Baltic Dry Index. 1315 -40 Brent
Crude 65.39 Spot Gold 1478
Never ending Brexit now January 31.
Trump’s Nuclear China Tariffs Now in effect.
The USA v EU trade war started October 18. Now in effect.
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith
Yesterday in stocks it was more of the same, hype on the
trade deal and hopium. Just to be sure, the Fed added in another 86.4 billion
dollars of monetisation, although the Fedster’s say we mustn’t call it
monetisation even though it is, and nobody is to know the real reason all the
massive monetisation is needed.
In the real world, far from the panicky Fed, the global
economy continues its slowdown. For that reason, I will continue to treat the
current stock market bubble as an exit opportunity. Reality always comes crashing back in at some
point, often with bad timing, and apparently to most, out of the blue.
With the Fed unable or unwilling to give us a reason for
all the massive monetisation since September 16th, to this old
dinosaur market trader since 1968, experience tells me something bad is
underway.
Below, now even hype seems to be losing its bite.
Asian stocks ride Wall St. momentum to 17-month peak, pound slips
December 17, 2019
/ 12:22 AM
SYDNEY
(Reuters) - Asian shares rose to their highest in more than a year on Tuesday,
as trade deal optimism and Wall Street’s run to all-time highs supported
sentiment, while familiar fears of a hard Brexit knocked the pound.
The mood carried MSCI's broadest index of Asia-Pacific shares outside Japan up 0.6% to its highest since July 2018. Japan's Nikkei .N225 hit its firmest in more than year, Hong Kong's Hang Seng .HSI rose almost a percent.
Korea's Kospi .KS11 stood at its highest since May and Shanghai blue chips .CSI300 rose 0.6%, while Australia's S&P/ASX 200 eked a tiny extension to Monday's big gains.
Bond markets, currencies and commodities were more circumspect, and futures trade pointed to softness in Europe and a flat open the United States after a bumper Monday.
“As long as volatility remains low, momentum is probably continuing, despite the amazing year to date gains,” said Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore.
“The risk is that nobody thinks that there’s anything left for the year, they’re all thinking 2020.”
The preliminary deal between Washington and Beijing will double U.S. exports to China, White House adviser Larry Kudlow told Fox News on Monday. The United States will also reduce some tariffs on Chinese goods under the agreement.
It is not yet signed, and the Chinese side have been more circumspect in their praise, but U.S. Trade Representative Robert Lighthizer said over the weekend it is “totally done”.
The three major U.S. stock indexes rose modestly, but posted record closing highs. So did the pan-European STOXX 600 index .
The Dow Jones Industrial Average .DJI rose 0.4%, the S&P 500 .SPX added 0.7% and the Nasdaq .IXIC almost one percentage point. For the year to date, the Nasdaq has increased its value by a third, while the other indexes are up by more than 20%.
---- Elsewhere currency markets were more pensive in the absence of many of the fine details of the trade deal. The U.S dollar recouped some of Monday’s losses, though moves were modest.
“Well, yeah, they’ve agreed a ‘phase one’ deal, but what’s actually in
it?” said Westpac analyst Imre Speizer.
“Equity markets just want to rally, so they’ll pick on anything that seems
remotely positive, but the other markets are maybe a little more thoughtful
about exactly what’s going on.”
Several Chinese officials told Reuters the wording of the agreement
remained a delicate issue and care was needed to ensure expressions used in
text did not re-escalate tensions.
More
New York Fed Adds $86.4 Billion in Day of Key Money-Market Pressures
Operations are aimed at ensuring financial system has enough liquidity to keep short-term borrowing rates stable
By Michael S. Derby Dec. 16, 2019
10:15 am ET
The Federal Reserve Bank of New York added $86.4 billion in
liquidity to financial markets.In two operations carried out Monday, the Fed injected $36.4 billion in overnight liquidity and $50 billion in 32-day liquidity extending into the coming New Year. Eligible banks took far less than the $120 billion the Fed was willing to offer in the overnight repurchase agreements, or repo, operation, while they wanted just slightly more long-term liquidity than the Fed was offering in the longer-term repo operation.
As of the most recent data from last week, the Fed reported that its balance sheet had risen to $4.1 trillion from $3.8 trillion in September. About $213 billion in repo interventions were also outstanding then. That amount of repo operations could rise to nearly half a trillion dollars if the eligible banks tap all the liquidity the central bank has said it would offer over coming days.
Monday’s operations came on a day where the market is likely to face pressure due to a tax payment and Treasury debt auction-settlement date. “Some of the ingredients of the mid-September funding squeeze will be present this month,” analysts at Wrightson ICAP said in a report. “However, the availability of more than $200 billion of Fed [repos] should keep funding pressures reasonably well contained.”
---- Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a short-term loan of central bank cash, collateralized by the securities.
The Fed’s money-market operations are aimed at ensuring that the
financial system has enough liquidity to keep short-term borrowing rates stable
and consistent with Fed goals, with the central bank’s federal-funds rate
staying within the 1.5%-to-1.75% target range. The Fed has repeatedly said repo
operations are technical in nature and have no broader economic implications.
More
Back in the real world, far from the global gambling casinos
of stocks, the global economy news was grim. 2020 is shaping up to be a repeat
of 2019s slowing, and growing manufacturing recession, now about to be aggravated
by a Boeing shutdown of 737 MAX airline production. For more on that scroll
down to the next section.
China won't resort to massive infrastructure stimulus as investment slows
December 17,
2019 / 2:56 AM
BEIJING (Reuters) - China will take a targeted approach to boosting
investment and will not resort to massive stimulus in its infrastructure push,
the state planner said on Tuesday, as Beijing ramps up support to stabilise its
slowing economy.
The comments flagging a cautious approach to stimulus come a day after
economic data showed fixed asset investment posting meagre growth in November.
“We will resolutely not open the floodgate of stimulus and will
scientifically push forward these major projects,” Meng Wei, spokeswoman at the
National Development and Reform Commission, told reporters in a regular
briefing.
Meng said the market would play a decisive role in resource allocation
and that policy support for infrastructure projects in the central and western
China would be stepped up.
Official data released on Monday showed fixed asset investment grew 5.2%
from January-November, in line with the increase seen in the first 10 months,
which was the weakest in decades. Infrastructure investment, in particular,
slowed further.
More
More borrowers are getting rejected for auto loans
Published: Dec 16, 2019 7:35 p.m. ET
U.S. consumers might have their pick of employment in
today’s robust job market, but that doesn’t mean everyone is getting financed
for a car.A Federal Reserve Bank of New York survey of consumer credit released Monday showed a spike in the rate of auto-loan rejections, to 8.1% in October from 4.5% in the same month last year.
And for the full year, the average rate of car-loan rejections was 7.1%, up from 6.1% for 2018, even through applicants reported fewer denials in other parts of the record $14 trillion consumer debt market for the same 12-month period.
“The reported rejection rates for credit cards, mortgages and mortgage refinancing applications all declined compared to 2018,” according to the Fed’s snapshot of its annual survey, which covers consumer experiences when applying for auto loans, credit cards, credit-card balance increases, mortgages and mortgage refinancing.
November saw a surprise dip in the U.S. unemployment rate, to 3.5% from 3.6%, matching a 50-year low and fueling optimism that a strong American consumer can help keep the economy chugging along beyond its record 11th year of expansion.
Still, a decade of easy auto credit has fueled concerns that U.S. households could be on the verge of yet another financing bubble, only a few years after many borrowers emerged from the worst foreclosure crisis since the Great Depression.
Last month, a report from the Wall Street Journal highlighted how one 40-year-old electrician took out a $45,000 loan on a $27,000 Jeep Cherokee, while other lenders also have been loosening their underwriting standards.
More
German economy stagnating despite signs of industrial rebound: ministry
December 16, 2019
/ 9:19 AM
BERLIN (Reuters) -
The German economy is more or less stagnating, the economy ministry said on
Monday, adding there are initial signs that an industrial recession could be
coming to an end as orders stabilize.
The ministry also
said in its monthly report that indicators at the start of the fourth quarter
pointed to subdued private consumption even though disposable incomes continued
to rise.
Consumption has helped keep Europe’s biggest economy humming by
compensating for weak exports. Trade tensions this year pushed the German
manufacturing sector into a recession but the overall economy narrowly escaped
the same fate.
“Industrial production has probably not reached the trough,” the
ministry said. “But orders and sales have stabilized at a low level. This
suggests that industry has gradually stabilized and could pick up slightly in
the New Year.”
There are fears that should the manufacturing sector continue to shrink,
the slowdown could spread to an otherwise resilient services sector.
IHS Markit’s flash composite Purchasing Managers’ Index (PMI) for December
on Monday confirmed the diverging trends: manufacturing activity slipped and
services rose.
Markit said the rate of decline in new orders and exports was
stabilizing, giving hope for the manufacturing sector.
The German central bank said last week that Germany faced another
sluggish year despite a likely rebound in exports as households see their
spending power shrink. The Bundesbank said households’ real disposable income
fell due to a slowdown in employment growth.
It trimmed its growth forecast for this year to 0.5 percent and halved
its prediction for 2020 to 0.6 percent.
In another grim sign for the economy, the BGA trade association said on
Monday that wholesalers planned to cut investments and their tendency to hire
new staff had decreased despite expectations that their nominal revenue will rise
by 2.3 percent to 1.3 billion euros this year.
German Factory Slump Deepens Again as Recovery Seems Elusive
By Carolynn Look
December 16, 2019, 8:30 AM GMT Updated on December 16, 2019,
9:55 AM GMT
·
PMI unexpectedly drops, indicating deeper
contraction
·
Disappointing report comes days after U.S.-China
trade relief
Denmark's economy to suffer from global downturn, government says
December 16,
2019 / 9:49 AM
COPENHAGEN (Reuters) - Denmark’s economic growth is likely
to slow by around 1 percentage point in the coming years, as the export-driven
economy suffers from a global downturn, the government said on Monday. Denmark’s economy, dominated by large companies such as shipper Maersk (MAERSKb.CO), drug producer Novo Nordisk (NOVOb.CO), brewer Carlsberg (CARLb.CO) and wind turbine maker Vestas (VWS.CO), has been booming since 2013 with average yearly growth of 2.5%.
But growth is expected to slow to 2.0% this year, then to 1.5% and 1.4%
next year and in 2021, the finance ministry said in a report.
“The prospect of a slower growth rate is mainly due to a weakened global
economy,” the finance ministry said.
In the coming years, growth is likely to be driven by private
consumption rather than exports, the ministry said.
The expected slowdown comes even as the fiscal policy of the new Social
Democratic government helps to support economic growth.
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
John Kenneth Galbraith
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Boeing again today. That 737 MAX disaster just
keeps dragging on. But what effect will this have on the US economy next quarter?
Boeing's 737 crisis deepens as production stops for first time in two decades
December 16,
2019 / 1:27 PM
SEATTLE/WASHINGTON (Reuters) - Boeing Co (BA.N) said on Monday it would suspend
production of its best-selling 737 MAX jetliner in January, its biggest
assembly-line halt in more than 20 years, as fallout from two fatal crashes of
the now-grounded aircraft drags into 2020.
Boeing, which builds the 737 south of Seattle, said it would not lay off
any of the roughly 12,000 employees there during the production freeze, though
the move could have repercussions across its global supply chain and the U.S.
economy.
The decision at a two-day board meeting came after the Federal Aviation
Administration (FAA) refused to approve the jet’s return to service before 2020
and delivered what was seen as a public rebuff to Boeing’s hopes of moving
faster.
The 737 MAX has been grounded since March after two crashes in Indonesia
and Ethiopia killed 346 people within five months, costing the plane
manufacturer more than $9 billion so far.
The decision to halt production will have little immediate impact on
airlines that have already seen deliveries halted, forcing many to cancel
flights or lease older replacements.
But it marks a deepening of a crisis that has already seen Boeing’s
fastest-selling jet grounded worldwide, its safety record scrutinized,
customers pressing for compensation and its cornerstone relationship with the
FAA placed under strain.
It also threatens to hit U.S. economy, with House representative Rick
Larsen calling Boeing’s decision “a body blow to its workers and the region’s
economy.”
“The only saving grace is the Boeing leadership has promised not to lay
off any workers. I am ready to work with Boeing workers to ensure ... they will
have access to the necessary resources in the event of a prolonged shutdown.”
Until now Boeing has continued to produce 737 MAX jets at a rate of 42
per month and purchase parts from suppliers at a rate of up to 52 units per
month, even though deliveries are frozen until regulators approve the aircraft
to fly commercially again.
Boeing did not say how long the shutdown might last, stressing this was
up to the FAA. Previous efforts to predict when the 737 MAX might return to
service after software training changes had drawn a sharp response from the
U.S. regulator.
---- After holding out for months by keeping its factory lines running at optimum speed for a quick return, Boeing said it had decided to put emphasis on delivering some 400 planes that have been produced and stored, once the FAA gives the green light.
Such an emphasis would most quickly release much-needed cash for Boeing,
but could cause other problems when production resumes, industry sources said.
Supply chains are fragile due to record demand and abrupt changes in speed
often cause snags.
---- Boeing’s shares closed down 4% on Monday and fell 1% after hours. Shares in Spirit AeroSystems Holdings Inc (SPR.N), its biggest supplier, fell 2%.
Analysts highlighted General Electric Co (GE.N), Safran (SAF.PA) and Senior Plc (SNR.L) as other suppliers that could experience disruptions.
GE and Safran co-produce engines for the 737 MAX and unlike most suppliers are paid mostly once the airplanes are delivered to the airline buyer.
Airlines with 737 MAX jets and orders also face added uncertainty after already scaling back flying schedules and delaying growth plans.
More
Boeing Weighs Suspending or Cutting Back 737 MAX Production
Management of aerospace giant sees an output pause as most viable option, as fleet grounding stretches into 2020
By Andrew Tangel, Andy Pasztor and
Doug Cameron Updated Dec. 15, 2019 7:12 pm ET
Global aviation regulators grounded the MAX in March after a fatal
accident in Ethiopia—the second one for the MAX, following one less than five
months earlier in Indonesia. The accidents took a total of 346 lives.
Boeing said in October a production freeze or further cut could be
necessary if federal approval of MAX flight-control software fixes and training
changes extends into 2020.
----No immediate employee layoffs were anticipated, this person said,
because of the previously scheduled closing of the 737 assembly plant in
Renton, Wash., for the Christmas and New Year’s holidays. The holiday break
typically lasts about two weeks.
Any MAX production changes could carry significant implications for the
U.S. economy. Boeing’s inability to deliver the aircraft during the prolonged
grounding has already weighed on the nation’s trade deficit.
More
John Kenneth Galbraith.
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?
Kenya launches Chinese-built 50MW solar power plant
Source: Xinhua| 2019-12-14 20:20:22
NAIROBI, Dec. 14 (Xinhua) -- Kenyan President Uhuru Kenyatta on Friday
launched a 50 MW solar power farm located in Garissa, northeast region, with
the plant being one of the largest photovoltaic electricity stations in Africa.
The project was designed and built by the EPC contractor China Jiangxi
Corporation for International Economic and Technical Co-operation (CJIC), in
conjunction with Kenya's Rural Energy Authority (REA).
The solar plant puts Kenya on the path of achieving green energy
sufficiency as the east African nation also runs one of the largest wind farms
in the continent.
The plant, which is a large solar energy installation in East and
Central Africa, adds to Kenya's rich profile as the epicenter of green energy
generation in Africa, Kenyatta said during the launch.
At the launch, Kenyatta noted the power plant which is near the border
with Somalia is part of a broad government renewable energy strategy to harvest
400 MW of electricity from the country's vast solar resources.
He announced that Garissa, which was previously dependent on unstable
thermal power, is now fully connected to the national power grid.
Kenyatta added his government will continue to initiate various
development projects across the country to help the people.
"We want money allocated for development to go to the right
projects but not the pockets of a few people. You, the people, are our
employers and you have the right to hold us as leaders to account to make sure
your money is used properly," said Kenyatta.
He said the government is keen on narrowing the development gap between
regions of the country.
"I see that the gap that existed is being reduced," said
Kenyatta. "We are developing our country uniformly from Moyale to Namanga
from Mombasa to Lake Victoria."
Peter Mbugua, chief executive officer of REA, said the project was
commissioned in November 2018, and has been generating power for the last year.
"It is occupying 210 acres and the solar panels sit on 120
acres," said Mbugua.
He noted that during construction, the firm dug a borehole for the
community and the project employed about 600 people.
"The first beneficiaries of this project have been the people of
Garissa. The county now has more stable power," he said.
Mbugua said that the project was funded through government to government
agreement between Kenya and China. The equipment and technologies are from
China.
"We are going to be bigger in renewable, especially by working with
counties. We have done up to 26 mini grids mainly in Northern Kenya, only two
are awaiting commissioning," he said.
Zhang Jian, country representative of CJIC in Kenya, said the project
was started in 2017 and was completed in one year.
"The output for annual power supply from the project is 100,000
MWH. I am so proud the project was successfully completed and has state-of-art
equipment. We are hopeful it will serve Kenya for the next 25 years," he
added.
Zhang said the firm trained 50 local experts for the installation of
solar panels, operation and repairs during the project.
More
If
economists could manage to get themselves thought of as humble, competent
people on a level with dentists, that would be splendid.
John
Maynard Keynes
The monthly Coppock Indicators finished November
DJIA: 28,051 +76 Up. NASDAQ: 8,665 +94 Up. SP500: 3,141 +90 Up. All higher again, but it’s
not a buy signal I would follow. I would wait for the next sell signal.
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