Baltic Dry Index. 1656 -19 Brent
Crude 62.58 Spot Gold 1487
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 speak Latin to God, Italian to
women, French to men and German to my horse."
Attributed to Charles V of Spain. Clever horse.
Actually, Ray Dalio, billionaire founder and CEO of investment
management firm Bridgewater Associates wrote “The World Has Gone Mad and the System Is
Broken.” Who am I to disagree.
I think the system actually broke all the way back in the
stock market crash of October 19 1987, when Greenspan rigged the stock market
opening on October 20, 1987, with the Fed rigging stock markets, and the US bond
market ever since.
Once China caught on and decided that two can play at
that game, the Fed increasingly lost control of the intended outcome.
Now, according to the IMF, China has replaced
the USA as the locomotive of the global economy. “The Asian country accounted for 28% of all growth
worldwide in the five years from 2013 to 2018, more than twice the share of the
United States, according to the International Monetary Fund.”
While the fiat dollar still
remains by far the world’s top reserve currency, the US economy no longer has
the means to fully back that position up.
America, on the Great Nixonian Error of fiat money, communist money, has
finally hit its “Triffin dilemma.”
How that plays out ahead,
probably comes down to how the next global recession plays out, and whether
extreme left wing socialists take over the US Presidency next year.
With the US Fed now a captive of
president Trump’s re-election campaign, and a stock market bubble 1720 style, I
don’t rule out a 1929 style calamity ahead. Though what will be the exact
trigger is the big unknown. Whoever knows that stands to become a new
billionaire, albeit in a western world fast turning on billionaires.
In old money, the way around the
Triffin dilemma was to temporarily go off the gold standard, but America went
off the gold standard on August 15 1971, arbitrarily forcing everyone else onto
fiat money. The benefits of fiat money were all front loaded and long ago
dissipated. Now the system is broken and the chickens are coming home to roost.
My best guess here, is that it’s now
become time to load up on some gold insurance. In our world of free money,
negative interest rates, WeWorks, and gargantuan unrepayable corporate debt, perhaps
the solution is to go back onto some form of gold standard, though no one is
yet arguing for that.
Triffin dilemma
The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was identified in the 1960s by Belgian-American economist Robert Triffin,[1] who pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, thus leading to a trade deficit.The use of a national currency, such as the U.S. dollar, as global reserve currency leads to tension between its national and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account, as some goals require an outflow of dollars from the United States, while others require an overall inflow.
Specifically, the Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the Bretton Woods system. John Maynard Keynes had anticipated this difficulty and had advocated the use of a global reserve currency called 'Bancor'. Currently the IMF's SDRs are the closest thing to the proposed Bancor but they have not been adopted widely enough to replace the dollar as the global reserve currency.
In the wake of the financial crisis of 2007–2008, the governor of the People's Bank of China explicitly named the reserve currency status of the US dollar as a contributing factor to global savings and investment imbalances that led to the crisis. As such the Triffin Dilemma is related to the Global Savings Glut hypothesis because the dollar's reserve currency role exacerbates the U.S. current account deficit due to heightened demand for dollars.
More
Asian markets flat as investors eye trade-deal developments
By Marketwatch
and Associated
Press
Published: Nov 5, 2019 11:56 p.m.
ET
Asian markets were little changed in early trading Tuesday, as investors were rattled by a possible snag in a U.S.-Chinese trade truce following reports Beijing wants Washington to life punitive tariffs.
Japan’s Nikkei NIK, +0.17% was up 0.1% while Hong Kong’s Hang Seng Index HSI, +0.11% dipped 0.1%. The Shanghai Composite SHCOMP, -0.26% slipped 0.2% and the Shenzhen Composite 399106, -0.59% fell 0.5%. South Korea’s Kospi 180721, +0.19% rose 0.1% while benchmark indexes in Taiwan Y9999, +0.08% , Singapore STI, +0.37% , Malaysia FBMKLCI, -0.39% and Indonesia JAKIDX, -0.46% were mixed. Australia’s S&P/ASX 200 XJO, -0.55% fell 0.5%.
---- Beijing wants 15% tariffs imposed in September on $125 billion of Chinese imports removed as part of a “Phase 1” deal in talks aimed at ending a trade war that threatens global growth, according to news reports. There was no sign whether President Donald Trump would agree, which raised the possibility of a new breakdown in negotiations.
“We see it fit to temper optimism for now,” said Vishnu Varathan of Mizuho Bank in a report.
On Wall Street, the Dow Jones Industrial Average DJIA, +0.11% and the Nasdaq COMP, +0.02% closed at record highs Tuesday. The S&P 500 index SPX, -0.12% closed just below the all-time high reached the previous day.
Gains have been driven by better-than-expected company earnings, interest rate cuts, hopes for a trade truce and a steadily growing economy.
The upbeat mood marks a pivot from the summer, when worries about trade,
Britain’s potentially messy exit from the European Union and the slowing global
economy loomed over the market.
China’s central bank helped ease worries about a possible liquidity
crunch by cutting its base interest rate on a one-year loan by 0.05% to 3.25%.
More
Column: China has replaced U.S. as locomotive of global economy
November 5, 2019 /
3:58 PM
LONDON (Reuters) -
China has replaced the United States as the engine of the global economy,
providing by far the largest contribution to growth in recent years and pulling
along the world’s smaller economies in its train.
The Asian country accounted for 28% of all growth worldwide in the five
years from 2013 to 2018, more than twice the share of the United States,
according to the International Monetary Fund.
The Fund predicts China will account for a similar share of growth over
the next five years between 2019 and 2024 (“World economic outlook”, IMF,
October 2019).
China, India, Indonesia, Russia and Brazil collectively will account for
more than half of all global growth through 2024, based on Fund projections.
There is no scenario in which the global economy can achieve healthy
growth unless these five economies, especially China, see their output and
incomes rise strongly.
Resolving the economic conflict between the United States and China, or
at least managing it better, will be critical if global growth is to accelerate
again over the next few years.
---- The United States is still important, and the Federal Reserve remains at the centre of global markets, but the U.S. economy is no longer large enough or growing fast enough to act as the sole locomotive for the world economic train.
China on its own, and the other major emerging markets collectively, are
now more important drivers of the global economy.
More
Ray Dalio Says the ‘World Has Gone Mad’ With So Much Free Money
By Nathan Crooks“At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps,” the billionaire founder of investment management firm Bridgewater Associates wrote.
The essay echoed comments he made earlier in the day at the Greenwich Economic Forum in Connecticut, where he said economic inequality had become a “national emergency.”
My below piece “The World Has Gone Mad and the System is Broken” explains some of the crazy things that are happening, why they are happening and why I believe that they are unsustainable. I’d be interested in knowing what you think about them. https://t.co/daUdsw0XLy
More
Finally, in European news, can Fiat Chrysler and Peugeot live
up to their promises in the merger?
European factories at risk in Peugeot-Fiat merger
November 5, 2019
/ 1:08 PM
FRANKFURT
(Reuters) - Fiat Chrysler and Peugeot owner PSA’s pledge not to close factories
if they merge is likely to come under heavy strain as the combined group would
have spare production capacity of almost six million vehicles in a slowing autos
market.
The companies last week unveiled plans to create a $50 billion group that would leapfrog Hyundai, General Motors, Ford and Honda to become the world’s No.4 automaker, based on their combined 8.7 million vehicles sold last year.
The new car and truck making giant would have potential manufacturing capacity of 14 million vehicles, forecasters LMC Automotive told Reuters. But the industry has entered a downturn and the
European small car market in particular - where both PSA and Fiat Chrysler (FCA) are heavily exposed - is under pressure.
“The utilization rate would be low at 58%, which would leave the group with almost six million units of spare capacity worldwide,” LMC Automotive said. “Europe is likely to bear the brunt of any potential plant closures.”
Labor unions and politicians have already voiced concerns about job losses, and both France-based PSA (PEUP.PA) and Italian-American FCA (FCHA.MI) (FCAU.N) have ruled out factory closures in an attempt to quell fears.
But a deadline to meet 2021 and 2025 emissions goals in Europe adds
pressure on FCA to adopt PSA’s more efficient engines, calling into question
some of FCA’s engine plants in Europe - mainly in Italy, as well as in Poland -
in particular.
“The focus will be Europe, where sub-scale product lines, powertrains
and future EV (electric vehicle) investments could be combined,” Bernstein
Research analyst Max Warburton, said in a recent note.
A combined PSA-FCA would have a market share of 22% in Europe, September
registration data from auto industry association ACEA shows, leapfrogging
Volkswagen which, with a market share of 20%, has been the largest carmaker in
Europe.
More
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.
Today, SoftBank Group presents its results. But will they tell the
truth, the whole truth, and nothing but the whole truth? Get real! This is the
21st century, everyone’s a winner.
Floundering tech bets put spotlight on SoftBank results, Son
November 5, 2019 /
9:43 AM
TOKYO
(Reuters) - SoftBank Group Corp and its founder Masayoshi Son face a day of
reckoning on Wednesday when the investment juggernaut is likely to post weak
quarterly results, hit by hefty falls in the valuation of some of its biggest
tech bets.
SoftBank has come under renewed investor scrutiny after it was forced to
bail out one of its best known portfolio companies - the cash-burning,
office-sharing firm WeWork - for $10 billion.
That has deepened concern about Son’s strategy of pouring billions of
dollars into unproven, money-losing startups at a time it is getting squeezed
by a sell-off in most of its listed bets.
Uber Technologies Inc posted on Monday a wide quarterly loss, sending
its shares sliding in after-hours trading. SoftBank’s $100 billion Vision Fund
has a $7.7 billion investment in the U.S. ride-hailing firm.
SoftBank’s quarterly results come at a crucial time for Son, when he is
trying to raise capital for a successor to the Saudi Arabia-backed Vision Fund.
SoftBank is expected to post an operating loss of 48 billion yen ($442
million) for the July-September quarter on Wednesday, according to the average
forecast of four analyst estimates compiled by Refinitiv.
That would be its first quarterly loss in 14 years, Refinitiv data shows,
and compares with an operating profit of 706 billion yen a year earlier.
SoftBank has delivered multiple quarters of sector-beating gains driven
by internal revaluations of tech bets by the Vision Fund, which had its first
major close in May 2017.
Analysts estimates vary widely, in part because SoftBank provides little
detail on how it accounts for those gains or losses on its books.
A further lack of disclosure over valuations on Wednesday would “risk
losing the trust of investors,” said Amir Anvarzadeh, market strategist at
Asymmetric Advisors.
Given
its falling share price - down around 30% since July - the conglomerate may
unveil a share buyback of around 500 billion yen to try and stem the slide,
Anvarzadeh said. SoftBank announced a 600 billion yen buyback in February.
Investors will be looking closely at how SoftBank accounts for the value
of its stake in WeWork, into which it has poured $13 billion to take a majority
stake. WeWork was valued by SoftBank as high as $47 billion as recently as
January, but is currently valued at just $8 billion.
The Japanese company is expected to announce on Wednesday a writedown of
at least $5 billion due to a slump in values of WeWork and some other top
holdings, Bloomberg reported late last month.
SoftBank has taken the unusual step of structuring the bailout to avoid
having to consolidate WeWork on its books, despite taking an 80% stake,
reducing its disclosure requirements as it tries to avoid liability for the
startup’s onerous lease obligations.
Dan Baker, analyst at Morningstar, said he is marking the value of
WeWork at zero until SoftBank’s restructuring has demonstrated a clear path to
profitability.
More
WeWork still on life support, rivals say it must cut costs fast
November 5, 2019 /
8:00 PM
NEW
YORK (Reuters) - SoftBank may be rescuing WeWork with a $9.5 billion cash
injection but most rivals say they believe the office space sharing company is
still in critical condition.
They say for Manhattan-based WeWork to survive it will need to slash
costs and balance sheet risk, and it will need to do that fast without scaring
off customers.
In interviews, six rivals were mostly more sober than gleeful about
WeWork’s fall to earth, which has seen estimates of its valuation drop from $47
billion or more in August to as little as $5.9 billion based on terms of the
SoftBank lifeline. Hedge fund investor Bill Ackman warned last week it may be
worth nothing.
The company was forced to abandon its plan for an initial public offering as investors questioned big losses, whether its business model was sustainable, and the way it was run by its cofounder Adam Neumann, who subsequently quit as chief executive.
Through its rescue, Japanese technology investment company SoftBank Group Corp (9984.T) is seeking to protect its previous investment of about $10 billion in WeWork, though many investors and analysts question whether it will ever be able to recoup that. Its stake will rise to 80 percent from 30 percent.
---- “WeWork is in a very challenging situation,” said Charles Robinson, senior vice-president for U.S. operations at Servcorp, an Australia-based company with more than 160 sites across the globe. “They’re going to have to look at ways of getting some of those liabilities off their balance sheet without destroying their reputation.”
He added: “Best-case scenario – if they do fix it, the company will be valued at $4 billion.”
BLEEDING CASH
The company has added 114 new sites in the past four months, according to its website, and is planning on opening another 208 in the next few months, bringing its total to 850.
More
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?
Dietary fiber effectively purifies carbon nanotubes
Date:
November 3, 2019
Source:
Nagoya University
Summary:
A dietary fiber can help separate out semiconducting carbon nanotubes used for
making transistors for flexible electronics.
A new, cheaper method easily and effectively separates two types of
carbon nanotubes. The process, developed by Nagoya University researchers in
Japan, could be up-scaled for manufacturing purified batches of single-wall
carbon nanotubes that can be used in high-performance electronic devices. The
findings were published in the journal Applied Physics Express.
Single-wall carbon nanotubes (SWCNTs) have excellent electronic and
mechanical properties, making them ideal candidates for use in a wide range of
electronic devices, including the thin-film transistors found in LCD displays.
A problem is that only two-thirds of manufactured SWCNTs are suitable for use
in electronic devices. The useful semiconducting SWCNTs must be separated from
the unwanted metallic ones. But the most powerful purification process, known
as aqueous two-phase extraction, currently involves the use of a costly
polysaccharide, called dextran.
Organic chemist Haruka Omachi and colleagues at Nagoya University
hypothesized that dextran's effectiveness in separating semiconducting from
metallic SWCNTs lies in the linkages connecting its glucose units. Instead of
using dextran to separate the two types of SWCNTs, the team tried the
significantly cheaper isomaltodextran, which has many more of these linkages.
A batch of SWCNTs was left for 15 minutes in a solution containing
polyethylene glycol and isomaltodextrin and then centrifuged for five minutes.
Three different types of isomaltodextrin were tried, each with a different
number of linkages and a different molecular weight. The team found that
metallic SWCNTs separated to the bottom isomaltodextrin part of the solution,
while the semiconducting SWCNTs floated to the top polyethylene glycol part.
The type of isomaltodextrin with high molecular weight and the most
linkages was the most (99%) effective in separating the two types of SWCNTs.
The team also found that another polysaccharide, called pullulan, whose glucose
units are connected with different kinds of linkages, was ineffective in
separating the two types of SWCNTs. The researchers suggest that the number and
type of linkages present in isomaltodextrin play an important role in their
ability to effectively separate the carbon nanotubes.
The team also found that a thin-film transistor made with their purified
semiconducting SWCNTs performed very well.
Isomaltodextrin is a cheap and widely available polysaccharide produced
from starch that is used as a dietary fibre. This makes it a cost-effective
alternative for the SWCNT extraction process. Omachi and his colleagues are
currently in discussions with companies to commercialize their approach. They
are also working on improving the performance of thin-film transistors using
semiconducting SWCNTs in flexible displays and sensor devices.
Finally
on this day in 1865, the last Confederate Cruiser, commerce raider surrendered
in Liverpool, England.
CSS Shenandoah
----The Liverpool Mercury reported the event on Tuesday, 7 November 1865:THE CONFEDERATE CRUISER SHENANDOAH IN THE MERSEY.
Considerable excitement was caused on 'Change yesterday morning by circulation of the report that the Confederate cruiser Shenandoah, of whose exploits amongst the American whalers in the North Pacific so much has been heard, was passed about 8 o'clock by the steamer Douglas at anchor at the bar, of Victoria Channel, apparently waiting for high water. By many the report was discredited, it being thought that those on board the Douglas were in error, and had mistaken some other craft for the celebrated ex-Confederate cruiser. At half past ten, however, all doubts on the point were set at rest, with the Shenandoah steaming up the Victoria Channel with the Palmetto flag flying from her masthead.[10]
More, much, much,
more.
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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