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The 525 seat Airbus A380 launched in 2007 is expected to reach the breakeven point in 2015. Higher deliveries of the A380 led to a 41% decline in net profit for the 3rd quarter 2014. Production improvements on the A380 increased operating income by 14%. This will enable Airbus to benefit from the fuel efficient long range A350, which completed a maiden flight in the 3rd quarter 2014, with the first deliveries by the end of the year. The A320 neo also will add to profitability, as it is sold out to 2020, according to UBS. The A380 will be profitable by 2020, with more investment needed to upgrade the engine's fuel efficiency to compete with Boeing's competing version, the 777X. The uncertainty is reflected in Airbus share price, declining 8% in 2014 and trading at 5.7 times earnings before interest, tax, depreciation and amortization, compared to Boeing's 8.7, according to FactSet.

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The S&P is up 1.3% for the 1st quarter of 2014. The Dow Jones Industrial Average declined by 0.7% in the 1st quarter. Tech IPO's, biotechnology stocks, solar energy stocks and junk bonds pulled back in March 2014 after what were seen as excessive gains in trading. In the bond market the Barclays U.S. Aggregate bond index was up by 1.8% in the 1st quarter, as investors responded to dampening economic news and the emerging markets crisis. Analysts point to the 10.6% rise in S&P 500 earnings in the 4th quarter of 2013 over the prior year quarter, as giving earnings a chance to catch up to the higher P/E's and boosting prospects of stocks in the latter part of 2014. S&P 500 stocks trade at 15.2 times the next 12 months expected earnings figures, according to FactSet, compared to 13.2 and13.8 average for the last 5 and 10 years.

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Wells Fargo bank's share price reached a high of $51.90 on June 13, 2014, up 14% in Jan-June 2014. Richard Kovacevich arranged the acquisition by Norwest Corp of Wells Fargo & Co. in 1998. Wells Fargo has a 16% share of the mortgage loan business in the U.S., with $36 billion in loans for the first quarter of 2014. It is the third largest bank in deposits, with 6200 branches, the most branches of any bank in the U.S. Wells Fargo performance shows 15 quarters of uninterrupted profit growth, making it the most valued bank at the June share price. Over the last 10 years the stock price is up 76%, the best of any bank including Bank of America, JP Morgan, Citigroup and Morgan Stanley. Compared to the other banks Well Fargo has relied on its mortgage business and marketing traditional banking products aggressively through cross selling, staying away from investment banking and trading businesses.

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Coorodination, forbearance and multilateralism are three ways to keep economic nationalism from disrupting a global trading system that has benefitted all countries. Even the small moves to help home countries like the the move for US steel in the American stimulus projects, and the demonstrations supporting "British jobs for British workers", and other steps that quietly find their way into individual countries efforts to protect their home industries and jobs, can over time build up into something that would exaggerate the size and extent of this economic downturn. Forbearance and leadership from the US government on this issue and by leading developed countries is vital. So is the effort to develop a coordinated effort through close consultation and joint monitoring of progress. And equally important is multilateralism which works to help emerging countries hit hardest, and help prevent millions from sinking back into poverty, thereby destroying the hope and aspirations that had propelled the global progress in improving living standards....

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Arthur Levitt former SEC Commissioner on proposed regulatory changes. He calls for the merger of the SEC with the Commmodities and Futures Trading Commission so that there is one unified regulator. It is the CFTC that has the responsibility to regulate derivative trades that have done lot of the damage in this crisis. The new agency would supervise markets for OTC, exchanges, boards of trade, municipal debt; broker dealers, investment banks, accounting standards,rating agencies,mutual funds, hedge funds,corporate reporting, and the clearance and settlement systems. He rejects Secretary Paulson's idea of gutting the SEC and the CFTC of their mandates and placing the Fed and Treasury in charge of our markets, a proposed approach made in 2007. To this Levitt says just imagine our financial markets controlled by the White House. He wants this new regulator agency have a chairman appointed for 7 years and commissioners appointed on a non partisan basis.

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A senior Indian diplomat, and former ambassador to China, Gautam Bambawale, says China's action in the June 15 clash at Galwan Valley was the worst violence since 1967. He sees it as a premeditated and well thought out action. His view is that India's relations with China will deteriorate further. That this was an action by the PLA to take territory to what it sees as the LAC or border. For small tactical gains he says "China has strategically lost India." This will impact trade and other relations going forward in his view.  Nothing of this sort was expected says Bambawale. All the agreements put in place since 1993, everything for tranquillity at the border, all the mechanisms, have now collapsed. Bambawale has provided a very lucid and clear account of the relations and the border issues. He goes on to say that Chinese observers have given reasons for the Galwan clash with PLA- that India should stay away from the US and other democracies such as the European Union. Some reflection shows that the opposite has happened. And further reflection would show that the same situation was repeated in the period of transfer from British Empire to Republican India, and from Nationalist China to Communist China from the period 1947 onwards. Different perceptions and different leaderships that gave the perception of gaps between the two countries. In the 1950's after the Korean War Chinese perceptions about India could have led to the incursions that brought China to the borders of India in 1950, similar perceptions of gaps in development and capabilities could have led to the conflict in 1962. From 1993 peace prevailed with India after China entered the World Trade Organization under president Clinton in 2001 following a 10 year effort. Because the focus in China was on development after a series of crises, internal sense of a widening technological gap with the US and Europe, disagreements with the Soviet Union, and the experiments with market economy, internal struggles for democracy. With that period coming to a close as the new trading relationship has led to working class losses in factory jobs in the US, China is faced with protecting its economy as it and the US look at changing supply channels and how it affects both countries. It is a critical time for China as it faces governments in US, France, UK and Canada determined to protect their own interests in manufacturing jobs, renewing supply channels, and in technological advancement. The response is similar to that in 1962 when seen from the Communist party perspective as a gap has opened up with India following China's progress in the 30 year trading relationship with the US and Europe. That gap and the difficult situation China faces today with the US and EU in trade and technology has brought forward the Galwan clash and future clashes in Ladakh and at the border.  As Mr. Jaishnkar, India's Minister of External Affairs as well as former ambassador to China,  has pointed out this is a very different aspirational India that China faces. The same kind of grassroots development that happened in China and rapid pooling of capital, human resources and technology inputs for development is taking place in India, and will continue for the next two decades, quickly bridging any gaps in modernization between the two countries. The difference between a youthful population in India and aging population in China and Japan, is likely to add another dimension. China's Buddhist culture that came from India is not likely to go away, more likely is that China will see a revival of Buddhist ideas of wellness and living more as culture than religion. The experience with British colonialism that prevailed both in India and China, and which from its base in India caused so much grief to China during the Opium wars will recede from memory. Extending borders from historical memory of Japanese incursions into border areas in Manchuria could have led leaders after 1950 in China to extend borders to remote areas in the Arunachal region of India and communist theory books may have created the perception of defensive moves. In the context of an aspirational India similar to China, and no real intention on the part of India to extend itself in any way to China's provinces in Sichuan, this extending of borders as a defensive move will be seen as stemming from memories of Japanese incursions in the 1930's, but simply costly and not relevant in any way to China's own aspirational development and progress. ...

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In this report WSJ looks at US Treasury Secretary's warning to China about its role in the free world and its position in the international trading system and the obligations to human values that come with it. Janet Yellen is so well known as head of the Federal Reserve and as US Treasury Secretary that it is easy to forget her experience at Yale studying under James Tobin who supported meeting social goals, whom she calls a life long mentor. Tobin set the foundations for economic policy in the Kennedy administration in the early post war period, after working in the Franklin Roosevelt administration during the war. Social goals, business paying its fair share of taxes, building infrastructure, were all a part of the FDR and Kennedy-Johnson administration.  It is also easy to forget that Yellen set the foundations for economic policy under Clinton and then under Obama administration the period when social goals were not met, infrastructure was neglected, globalization meant shipping jobs and factories overseas to China, and lack of financial oversight over banks that led to the 2009 financial crisis. The contradiction made Yellen realize only late during the Obama administration how much of a diversion she had taken from the social goals of the FDR-Truman-Kennedy post war period.  As one of the architects of the economic policy underpinning the emergence of China's role as the factory of the world, that destroyed many working class communities in the US, Yellen is in the economic role that Merkel shares in world of political economy with her integration of the German economy with that of China. Today as she calls for a retreat to the values shared by her mentor James T, Tobin and of FDR and Truman as they responded to the Berlin Crisis in the aftermath of 1945, and the Korean War with large scale invasion of South Korea and the kind of refugee crisis that we see today in Ukraine, there is much room for reflection. Reflection on what was lost in the intervening years of the Bush-Clinton and Obama years that led to the situation that the free world faces with totalitarianism today.   ...

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In the first day of trading , GM shares opened at $35, two dollars above the price investors paid in the company's IPO.

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Financial markets and investors now see the uncertainties emanating from tariffs negotiations as temporary and unlikely to affect corporate profits and the US economy says this report in WSJ. When the EU requested an extension with EU president Leyen calling DJT on May 27th, Trump who had said the EU was dragging its feet on trade negotiations with the US, granted her request. Leyen promised to speed up the negotiations with the new deadline of Juy 9, 2025. Trump had called for an across the board 50% tariff on all EU products if the EU continued the lack of response. In this way DJT called the bluff the Europeans were playing seeking to portray the American tariffs negotiations in an unfavorable way.  How did markets respond? The S&P 500 increased by 2% on May 27th when it became clear that a trade settlement was likely to be reached in 6 weeks. Earlier DJT had met with Mark Carney of Canada another key trading partner and come up with an understanding on moving forward. DJT has shown flexibility with advice from Treasury Secretary Scott Bessent who has experience with and carefully followed financial markets. ...

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This NYT editorial on Nov. 23, 2012, points out the importance of a forward looking Britain that has a needed voice in the affairs of the European Union, and positive engagement with the nations in the eurozone that make up its largest trading partner. Roger Carr, head of the British Confederation of Industry, made just such a call saying British engagement with the rest of Europe was "the linchpin of our wider global trade ambitions." The danger now is that because of missteps in the managing of affairs in the EU, including the hasty setup of the euro currency without proper safeguards for debt of individual countries and the strict fiscal arrangements imposed by Germany that stifle the chance of growth, the mood in Britain is now shifting towards exit from the EU. An Opinion/Observer poll suggests a referendum held today is likely to win an yes vote for Britain to leave the EU, a huge mistake for British interests. A referendum is expected to be scheduled for 2015.

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Serious doubts remain about the effectiveness of value at risk or VAR quant models used by JP Morgan Chase to measure potential losses on a trade on a bad day. A newer model used by Chase in the first quarter showed smaller losses. When the old model was run this trade showed double the losses according to Chase managers. Greenberger, a former CFTC official and a professor at the University of Maryland School of Law, says if the trade become hard to unwind it shows poor risk management. And experts say it is not much of a hedge if it is done in an obscure part of credit markets and hard to unwind without serious losses. Peter Tchir, a former head of index trading at RBS bank, says CEO Dimon must have seen these kinds of hedges as part of his overall strategy, which is why he supported them in April 2012. The problem lies in that the bank size has grown to such proportions that its simply too big to manage, with trades it has to make becoming massive as a consequence.

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Norway's sovereign wealth fund, the Government Pension Fund Global, is run by Yngve Slyngstad. The fund has $570 billon, $100,000 for each of Norway's 4.9 million people. The fund took a 23% loss in 2008. Then the fund made a shift from 40% equity holding to 60% equity holding, which has paid off. The losses were reversed with a 26% gain in 2009 and a 10% gain in 2010. The fund gets all of Norway's oil revenues less about 4% of the fund's value that goes to the state budget. Slyngstad became CEO in 2008, and persuaded finance ministers to take on greater risk, leading to $175 billion in stock investments during the financial crisis. He has told Parliament that he will get returns of 4% after inflation- higher than returns of 3.1% that were made since 1998. With assets equal to 2% of the total market value of stocks trading in Europe, the Norwegian fund is a major investor. Rules set for the fund prohibit investments larger than 10% in any one stock.

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Ethanol stocks are trading for what they were went they went public in 2006 or early 2007 way down from the highs they reached. When the IPO's were done corn was $1.80 a bushe and ethaol was $4.50 a gallon, since then things have changed and corn is now $5.64 a bushel and ethanol is $2.60 a gallon, corn prices tripling and ethanol prices almost half of what they were. So things look very different now. It takes refiners one bushel of corn to produce 2.8 gallons of ethanol. Ethanol sudden surge was because of its use as a replacement to methyl tertiary-butyl ether, a gasoline additive that has been proved to be a carcinogenic groundwater pollutant. But there are many uncertainties surrounding ethanol, the price of gasoline, corn, and ethanol and the future government mandates, subsidies to refiners and a possibility that tariffs on imported ethanol may be reduced or eliminated, and the effects on food prices of dedicating so much corn production to ethanol creates other concerns. So the inital excitement as faded....

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Quidel Corp. gets the first FDA approval of an antigen test which tests for the disease itself. Quidel is a company specializing in tests for the flu and infectious diseases. It uses an older technology to detect the disease. Quidel CEO Douglas Bryant, says he will ramp up the manufacturing of the test to go from 200,000 tests a week in the week of May 11, to more than a million a week in several weeks. The current testing technology has several shortcomings. The most common test so far is the PCR test which magnifies virus particles to ease their detection. It is cumbersome technology because it takes time to run the test and analyze the results. The new antigen tests have several advantages. They have a simpler design, are easier to process, and can be produced at lower prices because of the simpler design. They are designed to identify the virus in people in real time, to process results quickly in minutes in Quidel's Sofia analyzers. Because of the simple design and proven technology it can be scaled up quickly to do millions of tests.  The U.S. currently has the problem that it is not able to do enough testing- about twice the current rate is needed to do what health experts recommend. A minimum of 4 million tests weekly is needed and followed up with contact tracing to make it safe for people to go back to work, says Ashish Jha of the Harvard Global Health Institute.   The U.S.   ...

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A letter to the Editors of the Wall Street Journal refers to German Finance Minister Schauble's comment: "The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base." He also cites President Barrack Obama's former head of the Council of Economic Advisors, Christina Romer's comment: "Germany's reliance on exports rather than domestic demand ... is very hard on its trading partners." And laments that we are reduced to a long-shot prayer of begging countries like Germany to cut their current-account surpluses. He says, how about trading "our economic advisors for theirs."

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Age ol trading patterns between UAE and Iran separated only by 70 miles of ocean and the US sanctions on exports of sensitive items to Iran.

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After the 2008 election of president Obama rural whites left the Democratic Party, Following the election of president Trump educated suburbanites left the Republican Party. These two trends have accelerated as seen in the 2018 U.S. Congressional elections. Democrats won in and around major cities, and Republicans won in rural and small town America. Democrats won 27 GOP Republican COngressional seats to win the majority. Republicans added 2 seats to their Senate majority.  The electorate is sharply divided in terms of education in a way that is regressive and not good for America, and in a way that has never happened before. Republicans share of of House districts with lowest shares of college education bachelors degrees increased from 44% in 1998 to 60% in 2018. Democrats share of House districts with the highest share of Bachelors degrees went up from 50% in 1998 to 81% in 2018. Much of the Democrats support from educated suburbanites comes from lopsided support from educated women. The result is that the Republican Party is trading faster growing counties for slower growing smaller counties and now has a base of older voters. The Democrats have to find a leader who can rally support from this new combination of educated suburbanites, younger voters, and minorities. And big issues are at stake. About 77% of people in recent polls now support a national health care insurance like than in the UK and Canada. Poor reading skills and reading comprehension in school tests show a need for greater investment  in education. Infrastructure investment is a big priority for a decade that has yet to be tackled directly. Of the 50 new Democrats in the House of Representatives 24 campaigned on a promise for a national health insurance like that in Canada or UK. The focus on economic issues would move the Democratic Party back to where it was in all the post war years till the distractions from cultural issues  in the last decade shifted its focus from its historical base support of working class voters. ...

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The Trump administration released its framework for NAFTA negotiations. The framework is designed to reduce the U.S. trade deficit and promote "Buy America" provisions. It will challenge Mexico on labor and environmental matters, which is likely to win the support of Democrats. A mechanism for preventing countries from getting unfair advantage through currency manipulation is part of the framework, yet less of an issue with Mexico and Canada. It will also work to protect U.S. trade interests in an effort to appeal to workers who supported Trump in the 2016 election. Overall it does not deviate much from established U.S. trade policy, according to the WSJ. For this reason the new guidelines were welcomed by the Mexican and Canadian governments. Mexico and Canada also see this as an effort to modernize the agreement to reflect changes in technology and commerce since NAFTA was signed. Under fast track trade promotion authority the president's Trade Representative Mr. Lighthizer can start negotiations in 30 days. One of the matters up for change is the Chapter 19 dispute settlement mechanism which makes it easier for Canada and Mexico to avert trade sanctions. Mexico's economic prospects have improved as the NAFTA renegotiation avoids the sharp rhetoric of the election campaign. The Mexican peso which traded at 22 to the dollar in January 2017 following the U.S. election, is now trading in July 2017 at 18 to the dollar.   ...

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France was exceptionally well prepared says France 24, citing a report in Le Monde, for the SARS crisis in 2002 and the H1N1 influenza in 2009. A billion masks were stockpiled by 2009. Following the H1N1 influenza not appearing in any significant way the media, political parties and the public shifted their attention away from public health crises preparation. For H1N1 the government spent 1 billion dollars some of it going to pharmaceutical labs. The eurozone financial crisis that followed the global financial crisis shifted policy to austerity measures. The entire preparation effort for influenza type health crises was abandoned as too costly.  The same pattern repeated in Britain which was also well prepared before 2010. Austerity budgets after 2010 had little room for public health investment.  One could say a similar pattern was seen in the U.S. Today the worst hit countries are U.S., Britain, France and other European countries. France which had 1 billion masks in 2009 to tackle a possible H1N1 epidemic finds itself with 150 million masks in March 2020 and scrambling to find masks. Some masks which were usable were even destroyed as expired, ministers and experts who had built up the prevention effort in 2009 were even demoted and forgotten, as was much of the preparation in these years. It wasn't just medical supplies pubic awareness had practically disappeared. In the U.S., in Europe, the same situation of a lack of public awareness so that experts, government, and the public could work together quickly, was clear to see. In countries such as Taiwan the preparation led to speedy response at all levels, making contact tracing, isolation of clusters effective. In the U.S. and Europe this early, early, period was lost leading to makeup mitigation measures and the growing sense of a loss of control over the virus. ...

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In a corner of Wales known for its coastline and scenic beauty, a biology teacher Mr. Barry Rees sets up a homemade contact tracing system that worked. He is the director of Ceredigion county council. It is the safest county in mainland Britain with only 45 recorded cases in the last week for 75,000 residents. Early on in the coronavirus epidemic Mr. Rees decided to take up contact tracing with whatever resources were on hand and start quickly. This was was happening in German states which were also following low tech, get started quickly approach, but Rees was not aware of what was already happening in Germany. He knew about South Korea and Singapore efforts in contact tracing which put a lot of emphasis on human skills in calling and tracing and getting started immediately. Rees started with the people calling in sick of the 4000 people who worked for the county administration, as he had no testing resources. He started tracing these people and their contacts, and even though some were defensive the majority supported intervention to isolate. At the time there were fears of 200 deaths in the county so that there was no time to lose.  By April the area was facing an influx of people from Aberystwyth University and tourists visiting its sandy beaches, another reason for taking on the task with a homemade system. Today it has one tenth the cases in the rest of Wales.  The hidden fear in the country is that word can get out and lead to more visitors from outside the county. ...

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Raj Rajaratnam and the Galleon hedge fund that is accused by prosecutors and the SEC of securities fraud by running a large insider trading scheme for technology companies.

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The US Fed under Jerome Powell stress tests of 31 banks for 2024 shows the banks can withstand a rise in unemployment to 10% and 36% drop in house prices. This is relevant now that the new administration of DJT makes another effort to correct the huge trade imbalance with China, Mexico and Canada, which itself is destabilizing in the long run and needs to be addressed. The first term of DJT failed to correct the imbalance with new tariffs kept in place by the Biden administration. This is not just one's imagination, reports suggest China has poured $230 billion of subsidies into its EV industry since 2003 mandate given by premier Jen Biao to dominate that industry. And now has capacity of 20 million car production a year, twice the domestic demand in gasoline cars, wanting to send the surplus production to the US and Europe. This isn't the 1930's type of tariffs, it is simply to get a fair even playing field for trade, where no one side is massively subsidizing and dumping which is one of the principles of WTO free trade that is being broken by China and Mexico. Specifically the anti dumping clause in Article 6 of the 1994 GATT agreement on free world trading mechanism to ensure free and fair trade. ...

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WSJ Board criticism of DJT Tariffs paints a picture different from what is happening at a time when the president needs support to change the rules of world trade so that there is a level playing field for everyone. First Japan and then China have begun and pursued a course that uses the international trading system set up after 1945 to their advantage resulting in the deindustrialization of the US and Europe since the 1980's. WSJ's own reporting in July shows the inflation is subdued at about 2%. The president's jawboning or moral suasion has worked so that retailers such as Walmart have actually reduced prices on basic products and all retailers including Amazon and Target have cut prices on the more expensive products where their margins are larger. One WSJ report shows Amazon increased prices on products that were made in the US, as its own form of jawboning so that Amazon would get the point. It also belittles the extraordinary effort of Bessent and Jamieson as trade negotiators in getting the deal with Japan for $550 billion. It says DJT was lucky to get the deal when it is clear that Japan is returning the US the favor the US did to Japan, as a true ally should do, aside from US defense of Asia. ...