Baltic Dry Index. 754 -14. Brent Crude 65.70 Spot Gold 1560
Never ending Brexit now January 31. 11 days away.
Trump’s Nuclear China Tariffs Now in effect.
The USA v EU trade war started October 18. Now in effect.
This is a liquidity
and momentum driven market. It’s been that way for the past four months where
the correlation between the S&P 500 and the Fed’s balance sheet has
expanded to a 95% relationship. This is
a case of a very accommodative Fed policy. The double-digit growth in the money
supply is bypassing the real economy and has entered into asset markets
broadly, and specifically into equities. So as long as the Fed is in the game
priming the monetary pump, shorting stocks is going to be a very dangerous game
to play.
David Rosenberg.
As the central bank’s latest repo-money fuelled stock bubble
soars, America seems to be flirting with socialism. More on that below.
With US markets closed today marking Martin Luther King
day, Asia and Europe’s markets are nervously watching what happens later in the
week.
How long will Libya’s oil be withheld from the market?
Will the Davos billionaire’s junket add fuel to the fire
of rising global socialism. How green and preachy will the billionaires get? What
will Trump tweet and Greta say?
Back in Washington, President Trump’s impeachment trial
starts.
Up first the latest news from Asia.
Japan’s Nikkei edges higher ahead of Bank of Japan meeting
By MarketWatch
Published: Jan 19,
2020 11:40 p.m. ET
Japanese stocks edged higher Monday as investors looked for
trading clues ahead the Bank of Japan’s start to its two-day policy meeting.
The earnings season in Japan is also set to start later this week. The Nikkei was up 56 points in early trading, with the U.S. dollar trading at 110.18 yen, compared with 110.20 as of Friday’s Tokyo stock market close. The Nikkei Stock Average NIK, +0.22% ended 0.5% higher at 24041.26 on Friday.
South Korea’s GDP growth likely accelerated in 4Q from the previous quarter, analysts say. South Korea likely grew 0.7% in the fourth quarter versus the third quarter’s 0.4% expansion, according to the median forecast of seven economists polled by the Wall Street Journal. The country’s exports have yet to improve significantly despite easing tensions between the U.S. and China, and sluggish demand is still weighing on the domestic economy, Eugene Investment & Securities economist Lee Sang-jae says. The 4Q data are set to be released early Wednesday. The Kopsi 180721, +0.78% index was up just under 1 % early Monday.
China’s central bank will resume cutting interest rates before too long, with 50 basis points of easing by the end of 2020, says Julian Evans-Pritchard, senior China economist at Capital Economics. The central bank seems to have adopted a wait-and-see approach in response to the recent improvement in economic data, but Capital Economics is skeptical that the latest uptick in economic activity marks the start of a sustained turnaround.
China’s central bank left its one-year loan prime rate unchanged at 4.15%, holding off on easing credit further as it uses other methods to pump up liquidity in the markets ahead of the Lunar New Year.
Stocks in China were mixed early Monday, with Shanghai SHCOMP, +0.42% advancing and the Hang Seng HSI HSI, -0.59% dropping.
Week ahead: Davos, Trump impeachment trial, ECB
19 January 2020.
Despite a holiday-shortened week in the US, next week’s calendar is jam packed as the Trump impeachment trial gets under way in earnest, Davos 2020 kicks off and earnings season continues.
Despite a holiday-shortened week in the US, next week’s calendar is jam packed as the Trump impeachment trial gets under way in earnest, Davos 2020 kicks off and earnings season continues.
Here’s
what to watch in the coming days.
Davos
The
World Economic Forum in Davos, Switzerland, kicks off next week and the theme
this time round is, “Stakeholders for a Cohesive and Sustainable World”.
Climate change, healthcare challenges, reducing inequality and ethics in
technology are among the major themes at this year’s gathering of business and
political leaders from around the world. Climate and environmental activist
Greta Thunberg, German chancellor Angela Merkel, US president Donald Trump,
Bollywood actress and founder of Live Love Laugh Foundation Deepika Padukone
and United Nations under-secretary Winnie Byanyima are among the featured
speakers.
Impeachment
trial
Mr Trump’s impeachment trial is set to begin
in earnest next week, with opening arguments in the Senate on Tuesday. The
president has named Kenneth Starr, who investigated former president Bill
Clinton, and Harvard Law professor Alan Dershowitz to his legal team.
----Central
banks
The
Bank of Japan and Bank of Canada are scheduled to issue monetary policy updates
next week. The Bank of Japan will deliver its interest rate decision on Tuesday
and is widely expected to announce no change to monetary policy. “Pressure on
the BoJ to ease has subsided considerably over the past few months,” note
economists at Bank of America, following an easing in trade tensions, fewer
Brexit-related disruptions and some improved data from China.
More
World’s 2,153 billionaires hold more wealth than 4.6 billion people combined: report
By MarketWatch
Published: Jan 19,
2020 8:47 p.m. ET
The world’s 2,153 billionaires have more wealth than the 4.6 billion
people who make up 60% of the planet’s population, a new report from the
charity group Oxfam says.
Oxfam’s report, ‘Time to Care’, was released Sunday just ahead of the
World Economic Forum in Davos, Switzerland, where about 1,500 of the world
leaders in politics, business and finance come together each year.
“The gap between rich and poor can’t be resolved without deliberate
inequality-busting policies, and too few governments are committed to these,”
Oxfam India CEO Amitabh Behar, who is in Davos to represent the Oxfam confederation
this year said.
Oxfam noted that number of billionaires in the world has doubled in the
last decade.
“Our broken economies are lining the pockets of billionaires and big
business at the expense of ordinary men and women. No wonder people are
starting to question whether billionaires should even exist,” Behar said.
The report also noted gender disparities in the world economy. For
example, it found the 22 richest men in the world have more wealth than all the
women in Africa. The report said that women and girls put in 12.5 billion hours
of unpaid care work each and every day around the globe —a contribution to the
global economy of at least $10.8 trillion a year, more than three times the
size of the global tech industry.
More
Stock market is “eerily reminiscent of January 2018” when stocks suffered rapid correction, technical analyst says
Published: Jan 19,
2020 6:40 p.m. ET
Stock market investors could be setting themselves up for a nasty fall.
That’s according to Mark Newton, a popular independent market technician, in a Friday note to clients.
“US stocks have moved up at a clip that’s eerily reminiscent of January 2018,” he wrote. “No news really matters to shake markets, and bad economic news or earnings, not to mention geopolitical threats matter for a few hours only before the relentless rally continues unabated,” he wrote.”
The S&P 500 index SPX, +0.39% fell more than 10% between Jan. 26 of 2018 and Feb. 9 of that year, after rallying more than 27% between the start of 2017 and the Jan. 2018 top.
“Make no mistake, this market move is NOT normal, and is NOT something which should be able to continue technically into and through February without a major hiccup,” he added.
---- The S&P 500 index has risen 2.9% month-to-date, while the Dow Jones Industrial Average DJIA, +0.17% has added 2.8% and the Nasdaq Composite index COMP, +0.34% has advanced 4.4%.
Newton said he is also concerned with measures of market sentiment, including the American Association of Indivdual Investors Sentiment Survey, Bank of America’s monthly survey of institutional investors and the monthly CBOE put-to-call ratio, or the number of options to sell stocks relative to the number of options to buy stock, which remains “at the lowest level we’ve since at least the early 200s, with more than 2 calls being bought for every put,” Newton said, adding that this speaks to the euphoria of the current market.
“Markets truly seem to be near exhaustion using traditional methods, but it’s proper to wait on the sidelines until the break gets underway, which should prove swift and severe,” according to Newton.
More
Oil jumps to highest in more than a week after Libyan shutdowns
January 20, 2020
/ 1:54 AM
TOKYO (Reuters) - Oil prices rose to their highest in more than week on
Monday after two large crude production bases in Libya began shutting down amid
a military blockade, setting the stage for crude flows from the OPEC member to
be cut to a trickle.
Brent crude LCOc1 futures were up by 74 cents, or 1.1%, to $65.59 by
0331 GMT, having earlier reached $66.00 a barrel, the highest since Jan. 9. The
West Texas Intermediate CLc1 contract was up by 58 cents, or 1%, at $59.12 a
barrel, after rising to $59.73, the highest since Jan. 10.
In the latest development in a long-running conflict in Libya, where two
rival factions have claimed the right to rule the country for more than five
years, the National Oil Corporation (NOC) on Sunday said two big oilfields in the
southwest had begun shutting down after forces loyal to the Libyan National
Army closed a pipeline.
“If this sort of disruption endures, it’s meaningful ... the market is
right to be reacting with a bullish tone,” said Lachlan Shaw, head of commodity
research, at National Australia Bank in Melbourne.
“It just continues to emphasize, notwithstanding that the world market
is clearly in surplus and there are plenty of stocks, the fact is the market
still depends on a number of key regions that have heightened geopolitical
risk.”
More
Finally, is America about to flirt with socialism. I can
only hope most American’s are too smart for that.
Boomer Socialism Led to Bernie Sanders
Government policies limit millennials’ prosperity, Harvard economist Edward Glaeser argues. Will they realize more of the same isn’t the answer?
By Mene
Ukueberuwa
Jan. 17, 2020 6:38 pm ET
At 78, Bernie Sanders is too old to be a baby boomer. But the Vermont
senator has become an unlikely voice of the young generation. A Quinnipiac poll
out this week shows Mr. Sanders with 39% support among Democrats under 34 and
only 7% of those 65 and older.
Gaps between the old and young have shaped American life at least since
the 1950s, and it was the boomers themselves who made rebellion synonymous with
youth. But this axis of today’s struggle could change politics for generations
to come, as millennials reject the country’s capitalist consensus and embrace
socialism in record numbers. Fifty percent of adults under 38 told the Harris
Poll last year that they would “prefer living in a socialist country.” That
outlook recurs in many more surveys and far surpasses figures from even the
radical heydays of the ’60s and ’70s. In 1974, pollster Daniel Yankelovich
found that three-quarters of Americans 25 to 34 felt the country had “moved
dangerously close to socialism.”
Critics often blame today’s socialist surge on millennials’ laziness.
More charitably, some note that left-wing professors dominate college campuses.
One free-market economist has a different explanation. Edward Glaeser, a
Harvard professor and Manhattan Institute senior fellow, believes the problem
lies more in economics than culture or education.
Mr.
Glaeser, 52, argues that young people have radicalized politically because
“there are a number of ways in which the modern American economy isn’t working
all that well for them.” Many public policies make it harder to get a job, save
money or find an affordable home, leaving young idealists thinking, “Why not
try socialism?” But that cure would merely worsen the disease.
More
Ocasio-Cortez sums up inequality in 5 words after Dow breaks through 29,000
Published: Jan 18,
2020 5:33 p.m. ET
‘The Dow soars, wages don’t.’
That’s “inequality in a nutshell,” according to Rep. Alexandria Ocasio-Cortez, who fired off those words in a tweet response to NBC’s coverage of a fresh high for the Dow Jones Industrial Average DJIA, +0.17% on Friday.The New York Democrat was making the point that while the blue-chip index rallied more than 20% last year, U.S. average hourly earnings gained less than 3%. And since stocks are generally held by those with higher wealth levels, the data would support her “rich getting richer” stance.
Of course, President Trump constantly touts record highs in the market — like his “409K” tweet last week — but critics like Ocasio-Cortez maintain that such a message is irrelevant to the working class, which has missed out on such gains.
Only about half of Americans own stock, according to the Fed.
More
“Socialism
only works in two places: Heaven where they don’t need it and hell where they
already have it.”
Ronald
Reagan.
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, more on that “missing” recession, from the economist who called
the Great Recession for Merrill Lynch. Shame that no one at “Old Mother
Merrill” listened to him and MLP went bust and got hammered in to Bank of Ameica
the same weekend that Lehman Brothers collapsed.
Got Gold? - David Rosenberg Warns "We're Going To Have Helicopter Money"
David
Rosenberg, Chief Economist & Strategist of Rosenberg Research, doesn’t believe
in the sustainability of the stock market rally, and warns that investors may
be disappointed at the end of the year. He is bullish on energy stocks - and
predicts that the gold price will surge to $3000.
Mr. Rosenberg is also the author of Breakfast with Dave, a daily
distillation of his economic and financial market insights.
"At this level, many things have to go optimally so that the prices
are higher at the end of the year," comments David Rosenberg on the
growing complacency among investors.
The renowned economist and strategist is one of the most profound
experts on the U.S. economy and one of the last remaining skeptics to warn of a
correction.
His bearish view is based on exorbitantly high equity valuations and
over-optimistic earnings expectations. He also thinks that the US consumer
sector is in worse shape than the consensus believes.
----How sustainable is this rally?
I’m not bullish. Valuations are at extreme levels and the level of
complacency is also a red flag. There are needles in the haystack, but this
overall market rally is more a house of straw than a house of brick. You can
rent liquidity rallies, and you can rent them for an extended period of time,
but they’re very difficult to own. This is not a fundamentally based bull
market like in the 1980s and 1990s.
Back then, gains in stocks where premised
on much better demographics and much more solid productivity growth.
----Then again, concerns of a U.S. recession have faded since last summer. Are we definitely out of the woods?
People will claim that there is no recession. Statistically speaking
that’s true as far as GDP is concerned. But we know for a fact that we actually
had a four-quarter earnings recession. I never quite understood why GDP is so
important to an equity investor who is buying an earnings stream.
There’s no
ticker “GDP” on the New York Stock Exchange. So it’s not about the overall
level of GDP, it’s really about earnings and about the fact that if you look at
the 30% share of the U.S. economy that is outside of the consumer space, we
actually have been in a recession in the past two quarters.
Why would you exclude the other 70% of the economy from an investor’s
point of view?
As an equity strategist, you look at the stock market from a
breadth perspective to gauge the overall
health of the marketplace. You
should do the same thing to examine the breadth of GDP. On a median basis, the
U.S. economy has stopped growing three quarters ago. Also, the U.S. consumer is
not as nearly in good shape as people think. We see signs that the labor market
is starting to show some fatigue. Moreover, there is a big split between
spending growth on discretionary and non-discretionary items where things don’t
look as robust. We surely saw that not just in the latest retail sales report
but also in the CPI numbers this week. If consumer demand was really that
strong the underlying inflation rate would be accelerating not decelerating.
The Fed would not be cutting interest rates three times and then re-extending
its balance sheet at a rate that even exceeds what they were doing with QE3.
More. Much, much more.
Merrill Lynch
Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.
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?
A wearable gas sensor for health and environmental monitoring
Date:
January 16, 2020
Source:
Penn State
Summary:
A highly sensitive, wearable gas sensor for environmental and human health
monitoring may soon become commercially available.
A highly sensitive, wearable gas sensor for environmental and human
health monitoring may soon become commercially available, according to
researchers at Penn State and Northeastern University.
The sensor device is an improvement on existing wearable sensors because
it uses a self-heating mechanism that enhances sensitivity. It allows for quick
recovery and reuse of the device. Other devises of this type require an
external heater. In addition, other wearable sensors require an expensive and
time-consuming lithography process under cleanroom conditions.
Hand and arm showing sensor applied to inner write with moble phone
sized read beside it.
"People like to use nanomaterials for sensing because their large
surface-to-volume ratio makes them highly sensitive," said Huanyu Cheng,
assistant professor of engineering science and mechanics and materials science
and engineering, Penn State. "The problem is the nanomaterial is not
something we can easily hook up to with wires to receive the signal,
necessitating the need for something called interdigitated electrodes, which
are like the digits on your hand."
Cheng and his team use a laser to pattern a highly porous single line of
nanomaterial similar to graphene for sensors that detect gas, biomolecules, and
in the future, chemicals. In the non-sensing portion of the device platform,
the team creates a series of serpentine lines that they coat with silver.
When
they apply an electrical current to the silver, the gas sensing region will
locally heat up due to significantly larger electrical resistance, eliminating
the need for a separate heater. The serpentine lines allow the device to
stretch, like springs, to adjust to the flexing of the body for wearable
sensors.
----The
U.S. Defense Threat Reduction Agency is interested in this wearable sensor to
detect chemical and biological agents that could damage the nerves or lungs,
according to the researchers. A medical device company is also working with the
team to scale up production for patient health monitoring, including gaseous
biomarker detection from the human body and environmental detection of
pollutants that can affect the lungs.
More
Alan Schwartz, CEO Bear Stearns, March 12, 2008.
Bust March 16, 2008.
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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