Baltic Dry Index. 1090 -13 Brent
Crude 68.37 Spot Gold 1515
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.
Too bad ninety percent of the politicians give the other ten
percent a bad reputation.
Henry Kissinger
We are almost at the year-end, and stock promoters everywhere are
rejoicing at the central banksters latest stock market bubbles.
But the reality is that all these 2019 stock bubbles, are driven by the
world’s central banks, suppressing interest rates, even into the insanity of
negative interest rates, and flooding the financial markets with ever more
monetisation.
The latest manic round began last September, when the Fed began flooding
new money into the overnight repo-market, and purchasing T. Bills. Just don’t
call it monetisation or quantitative easing, says the Fed, but it is.
Worse, the Fed won’t or can’t tell us the reason for all the continuing
monetisation. Either they don’t know what’s broken in the financial system, or
they do know, but think that disclosure will make the gigantic problem worse.
I suspect that as 2020 unfolds, we are in for another systemic financial
crisis, similar to 2008-2009, but far larger due to the Mount Everest of
unproductive debt built up in the last decade. All the trade wars aren’t
helping either.
Below, the final stock market exit bubble still bubbles on, but for how
much longer?
China lifts Asian shares; oil up on drawdowns, Mideast tensions
December 30, 2019
/ 2:11 AM
SHANGHAI (Reuters)
- A broad gauge of Asian share markets rose to the highest in 18 months on
Monday as Chinese equities gained, while oil hovered near three-month highs on
a combination of U.S. crude inventory drawdowns, trade optimism and unrest in
the Middle East.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was last up 0.2%, turning around from an earlier loss. The index rose to its highest since June 19.
Chinese blue chips .CSI300, which had started the day lower, were up 1.24% at the midday break, bolstered by a report that 2019 retail sales are forecast to rise 8% and expectations that a new benchmark for floating-rate loans could lower borrowing costs and boost flagging economic growth.
But Australian shares remained down 0.44% as investors continued to consolidate recent gains. Japan's Nikkei stock index .N225 slid 0.58%.Easing trade war worries and reduced uncertainty over the United Kingdom's plans to leave the European Union after British elections returned a strong Conservative majority have offered a lift to global equities this month, helping the broad MSCI Asia index rise more than 6% and putting it on track for its strongest month since January.
Kay Van-Petersen, global macro strategist at Saxo Capital Markets, said that limited liquidity near the year-end and the easing of U.S.-China trade and Brexit uncertainties has “just left us drifting up higher. So even if there is a pullback... I don’t think it’s going to be significant by any means.”
Global equity markets gained late last week, with the S&P 500 .SPX and the Dow Jones Industrial Average .DJI closing at records on Friday.
More
Up next, rising trouble in China. There’s a debt refinancing problem
directly ahead, and ominously, China’s government has increasingly begun
allowing bond issuers to default.
Bills Come Due for China’s Local Governments
With more than $6 trillion worth of debt, some are finding it increasingly difficult to meet payment deadlines
By
Chao Deng Dec.
27, 2019 12:26 pm ET
ZHENJIANG,
China—For decades, local governments in China borrowed heavily to build urban
infrastructure, helping to fuel the country’s red-hot economic growth.
Now, they are under pressure to pay the bill, adding another financial worry to Chinese policy makers’ list.
Independent economists estimate that China’s municipalities have racked
up more than $6 trillion in debt—including debts authorities don’t acknowledge
on their books. Tax revenue and returns on the roads and other infrastructure
built with borrowed money aren’t enough to pay down the debts. Land sales,
which local governments have relied on, have weakened as the economy slows.
With nearly 3 trillion yuan ($428 billion) in bonds coming due in the
next two years, on top of bank loans and hidden debt, local governments need to
find ways to refinance.
More
China commerce ministry says it has proactively dealt with U.S. trade frictions
December 29,
2019 / 5:10 AM
BEIJING (Reuters) - China’s Commerce Ministry has “proactively dealt
with” trade frictions with the United States this year, it said on Sunday after
an annual work conference.
The ministry has implemented the decisions of the central government and
“resolutely safeguarded the interests of the country and the people”, it said
in a statement on its website.
The United States and China cooled their trade war this month,
announcing a “Phase one” agreement that would reduce some U.S. tariffs in
exchange for what U.S. officials said would be a big jump in Chinese purchases
of American farm products and other goods.
China’s commerce ministry has said it is in close touch with the United
States on signing the trade deal, and both sides are still going through necessary
procedures before the signing.
Finally, an untimely reminder from the past.
The true costs of very low interest rates
Artificial
distortions can cause ‘clusters of errors’ by businesses
Caitlin
Long August 11, 2010
Markets
tend to cheer falling interest rates. Low interest rates, however, can entail
real economic costs that become evident over time.
During
the earlier period of monetary stimulus, from 2001-04, many businesses made
economic calculation errors that later led to losses. Examples include
investments in housing, commercial real estate and mining exploration, as well
as the provision of defined benefit pensions to employees.
Interest
rates are the most important prices in the economy, according to Nobel laureate
F.A. Hayek, because they reflect the collective time preference of individuals
to consume either now or later. Accordingly, interest rates co-ordinate
allocation of capital across the economy by signalling to businesses whether
they should invest. Distortions in interest rates can cause “clusters of
errors” in which large swathes of businesses unwittingly miscalculate at the
same time.
Hayek
observed that interest rate stimulus interfered with economic calculations,
causing managers to invest in projects that would not otherwise have appeared
profitable. Losses can subsequently materialise as customer demand fails to
meet forecasts that were, in retrospect, optimistic. Long-term projects are
highly sensitive to interest rates and are therefore more susceptible to such
distortions. Pension obligations and long-term, capital-intensive projects are
at high risk of miscalculation based on artificially low rates.
More
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled
over.
Today, those trade war tariffs again. Were there any winners?
Fed study finds Trump tariffs backfired
By Greg Robb
Published: Dec 27, 2019 3:13 p.m. ET
“We find that the 2018 tariffs are associated with relative reductions in manufacturing employment and relative increases in producer prices,” concluded Fed economists Aaron Flaaen and Justin Pierce, in an academic paper.
While the tariffs did reduce competition for some industries in the domestic U.S. market, this was more than offset by the effects of rising input costs and retaliatory tariffs, the study found.
“While the longer-term effects of the tariffs may differ from those that we estimate here, the results indicate that the tariffs, thus far, have not led to increased activity in the U.S. manufacturing sector,” the study said.
Tit-for-tat trade retaliation is an idea best relegated to the past, given the presence of globally interconnected supply chains, the Fed researchers found.
The top ten manufacturing industries hit by foreign retaliatory tariffs were producers of: magnetic and optical media, leather goods, aluminum sheet, iron and steel, motor vehicles, household appliances, sawmills, audio and video equipment, pesticide, and computer equipment.
The top ten industries hit by higher prices were: aluminum sheet, steel product, boilers, forging, primary aluminum production, secondary aluminum smelting, architectural metals, transportation equipment, general purpose machinery and household appliances.
The researchers don’t measure the effects on business confidence resulting from the uncertainty regarding U.S. international trade policy. Many economists see this doubt about future government policy as a primary driver in the decline in business investment this year.
While the Federal Reserve did not specify companies affected by the U.S - China trade dispute of the past 18 months, semi-conductor and electronics manufacturers that depend on China for sales, like NVIDIA Corp. NVDA, -0.97%, Micron Technology MU, -1.95% and Intel Corp. INTC, +0.43% are seen as especially vulnerable in a trade war scenario.
Apple Inc. AAPL, -0.04% has been able to escape tariffs on its China-assembled phones to date.
While Chinese consumers mostly buy locally made automobiles, U.S. manufacturers like Tesla Inc. TSLA, -0.13% have been at risk. The electric vehicle maker first raised the price of its Model S and Model X cars by $20,000 after a new round of trade tariffs but then cut and decided to absorb the difference. However, together with its Chinese partners, General Motors GM, +0.22% sold 3.6 million vehicles in China in 2018, more than in the United States.
Some executives have blamed import tariffs for higher costs including heavy equipment manufacturer Caterpillar CAT, +0.04%
Nothing is so admirable in politics as a short memory.
John Kenneth Galbraith.
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?
2D materials: Arrangement of atoms measured in silicene
Date:
December 24, 2019
Source:
University of Basel
Summary:
Silicene consists of a single layer of silicon atoms. In contrast to the
ultra-flat material graphene, which is made of carbon, silicene shows surface
irregularities that influence its electronic properties. Now, physicists have
been able to precisely determine this corrugated structure. Their method is
also suitable for analyzing other two-dimensional materials.
In contrast to the ultra-flat material graphene, which is made of
carbon, silicene shows surface irregularities that influence its electronic
properties. Now, physicists from the University of Basel have been able to
precisely determine this corrugated structure. As they report in the journal PNAS,
their method is also suitable for analyzing other two-dimensional materials.
Since the experimental production of graphene, two-dimensional materials
have been at the heart of materials research. Similar to carbon, a single layer
of honeycombed atoms can be made from silicon. This material, known as
silicene, has an atomic roughness, in contrast to graphene, since some atoms
are at a higher level than others.
Silicene not completely flat
Now, the research team, led by Professor Ernst Meyer of the Department
of Physics and the Swiss Nanoscience Institute of the University of Basel, has
succeeded in quantitatively representing these tiny height differences and
detecting the different arrangement of atoms moving in a range of less than one
angstrom -- that is, less than a 10-millionth of a millimeter.
---- Different electronic properties
This unevenness, known as buckling, influences the electronic properties
of the material. Unlike graphene, which is known to be an excellent conductor,
on a silver surface silicene behaves more like a semiconductor. "In
silicene, the perfect honeycomb structure is disrupted. This is not necessarily
a disadvantage, as it could lead to the emergence of interesting quantum
phenomena, such as the quantum spin hall effect," says Meyer.
The method developed by the researchers in Basel offers new insights
into the world of two-dimensional materials and the relationship between
structure and electronic properties.
The longer I am out of office, the more infallible I appear to
myself.
Henry Kissinger
The monthly Coppock Indicators finished November
DJIA: 28,051 +76 Up. NASDAQ: 8,665 +94 Up. SP500: 3,141 +90 Up. All higher again, but it’s
not a buy signal I would follow. I would wait for the next sell signal.
