Thursday, December 13, 2018

"USDA confirms U.S. soybean sales to China; soy futures fall"

Mystery history?
Two from Reuters:
Private exporters have sold 1.13 million tonnes of U.S. soybeans for delivery to China, the U.S. Agriculture Department said on Thursday, confirming sales Reuters reported a day earlier, though soy futures fell as traders hoped for more deals.

Traders said on Wednesday that China, the world's top soybean importer, had booked its first significant U.S. soybean purchases in more than six months after a trade truce was reached on Dec. 1.
The sales came after U.S. President Donald Trump and China's President Xi Jinping agreed to a 90-day detente in their tit-for-tat tariff war to negotiate a trade deal after meeting at the Group of 20 summit in Buenos Aires.

Trump told Reuters in an interview on Tuesday the Chinese were already buying a "tremendous amount" of U.S. soybeans and would also soon cut tariffs on U.S. autos. But it was unclear how many soybeans China would actually buy, with tariffs still in place and a record Brazilian crop nearly ready for harvest.

China last year purchased about 60 percent of U.S. soybean exports in deals valued at more than $12 billion. The purchases confirmed on Monday were less than $500 million.
"There was talk we’d see like 5 million tonnes over the next few days, so we will need some follow-through buying from China, especially outside of Sino," one U.S. trader said, referring to China's state-run buyer Sinograin....MORE
Two weeks-o-beans:

https://finviz.com/fut_chart.ashx?t=ZS&cot=005602&p=h1&rev=636803028816085302
910.00, down 10.00.
 
And a couple hours earlier:
Exclusive: China makes first big U.S. soybean purchase since Trump-Xi truce
China on Wednesday made its first major purchases of U.S. soybeans since President Donald Trump and his Chinese counterpart Xi Jinping struck a trade war truce earlier this month, providing some relief to U.S. farmers who have struggled to find buyers for their record-large harvest....MORE

A Somber Fly Asks For Our Prayers

I'm starting to suspect multiple personality disorder combined with 'roid rage, manic-depression, psychotropic/mood-altering chemicals and too much time in the business.

This was just before the close yesterday: 

Wed Dec 12, 2018 3:57pm EST
Bought into the Bell — God Have Mercy on My Soul
I bought MU, PAYC, TWTR, APPF and ZEN into the bell — all 5% positions. Couple that with an earlier purchase of EXK and I’ve now allocated 70% of my cash. My portfolio is most unusual, centered around the idea that bonds, gold, and SAAS can rise at the same time. While this might appear to be an odd mixture of complexities, it is well thought out and a cowardly approach to a potential melt up....MORE
Followed by a late-night post:

Wed Dec 12, 2018 11:18pm EST 
NEWS FLASH: THE FLY WINS AGAIN
...HELLO — I was fucking born for these days, having toiled in the sewers of Brooklyn before it was gentrified. I’d walk to school in the coldest weather imaginable with a broken book bag, and holes in my speakers, into the horse trails of shit, mud, and wild animals. My life has been a series of incidents and accidents of the biblical scale, only bemused by periods of excess, but uncomfortable with success.
Down markets are my forte. You’ve only read about them in books.

Futures are sharply higher this evening. We’ve got follow thru underway on the reversal hammer from two days ago. The close this evening was just fine and STFU about the weakness. The market has crashed in recent weeks. Accept a +165 day as a good alternative to -500.
I allocated 25% into tech stocks before the bell. Expect winship in the A.M., followed by a stern chastising to never offer me financial advice again....MORE 
And this morning: 
Thu Dec 13, 2018 9:08am EST
JP Morgan Upgrades $GE — Merry Fucking Xmas
This is a very, very significant upgrade. Steve Tusa from JPM has been bearish on GE since $30. He nailed the downside in the stock and has now upgraded it. Enough of the negativity. It is time to purchase shares of GE, barreling fat and greasy into the Xmas season.
“We are upgrading GE to Neutral and removing it from the Analyst Focus List as a short idea as we now see a more event-driven, balanced risk reward at current levels,”...
It's almost as if three different people wrote the posts.  
Interesting that he likes the SaaS stocks.

GV, Google’s Venture Capital Arm, Leads $90 Million Round For Indoor Farming Startup, Bowery

A quick look at the biz.
From Xconomy:

Farm Startup Bowery Lands $90M to Take Indoor-Grown Greens National
Foodies in New York City may not realize it, but some of the tasty kale, bok choy, and other leafy greens they buy trace their origins to an industrial park in New Jersey. The produce grown by indoor farming startup Bowery never sees soil or natural sunlight before making its way to select restaurants and grocery stores in the Big Apple.

Now Bowery aims to give the rest of the country a taste. The New York-based company has raised $90 million in Series B financing to support more of its indoor farms across the country. GV, Google’s venture capital arm, led the investment.

Bowery says it will use the new capital for “multiple farms” that it aims to open by the end of 2019. It isn’t yet saying where they will be located. The company says the new funding will also support new hires and additional investments in the technology used on its farms.

“We plan to continue to build additional farms to scale our operation, keeping them all close to the point of consumption in densely populated areas in order to deliver Bowery produce at the height of freshness and flavor within a few days of harvest,” Bowery co-founder and CEO Irving Fain said via e-mail.

Indoor agriculture accounted for $146 million in agtech venture investments in 2018 spread across 29 deals globally, according to a report released last week by Finistere Ventures based on data from PitchBook. Adam Bergman, head of Wells Fargo’s agtech and foodtech investment practice, said in the report that indoor farming is growing to meet consumer demand for locally sourced, sustainably produced food.

Bowery got its start in 2015, using a combination of software, sensors, and automation to grow leafy greens and herbs in a controlled indoor environment in an industrial section of Kearny, NJ. Fain has said that the operation requires a fraction of the water needed by conventional agriculture and uses no pesticides. The company developed proprietary software to oversee all aspects of the growing environment.

Last year, Bowery raised $20 million in Series A financing to finance additional R&D and the opening of another indoor farm at the Kearny site. The new farm produces 30 times more compared to the first farm enabling it to increase its distribution in the New York area, Fain said. He wouldn’t say how many people it takes to operate a single Bowery farm. Across the New York headquarters and the two Kearny farms, Fain said Bowery currently employs more than 65, with new hires coming from companies such as Monsanto and Amazon (NASDAQ: AMZN)....MORE
Previously in agoraphobia indoor farming:
July 2018 
Is Vertical Farming Really the Future of Agriculture?
January 2018
Bezos/SoftBank-Backed Indoor Farming Powerhouse Plenty Planning for 300 Farms in China
October 2017
Tesla's Former Battery Director Joins Farming Startup—UPDATED
December 2017
"This Is Why Jeff Bezos Is Spending Millions on an Indoor Farming Startup"

December 2017
A Behind-the-Scenes Look at Europe’s Huge New Vertical Farm
December 2015
AeroFarms Raises $20 Million for High-Tech Urban Agriculture
   
Related:
The Other Musk: Overthrow Big Agriculture?

SSRN: "Twitter versus Traditional News Media: Evidence for the Sovereign Bond Markets"

Via the Social Science Research Network:
Date Written: November 28, 2018
Abstract
This paper compares news in Twitter with traditional news outlets and then emphasizes their differential impact on Eurozone’s sovereign bond market for a homogeneous news topic. We find a two-way information flow between Twitter’s “Grexit” tweets and the respective mentions in traditional news outlets. The influence of Twitter on the traditional news is consistently more prolonged, especially in high-activity periods. We also assess the differential impact of the two news sources on sovereign spreads over and above the impact of economic/financial fundamentals, namely measures of default risk, liquidity risk and global financial risk. Our focus is on the borrowing costs of Eurozone’s periphery; for comparison reasons, we also consider France as a core Eurozone country. The effect of Twitter on the Greek sovereign spread is positive and of higher magnitude than that of traditional news outlets. Weak contagion effects are recorded primarily for the case of Portugal and Ireland. 
SSRN download page

HT: Econometrics Beat

Ships: "Meyer Werft hands over LNG-powered AIDAnova"

A bit later than originally planned but considering it's the world's first LNG powered cruise ship and one of the five largest cruise ships, period, not bad.

From LNG World:

German shipyard Meyer Werft has handed over the world’s first LNG-powered cruise ship, the AIDAnova, to AIDA Cruises.  
 
https://www.lngworldnews.com/wp-content/uploads/2018/12/meyer-werft-hands-over-lng-powered-aidanova-768x491.jpg
Before the ship was handed over, AIDANova had completed three sea trials on the North Sea when many technical and nautical systems were put to the test, Meyer Werft said in its statement.

The shipbuilder noted that the engine room was made at Neptun Werft in Warnemünde, while the four very low-emission dual fuel engines were supplied by  Caterpillar and can run 100 percent on LNG both at sea and in port....MORE
Previously:
August 21 
UPDATED—We Are Just Hours Away From The Float-out Of The World's First LNG Powered Cruise Ship
October 9 
Giant LNG Powered Cruise Ship AIDAnova To Begin Final Fit-Out
Aug. 23 
"Maersk Containership Loads World Record 19,038 TEUs in Malaysia"
And speaking of big, gCaptain also has a story on the new ship that we looked at in Tuesday's:....


http://3kbo302xo3lg2i1rj8450xje.wpengine.netdna-cdn.com/wp-content/uploads/2018/08/39752000_2119573998305687_1198860801222377472_n-800x533.jpg  
AIDANova pictured Tuesday, August 21, 2018, after its float-out from Meyer Werft’s covered building dock. Photo: Meyer Werft
German shipbuilder Meyer Werft has floated out the world’s first LNG-powered cruise ship from its covered construction dock in Papenburg.

The float-out of AIDAnova took place Tuesday evening from the shipbuilder’s 504-meter building dock II. The vessel was then berthed at the outfitting pier, where its mast and funnel cladding will be fitted....MORE
There were reports that after the float-out some of the assembled spectators continued the festive mood mit bier und schnaps and got, ah, ship faced.

"... M&G’s economic and bond market outlook"

From Bond Vigilantes, Dec. 12:

Panopanic 2018
Whilst you can make some strong arguments for the negative returns from 90% of asset classes in 2018 based on the return of populist politics – think of Brexit, Italy’s political instability, AMLO’s election in Mexico and tariffs everywhere – the answer to those negative returns might be simpler: the de facto global discount rate, the 2-year US Treasury bond yield, has risen by almost 100 basis points (bps) over the year, and thus repriced global assets. Why did this happen?
Well, 2018 was the year in which the global Quantitative Easing (QE) experiment started to come to an end. In the wake of the Global Financial Crisis (GFC) in 2008 and the aftershock of the subsequent Eurozone Debt Crisis, central banks around the world started buying their own government bonds on a massive scale. The effectiveness of such programmes has been widely discussed, but most academic literature agrees that buying sovereign bonds brought down yields, creating a “portfolio rebalancing” effect that led investors to reach into riskier assets for income. In the UK, gilt investors sold their government bonds to the Bank of England and bought high quality corporate bonds instead; credit fund managers similarly added high yield bonds to their portfolios, while high yield investors moved down from BB to B rated debt. This led to a global inflation in asset prices, with the price of everything, from equities to art and fine wine, going up. The owners of such assets tended to be already wealthy, so inequality in society increased. Central banks regarded this as a known and necessary side effect, since inflation and economic growth also rose due to lower financing and debt servicing costs, benefiting everybody – but some argue that QE was a factor in the rise of political instability.

If you believe all this to be true, then you must also believe that when QE is reversed and becomes Quantitative Tightening (QT), then those portfolio effects should also turn. This year, we have already seen sovereign bond yields around the world starting to rise, helping risk-averse investors achieve their income targets without taking so much credit risk. This has led to the “yield tourists” in higher yielding asset classes starting to move back up the quality curve, pushing risk premia upwards, lifting borrowing costs and dragging down the price of risky assets.
So far, QT has mainly been a feature of US monetary policy and the Federal Reserve’s balance sheet: the central bank’s holdings of US government bonds, mortgage-backed securities and other assets is expected to shrink to around $3 trillion in two years’ time, from a peak of over $4 trillion between 2015 and 2017. Whilst the Fed is not actively selling bonds, the absence of its market presence as an ongoing bond buyer is highly relevant, especially at a time when supply is only set to increase. US President Trump’s tax cuts and the ongoing increases in fiscal burdens caused by an ageing population mean that we will see budget deficits of well over $1 trillion per year for the foreseeable future. So, more bonds are coming to market, but the biggest buyer has gone.

...MUCH MORE

Wednesday, December 12, 2018

DARPA Demonstrates Potential of Using Implanted Neurotechnology to Treat Mental Illness

I'm not sure government researched brain implants are going to fly with the paranoid schizophrenic crowd.

From DARPA:
Four years ago, DARPA announced the start of a “journey of discovery” toward understanding and treating networks of the brain. The Systems-Based Neurotechnology for Emerging Therapies (SUBNETS) program proposed to develop responsive, adaptable, closed-loop therapies for neuropsychiatric illness that incorporate recording and analysis of brain activity with near-real-time neural stimulation to correct or mitigate brain dysfunction. The premise of SUBNETS is that brain function and dysfunction — rather than being relegated to distinct anatomical regions of the brain — play out across distributed neural systems. By understanding what healthy brain activity looks like across these sub-networks, comparing that to unhealthy brain activity, and identifying predictive biomarkers that indicate changing state, DARPA plans to develop interventions that maintain a healthy brain state within a normal range of emotions.

This autumn, in three consecutive publications, researchers led by the University of California, San Francisco (UCSF) — one of two primary performers on SUBNETS, along with Massachusetts General Hospital — shared breakthroughs. First, they developed a decoding technology that can predict changes in mood from recorded neural signals. Next, they identified a specific sub-network of the brain that appears to contribute to depressed mood, especially in people with existing anxiety. Finally and most recently, they reported they were able to alleviate symptoms of moderate to severe depression using open-loop neural stimulation delivered to the orbitofrontal cortex (OFC) region of the brain to modulate a sub-network that contributes to depression. These cascading results appeared in Nature Biotechnology, Cell, and Current Biology, respectively, from September to November 2018.

Justin Sanchez, the director of DARPA’s Biological Technologies Office, oversees the SUBNETS program. Explaining the motivation behind the work, he said, “There are millions of veterans in the United States who suffer from neuropsychiatric illness, and for many of them existing treatments do not offer meaningful relief. Their experiences with mental illness have essentially been a black box against which doctors try a combination of medication and counseling, but because we have lacked a mechanistic understanding of how these illnesses manifest in the brain, these interventions are limited in their effectiveness and applicability. It is extremely frustrating for patients to not know why they feel the way they do and to not be able to correct it. We owe them and their families better options.”
DARPA’s approach was to establish if advanced neurotechnologies can offer more effective and personalized therapies that respond to an individual’s changing brain state to keep neural activity within a healthy range. Part of that work was elucidating what goes on inside the sub-networks of the brain as neuropsychiatric illnesses unfold to help doctors develop new, more effective strategies for intervention....MORE

A Dip Into Chips: "AI Chip Architectures Race To The Edge"

We'll be referring back to this piece, it's the next big thing.
A deep dive from Semiconductor Engineering, Nov. 28:

Companies battle it out to get artificial intelligence to the edge using various chip architectures as their weapons of choice. 
As machine-learning apps start showing up in endpoint devices and along the network edge of the IoT, the accelerators that make AI possible may look more like FPGA and SoC modules than current data-center-bound chips from Intel or Nvidia.

Artificial intelligence and machine learning need powerful chips for computing answers (inference) from large data sets (training). Most AI chips—both training and inferencing—have been developed for data centers. This trend will soon shift, however. A large part of that processing will happen at the edge, at the edge of a networks or in or closer to sensors and sensor arrays.
Training almost certainly will stay in the cloud because the most efficient delivery of that big chunk of resources comes from the Nvidia GPUs, which dominate that part of the market. Although a data center may house the training portion—with its huge datasets—the inference may mostly end up on the edge. Market forecasts seem to agree on that point.

The market for inference hardware is new but changing rapidly, according to Aditya Kaul, research director at Tractica and author of its report on AI for edge devices. “There is some opportunity in the data center and will continue to be. They [the market for cloud-based data center AI chips] will continue to grow. But it’s at the edge, in inference, where things get interesting,” Kaul said. He says at least 70 specialty AI companies are working on some sort of chip-related AI technology.
“At the edge is where things are going to get interesting with smartphones, robots, drones, cameras, security cameras—all the devices that will need some sort of AI processing in them,” Kaul said.


Fig. 1: Deep learning chipset revenue by market sector. Source: Tractica.

By 2025, cloud-based AI chipsets will account for $14.6 billion in revenue, while edge-based AI chipsets will bring in $51.6 billion—3.5X larger than in the data center, made up mostly of mobile phones, smart speakers, drones, AR/VR headsets and other devices that all need AI processing.
Although Nvidia and Intel may dominate the market for data-center-based machine learning apps now, who will own the AI market for edge computing—far away from the data center? And what will those chips look like?

What AI edge chips need to do
Edge computing, IoT and consumer endpoint devices, will need high-performance inference processing at relatively low cost in power, price and die size, according to Rich Wawrzyniak, ASIC and SoC analyst at Semico Research. That’s difficult, especially because most of the data that edge devices will process will be chunky video or audio data.

“There’s a lot of data, but if you have a surveillance camera, it has to be able to recognize the bad guys in real time, not send a picture to the cloud and wait to see if anyone recognizes him,” Wawrzyniak said.
By 2025, cloud-based AI chipsets will account for $14.6 billion in revenue, while edge-based AI chipsets will bring in $51.6 billion—3.5X larger than in the data center, made up mostly of mobile phones, smart speakers, drones, AR/VR headsets and other devices that all need AI processing.
Although Nvidia and Intel may dominate the market for data-center-based machine learning apps now, who will own the AI market for edge computing—far away from the data center? And what will those chips look like?

What AI edge chips need to do
Edge computing, IoT and consumer endpoint devices, will need high-performance inference processing at relatively low cost in power, price and die size, according to Rich Wawrzyniak, ASIC and SoC analyst at Semico Research. That’s difficult, especially because most of the data that edge devices will process will be chunky video or audio data.

“There’s a lot of data, but if you have a surveillance camera, it has to be able to recognize the bad guys in real time, not send a picture to the cloud and wait to see if anyone recognizes him,” Wawrzyniak said.
 
Source: Barclays Research reports May, 2018, via Xilinx
Some of the desire to add ML-level intelligence to edge devices comes from the need to keep data on those devices private, or to reduce the cost of sending it to the cloud. Most of the demand, however, comes from customers who want devices in edge-computing facilities or in the hands of their customers, rather than simply collecting the data and periodically sending it to the cloud so they can interact directly with the company’s own data or other customers and passers-by in real time....
...MUCH MORE

Citi: "How Innovation and Shifting Consumer Preferences Can Help Feed a Growing Planet"

A few notes up front.
1) You have to read past the buzzwords and buzz concepts. There is a lot of good information here but also a lot of hand-waving.

2) The situation is not yet dire. On the other hand, should the world experience two consecutive years of crop failures in any combination of the breadbaskets: northern China, American Midwest, Ukraine/western Russia then there is serious risk of famine.

3) This topic seems to bring out everyone's inner totalitarian and getting past that will be required if there is going to be agreement rather than insurrection.

4) Keep in mind this report was put together by a bank with something to sell. It might be loans, it might be green cred, it might be consulting services, it might be anticipating regulatory actions, it might be propaganda.
Take from it the ideas and data that support your priors and be open to the ideas which which don't.

From Citi GPS, Global Perspectives and Solutions, November 2018:
FEEDING THE FUTURE
How Innovation and Shifting Consumer Preferences Can Help Feed a Growing Planet
It’s a simple question: Will we be able to feed every one if the population of the planet rises from about 7 billion people today to 9 -10 billion in 2050? If you are a student of Thomas Malthus and buy into his Essay on the Principles of Population, then you believe this type of population increase will result in famine and poverty. The good news is that when Malthus published his famous paper in 1798 the global population was only 800 million and despite an almost nine-fold increase in population, his predictions luckily have not been realized. Advances in agriculture, food manufacturing, and food distribution together have increased the efficiency of the global food industry to supply an ever-growing population. But if we look at today’s global food industry , we find that it is unsustainable for future demand in its current format. For the industry to keep up with a 60 -70% increase in food demand over the next 30 years, it can’t continue to operate in a ‘business as usual’ mode.

What’s wrong? Three main issues plague the global food industry: sustainability, waste, and nutrition. On the sustainability front, agriculture today consumes 70% of surface and groundwater and uses 50% of habitable land while the entire food industry is responsible for up to one-third of human-caused greenhouse gas emissions. Globally, around 1.3 billion tonnes of food — almost one-third of all food produced — gets lost or wasted every year. Malnutrition — in the form of hunger and undernourishment, obesity or micronutrient deficiencies —affects almost 40 % of the global population and the impacts on public health and economic development now cost the global economy almost $ 3.5 trillion per year.

Is there a simple answer? No, not simple. But the first step towards a solution is to understand the problem ahead of us — identify the need for more sustainable agriculture, more efficient manufacturing and distribution, and consistent delivery of nutritious food.

In the report that follows, we look at ways the industry can use innovation and technology to become more sustainable. In farming, using big data and digital agriculture such as the use of sensors, field monitoring, and aerial imaging as well as new technology in farm equipment and aeroponics can increase sustainability and decrease the amount of land required for food production. New seed technology, feed additives, alternative proteins and biofortification also help increase nutrition. Expanding agriculture in the Southern Hemisphere is also an opportunity as improving yield gaps leads to better sustainability.

On the consumer front, a shift towards health and wellness is driving food manufacturers to alter their portfolios to deliver more nutritious, indulgent, safe, and sustainable products. Consumers are also changing the way they shop for food and are becoming more conscious of where their food comes from, leading to increased supply-chain transparency.

Can we get there? We think so, but it will require (1) easier access to financing; (2) the removal of distortions in the agriculture and food market; (3) vertical integration across the supply chain; (4) easier and faster access to the market for innovation and technology; (5) better data and information; and (6) better healthier products and a change in diets to continue to prove Malthus wrong....
...MUCH MORE (152 page PDF)

Capital Markets: Dollar Down, Assets Up, Something About Britain

From Marc to Market:

Markets Calm on May Day
Overview: The US S&P 500 failed to sustain the early upside momentum, but global equities are moving higher today, and there is some optimism on the trade front. Emerging market equities and currencies are also doing well today. Canada granted Meng Wanzhou bail shortly after a former Canadian diplomat was arresting China threatening to escalate the delicate situation. Some US companies have been fined for embargo violations in the past without any corporate officers being arrested. In any case, the fact that US-China trade talks have continued also aided sentiment. All the equity markets in Asia rallied more than 1% with the exception of a few smaller bourses and China. European markets are following suit. The Dow Jones Stoxx 600 is up (~0.6% near midday) for the second consecutive session. It has not posted back-to-back gains in a little more than a month. JGBs, Bunds, Gilts, and Treasuries are seeing slightly higher yields while peripheral European bonds and French bond yields are easing (one-three basis points). UK's May faces a vote of confidence among the Tory MPs today. Apparently, 48 letters were signed to trigger the challenge, but 158 is needed to win. Sterling is the strongest of the major currencies, but it is consolidating at the lower end of yesterday's ranges, stalling near $1.2550. The Swedish krona is the weakest of the majors, losing above 0.4%. Although it is closer to putting together a government three months after the election, the softer than expected inflation will frustrate the Riksbank desire to normalize monetary policy.

Asia Pacific
There is still no sign that the arrest of the Huawei CFO or other steps the US is taking to crack down on Chinese hackers and intellectual property theft is going to stall the still ill-defined G20 US-China trade talks. China is expected to soon if not already begun to purchase US soy. Reports suggest the process there is already underway to unwind the retaliatory tariff it imposed on US autos. For more than 16 years, the US and China had structured regular trade talks that were canceled by the Trump Administration. The resumption of discussions and the bringing the Chinese tariff back to 15% (from 40%) is a return to the status quo ante. Trump has also shown some willingness to keep the talks going. He indicated that if necessary he to interfere with the Huawei incident threatened (which it apparently is not).

The Japanese economic contracted at a 2.5% annual rate in Q3, twice the initial estimate, but the economy is bouncing back. The contraction was a function of earthquakes and other natural disasters. October industrial production jumped 2.9% on a preliminary basis, and the final estimate is due ahead of the weekend. Today, Japan reported core machinery orders rose 7.6% in October after an 18.3% plunge in September. Japan's December Tankan survey is out tomorrow and sentiment is not expected not to have changed very much.

The Nikkei gapped higher, and this follows the gap lower on Monday, leaving a potentially bullish two-day island in its wake. The dollar is at seven-day highs against the yen near JPY113.50. There is an option for about $360 mln at JPY113.40 that expire today. This month's high is about JPY113.85, and the trend line connecting the September, October, and November highs comes in near JPY114.00 today. A close below JPY113.00 would be disappointing. The Australian dollar is flattish around $0.7200. For the fifth consecutive session, it has slipped below there but has closed below it only once (Monday). A move above $0.7250, and ideally the 20-day moving average (~$0.7265) would lift the tone and confirm the base.

Europe
Prime Minister May's decision to pull the meaningful vote in Parliament on the Withdrawal Bill which has been months in the making because it was going to be decisively defeated was the last straw for many Tory MPs. Enough letters from Tory MPs have been turned in, after weeks of threats and feints, that a confidence vote with the Conservative Party will be held later today. The results will be likely be known late in the US trading session. If May survives, she cannot face another such challenge for a year. If she loses, she cannot run in the next contest. Her defeat is seen as more likely to produce a more hardline Brexit Prime Minister. A new Tory Prime Minister may have limited room to move, as May found. The EC is in no mood to re-open negotiations and time is running out in any event. Article 50 could be revoked but would have to be part of a larger plan, and it is not clear the legitimacy of a second referendum. Rather than the uncertainty being lifted, it appears to be intensifying....
...MORE  

The First Known Book About The Stock Market Will Be Auctioned At Sotheby's December 17

It's being offered as Lot 200 of the Fine Books & Manuscripts Online auction.
Online bidding closes December 17.
We've mentioned/posted on the book a few times, more after the jump.

From CNBC, December 4:

This is the first known book about the stock market — and it's worth $300,000
Sotheby's Fine Books and Manuscripts Online is auctioning Joseph de la Vega's "Confusion de Confusiones," the first known book written about a stock exchange, and it's estimated to go for between $200,000 to $300,000.

The book was written in 1688, according to Sotheby's. The main text, Sotheby's says, is penned as a dialogue between characters including a philosopher, merchant and shareholder, and it describes the Amsterdam stock exchange, which was the first stock exchange in the world.

The book also discusses four main principles of the market, many of which sound familiar: "never give anyone the advice to buy or sell shares" (even if it's well-intended advice, the book notes, it could turn out badly); "take every gain without showing remorse about missed profits" (as Kevin O'Leary says, "Never cry when the market goes down, because it's not crying for you"); "profits on the exchange are the treasures of goblins" (also akin to O'Leary's advice, "You'll see the markets go up and down.... Get over it. It's normal"); and "whoever wishes to win in this game must have patience and money" (the stock market is a long game, and you need money to play).
Author Vega, who was born in Spain around 1650 but lived in Amsterdam until his death in 1692, writes in the preface that he published the book for his own enjoyment, to champion the exchange as a fundamentally honest and useful enterprise and to warn of the deceitful practices that nevertheless flourished there, according to Sotheby's....MORE
The auction is getting international coverage:
Comprendre le marché boursier des Pays-Bas, en 1688 : le livre à 300 000 $
Den første boken om aksjemarkedet selges for 300.000 dollar

It seems that half the time we mentioned "Confusion de Confusiones," it was triggered by something written at FT Alphaville.
Here's an example from 2016's "Frontrun the Bank of England for Fun and Profit":
 Re: Mr. Keohane's headline [Confusion and the BoE’s corporate bond buying scheme], I couldn't help thinking of De la Vega's 1688 book Confusion of Confusions regarding the trading of Dutch East India Company stock.
The analysis in The Confusion of Confusions :  Between Speculation and Eschatology is a good introduction.

As another review puts it:
...He shows us all the tricks of the trade such as front-running large orders and spoofing the market with fake news to achieve a more favorable trading price.
 1688.
And more seriously in June of this year, a major piece: "Behavioral Finance at The World's First Stock Exchange".

"5 Tools to Help You Search the Archived Internet"

Sometimes I forget and have to shout "Siva, what's that archive site..." and if he deigns to respond, being a smartass (CalTech postdoc) it will be something like "Yes Sahib, how may I serve" or "Yes Sahib, my feet are like wings" (M*A*S*H episode) even though I've stopped reciting Kipling out loud and ...where was I?

From Tech.co:
The archived internet deserves more recognition. Online security has been a hot button topic in the tech community recently, with data scandals and privacy policy updates constantly driving the conversation. But, keeping the internet a stable and reliable network isn’t all about data security – it’s also about data preservation.

Anything that’s low tech is dismissed as “from the stone age,” but stone is by far the most stable way to record information. Not only will the hard drives and networked routers of today never last a thousand years, but plenty of information online won’t even last the decade. As local newspapers or long-in-the-tooth startups go under, they all leave dead links scattered across the internet, constantly replaced with fresh links that will themselves eventually die.

Wow, sorry, didn’t mean to get too dark there. My point is, memories that you might want to keep are increasingly likely to exist only on the internet — rambling G-Chat conversations with your best friend, say, or your first WordPress blog. If you want to preserve, protect, or search through your online footprint, read on to learn which five online tools can best help you comb through the archived internet.
What is the Deep Web? – Learn more about the hidden parts of the internet with our explainer guide
Archive.is
What It Does
This is the quickest and easiest way to grab a free, high-quality record of an existing webpage.
“This can be useful if you want to take a ‘snapshot’ a page which could change soon: price list, job offer, real estate listing, or drunk blog post,” the site explains.
You can search through the Archive.is site for previously archived webpages, if you’re interested in tracking a specific Twitter account or tech company. There’s even a draggable bookmarklet that you can add to your bookmarks bar to archive future webpages with a single click.
How You Can Use It
Go to the Archive.is site, paste the URL of your webpage into the bar at the top, and click on the “save the page” button.

Given the social fallout that can come from a single bad tweet, this site can be a useful way to grab a verifiable, photoshop-proof evidence of a tweet or post that will likely be deleted soon. The saved webpage that results won’t have any active elements or scripts (no popups or paywalls, in other words), but should look more or less the same, even down to the same clickable hyperlinks that the original page boasted.

Lumen
What It Does
Data loss on the internet isn’t always due to the natural process of link rot, as servers or domains become permanently unavailable. One major cause is due to legal demands for content removal. While the content removed due to takedowns can’t itself be archived, the legal complaints themselves can be.

Lumen is an online database of takedown notifications. It’s a project from the Berkman Klein Center for Internet & Society at Harvard University, designed to collect digital content removal requests.
“Our goals are to educate the public, to facilitate research about the different kinds of complaints and requests for removal–both legitimate and questionable–that are being sent to Internet publishers and service providers, and to provide as much transparency as possible about the “ecology” of such notices, in terms of who is sending them and why, and to what effect,” the website explains.
How You Can Use It
Type any search term into the site and you’ll likely pull up thousands of results. Use the advanced search functions, and you’ll be able to narrow down the DMCA requests by topic, sender, recipient, tags, country, language, action taken, and date.

The search results page includes an easily scanned list of takedown requests, including details such as who submitted them, on behalf of whom, and who to (the latter is almost always Google). You might want to use this database if you’re interested in why a seemingly innocent post in your search results or a favorite YouTube video has suddenly disappeared due to a content claim. You’ll get all the information you need to follow up on the takedown with the company who submitted the request in the first place.

Lumen has a feature that allows you to construct a DMCA counter notice, if you’re the one who has been hit with a takedown that you want to contest. You can also report your own takedown notification though the contact information available on the site....
...MORE

Archive.is, that's the one. I can usually remember the Wayback Machine (follow link) thanks to Sherman and Mr. Peabody but for some reason Archive.is just doesn't stick.

China’s COSCO Shipping Considers London Listing – Sources

From gCaptain, Dec. 7:
China’s largest shipping group, COSCO Shipping, is considering raising capital for the first time on the London Stock Exchange through a new initiative with Shanghai’s bourse, two finance sources familiar with the matter said.

The Shanghai-London Stock Connect will enable Chinese companies to raise fresh money on the LSE through issuing global depository receipts (GDR), which could boost momentum amid concerns that Brexit could dent the City of London’s leading position in financial markets.

The LSE is hoping to get a boost from China as the world’s fastest growing capital market.

The sources, who declined to identified citing sensitivity, said COSCO Shipping Holdings Co, which is Shanghai and Hong Kong listed, was examining the possibility of issuing GDRs in London. No decision had been taken yet, partly as it would also require Chinese regulatory approval.

“Any capital raising would be large to make it worthwhile and also to bolster connections with foreign investors,” one of the sources said.

The second source added: “For political reasons as well, London would be a preferable capital destination for COSCO rather than New York, for instance.”...MORE

"Mining Sector in Mexico Next Target of “AMLO Effect,” Shares Plunge"

This piece is getting stale and definitely not actionable so treat it as something to be aware of going forward.
López Obrador started his presidency 1 December.

From Wolf Street, Nov. 23: 

Mexico is #1 silver producer in the world, #2 gold producer in Latin America, and a major copper producer.
For a president who hasn’t taken office yet and whose government is still in waiting, Mexico’s Andres Manual Lopez Obrador (AMLO) has managed to ruffle a lot of very important feathers. First, he scrapped the country’s most lucrative infrastructure project, a partly built airport for the capital that was expected to generate billions of dollars for many of the country’s richest companies, banks and families. Then, two weeks ago, his National Regeneration Movement (MORENA) party proposed a bill that directly threatens one of the banks’ core businesses: fee gouging. Since then, billions of dollars have been wiped off the banks’ market value.

Now, the same party, which, together with its allies, holds majorities in both houses of Congress, has set its sights on the activities of the mining industry. On Tuesday Senator Angelica Garcia presented a bill that would make significant changes to Mexico’s mining laws, including a proposal that would allow the country’s Energy Secretary to declare certain parts of the country off-limits for mining companies due to their negative social or environmental impact.

Shares in Grupo Mexico, the country’s largest mining company, responded to the news by slumping 5% on Tuesday, 2% on Wednesday and another 5% on Thursday, to hit a 2-1/2-year low of 39 pesos. Shares in the company’s biggest domestic competitor, Penoles, have shed 13% over the last three days, and are now at their lowest level since April 2016.

Two analysts consulted by Reuters said the losses were fueled by concerns about the potential impact of the bill, if it is approved. The section of the bill that most worries investors is a clause that would require the consent of indigenous communities before granting mining concessions on their land — something that’s supposed to already happen in Mexico as a matter of course.

Almost 30 years ago, the Mexican government signed an International Labor Organization convention in which it committed to consult indigenous peoples on development projects that could affect them. But until today local laws only oblige the government to carry out such consultations for energy projects, and even then the pressure exerted by on indigenous communities to give up their land for energy pipelines or fracking wells can be unbearable.

It’s not just domestic mining firms that will be watching developments closely. Mexico is the world’s largest producer of silver and the second largest gold producer in Latin America, after Peru. It also produces 5% of the world’s copper and is the fifth largest lead producer.

This year Mexico is on track to reach a four-year high in foreign direct investment in mining. But the risks in the sector are piling up. Foremost among them is the prospect of AMLO’s new government hiking taxes on mining operations. In September the incoming minister of economy Graciela Márquez Colín said that “mining companies should pay an extraction levy, which would be used to mitigate the sector’s externalities.”

The revenues Mexico collects from taxing the mining sector are tiny. In 2017 the amount was the equivalent of just 0.2% of GDP, half the average registered across Latin America and the Caribbean. This is despite the fact that Mexico is home to 20% of the region’s mining exports and 15% of its foreign direct investment (FDI), second only to Chile and Brazil, according to the Economic Commission for Latin America and the Caribbean (Cepal)....MORE

Tuesday, December 11, 2018

Huawei's Meng Wanzhou Ordered Released on Bail

Via the Toronto Star's Vancouver deputy bureau chief:

As Huawei CFO Offers Husband, Children For Bail Collateral, Some Background

The first half of the headline is from ZeroHedge, December 11:
Lawyers for indicted Huawei CFO Meng Wanzhou put a new spin on an old Rodney Dangerfield joke on Tuesday when they offered to pledge both of Meng's multimillion dollar homes as well as her husband (and her children) as collateral should the executive be granted bail.
Yes, you read that right:
  • HUAWEI CFO'S LAWYER PLEDGES HUSBAND PLUS 4 OTHERS AS SURETIES
Meng's lawyer also agreed that their client would wear an ankle bracelet while free on bail.
  • MENG'S LAWYER ALSO AGREES TO ELECTRONIC SURVEILLANCE FOR BAIL
  • CANADA JUDGE AKS HOW `HYPOTHETICAL' BAIL RELEASE TO BE FRAMED
Canadian prosecutors argue that Meng is an obvious flight risk and should be held until she is extradited to the US (a process that could take years) or tried in Canada. Meng has no deep ties to Canada and also has at her disposal immense resources (including numerous passports and her father's $2 billion fortune) to evade justice in perpetuity should she return to China, which doesn't have an extradition treaty with the US or Canada. Meng's lawyers, meanwhile, cited her family's residences in Vancouver as well as their clients ill health following a bout with thyroid cancer as reasons why she should be released....MORE
And from the Wall Street Journal, December 10:

Arrest of Huawei CFO Hinges on an Offshore Puzzle
In a presentation to bankers in 2013, Meng Wanzhou, the chief financial officer of Huawei Technologies Co., explained that her company no longer had a stake in Skycom Tech Co., a Hong Kong company that did business with Iran, and that she had quit its board, according to the executive’s defense.

Ms. Meng said she had served on the Skycom board to ensure it complied with trade rules, according to newly released defense filings that cite the 2013 PowerPoint presentation to HSBC Holdings Ltd.
Ms. Meng’s lawyer said Friday that she and Huawei severed ties to Skycom in 2009 and can’t be held responsible for its activities in the years that followed.

Chinese telecom giant Huawei has long caused tension between Washington and Beijing. WSJ’s Shelby Holliday explains what the company does and why it’s significant. (Photo: Aly Song/Reuters)
U.S. prosecutors say Skycom remained under Huawei’s control; between 2010 and 2014, they say, Skycom was used as a front for Huawei’s dealings with Iran in an arrangement that duped banks into approving millions of dollars in transactions that violated sanctions.

Canadian officials arrested Ms. Meng, the 46-year-old daughter of Huawei’s billionaire founder Ren Zhengfei, on Dec. 1 at the request of the U.S., which is seeking her extradition to face multiple criminal charges that each carry up to 30 years in prison, a move that has enraged the Chinese government.

Ms. Meng denies the charges. A lawyer representing Ms. Meng told a Canadian court on Friday that the idea the executive engaged in fraud will be “hotly contested.” A Canadian judge was set to hear further arguments on Monday on whether Ms. Meng should be released on bail pending a decision on her extradition. Huawei has said it knows of no wrongdoing by Ms. Meng.
The case could hinge on a large piece of the Skycom puzzle: Who ultimately controlled the company after 2009?

The answer is shrouded in mystery in part because of the opaque ownership of Skycom during the time Ms. Meng served on its board. A Wall Street Journal examination of Hong Kong corporate records found that Canicula Holdings Ltd., a company registered in the Indian Ocean island nation of Mauritius, bought Skycom from a Huawei subsidiary in November 2007. Canicula retained ownership until Skycom was dissolved last year....MORE
It seems there is much more to this story to come out, stay tuned.

"USDA Ignores Trade War Rhetoric, Makes Minor Adjustments In WASDE"

Two more from AgWeb. The headliner:
12:21 PM
In their December World Agriculture Supply and Demand Estimates (WASDE) report, USDA didn’t change much.  U.S. corn and wheat ending stocks were bumped up slightly, soybeans left unchanged. U.S. corn and soybean exports did not change, and global stocks to use rations barely moved. Analysts had to look between the lines to see any impact from the trade war with China.
USDA pegged U.S. corn ending stocks at 1.781 billion bu., compared to the average trade guess of 1.738 billion bu. That’s up just slightly from USDA’s November number of 1.736 billion bu. Corn and soybean exports remain at 2.45 billion bu. and 1.9 billion bu., respectively.

There was one surprise in the report: USDA's increase to 2018/19 world soybean ending stocks at 115.33 million metric tons (mmt). According to Paul Gregory CEO of Allendale, Inc., the average trade guess was 112.79 mmt.

The larger than expected increase is the result from a 3 mmt cut to exports in Argentina, says Karen Braun, global agriculture columnist for Reuters.  “Brazil's crop and exports came up, and the 17/18 crop was revised to 120.3 mmt. Old crop c/o up over 100 mmt. China, USA unchanged,” she tweeted.
While some analysts expected indications of trade tensions with China in this report, Angie Setzer of Citizens Grain LLC, says she was surprised to see USDA leave global numbers relatively flat.
“USDA did absolutely nothing when it comes to supply, demand or carryout,” she says. “They made slightly adjustments elsewhere in world numbers, but nothing earth shattering.”

Setzer did find it interesting that USDA came higher than CONAB for both corn and bean production out of Brazil....MORE
And the talking point that dilettantes glommed on to:
2018 11:20 AM 
WASDE: Soybeans Maintain Record Ending Stocks

It has been common knowledge since the end of the harvest that not only are storage facilities full up but beans are being stored on the ground in tarpaulins and getting wet and beginning to rot.
The market has had all that priced in since September:


Soybeans settled at 914.75 up 5.00

Bloomberg May Have A Problem: "Super Micro says review found no malicious chips in motherboards"

From Reuters, December 11:
Computer hardware maker Super Micro Computer Inc told customers on Tuesday that an outside investigations firm had found no evidence of any malicious hardware in its current or older-model motherboards.

In a letter to customers, the San Jose, California, company said it was not surprised by the result of the review it commissioned in October after a Bloomberg article reported that spies for the Chinese government had tainted Super Micro equipment to eavesdrop on its clients.
Super Micro had denied the allegations made in the report.

A person familiar with the analysis told Reuters it had been conducted by global firm Nardello & Co and that customers could ask for more detail on that company’s findings.

Nardello tested samples of motherboards in current production and versions that were sold to Apple Inc and Amazon.com Inc, which were both named in the article, the person said....MORE

World Agricultural Supply Demand Estimates—December 2018

Meh.
Soybean prices up a little, corn down a little, wheat down over 1%.
From AgWeb:
COARSE GRAINS: This month’s 2018/19 U.S. corn outlook is for lower corn used for ethanol, reduced imports, and larger ending stocks. Imports are lowered based on observed trade to date. Corn used to produce ethanol is reduced 50 million bushels to 5.6 billion, based on the most recent data from the Grain Crushings and Co-Products Production report and weekly ethanol production data as reported by the Energy Information Administration for the month of November. These data imply corn used for ethanol during the September to November quarter declined relative to the prior year for the first time since 2012. With no other use changes, ending stocks are up 45 million bushels from last month. The season-average corn price received by producers is unchanged at a midpoint of $3.60 per bushel but the range is narrowed 5 cents on each end to $3.25 to $3.95 per bushel.

Global coarse grain production for 2018/19 is forecast 0.3 million tons higher to 1,373.6 million. The 2018/19 foreign coarse grain outlook is for larger production, and virtually unchanged consumption and ending stocks relative to last month. Foreign corn production is forecast higher with increases for Ukraine, the EU, and Thailand more than offsetting reductions for South Africa and Canada.  EU corn production is higher reflecting a larger forecast for Romania. Ukraine corn production is raised based on harvest results to date, and if realized, this month’s yield forecast would surpass the previous record set during 2016/17 by nearly 20 percent. South Africa corn production is lowered as dry planting conditions are expected to reduce area. Canada corn output is down on declines in both area and yield.  Corn exports are raised for Ukraine, but lowered for Mexico. Imports are raised for Vietnam, Canada, Japan, Iran, and Colombia, with partially offsetting reductions for Libya and Venezuela. Foreign corn ending stocks are higher than last month, mostly reflecting increases for the EU, Mexico, Vietnam, Ukraine, and Japan, that more than offset declines for Brazil, Canada, and South Africa.

WHEAT: The outlook for 2018/19 U.S. wheat this month is for unchanged supplies, lower exports, and higher ending stocks. Wheat exports are lowered 25 million bushels to 1.0 billion with all of the reduction in Hard Red Winter (HRW) on historically low exports for this class in the first half of the 2018/19 marketing year (MY). The reduction in HRW is partially offset by higher exports of Hard Red Spring and Soft Red Winter. Projected 2018/19 ending stocks are raised 25 million bushels to 974 million, which are still down 11 percent from last year. Based on NASS monthly prices reported to date and price expectations for the remainder of the MY, the projected season-average farm price is up $0.05 per bushel at the midpoint with the range narrowed to $5.05 to $5.25.

World 2018/19 wheat supplies are increased 0.8 million tons as additional Russian carry- in stocks and a larger Canadian crop more than offset a reduction in Australian  production.   Based on the updated ABARES estimate, Australia’s production is lowered by 500,000 tons to 17.0 million. This would be the lowest Australian wheat output since 2007/08. Canada’s wheat production is raised 300,000 tons to 31.8 million, based on the latest estimate by Statistics Canada.

Projected global 2018/19 trade is lower, as reduced Australian, EU, and U.S. exports are partly offset by higher Russian exports, which are increased 1.5 million tons to 36.5 million. Russia and other Black Sea suppliers continue to displace EU and U.S. exports in several markets in the first half of 2018/19 but are expected to be less competitive in the second half based on reduced exportable supplies. Australia’s wheat exports are lowered 1.0 million tons to 10.5 million as its export prices are expected to remain uncompetitive and more supplies are consumed domestically for feed. Global ending stocks are raised 1.4 million tons to 268.1 million, primarily on increases for the EU and the United States but are 4 percent lower than last year’s record 279.9 million....MORE

Gaming: "Farming Simulator 19 sold over one million copies in 10 days"

I don't get it. Granted, not being a gamer or a farmer I'm probably missing something but finding a million people who want to shell out $40 to $90 per (depending on the edition) seems quite amazing.

From Gamespot:

Farming Simulator 19 Sells 1 Million Copies After 10 Days, Sets New Franchise Sales Record
The PS4, Xbox One, and PC game is doing quite well.
The newest Farming Simulator game got off to a strong start. Farming Simulator 19 sold more than 1 million combined physical and digital copies over its first 10 days, it was announced today. A press release points out that the success is particularly notable given that Farming Simulator 19's release date--November 20--came amid a busy season for blockbuster releases....MORE
The report goes on to note:
...The game also adds a major new license in John Deere, along with a number of new locations in America and Europe to create and expand a farm. The game also adds rideable horses for the first time.
HT to and headline from VideoGamer who add this tidbit:

...Farming Simulator has been knocking around for a while now, and is pretty popular in European countries. The series has sold over 15 million units worldwide.
Is it the Germans?
It seems like something the Germans might get into, sort of like Cowboys and Deutschlanders or whatever that craze was called.
Yeah, it's gotta be the German's, as narrated in hushed received pronunciation:
Some compare it to snooker, others to figure skating. But for those who have given their lives to competitive ploughing, it’s more than a sport, it’s a way of life
That's from The Guardian's coverage of the World Ploughing Championships. Here's the first paragraph:.

On 31 August, the night before the first day of the World Ploughing Championship, the bar of the Hotel Fortuna in the small German town of Reutlingen was crammed with the global ploughing elite. The scene resembled a low-key United Nations afterparty – Swiss, Kenyans, Australians, Latvians, Canadians and French, all slugging back long glasses of German beer. The top flight of international ploughing is a limited pool, the same faces recurring every year, and so the atmosphere was jovial, like a school reunion, 50-odd ploughmen and two ploughwomen (the sport has historically been dominated by men) hailing each other affectionately across the room. Much of the talk concerned the wild boar who had apparently dug up the field where the following day’s competition would take place. But there was something else in the air too, a bonhomie edged with rivalry. They were here to win....

"The rise of UltraJunk bonds"

A quick hit from Felix Salmon at Axios:
90% of the debt issued out of private equity shops is rated B2 or lower, according to a new Moody's report. That's not just junk-rated, it's even worse than that.
If you look at junk-rated companies that aren’t sponsored by PE firms, only 40% of them have debt rated that low. Moody's credit-rating scale has 10 "investment-grade" ratings, from Aaa to Baa3. The bottom 11 ratings, from Ba1 to C, are considered "speculative," or junk. A B2 rating is deep into junk status and means there's a very significant chance you'll end up in default....MORE


Mexican President Weighs Bids on Huge New Oil Refinery Construction

AMLO has a lot on his plate.
From Sputnik:
Mexico's new President Andres Manuel Lopez Obrador said on Sunday that tenders for the construction of a new large oil refinery in the country's southeastern state of Tabasco would be announced no later than March 2019.

"The oil refinery will be built here because oil will be processed here as well, it will not be exported. This is the best site for the construction of the new refinery," Obrador said at a ceremony of the laying of a symbolic cornerstone for the future facility as quoted by the Excelsior news portal.

The Mexican president also confirmed that the state-owned Pemex petroleum company would receive additional $3.6 billion to boost its oil production....
He's also looking at the precious metals business.

EU wheat steady near two-week top as USDA report awaited

This was written yesterday after the close but could be repeated today almost word for word.
Today front Euronext wheat futures traded in an Open High Low range of 204.00    204.50    203.75.
That's pretty steady.
From Reuters, Dec. 10:
Euronext wheat ended little changed on Monday in the run-up to widely followed U.S. government data but improved export sentiment helped keep prices near an earlier two-week high.

Benchmark March milling wheat on the Paris-based Euronext exchange settled 0.25 euro, or 0.1 percent, higher at 204.00 euros ($232.07) a tonne, after earlier rising to 204.50 euros, its highest since Nov. 23.

“Tomorrow’s USDA report provides another reason for the market to stand still,” a futures dealer said. “As long as the 200 euro level holds, there won’t be much selling pressure.”
Grain markets are focusing on Tuesday’s monthly supply-and-demand forecasts from the U.S. Department of Agriculture (USDA).

Euronext had drawn strength from Friday’s rally in U.S. wheat, which climbed 3 percent on the back of strong export figures before easing on Monday....MORE
We'll be back after today's USDA WASDE report.

Monday, December 10, 2018

EIA: "U.S. liquefied natural gas export capacity to more than double by the end of 2019"

This note doesn't mention Russia; maybe next year as the Novatek Yamal project is still growing its capacity. Train 3 is scheduled to start up in the next 60 days. Scratch that, train 3 opened under-budget and ahead of schedule the week of November 19 and is now ramping production toward the 5.5 million tons capacity of the first two trains.

From the U.S. Energy Information Administration, December 10:

https://www.eia.gov/todayinenergy/images/2018.12.10/main.png
EIA projects that U.S. liquefied natural gas (LNG) export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world behind Australia and Qatar. Currently, U.S. LNG export capacity stands at 3.6 Bcf/d, and it is expected to end the year at 4.9 Bcf/d as two new liquefaction units (called trains) become operational.

The United States began exporting LNG from the Lower 48 states in February 2016, when the Sabine Pass liquefaction terminal in Louisiana shipped its first cargo. Since then, Sabine Pass expanded from one to four operating liquefaction trains, and the Cove Point LNG export facility began operation in Maryland. Two more trains—Sabine Pass Train 5 and Corpus Christi LNG Train 1—began LNG production this year, several months ahead of schedule, and are expected to ship their first cargos within the next few weeks.

Two more LNG export facilities—Cameron LNG in Louisiana and Freeport LNG in Texas—are currently being commissioned. Commissioning of liquefaction facilities involves introducing natural gas feed into the train and ultimately producing LNG. For liquefaction terminals, which use refrigeration to cool natural gas into liquid form, commissioning also includes getting the equipment and refrigerants down to sufficiently cold temperatures. The first LNG production from these facilities is expected in the first half of 2019. The developers of these projects expect all three trains at Cameron LNG and two trains at Freeport LNG to be placed in service in 2019.

The Elba Island LNG facility near Savannah, Georgia, is also scheduled to become fully operational by the end of 2019. Elba Island LNG consists of 10 small modular liquefaction units with a combined capacity of 0.33 Bcf/d. Project developers expect LNG production from the first train to begin early next year and from the remaining nine trains to commence sequentially through the rest of 2019. The second train at Corpus Christi LNG is scheduled to be placed in service in the second quarter of 2019. The final two trains of the U.S. liquefaction projects currently under construction—Freeport Train 3 and Corpus Christi Train 3—are expected in service in the second quarters of 2020 and 2021, respectively....MORE
The focus on LNG is sometimes given as a reason Qatar is leaving OPEC but it's probably as much about politics as anything.

Equities: "Nasdaq Leads Positive Reversal..."

Well that was interesting.
Two from Investor's Business Daily. First up the headline story:

Nasdaq Leads Positive Reversal; These 5 Growth Stocks Aim To Lead Next Uptrend
4:24 PM ET
Growth stocks made an impressive reversal on Monday, but the early sell-off in stocks briefly sent the key S&P 500 briefly below a November short-term low. Such action reaffirmed the increased whipsawing action on Wall Street.

Meanwhile, fast-growing companies are fighting to hold near or at their long-term 200-day moving averages, such as retailers Five Below (FIVE) and Ulta Beauty (ULTA). Others, such as Atlassian (TEAM), ServiceNow (NOW) and turnaround restaurant play Chipotle Mexican Grill (CMG), are fighting to stay above their medium-term 50-day lines.

Leaderboard stock Verizon Communications (VZ) bounced bullishly off its 50-day moving average. It rose 1% to end a four-session selling streak. The megacap telecom play had broken out of a base on base with a 55.31 buy point.

The S&P 500, down as much as 1.9% in the early going, finished the rocky session up nearly 0.2%. The Nasdaq composite showed a similar swing, going from a 1.3% intraday meltdown to an advance of around 0.7%. The Nasdaq 100-tracking Invesco QQQ Trust (QQQ) ETF jumped 1%.
The Dow Jones industrial average rose about 0.2%. Volume edged higher on the NYSE and fell mildly on the Nasdaq, according to early data. The Dow utility average rose nearly 0.4%, but the Dow transports fell more than 0.7%.

The Nasdaq composite refused to undercut the 6830 low set on Nov. 20. The next session, the tech-heavy Nasdaq rose, marking Day 1 of a new rally attempt. Then on Nov. 28, the composite issued a Day 5 follow-through following comments by Federal Reserve chief Jerome Powell on the future prospects for more rate hikes in 2019.

Interest Rate Hike Prospects Diminish
The heavy selling in stocks and corporate investment-grade bonds has been so severe that the CME Group now reports a less than 50% chance of a single quarter-point hike in the fed funds rate in all of 2019.

The U.S. central bank has raised short-term rates three times in both 2017 and in 2018. The Street still expects a fourth quarter-point jump in the fed funds rate at the end of this year's final FOMC meeting on Dec. 18-19.

Meanwhile, Apple (AAPL) staged a positive reversal, gaining less than 0.5% after hitting a session low of 163.33. At that price, the iPhone, Apple Watch and digital services giant has now fallen 30% from an all-time peak of 233.47.

Market breadth remained dour....MORE
I'm not sure a restaurant and a couple retailers are going to lead the market. Although...
Earlier today I was asked if I planned on shopping at Forever 21 in the near future.

Back to IBD, 50 minutes before the close:

Nasdaq Rallies, Dow Nearly Erases 505-Point Loss As Apple Reverses 
3:09 PM ET
The stock market continued its volatile ways Monday as the key indexes turned mixed heading into the final hour of the regular trading session.

The Nasdaq led with a 0.5% gain after slumping 1.3% early. The S&P 500 pared its loss to 0.1%, and the Dow Jones industrial average was also down 0.1%. Blue chips staged a remarkable reversal — the Dow had dived as much as 505 points in early trade and was off only 34 points. The Russell 2000 was about flat

Volume was tracking higher on both the NYSE and Nasdaq vs. the same time Friday.
Big-cap techs boosted the Nasdaq and outperformed on the Dow. Microsoft (MSFT) rose 2.3% as it works on a base. Intel (INTC) and IBM (IBM) added nearly 2% each. Cisco (CSCO) advanced 1%, while Apple (AAPL) was up 0.6% after an upside reversal.

Apple sank as much as 3% in early trade after a China court ruled in favor of Qualcomm (QCOM), with which the iPhone maker is embroiled in a legal battle. Also weighing on Apple: Citi cut its price target to 200 from 240, citing sales weakness in China among the reasons. Apple remains 13% below its 200-day moving average and is 27% off its early-October peak.

Chip design, software and solar stocks led the upside among sector gainers in the stock market today. But energy, airfreight transporters and specialty retailers lagged. A 1.5% slide in West Texas Intermediate crude prices weighed on oil stocks. As such, Exxon Mobil (XOM) and Chevron (CVX) weighed on the Dow Jones industrials with respective losses of 2.1% and 1.1%.

Chips Lead Stock Market Today
Qualcomm, up 2%, boosted chip stocks. Avago (AVGO) reversed from an early drop to a 4.5% gain to retake its 50-day and 200-day lines. Graphics chip designer Nvidia (NVDA) rose nearly 3%.
Leading software stocks advanced in the IBD 50. Security software maker Fortinet (FTNT) popped 4%, Atlassian (TEAM) added 3.4% to rebound off its 50-day line, and VMware (VMW) gained 2.4%....MORE