Baltic Dry Index. 2108-23 Brent
Crude 64.45 Spot Gold 1520
Never ending Brexit now October 31, maybe. 37 days away.
Trump’s Nuclear China Tariffs Now In Effect.
USA v EU trade war postponed to November, maybe.
“The present issue is one of comparative
simplicity. That is, the facts of the case are intelligible to the
least-instructed layman, and the only persons utterly at sea are those
connected with the law.”
A. P.
Herbert. Uncommon Law.
Global stock markets just keep churning away near the
highs, but trading on old news.
Meanwhile in the real global economy there’s nothing but increasing sign
of a new recession getting underway, if not already underway.
In the USA v China trade war, it's always “talks are
progressing well,” but no real action. How long that will support overpriced
stock markets flying on a wing and a prayer is anyone’s guess, but October, the
usual crash month for stocks, is fast approaching.
In other news, the USA – Japan trade agreement seems to have hit a snag.
Can it be solved at this week’s UN great leaders festival?
In Germany, even before Brexit, manufacturing seems to be
dragging the economy into the next recession. If it does, the rest of Europe
will follow as night follows day. But
can Deutsche Bank survive a new recession?
For additional entertainment this morning, the Supremes
of the UK’s highest court are due to give us lesser mortals their decision on
last week’s court hearing into the legality or otherwise of HMG’s decision to
prorogue Parliament. Their decision is due at 9:30 BST.
A decision either way is likely to be highly disruptive to
the UK’s mostly unwritten constitution, and equally disruptive to Brexit on
October 31. What fun.
Below, if it wasn’t for bells, whistles, and klaxons sounding,
we wouldn’t have any sound at all.
Global stocks inch up on trade hopes but growth fears temper gains
September 24,
2019 / 2:12 AM
TOKYO (Reuters) - Global shares ticked up
on Tuesday after U.S. Treasury Secretary Steven Mnuchin said U.S.-China trade
talks will resume next month, but lingering concerns about slowing global
growth tempered the overall appetite for riskier assets.
MSCI’s broadest index of Asia-Pacific shares outside Japan moved up
0.06%, supported by 0.4% gains in mainland Chinese shares, while Japan’s Nikkei
edged up 0.20% after a market holiday on Monday.
U.S. stock futures gained 0.39%, helped by comments from U.S. Treasury
Secretary Steven Mnuchin that U.S.-China trade talks will resume next week. He
later clarified that the negotiations will take place in two weeks.
“The comments gave a little bit of boost to sentiment, but markets are
still not that optimistic either,” said Masahiro Ichikawa, senior strategist at
Sumitomo Mitsui DS Asset Management.
---- The dispute between the world’s two largest economies has dragged on for well over a year, rattling investors and denting global growth.
Concerns over a slowing global economy remained front and center for
financial markets, as poor business activity readings from the euro zone
deepened fears of a recession and suggested more stimulus was required.
“While the Nikkei was fairly well supported, we need more catalysts to
further rises. That’s also true for U.S. markets as well,” said Takeo Kamai,
head of execution service at CLSA.
“While speculators have reacted to the trade-related headlines,
real-money people appear to be staying on the sideline.”
The euro wobbled at $1.0991, falling below a key support around $1.10
and not far from a 28-month low of $1.0926 touched earlier this month.
Sterling also slipped to $1.2435, having peaked at a two-month high of
$1.2582 set on Friday as traders looked to a Supreme Court ruling on whether
Prime Minister Boris Johnson misled Queen Elizabeth over his reasons for
suspending parliament this month.
The Supreme Court said it will issue its decision at 0930 GMT on
Tuesday.
More
U.S.-Japan trade deal hits snag as Tokyo seeks assurances on car tariffs
September 24, 2019
/ 1:16 AM
UNITED
NATIONS/WASHINGTON (Reuters) - A U.S.-Japan trade deal hit a last-minute snag
as Japanese officials sought assurances that the Trump administration will not
impose national security tariffs on Japanese-built cars and auto parts, people
familiar with the talks said on Monday.
U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe have
been aiming to sign a trade deal at a meeting this week during the United
Nations General Assembly in New York that provides increased access to Japan
for U.S. agricultural goods and bilateral cuts in industrial goods tariffs.
But the limited trade deal is not expected to include changes to tariffs
and trade rules governing autos, the biggest source of the $67.6 billion U.S.
trade deficit with Japan.
Trump has refrained thus far from following through on his threat to
impose tariffs of up to 25% on Japanese and European car and parts imports,
citing ongoing trade negotiations with these partners.
The New York Times earlier reported that Japan was demanding a “sunset
clause” that would cancel any trade benefits for the United States if Trump
imposes the auto tariffs on Japanese vehicles.
Japanese Foreign Ministry spokesman Masato Ohtaka said that Japan still
hoped to sign the U.S. trade deal by the end of September and that there was
still time to work out remaining issues.
---- Executives at two automakers briefed on the matter said Japan has expressed concerns about signing a deal without assurances that Trump will refrain from imposing tariffs on Japanese automotive exports as he benefits from Japanese agricultural concessions.
These people, speaking on condition of anonymity, confirmed that the
issue could delay the signing of a U.S.-Japan trade deal until subsequent
weeks.
Japanese Foreign Minister Toshimitsu Motegi told reporters after talks
with U.S. Trade Representative Robert Lighthizer that significant work was
under way to finalise the deal but that he did not expect much delay beyond an
end-September target signing off on the deal. He added he expected a “good
ceremony” when Abe and Trump meet.
More
Latest global economic data does nothing for investors “animal spirits”
By Clive
McKeef
Published: Sept 23,
2019 9:51 p.m. ET
Just when investors thought it may be safe to jump back
into the water, with the U.S. benchmark stock indexes DJIA, +0.06% SPX, -0.01%
again close to new highs after September economic data mostly surprised
to the upside, this week’s data so far has done nothing for what the economist
John Maynard Keynes called “animal spirits”. A gauge of employment in U.S. service industries pointed to job losses for the first time in almost a decade, adding to signs of a cooling labor market, according to data published Monday. The preliminary IHS Markit services purchasing managers’ index (PMI) for employment fell to 49.1 in September, the lowest since December 2009, from 50.4 the prior month. Readings below 50 indicate contraction. However, the overall U.S. services sector PMI rose to 50.9 from 50.7, while a similar index for manufacturing advanced to a five-month high of 51.
But the employment data suggest U.S. job gains will slow further, after the four-month average of hiring at companies fell to the lowest since 2012. “Firms have become more risk averse and increasingly eager to cut costs,” IHS Markit chief business economist Chris Williamson said. “At current levels, the survey employment index is indicative of nonfarm payroll growth falling below 100,000.”
Monday’s data followed US industrial production data for August last week showing a rise of 0.6%, the most in a year as crude oil production bounced back from Hurricane Barry’s impact on drilling in the Gulf of Mexico a month earlier, but that was not enough to improve the deteriorating annual trend which showed a mere 0.4% year-on-year growth, the weakest since January 2017.
The U.S. fiscal tailwinds of tax cuts, deregulation and extra spending have been no match for trade dispute headwinds, LPL Financial chief investment strategist John Lynch wrote.
Across the Atlantic, the economic data was much worse on Monday. Growth in the euro-area economy almost ground to a halt at the end of the third quarter amid evidence that the manufacturing slump is spreading to the services sector. The IHS Markit purchasing managers index for the 19-nation region fell to 50.4 in September, down from 51.9 a month earlier, and the weakest in more than six years, suggesting euro-zone economic growth of just 0.1% in the third quarter.
The signs of deepening malaise come less than two weeks after the ECB rolled out new monetary stimulus measures including an interest rate cut to even more negative levels and a restart of its bond-buying program. The package could yet turn out to be insufficient, according to Markit. “The details of the survey suggest the risks are tilted towards the economy contracting in coming months,” Markit economist Chris Williamson, said. “With survey data like these, pressure will grow on the ECB to add to its recent stimulus package.”
More
Eurozone manufacturing PMI drops in September to worst level in nearly 7 years
By Steve
Goldstein Published: Sept 23, 2019
5:02 a.m. ET
Manufacturing sentiment in the eurozone fell in September
to the worst level in nearly seven years, new figures released Monday show.The flash eurozone manufacturing purchasing managers index fell to an 83-month low of 45.6 in
September, down from 47 in August.
Economists polled by FactSet expected a 47.3 reading, and any reading below 50 indicates worsening conditions.
German manufacturing PMI fell to 41.4 in September from 43.5, the worst reading in more than a decade.
The flash eurozone services PMI fell to an 8-month low of 52 from 53.5 in August, which was below the 53.2 reading expected by economists.
“The eurozone economy is close to stalling as a deepening manufacturing downturn shows further signs of spreading to the services sector,” said Chris Williamson, chief business economist at IHS Markit.
New orders for goods and services fell for the first time since January, dropping at the sharpest rate since June 2013.
The flash readings are based on 85% to 90% of typical responses.
More
Banks Just Changed the Rules of the Negative Rate Game for Danes
Nick Rigillo and Morten Buttler September 23, 2019
(Bloomberg) -- Denmark is about to become a test case for what happens
when banks start charging a lot of customers to store their money.
That’s because one of the country’s biggest banking groups just changed
the rules of the game, by removing the floodgate that had shielded most retail
depositors. Until Friday, only people with roughly $1 million in surplus cash
at their banks were facing a negative rate. Now, the threshold has been reduced
to just over $100,000, with no guarantee it won’t go lower.
Other banks have hinted they’ll follow and economists say the
development marks a major shift in how monetary policy will be felt across the
economy.
Denmark’s latest response to negative interest rates has made it an even
more interesting case study for the European Central Bank. Jan Storup Nielsen,
a senior analyst at Nordea, reckons that many hitherto unknown consequences of negative
rates will finally play out in the real world.
“So far, it’s just been a lot of theories about what will happen, but
now we get a chance to see it in real life,” Nielsen said. “For the rest of
Europe and the ECB this is perfect, because they can let Denmark learn all the
consequences and then see what they should decide.”
Jyske Bank A/S, Denmark’s second-largest listed lender, said it had no
choice but to impose negative rates on all private customers with 750,000
($110,000) or more. Chief Executive Officer Anders Dam said the latest Danish
rate cut this month means Jyske is now “losing even more money” when it
deposits excess reserves at the central bank at minus 0.75%. Dam also says it’s
possible the rule will be extended to an even larger group of depositors.
As Jyske’s investors digested the news and calculated its likely effect
on the bank’s net interest income, its share price soared. Jyske rose 5.3% on
Friday and started Monday more than 1% higher in Copenhagen trading, even as
other European banks fell.
Denmark’s monetary policy is designed to defend the krone’s peg to the
euro. But its effect on the broader economy is being closely watched. Danes
have now spent seven years with rates below zero -- a world record -- and Dam
at Jyske says he’s bracing for another eight.
Normally, low rates encourage more household spending as it gets cheaper
to borrow and less appealing to save. In Denmark, negative rates have led to a
surge in mortgage refinancing, but they’ve also coincided with a record build-up
of consumer deposits. And, as is the case in much of the rest of Europe,
inflation is missing in action.
“Households have gotten all the benefits of negative rates so far, but
now they’re starting to see the bad side of negative rates,” Nielsen said.
----For consumers, it’s
made more sense to keep their cash in a deposit account that paid zero, rather
than invest in short-term market products at negative yields. Jyske’s decision
now has implications for everything from debt levels to inflation.
But it may not just be a question of economic theory. In Germany,
lawmakers have debated whether to ban banks from passing negative rates on to
retail depositors. Finland’s regulator has also asked its lawyers to examine
the legality of the practice. In Denmark, politicians have voiced concerns.
“I’m worried,” said Lisbeth Bech Poulsen, a member of the Socialist
People’s Party on which Denmark’s Social Democrats rely to govern. Banks “are
supposed to increase lending. This entire discussion is a sign that there is
something completely wrong in the economy.”
More
“It may be said at once that in any case no
blame whatever attaches to the persons responsible for the framing of these
charges, who are placed in a most difficult position by the appellant's
unfortunate act. It is a principle of the English law that a person who appears
in a police court has done something undesirable, and citizens who take it upon
themselves to do unusual actions which attract the attention of the police
should be careful to bring these actions into one of the recognized categories
of crimes and offenses, for it is intolerable that the police should be put to
the pains of inventing reasons for finding them undesirable.
" Is It a Free Country?”
Uncommon Law
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Does history repeat? Do banksters ever learn from past mistakes? This
time it’s different, right?
Below, another warning from the Basel Switzerland based Bank for
International Settlements. The banksters will listen to the BIS, right?
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
Booming Securitized Loan Market Has Echoes of Financial Crisis, BIS Warns
Sept. 23,
2019, at 2:05 a.m.
LONDON (Reuters) - Lending standards in the rapidly growing loan market
are deteriorating and complex financial products that mask risks to banks have
parallels with the run-up to the 2008 financial crisis, the Bank for
International Settlements warned on Sunday.
The number of collateralized loan obligations (CLOs), a form of
securitization which pools bank loans to companies, has ballooned in recent
years as investors hunt for higher returns by buying into loans to lower-rated
and riskier companies.
Like the collateralized debt obligations (CDOs) that bundled U.S.
sub-prime mortgages into complex products and were blamed for triggering the
global financial crisis, CLOs also have complex structures that can mask
underlying risks.
The BIS said there were important differences between CLOs and CDOs that
made the former less risky, but it warned that the scramble by investors for
higher yields was leading to worsening standards that could trigger bigger
losses in the future.
"Weak underwriting standards can reduce the likelihood of defaults
in the short run but increase the potential credit losses when a default
eventually occurs," Sirio Aramonte and Fernando Avalos, researchers at the
umbrella group for central banks said in a quarterly report.
The global outstanding CLO market is now estimated to stand at about
$750 billion, while the CDO market in 2007 before the crisis came to $640
billion, the BIS said.
CLOs tend to be far less complex than CDOs and avoid the use of
complicated credit derivatives but the loosening of credit standards and the
lack of visibility about indirect ownership are common factors.
CLOs usually invest in loans to highly-indebted firms given a
"junk" credit rating, or those that have high debt service costs
relative to earnings.
Leveraged loans without maintenance covenants - which help protect
investors in the loans - increased to 80% of all outstanding loans in 2018 from
20% in 2012 while the share of low-rated leveraged loans in CLOs has nearly
doubled to 18%, BIS data showed.
That has been accompanied by a steady rise in debt-to-earnings ratio of
borrowers.
The leveraged loan market has mushroomed in recent years to roughly $1.4
trillion outstanding, of which about $200 billion is denominated in euros and
the rest in U.S. dollars.
That rapid expansion has been accompanied by a securitization of such
loans into CLOs, with more than 50% of outstanding leveraged loans in U.S.
dollars and about 60% of those in euros now securitised via these products.
U.S. and Japanese banks have been among the largest investors in CLOs.
The exposure of banks to these products is concentrated in the top-rated
tranches, but ownership patterns among non-bank investors such as hedge funds
and insurance companies are more difficult to trace.
Banks could therefore be indirectly exposed should defaults escalate,
the BIS said.
"Like banks' off-balance sheet exposure to CDOs, which was a source
of instability in 2007, banks' prime brokerage exposure to CLO holders could
result in larger losses than implied by direct exposures, creating heightened
financial stress," the BIS said.
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?
'Poor man's qubit' can solve quantum problems without going quantum
Researchers demonstrate the first hardware for a 'probabilistic computer'
Date:
September 18, 2019
Source:
Purdue University
Summary:
Researchers have built and demonstrated the first hardware for a probabilistic
computer, a possible way to bridge the gap between classical and quantum
computing.
It may still be decades before quantum computers are ready to solve
problems that today's classical computers aren't fast or efficient enough to
solve, but the emerging "probabilistic computer" could bridge the gap
between classical and quantum computing.
Engineers at Purdue University and Tohoku University in Japan have built
the first hardware to demonstrate how the fundamental units of what would be a
probabilistic computer -- called p-bits -- are capable of performing a
calculation that quantum computers would usually be called upon to perform.
The study, published in Nature on Wednesday (Sept. 18),
introduces a device that serves as a basis for building probabilistic computers
to more efficiently solve problems in areas such as drug research, encryption
and cybersecurity, financial services, data analysis and supply chain logistics.
Today's computers store and use information in the form of zeroes and
ones called bits. Quantum computers use qubits that can be both zero and one at
the same time. In 2017, a Purdue research group led by Supriyo Datta, the
university's Thomas Duncan Distinguished Professor of Electrical and Computer
Engineering, proposed the idea of a probabilistic computer using p-bits that
can be either zero or one at any given time and fluctuate rapidly between the
two.
"There is a useful subset of problems solvable with qubits that can
also be solved with p-bits. You might say that a p-bit is a 'poor man's
qubit,'" Datta said.
Whereas qubits need really cold temperatures to operate, p-bits work at
room temperature like today's electronics, so existing hardware could be
adapted to build a probabilistic computer, the researchers say.
The team built a device that is a modified version of magnetoresistive
random-access memory, or MRAM, which some types of computers use today to store
information. The technology uses the orientation of magnets to create states of
resistance corresponding to zero or one.
Tohoku University researchers William Borders, Shusuke Fukami and Hideo
Ohno altered an MRAM device, making it intentionally unstable to better
facilitate the ability of p-bits to fluctuate. Purdue researchers combined this
device with a transistor to build a three-terminal unit whose fluctuations
could be controlled. Eight such p-bit units were interconnected to build a
probabilistic computer.
The circuit successfully solved what is often considered a
"quantum" problem: Breaking down, or factoring, numbers such as
35,161 and 945 into smaller numbers, a calculation known as integer
factorization. These calculations are well within the capabilities of today's
classical computers, but the researchers believe that the probabilistic
approach demonstrated in this paper would take up much less space and energy.
"On a chip, this circuit would take up the same area as a
transistor, but perform a function that would have taken thousands of
transistors to perform. It also operates in a manner that could speed up
calculation through the parallel operation of a large number of p-bits,"
said Ahmed Zeeshan Pervaiz, a Ph.D. student in electrical and computer
engineering at Purdue.
Realistically, hundreds of p-bits would be needed to solve bigger
problems -- but that's not too far off, the researchers say.
“It cannot be too clearly understood that
this is NOT a free country, and it will be an evil day for the legal profession
when it is. The citizens of London must realize that there is almost nothing
they are allowed to do. Prima facie all actions are illegal, if not by Act of
Parliament, by Order in Council; and if not by Order in Council, by
Departmental or Police regulation, or By-laws. They may not eat where they
like, drive where they like, sing where they like, or sleep where they like.
"Is It a Free Country?”
Uncommon
Law
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.
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