Monday 21 October 2019

Adjusting to a Slowing China. Fiat Money.


Baltic Dry Index. 1855 -06 Brent Crude 59.24 Spot Gold 1490

Never ending Brexit now October 31, maybe. 10 days away.
Trump’s Nuclear China Tariffs Now In Effect.
The USA v EU trade war starts October 18. Underway.

The Royal Navy victory at the Battle of Trafalgar 21 October 1805. Admiral Horatio Nelson defeated a combined French and Spanish fleet, ending Napoleon’s vision of invading Great Britain.  Nelson was shot and killed during battle.

Our global markets, this morning, are nervously reacting to the weekend’s news. A UK parliament vote on the Brexit deal didn’t happen forcing Britain to request another exit extension. While the EUSSR will almost certainly grant it, they will likely show their displeasure by dragging their feet.

More figures out of China show their economy continuing to cool. Far from buying 50 billion of US farm products as President Trump bragged on Friday October 11, China still seems to be buying Brazilian soybeans. With the US soybean harvest underway, that will become an increasing problem in the trade deal talks.

Finally, violent global anarchy seems to be breaking out and spreading. Spontaneous, or something more sinister?

Happy anniversary of Black Monday 1987.

Asian shares edge higher, pound stumbles on Brexit drama

October 21, 2019 / 1:51 AM
TOKYO (Reuters) - Asian stocks edged higher on Monday as Chinese shares reversed early losses due to hopes for progress in resolving the U.S.-China trade war and expectations for greater investment inflows into Hong Kong.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.19%. Chinese shares .CSI300 rose 0.13%, while Japan's Nikkei .N225 rose 0.28%. 

The pound slipped from a five-month high against the dollar and the euro after the British parliament forced Prime Minister Boris Johnson to seek a delay to an Oct. 31 deadline for Britain’s departure from the bloc.

The vote for an extension dealt a blow to optimism that a deal agreed last week would ensure Brexit happens with little economic disruption.

Oil futures fell as lingering economic growth concerns and excess supplies of crude prompted speculators to trim their long positions.

Chinese vice premier Liu He said on Friday that China will work with the United States to address each other’s concerns, and that stopping the trade war would be good for both sides and the world.

Shares in Hong Kong also got a lift after Chinese bourses revised rules to allow mainland investors to buy Hong Kong-listed dual-class shares for the first time.

“We’ve had some positive news from Liu, and allowing Chinese investors direct access to dual-listed Hong Kong shares is a another positive,” said Sean Darby, global equity strategist at Jefferies in Hong Kong.

“There is still a lot of money on the sidelines, and there are only eight or nine weeks left to put that money to work before we end the year. I expect markets to remain bid.”

U.S. stock futures ESc1 rose 0.27% in Asia as investors brace for high-profile earnings this week from Microsoft Corp (MSFT.O), Amazon.com (AMZN.O) and others.

The S&P 500 fell 0.4% on Friday partly due to worries about fallout from the U.S.-China trade war.
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China's home price growth flatlines in September as fewer cities report gains

October 21, 2019 / 4:08 AM
BEIJING (Reuters) - New home prices in China grew at a steady pace in September, with fewer cities reporting price gains, a relief for policymakers who remain wary of high debt and bubble risk and are refraining from stimulating the sector as the economy cools.

The property sector has held up as one of the few bright spots in the world’s second-largest economy with other parts hit as factories struggle to land new orders from abroad amid Beijing’s bruising trade war with the United States. 

Average new home prices in China’s 70 major cities rose 0.5% in September from the previous month, unchanged from the pace of growth in August, Reuters calculated based on National Bureau of Statistics (NBS) data on Monday.

On a year-on-year basis, home prices in September rose 8.4%, slowing from an 8.8% gain in August, and the slowest since September last year.

Chinese regulators have refrained from stimulating the property sector as rapidly-growing household debt and rising home prices have deepened fears about a sudden market correction and concerns over housing affordability.

Property prices increased for the 53rd straight month. Most of the 70 cities surveyed by the NBS still reported monthly price increases for new homes in September, though the number was down to 53 from 55 in August.

The government has clamped down on speculative investment in the housing market since 2016 to prevent a sharp correction as prices soared. But Beijing has been careful to tread its policy line to defuse risk without triggering a market collapse.
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After trade talks in U.S., China ramps up Brazilian soy purchases

October 18, 2019 / 11:57 AM
CHICAGO/BEIJING (Reuters) - Chinese importers have been busy booking fresh purchases of soybeans from Brazil this week, despite the White House announcement that China had agreed to buy up to $50 billion (38.6 billion pounds) of U.S. farm products annually during trade talks last week.

The purchases from Brazil, rather than the United States, show that Chinese buying has been driven more by price than policy since last week’s preliminary trade agreement that U.S. President Donald Trump hopes will be signed next month. 

Anticipation that Chinese buyers would return to the U.S. market to make big purchases in the wake of the deal drove benchmark U.S. soy prices Sv1 last Friday to their highest levels since the start of the trade war more than 15 months ago.

The rally in U.S. prices last week, however, made Brazilian soy more of a bargain for Chinese buyers. Brazilian soy is even more appealing to commercial importers because a 25% duty on U.S. shipments remains in effect and Beijing has not awarded the non-state-owned firms any new tariff waivers.

Since Monday, two traders said, China has booked at least eight boatloads, or 480,000 tonnes worth $173 million, of Brazilian soybeans. While Brazil is China’s largest soybean supplier, large purchases from South America are unusual at this time of year with the U.S. harvest coming in.

Benchmark U.S. prices Sv1 posted their first weekly decline in three weeks as Chinese buying failed to materialise in the U.S. market.

Trump said on Twitter on Sunday that China has already begun making U.S. agricultural purchases. But three U.S. soybean exporters said there have been no U.S. sales to China since last week’s talks in Washington, and none have been confirmed by the U.S. Department of Agriculture.
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In other news, a big change is coming to power generation, according to the International Energy Agency. Well maybe, but there’s still a big problem in battery storage technology that’s still to be solved.

Global renewable power capacity to rise by 50% in five years - IEA

October 21, 2019 / 5:29 AM
London, Reuters - Global renewable energy capacity is set to rise by 50% in five years’ time, driven by solar photovoltaic (PV) installations on homes, buildings and industry, according to the International Energy Agency (IEA).

Total renewable-based power capacity will rise by 1.2 terawatts (TW) by 2024 from 2.5 TW last year, equivalent to the total installed current power capacity of the United States. 

Solar PV will account for nearly 60% of this growth and onshore wind 25%, the IEA’s annual report on global renewables showed.

The share of renewables in power generation is expected to rise to 30% in 2024 from 26% today.

Falling technology costs and more effective government policies have helped to drive the higher forecasts for renewable capacity deployment since last year’s report, the IEA said.

“Renewables are already the world’s second largest source of electricity, but their deployment still needs to accelerate if we are to achieve long-term climate, air quality and energy access goals,” said Fatih Birol, the IEA’s executive director.

“As costs continue to fall, we have a growing incentive to ramp up the deployment of solar PV,” he added.

The cost of generating electricity from distributed solar PV (PV systems on homes, commercial buildings and industry) is already below retail electricity prices in most countries.

Solar PV generation costs are expected to decline a further 15% to 35% by 2024, making the technology more attractive for adoption, the IEA said.

However, policy and tariff reforms are needed to ensure solar PV growth is sustainable and avoid disruption to electricity markets and higher energy costs, the report said.

The Arizona Battery Explosion Is Changing Conventional Wisdom on Safety

Six months later, GTM gets an exclusive update from APS and Fluence on an event that’s forcing a new look at grid battery engineering.
Julian Spector

It's been nearly six months since an explosion ripped through a grid battery near Phoenix and upended the industry's understanding of the technology's safety.

The McMicken conflagration injured first responders and marred the safety record of the U.S. energy storage industry. The ability to store wind and solar electricity is crucial to the continued growth of clean energy, but the fire showed the risks of battery storage, even when handled by highly experienced professionals.
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Finally, why is anarchy breaking out all around the world?  Why now? Is it the increasing failure of the 48 year old, Great Nixonian Error of fiat money? On communist money, there is no check on issuing money left in the system. Those closest to the central banksters get bailed out and rich, those outside the central banks cronies go to the wall. 

A hollowed out economy becomes a financialised economy first, and an everything else economy second. Vast income inequality thrives as central banks only accommodate the financialised first economy.

The benefits of fiat money are all front loaded and long ago dissipated in louche lifestyle, never ending wars, and dragging future consumption forward into the now. Is the free lunch ending, as the consequences of fiat money come home to roost?

Protests around the world: violent clashes hit Chile, Hong Kong, Lebanon and Barcelona

Here's the latest in each of the country's affected by unrest
October 19, 2019
Protests have broken out in several countries across the world, with citizens unhappy for different reasons. Some are protesting over economic conditions, others are protesting over tax hikes and elsewhere protests are breaking out over controversial laws or prison sentences imposed by governments.

Here's the latest in each of the country's affected by violent clashes and unrest.

Chile

Chile's president declared a state of emergency in Santiago on Friday night and gave the military responsibility for security after a day of violent protests over increases in the price of metro tickets.
"I have declared a state of emergency and, to that end, I have appointed Major General Javier Iturriaga del Campo as head of national defense, in accordance with the provisions of our state of emergency legislation," President Sebastian Pinera said.

Throughout Friday, protesters clashed with riot police in several parts of the city and the subway system was shut after attacks on several stations.

Violent clashes escalated as night fell, and the ENEL power company building and a Banco Chile branch, both in the city center, were set on fire and several metro stations hit with Molotov cocktails.

The unrest started as a fare-dodging protest against the hike in metro ticket prices, which increased from 800 to 830 peso ($1.17) for peak hour travel, following a 20 peso rise in January.

Attacks on metro stations forced the closure of the entire subway system, which is the key form of public transport in the congested and polluted capital, carrying three million passengers a day.

"The entire network is closed due to riots and destruction that prevent the minimum security conditions for passengers and workers," the metro operator said on Twitter, after attacks against nearly all the 164 stations where many gates and turnstiles were destroyed.

The Santiago Metro, at 140 kilometres (90 miles) the largest and most modern in South America, is expected to remain closed this weekend and could reopen gradually next week.

Hong Kong

Hong Kong leader Carrie Lam took to the airwaves on Saturday to back the use of force by police ahead of a major anti-government march planned this weekend in the Chinese-ruled city, which has been battered by months of violent protests.

Following a week of relative calm, Sunday's march will test the strength of the pro-democracy movement. Campaigners vowed it would go ahead despite police ruling the rally illegal.

In the past, thousands of people have defied police and staged mass rallies without permission, often peaceful at the start but becoming violent at night.

The trigger for unrest in Hong Kong had been a now-withdrawn proposal to allow extradition to mainland China, as well as Taiwan and Macau. The case of a Hong Kong man accused of murdering his girlfriend in Taiwan before fleeing back to the city was held up as an example of why it was needed.
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A permanent Governor of the Bank of England would be one of the greatest men in England. He would be a little 'monarch' in the City; he would be far greater than the 'Lord Mayor.' He would be the personal embodiment of the Bank of England; he would be constantly clothed with an almost indefinite prestige. Everybody in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.

Walter Bagehot. Lombard Street, 1873.

Crooks and Scoundrels Corner.

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

Today, get ready for more negative interest rates, even though they don’t help, but destroy what little is left of “capitalism.” Coming next, the magic money tree, aka Modern Monetary Theory.

Exclusive: Kuroda says BOJ can 'certainly' cut short-term rates if it were to ease

October 20, 2019 / 1:24 AM
WASHINGTON (Reuters) - The Bank of Japan will “certainly” reduce short- to medium-term interest rates if it needed to ease monetary policy, Governor Haruhiko Kuroda said, suggesting that deepening negative rates will be the primary tool to fight heightening overseas risks.

Kuroda also said the BOJ already has a flexible framework that allows it to accelerate purchases of exchange-traded funds (ETF) if markets become volatile, signalling its readiness to moderate stock price falls that could hurt business sentiment. 

“On the whole, the world economic outlook ... has become less buoyant. And the timing of (pick-up) of world economic growth has been somewhat delayed,” Kuroda told Reuters, adding that risks continue to be “fairly high.”

“If we need further easing of monetary conditions, we would certainly reduce short- to medium-term interest rates. But we don’t want to reduce super-long interest rates,” he said on Saturday after attending the International Monetary Fund (IMF) and World Bank meetings.

The remarks underscore the BOJ’s concern over the pain the bitter U.S.-China trade war and slumping global demand are inflicting on the export-reliant economy, which could prod it to ramp up monetary stimulus as early as this month.

They are also the strongest signal to date from Kuroda that if the BOJ were to ease, the most likely step would be to push its short-term rate target deeper into negative territory.

Reducing short- and medium-term rates would have a “positive” impact on the economy, while excessive cuts in super- long yields could hurt consumer sentiment by eroding investment returns for pension funds and life insurers, he said.

Under a policy dubbed yield curve control (YCC), the BOJ guides short-term rates at -0.1% and 10-year bond yields around 0% in an effort to achieve its elusive 2% inflation target. It also buys government bonds and risky assets such as ETFs.

MORE EASING STILL EFFECTIVE

Markets are rife with speculation the BOJ could ease at its Oct. 30-31 meeting, after it signalled last month the chance of imminent action by warning of escalating overseas risks.

When asked whether overseas risks remain high enough to warrant easing at that meeting, Kuroda said it was “a bit difficult to say definitely.”

While U.S.-China trade talks have made some progress, the conflict may continue and the fate of Britain’s exit from the European Union remains uncertain, he said.

Such overseas risks and cuts in the International Monetary Funds’ global growth forecast would affect the BOJ’s projections on Japan’s economic prospects, he added.

While repeating that the BOJ won’t hesitate to ease if the economy’s momentum towards achieving its 2% inflation target is weakened, Kuroda said he had no pre-set idea on when to act.

“We have no predetermined policy decisions. It all depends on economic data,” he said, suggesting an action this month was hardly a done deal. “We have to carefully watch, analyse global and domestic economic situations.”

The BOJ has said it has four tools to ease - deepening negative rates, a cut in its long-term yield target, an increase in risky asset buying and an acceleration in money printing.

While Kuroda has said deeper negative rates is among key options, analysts have warned the move could backfire by pushing regional banks into financial trouble and hurting consumer mood.
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“What me worry?”

Mad Magazine.

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?

Double layer of graphene helps to control spin currents

New type of transistor one step closer

Date: October 17, 2019

Source: University of Groningen

Summary: In order to make transistors that operate using the spin of electrons, rather than their charge, it is necessary to find a way of switching spin currents on and off. Furthermore, the lifetime of the spins should at least be equal to the time taken for these electrons to travel through a circuit. Scientists have now taken an important step forward by creating a device that meets both of these requirements.

In order to make transistors that operate using the spin of electrons, rather than their charge, it is necessary to find a way of switching spin currents on and off. Furthermore, the lifetime of the spins should at least be equal to the time taken for these electrons to travel through a circuit. University of Groningen scientists have now taken an important step forward by creating a device that meets both of these requirements, based on a double layer of graphene on top of a layer of tungsten disulfide. 
Their results have been published on 16 October in the journal Physical Review B.

Graphene, a two-dimensional form of carbon, is an excellent conductor of electron spins. However, it is difficult to manipulate spin currents in this material. Spin is a quantum mechanical property of electrons, which makes them behave like tiny magnets. The Physics of Nanodevices group at the University of Groningen, led by Professor Bart van Wees, is working on this problem. They have previously shown that it is possible to control spin currents if the graphene is placed on top of a layer of tungsten disulphide (another 2D material).

New technique

'However, this approach reduces the lifetime of the spins', explains Siddhartha Omar, a postdoc in the Van Wees group. Tungsten is a metal, and its atoms influence the electrons passing through the graphene, dissipating the spin currents. This led Omar to use a double layer of graphene on the tungsten disulphide, based on the theory that electrons passing through the upper layer should 'feel' less of the metal atoms' influence.

Omar also used another new technique, in which two different types of spin current are passed through the graphene. Spin is a magnetic moment that has a given direction. In normal materials, the spins are not aligned. However, the magnetic moment of spin currents -- like that of magnets -- has a preferential alignment. Relative to the material through which the electrons are passing, their spins can either have an in-plane orientation or an out-of-plane orientation.

Energy level

'We found that, as the electrons pass through the outer graphene layer, the in-plane spins are dissipated very quickly -- in mere picoseconds. However, the lifetime of the out-of-plane spins is about one hundred times longer.' This means that, even in the presence of tungsten disulphide, one component of spin currents (spins with an out-of-plane orientation) can travel far enough to be used in devices such as transistors.

----'Unfortunately, certain technical limitations of the substrate on which we built these devices prevent us from creating electric fields that are strong enough to produce this gating effect', says Omar. 'However, we have shown that it is possible to send spin currents through a heterostructure made of graphene and tungsten disulphide. That is an important step towards the creation of a spin transistor.'

Why did I take up stealing? To live better, to own things I couldn't afford, to acquire this good taste that you now enjoy and which I should be very reluctant to give up.

Cary Grant. To Catch A Thief.

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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