Saturday, 1 February 2020

Weekend Update 01/02/2020 GB Exits. EU Slows. Virus Crisis Grows.


Baltic Dry Index. 487 -11  Brent Crude 58.16 Spot Gold 1589

Brexit now in effect.
Trump’s Nuclear China Tariffs Now in effect.
The USA v EU trade war started October 18. Now in effect.

This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.

Franklin Delano Roosevelt 1932.
GB Brexit January 31, 2020.

This weekend, because it wouldn’t reform, and snubbed former UK Prime Minister Cameron’s attempt to renegotiate a better deal, the EUSSR has lost its second largest economy and the world’s leading financial center. The rump-EU has also lost its second largest financial contributor. It will be interesting to watch how the rump-EUSSR adapts and survives.

Brexit at last: Britain leaves the EU as champagne corks fly

January 31, 2020 / 1:27 PM
LONDON (Reuters) - The United Kingdom finally cast off from the European Union on Friday for an uncertain future, with Brexiteers claiming victory and popping champagne corks for an “independence day” they said marked a new era for the country.

In its biggest shift since losing its global empire, the United Kingdom slipped away at 2300 GMT, turning its back after 47 years on the post-World War Two project that sought to build the ruined nations of Europe into a global power.

Beside the British parliament, flag-waving Brexit supporters cheered, revelling in a mix of nostalgia, patriotism and defiance. Some sang “God Save the Queen”, while others hugged amid the smoke of fireworks.

“The war is over: we have won,” Nigel Farage, a leading Leave campaigner, told the crowd. “This is the single most important moment in the modern history of our great nation.”

On the white cliffs of Dover, the message: “The UK has left the EU” was projected between a British and an EU flag.

Once considered the unlikely dream of a motley crew of “eurosceptics” on the fringes of British politics, Brexit also weakens the EU, conceived as a way to bind together Europe’s major powers in peace after centuries of conflict.

---- U.S. President Donald Trump has long supported Brexit. His Secretary of State Mike Pompeo said Britons wanted to escape the “tyranny of Brussels”.

At EU headquarters in Brussels, the British flag was lowered. Little will change immediately, however, as a transition period keeps the United Kingdom as a member in all but name until the end of 2020.

---- Cast either as an epic opportunity or a grave mistake, Brexit has turned long-held views of Britain upside down just as the world grapples with the rise of China and the West’s deepest divisions since the 1991 fall of the Soviet Union, whose liberated satellite states later joined the EU.

It also diminishes the EU. At the stroke of midnight in Brussels, the bloc lost 15% of its economy, its biggest military spender and the world’s international financial capital, London.
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Next, coronavirus news, a much more important global event. In our stock and commodity markets look out below! This has all the makings of a black swan disruptive event. All the more so if the virus can travel on China’s exports of consumer electrical goods.

China coronavirus toll rises to 259, U.S. border curbs disrupt more flights

February 1, 2020 / 12:55 AM
SHANGHAI (Reuters) - The number of deaths from a coronavirus epidemic in China has risen to 259, the country’s health authority said on Saturday, as the United States announced new border curbs on foreign nationals who have been in China.

The province of Hubei, the center of the epidemic, remains under virtual quarantine, with roads sealed off and public transport shut down, but small numbers of travelers continue to breach the lockdown.

Amid fears that the virus could spread further overseas, the United States announced measures to restrict entry to foreign nationals who have recently been in China. All three major U.S. airlines also said on Friday they would cancel flights to mainland China.

Qantas Airways Ltd and Air New Zealand said the international travel bans had forced them to suspend their direct flights to China from Feb. 9.

Nearly 10,000 flights have been suspended since the outbreak of the coronavirus in China, according to travel and data analytics firm Cirium.

Many nations have put on special charter flights to repatriate citizens from China.

More than 300 South Koreans arrived home on Saturday on a second charter flight from China and have been transported to a facility where they will be isolated for two weeks, the health ministry said. Seven people on the flight exhibited symptoms and were sent immediately to hospital.
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Macau casino revenue drops 11.3 percent in January as coronavirus worries mount

February 1, 2020 / 6:16 AM
HONG KONG(Reuters) - Gambling revenue in the Chinese territory of Macau dropped 11.3 percent in January year-on-year, with the world’s biggest casino hub a near ghost town after authorities announced a raft of measures to keep visitors away and contain a fast-spreading new coronavirus.

January’s figure of 22.1 billion patacas ($2.76 billion) was worse than analyst expectations of a drop of around 2 percent - estimates that were made prior to the implementation of visitor restrictions last week. 

Some analysts forecast a decline of at least 30% for as long as visiting restrictions are in place.
Transport links with mainland China have been curtailed, with dozens of flights and ferry services canceled. The local government has also extended the Lunar New Year break to the end of the week, keeping banks and businesses closed as the death toll from the virus outbreak topped 250 and hundreds of new cases were confirmed.

Chinese tourists desert Thai resort as coronavirus spreads

February 1, 2020 / 4:50 AM
PHUKET, Thailand (Reuters) - The narrow laneways and pastel-coloured shophouses of Phuket Old Town are usually bustling with Chinese tourists during the Lunar New Year holiday, but travel bans and local fears about coronavirus have largely emptied the streets this year.

Just a handful of tourists, many wearing face masks, strolled through the area during daylight hours this week. In the evening, foot traffic increased a little under the glow of the red lanterns strung across the thoroughfare, but remained far below normal levels. 

“The impact is tremendous,” 45-year old Ausana Akaradachakul told Reuters as she waited behind the counter for shoppers in her store selling postcards, straw bags, clothing and jewellery.

“Only a few days after the news broke about the virus, the Chinese tourists were visibly few,” Akaradachakul said. “I think about 70% of them are gone.”

The beach resort of Phuket is Thailand’s second most visited destination after Bangkok and is usually a big draw for visitors from China, who accounted for 11 million visitors last year, particularly around the Lunar New Year holiday.

But China this week imposed restrictions on all overseas tour groups because of the coronavirus that originated in the city of Wuhan and which has infected more than 11,000 people and killed more than 250.

Reduced travel from China alone could result in 50 billion baht ($1.52 billion) of lost tourism revenue, the Thai Tourism Ministry estimated.

The spread of coronavirus beyond China has also affected domestic tourism in Thailand, which has recorded more infections than anywhere but China with 19 cases. Thailand announced its first case of human-to-human transmission on Friday.
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Britain reports first two cases of new coronavirus

January 31, 2020 / 9:44 AM
LONDON (Reuters) - Two patients from the same family in England have tested positive for coronavirus, the first such cases in Britain, England’s chief medical officer said on Friday.

British health officials had previously warned that the United Kingdom was highly likely to have cases of the new type of coronavirus, which first emerged in China’s central province of Hubei and has killed 213 people so far. 

“The patients are receiving specialist National Health Service care, and we are using tried and tested infection control procedures to prevent further spread of the virus,” England’s chief medical officer, Chris Whitty, said.

“The NHS is extremely well-prepared and used to managing infections and we are already working rapidly to identify any contacts the patients had, to prevent further spread,” he added.

Whitty said he would not reveal where in England the infection had occurred, to protect patient confidentiality.
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Singapore bans China travellers to keep out coronavirus

January 31, 2020 / 10:44 AM
SINGAPORE (Reuters) - Singapore said on Friday it was banning entry to all Chinese visitors and foreigners with a recent history of travel to China in some of the most far-reaching moves worldwide to deter the fast-spreading coronavirus.

The ban, effective from Saturday, will also apply to transiting passengers but will exempt residents and long-term pass holders such as those on work permits, student visas or long-term visit passes, the health ministry said. 

The move to suspend visas to mainland Chinese passport holders effectively shuts out the island’s largest group of visitors and will also bar other travellers who have been to China in the last 14 days.

---- Singapore has reported 13 cases of the virus - all travellers from the Chinese city of Wuhan at the 
centre of the outbreak - and has warned that the outbreak will hit its economy this year just as it shows signs of recovery from decade-low growth.

“In view of the growing possibility of transmission from new travellers arriving from other parts of mainland China, the Ministry of Health has assessed that it is prudent to take additional pre-emptive measures at this stage,” the ministry said in a statement.

Chinese nationals make up the largest share of visitors to the Southeast Asian travel and tourism hub, one of the worst hit countries outside of China in the 2003 outbreak of Severe Acute Respiratory Syndrome (SARS) which killed 800 people globally.
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Travellers breach China virus lockdown by taking bridge over Yangtze

January 31, 2020 / 6:53 AM
JIUJIANG, China (Reuters) - People are leaving and entering China’s Hubei province by foot over a bridge spanning the Yangtze river despite a virtual lockdown on vehicle traffic due to a coronavirus epidemic that has killed about 200 people.

The Yangtze marks the dividing line between Jiujiang in Jiangxi province and Huanggang in neighbouring Hubei, one of the cities hit hardest by the coronavirus outbreak and now sealed off from the rest of China to try to contain the pathogen. 

But the foot traffic over the Yangtze shows the lockdown is permeable, raising doubts over its effectiveness and providing a glimpse at life inside the epicentre of what the World Health Organisation (WHO) has called a global emergency.

Wu Minzhou, a 40-year-old business owner who was fishing near the bridge on the Jiangxi side, said he was worried about the exceptions being made for people leaving Hubei.

“Because there’s an ... incubation period at play here, if they head out, for example, to cities in the north of China then it’s highly possible they will infect those areas too,” he said.

While vehicles are not allowed over the bridge, it is still open to pedestrians. Police explained that people were still entering Hubei and they could still get out, but only in “special circumstances”.

Those include people who were in Hubei but booked train tickets to leave from Jiujiang before the Lunar New Year.

---- Trains and other public transportation have been suspended, roads have been sealed off and checkpoints established at tollgates around Wuhan, and the special measures have been extended to other cities in Hubei province.

Though Jiujiang itself has not officially been locked down, its streets were mostly deserted and its tourist sites closed on what was officially the last day of China’s Lunar New Year celebrations on Thursday.
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Surge in virus infections stokes fear in cities flanking China's Wuhan

January 31, 2020 / 11:22 AM
BEIJING (Reuters) - A jump in infections in two Chinese cities flanking Wuhan, the epicentre of a rapidly-spreading virus epidemic, is fuelling fear that new hot spots are emerging in a province where strict transport curbs have already brought most activity to a halt.

China’s central province of Hubei has been the site of almost 60% of infections, as well as more than 95% of deaths, in an episode the World Health Organization has declared a global health emergency.
But the province’s two cities of Huanggang and Xiaogan, with combined populations of more than 12 million, have racked up more than 11% of global infections and deaths. 

To see graphic, please click here

As the virus in these cities spreads faster than in Wuhan itself and other sites outside a lockdown zone, the first dismissal of a senior health official in Hubei has spurred authorities to push for more effective measures.

“Medical supplies are in very short supply,” provincial governor Wang Xiaodong said. “Not only are there shortages in Wuhan and surrounding cities, but they are generally severely deficient in other parts of the province.”

Conditions in Huanggang, which had reported 573 infections and 12 deaths, are particularly severe, he warned in remarks on Wednesday, urging every effort to keep the city from becoming a second Wuhan.

---- To the northwest of Wuhan is Xiaogan, the third-largest centre of the outbreak, which has reported more than 540 cases and nine deaths and saw a rise of 35% in cases on Thursday from the previous day, versus 16% in Wuhan.

By Friday, there were 9,692 infections in China and 213 deaths, including 5,806 cases and 204 deaths in Hubei, national health authorities said.
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Finally, in business news, is Caterpillar the canary in America’s economy coal mine? The rump EU slows, and we still have the hit to the global economy from coronavirus to come.

Caterpillar's earnings add to industrial gloom

January 31, 2020 / 12:12 PM
(Reuters) - Caterpillar Inc (CAT.N) on Friday forecast worse-than-expected earnings for this year after reporting lower sales across all three primary segments in the last quarter, offering further evidence of strains in the U.S. industrial economy.

The world’s biggest construction and mining equipment maker said it expects 2020 profit of $8.50 to $10 per share, lower than $11.06 per share last year and below the average analyst estimate of $10.63 per share. 

The Deerfield, Illinois-based company, considered a bellwether for economic activity, has been buffeted by the prolonged U.S.-China trade war that has made its customers wary of committing to large capital expenditures, hitting its sales and forcing production cuts.

With customers hesitant to spend on new equipment, dealers reduced their inventories by $700 million in the quarter to end-December, leading to a drop in sales at machinery, energy and transport division.

The company expects as much as an annual 9% decline in retail sales this year, resulting in a reduction of up to $1.5 billion in dealer inventories.
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Eurozone Growth Hits 6-Year Low as Key Automobile Industry Struggles

Economists don’t expect a pickup in economic growth this year, although the manufacturing sector is expected to steady

Paul Hannon

The eurozone’s automobile sector is struggling with a cooling market and the cost of developing electric cars. Photo: ralph orlowski/Reuters

The eurozone’s economy slowed sharply in 2019 as factories faltered amid weak overseas demand and its key automobile industry struggled to get to grips with a cooling market and the costs of developing a new generation of electric cars.

The bloc’s economic weakness also reflects longer-term problems, including an aging and stagnant population, a weak presence in faster-growing digital sectors and problems coordinating its responses to those and other challenges across its 19 member countries.

Economists don’t expect a pickup in economic growth in 2020, although the manufacturing sector is expected to steady as global trade flows level out, aided in part by the recent trade truce between the U.S. and China. But they also say the economy could slow further if trade tensions with the U.S. escalate and the U.K.’s departure from the European Union on Friday leaves the future of commerce with one of the eurozone’s main export markets uncertain.

The European Union’s statistics agency said Friday the eurozone’s gross domestic product—the value of all goods and services produced across the economy—grew 1.2% last year, its weakest expansion since 2013, when the currency area was emerging from its twin government debt and banking crises.

That slowdown was in keeping with a wider global pattern, with the U.S. and China also having recorded decelerations in 2019. However, the eurozone economy was significantly more sluggish than its U.S. counterpart, which expanded by 2.3%. Overall, the global economy had its weakest year since the global financial crisis, although the International Monetary Fund expects to see a modest pickup in 2020.

----Eurozone GDP rose at an annualized rate of just 0.4% in the three months through December, its weakest expansion since the first quarter of 2013.

That slowdown was partly due to surprise contractions in France and Italy. The former performed better in the previous three quarters and grew by 1.2% over the year as a whole. By contrast, Germany’s economy grew by just 0.6% in 2019, while Spain’s economy expanded by 2%.
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This weekend’s musical diversion.  Mozart and a very young Russian pianist, plays a piano concerto from memory.

Mozart, Piano Concerto No 3 in D major Елисей Мысин Young pianist and composer


'You just never know. That unpredictability is the great thing about life. You change. The world changes. You live in a country where we are still blessed with enormous opportunity. Leave yourself open to the world of possibility. You have the ambition, you have the smarts and you have the toughness. So, turn the page on your biography - you have just started a new chapter in your lives.'

Lloyd Blankfein, “Mr. Goldman Sacks,” the ex-CEO of Goldman Sachs unintentionally backs Brexit in a US speech to graduates, mid 2016.

The monthly Coppock Indicators finished January

DJIA: 28,256 +97 Up. NASDAQ: 9,151 +152 Up. SP500: 3,226 +130 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, made all the more urgent by the still increasing coronavirus crisis.

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