slowdown and Brexit uncertainty continued to weigh on demand, a survey showed on Monday.

The recent dip in activity in the sector is the first since a near identical three-month downturn in early 2013, just before Ireland’s economy began its run as the EU’s best performer for each of the last five years. 

The economy has managed to weather the uncertainty created by the June 2016 vote by Britain, its near neighbour and close trading partner, to leave the EU, although data last week showed some moderation in the rapid pace of jobs growth. 

The AIB IHS Markit manufacturing purchasing managers index (PMI) edged slightly lower to 48.6 in August from 48.7 in July, remaining below the 50 mark that separates growth from contraction.

While the contraction in output and new export orders was not as sharp as July, pre-production inventories fell for the first time in a year to 48.0 from 50.8 in the previous month, with panellists citing weaker demand conditions.

The sub-index measuring stocks of purchases had hit its highest level in the 21-year history of the survey in March, as manufacturers stockpiled ahead of the then March 31 Brexit deadline that has since been extended to Oct. 31.

More

https://uk.reuters.com/article/uk-ireland-economy-pmi/irish-manufacturing-activity-shrinks-for-third-straight-month-pmi-idUKKCN1VN00X

I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.

Jesse Livermore

Crooks and Scoundrels Corner.

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

80 years ago today, Britain declared war on Germany over Germany’s invasion of Poland. Later that same day a U-boat torpedoed it’s first passenger liner. 

Today, the sad story of the SS Athenia, the first ship sunk in World War Two, and sunk in error. What rapidly goes wrong in war, which is why it’s generally a good idea not to start them.

Sinking of SS Athenia

The first shots of the Battle of the Atlantic was fired on September 3rd 1939, by Fritz Julius Lemp of U-30, a Type VIIA U-boat while on patrol in the northwestern sector of Ireland. When France and Great Britain declared war on Germany, Hitler was still hopeful of a diplomatic resolution. He believed that he might yet be able to dissuade the Western Powers from war and to this end, he issued strict orders for U-boats to follow the Prize Regulations. Under these regulations, attacks against passenger liners were prohibited, but unfortunately, the first ship that was sunk by a U-boat turned out to be a passenger liner. It caused an immediate furor in both Allied and neutral circles. It appeared that Germany was in favor of conducting unrestricted submarine warfare, as it had done during the First World War which came so close to strangling the shipping lanes of Great Britain.

This chapter presents the political situation surrounding the U-boat force at the onset of war, the events that unfolded during the first sinking and the aftermath of the incident. 

----Late that afternoon on September 3rd 1939, Oberleutnant Lemp in U-30 was on patrol about 250 miles northwest of Ireland, about 60 miles south of Rockall banks - a barren sixty-three foot rock projecting upwards from the sea. The U-30, a Type VIIA U-boat was one of the first fourteen U-boats to leave Germany in mid August when the Polish crisis seemed likely to lead to war with the Western Powers. Only a few hours ago, at 1256 hours Berlin time, that likelihood had become a reality. BdU had broadcast an urgent encoded message: “Hostilities with England effective immediately”.

On that day, when France and Great Britain declared war on Germany, Hitler was still optimistic of a diplomatic solution. He believed he might yet be able to persuade the Western Powers to accept German sovereignty in Europe, just as how the British had established colonies in Asia. If he was successful, then Poland would have been gained at a low price. To that end, he issued strict orders for the U-boat force to follow the Prize Regulations, which Germany had signed in 1936. Under the Prize rules, merchant ships had to be stopped and searched, and if found to be carrying contraband, then it could be sunk, but only after the crews had been safely evacuated in lifeboats and provisioned for. If no contraband was found, then the ship was allowed to sail on unmolested. Only warships, including troopships and vessels escorted in convoys could be sunk without warning. Attacks on passenger liners were strictly prohibited.

----At 1630 hours, U-30 was at the northern tip of its patrol zone when the bridge watch sighted a large ship looming in the distant horizon. U-30’s patrol zone was at Grid AM1631, which Lemp had chosen for concealment as it was out of the normal shipping lanes. Lemp made speed on the surface to close the distance, then dived for a closer periscope inspection. By 1900 hours, the two vessels had closed. Peering through his periscope, and by now in the fading light of the summer evening, Lemp observed that she was darkened and was zigzagging at high speeds in front of the U-boat. She was large enough to be a passenger liner, but passenger liners were not supposed to be blacked out or zigzagging as if they were combatant vessels. On this basis and her unusual route through Rockall banks, Lemp concluded that she must be a British Armed Merchant Cruiser, a converted passenger liner fitted with naval guns and thus fair game under the Prize Regulations.

He sent his crew to battle stations and made ready two torpedo tubes. At 1940 hours, from a submerged position, Lemp fired the first shots of the Battle of the Atlantic. The first torpedo struck the target squarely, stopping her dead in its tracks. The second had malfunctioned and ran wild. Fearing that it might circle back and endanger the boat, he dived deep to evade and resurfaced only after the danger had passed. By that time, the sky had darkened as it was about twilight. From the bridge of U-30, Lemp observed the listing target through his binoculars. It did not appear to be in danger of sinking, so he fired a third torpedo at it. It too malfunctioned and ran wild. Exasperated at the torpedo failures, Lemp edged ever closer to finish off the kill. 

Taking care to keep the moon at his back, as this helped conceal the approaching U-boat, Lemp was now able to clearly make out the silhouette of the darkened ship. He checked it against the boat’s copy of the Lloyd’s Register and what he discovered horrified him. After all the warnings and orders issued by his Fuehrer about attacking passenger liners, he discovered his error and learnt that he had just torpedoed the SS Athenia, a 13,580 ton British passenger liner of the Donaldson line. All doubts about the identity of the ship were removed when the operator of the Athenia radioed a distress call in plain English, providing her identity, position and a three letter code SSS, meaning she was attacked by a submarine. As it turned out, the Athenia was bound for Canada with over 1,100 passengers, including women and children and 311 Americans who were fleeing the war which had just erupted in England.

Lemp did not render any assistance to his victims and fearing that he might be recalled and relieved, he did not report the incident to BdU. He simply sailed away silently.

----Donitz first learnt about news of the sinking from the BBC. It came as a rude shock to him and to that of Grand Admiral Raeder. Berlin was still in the dark as Lemp had yet to report in. But after reviewing the patrol zones of all U-boats deployed in the Atlantic, Donitz had concluded correctly that Lemp in the U-30 had sunk the Athenia.

More

http://www.uboataces.com/battle-athenia.shtml

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 21^st century onwards?

Mathematicians develop new statistical indicator

Date: August 9, 2019

Source: Technische Universität Dresden

Summary: Up to now, it has taken a great deal of computational effort to detect dependencies between more than two high-dimensional variables, in particular when complicated non-linear relationships are involved. Mathematicians have now developed a dependence measure called 'distance multivariance'. 

---- Let us explain: The rising temperatures and the rising ice consumption are two statistical variables in linear dependence; they are correlated.

In statistics, correlations are important for predicting the future behaviour of variables. Such scientific forecasts are frequently requested by the media, be it for football or election results.

To measure linear dependence, scientists use the so-called correlation coefficient, which was first introduced by the British natural scientist Sir Francis Galton (1822-1911) in the 1870s. Shortly afterwards, the mathematician Karl Pearson provided a formal mathematical justification for the correlation coefficient. Therefore, mathematicians also speak of the "Pearson product-moment correlation" or the "Pearson correlation."

If, however, the dependence between the variables is non-linear, the correlation coefficient is no longer a suitable measure for their dependence.

René Schilling, Professor of Probability at TU Dresden, emphasises: "Up to now, it has taken a great deal of computational effort to detect dependencies between more than two high-dimensional variables, in particular when complicated non-linear relationships are involved. We have now found an efficient and practical solution to this problem."

Dr. Björn Böttcher, Prof. Martin Keller-Ressel and Prof. René Schilling from TU Dresden's Institute of Mathematical Stochastics have developed a dependence measure called "distance multivariance." The definition of this new measure and the underlying mathematical theory were published in the leading international journal Annals of Statistics under the title "Distance Multivariance: New

Dependence Measures for Random Vectors."

Martin Keller-Ressel explains: "To calculate the dependence measure, not only the values of the observed variables themselves, but also their mutual distances are recorded and from these distance matrices, the distance multivariance is calculated. This intermediate step allows for the detection of complex dependencies, which the usual correlation coefficient would simply ignore. Our method can be applied to questions in bioinformatics, where big data sets need to be analysed."

In a follow-up study, it was shown that the classical correlation coefficient and other known dependence measures can be regained as borderline cases from the distance multivariance.

Björn Böttcher concludes by pointing out: "We provide all necessary functions in the package 'multivariance' for the free statistics software 'R', so that all interested parties can test the application of the new dependence measure."

https://www.sciencedaily.com/releases/2019/08/190809113032.htm

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.

Jesse Livermore

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.