2018-05-22

Bitcoin Support at $7k, Monero Weakest, Decred Strongest

Monero major support at $155, could be a major break coming up here. Decred adding privacy to compete with Monero may be playing a role because Monero's weakness is out of step with rest of cryptos. Litecoin and OmiseGo have similar charts. Bitcoin is the key, support at $7000.

Chinese Fertility Locked Into Collapse

Metro: China ‘to scrap two-child policy and put an end to family restrictions’

Trends always end, but China's collapsing fertility has too many factors working against it. Urbanization, high home prices, expensive family formation, feminism, emphasis on formal education, social pressure.

The most powerful antidotes in the short-term would be a housing price collapse, a real collapse that made large apartments with 3 bedrooms affordable, and celebrities and high level officials having three or more children.

Back in 2013 I wrote: China to Relax One-Child Policy, But Chinese Fertility Rate Still Headed Lower
Consider the bigger picture. China is urbanizing and one plan for keeping growth from collapsing to near 0-3% is to push more people into cities. The fertility rates in the cities is already low by choice. China increasingly looks like Hong Kong, Taiwan and Singapore, where the fertility rates are 1.1, 1.1 and 0.8 children born/woman, respectively. China's fertility rate is currently about 1.6 children born/woman.

If they want to raise fertility, they should deurbanize. China's fertility rate is headed lower, one child policy or not.
This post from 2016 went into a lot more detail: China's 2-Child Policy Can't Stop Fertility Collapse

None Dare Call It Sedition Yet: Possible Second Spy Attempted to Infiltrate Trump Campaign

ZH: Second Spy Tried To Infiltrate Trump Campaign Says Former Adviser: "This Is Just The Beginning"
“Let me tell you something that I know for a fact. This informant, this person that planted, that they tried to plant into the campaign and even into the administration if you believe Axios–he’s not the only person that came at the campaign," Caputo claimed. "And the FBI is not the only Obama agency who came at the campaign,” Caputo continued.

“I know because they came at me. And I’m looking for clearance from my attorney to reveal this to the public."

Trump Fights to Protect Chinese Jobs

21st Century: 转机!中兴通讯销售禁令有望取消!或成下周中美重要议题,8万员工31万股东可稍松口气
CNBC: UPDATE 3-U.S., China nearing deal to remove U.S. sales ban against ZTE -sources
Washington and Beijing are nearing a deal that would remove an existing U.S. order banning American companies from supplying Chinese telecommunications equipment maker ZTE Corp , two people briefed on the talks told Reuters.

The people, who declined to be identified because negotiations are confidential, said the deal could include China removing tariffs on imported U.S. agricultural products, as well as buying more American farm goods.
Flawless Chinese victory.
White House advisors have said previously the ban against ZTE is being reexamined, and that the firm would still face "harsh" punishment, including enforced changes of management and at board level.
There will be no change to the real upper management of the Chinese state-owned enterprise.

The Chinese trade issue isn't going away. Trump could revive the trade issue at any moment and he probably will. If he doesn't, someone else will. Negative social mood will guarantee it.

2018-05-21

Bear Market or QE4?

I did another detailed look at the Fed's balance sheet versus stock market performance over at Seeking Alpha. Fed Fork In The Road: Bear Market Or QE4

One thing that surprised me is I'd been focused on March 2009 balance sheet expansion and missed the balance sheet reduction in early 2009. The market rebounded into December 2008 and the Fed started easing back some of its support for the market. Even though the Fed committed to expanding its balance sheet in December, the balance sheet shrank at the start and the dip lines up well with the stock market drop. The percent increase in the Fed's balance sheet and the percentage increase in the S&P 500 into 2016 is also too close for comfort.

Correlations often weaken over time and since the Fed balance sheet didn't matter from Nov 2016 to January 2018, it may be that doing nothing was the best option for the Fed. The Fed decided it had to shrink the balance sheet though, and at least since January the correlation has returned. Maybe it'll weaken again as happened from Nov 2016 to January 2018. If it doesn't, the Fed is headed for monthly balance sheet reductions of more than 1 percent of assets. That will translate into a approximately a negative 1 percent monthly headwind for stocks.

Chinese Govt Spends Big to Develop Memory Chip Companies

An article discusses Wuhan Xinxin Semiconductor Manufacturing Corp and the Chinese government's plan to spend billions on chip technology. Wuhan Xinxin is still unprofitable after 11 years.

21st Century: 中国芯”艰难突围路:武汉新芯十一年终扭亏
Following the investment in the first phase of the IC Fund, which amounted to RMB138.7 billion, the second phase of the Chinese government's large capital investment has once again focused on the market. Relevant media reports indicate that the second phase of the brewing fund is expected to be no less than 150 billion to 200 billion yuan in size.

How will the national team support the chip industry? On the morning of April 26th, when General Secretary Xi Jinping came to Wuhan Xinxin Research under the Yangtze River Storage Store of the Ziguang Group, he mentioned that the core technology with independent intellectual property rights is where the company’s “Gate of Life” lies. The chip of equipment manufacturing industry is equivalent to the heart of people. The heart is not strong, and the body size is not too strong. It is necessary to speed up major breakthroughs in chip technology and bravely climb the peak of semiconductor storage technology in the world.

The 21st Century Business Herald reporter recently interviewed relevant stakeholders of Wuhan Xinxin, taking samples of issues such as Wuhan's efforts to develop IC industry and Wuhan Xinxin's development over the past decade and beyond, to restore the difficult breakthroughs of the central government and enterprises in the chip field.

From 2006 to the present, the central government has continued to invest heavily in Wuhan Xinxin. The integrated circuit industry has a intensive and long-term investment cycle. This company, which continued to lose money before 2017, is also struggling to break through the controversy.
Wuhan Xinxin was launched more than a decade ago as part of an effort to develop domestic chip suppliers:
The chip is called "industrial food". China still has gaps in chip design, manufacturing capabilities, and talent teams. China is the world's largest chip consumer, with 90% relying on imports and imports exceeding $250 billion a year.

The representative company of the Wuhan Xinxin Central Government who made efforts to develop the chip industry was incorporated in April 2006. It is invested by Hubei Province, Wuhan City and Donghu High-tech Zone. The investment scale for the first phase reached 10.7 billion yuan, which is the first time in the Central Region in these years. A 12-inch integrated circuit production line project.

As of now, Wuhan Xinxin is the only memory-based IC manufacturing company in China. Wuhan Xinxin is facing an urgent task of catching up with technology. Behind it is the continued investment of the Central Government. On August 5, 2015, the Hubei integrated circuit industry investment fund with a total size of not less than 30 billion yuan was established, of which Wuhan Xinxin is the investment focus. The first phase of the national integrated circuit fund of 138.7 billion investment, one of its investment priorities is the memory.
Experts who participated in the new core project told the reporter of the 21st Century Business Herald that Xinxin did achieve losses in 2017. On the one hand, the international market conditions were relatively good. In the past 20 years, the global semiconductor factory was much more involved. In addition, with mobile communications and the Internet of Things, With the development of the chip, the demand for chips has greatly increased and it is good for Xinxin. Of course there is another reason. From the financial report, the depreciation of the equipment is over.

The loss of data in the financial report does not mean that the real dawn has come. According to the data provided by Tanshui, at present, the global memory market is highly monopolized and the market and key technologies are in the hands of several oligopolistic companies such as Samsung, Toshiba and Hynix. Samsung, Hynix and Micron monopolized 95% of the DRAM memory market. Samsung, Toshiba, Micron and Hynix monopolized 99% of the NAND memory market. The top six manufacturers monopolized 90% of the NOR memory market. Wuhan Xinxin still has a long way to go.
"Although it is a state-owned enterprise, unlike many monopolized state-owned enterprises, Wuhan Xinxin is faced with global market competition. This industry is a globally transparent market, and there is no designated unit procurement for the product. State-owned enterprises are not good at doing it." A practitioner from Wuhan Xinxin told a 21st Century Business Herald reporter.
Related:

A goos in-depth view at Semiconductor Engineering that sees high hurdles for China: Will China Succeed In Memory?
IP issues are just one of the challenges. China’s memory makers also face stiff competition in a tough market. “I look at this at maybe almost like what China did in the foundry industry. They have 10% market share. Maybe China will get 10% of the memory market,” IC Insights’ McClean said. “I don’t think it would be zero. But I don’t see big chunks of market share coming out of Samsung, Micron and Hynix anytime soon.”
Asia Times: China has too few chips to play in high stakes tech gameChina.org: Xi calls for maintaining new development philosophy, winning 'three tough battles'
"Businesses must unceasingly make breakthroughs in core technology, mastering more key technologies with self-owned intellectual property rights and building up the ability to dominate industrial development. The country needs you to pick up the pace," Xi said.

Xi then visited Wuhan Xinxin Semiconductor Manufacturing Corp. to inspect a national memory production base and assembly lines of integrated circuits.

In workshops, he listened to reports about smart manufacturing of chips and accelerating chip localization progress.

Referring to chips as like the human heart, Xi said, "No matter how big a person is, he or she can never be strong without a sound and strong heart," he said, urging businesses to make major breakthroughs in chip technology and challenge the new heights in global semiconductor industry.

2018-05-20

Anglosphere or Bust

Macrobusiness looks at Australian option with China rising in What will Australian life be like under the Chinese dictator?

The obvious solution is the one proposed by Paul Johnson in the late 1990s in Forbes magazine: the Anglosphere. He proposed a more formal arrangement, but the Anglo countries are already voluntarily cooperating in many ways. An Anglo confederation might formalize some military, economic and cultural ties. Britain in the EU would have been an issue, but that problem was solved by British voters. It also is a sort of push/pull solution to U.S. isolationism because a slightly more intense voluntary partnership would pull the U.S. into Europe and Asia, offsetting an isolationist exit from those areas. I doubt the U.S. will pull back entirely given communications and transportation advances, but this negative wave of social mood may not trough until the U.S. has abandoned most of its overseas commitments. This will also benefit the UK and Australia if the U.S. breaks apart into several nations. One could be a Hispanic southwest that has no desire for ties with the UK and Australia. Creating a structure for a seamless entry by new states in North America should be a very long-term consideration.

Did Bush Spy on Perot?

If George H.W. Bush was Halper's handler in 1980 and Halper tried setting up Trump in 2016, is it possible that G.W. Bush would have run an intelligence operation against Ross Perot in 1992?

NYTimes 1992: THE 1992 CAMPAIGN: The Overview; PEROT SAYS HE QUIT IN JULY TO THWART G.O.P. 'DIRTY TRICKS'
Marlin Fitzwater, the White House spokesman, told reporters in Billings, Mont.: "It's all nonsense. There's nothing to it. I don't want to attack Perot, but I don't know where he's getting it from. I mean, fantastic stories about his daughter and disrupting her wedding and the C.I.A. -- it's all loony."

No matter whether any of Mr. Perot's assertions are proved, they are bound to influence the final stretch of the Presidential campaign. With barely more than a week left, some analysts said the accusations could damage him by creating in the minds of voters a man who is forever imagining plots.

But the accusations also seemed calculated to feed a perception, fueled by Democrats and earlier in the race by Mr. Perot, that Republicans will do anything to win the White House.
The wedding story still sounds a little loony, but not the more important CIA part.
"I couldn't believe that anyone representing the President of the United States would stoop to these lows," he said on "60 Minutes," referring to a purported scheme to wiretap his office.

...Mr. Perot said that even after he left the race the Bush campaign cooked up a plan to install eavesdropping devices in his business office in Dallas. He said "a source" sent him "a floor plan, layout of my floor, and telephone numbers they wanted to tap."

...The Federal Bureau of Investigation confirmed in August that it was investigating accusations that someone had bugged Mr. Perot's office telephone and then had offered the tapes to Mr. Bush's campaign chairman in Texas. The Bush campaign chairman refused the tapes and notified the F.B.I., Federal officials said.
Well, Mr. Perot, you may be owed an apology. And the U.S. may be about to have a constitutional crisis of epic proportions.

In case you're wondering why Bush might help Clinton, there's two reasons. George H.W. Bush didn't like Trump and he's become friends with the Clintons, including voting for Hillary.

I can't find the clip, but George W. Bush once said in an interview while smiling, "Bush, Clinton, Bush, Clinton" when discussing who was next up for President. That doesn't mean he knew his father was working to make that a reality, but it does reveal that he wasn't at all bothered by the possibility and in fact seemed to think it was a good idea.

WaPo: How Bill Clinton and George W. Bush got over their politics and became BFFs

BBC: George Bush Sr calls Trump a 'blowhard' and voted for Clinton