Baltic Dry Index. 2501+59
Brent Crude 58.48 Spot Gold 1542
Never ending Brexit now October 31, maybe. 57 days away.
Trump’s Nuclear China Tariffs Now In Effect.
USA v EU trade war postponed to November, maybe.
“The problem with
fiat money is that it rewards the minority that can handle money, but fools the
generation that has worked and saved money.”
Adam Smith aka
George Goodman
With the world’s longest running farce, the UK House of
Commons, well covered by mainstream media and set to continue today, we focus
out attention on less amusing developments in the global economy.
While global stock markets mostly continue burning up
cash in a long term topping whipsaw pattern, the global economy continues to
slow, led by a global manufacturing recession.
The central banksters respond more and more by pushing
interest rates into negative territory, sending gold higher but having for now,
little other effect. But don’t go away, very bad things flow from the insanity
of negative interest rates, including if they go on long enough, the revulsion
of fiat currency.
Below, as the world turns this wet morning in the pretty Thames
Valley outside hectic London.
Asia stocks bounce on firmer Chinese lead, pound steadies
September 4, 2019
/ 1:47 AM
TOKYO (Reuters) -
Asian stocks bounced on Wednesday, led by Chinese markets after a report showed
growth in the country’s service sector accelerating despite broader economic
headwinds, while the pound halted its decline on hopes a no-deal Brexit may yet
be averted.
The Shanghai Composite Index added 0.45% while the blue-chip CSI300
index gained 0.5% after activity in China’s services sector expanded at the
fastest pace in three months in August, according to a business survey.
MSCI’s index of Asia-Pacific shares outside Japan snapped two days of
losses and gained 0.5%.
While some markets in Asia enjoyed gains, sentiment in the wider region
remained subdued amid worries about a global recession.
Data on Tuesday showed the U.S. manufacturing sector contracted in
August for the first time since 2016 amid worries about a weakening global
economy and rising trade tensions between China and the United States, the
Institute for Supply Management’s (ISM) report on Tuesday showed.
Australian stocks lost 0.75% and Japan’s Nikkei was little changed.
According to CME’s FedWatch tool, traders have almost fully priced in a
25 basis point (bp) interest rate cut at the Fed’s Sept. 17-18 policy meeting
while expectations for another 25 bp reduction being implemented at the October
meeting have risen to 61% from 53% over the past month.
The 10-year U.S. Treasury yielded 1.474% after stooping to 1.429% on
Tuesday, its lowest since July 2016.
“As the decline in U.S. yields show, the markets will be urging the Fed
on to do more even though a September rate cut is already priced in,” said
Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
More
Japanese automakers' sales fall in South Korea amid consumer boycott
September 4,
2019 / 3:07 AM
SEOUL (Reuters) - Japanese automakers posted sharper sales
falls in South Korea in August, industry data showed on Wednesday, hit by a
consumer boycott of Japanese vehicles amid a worsening diplomatic row between
the countries. Toyota Motor Corp (7203.T) and other Japanese carmakers saw South Korean sales tumble 57% to 1,398 vehicles in August from a year earlier, steeper than the 17% fall in July.
Japan’s decision in July to tighten controls on exports of materials that South Korea uses to make semiconductors and display screens has prompted a consumer backlash in Korea, with consumers boycotting Japanese products such as beer, clothes, vehicles and tours to the neighboring country.
Relations between the two U.S. allies had already soured over South Korean demands for Japanese compensation for South Korean forced laborers during World War Two.
Toyota’s South Korean sales fell 59% to 542 in August from a year earlier, while Honda Motor’s (7267.T) sales tumbled 81% to 138.
Australia's economy slows to decade low, government spurns stimulus
September 4, 2019
/ 4:56 AM
SYDNEY (Reuters) -
Australia’s much-vaunted economy grew at its slowest pace in a decade last
quarter as cash-strapped consumers went on strike, an urgent argument for more
monetary and fiscal stimulus as headwinds mount globally.
Gross domestic product (GDP) rose just 1.4% in the June quarter from a
year earlier, data showed on Wednesday, matching the worst of the global
financial crisis and well short of the 2.75% considered “trend”.
The downbeat report poses a challenge for Prime Minster Scott Morrison
who won election in May largely based on a pledge that growth would be stronger
on his watch.
Yet responding to the data, Treasurer Josh Frydenberg remained committed
to delivering a budget surplus and said any new fiscal steps, including on
business investment, would not come until the budget in May next year.
The Reserve Bank of Australia (RBA) has called for fiscal action, as it
cut interest rates in both June and July to reach an historic low of 1%.
The monetary easing has sparked a much-needed revival in house prices,
but home construction remains in a deep hole and consumer spending has yet to
show any recovery.
The central bank concluded its September policy meeting this week by
saying it would ease further if needed, and highlighted new risks from the
escalating Sino-U.S. trade dispute.
----
“There are powerful structural headwinds from weak wages
growth and productivity, constraining consumer spending. The global economy is
slowing and downside risks have intensified,” warned Westpac senior economist
Andrew Hanlan.
more
Thai economy slowing but not in recession yet - finance minister
September 4,
2019 / 4:35 AM
BANGKOK (Reuters) - Thailand’s economy is just slowing but not in a
recession yet and recently announced government stimulus measures should help
lift growth to 3% this year, the country’s finance minister said on Wednesday.
Uttama Savanayana also told reporters that he was not worried about high
household debt levels as some loans are still generating income and are
secured.
Thailand’s household debt was equivalent to 78.7% of gross domestic
product (GDP) at the end of March, and has been a drag on consumption, which
makes up half of the economy.
Last year’s economic growth was 4.1%.
Huawei says U.S. has launched cyberattacks against it
Huawei,
the Chinese telecoms giant, on Tuesday said the U.S. has launched cyber attacks
against it to infiltrate intranet and internal information systems as it denied
a series of allegations. Huawei also denied allegations in
a report in the Wall Street Journal that it stole
smartphone-camera patents.
"The
fact remains that none of Huawei's core technology has been the subject of any
criminal case brought against the company, and none of the accusations levied
by the U.S. government have been supported with sufficient evidence. We
strongly condemn the malign, concerted effort by the U.S. government to
discredit Huawei and curb its leadership position in the industry," the
company said in a statement.
Finally, via the
Financial Times, MoneyWeek tackles what to buy in an insane world of negative
interest rates. Surprise, surprise they forget all about the world of tangible
assets lead by precious metals.
What to buy in a world of negative interest rates
Merryn Somerset Webb 02/09/2019
----Negative interest rates are becoming the norm
It all seems very straightforward – but it isn’t. That is because the world’s most bizarre financial experiment ever, negative interest rates, continues. The European Central Bank currently charges banks minus 0.4% on their deposits. The Swiss National Bank is even more out there, with minus 0.75%.Negative interest rates are becoming the norm for institutional deposits – having to see cash on hand as a cost has taken a bit of getting used to, but now passes almost uncommented on in board meetings. The same could be on the way for retail deposits.
UBS is introducing a negative rate on large deposits and rivals are likely to follow. Yields on German government bonds are negative across all timeframes. The ten-year UK gilt yield is now below 0.5% for the first time ever. US ten-year yields are not negative, but they are at an all-time low. In total, $16trn worth of government bonds now actively eat your money if you hold them to maturity.
Expect more of the same. Most analysts forecast monetary loosening in the US and the EU in September. Albert Edwards of Société Générale (one of the first to predict all this) says we could consider this to be a massive bond market bubble messing with our sanity. One could also argue that it is entirely normal: why shouldn’t investors pay to have cash stored? They already do so for stocks, classic cars, and art, for example.
Perhaps, as former US Federal Reserve chair Alan Greenspan put it this month: “Zero has no meaning.” Or you could see it as something more terrifying; “an appropriate reaction” to the fact that the next recession will quickly turn into a global deflationary bust. That would require a mix of extreme fiscal policy and “helicopter money”, driving rates down even further.
----But these are political events, the likes of which developed countries with sound institutions have seen – and seen off – before. Negative interest rates are different.
Paper money has been around for about 1,000 years. No one has, as far as we know, ever offered negative interest rates on it before. In theory, that makes it the first thing investors should be thinking about. In practice, it also makes it impossible to have any sense of certainty about what to do.
It might mean you should start looking to buy a nice safe: if it costs you to keep your money in the bank, why not save yourself a bit of cash and keep it at home? It might mean that you should buy bond funds. Central banks may be thinking, as the US Federal Reserve’s Jay Powell suggested this week, about “whether we should expand our toolkit”. In a world overladen with debt and ageing populations, that means yields are going to keep falling and bond prices will rise – at least until inflation is finally unleashed.
More
Negative Interest Rates Threaten the Financial System
Markets may need to be rebuilt on a new set of assumptions, but we don’t know what those should be or how they would work.By Jim Bianco September 3, 2019, 10:00 AM GMT+1
Former Federal Reserve Chairman Alan Greenspan recently said he wouldn’t be surprised if yields on U.S. bonds turned negative and if they do, it wouldn’t be “that big a of a deal.” That seems to be a sentiment widely held in central banking circles these days, but it’s wrong. Negative interest rates represent a threat to the financial system.
To understand why, let’s start with the existing fractional reserve banking system, which is more than a century old. For every dollar that goes into a bank, some set amount (usually about 10%) must go into a reserve account to be overseen by the central bank. The rest is either lent out or used to buy securities.
In other words, the fractional reserve banking system is leveraged to interest rates. This works when rates are positive. Loans are made and securities bought because they will generate income for the bank. In a negative rate environment, the bank must pay to hold loans and securities. In other words, banks would be punished for providing credit, which is the lifeblood of an economy. As German bankers recently explained to the European Central Bank:
We already have a devastating interest rate situation today, the end of which is unforeseeable,” Peter Schneider, who represents public-sector savings banks in the southern German state of Baden-Wuerttemberg, said on Wednesday. “If the ECB aggravates this course, that would hit not only the entire financial sector hard, but especially savers.
And to make matters worse, the German government is considering outlawing negative deposit rates. In a negative rate world, forcing rates on short-dated debt to zero would keep the yield curve permanently inverted. The fractional reserve banking system cannot operate properly in this environment.
Valuation models are another area of finance that need to be tweaked in
a negative rate environment. Noble prizes have been awarded to economists that
developed concepts such as the efficient frontier, the Capital Asset Pricing
Model and the Black-Scholes option pricing model. But when a negative value is assumed
for the risk-free rate in these types of models, fair value results shoot off
toward infinity. With trillions of securities and derivatives dependent on
these models, valuation is critical.
Morehttps://www.bloomberg.com/opinion/articles/2019-09-03/negative-interest-rates-threaten-the-financial-system?srnd=premium-europe
“If the profit numbers on income statements are treated with such reverence, it was obviously only a question of time before some smart fellows would start building companies not around the logical progression of a business but around what would beef up the numbers.”
Adam Smith aka
George Goodman, The Money Game.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, more on Dorian and the Atlantic hurricane season. The Bahamas
needs help. Someone please inform AP on the meaning of "decimation."
‘Total devastation’ as Hurricane Dorian decimates Bahamas
By Associated
Press Published: Sept 3, 2019 10:43 p.m. ET
FREEPORT, Bahamas — Relief officials reported scenes of utter ruin
Tuesday in parts of the Bahamas and rushed to deal with an unfolding
humanitarian crisis in the wake of Hurricane Dorian, the most powerful storm on
record ever to hit the islands. At least seven deaths were reported, with the
full scope of the disaster still unknown.
The storm’s punishing winds and muddy brown floodwaters destroyed or
severely damaged thousands of homes, crippled hospitals and trapped people in
attics.
“It’s total devastation. It’s decimated. Apocalyptic. It looks like a
bomb went off,” said Lia Head-Rigby, who helps run a local hurricane relief
organization and flew over the Bahamas’ hard-hit Abaco Islands. “It’s not
rebuilding something that was there; we have to start again.”
She said her representative on Abaco told her that “there’s a lot more
dead” and that the bodies were being gathered.
Emergency
authorities, meanwhile, struggled to reach victims amid conditions too
dangerous even for rescue workers, and urged people to hang on.
---- Practically parking over a portion of the Bahamas for a day and a half, Dorian pounded the northern Abaco Islands and Grand Bahama with winds up to 185 mph and torrential rain before finally moving into open waters Tuesday on a course for Florida. Its winds were down to a still-dangerous 110 mph, making it a Category 2 storm.
Over 2 million people along the coast in Florida, Georgia and North and
South Carolina were warned to evacuate. While the threat of a direct hit on
Florida had all but evaporated, Dorian was expected to pass dangerously close
to Georgia and South Carolina — and perhaps strike North Carolina — on Thursday
or Friday.
---- In the Bahamas, Red Cross spokesman Matthew Cochrane said more than 13,000 houses, or about 45% of the homes on Grand Bahama and Abaco, were believed to have been severely damaged or destroyed. U.N. officials said more than 60,000 people on the hard-hit islands will need food, and the Red Cross said some 62,000 will need clean drinking water.
“What we are hearing lends credence to the fact that this has been a
catastrophic storm and a catastrophic impact,” Cochrane said.
Lawson Bates, a staffer for Arkansas-based MedicCorps, flew over Abaco
and said: “It looks completely flattened. There’s boats way inland that are
flipped over. It’s total devastation.”
More
Atlantic basin popping to life with tropical activity, drawing attention of AccuWeather meteorologists
By , AccuWeather
senior meteorologist September 2, 2019
While Dorian
will remain the most potent feature on the tropical weather maps, the
Atlantic basin is popping to life and AccuWeather meteorologists are monitoring
several other areas in the tropics for development in the coming days.
The first area of concern is a batch of showers and
thunderstorms traveling from the eastern Gulf of Mexico to the central areas of
the Gulf into early week.
The odds are against rapid escalation of this feature, but
there is a 50% chance a tropical depression or tropical storm evolves before
the shower and thunderstorm activity pushes inland over northeastern Mexico and
South Texas by midweek.
"At minimum, an uptick in torrential downpours and
perhaps locally gusty thunderstorms can occur in northeastern Mexico and South
Texas from later Tuesday through Wednesday," according to AccuWeather
Senior Meteorologist Bob Smerbeck.
---- The another area that is being monitored is a batch of
showers and thunderstorms that emerged from the western coast of Africa late
last week.
This area has a 90% chance of developing and becoming
Fernand this week as it drifts westward across the tropical Atlantic.
However, it may take a track much farther to the
northwest early on, when compared to Dorian.
As a result, it may only be of concern for shipping
over the middle of the Atlantic during the middle to latter part of next week.
Yet another batch of showers and thunderstorms will
emerge from central Africa this week and could develop over the next several
days.
A fourth area has been a persistent batch of showers
and thunderstorms about 400 hundred miles southeast of Bermuda. This has about
a 50% chance of development this week.
Tropical Storm Risk (TSR)
Tropical Storm Risk (TSR) offers a leading resource for
predicting and mapping tropical storm activity worldwide. The public TSR web
site provides forecasts and information to benefit basic risk awareness and
decision making from tropical storms. The new TSR Business service and web site
offers real-time products of unrivalled accuracy for the detailed mapping and
prediction of tropical storm impacts worldwide. TSR has won two major insurance
industry awards - the British Insurance Awards for Risk Management (2006) and
for London Market Innovation (2004).
More
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?
The Biggest Batteries Coming Soon to a Grid Near You
The “100 Megawatt Club” is about to get a lot busier. Here are the world’s eight largest battery storage projects.
Julian SpectorSeptember 03, 2019
Sure, small-scale batteries in homes and businesses can link up and deliver veritable megawatts of capacity. But there’s nothing like the sheer adrenaline rush of stacks and stacks of lithium-ion cells packed into climate-controlled boxes and blasting electrons faster than a coal plant operator can say “secular decline.”
So who’s got the biggest battery?
Elon Musk supplied the biggest lithium-ion battery to a wind farm in South Australia back in 2017, and that project retains the biggest battery title two years later. But the early-adopter phase is about to end: Contracts for bigger and bigger batteries will jockey for dominance into the early 2020s. Interconnection queues suggest even bigger ones will follow, north of 500 megawatts.
This size trend reflects the increasing ambitions of storage developers to serve not just a little frequency regulation but real bulk capacity. Some projects on this list explicitly set out to take over for gas plants; others are designed to make use of an overabundance of solar energy, turning it into peak power and thereby obviating the need for more gas burn.
That still leaves work to do to unlock a highly renewable grid. Even the biggest batteries on the books can’t last long enough to fully replace fossil fueled capacity. But there’s enough value on the table now to make these projects pencil out, and the premium for instantaneous, flexible capacity is only going to grow.
To make sense of this battery arms race, GTM plumbed our recent coverage to bring all the massive contenders together in one place. Here’s what you need to know about the “100 megawatt club,” at least until another announcement comes and scrambles the lineup.
(A note on terminology: The list focuses on lithium-ion battery plants, built or contracted, that have been confirmed to GTM. They are ranked on megawatt capacity, though in the case of ties projects with higher megawatt-hour capacities and earlier online dates are listed first.)
8. Neoen Hornsdale: 100MW/129MWh
- Online date: November 2017
Somehow, nobody has copied that playbook since, and this facility remains the only mega-battery on this list that has actually been built.
7. Strata Oxnard: 100MW/400MWh
- Online date: December 2020
More
The modern banking
process manufactures currency out of nothing. The process is perhaps the most
astounding piece of slight hand that was ever invented…If you want to be slaves
of the bankers, and pay the cost of your own slavery, then let the banks create
currency”.
Lord Josiah Stemp,
Former Director of the Bank of England (1937)
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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