David Fuller and Eoin Treacy's Comment of the Day
Category - General

    What a Big Deficit You've Got There, Mr. President

    This article by Justin Fox for Bloomberg may be of interest to subscribers. Here is a section:

    It’s also important to note that the natural tendency in a growing economy, absent any tax changes, is for revenue to rise. Real revenue dropped in 2016, but that was because of the mini- recession that had started the year before. Revenue has risen during every other year of the current recovery. This year the economy is growing at what may turn out to be the fastest pace since the 2000s, around 3 percent, yet revenue is down. Some of that economic growth is surely due to the tax cuts and to this year’s spending increases, but it’s clear that the Tax Cuts and Jobs Act has so far displayed none of the magical revenue-increasing properties that some of its supporters claimed for it last year. If we take last year’s revenue growth of 1.1 percent as the — very conservative — baseline, it would seem instead to have so far resulted in a revenue decline of 3.5 percent, or $109 billion.

    Federal spending, meanwhile, is up an inflation-adjusted 2.9 percent so far this year. That’s bigger than the revenue decrease but smaller than last year’s 3.5 percent increase. Overall, my read of the two charts above is that the overall shift since 2015 from shrinking deficits to rising ones has been mainly about rising spending, but the increase in the deficit this year has been mainly about the tax cuts.

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    Platinum price gets $6 billion shot in the arm

    This article by Frik Els for Mining.com may be of interest to subscribers. Here is a section:

    Korean carmaker Hyundai on Tuesday announced a $6.7 billion program to raise production of fuel cells 200-fold going from 3,000 this year to 700,000 per annum by 2030.

    The hydrogen society is probably further into the future than its promoters want you to believe, and detractors are plentiful 

    Toyota was the first to back the technology for passenger vehicles, launching its Mirai – "future" in Japanese – back in 2015. Honda is bringing the Clarity back to its line-up and Hyundai’s Nexo SUV is launching in North America next year. Hyundai also inked a collaboration on fuel cells with Volkswagen in June.

    The hydrogen society is probably further into the future than its promoters want you to believe, and detractors are plentiful. (Elon Musk was not only talking his book when he called fuel cell cars "extremely silly".)

    Alongside Hyundai's announcement, the Korean government also made a commitment to roll out a fuel cell fleet and charging stations. But Canada, for example, got its first and so far only public hydrogen fuelling station only in August and California’s years long backing for fuel cell cars have hardly moved the needle on consumer and business uptake.

    Nevertheless, the impact on platinum could be enormous.

    There’s a simple reason – today's fuel cell cars need a full ounce of platinum versus a 2 – 4 grams PGM loading for your average gasoline (primarily palladium) or diesel vehicle.

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    Behind the Brexit Chaos: A Faulty U.K. Negotiating Strategy

    This article by Stephen Fidler and Laurence Norman for the Wall Street journal may be of interest to subscribers. Here is a section:

    The U.K. also anticipated it could appeal to traditional allies in Northern Europe, like Sweden, Denmark and the Netherlands. Inside the EU they had together championed the values of free markets and open trade. But once the U.K. left, a different dynamic took over.

    One issue the U.K. missed was that some of these governments were also faced with euroskepticism and political concerns about EU overreach.

    In the turmoil immediately after the 2016 Brexit referendum, Mark Rutte, prime minister of the Netherlands, one of the most like-minded countries, said the U.K. had just “collapsed: politically, monetarily, constitutionally and economically.”

    Mr. Rutte, facing the political fight of his life against the right-wing populism of Geert Wilders, had a fundamental political interest in ensuring that Brexit turned out to be an anti-model for how to handle angst about Brussels. The Dutch leader echoed that point on Thursday.

    “If anyone in the Netherlands thinks Nexit is a good idea, look at England and see the huge damage it’s done,” he said.

    The U.K. also missed that it would come to be seen as a rival. Some Northern European countries have many cutting-edge small exporters who worried that an U.K. outside the EU would undercut them in international markets and in the EU if Britain retained easy access to the bloc’s markets.

    Mrs. May’s so-called Chequers proposal in July 2018, which aimed at keeping the U.K. in the EU’s single market for goods but able to sign free-trade agreements with the U.S. and others, was viewed on the continent as a blueprint for the U.K. becoming an EU offshore-manufacturing assembly platform.

    “It’s always going to be a relationship now of tension and not just partnership, because our interests are diverging from theirs and we are seeking to derive deliberate advantage from having left,” Mr. Rogers said. “We can’t expect them not to react.”

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    Virgin Galactic SpaceShipTwo Reaches Space for the First Time

    This article by Ryan Whitwam Extreme Tech may be of interest to subscribers. Here is a section: 

    Virgin first unveiled the VSS Unity in 2016 and has flown it (with the rocket engine) four times now. Each test pushed the altitude a little higher: 16.0 miles, 21.7 miles, 32.3 miles, and now 51.4 miles. Unity replaced the VSS Enterprise, which broke apart in 2014 because its “feathering” airbrake system was accidentally deployed too early. That accident killed co-pilot Michael Alsbury and injured pilot Peter Siebold. Virgin took steps to make sure the same thing can’t happen on new versions of its SpaceShipTwo design.

    Safety is of higher importance than ever as Virgin Galactic nears its ultimate goal of taking passengers into space. For a mere $250,000, a person can ride up to the edge of space aboard one of Virgin’s spacecraft. The trip won’t be long, but they’ll get a few minutes of weightlessness before the craft heads back down for a landing. Virgin Galactic started pre-selling tickets several years ago and says it has sold all available seats through 2021.

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    Markets Conclude U.S. Is Riskier Than China

    This article by Matthew A. Winkler for Bloomberg may be of interest to subscribers. Here is a section:

    They would be pricing in various economic realities: the slowing rate of U.S. economic growth, the U.S. government's exploding debt, the diminished Treasury revenue caused by the 2017 tax cuts, and the Fed's pursuit of a monetary policy keeping rates well above their average for the decade.

    Investors see growth slowing, and it shows. Extreme fluctuations in the stock and bond markets the past month reflect investor anxiety over the transition from a brightening economy to the creeping sense that the best of this cycle has come and gone.

    U.S. government debt is also moving in the wrong direction. Since 2016, when the federal budget deficit as a percentage of gross domestic product declined to a decade-low of 2.2 percent from more than 10 percent in 2009, the deficit nearly doubled to almost 4 percent. GDP increased to a record $19.39 trillion at the end of 2017 as the annual rate climbed to 2.2 percent from 1.8 percent in 2007. But U.S. growth will deteriorate to an annualized 1.9 percent by 2020, according to economists surveyed by Bloomberg, putting more pressure on the widening deficit. Revenue isn't stepping in to close that gap. The Trump tax cuts are estimated to increase these deficits by $1 trillion during the next 10 years.

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    Uranium price: best performer of 2018 set for more gains

    This article by Frik Els for Mining.com may be of interest to subscribers. Here is a section: 

    Struggling French nuclear giant Areva (rebranded as Orano this year) slashed production more than a year ago. In August Paladin put its Langer Heinrich mine in Namibia on care and maintenance, although this week the Sydney-based miner said it's working on a possible restart of operations with vanadium as a byproduct (vanadium is trading at record highs and the only metal outperforming uranium).

    In a research note on Kazatomprom, BMO Capital Markets says the production discipline from top miners will break the trend of rising global uranium inventories following the Fukushima nuclear disaster in Japan in 2011 and prompt the first production deficit in more than a decade.

    And

    China has 42 operating nuclear reactors, 16 reactors under construction and a further 43 planned. At the end of November, the country's national uranium corporation bought control of the Rossing uranium mine in Namibia. China is also behind the only sizeable uranium mine to come into production in the past few years, the Husab mine in Namibia, although ramp there has been slow.

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    Bank of France Trims Growth Forecasts as Protests Drag

    This article by William Horobin for Bloomberg may be of interest to subscribers. Here is a section:

    Still, the central bank said 1.5 percent growth was a level that would help the country close a gap with euro-area peers. It expects consumers to drive growth next year thanks to a rise in spending power, supported by tax cuts.

    “French growth should remain above its average of recent years: That is still a rather favorable economic situation,” Villeroy said.

    The central bank’s forecasts do not take into account Macron’s planned tax cuts. But it said the measures could also support consumer spending next year.

    In the Les Echos interview, Villeroy also commented on the European Central Bank’s decision to end its net asset purchases. He said a “gradual normalization” of policy is justified by euro-area figures, but the central bank remains flexible in uncertain times and has powerful instruments available.

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