Monday, 25 November 2019

Exit Bubble Continues. Trade Talk Hopium.


Baltic Dry Index. 1284 +29 Brent Crude 63.64 Spot Gold 1460

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.

The difference between a misfortune and a calamity is this: If Comrade Corbyn fell into the Thames, it would be a misfortune. But if someone dragged him out again, that would be a calamity.
With apologies to Benjamin Disraeli.
The week opens with yet more hopium on the USA v China trade talks, a massive rebuke to Beijing in the Hong Kong local elections, and a massive rebuke to the USA from China at the weekend G-20 meeting.

Later today Federal Reserve Chairman Jerome Powell is giving another speech, but little of importance is expected.

Below, yet more reasons to think that this is a time to be exiting stocks not entering stocks. In fact, to this old dinosaur market follower, everything about our current markets suggests the everything bubble is about to soon burst.

Asia shares find footing as mood swings on trade

November 25, 2019 / 12:41 AM
SYDNEY (Reuters) - Asian shares staged a cautious rally on Monday as investors dared to hope for some progress in the endless Sino-U.S. trade dispute, while the outperformance of recent U.S. economic data gave the dollar a leg up on its peers.

MSCI’s broadest index of Asia-Pacific shares outside Japan bounced 0.7%, after losing 0.4% last week.

Japan’s Nikkei firmed 0.7%, while Australian stocks rose 0.5% and Shanghai blue chips 0.3%.
E-Mini futures for the S&P 500 added 0.2%, while EUROSTOXX 50 futures gained 0.6%. FTSE futures firmed 0.3%.

On Saturday, U.S. national security adviser Robert O’Brien said an initial trade agreement with China is still possible by the end of the year, though he warned Washington would not turn a blind eye to what happens in Hong Kong.

The comments add to worries that a Chinese crackdown on anti-government protests in Hong Kong could further complicate the talks.

Over the weekend, pro-democracy candidates in Hong Kong romped to a landslide and symbolic majority in district council elections in the embattled city.

“The fact that talks are still happening remains a positive,” said Robert Rennie, head of financial market strategy at Westpac. “Markets are showing some signs of tiring of the steady drip feed of upbeat comments from U.S. officials and no signs of a final agreement looking likely.”

He noted six weeks had passed since the “phase one” deal was agreed in principle yet there was still no deal in place.

---- European Central Bank President Christine Lagarde on Friday called on euro zone governments to strengthen domestic demand after a global trade war brought a decade of export-driven growth to an abrupt end.

Federal Reserve Chair Jerome Powell speaks later on Monday and is expected to underline the steady outlook for rates given the better economic figures.
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Earnings recession is expected to swallow all of 2019 after holiday forecasts disappoint

Published: Nov 23, 2019 2:43 p.m. ET
The holiday season is no longer expected to pull corporate earnings out of a recession that has lasted the entire year.

Earnings in the S&P 500 index SPX, +0.22%  are now projected to decline 1.51% in the fourth quarter from the year before, according to a FactSet computation of analysts’ average forecasts for individual companies. An earnings recession is defined as two quarters or more of consecutive year-over-year declines, and earnings for S&P 500 components dipped in the first two quarters of 2019 and are all but certain to do so again in the third quarter — with nearly 95% of calendar third-quarter reports posted, earnings have dropped 2.34%, the biggest decline so far this year.

The last time profits decreased for four quarters in a row was in the period beginning with the third quarter of 2015, FactSet’s senior earnings analyst John Butters told MarketWatch in an email.

Three-fourths of earnings recessions since World War II have morphed into economic recessions, said CFRA Chief Investment Strategist Sam Stovall, who told MarketWatch that he has been “scratching his head” trying to reconcile analyst pessimism around earnings with continued stock-market rallies.
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China attacks U.S. at G20 as the world's biggest source of instability

November 23, 2019 / 11:49 AM
BEIJING (Reuters) - The United States is the world’s biggest source of instability and its politicians are going around the world baselessly smearing China, the Chinese government’s top diplomat said on Saturday in a stinging attack at a G20 meeting in Japan.

Relations between the world’s two largest economies have nose-dived amid a bitter trade war - which they are trying to resolve - and arguments over human rights, Hong Kong and U.S. support for Chinese-claimed Taiwan. 

Meeting Dutch Foreign Minister Stef Blok on the sidelines of a G20 foreign ministers meeting in the Japanese city of Nagoya, Chinese State Councillor Wang Yi did not hold back in his criticism of the United States.

“The United States is broadly engaged in unilateralism and protectionism, and is damaging multilateralism and the multilateral trading system. It has already become the world’s biggest destabilising factor,” China’s Foreign Ministry cited Wang as saying.

The United States has, for political purposes, used the machine of state to suppress legitimate Chinese businesses and has groundlessly laid charges against them, which is an act of bullying, he added.

“Certain U.S. politicians have smeared China everywhere in the world, but have not produced any evidence.”

The United States has also used its domestic law to “crudely interfere” in China’s internal affairs, trying to damage “one country, two systems” and Hong Kong’s stability and prosperity, he added.

China was incensed this week after the U.S. House of Representatives passed two bills to back protesters in Hong Kong and send a warning to China about human rights, with President Donald Trump expected to sign them into law, despite delicate trade talks with Beijing.

---- Wang said that China’s development and growth was an inevitable trend of history that no force could stop.

“There is no way out for the zero-sum games of the United States. Only win-win cooperation between China and the United States is the right path.”
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 When it comes to selling stocks, it is plain that nobody can sell unless somebody wants those stocks.

Jesse Livermore

Crooks and Scoundrels Corner.

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

WeWork again! Now the layoffs start. Others are forced off the books and onto the books of outside contractors.  Scam or genius 21st century business model? Well if it looks like a duck and all that. I sense the US tort bar sharpening its class action knives against WeWork, Softbank Group, and Adam Neumann, for starters.

Every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.

George Orwell.

WeWork and Adam Neumann represent all that is wrong with the business world

You might have heard of Adam Neumann, the grifter mastermind behind WeWork, a failing real estate company that claims to be worth many billions. Neumann, like Mark Zuckerberg or Travis Kalanick, the Uber founder, is another offspring of Silicon Valley’s slash and destroy culture, reaping great wealth off a start-up that was either actively corrosive or merely unnecessary.

After a disastrous public offering that forced Neumann out, WeWork, which rents office spaces from landlords and refurbishes them as tony workspaces for customers, announced this week it would lay off 2,400 employees. The cuts represent 19% of its workforce. Neumann, the former CEO, was set to walk away with a $1.7bn golden parachute, selling off up to $970m in company stock, netting $185m in nebulous consulting fees and a $500m credit line to cover personal debts. Backlash from WeWork’s beleaguered employees may trim the deal—Softbank, the Japanese conglomerate that has been propping WeWork up with investment cash, could cut some of Neumann’s benefits.

----The WeWork story is now a disturbingly familiar one, in an era when the economics of major start-ups can seem as surreal and ludicrous as whatever happens in the White House. Capitalism has always been a deeply flawed way of arranging a society, but big business, until around the 21st century, was at least bound by a few basic laws of monetary gravity. You were successful when you produced more revenue than the cost of running the business. You expanded when your profit margins increased.

All the titans of the 20th century functioned this way because what alternative was there? Ford or US Steel or IBM could not just lose money and indefinitely survive. Their stock would plummet. Headquarters and factories would shutter. In a few years, the corporations would disappear.

Enter Silicon Valley. While a few of the tech behemoths, like Amazon, Facebook, and Google, do indeed turn profits, many others don’t come close. In the startup world, the logic is inverted, the math alchemic. You are worth the appeal of your idea to a bunch of rich people and companies who will keep giving you money in the hope that one day a fiction will be made real. You can keep losing money at spectacular rates as long as you, like junkie after the next quick fix, keep expanding, at whatever maniacal clip the market justifies.

----Thanks to SoftBank, the conglomerate that keeps pumping it with money, WeWork was initially valued at $47bn, a nonsensical figure for a company that has always lost money. Profit-making real estate firms worth far less—think of your average big city developer—rightfully grumbled. How can they be worth a fraction of WeWork when they make money? WeWork’s initial public offering showed it burned through billions a year, racking up huge losses as it continued to rent out office space in just about every city imaginable.

The business model, if it can be called that, is vulnerable to economic downturns, since WeWork is locked into long-term leases with its landlords. Tenants of WeWork can more easily walk away if business goes sour. But WeWork can’t exit a 10-year lease from an office building if a space suddenly goes vacant.
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https://www.theguardian.com/commentisfree/2019/nov/23/wework-adam-neumann-business-world

‘We were sold off’: WeWork’s support staff face uncertain future as company collapses

Workers say they were pressured into accepting job offers with outside contractors or face termination as part of restructuring

In many ways it was the little things that helped WeWork build its office rental business into the biggest private landlord in New York and London.

WeWork “members” – as the company calls its tenants – gather to gossip around the fruit water coolers lined with fresh slices of pineapple or strawberries and kiwi on each floor. They hold meetings fueled by La Colombe coffee served up in endless supply of clean WeWork mugs, stamped with the logo “Do What You Love”. They network over IPAs at the always replenished beer taps.

Those taps were closed at WeWork’s Manhattan headquarters on Thursday as the debt-ridden company began laying off thousands. Few are being hit harder than the support staff who made that happen. Staff who were paid as little as $24,000 a year in New York while WeWork’s co-founder walked away with $1.7bn.

“We are the lifeblood of WeWork. I feel as if we were sold off with no thought or understanding,” said one maintenance worker now facing an uncertain future.

“We are responsible for the upkeep and flow of the buildings. We’re the ones who make the coffee and famous fruit water that WeWork members rave about. We are responsible for the maintenance and cleanliness of the buildings,” the worker added. “Without CSAs [community service associates] and BCAs [building cleaning associates], WeWork wouldn’t work.”

----As part of WeWork’s restructuring, the company’s cleaning and maintenance staff, around 1,000 workers, are being outsourced to contractors.

The cleaning and maintenance workers are classified at WeWork as community service associates and building cleaning associates. All community service associates are being outsourced to Chicago-based real estate services contractor Jones Lang Lasalle (JLL), while building cleaning associates are divided between Unity Building Associates and ABM Industries.

----Some faced losing retirement savings WeWork had offered and workers said they had not received any answers from management over what will happen to the company shares provided to WeWork employees after one year of employment.

“It felt like we were being pressured to sign contracts with no real talk of anything and this is right before the holidays. People have families, bills, obligations. If we didn’t sign, we would’ve been left out in the cold,” said a building cleaning associate in New York City, who is being outsourced to Unity Building Associates. “WeWork sold their lower staff off like cattle. There was no warning that the lower staff were about to be outsourced to another company.”
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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?

Old newspapers can be used to grow carbon nanotubes

Newspapers provide a green, economical way to produce carbon nanotubes

Date: November 22, 2019

Source: Swansea University

Summary: New research has found that old newspaper provide a cheap and green solution for the bulk production of single walled carbon nanotubes.

A research collaboration between Rice University and the Energy Safety Research Institute (ESRI) at Swansea University has found that old newspapers can be used as a low cost, eco-friendly material on which to grow single walled carbon nanotubes on a large scale.

Carbon nanotubes are tiny molecules with incredible physical properties that can be used in a huge range of things, such as conductive films for touchscreen displays, flexible electronics, fabrics that create energy and antennas for 5G networks.

The new study, published in the MDPI Journal C , details the research experiments carried out in producing carbon nanotubes which could have the potential to solve some of the problems associated with their large scale production such as:-
  • The high cost of preparing a suitable surface for chemical growth.
  • The difficulties in scaling up the process, as only single surface growth processes have been previously available.
The research team discovered that the large surface area of newspapers provided an unlikely but ideal way to chemically grow carbon nanotubes.

Lead researcher Bruce Brinson said: "Newspapers have the benefit of being used in a roll-to-roll process in a stacked form making it an ideal candidate as a low-cost stackable 2D surface to grow carbon nanotubes."

However, not all newspaper is equally good -- only newspaper produced with sizing made from kaolin, which is china clay, resulted in carbon nanotube growth.

Co-author Varun Shenoy Gangoli said: "Many substances including talc, calcium carbonate, and titanium dioxide can be used in sizing in papers which act as a filler to help with their levels of absorption and wear. However it was our observation that kaolin sizing, and not calcium carbonate sizing, showed us how the growth catalyst, which in our case was iron, is affected by the chemical nature of the substrate."

ESRI Director Andrew Barron, also a professor at Rice University in the USA, said: "While there have been previous research that shows that graphene, carbon nanotubes and carbon dots can be been synthesised on a variety of materials, such as food waste, vegetation waste, animal, bird or insect waste and chemically grown on natural materials, to date, this research has been limited.

"With our new research, we have found a continuous flow system that dramatically reduces the cost of both substrate and post synthesis process which could impact on the future mass manufacture of single walled carbon nanotubes."

 25 November 1944, 12.26 pm

The F.W. Woolworth store in New Cross Road, Deptford in South East London opened in September 1929 and quickly became established as a popular local favourite. Its location, opposite the ornate Deptford Town Hall made it a favourite haunt for the corporation's manual workers, and its proximity to two main line stations with frequent trains to Central London coupled with the passing tram service encouraged shoppers to pop in on the way to or from work. Trade was boosted by its tea bar which offered a wide range of hot drinks, snacks and light meals, all at affordable prices.

Until November 1944 it was just one of over 700 branches across the UK that few people outside the local area would ever have heard of. Then everything changed, for all the wrong reasons.

----At 12.15 second break started at Woolworth's and the next wave of store staff headed upstairs for a cooked lunch in the canteen. The train cleaners from New Cross Station on the Southern Railway slipped off early, hoping to get a hot drink of Bovril at the Woolies Tea Bar. The pile of saucepans near the back tills was going down. And the 251st rocket was launched.

Suddenly, with no warning, at 12.26 the V2 rocket hit the rear of the flat roof of the Woolworth store. After a moment's silence the walls bowed, and the building collapsed and exploded. The Royal Arsenal Co-operative Society store next door and the queue of people waiting for a tram in the street outside were caught in the inferno. As the dust settled shards of glass and debris stretched ankle-deep all the way to New Cross Station, half a mile (0.4km) away. It is believed that the station had been the target.

In the hours that followed local people helped the emergency services to lift the rubble by hand. As it was cleared the full horror was evident. 168 people had died, both customers and staff. 122 passers-by were injured. Just one person survived. These terrible losses would have been even worse if traffic problems had not caused a suspension of the tram service along New Cross Road a few minutes before the attack.
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The monthly Coppock Indicators finished October

DJIA: 27,046 +59 Up. NASDAQ: 8,292 +67 Up. SP500: 3,038 +67 Up.

Another inconclusive month, but all three continued to move up weakly. A buy signal. But, like the Fed, I would await more data.

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