Baltic Dry Index. 1801 +16 Brent
Crude 61.90 Spot Gold 1504
Never ending Brexit now October 31, maybe (not.) 3 days
away?
Trump’s Nuclear China Tariffs Now in effect.
The USA v EU trade war started October 18. Now in effect.
This is the way things are,
and the Game has been so successful that, like everything, it will get more and
more successful until it stops being successful.
George
Goodman, aka Adam Smith, The Money Game. 1968.
We are in a critical week for most markets. The big disruptor would be the Fed surprising
everyone and not cutting their key interest rate on Wednesday. Since that would
likely set off a stock market rout and they know it, the market takes for
granted that they will cut their interest rate again, boosting President Trump’s
re-election chances in the process.
The week also features a Brexit extension, the peak of US
corporate earnings announcements, more details of US v China trade deal “lite,”
part one, and the end of the first month of the final quarter of 2019.
It ought to be a dress up week for US stocks unless the
US Fed switches sides on President Trump.
Asian stocks rise ahead of a busy week for markets
By Marketwatch
and Associated
Press
Published: Oct 27,
2019 11:28 p.m. ET
Asian markets kicked off a busy week by gaining in early trading Monday, after comments Friday that the U.S. and China were close to reaching a “phase one” trade deal.
The U.S. Trade Representative’s office said that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin spoke with Chinese Vice Premier Liu He on Friday and will speak again soon, and that the two sides are close to finalizing parts of a deal.
U.S. officials have said they hope to sign a deal in mid-November. China is reportedly seeking a pause in new tariffs; the next round of U.S. tariff hikes against Chinese goods is set to take effect Dec. 15.
“It’s been a tranquil start to a potentially eventful week,” Stephen Innes, Asia-Pacific market strategist for AxiTrader, wrote in a note, pointing out that the coming week includes potentially market-moving events such as meetings by the U.S. Federal Reserve and the Bank of Japan, Brexit developments, and the busiest week of Wall Street’s earnings season.
“Behind [recent] doom and gloom, however, short-term investors are smelling a reversal in risk sentiment as even a mini U.S.-China trade deal together with the removal of the no-deal Brexit risk could trigger a decisive turn in sentiment,” he wrote.
More
Why would the Fed cut interest rates a 3rd time in a row even as stocks near records? Investors may soon find out
By Mark
DeCambre Published: Oct 28, 2019
12:36 a.m. ET
Is three the magic number for Wall Street? We’ll soon find out. Only a
few think that Jerome Powell & Co. will not cut interest rates next week
for a third time in as many gatherings of the rate-setting
Federal Open Market
Committee.
Market-based probabilities imply a 93.5% chance of a
quarter-of-a-percentage-point rate reduction to a 1.50%-1.75% range from the
current 1.75%-2%, following the two-day Oct. 29-30 meeting, according to CME
Group based on federal-funds futures.
“It’s important to the market that the Fed cuts rates next week because
it is so widely expected – e.g. over 90% probability of a rate cut is implied
by the Fed-funds futures at this point,” Chris Zaccarelli, Chief Investment Officer
at Independent Advisor Alliance, told MarketWatch in emailed comments on
Friday.
---- Experts say that a third cut matches the definition of a mid-cycle shift and could be justified as further insurance as a recession that appears to be emerging in Europe is creeping up on the U.S.
Keith Lerner, chief market strategist at SunTrust Advisory Services,
pointed to a trio of rate cuts in 1995 and 1998 as parallels for the current
monetary tactic.
“Actually, both 1995 (which Powell has often talked about in a favorable
light) and 1998 both saw three 25 basis point rate cuts and then the Fed
stopped; these are both largely looked at as mid-cycle adjustments or for
insurance reasons, especially 1995,” the SunTrust strategist said.
Lerner added: “To your point about the division within the FOMC, Powell
is likely not going to want to put the Fed in a box.”
“I suspect he will discuss that the Fed has cut rates to support the
economy and now the Fed will watch the data and he may focus on the term ‘data
dependent.’ Monetary policy works with a lag and some of the recent cuts are
still working their way into the economy,” he explained.
Still, a failure to deliver a cut won’t be met kindly by investors.
More
Brexit: EU considers flexible three-month extension
7 hours ago
The EU is due to meet on Monday to consider a Brexit extension until 31
January, with an option for the UK to leave earlier if a deal is ratified.
A draft text to be shown to ambassadors from the 27 member countries
includes multiple possible dates for Brexit: 30 November, 31 December or 31
January.
There will also be a commitment that the Withdrawal Agreement cannot be
renegotiated in future.
Unless the extension is approved, the UK will leave the EU on Thursday.
Under the proposed legal decision to extend the Brexit process, the EU would also retain the right to meet without the UK to consider future business during the extension.
The EU has so far agreed to an extension after Boris Johnson was forced by Parliament to request it, but has not specified the new deadline date.
If EU members approve the request for a three-month extension, Mr Johnson would have to accept it, under the terms of the law passed by MPs to prevent a no-deal Brexit.
Any extension to the Article 50 process is technically flexible, meaning that it can come to an end as soon as a deal is approved by both parties.
But by writing this flexibility into the legal decision to delay Brexit, EU leaders aim to underline their neutrality from the political debate in the UK.
A short delay could be seen as risking a no-deal Brexit by those who support remaining in the EU, while a long delay could be seen by Brexit supporters as attempting to prevent the UK from leaving.
As part of the extension, the EU is expected to say the UK has "an obligation to suggest a candidate" to represent it on the EU Commission.
Mr Johnson has previously said "under no circumstances" will he nominate anyone to take over from Julian King when the new commission takes office on 1 November, arguing that officials need to focus on the UK's future outside the EU.
More
In other news, global instability is on the rise. The
start of the breakdown of the Great Nixonian Error of fiat money, communist
money? Who knows?
But global instability, and fiat money, with no intrinsic
value, and a financial crisis in America requiring the Fed to be monetising via
repos of 120 billion a day, is a combination of impending disaster.
Washington crowd boos Trump at World Series, chants ‘Lock him up!’
By Mike
Murphy Published: Oct 27, 2019 11:41
p.m. ET
That was likely not the reaction President Donald Trump expected when he
attended Sunday night’s World Series game in Washington.
Audible boos rained down on the president after the third inning, when
the outfield video screen showed Trump sitting in a luxury box. Immediately
before, the crowd had been cheering video of U.S. servicemembers. The jeers
were followed with a chant of “Lock him up!”
Other Trump critics displayed signs behind
home plate — directly in line with TV cameras — that read “Veterans for
impeachment.”
Trump, along with first lady Melania Trump and a group of lawmakers including Sen. Lindsey Graham, attended Game 5 of the World Series, pitting the Washington Nationals against the Houston Astros.
It should have been a triumphant moment for Trump, who earlier Sunday announced the death of Islamic State leader Abu Bakr al-Baghdadi in a U.S. military raid. Some analysts said the raid could be a political boost for Trump, who is embattled in impeachment proceedings.
More.
East German state Thuringia faces political stalemate after election
Hard-left Die Linke the likely winner as
far-right AfD increases its share of ballots
Berlin yesterday
The east German state of Thuringia found
itself facing a political stalemate on Sunday after elections failed to produce
a majority for any discernible governing coalition, in a result that highlights
how fragmented Germany’s political landscape has become.
According to projections by Germany’s MDR
news channel, the elections were won by Die Linke, a hard-left party with its
roots in the East German communist party, which garnered 31 per cent of the
vote. But despite its strong performance it is unclear how Die Linke will be
able to cobble together a functioning coalition government.
The party currently rules Thuringia in an
alliance with the left-of-centre Social Democrats and the Greens. But after
Sunday’s election, the so-called red-red-green coalition will no longer command
a majority in the regional parliament.
The SPD won just 8.2 per cent of the vote,
the Greens 5.1 per cent. Angela Merkel’s Christian Democratic Union, which came
third, with 21.6 per cent of the vote, has refused to co-operate with Die
Linke. The liberal Free Democrats (FDP) were on 5 per cent.
The big winner of the election was the
Alternative for Germany, a far-right, anti-immigration party, which saw its
share of the vote increase from 10.6 per cent in the last Thuringian elections
in 2014 to 23.8 per cent. That represents a big win for the party’s leader in
Thuringia, Björn Höcke, a nationalist firebrand and former history teacher who
is one of Germany’s most controversial politicians.
More
Argentina's Peronists sweep back into power as Macri ousted
October 27, 2019 /
9:05 AM
BUENOS AIRES
(Reuters) - Argentina’s Peronists swept back into power on Sunday, ousting
conservative president Mauricio Macri in an election result that shifts Latin
America’s No. 3 economy firmly back toward the left after it was battered by
economic crisis.
Peronist Alberto Fernandez had 47.79% of the vote, ahead of Macri’s
40.71%, with more than 90% of ballots counted, putting the center-left
challenger over the 45% threshold to avoid a runoff and win the election
outright.
Macri, speaking at his election party, conceded the race and
congratulated Fernandez. He said he had invited Fernandez to the presidential
palace on Monday to discuss an orderly transition, seen as essential for
Argentina’s shaky economy and markets.
More
Hong Kong enters recession as protests show no sign of relenting
October 28, 2019 /
3:24 AM
HONG KONG
(Reuters) - Hong Kong has fallen into recession, hit by more than five months
of anti-government protests that show no signs of relenting, and is unlikely to
achieve annual economic growth this year, the city’s Financial Secretary said.
“The blow to our economy is comprehensive,” Paul Chan said in a blog
post on Sunday, adding that a preliminary estimate for third-quarter GDP on
Thursday would show two successive quarters of contraction - the technical
definition of a recession.
He also said it would be “extremely difficult” to achieve the
government’s pre-protest forecast of 0-1 % annual economic growth.
Protests in the former British colony have reached their 21st week. On
Sunday, black-clad and masked demonstrators set fire to shops and hurled petrol
bombs at police who responded with tear gas, water cannon and rubber bullets.
More
IMF stresses urgency of reforms in Lebanon to restore economic stability
October 28, 2019
/ 5:22 AM
DUBAI (Reuters)
- The International Monetary Fund (IMF) said it is assessing an emergency
reform package announced by Lebanon’s government last week and stressed reforms
should be implemented urgently given the country’s high debt levels and fiscal
deficits.
Lebanon has been swept by over 10 days of protests against a political
class accused of corruption, mismanagement of state finances and pushing the
country toward an economic collapse unseen since the 1975-90 civil war.
Last week the government unveiled a set of measures aimed partly at
appeasing demonstrators and convincing foreign donors it can slash next year’s
budget deficit.
But the emergency reform package failed to persuade demonstrators to
leave the streets or investors to halt a plunge in its bonds.
---- Lebanon has one of the world’s highest levels of government debt as a share of economic output. The IMF has forecast a fiscal deficit of 9.8% of GDP this year and 11.5% next year.
Prime Minister Saad al-Hariri said the emergency measures introduced
last week – which included the symbolic halving of the salaries of ministers
and lawmakers – might not meet the protesters’ demands but were a start towards
achieving some of them.
More
“Beyond
this, the problem is universal. It is that governments are now held responsible
for the welfare of the people. The aspirations of the people can outrun their
ability to pay for them, and nobody has yet found a way to create answers to
the aspirations out of thin air.”
George
Goodman, aka Adam Smith, The Money Game. 1968.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, China again. Later this week we are
expecting an announcement that the USA v China trade deal “lite” part one, is
ready for signing at the APEC meeting in Chile next month. So, who in the “deep
state” is trying to derail it? Why?
China’s financial threat to the 2020 US election
FBI wants to prevent financial warfare and a disinformation campaign that could trigger a market collapse to influence voters
By Bill Gertz October 25, 2019
The Federal Bureau of Investigation is expanding efforts to counter
foreign election meddling by targeting China, a state engaged in aggressive
operations aimed at blocking President Donald Trump’s 2020 re-election.
“Make no mistake, China is aggressively pursuing foreign influence
operations,” said Nikki Floris, deputy assistant director for the FBI’s
counter-intelligence section.
“They use economic levers, [and] their end goal is really to unseat us
as a global economic superpower.”
Floris heads a new FBI unit called the Foreign Influence Task Force. She
testified at a congressional hearing on October 23 that China, along with
Russia, Iran and other adversaries are working to sway the outcome of the 2020
presidential election.
Both China and Russia pose what the FBI counterspy called pervasive and
persistent influence threats. “It’s not just based on the electoral cycle,
therefore. [Their] influence operations are essentially always present,” Floris
said.
A day after the House testimony, US Vice President Mike Pence punctuated
the warning he made a year ago about Beijing using economic and strategic means
to shape public opinion and influence the upcoming election. “China wants a
different American president,” Pence said.
The FBI and other agencies believe the main foreign threat to the 2020
American presidential election will come in the form of cyberattacks and social
media disinformation and influence operations – similar to those used by the
Russians in 2016. That program involved hacking into sensitive emails and
releasing them to the public as well as using Facebook to organize political
operations and sow discord.
A more likely election threat from China, however, would involve Chinese financial warfare aimed at triggering a sharp downturn in the US financial markets in the weeks before November 2020.
Just as few foresaw the 2008 economic crash that crippled then-US Senator John McCain’s bid for the White House, current efforts on election security are missing the potential danger of a Chinese foreign covert operation to engineer an economic crisis triggered by a sharp fall in the US stock market.
The vulnerability of stock markets to such manipulation was highlighted in 2013 when the Associated Press Twitter account was hacked and a bogus tweet from AP falsely declared an explosion had injured then-President Barack Obama.
----US intelligence assessments of Chinese election meddling remain secret over concerns disclosing the activities will prompt China to change tactics and make future detection more difficult.
Few signs of influence operations have been made public. One example was Beijing’s purchase of inserts in American newspapers in US farm states seeking to spread state-run Chinese propaganda designed to drum up anti-Trump sentiment over his use of tariffs.
Another was the leak and publication of an internal Chinese government directive, mentioned by Pence last year, urging Chinese propagandists to use all means to divide Americans politically.
The China strategy for financial warfare was disclosed 20 years ago in what is likely a blueprint for any covert action next year.
That blueprint was contained in the financial warfare section of the 1999 book Unrestricted Warfare by PLA colonels Qiao Liang and Wang Xiangsui. The authors stated that financial warfare will become a dominant form of warfare in the future, and will be a new “hyper-strategic weapon.”
“This is because financial war is easily manipulated and allows for concealed actions, and is also highly destructive,” they stated. The officers called the combination of conventional military power, cyberattacks, financial war and other irregular warfare “our real hand of cards.”
More
US lawmakers Schumer and Cotton repeat 'China threat' hysteria, badmouthing TikTok
By Wang Jiamei Source:Global Times
Published: 2019/10/27 15:33:40
Some paranoid politicians in Washington seem to have found another
target to vent their "China threat" hysteria on. This time, the
victim is the short video app TikTok, which is owned by Beijing-based
ByteDance.
US Senators Chuck Schumer and Tom Cotton last week formally requested US
intelligence agencies to "conduct an assessment of the national security
risks posed by TikTok and other China-based content platforms operating in the
US."
What's the beef? Simply put, TikTok is considered a potential
counter-intelligence threat for being too popular, with more than 110 million
downloads of the app in US.
But the allegations cited by the couple of US lawmakers are their wanton
accusations of the so-called national security risks, which are actually
untenable and groundless.
According to a statement issued by TikTok, the company is "not
influenced by any foreign government, including the Chinese government. TikTok
does not operate in China, nor do we have any intention of doing so in the
future ... Our data centers are located entirely outside of China, and none of
our data is subject to Chinese law."
As such, the delusional national security risks to US prove to be
nothing but the Senators' "China threat" paranoia, which has
apparently reached new heights.
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?
Tesla Unveils Latest Version of Solar Roof While Dodging Big Questions
In a significant strategic shift, Tesla will begin working with outside roofing companies.
Julian SpectorOctober 25, 2019
Three years in, Tesla is beginning to publicly acknowledge the difficulties involved in creating and scaling a solar roof tile.
The electric car company turned clean energy provider has tended to downplay or ignore the long history of failures and disappointments in the solar roof industry. In October 2016, Tesla pitched the tiles as an aethetically stunning tool for a renewably powered future.
CEO Elon Musk is still envisioning a better future, but he's now sharing more of the shortcomings Tesla has encountered in its product development so far. That started with revealing, in a quarterly earnings call this week, that the first two versions of the solar roof were not ready for the big time.
He promised to reveal the third generation the following afternoon. On the following afternoon, he tweeted that the unveiling would take place the next day at 2 p.m. "California time." The next day, at 2:30 Pacific, Musk followed through on his promise.
The third version of the solar roof reflected continued refinements rather than a clear transformation from the previous versions, which were never widely released.
Tesla engineers have increased the size and power density of each tile and reduced the number of parts by more than half. The designers also improved the edges of the roof, which Musk said previously required "artisanal" and time-consuming labor onsite.
Other aspects of the new product still remain fuzzy.
8-hour installation time?
The solar roof will cost less than the combined cost of your average roof plus solar panel installation, Musk said. That's the same promise he made when launching it the first time, three years ago."It’s been quite hard to get to this point," he noted. For one thing, he said, roofs have to last a long time, and the wiring has to be safe and not cause risk to the house (Tesla has recently run into troubles with installations catching fire). These observations reflect the challenges inherent to the task at hand, but it was new to hear Musk address the reasons for delayed product arrival.
In another shift, Musk said Tesla is open to working with roofers outside of his organization. A major risk for Tesla's solar roof was its go-it-alone mentality, which would force the company to stand up an entire roofing business internally, and compete against established roofing channels.
Tesla does not have roofing installation partners yet, but Musk said he's open to creating a "Tesla-certified installer" program, and enlisting outside roofers to help improve the installation process. That move could get the product to market more rapidly; it eliminates a potential labor bottleneck and leverages the sales capabilities of established companies. According to numbers through April, Tesla had installed just 31 roofs in California, the leading state for residential solar installations.
More
NOT even a
decade ago, everybody believed. Events did seem under control. Inflation would
creep, not gallop; the New Economics would fine-tune the economy; productivity
would increase; wars would be fought, but not by us—we were the mediators,
understanding but tough; problems would be articulated, and that articulation
was half the solution; we would begin upon the solutions. Kennedy rhetoric: let
us begin; let the word go forth; let us never negotiate from fear, nor fear to
negotiate; let anybody call upon us. Confident, ambitious, optimistic, even
naïve—the very best of the American tradition. Hail Columbia, happy land.
Then, one thing
and another, the John Philip Sousa music faded a bit. Could rational men make
events behave rationally? Maybe they couldn’t.
George Goodman, aka Adam
Smith, Supermoney, 1972
The monthly Coppock Indicators finished September
DJIA: 26,917 +57 Up. NASDAQ: 7,999 +62 Up. SP500: 2,977 +61 Up.
Another inconclusive month,
but all three moved up weakly. I would not rely on nor take such a weak buy
signal.
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