Baltic Dry Index. 598 -19 Brent Crude 28.46
Spot Gold 1699
Coronavirus Cases 05/5/20
World 3,646,304
Deaths 252,425
The Panic of 1893 (May – November) Deja Vu?
---- As a result of the panic, stock prices declined. Five hundred banks closed, 15,000 businesses failed, and numerous farms ceased operation. The unemployment rate hit 25% in Pennsylvania, 35% in New York, and 43% in Michigan. Soup kitchens were opened to help feed the destitute. Facing starvation, people chopped wood, broke rocks, and sewed by hand with needle and thread in exchange for food.----President Grover Cleveland was blamed for the depression. Gold reserves stored in the U.S. Treasury fell to a dangerously low level. This forced President Cleveland to borrow $65 million in gold from Wall Street banker J.P. Morgan and the Rothschild banking family of England.[13] His party suffered enormous losses in the 1894 elections, largely being blamed for the downward spiral in the economy and the brutal crushing of the Pullman Strike. After their defeat in 1896, the Democrats did not regain control of any branch of the Federal Government until 1910.
Never
mind the collapsing US and global economies, hopium’s back in the casinos. Buy
more, things can only get better!
And
in the long run that’s probably true. But as Keynes aptly remarked, “in the
long run we’re all dead.”
Its
folly to try to front run the Fed in the casinos at present, since the Fed and
the other central banksters are the only greater fool buyers left and they can
drop out at will. Long before things can only get better, things are going to
get much worse.
US
and global unemployment is going to continue to rise for most of the rest of
the year. Outside of the G-7 rich nations, few nations have much in the way of
social safety nets. Things can turn ugly on the streets very fast.
Besides,
in an unprecedented experiment in adopting Zimbabwe economics, the Fedsters are
embarking of electronically printing up out of nothing 3 trillion dollars of
new money in the next three months. Officially it’s to replace what they think
just got destroyed in March.
That’s
3,000,000,000,000 dollars. About 1/7th of the US GDP before we put GDP
into reverse with all the lockdowns.
No
one, least of all at the Fed, has any idea of what happens next. Deflation 1893
style? Deflation followed by food price
inflation as all the new trillions start chasing scarce goods from all the broken
supply chains? The beginning of the end for the universal dollar reserve
standard?
Stick
around, in a US presidential year, things can only get worse.
Asian markets gain, despite Hong Kong economy posting worst quarter since 1974
Published:
May 4, 2020 at 10:17 a.m. ET
The
Federal Reserve said it would start buying corporate bond exchange-traded funds
in early May, as it offered up further details on its planned purchases of debt
from U.S. businesses on Monday. Soon after, the central bank will start
purchasing debt issued by companies directly, and from the market. The Fed also
said it could buy an entire sale of corporate bonds by itself. Even without
having yet bought bonds, the central bank's announcement of the lending
programs have been enough to arrest turmoil in corporate bond trading, and has
allowed businesses like Boeing to issue debt to raise cash.
This year is lining up exactly like the 2000 dot-com bubble crash — stocks will drop 40% from here, former Goldman manager says
Published: May 4, 2020 at 7:33 a.m. ET
It’s Monday and stocks are falling again. A number of U.S. states have started efforts to restart their economies, but that sliver of positive news has been cast aside by the ramping up of tensions with China and the economic impact of coronavirus.
Billionaire investor Warren Buffett’s gloomy remarks about airlines have also caught investors’ attention, as his company Berkshire Hathaway reported a near $50 billion loss in the first quarter and is sitting on a $137 billion cash pile. April produced the best monthly gains for the Dow Jones Industrial Average and S&P 500 in 82 years — after the worst first quarter in history — but May’s bad start looks set to continue on Monday with futures down.
In our call of the day, former Goldman Sachs analyst Will Meade said the rest of the year looked even worse for stocks, predicting a 40% drop over the rest of 2020.
Meade said the year was lining up to be “exactly like” the 2000 dot com bubble crash.
“The Nasdaq in 2000 did a similar bear market bounce as stocks this year — dropped 40%, then bounced 42% off the bottom retracing 61.8% of its drop. It stalled then fell 43%, making a new low four months later,” Meade said. He added that the presidential election on the horizon, as it was in 2000, creates further risk and uncertainty, while retail participation and leverage was near the 2000 bubble level.
More
May 4, 2020 / 5:54
AM
SYDNEY
(Reuters) - Asia’s factory activity was ravaged in April, business surveys
showed on Monday, and the outlook dimmed further as government restrictions on
movement to contain the coronavirus outbreak froze global production and
slashed demand.
A series of Purchasing Managers’ Indexes (PMIs) from IHS Markit fell
deeper into contraction from March, with some diving to all-time lows and
others hitting levels last seen during the 2008-2009 global financial crisis.
Similar gauges out of Europe’s largest economies due on Monday and later
in the week are also expected to show dire global industry conditions.
The PMI for South Korea, Asia’s fourth-largest economy and a global
manufacturing powerhouse, skidded to 41.6 in April, the lowest reading since
January 2009. Japan’s PMI released last week similarly fell to an 11-year low.
“The bad news is that the hit to industry in many places is unlikely to
be passed the worst,” Alex Holmes, Asia Economist at Capital Economics, wrote
in a note.
“Global demand has slumped and we don’t think it has bottomed out yet.
The latest incoming data for the U.S. and Western Europe point to an
unprecedented slump in demand. And while China’s economy has started to
recover, demand there remains very weak.”
More
Coronavirus pushes Hong Kong economy into deepest contraction on record in first quarter
May 4, 2020 / 9:52
AM
HONG
KONG (Reuters) - Hong Kong’s economy recorded in the first quarter its deepest
annual contraction since at least 1974, as the coronavirus pandemic dealt a
heavy blow to business activity, already in decline following months of
anti-government protest last year.
The outbreak has killed four of Hong Kong’s 1,041 virus patients, and
largely put a brake on protests, while crushing tourism and keeping shoppers
off the streets, hitting two key contributors to gross domestic product (GDP).
The Chinese-ruled city’s success in keeping the virus under control
brings some hope of a tentative resumption of activity in coming months, but
also fuels the prospect of renewed protest as anger against the government has
not dissipated.
“Social distancing will continue to hurt catering and shopping, but
another issue is ... I believe there will be more protests over the summer
holidays,” said Iris Pang, Greater China economist at ING.
It is also unlikely that consumers will have the appetite to spend,
given the uncertainty over job prospects in an economy highly exposed to global
trade and finance.
With most of the world still battling the virus, tourism is also
unlikely to recover in the near term.
More
Battered global tourism industry makes reopening plans
May 4, 2020
Six months ago, the global tourism industry was celebrating a record
year for travel. Now, it’s decimated and facing a recovery that could take
years.
Tourism Economics, a data and consulting firm, predicts global travel
demand won’t resume its normal pace until 2023.
When tourists do finally return, they will face a changed landscape that
incorporates social distancing and other measures to calm residual fears over
COVID-19, the disease that has so far killed more than 244,000 people worldwide
and infected millions more.
“It takes time to shake fear from the hearts of people, not to mention
the economy,” said Mahmoud Hadhoud, founder of Egypt Knight Tours, who doesn’t
expect foreign tourists to start trickling back into Egypt until September.
Last week, Hilton, Marriott and Airbnb all
announced enhanced
cleaning procedures worldwide to ease travelers’ minds. In Egypt, Hadhoud
is removing cruises and hot air balloon rides from his packages and replacing
them with tours of Egypt’s vast western deserts, where travelers can keep their
distance from one another.
At Universal Studios in Orlando, Florida,
multiple teams are working on scenarios, including putting more space between
riders on roller coasters, said John Sprouls, the resort’s chief administrative
officer, at a recent virtual event for tourism officials.
Wynn Resorts CEO Matt Maddox said his company
may sanitize dice between users, put fewer seats at blackjack tables and idle
slot machines between players at its casinos in Las Vegas, Boston and Macau.
Gary Thulander, managing director of Chatham
Bars Inn, a 106-year-old resort on Cape Cod, said the resort is planning many
changes when it reopens this summer, including checking in guests via cell
phones, letting them opt out of room service and lengthening dining hours so
fewer guests will be eating at the same time.
The road to recovery will be long and hard for
the tourism industry. The United Nations World Tourism Organization predicts
global tourist arrivals — or visits from tourists who come to their
destinations and stay at least one night — will fall 30% this year from the
record 1.5 billion in 2019. Airlines have grounded nearly two-thirds of their
planes as passengers vanish. Cruise ships are docked; some won’t sail again
until November.
----Alexandre de Juniac, CEO of the
International Air Transport Association, the leading airline trade group, said
carriers need to fill at least 70% of seats to break even on most flights. If
they’re required to block or remove many seats, they will either stop flying or
raise prices 50%, he said.
More
New Global Trade Dispute Body Advances With China Backing, but Without U.S.
May 04, 2020
05:16 PM
China, the European Union and Australia have teamed up to back a new
global trade dispute resolution mechanism, the Australian Financial review
reported.
The system will work much like the World Trade Organization’s Appellate
Body, which has been paralyzed since last year after the U.S. refused to allow
any new judges to be appointed to the body.
The new Multi-Party Interim Appeal Arbitration Arrangement (MPIA) was
formalized on Friday, and will have a pool of 10 judges chosen by the 20 WTO
members involved in the initiative so far.
U.S. President Donald Trump’s administration started blocking new
appointments last year over its belief that the Appellate Body was “overreaching
its remit, and was creating new international trade law,” AFR reported.
By supporting the new initiative, China can show the world it supports
multilateralism, analysts told AFR.
While the MPIA lacks Washington's support, “there's still a chance the
new body may end up addressing U.S. concerns if it can operate in a way that
avoids judicial activism,” they added.
Pipe-laying vessel reaches Baltic as Russia's Nord Stream 2 target looms
May 3, 2020 / 3:19
PM
MOSCOW
(Reuters) - A special pipe-laying vessel that could be used by Russia to
complete construction of the Nord Stream 2 gas pipeline to Germany has arrived
in the Baltic Sea, a Reuters witness said on Sunday.
The arrival of the Academic Cherskiy suggests that the pipeline project
remains a priority for Moscow despite U.S. sanctions on Russia.
The Nord Stream 2 pipeline was designed by Moscow to increase gas
supplies via the Baltic Sea to Germany, Russia’s biggest energy customer.
Russia’s energy ministry said in December that the pipeline was expected to be
launched before the end of 2020.
Footage taken by Reuters from the coast showed the Academic Cherskiy
idle in a bay near the Kaliningrad region, which is separated from Russia’s
mainland and is sandwiched between Poland and Lithuania.
The Academic Cherskiy, which Russian gas company Gazprom bought in 2016,
was in the Russian Pacific port of Nakhodka in December when the United States
imposed sanctions on Nord Stream 2.
The United States says the pipeline would make the continent too reliant
for energy on Russia, leaving it in Moscow’s political grip. Washington has
touted exports of U.S. liquefied natural gas, or LNG, to provide Europe with
alternatives to gas pipelined from Russia.
As a result of the sanctions, the Swiss-Dutch company Allseas, which was
laying the pipeline, suspended work on it. Russia then said it was preparing to
use an alternative vessel for the project, as 160-km (100-mile) stretch near
the Danish island of Bornholm has not yet been completed.
More
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.
John
Kenneth Galbraith
Though
hopefully, we are passing/have passed the peak of new cases, at least of the
first SARS-CoV-2 outbreak, this section will continue until it becomes
unneeded.
Bangladesh coronavirus cases exceed 10,000: health ministry
May 4, 2020 /
10:08 AM
DHAKA (Reuters) - The number of coronavirus cases in Bangladesh
surpassed 10,000 on Monday, the country’s health ministry said, with infections
increasing in pace over the past several days.
Bangladesh reported 688 new cases of COVID-19 over the past 24 hours,
taking its tally since it reported its first case two months ago to 10,143. The
death toll rose to 182 from 177.
More than 2,000 garment factories in Bangladesh that supply to global
brands reopened last week after a month-long shutdown to curb the spread of the
coronavirus, but much of the rest of the economy remains offline.
Some
of the world’s biggest clothing companies including Gap Inc, Zara-owner Inditex
and H&M source their supplies from Bangladesh, which allowed garment
manufacturers, mostly concentrated around the capital Dhaka and the port city
of Chittagong, to resume work last week.
Bangladesh is home to around 4,000 garment factories employing 4.1
million workers, and industry groups for the sector had warned that the
shutdown that began on March 26 and cancellation of orders could cause the
country to lose $6 billion in export revenue this financial year.
Competitors such as Vietnam, China and Cambodia have already resumed
operations.
Prime Minister Sheikh Hasina has told government officials that schools
and colleges may have to remain closed until September if the situation does
not improve.
'Like watching a train wreck' - The coronavirus effect on North Dakota shale oilfields
May 4, 2020 /
12:43 PM
NEW
YORK (Reuters) - Oil executive Bill Kent was with fellow managers in the
Colorado board room of Resource Energy headquarters on April 20 when benchmark
U.S. crude prices collapsed to minus $37 a barrel. Sitting six feet apart
because of the coronavirus, they knew the pandemic was not only a personal
matter.
It was also a business concern.
“As we were sitting around the board room watching what was happening
with prices, it was like watching a train wreck,” said Kent, vice president of
engineering and operations at Resource Energy, backed by private equity giant
Apollo Global Management.
With businesses locked down and billions of people staying at home,
demand for oil to fuel cars, planes and industry has dropped around 30%
worldwide. The resulting supply glut has pushed U.S. crude prices well below
production costs, forcing companies to start winding down operations. Producers
are shutting down the higher-cost output first - and those are also the
operations likely to stay shut the longest.
The Resource Energy team’s discussion turned to the remote Bakken shale
region in North Dakota where the company, a relatively small producer,
operates. Costs of extracting are some of the highest in the United States. So
are the costs of transporting due to limited storage and the distance to
refineries and consuming centers.
Oil producers in the Bakken, which sprawls across North Dakota and
eastern Montana, on average break even at $46.54 a barrel, according to an
analysis by Deutsche Bank. That is well above the around $40 a barrel in the
Permian basin, the largest U.S. shale field.
Bakken crude BAK- fetched $3.40 a barrel on April 21.
The team at Resource Energy realized they would need to consider
shutting down the remaining 20 percent of output still operating in the Bakken
shale region, Kent said. North Dakota, second only to Texas in oil output among
U.S. states, was taking a big hit. In just one day in late April, some 60,000
bpd were shut in the state.
Output has dropped by at least 400,000 bpd since March 1, nearly a third
of the state’s around 1.4 million bpd output before the crisis. State officials
expect the volume shut in to rise further.
“This is truly unprecedented,” said Lynn Helms, director of North
Dakota’s Department of Mineral Resources, the state regulator overseeing oil
production. In the days following the price collapse, oil companies sent teams
out to shut wells.
More
If
economists could manage to get themselves thought of as humble, competent
people on a level with dentists, that would be splendid.
John Maynard Keynes
Technology Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Updates as they get reported. Is converting sunlight to usable cheap AC or DC
energy mankind’s future from the 21st century onwards.
Harnessing the motherlode of the sun’s power is almost within our reach.
The sun, our primary source of energy, bathes our Blue Planet in more solar energy than we can ever hope to reasonably use. Each hour, the sun sends 430 quintillion Joules of energy our way, more than the 410 quintillion Joules that humans consume in a whole year. With the sun likely to be around for another five billion years or so, we have a virtually unlimited source of energy--if only we could tap it efficiently.
Unfortunately, we are currently only able to harness a minuscule amount of this energy due to technical limitations.
But that could be about change, thanks to advances in one wonder-crystal--perovskite.
The U.S. Department of Energy’s (DOE’s) National Renewable Energy Laboratory (NREL) has forged a public-private consortium dubbed the US-MAP for US Manufacturing of Advanced Perovskites Consortium, that aims to fast track the development of low-cost perovskite solar cells for the global marketplace.
Silicon Panels
According to the IEA, solar power supplied just 592GW, or a mere 2.2%, of the world’s 26,571GW in electricity consumption in 2018. That was after an impressive 20% growth in global PV installations to the tune of nearly 100GW.
More than 90% of those photovoltaic (PV) panels installed were constructed from crystallized silicon.
Silicon panels have their advantages: They’re quite robust and relatively easy to install. Thanks to advances in manufacturing methods, they’ve become quite cheap over the past decade, particularly the polycrystalline panels constructed in Chinese factories.
However, they have one major drawback: Silicon PV panels are quite inefficient, with the most affordable models managing only 7%-16% energy efficiency depending on factors like placement, orientation, and weather conditions. Si panels are wafer-based rather than thin-film, which makes them sturdier and durable, but the trade-off is a sacrifice of efficiency.
To meet the world’s rapidly growing energy appetite--and achieve the kind of de-carbonization goals that would help slow the impact of climate change--it would take hundreds of years to build and install enough silicon PV panels.
This is way too slow, given that we have a mere 10-year window to act to avert irreversible and catastrophic climate change.
More critically, the best (and most expensive) silicon panels to-date boast an efficiency rating maximum efficiency rating of 26.7%, pretty close to the theoretical maximum of 29.1%.
More
John Kenneth Galbraith
The Monthly Coppock Indicators finished April
DJIA: 24,346 +26 Down. NASDAQ: 8,890 +162 Up.
SP500: 2,912 +89 Down.
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