Friday 1 November 2019

More Trade War Ping Pong.


Baltic Dry Index. 1731 -51 Brent Crude 59.69 Spot Gold 1510

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.

I knew something was wrong somewhere, but I couldn’t spot it exactly. But if something was coming and I didn’t know where from, I couldn’t be on my guard against it. That being the case I’d better be out of the market.

Jesse Livermore

Today, more of the same. Trump talks up his never-ending trade talks with China, unnamed China officials talk it down. The markets nervously churn slightly higher or slightly lower on each attempt to move the market.

To this old dinosaur market follower, watching markets since 1968, our stock markets are trading near the highs, running on fumes, flying on a wing and a prayer.

Trump’s trade war deal “lite” part one, is already priced in to stocks, albeit no one yet knows what’s in it, or whether or not it will match market expectations.

With downside risk far exceeding upside reward, roughly 40% to 10%, to this old dinosaur, that’s a classic exit market.

Deep pocket, high risk gamblers would probably put on year-end purchased synthetic double option positions here, gambling the stocks will break one way or the other, but for most regular casino investors, the correct approach is to bide one’s time in cash and precious metals.

Asian shares turn higher after positive China data

November 1, 2019 / 1:20 AM
SHANGHAI (Reuters) - Asian shares reversed early losses on Friday as an unexpected bounce in Chinese manufacturing activity offset some negativity cast by a Bloomberg news report that raised doubts over whether the United States and China can reach a long-term trade deal.

Factory activity in China expanded at its fastest pace in more than two years in October as export orders and production rose, a private business survey showed on Friday. 

The expansion, which beat expectations and contrasted with the dour results of an official survey Thursday, helped to boost Chinese blue chips .CSI300, which rose 0.7%.

Hong Kong's Hang Seng .HSI added 0.3% and Seoul's Kospi .KS11 rose 0.42%.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS reversed early losses to add 0.16%, having hit three-month highs on Thursday.

The index’s performance reflected a results season that has shown companies to be more resilient than expected, said Jim McCafferty, head of Equity Research, Asia ex-Japan at Nomura.

“If you look at the micro data supplied by the companies, then it tells you that customers ... are continuing to do business. So I think that we are in a better state than perhaps investors thought we were just one month ago,” he said.

Earlier on Friday, losses had mirrored falls in global stock markets, as MSCI’s gauge of equity performance in 47 countries .MIWD00000PUS fell from 20-month highs after a report that cast doubt on the likelihood of a U.S.-China trade deal.

On Wall Street, the Dow Jones Industrial Average .DJI fell 0.52%, the S&P 500 .SPX lost 0.30% and the Nasdaq Composite .IXIC dropped 0.14%.
More

China Casts Doubts Long-Term Trade Deal Possible With Trump

Bloomberg News
October 31, 2019, 9:12 AM GMT
Chinese officials are casting doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a “phase one” agreement, Bloomberg News reported.

In private conversations with visitors to Beijing and other interlocutors in recent weeks, Chinese officials have warned they won’t budge on the thorniest issues, according to people familiar with the matter. They remain concerned about President Donald Trump’s impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.

Mazda braces for 30% full-year profit drop on falling car sales in U.S., China: Nikkei

November 1, 2019 / 2:51 AM
TOKYO (Reuters) - Mazda Motor Corp (7261.T) is facing a drop in annual profit of about 30% as the Japanese automaker struggles with falling sales in the United States and China, its biggest markets, the Nikkei newspaper reported on Friday.

Japan’s fifth-largest automaker expects to post about 60 billion yen ($555.4 million) in operating profit for the year ending March, falling from last year’s 82.3 billion yen to a seven-year low.
The updated forecast would be almost half the automaker’s previous profit forecast of 110 billion yen.

Mazda said that while the Nikkei report was not based on any announcement made by the company, it anticipated a profit revision largely in line with the figure stated in the report, which would be its lowest since the 2013 financial year.

It will make an announcement alongside its financial results for the July-September quarter later in the day.

Demand for Mazda vehicles including the Mazda3 sedan and the CX-5 SUV crossover has slumped since the company posted record annual sales of about 1.6 million vehicles in the 2018 financial year.
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Trade war with China suffocating US manufacturers

By Hu Weijia Source:Global Times Published: 2019/10/30 20:58:49
US President Donald Trump's plan to "Make America Great Again" will come to naught due to US manufacturing woes.

Reviving US manufacturing has been a key goal for the Trump administration, but a Commerce Department report released on Tuesday showed manufacturing made up just 11 percent of GDP in the second quarter, the lowest level since 1947.

According to the US Labor Department, factories shed 2,000 jobs in September. In a Wall Street Journal economic survey conducted in recent weeks, two-thirds of economic forecasters said the manufacturing sector was in recession, which is defined as two or more consecutive quarters of contraction.

The Trump administration has placed manufacturing at the center of its economic strategy. The plan to "Make American Great Again" is doomed to fail if the strategy focuses on bringing back jobs in manufacturing and establishing complete industry chains in the US.

Flows of capital from developed countries to nations with pools of low-cost labor have remained robust in recent years.

If some countries erect barriers to economic ties or even try to reverse the long-term trend, it will violate economic rules and damage the interests of manufacturers.

More than a year after the start of the US-China trade war, few American manufacturers have moved their operations back to the US. Instead, some of them shifted production from China to low-cost sites in Southeast Asia.

The trade war isn't helping bring manufacturing jobs back to the US - instead, it's causing serious damage to US manufacturing industries because of the rise in prices of imported raw materials.

The trade war is the direct cause of US manufacturing woes. The downturn in manufacturing in the US adds to evidence that the trade policies adopted by the US government are wrong.

The trade war has resulted in a reorganization of supply chains. In this process, the US' role is being weakened by its protectionism. The most urgently needed action for the US is to maintain its share of global production and consolidate the country's position in international supply chains.

This means that manufacturers doing business in the US need both imported raw materials and external markets. With the protectionist policies adopted by the US government, more US manufacturers will suffocate to death.
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, more on that easy to win trade war.  Asia’s manufacturing recession won’t go away and is threatening to spread out to affect the service economy.

Asia’s Factory Hubs Stuck in the Doldrums as Trade Talks Linger

By Enda Curran and Michelle Jamrisko
Asia’s factory hubs remained in the doldrums in October despite anticipation that the U.S. and China are moving toward an interim trade agreement.

Purchasing manager indexes for South Korea, Japan, Malaysia and Indonesia remained in contraction territory while Taiwan also moved below 50, the dividing line between contraction and expansion.
Even Vietnam, which has been more resilient than many of its peers, slid to the dividing line. Thailand joined Vietnam at 50, having stayed close to the dividing line for much of this year.

China’s Caixin index -- which is more weighted toward private manufacturing companies -- rose to 51.7 from 51.4, but an official gauge released Thursday dropped to its lowest level since February.

“The headwinds for global growth, including China, continue to be a challenge,” Johanna Chua, chief Asia Pacific economist at Citigroup Inc., told Bloomberg Television.

The protracted slowdown comes against a backdrop of the slowest global growth in a decade, as rising protectionism and weakening demand takes its toll on business confidence across Asia.

South Korean exports, a bellwether for global trade, plunged again in October. Shipments fell 15% from a year earlier, pushed down by a slide in semiconductor and petrochemical shipments. Imports also fell 15%.

Much will depend on how the U.S.-China trade talks play out. The two governments had flagged progress toward an initial agreement to be signed at the Asia-Pacific Economic Cooperation summit later this month, but Chile’s decision to cancel the event amid social unrest has raised doubts about when a deal will be inked.

In a tweet Thursday, U.S. President Donald Donald Trump said officials are searching for a new location for him and Chinese President Xi Jinping to sign the deal, which he said would be “about 60% of total deal.” At the same time, Chinese officials are casting doubts about reaching a comprehensive agreement.

China Said to Doubt Long-Term Trade Deal Possible With Trump

Asian central banks from India to South Korea have loosened monetary policy this year to help offset the trade slump. The U.S. Federal Reserve’s signal this week of a policy pause after three rate cuts may give them reason to be more cautious going forward.

Reaching an agreement will be critical for corporate sentiment, according to Rob Carnell, chief economist for Asia Pacific at ING Groep NV in Singapore.

“The trade war, geopolitics are the single biggest driver of financial markets and what corporate decision makers are using to decide whether or not to do things,” he told Bloomberg Television.

He warned that the weakness in manufacturing PMIs signals the services sector will be next.

“You look at what’s happening to manufacturing and you just stick a big lag in, and that’s typically where non-manufacturing is going to go.”

“When life itself seems lunatic, who knows where madness lies? Perhaps to be too practical is madness. To surrender dreams — this may be madness. Too much sanity may be madness — and maddest of all: to see life as it is, and not as it should be!”

Miguel de Cervantes Saavedra, Don Quixote


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?

How do you know it's perfect graphene?

The answer has been there all along

Date: October 30, 2019

Source: DOE/Ames Laboratory

Summary: Scientists have discovered an indicator that reliably demonstrates a sample's high quality, and it was one that was hiding in plain sight for decades.

Producing structurally perfect graphene and other 2D materials is the secret to tapping into their potential novel electronic and spintronic properties. But how do we know when graphene, the most widely studied 2D material, is perfect -- a defect-free and uniform layer of atoms?

Scientists at the U.S. Department of Energy's Ames Laboratory have discovered an indicator that reliably demonstrates a sample's high quality, and it was one that was hiding in plain sight for decades.

The researchers were investigating samples of graphene using low energy electron diffraction, a technique commonly used in physics to study the crystal structure of the surfaces of solid materials.

What they found didn't follow the accepted rules of diffraction.

"The discovery is a paradox," said Michael Tringides, a senior scientist at Ames Laboratory who investigates the unique properties of 2D materials and metals grown on graphene, graphite, and other carbon coated surfaces. "Textbook diffraction states that the more flawless a material is, the sharper and clearer the diffraction spots, and imperfect materials have low intensity, broader diffraction spots."

But in the case of highly uniform samples of graphene, the diffraction studies not only showed the expected sharp spots, but also a very broad band of diffuse diffraction in the background.

"That result is not intuitive and very strange," said Tringides, "but we find this broad diffraction pattern to be an intrinsic feature to graphene, and when you have it, you have very good graphene. This is a good way to quantitatively measure its structural perfection."

What's more, this strange diffraction pattern was present and visible in the last 25 years of graphene research publications, and yet ignored. "It was a big, noticeable phenomena, and reproducible, and we realized it must be extremely important in some way," said Tringides.

While more theoretical work is needed to fully explain the experimental findings, the scientists believe the broad diffraction phenomenon is caused by the confinement of graphene electrons within a single layer of atoms. According to the fundamentals of quantum mechanics, because the electron position normal to the layer is precisely known, their wave vector must have a spread, which is transferred to the diffracted electrons. This effect is significant for other types of 2D materials as well. With the continued and growing interest in 2D materials for a variety of applications, improving their structural quality will be the key to promising new technologies, said Tringides.

"This work provides an important step towards the ability to optimize graphene and other 2D materials precisely, and tailor their properties for specific applications," he said.
More

Another weekend and 3 years on still no Brexit. Welcome to the wealth and jobs destroying, bureaucratic, EUSSR. Snails race along, compared to Brussels. Will John Bull ever get free from the great bog of Europe? More excitement next week. Have a great weekend everyone.

“Finally, from so little sleeping and so much reading, his brain dried up and he went completely out of his mind.”

Miguel de Cervantes Saavedra, Don Quixote

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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