Fed to Markets: Drop Dead.

Baltic Dry Index. 1802 +01 Brent Crude 61.40 Spot Gold 1490

Never ending Brexit now January 31, or maybe sooner.

Trump’s Nuclear China Tariffs Now in effect.

The USA v EU trade war started October 18. Now in effect.

Ford to City: Drop Dead

In a speech before the National Press Club on October 29, 1975, President Gerald Ford denied the near-bankrupt New York City a federal bailout, prompting the New York Daily News to run the infamous "Ford to City: Drop Dead" headline the next day.

It is Fed Day big time. The Powell Fed is fully expected to cut its key interest rate later today by a quarter of one percent. Its so fully priced in to US stocks that passing on the cut would set off an earthquake across all markets. The Fed is not about to say: Fed to Markets: Drop Dead.

So, given that the Fed isn’t about to blow President Trump’s re-election campaign sky high, all of the focus will be on Chairman Powell’s remarks following the Fed’s interest rate cut.

How many more rate cuts to come? Why is the Fed monetising via overnight repos? Why at a massive rate of 120 billion a day? If there’s a China trade deal leading to tariff cuts, will the Fed have to tighten once again.

Only joking, that last question won’t be asked or addressed. But the answer is probably yes, leaving some 15 trillion of global, mostly European negative interest rate T. bonds, submerging at some point ahead.

What won’t be addressed either, at least not honestly, will be the Fed’s assessment of the chance of a new global recession starting, or worse already underway. Expect Chairman Powell to be economical with the truth.

Below, nervous markets watch and wait on the wisdom or otherwise of Jay.

Protectionism will do little to create jobs and if foreigners retaliate, we will surely lose jobs.

Alan Greenspan

Asian shares slip before Fed decision on trade deal worries

October 30, 2019 / 1:01 AM

TOKYO (Reuters) - Asian share markets slipped on Wednesday, as the prospect of a rate cut by the Federal Reserve was countered by worries a Sino-U.S. first-stage trade deal could be delayed.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.33% from Tuesday's three-month high while Japan's Nikkei .N225 lost 0.35% after hitting a one-year high the previous day. 

On Wall Street overnight, the S&P 500 index touched a record intraday high, led by strong earnings from drug manufacturers such as Merck (MRK.N) and Pfizer (PFE.N), before ending down 0.08%.

Markets had erased gains after Reuters reported a U.S. administration official said an interim trade agreement between Washington and Beijing might not be completed in time for signing in Chile next month as expected.

A disappointing profit report from Google parent Alphabet (GOOGL.O) kept the technology-rich Nasdaq in the red, with the Nasdaq Composite .IXIC falling 0.59%.

MSCI’s gauge of stocks across the globe .MIWD00000PUS slipped 0.06% in Asia on Wednesday from a 21-month high reached on Tuesday.

Since U.S. President Donald Trump outlined what he called the first phase of a trade deal with China earlier this month, investors have bet on a trade truce between the two countries, driving global equities higher.

Expectations of further U.S. monetary policy loosening also emboldened investors, with a reduction of 0.25 percentage point later in the day almost seen as a done deal.

“With a cut today completely priced in, markets are looking to the Fed’s stance on its policy outlook,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

More

https://uk.reuters.com/article/uk-global-markets/asian-shares-slip-before-fed-decision-on-trade-deal-worries-idUKKBN1X901G

A bear-market catalyst is lying in wait for stocks, warns UBS

By Barbara Kollmeyer  Published: Oct 29, 2019 7:09 a.m. ET

f you’d listened to some statisticians you could have seen Monday’s bullish session, and a fresh record for the S&P 500 SPX, +0.56%, coming from a mile off.

Aside from historic patterns to go by, Wall Street had encouraging trade chatter and earnings on its side. But Tuesday is looking tougher as investors face up to disappointing results from Alphabet, Google’s parent company, while Apple AAPL, +1.00% and Facebook FB, +0.80% report earnings on Wednesday. 

We’re also a day away from a potential interest-rate cut from the Federal Reserve. Expectations of this have been credited by some for helping stocks rebuild strength since October’s rocky start.

But our call of the day from strategists at UBS warns a big threat is lying in wait for equities: earnings expectations.

“Every bear market of the past 50 years has witnessed an actual decline in S&P 500 forward earnings,” says lead strategist Francois Trahan, who lays out a deteriorating landscape in a note to clients.

He says the consensus year-on-year growth rate in S&P 500 forward earnings has dropped to a mere 1% from a peak of 23% in September 2018. And leading economic indicators, which forecast future activity and can offer clues on future earnings trends, also hint at more weakness ahead, as this chart shows:

----“Ultimately, the most vulnerable macro backdrop for equities occurs when forward earnings growth turns negative as LEIs are trending downward (pushing [price-to-earnings] lower),” says Trahan, who offers another ominous chart:

More

https://www.marketwatch.com/story/a-bear-market-catalyst-is-lying-in-wait-for-stocks-warns-ubs-2019-10-29?mod=mw_latestnews

‘We are all screwed!’ The U.S. is like a banana republic and a depression could be on the way, warns money manager

By Shawn Langlois  Published: Oct 28, 2019 2:54 p.m. ET

That’s Michael Pento of Pento Portfolio Strategies giving his timely Halloween-week assessment of the current climate in an interview on USAWatchdog.com.

At this point, if the Federal Reserve stops juicing the economy, Pento argues, we could be looking at another depression.

“That’s why the Fed’s panicking,” he said. “If anybody still believes they’re omniscient or omnipotent or know their butt from their elbow, that’s over.”

The Federal Reserve is expected to lower its benchmark interest rate this week by 25 basis points, the third such cut in three months. According to the minutes from the Sept. 17-18 meeting, “downside risks had become more pronounced since July,” yet “several participants” wanted the Fed to provide more clarity on when the response to those risks, including “trade uncertainty,” would end.

Pento, whose holdings lean heavily on Treasurys TMUBMUSD10Y, -0.72% and gold GC00, -0.42%  , expects the interest-rate cuts to keep coming in the face of record household and corporate debt.

“It’s not that it’s QE. It’s QE on steroids,” he said. “Everybody knows that this QE is permanent just like any banana republic would do, or has done.”

With all the imbalances in the system, Pento says the Fed is well aware the next recession won’t be a mild one, so it keeps pumping to avoid that fate.

“The plunge in the stock market would be huge and from a much higher level,” he said. “Back in the Great Recession, unemployment claims spiked. We had millions of people laid off, and the same thing would happen today only... much worse.”

More

https://www.marketwatch.com/story/qe-on-steroids-could-lead-to-a-depression-warns-money-manager-who-compares-the-us-to-a-banana-republic-2019-10-28?mod=home-page

Opinion: Printing money isn’t a universal cure-all in recession, Roubini says

By Nouriel Roubini  Published: Oct 28, 2019 3:40 p.m. ET

Monetizing the debt won’t help get us out of a permanent negative supply shock

Helicopter money may be coming, even if it’s not the best remedy. 

NEW YORK (Project Syndicate) — A cloud of gloom hovered over the International Monetary Fund’s annual meeting this month. With the global economy experiencing a synchronized slowdown, any number of tail risks could bring on an outright recession.

Among other things, investors and economic policy makers must worry about a renewed escalation in the Sino-American trade and technology war. A military conflict between the United States and Iran would be felt globally. The same could be true of “hard” Brexit by the United Kingdom or a collision between the IMF and Argentina’s incoming Peronist government.

Still, some of these risks could become less likely over time.

----Meanwhile, financial markets have been reacting positively to the reduction of global tail risks and a further easing of monetary policy by major central banks, including the Federal Reserve, the European Central Bank, and the People’s Bank of China.

A recession is coming, some time

Yet it is still only a matter of time before some shock triggers a new recession, possibly followed by a financial crisis, owing to the large build-up of public and private debt globally.

What will policy makers do when that happens? One increasingly popular view is that they will find themselves low on ammunition. Budget deficits and public debts are already high around the world, and monetary policy is reaching its limits. Japan, the eurozone, and a few other smaller advanced economies already have negative policy rates, and are still conducting quantitative and credit easing.

Even the Fed is cutting rates and implementing a backdoor QE program, through its backstopping of repo (short-term borrowing) markets.

But it is naive to think that policy makers would simply allow a wave of “creative destruction” that liquidates every zombie firm, bank, and sovereign entity. They will be under intense political pressure to prevent a full-scale depression and the onset of deflation. If anything, then, another downturn will invite even more “crazy” and unconventional policies than what we’ve seen thus far.

In fact, views from across the ideological spectrum are converging on the notion that a semi-permanent monetization of larger fiscal deficits will be unavoidable — and even desirable — in the next downturn.

----Will such policies actually be effective in stopping and reversing the next slump? In the case of the 2008 financial crisis, which was triggered by a negative aggregate demand shock and a credit crunch on illiquid but solvent agents, massive monetary and fiscal stimulus and private-sector bailouts made sense.

But what if the next recession is triggered by a permanent negative supply shock that produces stagflation (slower growth and rising inflation)? That, after all, is the risk posed by a decoupling of U.S.-China trade, Brexit, or persistent upward pressure on oil prices.

Fiscal and monetary loosening is not an appropriate response to a permanent supply shock. Policy easing in response to the oil shocks of the 1970s resulted in double-digit inflation and a sharp, risky increase in public debt.

Moreover, if a downturn renders some corporations, banks, or sovereign entities insolvent — not just illiquid — it makes no sense to keep them alive. In these cases, a bail-in of creditors (debt restructuring and write-offs) is more appropriate than a “zombifying” bailout.
More
https://www.marketwatch.com/story/printing-money-isnt-a-universal-cure-all-in-recession-roubini-says-2019-10-28?mod=home-page

Finally, more bad news for US grain farmers, though for once it has nothing to do with Trump’s misguided trade wars. Bumper crops of global wheat have depressed US prices to the point many wheat farmers are considering planting corn (maize.) It never rains but it pours, and US farmers have had quite enough pouring this year.

SoftBank, has the bubble burst? Has SoftBank gone off the rails?

U.S. Winter-Wheat Acres Set to Drop to Lowest in 110 Years

Michael Hirtzer  BloombergOctober 28, 2019

(Bloomberg) -- America’s bread basket looks like it’s going gluten free: Dogged by lower prices and tepid demand, U.S. wheat farmers are poised to plant the fewest acres of winter varieties in 110 years.

That’s according to a Bloomberg survey. Analysts are predicting another year of declines for acreage as U.S. producers face stiff competition from global rivals gathering bumper crops. World supplies are so plentiful that futures for hard red winter wheat are down about 15% in 2019, one of the worst performances for commodities this year. In some parts of the southern U.S. Plains, wheat is now cheaper than corn, making the yellow grain a better bet.

“The price doesn’t get high enough to tell us to keep planting wheat,” said Ken Horton, who grows wheat, corn and sorghum with his sons in Leoti, Kansas. Horton is cutting plantings of the HRW wheat variety by 30% to about 3,000 acres.

“Any time you have cash corn higher than cash wheat, you’ll see more acres go to corn,” Horton said in a telephone interview.

As of Oct. 27, U.S. farmers had planted 85% of their winter wheat, up from 77% at the same time in 2018, according to U.S. Department of Agriculture data.

However, rains in parts of the Midwest may hamper the last phase of sowing. Some growers who double-crop wheat in soybean fields might not be able to harvest their soy in time to seed wheat, according to Arlan Suderman, chief commodities economist at INTL FCStone in Kansas City. That could result in fewer planted acres of the soft red winter variety, he said.

“There’s quite a correlation in soybean-harvest pace and wheat plantings,” Suderman said by phone.

Planted acres of all varieties of winter wheat are forecast to decline to 31.118 million, according to a Bloomberg survey of six analysts. That would be down from 31.159 million a year ago and above only the 29.196 million acres from 1909, the first year in USDA records. The agency won’t make an official estimate until January.

In the Texas Panhandle, farmers are turning to cotton instead of wheat, said Darby Campsey, director of communications and producer relations at the Texas Wheat Producers.

“The low wheat prices have given way to other options,” she said.

https://finance.yahoo.com/news/u-winter-wheat-acres-set-214215235.html

Opinion: SoftBank’s problems aren’t so surprising if you understand this one thing about the company

By Phil Wickham and Koichiro Nakamura  Published: Oct 30, 2019 1:37 a.m. ET

The humbling of the world’s biggest technology investor has come quickly.

SoftBank’s Vision Fund went from zero to $100 billion in two years, shaking up the venture capital industry with huge bets on household names like Uber UBER, -2.41%, WeWork and Slack WORK, +4.80%. But now the fund is in damage-control mode after WeWork canceled its IPO.

The office-sharing company’s fall from grace has been dramatic. In its last round of private funding, it boasted a $47 billion valuation. But then growing concerns about steep losses and the company’s governance structure prompted the CEO to resign and pushed the company’s valuation to under $10 billion, according to some reports.

With Uber’s and Slack’s respective market values down big since their public debuts, SoftBank’s Vision Fund is facing billions in losses. This has sparked questions from the fund’s backers over how SoftBank founder Masayoshi Son lost his Midas touch.

Surprise over Son

The dominant tone in coverage of the WeWork debacle has been one of surprise that Son, who acquired a deserved reputation as a visionary with SoftBank’s early investments in Yahoo and Chinese e-commerce platform Alibaba BABA, -1.00%, could have so badly misjudged a business and its founder. But for those who understand the venture capital industry and SoftBank’s history in Japan, its current problems aren’t so shocking.

The common image of SoftBank is of a cutting-edge Japanese technology firm. But, in fact, SoftBank is a strange hybrid of unsexy subsidiaries rooted firmly in traditional, industrial Japan. SoftBank is essentially a telecom company.

It didn’t make much sense then, and it makes even less sense now.

A large number of SoftBank’s executives come from the railway industry through its 2004 purchase of Japan Telecom, which emerged from the privatization of Japan Railways. The company’s executive team comes from that staid industry, along with bankers and private-equity specialists picked up in SoftBank’s 2017 acquisition of Fortress Investment Group.

More

https://www.marketwatch.com/story/softbanks-problems-arent-so-surprising-if-you-understand-this-one-thing-about-the-company-2019-10-30?mod=mw_latestnews

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.

Alan Greenspan

Crooks and Scoundrels Corner.

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

No crooks today, unless we’ve just discovered some bent,  endangered steppe eagles. Today, how the best laid plans o’ mice an men, gang aft a-gley. Are you listening Presidents Trump and Xi?

Text Messages Sent by Roaming Eagles Bankrupt Scientific Study

A steppe eagle named Min spent months out of range before reappearing in Iran and sending hundreds of expensive SMS texts

October 28, 2019 12:47PM

When a team of Russian researchers set out to track endangered steppe eagles using a device that sends the birds’ locations via text messages, they knew they would occasionally lose track of the birds when they flew into regions with little or no cellular coverage. Going off the grid isn’t a huge deal; usually when that happens, the messages are sent once the eagles flew back into range, which works great as long as they stay in network. With a solid cellular plan, the study should have been cost effective.

But what they didn’t plan for was Min, a globetrotting steppe eagle whose taste for adventure turned into a big international texting habit.

The Russian Raptor Research and Conservation Network team had equipped 13 steppe eagles with SMS text-based tracking devices. Four times a day, the devices would send the coordinates of the eagles so researchers could figure out where they spend their time. However, the birds often spend most of the summer breeding season in regions with little or no cellular coverage, mostly in Kazakhstan. Once they move on, the device sends dozens—or sometimes hundreds—of backlogged tracking messages all at once.

That’s not a problem when the birds send messages on the Kazakh or Russian networks. But when Min reappeared in early October after being out of range, the eagle did so in Iran, where roaming rates are sky-high.

“He disappeared for five months, and all of a sudden here he is, with a very, very heavy phone bill,” Elena Shnayder, a scientist who works for the network, tells Elian Peltier at the New York Times.

Min sent hundreds of text messages at once at about 77 cents each. That price is five times the typical price on the Russian network, wiping out the project's budget in one fell swoop. The budget had already taken a hit when other eagles took off to other places in Central Asia with high roaming charges. According to The Siberian Times, another eagle named Khakas is hanging out near the border of Uzbekistan and Turkmenistan. One nation has reasonable roaming charges and the other is quite expensive—and Khakas was toeing that line. Other eagles have sent messages from expensive networks in Tajikistan and Pakistan.

According to a blog post, the research team raised about $5,000 in crowdfunding to help cover the costs so they can continue tracking the eagles through the end of the year and into 2020. Peltier reports that the network used by the eagles' text-trackers, Megafon, announced that it would refund several months worth of charges to the project and will now offer special rates for the wayward eagles. In fact, Shnayder says other phone companies have reached out offering free SIM cards for any new eagles the project tracks now that the story has gone viral.

“It’s quite an irony, because when we started the project and asked for discounts, many of them turned us down,” she tells Peltier.

The steppe eagle needs all the help it can get. As Ryan F. Mandelbaum at Gizmodo points out, the massive eagle with a 7-foot wingspan spends its breeding season hunting the open deserts, steppes and savannas of Central Asia before dispersing to southern Asia and parts of Africa for the winter. According to the IUCN, there are about 50,000 to 75,000 adult eagles remaining, but they face many threats. Areas in their preferred habitat are being converted to agricultural use and increases in wind turbines and power lines are also taking a toll on the species. Poachers and sport hunters also target the big eagles.
more

https://www.smithsonianmag.com/smart-news/text-messages-sent-roaming-eagles-bankrupt-scientific-study-180973415/?utm_source=smithsoniandaily&utm_medium=email&utm_campaign=20191028-daily-responsive&spMailingID=40987826&spUserID=NjUwNDIzNTUzNDE0S0&spJobID=1622614398&spReportId=MTYyMjYxNDM5OAS2

Corruption, embezzlement, fraud, these are all characteristics which exist everywhere. It is regrettably the way human nature functions, whether we like it or not. What successful economies do is keep it to a minimum. No one has ever eliminated any of that stuff.

Alan Greenspan

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 21^st century onwards?

3 Trends Making the Case for Bus Electrification

Proterra’s CCO on why the electric bus pitch keeps getting more compelling, as the company bags its 100th customer.

Julian Spector October 04, 2019

 

U.S. electric bus manufacturer Proterra reached its 100th customer this week, in a sign of how far the industry has come.

Just a few years ago, electric buses had negligible market presence and faced an uphill battle to convince transit agencies to part ways with the buses they knew and trusted. That has changed now, thanks to declining battery prices, innovative financing mechanisms and a growing roster of customer testimonials.

GTM checked in with Proterra Chief Commercial Officer Matt Horton to gauge what this milestone really means.

A deal with the Detroit Department of Transportation and Michigan's Suburban Mobility Authority for Regional Transportation got Proterra to the 100-customer mark. Besides being a nice round number, 100 customers equates to about 10 percent of Proterra's addressable market of U.S. transit agencies operating heavy duty buses.* 

"One hundred transit customers is actually a very meaningful percentage of transit agencies that have now decided to move to electric vehicles," Horton said.

Proterra has sold more than 800 buses now, but only 390 have hit the streets to date, due to the time it takes to build them after an order comes in. That leaves plenty of work before Proterra and peers like BYD, New Flyer, Nova Bus and Gillig can declare victory in bus electrification.

But Horton pointed to several trends he sees helping the cause. "On the transit side, the path toward full electrification seems much more clear today than it ever has been."

When electric buses were new on the scene, transit agencies were hesitant to go all in. They wanted to vet the technology and ensure that it performed as well as diesel or natural-gas buses, and that charging cycles did not interrupt their duties.

"One of the clear trends that we’re seeing is that many customers that purchased their first pilot vehicles almost a decade ago have now purchased several rounds of electric vehicles," Horton said.

The average order size is also rising. "Where five years ago, we saw transit agencies purchasing two or three vehicles, we’re now regularly seeing procurements for 30 to 100 vehicles."

The largest single deal Proterra has completed so far is 39-bus order from Edmonton, Alberta. The next largest came from Septa in Philadelphia, which ordered 25 buses; Chicago ordered 20.

More

https://www.greentechmedia.com/articles/read/3-trends-making-the-case-for-bus-electrification?utm_medium=email&utm_source=Storage&utm_campaign=GTMStorage

"The London Banker Henry Fauntleroy forged to keep his bank solvent. He was executed for it in 1824."

Charles P. Kindleberger, Manias, Panics and Crashes.

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.