Tuesday, 30 June 2020

China. HK Takedown. Fake Gold. Covid-19.

Baltic Dry Index. 1794 + 45 Brent Crude 41.45
Spot Gold 1772

Coronavirus Cases 30/6/20 World 10,455,518
Deaths 509,239

“When I used to read fairy tales, I fancied that kind of thing never happened, and now here I am in the middle of one!” 

Fed Chairman Powell, with apologies to Lewis Carroll.

Well we have reached the last day of the disastrous “China virus” half year of 2020. The Fed and its minions will be out in the markets busy dressing up stocks and bonds. But like most Chinese statistics and now apparently Chinese gold collateral, it’s all fake.

Our “price discovery” markets are all a thing of the past. Prices are set by unelected central banksters driven by the needs of political parties demands for re-election or to get elected to get control of the levers of power.

In not quite 50 years, the Great Nixonian Error of Fiat Money, communist money, destroyed capitalism, replaced by financial gangsterism in the west, and moderated communism in China, Russia and the rest of the Shanghai Cooperation Organisation.

With the central banksters fuelling the massive and still growing wealth inequality in the west, we seem determined to have a decade of social disorder and perhaps revolution.

As we prepare to enter the second half of 2020 tomorrow, with holidays in Canada and Hong Kong, to this old dinosaur commodities and stock market trader since 1968, our commercial prospects have never looked bleaker.

We are on the cusp of a great wave of bankruptcies, rising permanent unemployment, commercial real estate failure, supply chain failure, consumer demand destruction, and social disorder.

Standing against all of that are our central banksters who only know how to rig stocks and bonds higher. To this old dinosaur it is not enough to avert our new decade of disorder. The Great Nixonian Error of Fiat Money has finally run out of road. Each solution now only buys into a bigger problem.

But for today, more stock and bond price rigging.

Asia stocks up as China PMI, U.S. data cheer markets worried over coronavirus surge

June 30, 2020 / 1:01 AM
TOKYO/NEW YORK (Reuters) - Asian shares rose on Tuesday after data showed China’s manufacturing sector grew more than expected in June, a hopeful sign for a global economy still struggling to recover from the sweeping impact of the coronavirus crisis.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.9%, while U.S. stock futures, the S&P 500 e-minis ESc1, advanced 0.23%.

Sentiment in the region, which got a boost from overnight gains on Wall Street thanks to strong housing data, got a further lift from a survey in China showing a quickening in activity in its vast factory sector.

The stock market in Australia , which has crucial economic links with China, rose 1.59%, while shares in China .CSI300 gained 0.72%.

Hong Kong stocks .HSI jumped 1.18%, undeterred by the Chinese parliament's passage of a security law that will increase Beijing's control over the former British colony.

The Nikkei .N225 rose 2%, shrugging off a larger-than-expected decline in Japanese industrial production.

Overall, however, Asian shares are still on course for a 7% decline over the first half of this year, underscoring the severity of the pandemic-sparked losses and the challenges facing investors as global infections continue to rise in a blow to hopes of a quick recovery. 

“Overnight moves in markets were not large but one does get the distinct impression that markets have got it both ways – with equities rallying on rebounding data and bonds rallying on dismal COVID-19 news,” said ANZ Research analyst Rahul Khare.

Indeed, for the second quarter Asia ex-Japan shares were on course for a 17.8% gain, which would be the biggest quarterly increase since the third quarter of 2009. Stocks appear to have received an added boost on Tuesday as some investors adjusted positions on the last trading day of the quarter.

On Monday, the Dow Jones Industrial Average .DJI rose 2.32%, the S&P 500 .SPX gained 1.47% and the Nasdaq Composite .IXIC added 1.2%.

China's factory activity quickens, but pandemic drags on exporters and recovery

June 30, 2020 / 2:12 AM
BEIJING (Reuters) - China’s factory activity expanded at a stronger pace in June in a boost to hopes for a quick economic recovery globally and at home, but the persistent weakness in export orders suggests the coronavirus crisis will remain a drag on growth for some time.

The official manufacturing Purchasing Manager’s Index (PMI) came in at 50.9 in June, compared with May’s 50.6, National Bureau of Statistics (NBS) data showed on Tuesday, and was above the 50.4 forecast in a Reuters poll of analysts.

The 50-point mark separates expansion from contraction on a monthly basis.

The uptick was underpinned by the quickening pace of expansion in production. The forward-looking total new orders gauge also brightened, rising to 51.4 from May’s 50.9, suggesting domestic demand is picking up as industries from non-ferrous metals to general equipment and electrical machinery all showed an improvement.

But export orders continued to contract, albeit at a slower pace, with a sub-index standing at 42.6 compared to 35.3 in May, well below the 50-point mark.

“Despite the strong recovery between March and mid-June, we believe a full economic recovery remains distant. In our view, it is too early for Beijing to reverse its easing stance,” Nomura analysts wrote in a note to clients.

In a statement, NBS official Zhao Qinghe underscored the prevailing uncertainty about the outlook, noting that small firms in China are suffering more than their larger peers.

Indeed, despite a flurry of government measures to support smaller companies, the PMI survey showed activity in these firms contracting last month.

83 Tons Of Fake Gold Bars: Gold Market Rocked By Massive China Counterfeiting Scandal

by Tyler Durden  Mon, 06/29/2020 - 12:15
---- Yet one market which seemed stubbornly immune to any counterfeiting was that of physical gold in China, which was odd considering that over the past decade China had emerged as the world's biggest counterfeiter of various, mostly industrial metals used to secure bank loans, better known as "ghost collateral", and which adding insult to injury, would frequently  be rehypothecated meaning often several banks would have claims to the same (fake) asset.

All that is about to change with the discovery of what may be one of the biggest gold counterfeiting scandal in recent history. And yes, not only does it involve China, but it emerges from a city that has become synonymous for all that is scandalous about China: Wuhan itself.

With that preamble in mind, we introduce readers to Wuhan Kingold Jewelry Inc., a company which as the name implies was founded and operates out of Wuhan, and which describes itself on its website as "A Company with a Golden future."

In retrospect, it probably meant "copper" future, because as a remarkable expose by Caixin has found, more than a dozen Chinese financial institutions, mainly trust companies (i.e., shadow banks) loaned 20 billion yuan ($2.8 billion) over the past five years to Wuhan Kingold Jewelry with pure gold as collateral and insurance policies to cover any losses. There was just one problem: the "gold" turned out to be gold-plated copper.

Some more background: Kingold - whose name was probably stolen from Kinross Gold, one of the world's largest gold miners - is the largest privately owned gold processor in central China’s Hubei province. Its shares are listed on the Nasdaq stock exchange in New York (although its current market cap of just $10MM is a far cry from its all time highs hit when the company IPOed on the Nasdaq around 2010) . The company is led by Chairman Jia Zhihong, an intimidating ex-military man who is the controlling shareholder.

What could go wrong?

Well, apparently everything as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan of loans outstanding against the bogus bars. And as Caixin adds, the loans were covered by 30 billion yuan of property insurance policies issued by state insurer PICC Property and Casualty 
and various other smaller insurers.

The fake gold came to light in February when Dongguan Trust (one of those infamous Chinese shadow banks) set out to liquidate Kingold collateral to cover defaulted debts. As the report continues, in late 2019 Kingold failed to repay investors in several trust products. To its shock, Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.
The news sent shockwaves through Kingold’s creditors. China Minsheng Trust - another shadow banking company and one of Kingold’s largest creditors - obtained a court order to test collateral before Kingold’s debts came due. On May 22, the test result returned saying the bars sealed in Minsheng Trust’s coffers are also copper alloy.

China passes Hong Kong security law amid global opposition

June 30, 2020 / 2:37 AM
HONG KONG/BEIJING (Reuters) - China’s parliament passed national security legislation for Hong Kong on Tuesday, setting the stage for the most radical changes to the former British colony’s way of life since it returned to Chinese rule almost exactly 23 years ago.

State media is expected to publish details of the law - which comes in response to last year’s often-violent pro-democracy protests in the city and aims to tackle subversion, terrorism, separatism and collusion with foreign forces - later on Tuesday.

Amid fears the legislation will crush the global financial hub’s rights and freedoms, and reports that the heaviest penalty would be life imprisonment, prominent pro-democracy activist Joshua Wong said he would quit his Demosisto group.

“It marks the end of Hong Kong that the world knew before,” Wong said on Twitter.

The legislation pushes Beijing further along a collision course with the United States, Britain and other Western governments, which have said it erodes the high degree of autonomy the city was granted at its July 1, 1997, handover.

The United States began eliminating Hong Kong’s special status under U.S. law on Monday, halting defence exports and restricting the territory’s access to high technology products.

Hong Kong leader Carrie Lam, speaking at her regular weekly news conference, said it was not appropriate for her to comment on the legislation as the meeting in Beijing was still going on, but she threw a jibe at the United States.

“No sort of sanctioning action will ever scare us,” Lam said.

Lau Siu-kai, vice-president of a think-tank under the Beijing cabinet’s Hong Kong and Macau Affairs Office, told Reuters the internationally criticised law was passed unanimously with 162 votes.

The editor-in-chief of the Global Times, a tabloid published by the People’s Daily, the official newspaper of China’s ruling Communist Party, said on Twitter the heaviest penalty under the law was life imprisonment, without providing details.

---- Beijing is expected to set up a national security office in Hong Kong for the first time to “supervise, guide and support” the city government. Beijing could also exercise jurisdiction on certain cases.

Judges for security cases are expected to be appointed by the city’s chief executive. Senior judges now allocate rosters up through Hong Kong’s independent judicial system.

Finally, that trade war, all against all, is back on. Will we re-run the 1930s but with massively more unrepayable debt?

Coronavirus rekindles global trade disputes

June 29, 2020 / 7:13 AM
BRUSSELS (Reuters) - At the start of the year, U.S.-China tensions were easing after their Phase I trade deal, while Washington, Brussels and Tokyo agreed on new global trading rules to curb subsidies. A relative calm had set in.

Then the new coronavirus struck.

Countries across the world imposed 222 exports curbs on medical supplies and medicines and in some cases food, according to Global Trade Alert, a Swiss monitoring group. For medical products, it was more than 20 times the usual level.

Those curbs are now being lifted, but the pandemic has reinforced protectionist arguments by highlighting how global supply chains can deprive people of essential medical protection and disrupt food supplies, as well as threaten jobs.

U.S. President Donald Trump has said he wants to cut ties with China, the European Union is planning barriers to state-backed investment from China and elsewhere and China is demanding declarations that food imports are virus-free.

Former EU trade chief Cecilia Malmstrom said there was a “worrying” tendency towards protectionism in the world and the re-emergence of trade conflicts briefly paused by the health crisis.

“Trade-wise we should be concerned,” she told a seminar on Wednesday.

The World Trade Organization said on Tuesday that global trade in goods was set for a record fall this year and that wider restrictions could see a 2021 rebound falling short.

In the past fortnight, the United States has withdrawn from negotiations with European countries over a tax on digital firms and pledged a “broad reset” of its set of tariffs agreed with World Trade Organization partners.

It has also threatened tariffs on a new range of European products, including fresh olives, bakery items and gin, to maintain pressure in a 16-year dispute over aircraft subsidies.

To some extent, political rhetoric is running ahead of reality: U.S. China trade rose in April after COVID-19-related falls and U.S. officials have said China is committed to buying more U.S. goods in line with the Phase 1 deal.

Chinese leaders and EU chiefs met virtually last Monday, although Brussels told China to make good on its promise to allow greater access for European companies and criticised its actions on the coronavirus and Hong Kong.

China offered deeper cooperation on COVID-19 and urged the EU to relax export controls. On Wednesday, Beijing said it was opening up seven more sectors to foreign investors.

China to impose visa restrictions on U.S. individuals over Hong Kong

June 29, 2020 / 8:33 AM
BEIJING (Reuters) - Beijing said on Monday it will impose visa restrictions on U.S. individuals with “egregious conduct” on Hong Kong-related issues, mirroring U.S. sanctions against unnamed Chinese officials deemed responsible for curbing freedoms in the city. 

The announcement comes as the top decision-making body of China’s parliament deliberates a draft national security law for Hong Kong that pro-democracy activists in the city fear will be used to eliminate dissent and tighten Beijing’s control.

Chinese foreign ministry spokesman Zhao Lijian, who announced the new sanctions during a press briefing in response to a question about Washington’s new visa restrictions, did not specify which U.S. individuals have been targeted.

“The U.S. is attempting to obstruct China’s legislation for safeguarding national security in the HK SAR (Hong Kong Special Administrative Region) by imposing the so-called sanctions, but it will never succeed,” he told reporters.

“In response ... China has decided to impose visa restrictions on U.S. individuals with egregious conduct on HK related issues.”

U.S. Secretary of State Mike Pompeo said last week that the new visa restrictions by Washington apply to “current and former” officials of China’s ruling Communist Party “believed to be responsible for, or complicit in, undermining Hong Kong’s high degree of autonomy.”

The U.S. Senate also approved a bill last week that would impose mandatory sanctions on people or companies that back efforts to restrict Hong Kong’s autonomy. It includes secondary sanctions on banks that do business with anyone backing any crackdown on the territory’s autonomy.

Zhao, the foreign ministry spokesman, told reporters that China has lodged a complaint with the U.S. over the bill and warned that Beijing will respond with strong countermeasures in response to U.S. actions on Hong Kong.

Swiss-EU treaty deal unlikely this year: former EU commissioner

June 29, 2020 / 9:38 AM
ZURICH (Reuters) - Switzerland and the European Union are unlikely to agree a deal on a new treaty regulating their relations until next year, when the outcome of Brexit talks is known, former EU Commissioner Guenther Oettinger said in an interview published on Monday. 

Switzerland, which is not part of the EU, has a patchwork of 120 sectoral accords with the bloc, and the two sides have spent years negotiating a framework agreement.

But officials have said a Swiss-EU accord is unlikely to emerge until the terms of Britain’s future relationship with the bloc have been settled, because Brussels has been loath to give the Swiss concessions that Britain might seize on.

Britain, which quit the EU at the end of January, has until the end of this year to reach an agreement with the EU on their future relationship but the talks are at an impasse.

“I don’t think that an (EU-Swiss) agreement will be reached in the second half of the year before the exact course of Brexit is clear,” Oettinger, the former point person in Swiss-EU ties, told the Neue Zuercher Zeitung newspaper.

---- Swiss Foreign Minister Ignazio Cassis has said a new agreement is not his country’s top priority as it tackles the COVID-19 pandemic. Bern wants to keep the treaty issue under wraps before a September referendum on ending a Swiss-EU pact on the free movement of citizens.

Airbus sees output down 40% for two years as job cuts loom

June 29, 2020 / 6:58 AM
PARIS/TOULOUSE (Reuters) - Airbus (AIR.PA) plane output will be 40% lower for two years compared to pre-crisis plans, its chief executive said in remarks published on Monday, underscoring the threat to jobs as it draws up rapid restructuring plans due to a travel slump.

Reuters reported on June 3 that Airbus was looking to hold underlying jet output at 40% below pre-coronavirus pandemic plans for two years as the basis for the restructuring.

“For the next two years - 2020/21 - we assume that production and deliveries will be 40% lower than originally planned,” CEO Guillaume Faury told Die Welt newspaper, saying output would return to normal by 2025.

Airbus has till now said it was cutting output by a third on average.

The latest figures do not imply any immediate new production cut after Airbus reduced output by between 33% and 42% to new output levels that it plans to keep under review.

Industry sources say the 40% cut in core or “single-aisle equivalent” output is expected to drive a widely anticipated restructuring of the company’s workforce, details of which Airbus has promised to announce by the end of July.

The sources have predicted phased cuts of between 14,000 and 20,000 jobs based on the production targets.

Union officials said the plans could be set out as early as Wednesday, when Airbus has called an emergency session at the end of two days of union meetings.

“If there’s no meaning in it,” said Chairman Powell, “that saves a world of trouble, you know, as we needn’t try to find any.”

With apologies to Lewis Carroll

Covid-19 Corner                       

Though hopefully, we are passing/have passed the peak of new cases, at least of the first SARS-CoV-2 outbreak, this section will continue until it becomes unneeded.
We start with an intriguing development from Spain. If other countries are also storing frozen wastewater samples, we need them to start back testing too.

Coronavirus traces found in March 2019 sewage sample, Spanish study shows

June 26, 2020 / 6:18 PM
MADRID (Reuters) - Spanish virologists have found traces of the novel coronavirus in a sample of Barcelona waste water collected in March 2019, nine months before the COVID-19 disease was identified in China, the University of Barcelona said on Friday.

The discovery of virus genome presence so early in Spain, if confirmed, would imply the disease may have appeared much earlier than the scientific community thought.

The University of Barcelona team, who had been testing waste water since mid-April this year to identify potential new outbreaks, decided to also run tests on older samples.

They first found the virus was present in Barcelona on Jan. 15, 2020, 41 days before the first case was officially reported there.

Then they ran tests on samples taken between January 2018 and December 2019 and found the presence of the virus genome in one of them, collected on March 12, 2019.

“The levels of SARS-CoV-2 were low but were positive,” research leader Albert Bosch was quoted as saying by the university.

The research has been submitted for a peer review.

Dr Joan Ramon Villalbi of the Spanish Society for Public Health and Sanitary Administration told Reuters it was still early to draw definitive conclusions.

“When it’s just one result, you always want more data, more studies, more samples to confirm it and rule out a laboratory error or a methodological problem,” he said.

There was the potential for a false positive due to the virus’ similarities with other respiratory infections.

Asia Today: India’s virus cases jump with another daily high

NEW DELHI (AP) — India has reported a new daily record of nearly 20,000 new infections as several Indian states reimpose partial or full lockdowns to stem the spread of the coronavirus.
India’s health ministry has recorded 548,318 COVID-19 total cases as of Monday, a jump of nearly 100,000 cases in a week in the world’s fourth-worst affected country after the United States, Brazil and Russia. India’s death toll has reached 16,475, while 321,723 patients have recovered from the disease.

The capital district of the northeastern state of Assam on the Bangladesh border has reimposed a full lockdown until July 12 following a spike in cases. Another border state, West Bengal, has extended its lockdown until July 31.

However, in India’s worst-affected states, Maharashtra which includes India’s financial capital, Mumbai, and Delhi, home to the federal capital of New Delhi, most of the country’s lockdown restrictions have been eased, with restaurants, shopping malls and parks reopened, and public buses and shared-ride services back on the roads.

In other developments in the Asia-Pacific region:

— Fans of South Korea’s pro sports may be required to wear masks and discouraged from shouting or eating food when they possibly return to the stands in coming weeks. Jung Eun-kyeong, director of South Korea’s Centers for Disease Control and Prevention, said such measures were being discussed as health authorities and the sports ministry map out plans for spectators to return to sports. The plans could be announced as early as this week. Jeong said it will be crucial for the leagues to enforce distance between the fans. Limits on attendance could be eased as the country’s anti-virus efforts progress. South Korea’s professional baseball and soccer leagues returned to action in May without spectators. The discussions on fans’ return come despite a resurgence of the virus in the Seoul area. South Korea on Monday reported 42 new infections, and authorities are considering stronger social restrictions if if the epidemic continues to grow.

— Philippine officials say authorities in a central village may face criminal or administrative complaints for allowing a street parade and dance despite a strict coronavirus lockdown. Mayor Edgar Labella of Cebu city said officials of Basak village have been ordered to explain why the religious fiesta in honor of St. John the Baptist was held Saturday despite a prohibition against public gatherings. Performers in native wear and face masks danced during the night procession, which drew a large crowd. While the Philippines has eased quarantine restrictions in most regions, Cebu city is under a strict lockdown following a spike in infections. The Philippines has more than 35,000 virus case, including 1,244 deaths.

---- — China reported a further decline in new cases, with just 12. Seven of those were locally spread cases in Beijing, where nearly 8.3 million people have been tested in recent weeks. The number of new cases in the city was down by half from the day before, the National Health Commission reported. Beijing temporarily shut a huge wholesale food market where the virus spread widely earlier this month, reclosed schools and locked down some neighborhoods. Anyone leaving Beijing is required to have a negative virus test result procured within the previous seven days.

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.

Process for 'two-faced' nanomaterials may aid energy, information tech

Date: June 26, 2020

Source: DOE/Oak Ridge National Laboratory

Summary: A team used a simple process to implant atoms precisely into the top layers of ultra-thin crystals, yielding two-sided structures with different chemical compositions. The resulting materials, known as Janus structures after the two-faced Roman god, may prove useful in developing energy and information technologies.

"We're displacing and replacing only the topmost atoms in a layer that is only three atoms thick, and when we're done, we have a beautiful Janus monolayer where all the atoms in the top are selenium, with tungsten in the middle and sulfur in the bottom," said ORNL's David Geohegan, senior author of the study, which is published in ACS Nano, a journal of the American Chemical Society. "This is the first time that Janus 2D crystals have been fabricated by such a simple process."

Yu-Chuan Lin, a former ORNL postdoctoral fellow who led the study, added, "Janus monolayers are interesting materials because they have a permanent dipole moment in a 2D form, which allows them to separate charge for applications ranging from photovoltaics to quantum information. With this straightforward technique, we can put different atoms on the top or bottom of different layers to explore a variety of other two-faced structures."

This study probed 2D materials called transition metal dichalcogenides, or TMDs, that are valued for their electrical, optical and mechanical properties. Tuning their compositions may improve their abilities to separate charge, catalyze chemical reactions or convert mechanical energy to electrical energy and vice versa.

A single TMD layer is made of a ply of transition metal atoms, such as tungsten or molybdenum, sandwiched between plies of chalcogen atoms, such as sulfur or selenium. A molybdenum disulfide monolayer, for example, features molybdenum atoms between plies of sulfur atoms, structurally similar to a sandwich cookie with a creamy center between two chocolate wafers. Replacing one side's sulfur atoms with selenium atoms produces a Janus monolayer, akin to swapping one of the chocolate wafers with a vanilla one.

Before this study, turning a TMD monolayer into a two-faced structure was more a theoretical feat than an actual experimental accomplishment. In the many scientific papers about Janus monolayers published since 2017, 60 reported theoretical predictions and only two described experiments to synthesize them, according to Lin. This reflects the difficulty in making Janus monolayers due to the significant energy barriers that prevent their growth by typical methods.

In 2015, the ORNL group discovered that pulsed laser deposition could convert molybdenum diselenide to molybdenum disulfide. At the Center for Nanophase Materials Sciences, a DOE Office of Science User Facility at ORNL, pulsed laser deposition is a critical technique for developing quantum materials.

 `Have you guessed the riddle yet?′ Trump said, turning to Powell again.

`No, I give it up,′ Powell replied: `what’s the answer?′

`I haven’t the slightest idea,′ said President Trump.

With apologies to Lewis Carroll.

The Monthly Coppock Indicators finished May

DJIA: 25,383 +12 Down. NASDAQ: 9,490 +178 Up. SP500: 3,044 +83 Down.

The NASDAQ has remained up. The S&P and the DJIA still remain down despite the best efforts of the Fed to get them to go higher.