Baltic Dry Index. 1785 +06 Brent
Crude 61.35 Spot Gold 1503
Never ending Brexit now October 31, maybe (not.) 6 days
away?
Trump’s Nuclear China Tariffs Now in effect.
The USA v EU trade war started October 18. Now in effect.
Success is the ability to
go from one failure to another with no loss of enthusiasm.
Winston Spencer
Churchill.
Another Friday ahead of the run up to month end.
Normally, that would trigger the bulls into starting to aggressively try to run
the shorts and trigger stop loss buying.
But this Friday we have a miss by Amazon and a warning by
Amazon of lower sales this quarter, a delay of unknown length to Brexit, a markedly slowing Germany, and an upcoming
Fed meeting next week, where they are widely expected to cut their key interest
rate again in the face of a slowing global and US economy. Failure to cut will
send an earthquake through stock markets.
Lingering in the background, uncertainty over that USA v
China trade deal “lite” part one. Will it be ready for both parties to sign
November 16-17 at the APEC meeting in Chile? China seems to be upping the ante.
Below, good reasons to sit out the weekend in cash.
Asian shares, sterling falter as Brexit, growth anxiety sap confidence
October 25, 2019
/ 2:07 AM
SHANGHAI (Reuters) - Asian shares wobbled on Friday as investors were
reluctant to make big bets ahead of key central bank policy meetings next week
against the backdrop of slowing global growth, while sterling extended its
slide on a fresh bout of Brexit anxiety.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down just 0.03%, giving up small gains early in the day.
Chinese blue chips .CSI300 were up by less than 0.1% and Hong Kong's Hang Seng .HSI fell 0.4%. Shares in South Korea .KS11 were also treading water.
Japan's Nikkei .N225 was a touch lower, while the Australian share market was a rare bright spot, adding 0.66% following on from gains on Wall Street.
The British pound, which had fallen 0.51% on Thursday after British Prime Minister Boris Johnson’s call for a general election on Dec. 12, extended its slide, edging down 0.07% to $1.2841.
Johnson conceded on Thursday for the first time that he would not meet his “do or die” deadline to leave the European Union next week.
The continued uncertainty over Brexit comes against the backdrop of persistently sluggish global growth.
New orders for U.S.-made capital goods fell more than expected in September and shipments also declined, in a sign that business investment remains soft.
A Reuters poll of economists in recent weeks showed that most think a steeper decline in global growth is more likely than a synchronised recovery, despite central bank easing.
In his last meeting as president of the European Central Bank, Mario Draghi left ECB policy and guidance unchanged, but advised his successor to “never give up” on propping up the eurozone economy in the face of a worsening outlook.
The major focus for investors is next week’s U.S. Federal Reserve policy meeting at which it’s almost certain to cut interest rates for a third time this year.
“It’s less about the Fed going to cut, it’s more about if they’re going to signal the pace, the magnitude of cuts”, said Kay Van-Petersen, global macro strategist at Saxo Bank in Singapore.
Investors will also scrutinise a raft of data that will follow the Fed decision, he said. “It’s really all about next week.”
The Bank of Japan is also set to meet for a two-day meeting ending Oct. 31. The decision is expected to be a close call, though sources told Reuters the BOJ is leaning towards keeping monetary policy steady amid relatively stable markets and a lull in U.S.-China trade tensions.
On Wall Street, strong quarterly results from Microsoft (MSFT.O) and PayPal (PYPL.O) helped lift the tech-heavy Nasdaq, which closed up 0.81% at 8,185.80.
---- Investors are also nervous ahead of a summit in Chile where U.S. President Donald Trump hopes to finalise a partial trade deal with his Chinese counterpart Xi Jinping.
Rattling confidence was a speech by U.S. Vice President Mike Pence on
Thursday, which criticised China’s handling of the Hong Kong protests and its
treatment of Muslim Uighurs in the Xinjiang region. Those comments sent the
S&P 500 index briefly lower.
More
Amazon shares hit by weaker Christmas trading forecast
The world's biggest online retailer's outlook will fuel fears that the US-China trade war is hurting the American retail industry.
Friday
25 October 2019 06:00, UK
Amazon is predicting a less than bumper holiday trading period this
year, as it faces fierce competition from Walmart and other rivals.
The company said after markets closed on Thursday that it is forecasting
net sales in the range of $80bn (£62.1bn) to $86.5bn (£67.1bn) for the fourth
quarter which includes Christmas.
That fell short of analysts' sales predictions of around $87.37bn
(£67.8bn).
Amazon also said it expected operating income in the fourth quarter to
be between $1.2bn and $2.9bn, some way short of analysts' expectations of
around £4.19bn, according to the research firm FactSet.
The downbeat forecast from the world's biggest online retailer sent its
shares down by as much as 9%, as sales during the holiday season tend to
generate the majority of retailers' sales and profit.
Amazon's outlook will fuel worries that the ongoing trade war between
the US and China is hitting the American retail industry.
The forecasts come as Amazon's profits dropped in the third quarter -
the first decline in two years.
More
China to ask U.S. to remove tariffs in exchange for agricultural buys in Friday talks - sources
October 25, 2019 /
6:07 AM
WASHINGTON
(Reuters) - Top U.S. and Chinese trade officials will discuss plans on Friday
for China to buy more U.S. farm products, but in return, Beijing will request
cancellation of some planned and existing U.S. tariffs on Chinese imports,
people briefed on the talks told Reuters.
Robert Lighthizer, the United States Trade Representative, U.S. Treasury
Secretary Steven Mnuchin, and Chinese Vice Premier Liu He will speak by
telephone Friday, their latest attempt to calm a nearly 16-month trade war that
is roiling financial markets, disrupting supply chains and slowing global
economic growth.
The two sides are working to try to agree on a text for a “Phase 1” trade
agreement announced by U.S. President Donald Trump on Oct. 11, in time for him
to sign it with China’s President Xi Jinping next month at a summit in Chile.
So far, Trump has only agreed to cancel an Oct. 15 increase in tariffs
on $250 billion in Chinese goods as part of understandings reached on
agricultural purchases, increased access to China’s financial services markets,
improved protections for intellectual property rights and a currency pact.
But to seal the deal, Beijing is expected to ask Washington to drop its
plan to impose tariffs on $156 billion worth of Chinese goods, including cell
phones, laptop computers and toys, on Dec. 15, two U.S.-based sources told
Reuters.
Beijing also is likely to seek removal of 15% tariffs imposed on Sept. 1
on about $125 billion of Chinese goods, one of the sources said. Trump imposed
the tariffs in August after a failed round of talks, effectively setting up
punitive duties on nearly all of the $550 billion in U.S. imports from China.
“The Chinese want
to get back to tariffs on just the original $250 billion in goods,” the source
said.
---- If a text can be sealed, Beijing in return would exempt some U.S. agricultural products from tariffs, including soybeans and wheat and corn, a China-based source told Reuters. Buyers would be exempt from extra tariffs for future buying and get returns for tariffs they already paid in previous purchases of the products on the list.
But the ultimate amounts of China’s purchases are uncertain. Trump has
touted purchases of $40-50 billion annually — far above China’s 2017 purchases
of $19.5 billion as measured by the American Farm Bureau.
More
Private sector job losses bode ill for German hopes of end-year rebound - PMI
October 24, 2019 /
10:08 AM
BERLIN (Reuters) -
Employment in Germany’s private sector fell for the first time in six years in
October, a survey showed on Thursday, suggesting that a third-quarter slowdown
in Europe’s largest economy could stretch into the closing months of the year.
Markit’s flash Purchasing Managers’ Index (PMI) survey showed that the
slight fall in employment was mainly the result of job losses in the
manufacturing sector, where staffing numbers fell to their lowest level in
almost 10 years.
The slowdown in Germany’s export-dependent manufacturing sector, in
recession due to trade conflicts and uncertainties linked to Britain’s planned
departure from the European Union, is leaving a bigger mark on services, the
survey also showed.
Job creation in the services sector fell to its lowest level in 3-1/2
years, IHS Markit said.
“Hopes of a return to growth in Germany in the final quarter have been
somewhat dashed by the PMI numbers, which show business activity in the euro
zone’s largest economy contracting further and underlying demand continuing to
soften,” said Phil Smith, principle economist at IHS Markit.
“Manufacturing remains the main weak link, though here there are some
signs of encouragement with rates of decline in production and new orders
easing and business confidence improving to a four-month high,” he added.
More
German economy continues to struggle with manufacturing troubles spreading to services
Published: Oct 24, 2019 4:46 a.m. ET
The German economy is continuing to struggle, new data released Thursday
shows, with the difficulties of its export-oriented base extending to the
service sector as global trade dries up.
The IHS Markit flash German manufacturing PMI inched up to 41.9 in
October from September’s decade-worst 41.7, which is still a reading that shows
the factory segment of the country’s economy in dire straits. Readings below 50
indicate contraction.
The flash German services PMI meanwhile fell to a 37-month low of 51.2
in October from 51.4.
The manufacturing data was in line with forecasts, while the services
figures lagged expectations of a 51.7 reading, according to FactSet.
IHS said the employment component of the composite index with both
manufacturing and services fell for the first time in six years.
As global trade wilts in the face of conflicts across the globe, the
German government has debated, but not instituted, fiscal stimulus. The
International Monetary Fund says Germany’s fiscal space is “substantial” after
years of running surpluses.
For the eurozone as a whole, the manufacturing PMI rose to a 2-month
high of 46.2, while the flash services PMI rose to 51.8 from 51.6. Economists
had expected a 46 reading on manufacturing and a 51.9 reading on services,
according to a FactSet poll.
An improved performance out of France kept the eurozone composite index
above the 50 mark, at 50.2 in October.
The flash data is based on 85% to 90% of survey responses in a month.
A nasty Japan-style market drop looms if this chart is any indication
By Shawn
Langlois Published: Oct 24, 2019 2:41 p.m. ET
Jesse Felder, the former hedge-funder behind the popular
Felder Report blog, says the stock market could be facing a Japan-style
slowdown.In a recent post, Felder painted “a Nikkei-post-1990-type of scenario,” which led to Japanese stocks trading on the Nikkei NIK, +0.05% lingering more than a third below a peak the index had reached 30 years prior:
Macroeconomic pundits often reference the protracted period of low-growth and low-inflation environment that began in the early 1990s in Japan — typically described as Japanification — as a cautionary tale for the rest of the world.
Japan is approaching its fourth consecutive decade of consistently low nominal growth, inflation, and interest rates.
“Is it so hard to believe that, after the U.S. equity market hit 140% of GDP this year [like the Japanese market did in the early 1990s] that the S&P 500 could suffer a similar fate?” Felder wrote. “Of course it is, we’re in the midst of another mania and there is only room for belief in the impossible.”
But seriously, a mania in markets, he explained, is “marked by excessive enthusiasm that leads to belief in the impossible that allows for a bubble to form.” And, he says, that’s exactly what we’re seeing now — just like we saw in 2000.
“Twenty years ago, the mania that drove prices to bubble territory was the false believe that it didn’t matter what prices investors paid for fast-growing internet stocks,” Felder wrote. “So long as they bought in before it was too late they would certainly make a fortune over time.”
Today’s mania, however, is driven in part by the notion, he said, that it doesn’t matter what price investors pay for equities via passive funds.
“So long as they hold on they will be entitled to the historical rate of return and, if prices ever decline, they will always come back,” Felder said. “Of course, and probably more importantly, there’s also a mania on the part of corporate managements focused on stock buybacks based on the false belief that what’s good for shareholders in the short run is the most important thing.”
Finally, Tesla. One
day after Tesla’s good news, disturbing news. We will follow this case with
great interest.
Florida woman sues Tesla, blames door handles for husband's death
Oct. 24, 2019 /
6:19 PM
Oct. 24 (UPI) -- A Florida woman sued Tesla for her husband's death after his vehicle's retractable door handles failed to extend following a crash, making it impossible for rescuers to reach him.
Liliana Awan filed a wrongful death lawsuit against the automaker on behalf of her husband, 48-year-old Dr. Omar Awan, stating that the vehicle's handles failed to automatically extend from their retracted positions after his car caught on fire in a crash, preventing police from rescuing him.
A police officer arrived at the scene almost immediately but was unable
to open the doors, because they remained in their retracted positions while the
car was engulfed in flames.
"After the Tesla hit the tree, he was alive. He had no internal
injuries or broken bones. He died from smoke inhaled as he sat locked inside
the Tesla, despite that a police officer and others were there and ready to
help, until flames forced them away," the suit states.
The automatically retractable door handles are a feature of the car's
design that cause them to withdraw flush to the door in order to create a
"smooth, stylish line," but they cannot be accessed manually, the
suit states.
The suit states that Omar Awan's Tesla was "defective and unreasonably dangerous" because the door handles couldn't be operated after the crash and that Tesla was negligent for failing to warn him of the alleged defects.
https://www.upi.com/Top_News/US/2019/10/24/Florida-woman-sues-Tesla-blames-door-handles-for-husbands-death/7961571950894/?lh=1
It is a fraud to borrow what we are unable to pay.
Publilius Syrus. 1st Century BC, Roman Writer.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, the “final” word on WeWork from the Wall
Street Journal. Somehow I get the feeling that this probably isn’t going to be
the final word on the WeWork fiasco. WeWork, I suspect, is going to continue
burning through other people’s money, until one day it can’t.
Below, the Journal weakly puns on “sunk.”
SoftBank, WeWork and Sunk Costs
Jacky Wong Updated Oct. 23, 2019 2:51 pm ET
The Japanese technology conglomerate said Tuesday it will
double down on its ill-fated investment in office-sharing company WeWork after
investors gave its planned initial public offering the cold
shoulder last month. The investment package includes a $5 billion
loan, a $3 billion tender offer to buy shares from existing shareholders and
moving up a $1.5 billion equity infusion it had originally scheduled for next
year. All these will take Softbank’s stake in WeWork to 80%, from around
one-third currently. But bizarrely, Softbank claims it won’t have control of
the company and therefore isn’t required to consolidate WeWork’s heavily
indebted balance sheet, mainly from its lease obligations, onto its own.Separately, SoftBank will give a $1.7 billion windfall to co-founder Adam Neumann, who was forced out as chief executive last month, including buying nearly $1 billion of his shares and a $185 million consulting fee. Mr. Neumann’s absolute control of WeWork through his supervoting shares helped him to extract such a lucrative deal on his way out despite his significant responsibility for the debacle.
That looks like a classic case of throwing good money after bad. The latest deal values WeWork at $8 billion, which still would imply hefty paper losses for SoftBank; it last invested into the company at an implied $47 billion valuation in January. SoftBank, and its nearly $100 billion Vision Fund, had sunk nearly $10 billion into WeWork before the latest infusion, including investments in some regional joint ventures.
While the latest deal would rescue SoftBank’s existing investment for now, it isn’t clear how long the $5 billion loan can sustain the money-losing real-estate firm: WeWork burned through around $2 billion in cash in the 12 months through June. The company could perhaps lower its sights, turning itself into a more boring, less cash-hungry shared-office-space company, like its London-listed competitor IWG. But that would mean much lower growth, undercutting not only the rationale, if there ever was one, for a $47 billion valuation, but even $8 billion. IWG is valued at only $4.5 billion, even though its revenue was 30% higher than WeWork’s as of June.
SoftBank’s investors clearly don’t like the latest deal: Its Tokyo-listed stock fell 2.5% Wednesday, bringing its retreat in the past six months to around 30%. It is now trading at a deep discount to its net assets, which include a $110 billion stake in Chinese e-commerce giant Alibaba. But the gap is appropriate as the WeWork debacle casts serious doubt on its investment approach and on its prospects for raising a second $100 billion technology investment fund.
Losing money is forgivable, but needlessly compounding those losses is another matter entirely.
Question: How do you make
a small fortune on Wall Street?
Answer: Start with a large one.
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?
Atomic images reveal unusually many neighbors for some oxygen atoms
Date:
October 21, 2019
Source:
University of Vienna
Summary:
The identification of new chemical bonds is crucial for the design of new
material structures. A team has found unexpected new configurations of oxygen
and nitrogen in graphene.
The
identification of new chemical bonds is crucial for the design of new material
structures. A team led by Jani Kotakoski at the University of Vienna and Jannik
Meyer at the University of Tübingen has found unexpected new configurations of
oxygen and nitrogen in graphene.
----
Nitrogen and oxygen atoms were found to bond to their neighbors in a rich
variety of configurations. For the most part, the study confirmed the textbook
picture, which could now be displayed with direct images of actual atoms:
Nitrogen atoms were bound to two or three carbons atoms, while most oxygen
atoms had two carbon neighbors. "What really surprised us, however, was
the additional presence of structures with oxygen bonded to three carbon
neighbors," says Christoph Hofer, the lead-author of the study which was
recently published in the journal Nature Communications: "Until
now, the exception of oxygen with three bonds was only known in an unusual
highly charged state, referred to as oxonium, which is difficult to
stabilize," he explains.
This
is in contrast to the current study, where the structures were remarkably
stable allowing their imaging in the microscope. The study also revealed a
"paired oxygen" configuration where two oxygen atoms occupy
neighboring sites in the graphene lattice but do not create a bond. In addition
to providing new insights to the building blocks of life, these new bonding
configurations may also lead to the development of new materials.
Another weekend and time in GB to turn back the clocks to
Greenwich Mean Time. And with winter just about to arrive in earnest, it is a
mean time too, often a very mean time.
Have a great weekend everyone.
Since
love and fear can hardly coexist together, if we must choose between them, it
is far safer to be feared than loved.
Niccolo
Machiavelli.
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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