Monday 13 January 2020

Trade Deal “Lite,” Phase One.


Baltic Dry Index. 774 +02  Brent Crude 65.03 Spot Gold 1555

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.

“When you put tariffs on goods that people in the United States consume every day, it's a consumption tax. So all the tariffs did is they made products that Americans were going to buy more expensive. And in fact we got the final trade data numbers ... And lo and behold [in 2018], we hit an all-time record-high trade deficit globally, and with China."

Gary Cohn.  President Trump's former director of the National Economic Council.

Markets are awaiting this week’s singing in Washington of the USA – China, trade deal “lite.” phase one on Wednesday. 

While expected to boost the markets, especially the agricultural commodity markets, it already pretty much been priced in to stock markets since first announced back on December 12th.

While it’s not likely to be a case of “buy the rumour sell the fact,” from what’s known so far, it doesn’t seem to live up to most of the hype. China’s silence on the touted agricultural purchases, suggests caution.

Below, Asian markets clearly underwhelmed.

Asian markets subdued ahead of signing of U.S.-China ‘phase one’ trade deal

By Marketwatch  Published: Jan 12, 2020 11:34 p.m. ET
Asian markets were mixed in subdued early trading Monday, ahead of the signing of a “phase one” trade deal between the U.S. and China later this week.

The world’s two largest economic powers are scheduled to sign the phase-one deal Wednesday in Washington, with China reportedly agreeing to buy more U.S. agricultural products and implementing economic reforms, and some tariff relief coming from the U.S. The Wall Street Journal reported Saturday that the U.S. and China have also agreed to hold semiannual talks to discuss and resolve points of dispute.

“It’s unlikely there will be an exceptional level of excitement in the market as the agreement has been extensively telegraphed, although President Trump will likely herald the deal in with much fanfare,” wrote Stephen Innes, chief Asia market strategist for AxiTrader, in a note Sunday. “Provided the deal inks a commitment from China to increase agricultural products and outlines a dependable enforcement mechanism, the market will go merrily along the way.”
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China's U.S. trade deal commitments not changed in translation: Mnuchin

January 12, 2020 / 6:06 PM
WASHINGTON (Reuters) - China’s commitments in the Phase 1 trade deal with the United States were not changed during a lengthy translation process and will be released this week as the document is signed in Washington, U.S. Treasury Secretary Steven Mnuchin said on Sunday.

Mnuchin told Fox News Channel that the deal reached on Dec. 13 still calls for China to buy $40 billion to $50 billion worth of U.S. agricultural products annually and a total of $200 billion of U.S. goods over two years. 

“It wasn’t changed in translation. I don’t know where that rumor started,” Mnuchin said on the “Sunday Morning Futures with Maria Bartiromo” show.

“We have been going through a translation process that I think we said was really a technical issue,” Mnuchin said. “And the language will be released this week. So I think it is — the day of the signing, we will be releasing the English version.”

“And people can see. This is a very, very extensive agreement,” he added.

White House officials had said as late as Friday that the final Chinese text was not yet completed, even as invitations went out to more than 200 people for a Jan. 15 signing event at the White House.

Asked if he still expected China to purchase $40 billion to $50 billion in U.S. farm products under the deal, Mnuchin said: “I do. Let me just say, it is $200 billion of additional products across the board over the next two years, and, specifically in agriculture, $40 billion to $50 billion.”

Thus far, Beijing has not confirmed those purchase commitments, and recent government actions here in the agriculture industry have raised questions over the $40 billion to $50 billion target cited repeatedly by Trump administration officials.

Chinese officials have been careful not to publicly discuss details of the Phase 1 deal, because Washington has changed its position multiple times during negotiations, three Chinese officials with knowledge of the situation told Reuters last week.
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Next, more fallout from the continuing Boeing 737-Max errors. There are probably more lay-offs still to come in the supply chain.

Boeing supplier to lay off 2,800 after suspension of 737 Max program

Jan. 11, 2020 / 3:40 PM
Jan. 11 (UPI) -- Spirit AeroSystems has announced it's laying off 2,800 employees at its Wichita, Kan., facility, due to suspension of production of the Boeing 737 MAX plane.

A press release from the company, which is a supplier for the 737 Max program, said Spirit is cutting jobs because it's not clear when or at what level production will resume.

"The difficult decision announced today is a necessary step given the uncertainty related to both the timing for resuming 737 Max production and the overall production levels that can be expected following the production suspension," said Tom Gentile, Spirit AeroSystems president and CEO. "We are taking these actions to balance the interests of all of our stakeholders as a result of the grounding of the 737 Max, while also positioning Spirit to meet future demand."

The company is also planning smaller workforce reductions at its plants in Tulsa and McAlester, Okla., later this month. 

Boeing announced in December that it would suspend production of the 737 Max, which had already been grounded by regulators in countries across the world after two crashes that killed 346 people.

The crashes have cost the company billions of dollars, tarnished its reputation and led to a shakeup among top brass, including the ouster of its CEO at the end of December.

Earlier this week Boeing submitted to Congress more than 100 pages of internal communication in which employees boasted about manipulating safety regulators and flatly admitted they would not let their own families fly on the 737 Max.
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https://www.upi.com/Top_News/US/2020/01/11/Boeing-supplier-to-lay-off-2800-after-suspension-of-737-Max-program/7681578773647/?lh=8

Finally, more confusion in Washington over that assassination in Baghdad. Like it or not, assassination in third countries has just become legitimised. We can only hope that all nations use it sparingly.

Pentagon chief says no specific evidence Iran was plotting to attack four U.S. embassies

January 12, 2020 / 5:23 PM
WASHINGTON (Reuters) - U.S. Defense Secretary Mark Esper on Sunday said he did not see specific evidence from intelligence officials that Iran was planning to attack four U.S. embassies, an assertion made by President Donald Trump in justifying the killing of Iran’s top general.

While Esper said he agreed with Trump that additional attacks against U.S. embassies were likely, he said on CBS’s “Face the Nation” that Trump’s remarks to Fox News were not based on specific evidence on an attack on four embassies.

“What the president said was that there probably could be additional attacks against embassies. I shared that view,” Esper said. “The president didn’t cite a specific piece of evidence.” 

When pressed on whether intelligence officers offered concrete evidence on that point he said: “I didn’t see one with regards to four embassies.”

---- Esper said in a separate interview on CNN’s “State of the Union” that the administration had 
“exquisite intelligence” that a broader attack against multiple embassies was likely but that could only be shared with the “Gang of Eight,” a group of top congressional leaders who get briefed on sensitive information that the rest of Congress does not have access to.

National Security Adviser Robert O’Brien echoed Esper’s comment that the administration had “exquisite intelligence” on NBC’s “Meet the Press” that a threat was imminent but did not comment on evidence saying four embassies were targeted.

House Intelligence Committee Chairman Adam Schiff, a California Democrat and member of the Gang of Eight, said on Sunday that the group was not informed about possible attacks on four embassies.

“There was no discussion in the Gang of Eight briefings that these are the four embassies that are being targeted and we have exquisite intelligence that shows these are the specific targets,” he said.
Republican Senator Mike Lee on Sunday said he was worried about the integrity of information the president and security briefers have provided Congress about Iran.
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Maple Leaf CEO flays U.S. government after Iran plane crash

January 13, 2020 / 5:59 AM
(Reuters) - Maple Leaf Foods Inc Chief Executive Officer Michael McCain criticized the U.S. government for escalating tensions in the Middle East, after an Iranian missile accidentally shot down a Ukrainian airliner killing 176 people onboard, including an employee’s family.

“A MLF colleague of mine lost his wife and family this week to a needless, irresponsible series of events in Iran. U.S. government leaders unconstrained by checks/balances, concocted an ill-conceived plan to divert focus from political woes,” McCain said in a tweet posted on the company’s Twitter account on Sunday. 

"The world knows Iran is a dangerous state, but the world found a path to contain it; not perfect but by most accounts it was the right direction," he added in a series of tweets. (bit.ly/2QOdgtc)

The CEO of the packaged meat producer said the tweets were his “personal reflections”.

Iran admitted on Saturday that it accidentally shot down the plane in which 57 Canadians, mostly of Iranian descent, died.

Iran said its air defences were fired in error while on alert after Iranian missile strikes on U.S. targets in Iraq.

Prime Minister Justin Trudeau on Sunday told a vigil for some of those killed in the disaster that he would “pursue justice and accountability” for what happened.

"Tariffs don't work. If anything, they hurt the economy because if you're a typical American worker, you have a finite amount of income to spend. If you have to spend more on the necessity products that you need to live, you have less to spend on the services that you want to buy. And you definitely don't have anything left over to save.”

Gary Cohn.  President Trump's former director of the National Economic Council.

Crooks and Scoundrels Corner.

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

Today, more sign of rising trouble in China’s economy. The USA v China trade deal lite phase one, due to be signed later this week, is a start but not an end to the current slowdown.

Auto industry cautious about China's sluggish market at start of decade

January 13, 2020 / 5:23 AM
BEIJING/SHANGHAI (Reuters) - China’s auto market is likely to shrink for the third year in a row in 2020, the country’s top auto body is expected to say on Monday, but industry watchers are cautiously hoping a sales recovery in lower-tier cities ease the pace of decline.

The drop in car sales is expected to be milder than last year, when sales were pressured due to new emission standards in a broader economy that was both shrinking and under attack amid a trade war with the United States. 

The China Association of Automobile Manufacturers (CAAM) last month forecast annual car sales in 2020 would dip 2% after an estimated 8% slump in 2019.

In 2018, sales declined 2.8%, halting a growth march that started in the 1990s.

“The negative effect of cutting purchase tax in 2015-2017 has disappeared, and car sales in lower-tier cities are expected to recover,” said Alan Kang, a senior analyst at LMC Automotive.

“The easing of trade tensions between China and the United States has also helped restore consumer confidence,” said Kang, who expects car sales in China to grow 0.05% this year.
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Ford's China vehicle sales drop 26% in third straight year of decline

January 13, 2020 / 2:34 AM
SHANGHAI (Reuters) - Ford Motor Co’s (F.N) China vehicle sales fell for a third consecutive year, by 26.1%, as it battles a prolonged overall sales decline in its second-biggest market that has hit demand for its mass-market Ford brand and sports utility vehicles.

The U.S. automaker delivered 146,473 vehicles in China in the fourth quarter, down 14.7% year-on-year, Ford said in a statement. In total, it sold 567,854 vehicles over 2019.

Ford has been trying to revive sales in China after its business began slumping in late 2017. Sales sank 37% in 2018, after a 6% decline in 2017.

Anning Chen, president and chief executive of Ford Greater China, said that while 2019 was a “challenging” year for the automaker, it saw its market share in the high-to-premium segment stabilise and its sales decline in the value segment start to narrow in the second-half of the year.

“The pressure from the external environment and downward trend of the industry volume will continue in 2020, and we will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers’ profitability.”

The automaker plans to launch more than 30 new models in China over the next three years of which over a third will be electric vehicles. It has also said it would localise management teams by hiring more Chinese staff and aimed to improve relationships with joint venture partners.

Models launched in the fourth quarter include a new Ford Escape version - for which the automaker said orders received so far have been much higher than expected - and the Lincoln Corsair, the first localized Lincoln model in China.

Bill Russo, head of Shanghai consultancy Automobility Ltd, said Ford was dealing with a “perfect storm” of trends which were not favourable to multinational mass market brands, and while the automaker was addressing the need to update its showrooms with new and refreshed models, this was taking time.
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China's Hengfeng bank receives $14 billion strategic investment - Xinhua

January 12, 2020 / 7:56 AM
BEIJING (Reuters) - China’s Hengfeng Bank has received 100 billion yuan ($14.46 billion) in strategic investment as part of a restructuring process led by local government, state media Xinhua reported on Sunday, citing a local financial regulator.

The move is part of government efforts to support indebted smaller banks and to ease risk in the country’s financial system.

The former chairman of the Shandong-based lender, Jiang Xiyun, was convicted of corruption and sentenced to death in December, with a two-year reprieve.

"So we should try and make the goods as cheap as possible. And we don't produce the goods in the United States; we import the goods from other countries. And if we could produce the goods as cheaply as other countries do, we would produce them in the United States."

Gary Cohn.  President Trump's former director of the National Economic Council.

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?
01.10.2020 01:40 PM

Scientists Made a Nearly Invincible Lithium-Ion Battery

This new type of battery can be cut, bent, soaked, shot, and lit on fire—and it still powers up just fine.
Lithium-ion batteries have shaped the modern world. These power pouches are at the heart of most rechargeable electronics, from cell phones and laptops to vapes and electric cars. But while they’re great at holding a charge and have a high energy density, lithium-ion batteries aren’t without their problems. Their reliance on toxic, flammable materials means the smallest defect can result in exploding gadgets.

A team of researchers led by physicists at the Johns Hopkins Applied Physics Laboratory believed a safer battery was possible, and for the past five years they have been developing a lithium-ion battery that’s seemingly immune to failure. The rugged battery they first unveiled in 2017, working with researchers at the University of Maryland, can be cut, shot, bent, and soaked without an interruption in power. Late last year, the Johns Hopkins team pushed it further, making it fireproof and boosting its voltages to levels comparable with a commercial product.

---- The secret to making an indestructible battery comes down to the electrolyte, the chemical goulash that separates the positive and negative ends of a battery, says Konstantinos Gerasopoulos, a senior scientist at APL who is leading the research. When you use a lithium-ion battery, charged lithium particles travel through a barrier in the electrolyte from the anode (the negative end) to the cathode (the positive end), where they undergo a chemical reaction that produces energy.

---- Aqueous batteries avoid all these problems, with electrolytes that are water-based and therefore both nonflammable and nontoxic. They’ve been around for 25 years but have been too weak to be useful. What the APL team figured out is that by increasing the concentration of lithium salts and mixing the electrolyte with a polymer—a material resembling a very soft plastic—they could bump the electric potential from around 1.2 volts to 4 volts, which is comparable with commercial lithium-ion batteries.

When Gerasopoulos and his colleagues attached a commercially available anode and cathode to this plasticky electrolyte, they ended up with a lithium-ion battery unlike anything you’ve ever seen. It’s clear and flexible like a contact lens, nontoxic and nonflammable, and can be manufactured and operated in the open air without a case. On top of that, it can withstand pretty much any kind of abuse.

During tests, which you can watch here, the APL team submerged the device in salt water, cut it with scissors, used an air cannon to simulate a ballistic impact, and lit it on fire. Through each test, the battery kept pumping out electricity. After one trial by fire, the charred portion was cut off and it continued to operate normally for 100 hours.
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In any great organization it is far, far safer to be wrong with the majority than to be right alone.

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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