Baltic Dry Index. 2266-17 Brent
Crude 63.66 Spot Gold 1495
Never ending Brexit now October 31, maybe. 42 days away.
Trump’s Nuclear China Tariffs Now In Effect.
USA v EU trade war postponed to November, maybe.
On 19 September 1893 the
governor, Lord Glasgow, signed a new Electoral Act into law. As a result of
this landmark legislation, New Zealand became the first self-governing country
in the world in which women had the right to vote in parliamentary elections.
As widely expected, the Fed cut its key interest rate
yesterday, but disappointed an irate President Trump, by only a quarter of one
percent. President Trump who’d ordered them to cut by more and even go into
negative interest rate folly, quickly made known his displeasure.
Worse, the Fed sent out a mixed signal on the prospect of
a further cut in October. Historically, never a good month to disappoint US
stock markets.
So was that it for the Fed? Even if they cut another quarter
of one percent next month, with an election year fast approaching in 2020, the
Fed is unlikely to be an activist Fed planted firmly in the Republican
re-election camp. One more cut and done, seems highly probable barring a new
recession.
I think a new recession is highly likely, if the onset of
one isn’t already underway, but it’s a reason to sell stocks near the top not a
reason to hols on or buy more.
With Brexit still to come a new trade war against Europe
still to come in November, and an unfinished trade war with China fast going
nowhere, to this old dinosaur market follower, it’s time to be in cash and
precious metals, awaiting the next shoe to fall.
Asian shares turn lower on guarded Fed, yen rises after BOJ
September 19, 2019
/ 1:39 AM
TOKYO
(Reuters) - Asian shares turned lower on Thursday after the U.S. Federal
Reserve cut interest rates as expected but signalled a higher bar to further
policy easings.
Treasury yields rose broadly and the curve flattened as Fed Chairman Jerome Powell took a cautious approach to any further reductions in borrowing costs, while division among central bankers has increased uncertainty over how much further rates might fall.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.36%. Hong Kong shares .HSI shed 0.96%, but Japan's Nikkei .N225 rose 1.01%.
The yen JPY=EBS rose from a seven-week low versus the dollar and held onto those gains after the Bank of Japan kept policy on hold, as expected, but signalled it could ease next month.
Central banks around the world have been loosening policy to counter the risks of low inflation and recession. Easier monetary policy has generally supported equities.
However, some analysts argue that a bond market rally has gone too far, saying yields have fallen too fast and curves flattened too much. Others are worried about the growing amount of sovereign debt with negative yields.
“This is a small positive for share prices as long as there is no recession,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.
---- The Fed cut interest rates for a second time this year to 1.75%-2.00% in a 7-3 vote but signalled further cuts are unlikely as the labour market remains strong.
The rate cut was widely expected, but the split vote has raised some
concern about predicting the future path of monetary policy.
So-called dot-plot forecasts from all 17 policymakers showed even broader
disagreement, with seven expecting a third rate cut this year, five seeing the
current rate cut as the last for 2019, and five who appeared to have been
against even Wednesday’s move.
More
Guggenheim's Minerd says aggressive Fed moves can delay recession, but not avoid it
September 18,
2019 / 3:25 AM
NEW YORK (Reuters) - Guggenheim Partners global chief investment officer
Scott Minerd warned on Tuesday the firm’s recession forecast model showed a 58%
chance of the economy being in a recession by mid-2020, and a 77% chance of one
beginning in the next 24 months.
Minerd, who oversees more than $240 billion in assets under management,
said history shows that once Guggenheim’s Recession Probability Model reaches
current levels, “aggressive policy action can delay recession, but not avoid
it.”
Minerd, in a research note to clients, said Guggenheim expects the Trump
administration will continue to use easier monetary policy as a “green light
for more aggressive trade policy.”
He noted that Federal
Reserve Chairman Jerome Powell explicitly cited trade policy as a rationale for
cutting rates, which risks the development of a feedback loop between Fed rate
cuts and trade war escalation.
More
A Decline in RV Sales Is Bad News for Trump
The president’s trade war has increased manufacturing costs and hurt a bellwether industry.
Justin Fox
September 16, 2019, 7:00 AM EDT
Justin Fox is a Bloomberg Opinion columnist covering
business. He was the editorial director of Harvard Business Review and wrote
for Time, Fortune and American Banker. He is the author of “The Myth of the
Rational Market.” Last summer something strange started happening in the recreational-vehicle business. Even as President Donald Trump proclaimed “an economic turnaround of historic proportions” and his top economic adviser, Larry Kudlow, asserted that “this is a boom that will be sustainable frankly as far as the eye can see,” RV manufacturers shipped out 11.4% fewer vehicles and trailers in June 2018 than in the same month a year earlier. Shipments rebounded in July but turned negative again in August, and have been falling short ever since.
This RV decline has been getting a lot of attention lately as a possible harbinger of a broader economic downturn to come. The last three recessions (which started in July 1990, March 2001 and December 2007) were all preceded by declines in RV manufacturers’ shipments.
Then again, that’s not a big sample size, and there were modest RV-shipment dips in the mid-1980s and mid-1990s that turned out not to precede recessions. “I do want to be clear that we don’t have long enough time series to make a strong causal inference between RV sales and recessions,” emailed Michael Hicks, a professor of economics and director of the Center for Business and Economic Research at Ball State University in Muncie, Indiana. “But if this were a medical trial involving declining RV sales as a drug to cause recessions, the drug would be approved by the FDA.”
I checked in with Hicks recently because (1) my wife and I were about to pay a visit to the RV/MH Hall of Fame (the “MH” can stand for either motor home or manufactured home) in Elkhart, Indiana, the headquarters of the global RV industry, and (2) he has been warning since last fall that the decline in RV shipments might presage bad times ahead. It’s not that the RV industry is itself huge economic force — the combined trailing-12-month revenue of publicly traded RV biggies Thor, Patrick, and Winnebago ($11.7 billion) amounts to just 7.4% of Ford’s. 1 The theory behind an RV-sales/recession link is that they function as an early signal of other problems.
More
https://www.bloomberg.com/opinion/articles/2019-09-16/decline-in-rv-sales-is-bad-news-for-manufacturing-trump
We are in an earnings recession, and it is expected to get worse
By Emily Bary Published: Sept 18, 2019 5:33 p.m. ET
The S&P 500 is officially in an earnings recession for
the first time in three years, and the trend is expected to get worse in the
third quarter.The entirety of the S&P 500 index SPX, +0.03% has reported results for the second quarter, showing an average earnings drop of 0.35%. Components posted a 0.29% decline in earnings per share in the first quarter, marking the first period of back-to-back declines since the second quarter of 2016. Earnings recessions are typically categorized as two straight quarters of falling earnings.
Opinion: Stock market’s eerie parallels to September 2007 should raise recession fears
Analysts surveyed by FactSet currently project a steeper drop for the third quarter, with estimates calling for a 3.95% decline on average. Sentiment has worsened since the start of the year, as analysts had been projecting a 1.07% increase in third-quarter earnings as of late March. But they expect things to turn positive again in the holiday period, with expectations for 1.3% growth overall in the calendar year.
Some of the worst-performing companies for the second quarter were in metals and mining, with earnings for that subsector down 76% on average amid falling prices and rising costs for companies like Freeport-McMoRan Inc. FCX, -0.48% . The materials sector overall saw a 17.88% decline, led by weakness in mining that’s projected to persist for another quarter.
More
https://www.marketwatch.com/story/the-sp-500-is-in-its-first-earnings-recession-in-three-years-2019-09-18?mod=mw_theo_homepage
In European news, the bad news just keeps rolling in.
EU car sales drop in August
By Dow
Jones Newswires Published: Sept 18, 2019 2:34 a.m. ET
New car sales in the European Union fell in August with the bloc’s five
major markets recording decreases, according to data published on Wednesday.
New car registrations, a reflection of sales, fell 8.4% on year in
August across the EU to 1.04 million vehicles, the European Automobile
Manufacturers’ Association, or ACEA, said.
The decrease was mainly the result of a high comparison base, the
association said. In August 2018, car makers ramped up sales ahead of the
introduction of new emissions rules, leading to double-digit growth in many
European markets.
The association, whose members include Europe’s biggest car makers, said
the drop in demand was led by Spain and France, where sales fell 31% and 14%, respectively.
New car sales were 0.8% lower in Germany and fell 3.1% in Italy, while the UK
recorded a 1.6% decline.
I knew something was wrong somewhere, but I
couldn’t spot it exactly. But if something was coming and I didn’t know where
from, I couldn’t be on my guard against it. That being the case I’d better be
out of the market.
Jesse Livermore
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, yet more on those great USA rains. The trouble is, more seem likely to follow.
South Dakota farmers reeling from year's second record-breaking flood
Sept. 17, 2019 /
2:24 PM
Sept. 17 (UPI) -- Farmers in South Dakota, many still recovering from
historic spring flooding, were hit with another record-shattering flood this
week.
Although it is too soon to determine the full extent of damage, the flooding
could prevent farmers from harvesting thousands of acres of corn, soy and other
crops. It also has destroyed miles of county roads and bridges and threatens
livestock across the region.
"What's crazy is we saw water like this already this spring, and that was way beyond anything anybody had seen," said Jim Petrik, who farms near Gayville, in the southeast part of the state. "Now, six months later, it's all water again. It's almost Biblical out there."
South Dakota normally receives just a couple of inches of rain in September.
"Usually, this time of year, the dust is blowing and it is bone dry out," said Matt Bainbridge, a farmer near Ethan.
But beginning late last week and over the weekend, torrential rain fell across the eastern part of the state and parts of Minnesota, said Scott Vanderwal, the president of the South Dakota Farm Bureau, who farms near Volga. Some areas saw nearly a foot of rain.
"This flood is breaking the records set in the spring," said Angel Kasper, a spokeswoman for South Dakota Farm Families.
Several rivers and tributaries swelled, washing away roads and bridges, filling grain bins and drowning crops that were nearly ready for harvest.
Many places remain underwater Tuesday, making it is impossible to assess the full damage.
Livestock producers scrambled over the weekend to move animals to higher ground.
"We were able to get everybody to a higher spot in the pasture," said Bainbridge, who raises cattle in addition to growing corn and soybeans. He said he has heard stories of other producers having to evacuate herds to other sites as the water enveloped entire farms.
Bainbridge said much of his farm remains underwater, including his pasture land and his corn and soy fields. Like many South Dakota farmers, his land also flooded this spring. That, he said, destroyed his fences and prevented him from planting most of his land.
"The fields were too saturated," Bainbridge said. "We didn't hardly plant anything, really -- maybe 15 percent of our corn fields and 15 percent of our soybeans."
It was the same story across the state, where weather prevented farmers from planting nearly 4 million acres this year, according to the U.S. Department of Agriculture.
This second round of flooding now threatens the limited crops that farmers were able to plant, Kasper said.
"It's a real serious situation for anyone who makes a living off farming," the Farm Bureau's Vanderwal said.
The plants might not survive the deluge, and even if they do, farmers will have to wait for the fields to dry before they can get their tractors in for harvest. Harvest must happen before the first frost -- which will be a tight window.
And, because the flooding has destroyed many roads and bridges, even farmers who are able to harvest their grains might not be able to move the produce off their properties.
More
Hurricane Humberto lashes Bermuda as other storms threaten Mexico, Texas, Caribbean
By Associated Press
Published: Sept 18, 2019 11:42 p.m. ET
MIAMI — Hurricane Humberto lashed Bermuda with strong winds Wednesday as
the powerful Category 3 storm passed just to the north of the British Atlantic
territory, while a newly formed hurricane threatened tourist resorts along Mexico’s
Pacific coast.
The hurricane came within about 75 miles of Bermuda before moving away
out toward open waters late Wednesday.
----Meanwhile, new Hurricane Lorena posed an increasing
threat to tourist resorts on Mexico’s Pacific Coast and the Baja California
Peninsula.
----Hurricane warnings were in effect from Punta San Telmo to Cabo Corrientes.
Heavy rains were spreading onshore along the coast, the Hurricane Center
said. Mexican officials voiced concern that some parts of southern Mexico,
which have seen a lack of rainfall, could now get torrential rains that could
result in dangerous flash floods and landslides.
In parts of Colima, Jalisco and Michoacan states, “it is forecast that
the total accumulations of rain could ... represent 40% of the rain for an
entire year in that part of the country,” said Blanca Jiménez Cisneros,
director-general of Mexico’s National Water Commission.
In Texas, the remnants of Tropical Storm Imelda drenched parts of
Southeast Texas, but officials in the Houston region said that there had been
no severe problems by late Wednesday. It was the first named storm to hit that
area since Hurricane Harvey’s much heavier rains flooded more than 150,000
homes around the city and caused an estimated $125 billion in damage in Texas.
Tropical Storm Jerry also formed Wednesday morning far out in the
Atlantic and was forecast to become a hurricane before closing in on the
outermost Caribbean islands Thursday night or Friday.
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
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?
Why These Two Innovations In Artificial Intelligence Are So Important: Eye on A.I.
By Jeremy Kahn and Jonathan Vanian September 17, 2019
In the past few weeks, two important developments in artificial
intelligence research have gone largely unheralded. Both hint at just how earth
shaking – or at least industry-shattering – A.I.’s potential really is.
The findings aren’t about using A.I. for marginal gains, like better ad
targeting or for preventative maintenance. We’re talking about upending
business models.
The first item was news that a Hong Kong-based biotechnology startup, InSilico Medicine, working with researchers from the University of Toronto, had used machine learning to create a potential new drug to prevent tissue scarring.
The first item was news that a Hong Kong-based biotechnology startup, InSilico Medicine, working with researchers from the University of Toronto, had used machine learning to create a potential new drug to prevent tissue scarring.
What’s eye-popping here is the timescale: just 46 days from molecular
design to animal testing in mice. Considering that, on average, it takes more
than a decade and costs $350 million to $2.7 billion to bring a new drug to
market, depending on which study one believes, the potential impact on the
pharmaceutical industry is huge.
Sure, much of that time and the vast majority of the expense comes from human clinical trials, which only happen after testing in mice. But pre-clinical research can still take years and cost millions.
What’s also interesting here is that InSilico used reinforcement learning, an A.I. technique that hasn’t yet impacted business much. Reinforcement learning is notable because it doesn’t require the vast pools of structured, historical data that other A.I. methods do.
Here researchers used reinforcement learning to rapidly design 30,000 new molecules and then narrow them down to six, which were synthesized and further tested in the lab. Look for more A.I. breakthroughs like this to start upending the balance of power between biotech startups and Big Pharma.
The second piece of underappreciated news is that researchers at DeepMind, the London A.I. shop owned by Google parent Alphabet, and Imperial College London, successfully used a deep neural network to find more precise answers to quantum mechanical problems. That’s basically the physics that underpins all of chemistry.
To
date, the only element for which we can completely solve the underlying quantum
equations is the simplest, hydrogen, which has just one proton and one
electron. For every other element, we rely on approximations. Get better
approximations, and you potentially get new chemistry – and that means new
materials. Think room temperature superconductors or new kinds of batteries
that will vastly extend the range of electric vehicles.
DeepMind’s A.I.-powered approximations were in some cases almost an order of magnitude better than previous methods. If you’re Dow or DuPont, or Formosa Plastics or LG Chem, that sort of advantage could be worth billions.
https://fortune.com/2019/09/17/artificial-intelligence-insilico-deepmind/DeepMind’s A.I.-powered approximations were in some cases almost an order of magnitude better than previous methods. If you’re Dow or DuPont, or Formosa Plastics or LG Chem, that sort of advantage could be worth billions.
“I have wondered at times what the Ten Commandments would have
looked like if Moses had run them through the US Congress.”
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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