Baltic Dry Index. 689 -40 Brent Crude 64.39 Spot Gold 1553
Never ending Brexit now January 31. 9 days away.
Trump’s Nuclear China Tariffs Now in effect.
The USA v EU trade war started October 18. Now in effect.
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
In Davos yesterday, it was the Trump v Thunberg show, with
the assembled billionaires as the “impartial” jury. By the end of the contest, the preachy billionaires
all seemed to agree it was time to buy more stocks. Look away from the Baltic
Dry Index.
With the US Federal Reserve monetising again like a
drunken sailor, they’re probably right until the Fed, for whatever reason, is
forced to stop.
To this old dinosaur market follower since 1968, I’ll
pass on the wisdom of billionaires scrambling to pick up nickels in front of
steam rollers.
Something has gone very badly wrong in the financial
system again, forcing the Fed into a massive monetisation. Rumours suggest that
the problem lies in the hedge funds, which might in turn end up bankrupting the
clearing houses, LCH, DTCC, and FICC.
The Fed now has an epic task on monetising all the way
out to November 3.
Below, Asia opens higher and yesterday’s developments in
mile high Davos. What could possibly go wrong?
Stocks in Asia mostly shrug off concerns over coronavirus in early Wednesday trading
By MarketWatch
Published: Jan 21, 2020 11:15 p.m. ET
Asian stock markets were largely unfazed early Wednesday by
the rising global concerns over an outbreak of a coronavirus that can cause
deadly pneumonia, despite investor worry over the impact the health emergency
may have on travel and tourism ahead of the Lunar New Year that starts
Saturday.Stocks in China were mixed early Wednesday. The Shanghai Composite SHCOMP, +0.24% was down about 0.25%, with the Shenzhen 399106, +0.71% flat. Hong Kong HSI, +1.12% stocks, which took a hit Tuesday, were rebounding by about 0.8% on Wednesday.
UBS believes China learned lessons from the SARS outbreak in 2002. The mortality rate of the Wuhan pneumonia seems notably lower than SARS. However, the ongoing travel peak season -- the lunar new year starts Saturday -- is a tremendous challenge, which could complicate the disease diffusion.
If the pneumonia couldn’t be contained in the short term, expect China’s
retail sales, tourism, hotel and catering, travel activities likely to be hit,
especially in 1Q and early 2Q. UBS’ forecast of sequential growth rebound in
the first half of 2020 would face some downside risk.
“There is a legitimate threat to travel,” Henry Harteveldt, a travel
industry analyst in San Francisco, told the Associated Press. “It’s small now,
but with the potential to become much larger with just some innocuous event
such as an undetected passenger getting through (health) screening at an
arrival airport like San Francisco International, Kennedy or LAX.”
Harteveldt said the situation also could become worse for airlines if
companies start to restrict travel to China.
More
Trump urges Davos to reject environmental ‘prophets of doom’
As impeachment reaches climax, president
says he has made US economy ‘roaring geyser of opportunity’
The US president claimed that he had turned a
stagnant economy into “a roaring geyser of opportunity”.
Although
he reiterated his criticism of the Federal Reserve, saying it had “raised rates
too fast and lowered them too slowly”, Mr Trump said the US was “in the midst
of an economic boom, the likes of which the world has never seen before”, in
remarks seen in the room as an appeal to domestic voters in an election year.
He
also argued that Davos delegates should “reject the perennial prophets of doom
and their predictions of apocalypse” — a thinly-veiled attack on environmental
activists such as Greta Thunberg, who on Tuesday used the event to argue that
governments and business leaders were doing too little to avoid irreversible
climate change.
Speaking shortly after Mr Trump, Ms Thunberg told Davos attendees that her warning last year that “our house is on fire” had achieved nothing, as global emissions of carbon dioxide had continued to rise.
Speaking shortly after Mr Trump, Ms Thunberg told Davos attendees that her warning last year that “our house is on fire” had achieved nothing, as global emissions of carbon dioxide had continued to rise.
She
mocked the leaders of governments and businesses who tell activists “don’t be
so pessimistic” while offering only “empty words and promises” rather than
action.
----
In Davos, Mr Trump made little reference to the impeachment proceedings.
Instead he hailed his recent trade agreements with China, Canada and Mexico and
said his relationship with China’s president Xi Jinping was “extraordinary”,
adding: “He’s for China, I’m for US, but other than that we love each other.”
The US had pioneered “a new model of trade for the 21st century”, Mr Trump
said. Phase two of its trade negotiations with China would begin “very
shortly”, he added.
Addressing
Davos delegates after Mr Trump’s speech, Chinese vice-premier Han Zheng said
that the world’s second-largest economy would not follow the lead of “some
other countries” in moving away from globalisation. “Unilateral and
protectionist policies which run counter to the global trend will lead
nowhere,” he said, adding that China would pursue trade agreements with more
countries.
More
Fed Adds Just Over $90 Billion in Temporary Money to Markets
Intervention comes as overnight repo totaling $58.6 billion and 14-day repo totaling $32.2 billion
Jan. 21, 2020 10:13 am ET
The Federal Reserve added $90.8 billion in short-term money
to financial markets Tuesday.The Fed added money in two repurchase-agreement operations, or repos. The overnight intervention added $58.6 billion, while a 14-day repo added $32.2 billion. In both cases, eligible banks—called primary dealers—took less money than the Fed was willing to offer.
Fed repo interventions take in U.S. Treasurys, agency and mortgage bonds from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by the securities. The banks tapping this cash are limited in the amount of liquidity they can take in exchange for their securities, and they pay interest to the central bank to get the funds.
Fed money-market interventions are aimed at keeping the federal-funds
rate within the 1.5%-to-1.75% range, and to limit the volatility of other
money-market rates. The Fed restarted its repo operations in September after
unexpected market volatility and steadily increased the sizes of its
operations. Demand for Fed money has waxed and waned, and by and large the Fed
has restored calm to markets.
The Fed said this past Thursday that its balance sheet stood at $4.18
trillion as of Wednesday, versus $3.8 trillion in September. Peak Fed holdings
were $4.5 trillion. About $229.5 billion in repo interventions were also
outstanding on Wednesday, versus $210.6 billion on Jan. 9.
The Fed had originally planned to wind down repo operations at the end
of this month but will keep them going until at least mid-February. Many
analysts expect them to go on for even longer.
https://www.wsj.com/articles/fed-adds-just-over-90-billion-in-temporary-money-to-markets-11579619605
Founder of world’s largest hedge fund says ‘cash is trash’ as the Dow soars to records
By Mark
DeCambre Published: Jan 21, 2020
8:45 p.m. ET
Cash
isn’t king to Dalio
‘Get
out of trash. There’s still a lot of money in cash.’
If there are investors who believe cash is king amid this market bull run, they ought to think again, suggests Ray Dalio.
The billionaire founder of the hedge fund Bridgewater Associates said during a CNBC interview on Tuesday on the sidelines of the World Economic Forum in Davos, Switzerland, that investors should be buying this market, rather than seeking safety in cash.
“Cash is trash,” said the hedge-fund luminary, who founded Westport, Conn.–based Bridgewater in 1975. The investment-management firm looks after some $160 billion.
Dalio’s comments, to be sure, echo others he has made previously. In fact, at Davos back in 2018, the honcho famously said investors were going to “feel pretty stupid” if they were holding cash as stocks climbed toward records. Markets tumbled soon thereafter on the back of increasing worries about Sino-American trade tensions, but they later recovered.
However, the decline came uncannily close — within a few short weeks — to Dalio’s 2018 cash bashing.
More
Paul Tudor Jones says this ‘crazy’ stock market run reminds him a lot of early ’99
“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination,” Jones said on CNBC’s “Squawk Box” on Tuesday at the World Economic Forum in Davos, Switzerland. “It reminds me a lot of the early ’99. In early ’99 we had 1.6% PCE, 2.3% CPI. We have the exact same metrics today.”
“The difference is fed funds were 4.75%; today it’s 1.62%. And back then we had budget surplus and we’ve got a 5% budget deficit,” Jones added. “Crazy times.”
Asked if investors should sell now to avoid a blow-up like the one that took place in March of 2000, Jones said, “Not really. The train has got a long, long way to go if you think about it.”
The legendary hedge fund manager and trader noted that the Nasdaq Composite more than doubled from a similar stage to the dot-com bubble top. “That’s a long way from now. At the top theoretically, rates [would] be substantially higher.”
The stock market hit a peak in 2000 before the dot-com bubble burst. The tech-heavy Nasdaq Composite approached 5,000 in early 2000 then dove thousands of points, crushing investors.
Jones, founder and chief investment officer of Tudor Investment Corporation, warned that the new “curveball” to derail the bull market could be the outbreak of the coronavirus.
More
China virus death toll rises to nine as pandemic fears mount
January 22, 2020 /
2:36 AM
BEIJING/SHANGHAI
(Reuters) - The death toll from a new flu-like coronavirus in China rose to
nine on Wednesday with 440 confirmed cases, Chinese health officials said as
authorities stepped up efforts to control the outbreak by discouraging public
gatherings in Hubei province.
Another 2,197 people who came into contact with infected people were isolated,
with 765 so far released from observation, National Health Commission
vice-minister Li Bin told reporters, adding that there was already evidence
that the virus was being spread through “respiratory transmission”.
“Recently there has been a big change in the number of cases, which is
related to our deepening our understanding of the disease, improving diagnostic
methods and optimizing the distribution of diagnostic kits,” said Li.
As China vowed to tighten containment measures in hospitals, the World
Health Organization (WHO) was due to hold an emergency meeting on Wednesday to
determine whether the outbreak of the new coronavirus constitutes a global
health emergency.
The virus, originating in the central Chinese city of Wuhan in Hubei at
the end of last year, has spread to Chinese cities including Beijing, Shanghai
and Macao, as well as the United States, Thailand, South Korea, Japan and
Taiwan.
The Chinese government has been providing daily updates on the number of
cases in a bid to head off public panic, as millions of people prepare to
travel domestically and abroad for the country’s Lunar New Year celebrations
starting this week.
More
Finally, not content with monopolising fiat money and generating
massive and growing wealth inequality, our central banksters want to take over
cryptocurrencies.
Group of central banks to study case for issuing their own digital currencies
Andy Bruce and Francesco Canepa 21 January
2020
Major central banks are looking at the case for issuing their own
digital currencies, the Bank of England and European Central Bank said on
Tuesday, amid a growing debate over the future of money and who controls it.
The central banks of Britain, the euro zone, Japan, Sweden and
Switzerland will share experiences in a new group headed by former European
Central Bank official Benoit Coeure and assisted by the Bank of International
Settlements, they said.
Central banks across the world have quickened the pace with which they
are looking at issuing their own digital currencies in the wake of Facebook’s
push to launch Libra.
Of major central banks, China’s has emerged as the front-runner in the
drive to create its own digitized money, though details of the project are
still scarce.
“The group will assess … economic, functional and technical design
choices, including cross-border interoperability; and the sharing of knowledge
on emerging technologies,” the central banks said in a statement.
CBDCs are traditional money, but in digital form, issued and governed by
a country’s central bank.
By contrast, cryptocurrencies such as bitcoin are
produced by solving complex maths puzzles, and governed by disparate online
communities instead of a centralized body.
The common denominator is that cryptocurrencies and CBDCs, to a varying
degree, are based on blockchain technology, a digital ledger that allows
transactions to be recorded and accessed in real time by multiple parties.
Last year BOE Governor Mark Carney took aim at the U.S. dollar’s
“destabilizing” role in the world economy and said central banks might need to
join together to create their own replacement reserve currency.
The best solution would be a diversified multi-polar financial system,
something that could be provided by technology, Carney said.
Facebook’s Libra was the most high-profile proposed digital currency to
date but it faced a host of fundamental issues that it had yet to address, he
added.
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
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, Trump’s proposed EU wine tariffs generate
shock and awe across America’s wine
industry. Who knew? Apparently, no one in the Wine House, correction,
White House. It’s enough to turn a man to drink.
Some weasel took the cork out of my lunch.
W. C. Fields
Wine industry in a state of ‘near panic’ as it girds for impact of Trump tariffs
Published:
Jan 18, 2020 5:07 p.m. ET
What
if your favorite Prosecco suddenly shot up to $30 a bottle, your weeknight
Côtes du Rhône doubled in price or that biodynamic Beaujolais you favor
disappeared altogether, along with just about every reasonably priced natural
wine?
A
series of proposed and imposed tariffs has the wine world on edge. It started
in October, when the Office of the U.S. Trade Representative (USTR) announced a
25% tariff on several items, including certain wines from France, Germany,
Spain and the U.K. That tariff was levied in response to EU subsidies granted
to the aerospace company Airbus AIR, -1.07% .
In early
December, the USTR proposed tariffs of up to 100% on French sparkling wine
(excluded from the October tariff) and other items, in response to the French
digital services tax, which, a USTR investigation concluded, “discriminates
against U.S. digital companies, such as Google GOOG, -0.38% GOOGL, +2.02% , Apple AAPL, +1.11% , Facebook FB, -0.60% and Amazon AMZN, -0.47% . ” Then on
Dec. 12, the USTR said it could expand the October tariffs to additional
products, including putting levies of as high as 100% on nearly all wine from
Europe.
There is no timeline for when these tariffs might go into effect, and
the USTR didn’t respond to repeated queries.
Why does this matter to American wine drinkers? A 100% tariff on
European wine would cripple the wine importing and distribution business and
also harm wine retailers. American wineries would be affected, too, if their
distributors go out of business and retailers and restaurants close.
How Tariffs Could Devastate the Wine World
Across the U.S., wine professionals and restaurateurs predict catastrophe for their businesses and slim choice for consumers should new tariffs on European wine take hold
By Lettie Teague Jan. 8, 2020
3:00 pm ET
Once, during Prohibition, I was forced to live for days on
nothing but food and water.
W. C. Fields
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?
Today, a new
technology downside.
America’s Radioactive Secret
Oil-and-gas wells produce nearly a trillion gallons of toxic waste a year. An investigation shows how it could be making workers sick and contaminating communities across America
Justin Nobel January 21, 2020 7:00AM ET
----In a
squat rig fitted with a 5,000-gallon tank, Peter crisscrosses the expanse of
farms and woods near the Ohio/West Virginia/Pennsylvania border, the heart of a
region that produces close to one-third of America’s natural gas. He hauls a
salty substance called “brine,” a naturally occurring waste product that
gushes out of America’s oil-and-gas wells to the tune of nearly 1 trillion
gallons a year, enough to flood Manhattan, almost shin-high, every single day.
At most wells, far more brine is produced than oil or gas, as much as 10 times
more. It collects in tanks, and like an oil-and-gas garbage man, Peter picks it
up and hauls it off to treatment plants or injection wells, where it’s disposed
of by being shot back into the earth.
One day in 2017, Peter pulled up to an injection well in
Cambridge, Ohio. A worker walked around his truck with a hand-held radiation
detector, he says, and told him he was carrying one of the “hottest loads” he’d
ever seen. It was the first time Peter had heard any mention of the brine being
radioactive.The Earth’s crust is in fact peppered with radioactive elements that concentrate deep underground in oil-and-gas-bearing layers. This radioactivity is often pulled to the surface when oil and gas is extracted — carried largely in the brine.
----So Peter started quietly taking samples of the brine he hauled, filling up old antifreeze containers or soda bottles. Eventually, he packed a shed in his backyard with more than 40 samples. He worried about further contamination but says, for him, “the damage is already done.” He wanted answers. “I cover my ass,” he says. “Ten or 15 years down the road, if I get sick, I want to be able to prove this.”
Through a grassroots network of Ohio activists, Peter was able to
transfer 11 samples of brine to the Center for Environmental Research and
Education at Duquesne University, which had them tested in a lab at the
University of Pittsburgh. The results were striking.
Radium, typically the most abundant radionuclide in brine, is often
measured in picocuries per liter of substance and is so dangerous it’s subject
to tight restrictions even at hazardous-waste sites. The most common isotopes
are radium-226 and radium-228, and the Nuclear Regulatory Commission requires
industrial discharges to remain below 60 for each. Four of Peter’s samples
registered combined radium levels above 3,500, and one was more than 8,500.
----Peter’s samples are just a drop in the bucket. Oil fields across the country — from the Bakken in North Dakota to the Permian in Texas — have been found to produce brine that is highly radioactive. “All oil-field workers,” says Fairlie, “are radiation workers.” But they don’t necessarily know it.
Tanks, filters, pumps, pipes, hoses, and trucks that brine touches can all become contaminated, with the radium building up into hardened “scale,” concentrating to as high as 400,000 picocuries per gram. With fracking — which involves sending pressurized fluid deep underground to break up layers of shale — there is dirt and shattered rock, called drill cuttings, that can also be radioactive.
But brine can be radioactive whether it comes from a fracked or conventional well; the levels vary depending on the geological formation, not drilling method. Colorado and Wyoming seem to have lower radioactive signatures, while the Marcellus shale, underlying Ohio, Pennsylvania, West Virginia, and New York, has tested the highest. Radium in its brine can average around 9,300 picocuries per liter, but has been recorded as high as 28,500.
More
If
all else fails, immortality can always be assured by spectacular error.
John Kenneth
Galbraith.
The monthly Coppock Indicators finished December
DJIA: 28,538 +91 Up. NASDAQ: 8,973 +125 Up.
SP500: 3,231 +114 Up.
All higher again, but it’s
not a buy signal I would take. The rally is all down to the Fed monetizing at a
rate of about 100 billion a month. I continue to look on the Fed’s latest stock
bubble as an exit rally.
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