Baltic Dry Index. 1767 +10 Brent
Crude 58.35 Spot Gold 1506
Never ending Brexit now October 31, maybe. 24 days away.
Trump’s Nuclear China Tariffs Now In Effect.
The USA v EU trade war starts October 18.
Nothing is so admirable in politics as a short memory.
John Kenneth Galbraith.
As goes this week’s USA V China trade war talks, likely
goes the fate of this week’s stock markets. If so, the latest background
position reported from China suggests very little room for optimism. China
seems to think its hand is strengthened the longer it holds out, and the deeper
President Trump’s political problems grow.
President Trump talked recently about settling for an
interim deal, leaving more difficult problems for later, but that hardly matches
President Trump’s rhetoric “trade wars are easy to win.”
Besides, with a new USA v EU trade war kicking off on the
18th, Brexit on October 31, (maybe,) the WeWork fiasco, and the new
NAFTA, the USMCA, stalled, stock markets may not have anything going for the
bulls this final quarter.
Below, another iffy October week.
In any great organization it is far, far safer to be wrong with the majority than to be right alone.
John Kenneth Galbraith
Asian shares up on U.S. jobs report, but caution seen on trade talks
October 7, 2019 /
2:03 AM
TOKYO
(Reuters) - Asian shares edged higher on Monday after data showed the U.S.
unemployment rate dropped to the lowest in almost 50 years, easing concerns of
a slowdown in the world’s largest economy.
U.S. stock futures, ESc1 fell 0.44% in Asia on Monday after the S&P 500 .SPX surged 1.4% on Friday.
The offshore yuan CNH fell 0.3% to 7.1352 to the dollar after Bloomberg reported that Chinese officials are signalling they are increasingly reluctant to agree to a broad trade deal pursued by U.S. President Donald Trump.
There was no onshore yuan trading, as Monday is the last day of a long China holiday for its national day.
The media report also pushed up safe-haven assets such as gold and the
yen.
Crude oil futures extended declines in a sign that investors remain
cautious about a resolution to the trade dispute.
Sentiment toward the U.S. economy deteriorated sharply much of last week
after disappointing data on manufacturing and services suggested the trade war
was taking a toll, and more rate cuts would be needed to avert a potential
recession in the world’s biggest economy.
---- This week, the main focus will be the high-level U.S.-China trade negotiations expected in Washington on Oct. 10-11 to see if the two sides can end a bruising year-long trade war that has hurt global growth and raised the risk of recession.
“The dollar is a little soft heading into U.S.-China trade talks,” said
Yamada. “I see some scope for yen gains, but it is not likely to be a big move
higher.”
More
Stormy start to October has stock investors worried: Will Q4 be ‘deja vu all over again’?
Published: Oct 5,
2019 8:00 a.m. ET
If you somehow forgot the stock market turmoil of the last
few months of 2018, the first few days of this quarter may have been a
stomach-churning reminder. But there are some fundamental differences now compared to then, analysts say, and while it doesn’t necessarily guarantee smooth sailing, it’s also possible we’ll avoid the worst of last year’s market carnage.
As a refresher: the Dow Jones Industrial Average DJIA, +1.42% opened on October 1, 2018 at 26,598. Three months later, shell-shocked traders were rummaging for dusty “Dow 24,000” sunglasses, with the index down 12%.
Put another way, as of Tuesday this week, all three U.S. stock indexes were up handily since the start of the calendar year, but over the past 12 months, with the dismal showing from last year’s fourth quarter baked in, they were negative.
The
first two trading days of this quarter may have raised grim memories of last
year, with major indexes off to the worst
start of a quarter since the global financial crisis of 2008. But there are
some important distinctions to draw.
More
China takes some key trade issues off the negotiating table with U.S.: report
By
Mike
Murphy
Published: Oct 6, 2019 6:45 p.m. ET
Chinese
officials have significantly narrowed the scope of issues they're willing to
discuss at upcoming trade negotiations with the U.S., Bloomberg News reported Sunday. The leader of China's trade
delegation, Vice Premier Liu He, recently told dignitaries that China will not
commit to reforming industrial policies or government subsidies -- two of the
Trump administration's main complaints -- Bloomberg reported. Experts believe
China may be gaining the upper hand in trade negotiations as President Donald
Trump gets caught up in impeachment proceedings and U.S. economic data
continues to weaken, the report said. U.S. and Chinese negotiators are
scheduled to hold trade talks in Washington this week.
Yen creeps higher amid caution over Sino-U.S. trade talks
October 7, 2019
/ 2:00 AM
TOKYO/SINGAPORE (Reuters) - The yen gained
slightly and the yuan slipped on Monday as investors nervously awaited
U.S.-China talks this week for signs of whether the two sides can de-escalate
or end their punishing trade war.
Risk appetite soured noticeably after Bloomberg reported that Chinese
officials are signalling they are increasingly reluctant to agree to a broad
deal pursued by U.S. President Donald Trump.
“Nothing is yet in the bag, and optimism on trade has proved time and
again to be misplaced,” said Rob Carnell, Asia-Pacific chief economist at ING.
The Japanese yen, regarded as a safe haven by virtue of Japan’s status
as the world’s biggest creditor, edged up 0.1% to 106.79 per dollar.
The Chinese yuan, the currency most exposed to trade-war tensions, fell
more than 0.3% to 7.1356 per dollar in offshore trade. There was no onshore
trading as Monday is the last day of China’s long holiday break for its
national day.
Other trade-exposed currencies such as the Australian dollar and the
Korean won also fell on doubts that much will be achieved at the trade
negotiations.
Deputy-level meetings will be held on Monday and Tuesday, with top-level
talks scheduled for Thursday and Friday, when Chinese Vice Premier Liu He meets
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven
Mnuchin in Washington.
Global markets have been on a roller coaster ride this year as hopes for
a deal have waxed and waned, while weak economic data in Europe, the United
States and China have added to evidence that the tensions are dragging on
global trade and growth.
The jitters knocked the dollar from a two-year high last week, and it
remained subdued on Monday. Against a basket of major currencies it was steady
at 98.818 - almost a percentage point below its week-ago peak.
Signals from both sides in the lead-up to
the trade talks have been mixed.
More
In other news, is
the USA about to abandon its ally the Kurds in Syria?
Fate of Kurds unknown as U.S. says Turkey will invade northern Syria
Published: Oct 6,
2019 11:58 p.m. ET
WASHINGTON — The White House says Turkey will soon invade Northern
Syria, casting uncertainty on the fate of the Kurdish fighters allied with the
U.S. against in a campaign against the Islamic State group.
Press secretary Stephanie Grisham said Sunday night that U.S. troops
“will not support or be involved in the operation” and “will no longer be in
the immediate area.”
Grisham said that after a call between President Donald Trump and
Turkish President Recep Tayyip Erdogan, Turkey will take custody of foreign
fighters captured in the U.S.-led campaign against the Islamic State group who
have been held by the Kurdish forces supported by the U.S.
Kurdish forces bore the brunt of the ground campaign against Islamic
State militants but are considered terrorists by the Turkish government.
In
December, Trump announced he was withdrawing American troops from Syria but was
met with widespread condemnation for abandoning Kurdish allies to the Turkish
assault. The announcement prompted the resignation in protest of then-Defense
Secretary Jim Mattis, and a coordinated campaign by then-national security
adviser John Bolton to try to protect the Kurds.
Finally, as WeWork falls apart, why London commercial
landlords are fearful of a coming commercial real estate bust. Is WeWork the
sound of yet another dodgy global bubble bursting? And if it is, will it pop
SoftBank Group’s tech bubble too?
In another issue, is the WeWork IPO failure the major
reason why US banks have stopped lending to each other forcing the Fed into
multiple overnight repos now extended out to mid November? Are we back to
2007-200 again? Are US banks overloaded with WeWork debt and CMBS soon to be
non performing?
Why WeWork's problems have London landlords fretting
The office space firm is the capital’s largest private tenant but its very public and rapid retrenchment is making wavesSat 5 Oct 2019 08.00 BST
At the UK headquarters of office space company WeWork, the skateboard half-pipe is empty, the arcade machines aren’t in use and the DJ turntables are motionless.
It could be because it’s 11am on a grey weekday in London, or it could be because this fast-growing company has suddenly found itself in crisis mode.
Having ejected controversial founder Adam Neumann from the chief executive’s seat, on Monday directors pulled the plug on a stock market listing.
A chastening retrenchment looms that could mean 5,000 job cuts – a third of the company’s global workforce. The company’s $60m (£49m) Gulfstream private jet is up for sale.
Less than two months ago, WeWork was seeking a price tag of $47bn from its now abandoned float. Bankers at Goldman Sachs reckoned it might have been worth much more, maybe $65bn. Now the firm, which has lost $3bn in the last two years, is reckoned to be worth $10bn. Tops.
There is even mounting concern that it could run out of cash altogether in 2020 unless Softbank – the Japanese tech investment giant that is WeWork’s largest shareholder with 29% - dips into its pocket again.
If WeWork were to fail, the tremors would be felt throughout the property industry, particularly in the UK.
Why? Because WeWork has quietly become the largest private tenant in London, as well as extending its reach beyond the capital to Birmingham, Manchester, Edinburgh and Cambridge, with 60 offices nationwide. Only the UK government has more office space in the capital.
In the past five years, it has signed lease agreements for 344,000 sq metres (3.7m sq ft) of office space – more than seven times the floorspace in the Gherkin tower in the City financial district.
----He said: “Their occupancy rates are high and there’s definite demand for this but they have a lot of high fixed costs, regardless of whether [each building] is full or empty, or the yield per desk is going up or down.”
According to accounts filed at Companies House, UK landlords are expecting rent payments from WeWork that could top £5bn over the course of its lease agreements. The 2017 accounts show that subsidiaries of the UK parent company, WeWork International Ltd, have signed non-cancellable operating leases worth more than £3.2bn.
WeWork has formed at least 50 new companies since then, indicating rent commitments are likely to have risen substantially.
Each of these firms was created solely to house separate premises where office space could be hired out to new customers. If WeWork does decide it needs to shrink to survive, it could simply place some of those companies into administration, leaving landlords high and dry.
More
https://www.theguardian.com/business/2019/oct/05/why-weworks-problems-have-london-landlords-fretting
British landlords exposed to billions in WeWork rental commitments
6 October
2019 • 7:00am
British landlords are exposed to billions of pounds in rental commitments from WeWork that stretch two decades into the future and are at risk as the trendy office operator threatens to unravel.
WeWork’s British subsidiary has more than £3.2bn in lease obligations, according to accounts filed in Britain. The vast majority are in London, where WeWork is the biggest office tenant after an explosive expansion.
It rents some 4.3m sq ft of UK real estate from dozens of landlords, according to data company CoStar.
More
https://www.telegraph.co.uk/technology/2019/10/06/british-landlords-exposed-billions-wework-rental-commitments/
Alan Schwartz, CEO Bear Stearns, March 12, 2008.
Bust March 16, 2008.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, China’s view on gold. They might add more,
especially if Trump’s anti-China trade war sends China into de-dollarisation.
Deepening mutual trust higher on the agenda for China and Russia than buying gold
By By Gao Fei and Xu Guoying Source:Global
Times Published: 2019/10/4
According to data from the Central Bank of
the Russian Federation, Russia's foreign exchange reserves reached a record
high of $529.1 billion in August. Gold reserves were 2219.2 metric tons, or
$109.5 billion, accounting for 20.7 percent of total foreign exchange reserves.
It is the first time in 30 years that the share of gold in Russian foreign
exchange reserves has exceeded 20 percent.
Russia's central bank is increasing its gold reserves and has been the world's largest buyer of gold for years. In the last 10 years, Russia's gold reserves have more than tripled. There are reasons why Russia has significantly increased its gold reserves.
First, it's a way to avoid international economic risks. Gold has high liquidity and scarcity; it can be traded as a commodity, used as currency and invested as an asset. Holding gold can help a country establish safe mechanisms to enhance its ability to withstand international financial risks.
Since the global financial crisis of 2008, the role of the US dollar as a global currency has been increasingly questioned. Buying gold has become an effective way to hedge against the greenback and enrich investment. Russia apparently expects to avoid the risk of dollar volatility and maintain assets value by diversifying its foreign exchange reserves. In the past 20 years, the annual rate of return of the entire commodity market is only about 1 percent, while that of gold approaches 8 percent. Russia has certainly made a fortune.
Second, buying gold can promote Russia's power in political competition. Since 2008, relations between Russia and the West have deteriorated, geopolitical relations have become increasingly tense, and economic cooperation has suffered setbacks. Western sanctions, volatile oil prices and the devaluation of the ruble have accelerated Russia's de-dollarization pace by selling US bonds and replacing them with gold. According to data released by the US Treasury, Russia dropped out of the list of 30 top US bondholders in May 2018 and has continued reducing the US bonds holding. By abandoning the US dollar, the central bank of Russia intends to use gold to diversify its foreign exchange reserves, and to establish a new financial system independent of the US dollar that can stabilize the domestic economy and respond to external challenges.
Third, Russia can better respond to changes in the international order with more gold. The current international order and relations among countries are undergoing major changes and adjustments, and the world is facing prominent instability and uncertainty. Gold has thus returned as a safe haven. As a long-established major world power, Russia has greatly increased the proportion of gold reserves, which reflects its concern about future changes in the world. In addition, escalating China-US trade frictions add uncertainty to the world economy. Under expectations of a global economic recession, the purchase of gold can be seen as a bet made by Russia on the future.
Compared with Russia, China's gold reserves have not surged. Although China's total reserves have reached 1,942.4 tons, its gold reserves only account for 2.7 percent of its foreign exchange reserves.
From China's perspective, gold reserves are a vital part of international reserves and an important factor to diversify investment portfolios, but they are not the only substitutes for foreign exchange reserves. Nevertheless, since the price of gold assets is doing well, it does not rule out the possibility that China may follow Russia to increase gold reserves.
The current world trade situation remains tense with the shadow of a "currency war" hanging over it. Central banks worldwide have increased their holdings of gold to evade risks. However, it is not gold, but trust and cooperation among countries that the world lacks. For China and Russia, improving mutual trust and deepening cooperation is more important than buying gold.
In September, China and Russia emphasized promoting cooperation of gold market participants between the two countries while Chinese Premier Li Keqiang paid an official visit to Moscow.
Deepening mutual trust and cooperation between Russia and China can be seen as investing in each other. The China-Russia comprehensive strategic partnership of coordination for a new era is becoming a model of new-type relations between major countries, which is even more stable and valuable than gold.
Russia's central bank is increasing its gold reserves and has been the world's largest buyer of gold for years. In the last 10 years, Russia's gold reserves have more than tripled. There are reasons why Russia has significantly increased its gold reserves.
First, it's a way to avoid international economic risks. Gold has high liquidity and scarcity; it can be traded as a commodity, used as currency and invested as an asset. Holding gold can help a country establish safe mechanisms to enhance its ability to withstand international financial risks.
Since the global financial crisis of 2008, the role of the US dollar as a global currency has been increasingly questioned. Buying gold has become an effective way to hedge against the greenback and enrich investment. Russia apparently expects to avoid the risk of dollar volatility and maintain assets value by diversifying its foreign exchange reserves. In the past 20 years, the annual rate of return of the entire commodity market is only about 1 percent, while that of gold approaches 8 percent. Russia has certainly made a fortune.
Second, buying gold can promote Russia's power in political competition. Since 2008, relations between Russia and the West have deteriorated, geopolitical relations have become increasingly tense, and economic cooperation has suffered setbacks. Western sanctions, volatile oil prices and the devaluation of the ruble have accelerated Russia's de-dollarization pace by selling US bonds and replacing them with gold. According to data released by the US Treasury, Russia dropped out of the list of 30 top US bondholders in May 2018 and has continued reducing the US bonds holding. By abandoning the US dollar, the central bank of Russia intends to use gold to diversify its foreign exchange reserves, and to establish a new financial system independent of the US dollar that can stabilize the domestic economy and respond to external challenges.
Third, Russia can better respond to changes in the international order with more gold. The current international order and relations among countries are undergoing major changes and adjustments, and the world is facing prominent instability and uncertainty. Gold has thus returned as a safe haven. As a long-established major world power, Russia has greatly increased the proportion of gold reserves, which reflects its concern about future changes in the world. In addition, escalating China-US trade frictions add uncertainty to the world economy. Under expectations of a global economic recession, the purchase of gold can be seen as a bet made by Russia on the future.
Compared with Russia, China's gold reserves have not surged. Although China's total reserves have reached 1,942.4 tons, its gold reserves only account for 2.7 percent of its foreign exchange reserves.
From China's perspective, gold reserves are a vital part of international reserves and an important factor to diversify investment portfolios, but they are not the only substitutes for foreign exchange reserves. Nevertheless, since the price of gold assets is doing well, it does not rule out the possibility that China may follow Russia to increase gold reserves.
The current world trade situation remains tense with the shadow of a "currency war" hanging over it. Central banks worldwide have increased their holdings of gold to evade risks. However, it is not gold, but trust and cooperation among countries that the world lacks. For China and Russia, improving mutual trust and deepening cooperation is more important than buying gold.
In September, China and Russia emphasized promoting cooperation of gold market participants between the two countries while Chinese Premier Li Keqiang paid an official visit to Moscow.
Deepening mutual trust and cooperation between Russia and China can be seen as investing in each other. The China-Russia comprehensive strategic partnership of coordination for a new era is becoming a model of new-type relations between major countries, which is even more stable and valuable than gold.
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?
Finding the 'magic angle' to create a new superconductor
Date:
October 2, 2019
Source:
Ohio State University
Summary:
Researchers have made a discovery that could provide new insights into how
superconductors might move energy more efficiently to power homes, industries
and vehicles. Their work showed that graphene -- a material composed of a
single layer of carbon atoms -- is more likely to become a superconductor than
originally thought possible.
Researchers at The Ohio State University, in collaboration with
scientists around the world, have made a discovery that could provide new
insights into how superconductors might move energy more efficiently to power
homes, industries and vehicles.
Their work, published last week in the journal Science Advances,
showed that graphene -- a material composed of a single layer of carbon atoms
-- is more likely to become a superconductor than originally thought possible.
"Graphene by itself can conduct energy, as a normal metal is
conductive, but it is only recently that we learned it can also be a
superconductor, by making a so-called 'magic angle' -- twisting a second layer
of graphene on top of the first," said Jeanie Lau, a professor of physics
at Ohio State and lead author of the paper. "And that opens possibilities
for additional research to see if we can make this material work in the real
world."
Unlike most conventional conductors, superconductors are metals that can
conduct electricity without resistance, thus suffering no loss of energy.
Graphene is two-dimensional crystal -- a perfectly flat piece of carbon
-- and, as a single layer, is not a superconductor. But earlier this year,
scientists at the Massachusetts Institute of Technology published research that
showed that graphene could become a superconductor if one piece of graphene
were laid on top of another piece and the layers twisted to a specific angle --
what they termed "the magic angle."
That magic angle, scientists thought, was between 1 degree and 1.2
degrees -- a very precise angle.
----"This research pushed our understanding of superconductors and the magic angle a little further than the theory and prior experiments might have expected," said Marc Bockrath, a co-author of the paper and physics professor at Ohio State.
"Superconductivity could revolutionize many industries -- electric
transmission lines, communication lines, transportation, trains," Codecido
said. "Superconductivity in twisted bilayer graphene will teach us about
superconductivity at much higher temperatures, temperatures that will be useful
for real-world applications. That's where future work will be focused."
If economists could manage to get themselves
thought of as humble, competent people on a level with dentists, that would be
splendid.
John
Maynard Keynes
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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