Monday 29 June 2020

The Half Year Dress Up Arrives.


Baltic Dry Index. 1749 + 11  Brent Crude 40.23
Spot Gold 1774

Coronavirus Cases 29/6/20 World 10,290,510
Deaths 505,406

Federal Reserve Chair(man) Jerome Powell and Treasury Secretary Steven Mnuchin testify before Congress on June 30 in what's expected to be a broad overview of the economy and monetary policy. The Fed's John Williams and Charles Evans also have speeches on the calendar and FOMC minutes are due out on July 1. (AKA Canada Day. Laid back Canadians party, socialise, Bar B Q, and speculate on what country’s national dress their Prime Minister will show up in on TV, later in the day, to celebrate Canada Day. Happily, the rest of the world gets on with a less complicated life.)

On the economic front, reports on factory orders, trade balance, and manufacturing PMI will all pour in before the June jobs report steals the show on July 2. Economists project a gain of 3M jobs during the month to take the unemployment rate to 12.2% from 13.3%. If payrolls look weak for June, the pressure could increase on President Trump and Senate Republicans to pass another sweeping COVID-19 relief bill.

Source: Seeking Alpha.

Friday, the USA celebrates Independence Day, when European  Americans broke free of the English, Mad “German” King George, and Scots “civilisation.” Almost immediately, poor, thirsty, Americans were forced into (almost) fighting the whiskey war of 1791-1794. (Surprisingly, most Brits now also celebrate Independence Day too, as it roughly corresponds to the day when they stop working for HMG taxes, and start working for themselves and their increasingly, downwardly mobile families.)

Whiskey Rebellion


We are at the half year dress up for stock markets. Normally it’s a Fed fuelled no brainer of dressing up the technology stocks, which then drives the rest of the stock indexes higher.

Add in a few oily, soapy clichés about buy and hold, “V” shaped recoveries, the bottom is in, the worst is over, things can only get better, and money manager bonuses soar along with stocks.

This year it’s a little harder to dress up the markets, though Chairman Powell and the Fed’s team of NY market riggers will be trying their best.

With Covid-19 cases surging along at over a million new cases a week, there’s clearly no rapid end in sight for the global coronavirus crisis.

No end to that, and no return to full planes of happy businessmen and tourists flying all around the globe. No end to empty hotels, bars and theatres, cancelled conventions, concerts and festivals. No return to dining out in anything like old times.

With a viable vaccine still probably about a year away and a logistical nightmare to distribute, and massive unemployment and underemployment dragging on the global economy, why take the risk of holding stocks here, when at best they will still likely be priced here a year from now, and at worst face another collapse if a second wave arrives in the autumn along with flu season.

Still, it will be interesting this week to watch Chairman Powell and his Trump re-election team do their best to spin that stocks and bonds are undervalued here, buy more.

Asia stocks wary as coronavirus threatens economic reopening

June 29, 2020 / 1:34 AM
SYDNEY (Reuters) - Asian share markets began the week with a cautious tone on Monday as the relentless spread of the coronavirus finally made investors question their optimism on the global economy, benefiting safe harbour bonds and the U.S. dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.6% and further away from a four-month top hit last week. Japan's Nikkei .N225 shed 1.3% and Chinese blue chips .CSI300 0.6%. 

In a more promising sign, E-Mini futures for the S&P 500 ESc1 recouped their early losses to edge up 0.3% and EUROSTOXX 50 futures STXEc1 added 0.2%. FTSE futures FFIc1 dipped 0.2%.
Wall Street had faltered on Friday as some U.S. states reconsidered their reopening plans. The global death toll from COVID-19 reached half a million people on Sunday, according to a Reuters tally.

About one-quarter of all the deaths so far have been in the United States, with cases surging in a handful of southern and western states that reopened earlier.

“The increase in U.S. COVID-19 infection rates has dented momentum across markets despite the improvements in the global economy, which continues to beat most data expectations,” wrote analysts at JPMorgan in a note.

“Our strategists remain sanguine and recommend to buy on dips but also selectivity,” they added. “Traditional hedges like JPY vs USD, USD vs EM FX, gold and quality stocks are still outperforming this month. We stay overweight U.S. equities but move EM equities to neutral and stay neutral U.S. credit.”

Sovereign bonds benefited from the shift to safety with yields on U.S. 10-year notes US10YT=RR falling to 0.64%, having briefly been as high as 0.96% early in June.
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Stock futures little changed as U.S. coronavirus cases surge to record levels

U.S. stock futures hovered around the flatline following an earlier decline as coronavirus cases continue surging in the U.S., stoking concerns about the economic reopening and recovery.

As of early morning trade on Monday, Dow Jones Industrial Average futures traded 27 points lower. S&P 500 futures and Nasdaq-100 futures also stood little changed. Earlier in the session, Dow futures had traded more than 100 points lower.

Data compiled by Johns Hopkins University showed more than 2.5 million cases have been confirmed across the U.S. On Friday alone, there were 45,255 additional cases were reported, bringing the country’s seven-day average to more than 41% from the prior week.

On Saturday, Florida reported a one-day record of cases of 9,636. The state reported an additional 8,577 on Sunday. Those figures were released after Florida once again banned drinking at bars on Friday. Texas — another state that has seen record spikes in coronavirus infections — rolled back on Friday some of its reopening measures. Arizona Gov. Dough Ducey said Friday cases in the state are “growing fast across all age groups and demographics.”

Health and Human Services Secretary Alex Azar warned on Sunday that the “window is closing” for the U.S. to curb the coronavirus outbreak. 
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Oil falls in second straight session as virus cools demand

June 29, 2020 / 1:33 AM
SINGAPORE (Reuters) - Oil prices fell for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.

Brent crude LCOc1 dropped 66 cents, or 1.6%, to $40.36 a barrel by 1150 GMT while U.S. crude CLc1 was at $37.86, down 63 cents, or 1.6%. 

Brent crude is set to end June with three consecutive monthly gains as OPEC+ supply cuts and as oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The market continues to fret about the recovery in demand as authorities reviewed reopening strategies,” ANZ analysts said, referring to the three most populous U.S. states - Texas, Florida and California.

Despite efforts by the Organization of the Petroleum Exporting Countries and their allies including Russia to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs.
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Chesapeake’s Collapse Is Latest in Long Line of Shale Disasters

By David Wethe
The shale bust has reached a grim milestone by claiming the pioneer of America’s drilling renaissance. But Chesapeake Energy Corp., which filed for bankruptcy protection on Sunday, is just the latest in a long list of casualties.

More than 200 North American oil and gas producers, owing over $130 billion in debt, have filed for bankruptcy since the beginning of 2015, according to a May report from law firm Haynes & Boone. This year alone, at least 20 have gone under after oil prices plunged amid the Covid-19 pandemic.

Shale Collapse

More than 200 North American oil explorers went bankrupt since 2015
Haynes and Boone LLP

The shale boom spearheaded by the likes of Chesapeake a decade ago was fueled by debt.
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https://www.bloomberg.com/news/articles/2020-06-29/chesapeake-s-collapse-is-latest-in-long-line-of-shale-disasters

In other news, the news remains unrelentingly grim. Far from a “V” shaped rebound we still probably haven’t hit the bottom in unemployment.

British Airways sacks 350 pilots and puts 300 in 'pool' for rehire - The Sun

June 28, 2020 / 2:58 PM
(Reuters) - British Airways, which has said it needs to cut 12,000 jobs and proposed pay cuts for cabin crew, has reached a deal with its pilots that will see 350 laid off and another 300 put in a ‘pool’ for rehiring when needed, The Sun on Sunday reported.

Captains and first officers placed in the pool do not currently have an aircraft to operate and will remain on half-pay, the report said, while all other operating flight crew will take a 15% pay cut.

Once ‘pooled’ pilots return, operating flight crew members will get 7.5% of their deducted pay back, while the rest of the pay cut will be lost, the report added.

The majority of pilots being ‘pooled’ will be Boeing 747 jumbo jet first officers.

British Airways, owned by International Consolidated Airlines Group (ICAG.L), which also owns Aer Lingus, Iberia and Vueling, said in an emailed statement that “constructive talks are ongoing with (UK pilots union) BALPA to save as many jobs as possible.”

BALPA did not immediately respond to a request for comment.

Reuters reported last week that British Airways has made a proposal to its cabin crew on pay cuts. The airline plans to lay off a quarter of its pilots.

Planes were grounded in March by lockdowns to curb the coronavirus pandemic, tipping the industry into crisis.

Universal Studios Japan to delay Nintendo-themed area opening - Kyodo

June 27, 2020 / 1:38 PM
TOKYO (Reuters) - Comcast’s (CMCSA.O) Osaka-based theme park Universal Studios Japan is pushing back the opening of a Nintendo (7974.T) themed area from this summer, and possibly into next year, due to the coronavirus outbreak, Kyodo reported on Saturday.

The pandemic has affected operations at the park and preparations for the new area, Kyodo said, without citing sources. 

Universal Studios Japan and Nintendo were not immediately available for comment outside normal business hours.

“Super Nintendo World” had been due to open by the Tokyo 2020 Olympic Games - which were scheduled to start in late July but have been pushed back to next year.

Finally, some uncommon sense about trade deals. Good news if it actually happens, though far more 2021-2022 at the earliest.

No need to have all-encompassing trade deal with UK initially - U.S. housing secretary

June 28, 2020 / 10:32 AM
LONDON (Reuters) - U.S. Housing and Urban Development Secretary Ben Carson said on Sunday the United States and Britain could agree a trade deal that did not cover all sectors straight away, instead leaving the more difficult issues for a later date.

Asked by the BBC whether, in his opinion, a UK-U.S. trade deal would have to cover every single sector all at once, Carson told the Andrew Marr Show: “I don’t see any reason that it does. There are areas where President (Donald) Trump and Prime Minister (Boris) Johnson have a lot of agreement and there are some areas where there needs to be further discussion. 

“I don’t see why you can’t work on the areas where you have agreement, get that done, with an eye to solving the other problems subsequently,” he said, adding he was not in charge of the trade negotiations.
Fisher Ames.

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 will be living with the coronavirus pandemic well into 2021

The virus is winning. That much is certain more than six months into a shape-shifting pandemic that’s killed 450,000 people worldwide, is gaining ground globally and has disrupted lives from Wuhan to Sao Paulo.

While promising, fast-moving vaccine projects are underway in China, Europe and the U.S., only the most optimistic expect an effective shot to be ready for global distribution this year.

If, as most experts believe, an effective vaccine won’t be ready until well into 2021, we’ll all be coexisting with the coronavirus for the next year or longer without a magic bullet. And this next phase of the crisis may require us to reset our expectations and awareness and change our behavior, according to public-health professionals.

In their view, success isn’t defined as returning to life as it was in 2019. Rather, it’s about buying time and summoning the staying power and policy flexibility to limit the destructive capacity of an expanding pandemic, which may result in global deaths of more than one million according to one estimate, until there are medical tools to effectively treat and immunize against the virus.

“People are fatigued. They mistakenly feel that things were going away,” said Cameron Wolfe, an infectious-disease doctor and associate professor of medicine at Duke University. “We’re going to have to figure out a way to live with this.”

Complicating matters, the perceived threat varies from neighborhood to neighborhood, let alone country to country. Much depends on the severity of local outbreaks and the effectiveness of testing, contact tracing, social distancing, hospital systems and public-health messaging that is free of political shading.

---- Yet that progress came at the cost of economic contraction, soaring unemployment and trillions of dollars in fiscal and monetary stimulus measures. Governments are likely to be reluctant to resort to wholesale lockdowns again in anything short of a catastrophe.

Instead, the biggest economies seem intent on reopening, even if the pace varies. That, in turn, means more social mobility and more opportunities for the virus to spread. Already, scientists who track virus trends are seeing signs that re-opening is leading to a spike in cases.

“I understand there is a perception of the need to balance on these economic considerations,” said Ada Adimora, an epidemiologist and professor of medicine in infectious diseases at the University of North Carolina School of Medicine. “But to the extent that we open up society and have people going to restaurants — you can’t wear a mask while you eat — you are not really working to control the threat of the virus.”

The ability to coexist with SARS-CoV-2, as the virus is known, will increasingly ride on how individuals assess risks and make decisions.

“No activity will be without the risk of coronavirus,” said Amesh Adalja, a senior scholar at Johns Hopkins Center for Health Security in Baltimore. “It’s just how much risk people think is worth assuming.”
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How the Coronavirus Short-Circuits the Immune System

In a disturbing parallel to H.I.V., the coronavirus can cause a depletion of important immune cells, recent studies found.
June 26, 2020

At the beginning of the pandemic, the coronavirus looked to be another respiratory illness. But the virus has turned out to affect not just the lungs, but the kidneys, the heart and the circulatory system — even, somehow, our senses of smell and taste.

Now researchers have discovered yet another unpleasant surprise. In many patients hospitalized with the coronavirus, the immune system is threatened by a depletion of certain essential cells, suggesting eerie parallels with H.I.V.

The findings suggest that a popular treatment to tamp down the immune system in severely ill patients may help a few, but could harm many others. The research offers clues about why very few children get sick when they are infected, and hints that a cocktail of drugs may be needed to bring the coronavirus under control, as is the case with H.I.V.

Growing research points to “very complex immunological signatures of the virus,” said Dr. John Wherry, an immunologist at the University of Pennsylvania whose lab is taking a detailed look at the immune systems of Covid-19 patients.

In May, Dr. Wherry and his colleagues posted online a paper showing a range of immune system defects in severely ill patients, including a loss of virus-fighting T cells in parts of the body.

In a separate study, the investigators identified three patterns of immune defects, and concluded that T cells and B cells, which help orchestrate the immune response, were inactive in roughly 30 percent of the 71 Covid-19 patients they examined. None of the papers have yet been published or peer reviewed.
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Is the coronavirus pandemic entering a second wave?

·         Unclear whether Covid-19 will have similar trajectory to 1918 flu pandemic, which is infamous for its more lethal later surge
·         Experts say the term is ambiguous but people’s behaviour and government actions will be critical
Published: 12:00pm, 29 Jun, 2020

---- On Thursday, the World Health Organisation’s regional director for Europe Hans Kluge said 30 countries and territories in the region had seen increases in new cumulative cases in the past two weeks as they eased social distancing measures, with 11 of those experiencing a “significant resurgence”

But whether this means such areas are seeing a second wave remains unclear, largely due to the ambiguity of the term, experts say.

Many caution against declaring a new rise in case numbers in areas or countries where cases had appeared to decline as a “second wave”, since an uptick of cases as social distancing restrictions are relaxed did not necessarily mean the start of a new cycle – or the end of old one – especially if there was still a significant amount of transmission.

Anthony Fauci, director of the US National Institute of Allergy and Infectious Diseases, speaking in a June 18 interview with The Washington Post, said the United States was still in the first wave, even as case rates decline and increase at different times in various regions of the country.

John Mathews, an honorary professor at the University of Melbourne’s School of Population and Global Health, said a second wave would typically be characterised by a dramatic decline followed by a sudden comeback in the numbers of cases.
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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.

Chemists achieve breakthrough in the synthesis of graphene nanoribbons

Date: June 25, 2020

Source: Martin-Luther-Universität Halle-Wittenberg

Summary: Graphene Nanoribbons might soon be much easier to produce. An international research team has succeeded in producing this versatile material for the first time directly on the surface of semiconductors. Until now, this was only possible on metal surfaces.

Graphene Nanoribbons might soon be much easier to produce. An international research team led by Martin Luther University Halle-Wittenberg (MLU), the University of Tennessee and Oak Ridge National Laboratory in the U.S. has succeeded in producing this versatile material for the first time directly on the surface of semiconductors. Until now, this was only possible on metal surfaces. The new approach also enables scientists to customise the properties of the nanoribbons. Storage technology is one of the potential applications of the material. The research team reports on its results in the upcoming issue of Science.

For years, graphene has been regarded as the material of the future. In simple terms, it is a two-dimensional carbon surface that resembles a honeycomb. This special structure gives the material distinctive properties: for example, it is extremely stable and ultra-light. There is a particular interest in graphene nanoribbons as they are a semiconductor material that could be used, for instance, in the electrical and computer industry. "This is why many research groups around the world are focusing their efforts on graphene nanoribbons," explains chemist Professor Konstantin Amsharov at MLU. 
These ribbons, which are only nanometres in size, are made up of just a few carbon atoms wide. Their properties are determined by their shape and width. When graphene research was just beginning, the bands were produced by cutting up larger sections. "This process was very complicated and imprecise," says Amsharov.

He and colleagues from Germany, the U.S. and Poland, have now succeeded in simplifying the production of the coveted nanoribbons. The team produces the material by joining together individual atoms, which enables the properties to be customised. The researchers have succeeded for the first time in producing the ribbons on the surface of titanium oxide, a non-metallic material. "Until now, the ribbons were mainly synthesised on gold surfaces. This is not only comparatively expensive, but also impractical," explains Amsharov. The problem with this approach is that gold conducts electricity. This would directly negate the properties of the graphene nanoribbons, which is why this method has only been used in basic research. However, the gold was needed as a catalyst to produce the nanoribbons in the first place. In addition, the nanoribbons had to be transferred from the gold surface to another surface -- a very tricky undertaking. The new approach discovered by Amsharov and his colleagues solves this set of problems.

"Our new method allows us to have complete control over how the graphene nanoribbons are assembled. The process is technologically relevant as it could also be used at an industrial level. It is also more cost-effective than previous processes," says Amsharov, in summary. There are numerous areas of application for the nanoribbons: they could be used in future storage and semiconductor technology and they play a crucial role in the development of quantum computers.


Joseph J. Cassano, the former A.I.G. executive London, August 2007, on Credit Default Swaps that wiped out A.I.G in 2008.

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.

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