Thursday 7 November 2019

Trade Deal Lite Or No Deal? EU Stagnates.



Baltic Dry Index. 1533 -123 Brent Crude 61.69 Spot Gold 1491

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.

“If you're not gonna pull the trigger, don't point the gun.”

James Baker. United States Secretary of the Treasury under President Ronald Reagan, and U.S. Secretary of State and White House Chief of Staff under President George H. W. Bush.

Will there be a USA v China trade deal “lite part one,” or no deal? After talking up TDLP1 last week, on Monday in Shanghai China, and yesterday in Washington TDLP1 was talked down.

The stock market breakout ground to a halt. Is the 2018 last quarter sell-off about to repeat?

If it is, there will be no Christmas eve bailout by the Trump run Fed. Chairman Powell has already bowed to President Trump reversing policy and cutting interest rates. A no deal outcome will completely destroy stock market expectations. Another quarter point cut in December won’t reignite a failed breakout.

But with President Trump desperate for a trade deal and tying his re-election directly to the fate of the US stock market, he can’t afford a no deal outcome. President Xi seems to be holding all the high cards.

Asia stocks stymied by trade talk frustration

November 7, 2019 / 12:30 AM
SYDNEY (Reuters) - Asian shares managed to cling near multi-month peaks on Thursday while bonds eked out a bounce as reports of delays in sealing a preliminary Sino-U.S. trade deal left investors frustrated at the lack of concrete progress.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased a slight 0.1%, just off a six-month high hit earlier in the week.

Japan's Nikkei .N225 dithered either side of flat in quiet trade, having touched a 13-month top on Wednesday. South Korean stocks .KS11 were up 0.1% after hitting their highest since May.

Shanghai blue chips .CSI300 added 0.3%, while E-Mini futures for the S&P 500 ESc1 were down a touch.

Reuters reported on Wednesday a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim trade deal could be delayed until December as discussions continue over terms and venue.

“One could take the view that by not committing to meet the original deadline it gives more time for a somewhat more comprehensive agreement to be thrashed out,” said Ray Attrill, head of FX strategy at National Australia Bank.

 “But markets have understandably jumped the other way, exhibiting a slight loss of confidence that anything more substantial than an agreement not to further lift tariffs, in return for some increase in US agricultural purchases, can be agreed by way of an initial deal.”

Wall Street was underwhelmed by the news and the Dow .DJI ended Wednesday all but flat, while the S&P 500 .SPX gained 0.07% and the Nasdaq .IXIC dropped 0.29%.
More

Next poor Europe! But wait as goes Europe, largely goes poor John Bull, just don’t let on to the deluded left wing folks at the extreme left wing BBC. They think it’s all Brexit! Please don’t disillusion them.

Europe: Facing Spillovers From Trade and Manufacturing

November 6, 2019
As in the rest of the world, European trade and manufacturing have weakened. There are some signs that this slowdown is spreading into the rest of the economy. While services and consumption have remained relatively resilient in line with strong labor markets, investment is starting to lose steam.

These developments have slowed economic activity in the region, especially in advanced Europe, according to the IMF’s latest health check of Europe’s economy.

The report predicts growth will moderate from 2.3 percent in 2018 to 1.4 percent in 2019, its lowest rate since 2013. In 2020, growth is projected to recover modestly to 1.8 percent as international trade is expected to rebound. But several risks to the outlook remain.

Here are six charts that tell the story of Europe’s economic health and its prospects.

European trade and industry have weakened, slowing growth. Following global trends, trade and manufacturing in Europe have weakened considerably. This weakness is primarily driven by machinery and transport equipment—sectors that are particularly relevant for Europe. As a result, economic activity in Europe has slowed, especially in advanced economies. Emerging European economies outside of Russia and Turkey were a bright spot, with growth remaining strong.

----Some signs of spillovers, but still relatively limited. The weakening trade and manufacturing—along with subdued business confidence and elevated trade uncertainty—have started to spill over into investment, especially in many advanced European countries. While the services sector has been relatively buoyant, it too has started to soften. Private consumption, however, has stayed relatively robust.
More + Charts.
 

Euro area PMI data shows region 'remains close to stagnation'

Published: Nov 6, 2019 4:27 a.m. ET

The final Composite Purchasing Managers Index for the euro area showed the region remained "close to stagnation" in October, according to IHS Market on Wednesday. The index rose to 50.6, though that was an improvement on a preliminary 50.2 level and a 50.1 level for September. The data still signals a rate of growth that's among the weakest in the past six-and-a-half years. At the national level, Germany remained the only country inside contraction territory in October, while France was the top-performing nation, with its composite PMI reaching a two-month high of 52.6.

Italian PM says ArcelorMittal wants mass layoffs, govt rejects demand

November 6, 2019 / 10:26 PM
ROME (Reuters) - Steel giant ArcelorMittal (MT.AS) wants to cut 5,000 jobs in Italy because of low production levels at its Taranto plant, Italian Prime Minister Giuseppe Conte said on Wednesday, denouncing the plan as “unacceptable”.

The mooted layoffs at the Ilva steelworks in Taranto came just two days after ArcelorMittal announced that it planned to pull out of a year-old deal to buy the Italian company.

ArcelorMittal blamed its decision at time on the government’s failure to renew a legal shield it had previously provided which gave the firm immunity from prosecution while it cleaned up the heavily polluting plant.

Conte met ArcelorMittal managers earlier in the day and said it was clear the legal shield had nothing to do with the threat to quit Italy. The real problem was that the firm had not hit its production targets, he told reporters.

“The legal shield is not the issue. The company believes that the current production level of 4 million tonnes a year does not cover its investments and cannot justify current job numbers,” Conte said.

There was no immediate comment from ArcelorMittal.

ArcelorMittal took control of Ilva in November 2018 and has some 10,700 employees in Italy, including 8,200 in Taranto — the largest such steel plant in Europe.

Conte said it had aimed to produce 6 million tonnes of steel a year in Taranto. He added that ArcelorMittal could not turn around one year into its contract and announce that its plan was no longer viable.
More.

But with Trump’s America erratic and threatening a new trade war on French wines and German cars, and a European slump developing, France lines up a giant ally for its own camp. President Xi takes a pot shot at President Trump without naming him. Is President Xi giving up on a meaningful trade deal with President Trump?

China, France pledge to expand economic cooperation amid U.S. trade tensions

Nov. 6, 2019 / 12:55 PM
Nov. 6 (UPI) -- China and France signaled closer economic cooperation in Beijing on Wednesday, while agreeing to commit to multilateralism and free trade.

Chinese President Xi Jinping and French President Emmanuel Macron agreed to cooperate on trade, finance and aerospace at the Great Hall of the People, Xinhua news agency reported. Both leaders have grappled with U.S. trade tensions since President Donald Trump assumed office.

Xi may have been pleased about the recent issuance of 4 billion euro-denominated sovereign bonds in Paris, the first time China has issued euro bonds since 2004, the report said.

The Chinese leader said the issuance of bonds represents Chinese support of an international finance hub in Paris, and an important step to "deepen financial cooperation between China, France, as well as the European Union."

"We should expand the opening up of the two-way markets. China is willing to expand two-way trade and investment with France, improve trade and investment liberalization, and jointly uphold market rules and the principle of fair competition," Xi said.

Xi also said China will import more French produce and "carry out all-round agricultural cooperation in accordance with market demand."

China has used trade as a means of penalizing countries, however. Beijing banned Canadian pork four months ago, but is reopening its market to Canadian pork and beef owing to ongoing troubles with containing swine fever, the Globe and Mail reported Tuesday.

Macron, who had attended the China International Import Expo in Shanghai, expressed trust in Beijing.

"My frequent exchanges with Xi have deepened friendship and political mutual trust between France and China. It has boosted pragmatic cooperation," Macron said.

https://www.upi.com/Top_News/World-News/2019/11/06/China-France-pledge-to-expand-economic-cooperation-amid-US-trade-tensions/3331573062187/?ls=3

China leader Xi Jinping takes aim at U.S. in free trade speech

Nov. 5, 2019 / 12:23 PM
Nov. 5 (UPI) -- Chinese President Xi Jinping said Tuesday China's foundation is built on open markets, and that he is willing to work with partner nations to "grow the pie," a reference to the benefits of free trade.

Xi's remarks at the China International Import Expo, where leaders like French President Emmanuel Macron were in attendance, come at a time of deadlock with the United States.

China's export orders have fallen for the third year in a row amid a trade dispute with Washington, the South China Morning Post reported.

On Tuesday in Shanghai Xi said he would "further open China's markets," according to Beijing's state-owned China Central Television.

In a speech that appeared to be aimed at the Trump administration, Xi said economic globalization is an irresistible tide, and that "no one can stop it."

The Chinese leader stressed the importance of multilateral cooperation on economic issues, saying the difficulties facing the global economy "cannot be solved independently by any nation."

An "open attitude is needed to grow the pie together," Xi said.

"All countries should adhere to the concept of people first, and we should not put our own interests above human interests," he said. "We should pursue 'tearing down walls' instead of 'putting up walls,' resolutely opposing protectionism, unilateralism, continuously reduce trade barriers, improving global value chains and supply chains and jointly cultivating market demand."

Xi's speech on trade comes only days after China was criticized for "bad behavior" in a report on the Indo-Pacific from the U.S. State Department, according to Epoch Times.

The report said China was using its economic power to suppress democratic freedoms in other countries.

"Such practices, which Beijing exports to other countries through its political and economic influence, undermine the conditions that have promoted stability and prosperity in the Indo-Pacific for decades," the report read.
https://www.upi.com/Top_News/World-News/2019/11/05/China-leader-Xi-Jinping-takes-aim-at-US-in-free-trade-speech/4361572972622/?st_rec=3331573062187

Crooks and Scoundrels Corner.

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

More on that warning yesterday from Ray Dalio, the founder of the world’s biggest hedge fund. 

Below that, SoftBank. When “buying dreams,” goes wrong. The more I learn of WeWork, the more I think the whole business premise is wrong. Pouring good money after bad.

“You only have to do a very few things right in your life so long as you don’t do too many things wrong.”

Warren Buffett.

Founder of world’s biggest hedge fund warns of ‘big squeeze’ with investors ‘buying dreams rather than earnings’

Published: Nov 5, 2019 2:18 p.m. ET
Ray Dalio, the founder of hedge-fund behemoth Bridgewater Associates, says he believes investors haven’t necessarily been investing on a firm footing and that it’s a condition that will eventually have to be rectified. 

‘They’re selling dreams. They’re not selling earnings, and they’re not even selling a path to earnings.’ Ray Dalio

The prominent investor, during a particularly downbeat CNBC interview on Tuesday, suggested investors are flush with cash because of monetary policy but haven’t been discerning about investment strategies. They are “buying dreams rather than earnings and stocks,” he said.

His comments come as WeWork parent We Co. canceled a prominent public sale of stock amid a fervor over its business model and valuation.

At the same time, results for the third quarter have come in better than feared but have otherwise been weak on absolute terms.

Dalio, whose fund counts some $150 billion in assets under management, painted a particularly gloomy picture of financial markets that have managed to register all-time highs after a fitful past several months.

---- The hedge-fund investor also said he believed that monetary policy is “stuck... you can’t raise rates because as a result of the stimulation companies and various entities have a lot more debt,” he said.

Hence, he warned that financial markets could be facing a “big squeeze.”

Dalio told CNBC at the Greenwich Economic Forum that he felt that companies will struggle to increase profit margins, which have been near records and with a greater likelihood of producing lower margins as companies struggle to cut costs further than they already have.

“There are not a lot of things to push that higher,” Dalio said, explaining that profit margins had gone up from 7% to 14%, by his estimates.

The 70-year-old investor also lamented the U.S. government’s budget deficit, which is just under $1 trillion in the just-closed fiscal year, according to the latest, almost official estimate by the Congressional Budget Office.

SoftBank Books $4.7 billion loss due to WeWork investment

Published: Nov 6, 2019 3:00 a.m. ET
SoftBank Group Corp. said Wednesday that it recorded a loss of about $4.7 billion on its investment in U.S. office-sharing company WeWork made through a wholly owned subsidiary.

The loss came after SoftBank 9984, +0.65%  marked down the total value of WeWork’s equity to $7.8 billion.

WeWork, formally called We Co., had been valued at $47 billion before its attempt to go public backfired amid widespread skepticism about its profitability and management.

SoftBank said the loss represented the difference between what it considered the fair value of its wholly owned subsidiary’s stake in WeWork as of the end of September and the price at which SoftBank had purchased that stake.

SoftBank Chief Executive Masayoshi Son likened the company’s results, which also included losses on other investments, to a “big storm” and said it was his first time reporting such a big loss.

In October, SoftBank put together a $9.5 billion bailout for WeWork, consisting of a mix of debt and equity. SoftBank said it hadn’t calculated the effect of the rescue package on its earnings.

"Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be a more productive than energy devoted to patching leaks."

Warren Buffett.

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?

Ford goes beast mode in 900-hp electric Mustang ... and it's a manual

November 05, 2019
Prior to today's start of SEMA 2019, we would have expected a collaboration between Ford and Webasto to relate to a commercial vehicle or perhaps a camper van like the Ford Transit Nugget. Instead, the two partner together on one of the show's most aggressive sports cars, an electrified Mustang capable of developing 900 hp and 1,000 lb-ft. Ford distributes all that torque with a fortified six-speed manual transmission, exploring the potential for a thrilling, engaging breed of electric sports car as it gets ready for a production EV offensive. Will the future of pony cars look like the Mustang Lithium?

Ford's already detailed its plans to expand its electrified vehicle lineup, starting with a Mustang-inspired electric SUV later this month, with hybrid and all-electric F-150 pickups to follow down the line. It's already opened the checkbook and plans to spend $11.5 million on electrified vehicle development by 2022.

So with this year's SEMA build, Ford worked with Webasto to explore what an all-electric Mustang would look like. Webasto supplies an 800V battery system capable of discharging a full megawatt. 
That battery fires up the Phi-Power dual-core electric motor that peeks out from under the see-through polycarbonate panels of the Webasto hood. In an unexpected twist for an electric vehicle, Ford routes output from the 900-hp e-motor through a six-speed manual, specifically a drag-grade Calimer Getrag MT82 transmission with billet internals built up to handle the 1,000 lb-ft of torque. 
Ford Performance half shafts and a Super 8.8 Torsen differential further distribute power to the lightweight 20-in Forgeline wheels wrapped up in Michelin Pilot Sport 4S tires.

Ford helps drivers manage all that electrified muscle via four individual modes with controlled amounts of torque. Valet, sport, track and beast modes are selected on the custom 10.4-in touchscreen.

Beyond the powertrain overhaul, Ford drops the Lithium by an inch (2.5 cm), cuts weight with custom carbon components, adds in a Ford Performance Track Handling Pack, bolts on Sankuer Composite Technologies side splitters and rear diffuser, and borrows Brembo six-piston front brakes from the Shelby GT350R.

"Ford has made no secret of the fact that we are electrifying our most popular nameplates,” says Hau Thai-Tang, Ford’s Chief Product Development and Purchasing Officer. "This one-off Mustang prototype is a great opportunity for us, together with Webasto, to showcase what new electrified powertrains can do for performance in a car they already know and love."

Unfortunately, Ford doesn't yet provide an indication of what the Mustang Lithium's 800V electric powertrain can do for performance, offering no acceleration or top speed estimates more specific than "stunning quarter-mile acceleration." We have to imagine it'll leave the standard Mustang feeling a slight bit sluggish on the 0-60 sprint.

There should be more to come. The Mustang Lithium isn't presented merely as a SEMA show car never to be heard from again but as an active test bed for battery and thermal management technologies Ford and Webasto hope to bring to market. It's also designed to gauge market interest in an all-out performance electric car, and it's going to be hard to do that without giving the world a better feel for what "beast mode" is all about.

For now, we'll have to settle for seeing it standing still under the lights of SEMA, which runs through Friday.
Source: Ford

SEMA

Specialty Equipment Market Association (SEMA) of the automobile aftermarket was formed in 1963 by Roy Richter, Els Lohn, Willie Garner, Bob Hedman, Robert E. Wyman, John Bartlett, Phil Weiand Jr, Al Segal, Dean Moon, and Vic Edelbrock Jr. and now consists of 6,383 companies worldwide, bringing together aftermarket manufacturers, original equipment manufacturers (OEM), media, car dealers, specialty equipment distributors, installers, retailers and restoration specialists.[citation needed]

SEMA provides services for employees of its member companies that include education and professional development, market research, legislative and regulatory advocacy, industry publications, international business development and business-to-business events.[citation needed]

The largest of the SEMA events held annually during the first week of November is the SEMA Show at the Las Vegas Convention Center in Las Vegas, Nevada in conjunction with the Automotive Aftermarket Industry Week.[1][2] As part of this event, SEMA and other automotive aftermarket trade groups make-up one of the single largest events on the Las Vegas calendar.[3] This auto show is not open to the public. Registration as media, manufacturer, buyer or exhibitor is required.[
More

"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

Warren Buffett.

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.

No comments:

Post a Comment