Baltic Dry Index. 2483 -12 Brent Crude 75.84
Spot Gold 2005 U S 2 Year Yield 4.71 +0.13
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Citigroup’s Chuck Prince wants to
keep dancing
By wpcomimportuser1 July 10, 2007
In
the stock casinos, bubble on. The Sahm Rule says no US recession for now. But
did US unemployment really fall to 3.7 percent, or was that just noise from the
end of the US auto strikes?
Wall St Week Ahead Year-end rally in US stocks faces twin
tests as Fed, inflation data loom
By Lewis Krauskopf December 8, 2023 11:17 PM GMT
NEW YORK, Dec 8 (Reuters) - The Federal
Reserve’s last monetary policy meeting of 2023 and a U.S. inflation report in
coming days should test a stock market rally that some view as stretched
following weeks of gains.
Bets the Fed will
begin cutting interest rates sooner
than expected have fueled a surge in U.S. equities, which
received a tailwind from a rapid
decline in Treasury yields. The S&P 500 (.SPX) up
nearly 20% in 2023 after a monthly gain in November that was its biggest of the
year.
Yet some investors believe
the rise in stocks has left markets more vulnerable to reversals if consumer
prices do not keep cooling or the Fed is less dovish than expected.
The S&P 500 rose 0.2%
this week, marking its sixth-straight weekly increase, the longest such winning
streak in about four years. The index stands at its highest closing level since
March 2022.
"There is some
optimism priced in on earnings and the economy and the Fed, so that has taken
us to this level,” said Scott Wren, senior global market strategist at the
Wells Fargo Investment Institute (WFII). With the S&P 500 near the top of
its trading range, "we think there is a lot more potential for downside
than upside."
The WFII has a 2024 price
target for the S&P 500 of about 4,700, or about 2% above current levels.
While the Fed is expected
to keep rates steady on Wednesday for a third straight meeting, investors will
watch for signs from policymakers that confirm the market’s view for rate cuts
as early as March 2024. The Fed will also release its summary of economic
projections, which will show officials’ rate expectations for next year.
Friday's
stronger-than-expected jobs and consumer sentiment data, combined with a rise
in yields, bolstered the case for those betting the Fed “could lean more
hawkish” next week, said Quincy Krosby, chief global strategist for LPL
Financial.
The federal funds futures
market on Friday was pricing in a 46% chance of a cut at the Fed's March
meeting, and a nearly 80% chance of a cut in May, according to the CME FedWatch
tool.
Many investors believe
stocks can continue rising in the weeks and months ahead, with the S&P 500
just 4% from making a fresh all-time high.
Past rate cycles have shown
that stocks tend to climb during the period when monetary policy is “on hold.”
The S&P 500 has gained an average of 5.1% in periods that the Fed has
paused its rate-hiking cycle and before the central bank’s first cut, according
to an analysis of nine such periods by ClearBridge Investments.
More
In
other news, China deflation. The global economy rolling over?
China’s
November consumer prices fall the fastest in 3 years
China’s consumer prices fell the fastest in three
years in November, while factory-gate deflation deepened, suggesting
heightening deflationary pressure as weak domestic demand casts doubts over the
economic recovery.
The consumer price index (CPI) dropped 0.5% both
from a year earlier and compared with October, data from the National Bureau of
Statistics (NBS) showed on Saturday.
The falls were deeper than the median 0.1%
declines, both year-on-year month-on-month, forecast in a Reuters poll. The
year-on-year CPI decline was the steepest since November 2020.
Year-on-year core inflation, excluding food and
fuel prices, was 0.6%, the same as October, pointing to a daunting task faced
by Chinese authorities to revive demand as deflationary forces persist.
Although consumer prices in the world’s
second-biggest economy have been teetering on the edge of deflation in recent
months, China’s central bank Governor Pan Gongsheng said last week inflation
was expected to be “going upwards.”
The producer price index (PPI) fell 3.0%
year-on-year against a 2.6% drop in October, marking the 14th straight month of
decline and the quickest since August. Economists had predicted a 2.8% fall in
November.
Mixed trade data and manufacturing surveys have
kept alive calls for further policy support to shore up growth.
China’s economy has grappled with multiple
headwinds this year - including mounting local government debt, an ailing
housing market and tepid demand at home and abroad - with consumers tightening
their purse strings, wary of uncertainties amid an elusive economic recovery.
Moody’s on Tuesday slapped a downgrade warning on
China’s credit rating, saying costs to bail out local governments and state
firms and control its property crisis would weigh on the economy.
More
Inflation
in China: November consumer prices fall fastest in 3 years (cnbc.com)
Inflation
expectations plunge in closely watched University of Michigan survey
Consumer fears over inflation tumbled in December
amid declining energy prices and as the impact of interest rate hikes take
hold.
In the latest University of Michigan consumer
sentiment survey released Friday, the one-year outlook for the inflation rate
slid to 3.1%, down sharply from 4.5% in November and the lowest since March
2021. The five-year outlook also moved lower, down to 2.8% from 3.2% the
previous month.
Federal Reserve officials consider consumer
expectations a key in the way inflation moves, so the switch in sentiment could
further convince policymakers to keep interest rates on hold and possibly start
cutting in 2024. The University of Michigan survey is one of the more closely
watched gauges.
More
Inflation expectations plunge in closely watched University of Michigan survey (cnbc.com)
Back in early November I wrote about a US recession:
The other signal was the Sahm Rule, on the verge of giving a confirmatory recession signal, depending on the next November US employment rate, due on December 8th. An unemployment rate of 3.9 or higher will trigger a Sahm signal.
Yesterday’s US unemployment rate came in at 3.7% making the three-month average 3.8%, or only 0.4% above the 2023 double low rate of 3.4%. So no signal yet, if at all. The Sahm Rule triggers at 0.5% over the low, and while recession doesn’t automatically happen, it hasn’t been wrong yet.
But this link is still signalling that the US economy has already slid into recession every time it falls below minus 5 percent.
US - Conference Board Leading Economic Index vs. GDP | MacroMicro
What’s the Sahm rule? Here’s what you need to know about the
recession indicator that has Wall Street talking.
The
Sahm rule was devised to sniff out a recession long before one is officially
declared
More,
subscription required.
The
Sahm rule: What to know about the recession indicator that has Wall Street
talking - MarketWatch
U.S.
payrolls rose 199,000 in November, unemployment rate falls to 3.7%
Job creation showed little signs of a letup in
November, as payrolls grew even faster than expected and the unemployment rate
fell despite signs of a weakening economy.
Nonfarm payrolls rose by a seasonally adjusted
199,000 for the month, slightly better than the 190,000 Dow Jones estimate and
ahead of the unrevised October gain of 150,000, the Labor Department reported
Friday. The numbers were boosted by sizeable gains in government hiring as well
as workers returning from strikes in the auto and entertainment industries.
The unemployment rate declined to 3.7%, compared
with the forecast for 3.9%, as the labor force participation rate edged higher
to 62.8%. A more encompassing unemployment rate that includes discouraged
workers and those holding part-time positions for economic reasons fell to 7%,
a decline of 0.2 percentage point.
“The job market continues to be resilient after a year of dodging
recession fears,” said Daniel Zhao, lead economist at job ratings site
Glassdoor. “Really the one concern that we had coming in today’s report was the
recent rise in the unemployment rate. So the improvement in unemployment was a
welcome relief.”
The department’s survey of households, used to
calculate the unemployment rate, showed much more robust job growth of 747,000
and an addition of 532,000 workers to the labor force.
Average hourly earnings, a key inflation indicator,
increased by 0.4% for the month and 4% from a year ago. The monthly increase
was slightly ahead of the 0.3% estimate, but the yearly rate was in line.
Markets showed mixed reaction to the report, with
stock market futures modestly negative while Treasury yields surged.
More
Jobs
report November 2023: U.S. payrolls rose 199,000 unemployment rate falls to
3.7% (cnbc.com)
Global
Inflation/Stagflation/Recession Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians, inflation/recession now needs an entire
section of its own.
Japan's Q3 GDP falls faster than first estimates as
consumption sags
By Satoshi
Sugiyama December 8,
2023 5:14 AM GMT
TOKYO, Dec 8
(Reuters) - Japan's economy fell faster than first estimated in the third
quarter, revised data showed on Friday, as the household sector faced growing
headwinds, complicating the central bank's efforts to phase out its
accommodative monetary policy.
Consumer and
business spending both shrank, driving down third-quarter gross domestic
product (GDP). Separate data showed real wages and household spending kept
falling in October, as prolonged inflation discouraged shoppers.
"Weakness
in personal consumption is likely to continue for the foreseeable future, as
real disposable income is likely to extend its decline, which is seen as a
factor in sluggish consumption," said Kota Suzuki, an economist at Daiwa
Securities.
The economy
lost an annualised 2.9% in July-September, the revised Cabinet Office data
showed, more than a previously estimated 2.1% contraction and market forecasts
for a revised 2.0% decline.
Capital
expenditure fell 0.4%, which compared with a preliminary 0.6% decease and a
median market forecast for a 0.5% fall.
Private
consumption, which makes up more than half of the economy, fell 0.2% in
July-September, versus a mostly flat performance in the initial estimate.
External
demand shaved 0.1 percentage point off real GDP, in line with the preliminary
reading, as service imports outgrew auto exports.
Separate data
showed inflation-adjusted real wages dropped 2.3% year-on-year in October to
mark a 19th straight month of decline, although slower than the 2.9% fall in
September, according to the labour ministry.
Although nominal
salaries rose 1.5%, inflation of more than 3% wiped off the wage growth in real
terms, which is seen as a gauge of consumers' purchasing power. With income
stagnant, household spending decreased 2.5% in October from a year earlier,
falling for eight months in a row, internal affairs ministry data showed.
The
Bank of Japan has stressed it needs to maintain ultra-low interest rates until
sustainable inflation of 2% along with wage hikes comes into view. Next year's
wage outlook would be crucial for determining whether prices were on the right
track, governor Kazuo Ueda said on Thursday.
Japan's
Q3 GDP falls faster than first estimates as consumption sags | Reuters
This
section will continue until it becomes unneeded.
New
fast-growing Covid variant JN.1 identified as random testing begins again
December 7, 2023
A new
variant has been identified which could trigger a winter Covid-19 wave
as random swab testing is restarted in Britain.
The
variant known as JN.1 has been the fastest growing variant for at least eight
months according to new analysis by the UK Health Security Agency.
Although
Covid infection rates in Britain remain low overall the Office for National Statistics has restarted random
testing and early indications are that 1.2% of the population had the virus in
the last week of November. Its first winter report published on Thursday shows
this was up from 1% the previous week.
Health chiefs
are now “closely monitoring” JN.1 which makes up one in 13 cases detected. So
few people are testing for Covid-19 now it is impossible to know true infection
numbers but samples from hospital patients picked up the new variant on October
27.
The UKHSA has this week designated JN.1 as an
official variant named V-23DEC-01 - which means it is formally being tracked.
Some 302 UK cases of the strain had been detected as of Monday.
Dr Meaghan Kall, an epidemiologist at the UKHSA,
tweeted: “JN.1 has been designated variant V-23DEC-01 due to increasing
sequence prevalence in the UK and internationally.” She added: “So JN.1 is the
variant with the highest growth advantage since at least 8 months. With variant
status, we will closely monitor JN.1. It seems likely we must now add variant
pressures to the forecast of a winter Covid-19 wave.”
The UK’s world leading
genome sequencing capability means new variants are often identified here
first. We are one of a number of countries to have flagged JN.1 with 3,618
cases confirmed globally. It has a L455S mutation in the spike protein which
suggests it could be better at escaping immunity. Health experts say being
recently vaccinated is the best protection against the virus.
More
New
fast-growing Covid variant JN.1 identified as random testing begins again
(msn.com)
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section.
Why Graphene Batteries Might Be The Next
Big Breakthrough In The EV Industry
After lithium-ion and solid-state batteries,
graphene batteries might be the next big thing to happen to EVs, and here's
why.
December 7, 2023
While lithium-ion
batteries are presently the best option for EVs, their shortcomings have driven the
auto industry’s urge to find a technology that can supersede them. As car
manufacturers continue to throw research funding at
solid-state batteries, graphene has emerged
as the next technology that might “revolutionize,” “reinvent,” or “redefine”
the battery (depending on which managerial word one prefers). While car-sized
graphene batteries are not ready for the road, some auto companies are earnestly
trying to make them happen.
- ---- A Graphene battery contains graphene in its
electrodes.
- Graphene batteries can charge faster and weigh
less.
- Graphene batteries reduce the risk of battery
fires.
A
graphene battery uses a material called graphene in its electrodes. To
step back further, graphene is a form of carbon. (Diamonds, graphite, and
charcoal are other forms of carbon.) Graphene is a sheet of carbon that is only
one atom thick. When stacked up, these sheets of graphene form graphite, which
most people recognize as the stuff in pencils. In other words, if graphite is a
deck of cards, graphene is a single card.
To round out the relevant
definitions, a battery’s electrode is what sends the electricity out of the
battery and into whatever is connected to it. The electrolyte sits in the
middle of the battery and stores the energy that will eventually go out through
the electrode and into the car (or stereo, or battery-powered toy).
It’s important to note
that the graphene in these batteries is going into the electrodes at each end
of the battery, not the electrolyte in the middle.
Graphene-based electrodes have shown themselves to be a lot
better at conducting electricity than the electrodes currently used in mass-produced
lithium-ion batteries. In other words, they
are more efficient at getting electricity out of the battery when using it, and
also at pushing electricity into the battery when charging. With graphene, the
electricity can get into the battery a lot more easily than with previous
electrode designs. This leads to the biggest advantage that the average EV
purchaser will care about: faster charging.
More
Why Graphene Batteries Might Be The Next Big
Breakthrough In The EV Industry (topspeed.com)
This weekend’s music
diversion. Another long forgotten English composer. Approx. 9 minutes.
Samuel
Arnold (1740-1802) - Overture in F (c.1781)
Samuel
Arnold (1740-1802) - Overture in F (c.1781) - YouTube
This weekend’s chess
update. Approx. 10 minutes.
Everyone
Blunders!
No
weekend the math’s update again this week. This week, how crude oil becomes
petrol. Approx. minutes.
How
PETROL is MADE from CRUDE OIL | How is PETROLEUM EXTRACTED?
How PETROL is MADE from CRUDE OIL | How is PETROLEUM EXTRACTED? - YouTube
Richard Wittington, an honest dreamer, travels to London “where
the streets are paved with gold”. Fairy Bow Bells realises his destiny, and
supplies him with an introduction to the leading London bitcoin gambler, Bernie
Buymore, a 22 year old dropout from the London School of Economics, who’s
fighting extradition to America over an unintended flash crash in shady
Chicago.
A Panto for modern times. With apologies to Richard Gauntlett
author of pantomime scripts.
