Yellen To Congress, Spend, Spend, Spend!

Baltic Dry Index. 1766 +26 Brent Crude 56.19

Spot Gold 1851

Coronavirus Cases 02/04/20 World 1,000,000

Deaths 53,100

Coronavirus Cases 20/01/21 World 96,628,704

Deaths 2,065,732 

A trillion here, a trillion there, pretty soon you’re talking real money.

With apologies. 

Incoming US Treasury Secretary Yellen, yesterday urged Congress to spend, spend, spend like a drunken sailor. Of course, she used more refined language, but her message was crystal clear.

From later this afternoon, once President Biden is sworn in, the USA is going to adopt a weak dollar policy, despite pious words to the contrary. 

How long before commodity prices start to react? Not long, I’ll bet, once the spending starts.

Asian shares hit a record high after Yellen calls for big spending

January 19, 2021 11:52 PM  By Hideyuki Sano

TOKYO (Reuters) - Asian shares climbed to a record high on Wednesday as U.S. Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package to help the world’s largest economy ride out a pandemic-driven slump.

At her confirmation hearing on Tuesday, she said the benefits of a big stimulus package are greater than the expenses of a higher debt burden.

U.S. President-elect Joe Biden, who will be sworn into office on Wednesday, last week laid out a $1.9 trillion stimulus package proposal to boost the economy and speed up the distribution of vaccines.

“There will be a large-scale fiscal spending. The Fed is seeking to achieve two percent inflation and full employment, which still look distant, so it will keep interest rates low for some time and market sentiment should remain robust,” said Yoshinori Shigemi, macro strategist at Fidelity International.

MSCI’s Asia-Pacific index outside Japan rose 0.95%, reaching its highest level ever.

Hong Kong’s Hang Seng rose 1.0% to approach its 2019 peak while Australian shares added 0.6% to reach an all-time high. Japan’s Nikkei, however, slipped 0.45% on profit-taking.

The U.S. Nasdaq futures gained 0.4%, with Netflix shares jumping 12.6% after the bell as the streaming pioneer reported strong growth in subscribers and projected it will no longer need to raise debt.

The results came after all three major Wall Street indexes posted solid gains on Tuesday.

U.S. President Donald Trump, in a farewell address released on Tuesday, touted his legacy and wished luck to the new administration even though he steered clear of acknowledging his successor by name.

Biden will take office on Wednesday under unprecedented security measures after the Jan. 6 assault on the Capitol.

“The transition will likely be smooth and hassle-free, so that’s another reason supporting markets overall,” said Yasutada Suzuki, head of emerging markets investment at Sumitomo Mitsui Bank.

In the currency market, the dollar was on the back foot against other currencies.

The euro stood at $1.2148, up 0.15% and off Monday’s 1 1/2-month low of $1.2054, drawing support from a ZEW investor sentiment survey that beat forecasts and the Italian government surviving a confidence vote.

The yen was little moved at 103.81 to the dollar while the Chinese yuan ticked up about 0.1% to 6.4741 per dollar.

Oil prices rose on hopes that Biden’s proposed stimulus will lift economic output.

U.S. crude futures inched up 0.3% to $53.15 a barrel while international benchmark Brent futures rose 0.3% to $56.09 per barrel.

https://www.reuters.com/article/us-global-markets/asian-shares-hit-a-record-high-after-yellen-calls-for-big-spending-idUSKBN29O2SY

Analysis: Yellen-backed policies set to aid risk assets, raise longer-term worries

January 19, 2021  8:11 PM  By Lewis Krauskopf

NEW YORK (Reuters) - Treasury Secretary nominee Janet Yellen’s unequivocal support for a pandemic rescue plan cuts both ways for investors, fueling optimism that the rally in risk assets will continue while bolstering concerns over a massive runup in government debt.

In her Senate confirmation hearing on Tuesday, the former Federal Reserve chair urged lawmakers to “act big” on the next coronavirus relief package after President-elect Joe Biden last week outlined a $1.9 trillion stimulus proposal as part of a domestic policy agenda heavy on government spending.

While the plan is expected to provide a critical boost for the coronavirus-hit economy, investors said the massive stimulus also could widen already huge deficits and drive up bond yields, while feeding a rally that some worry has already inflated bubbles in various assets. Other aspects of Biden’s plan, such as increased taxes on corporations and the wealthy, have also received a mixed reception.

“Obviously, she feels the economy needs this assistance and it’s a question of convincing the Senate,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “I believe they’ll pass it, we’ll see another big package and that’s a short-term positive but a long-term negative.”

Since Democrats won control of the Senate earlier this month, setting the stage for greater stimulus, the S&P 500 has climbed about 2%, with particular strength in banks, small caps and other stocks expected to perform well in an improving economy.

Yellen alluded to some of the market’s longer term concerns in Tuesday’s testimony, during which she urged lawmakers to boost spending now, and pay down debt later.

“The long term fiscal trajectory is a cause for concern. It is something we will look into... But it is also important for America to invest,” Yellen told the Senate. “It is important to remember that we are in a very low interest rate environment.”

Yellen also said she agreed that President Donald Trump’s 2017 corporate tax cut had improved the competitiveness of American businesses, and that Biden was not proposing to raising corporate taxes to the pre-2017 level. But she said it was also important that corporations and wealthy individuals paid their fair share.

More

https://www.reuters.com/article/us-usa-markets-yellen-analysis/analysis-yellen-backed-policies-set-to-aid-risk-assets-raise-longer-term-worries-idUSKBN29O2GN

Up next, the EUSSR eyes usurping the international role of the US dollar. No really.

EU Eyes Dollar’s Global Dominance in Bid to Bolster the Euro

By Viktoria Dendrinou

January 19, 2021, 4:00 AM GMT Updated on January 19, 2021, 8:34 AM GMT

·         Commission to back plans for more economic, financial autonomy

·         Plans include strengthening international role of the euro

The European Union will unveil its plan on Tuesday to strengthen the international role of the euro as it seeks to erode the dominance of the U.S. dollar and to insulate the bloc from financial risks, including U.S. sanctions.

The European Commission blueprint will outline how the region can fortify its economic and financial resilience by bolstering the single currency’s architecture and through growing markets like green finance, according to a draft of the plan seen by Bloomberg.

Calls to boost the bloc’s autonomy have been growing for years and gained steam after the U.S. imposed sanctions against Iran that would also punish European banks, companies and people who do business with the Islamic republic. The commission’s plan reflects increasing pressure by member states for the EU to adopt tools that will allow it to pursue its foreign-policy goals with less recourse to an unpredictable U.S. ally.

The U.S.’s ability to enforce international sanctions because of the dollar’s power “has seriously affected the EU’s and its member states’ ability to advance foreign policy objectives,” the draft document says. Policy made in Washington has, at times, “compromised legitimate trade and investment of EU businesses.”

Volatile Ally

The initiative to boost the role of the euro was first put on the EU’s agenda by former European Commission President Jean-Claude Juncker, who, faced with an erratic partner in Washington, called for steps to shield the region’s economies and currency from volatility elsewhere in the world. It was during Juncker’s term, in 2018, that President Donald Trump pulled the U.S. out of the international accord that restricted Iran’s nuclear program and reimposed sanctions.

The U.S. has also crippled one of Europe’s signature energy infrastructure projects, Nord Stream 2, by threatening businesses with sanctions. The American measures are seen as a way to boost U.S. liquefied natural gas exports to Europe while also maintaining the fuel’s transit through eastern European nations that don’t use the euro but are friendly with Washington.

According to the European Central Bank, the euro remains the second most-used currency in the world behind the dollar. But despite the latest push, there’s little the EU can do in terms of policy or legislative initiatives to meaningfully boost the use of its currency.

A main focus for the EU will be to complete flagship projects that will better unify its banking sector and capital markets. These initiatives have stalled, however, often due to entrenched disagreements between governments.

Yet the EU thinks its landmark recovery fund, designed to help countries rebound from the pandemic-induced recession, could help buttress the euro. The stimulus package will provide 750 billion euros ($905 billion) in grants and loans, raised by jointly backed debt, while a third of these funds will have to be spent toward green projects.

“Promoting sustainable finance is an opportunity to develop EU financial markets into a global ‘green finance’ hub, bolstering the euro as the default currency for the denomination of sustainable financial products,” the draft plan said.

More

https://www.bloomberg.com/news/articles/2021-01-19/eu-eyes-dollar-s-global-dominance-in-a-bid-to-bolster-the-euro?srnd=premium-europe

Finally, US inaugurations of the past.

The History of Inauguration Day, From George Washington to Joe Biden

Looking back at the highs and lows of past presidential inaugurations.

The United States has seen 58 previous presidential inaugurations, but none like this one. On January 20, Joe Biden will be sworn in as the 46th President amid a global pandemic and the aftermath of an attack on the U.S. Capitol by supporters of the defeated incumbent, Donald Trump, who will become only the fourth president not to attend his successor’s inauguration.

But while this year’s inauguration will complete arguably the most tumultuous transfer of power in American history, the drama is not entirely unprecedented. Read on to explore the history of past inaugurations and presidential transitions, including John Adams snubbing Thomas Jefferson’s inauguration, the threats against President-elect Abraham Lincoln on the eve of the Civil War, and the bitter transition from Herbert Hoover to Franklin D. Roosevelt during the Great Depression.

More

https://getpocket.com/explore/item/the-history-of-inauguration-day-from-george-washington-to-joe-biden

The euro is going to be a big source of problems, not a source of help.

Milton Friedman

Covid-19 Corner                       

This section will continue until it becomes unneeded.

Today something a little different, a video on Covid-19 treatment via Ivermectin.  Approx. 12 mins.

Dr. Andrews Hill's Ivermectin meta-analysis, from University of Liverpool, England, supported by The Access to COVID-19 Tools (ACT) Accelerator.

Ivermectin meta-analysis by Dr. Andrew Hill

https://www.youtube.com/watch?v=yOAh7GtvcOs

Taiwan cancels major festival as domestic COVID-19 cases rise

January 19, 2021 9:02 AM  By Reuters Staff

TAIPEI (Reuters) - Taiwan on Tuesday cancelled a major festival during the upcoming Lunar New Year holiday as the island reported four locally transmitted cases of COVID-19, the biggest daily rise in local infections in nearly 11 months.

Taiwan, which has kept the pandemic well under control thanks to early and effective prevention methods, has been unnerved by new domestic transmissions, first in December and now in a hospital in the northern city of Taoyuan.

It has reported 868 cases, the majority of which were imported, including seven deaths, with 102 in hospital being treated.

The Taiwan Lantern Festival, an annual celebration to mark the end of the upcoming Lunar New Year in mid-February, will be cancelled this year because of COVID-19, the Ministry of Transportation and Communications said, citing the recent local infection cases.

“This is a tough decision, but pandemic-prevention is our top priority,” Transportation Minister Lin Chia-lung told reporters.

The festival, which features oversized lanterns and fireworks displays, attracts hundreds of thousands of visitors every year and has become a major selling point for the government to attract tourists from overseas.

Lin Chih-Chien, mayor of the northern city of Hsinchu where the festival was to be held, said several technology companies there had asked the government to cancel the event, citing concerns of a local outbreak curtailing production at a technology hub that hosts firms including the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co Ltd.

More

https://www.reuters.com/article/us-health-coronavirus-taiwan/taiwan-cancels-major-festival-as-domestic-covid-19-cases-rise-idUSKBN29O0R6

Next, some vaccine links kindly sent along from a LIR reader in Canada. The links come from a most informative update from Stanford Hospital in California.

World Health Organization - Landscape of COVID-19 candidate vaccines. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines

NY Times Coronavirus Vaccine Tracker. https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html

Stanford Website. https://racetoacure.stanford.edu/clinical-trials/132

Regulatory Focus COVID-19 vaccine tracker. https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker

Some other useful Covid links.

Johns Hopkins Coronavirus resource centre

https://coronavirus.jhu.edu/map.html

Rt Covid-19

https://rt.live/

Covid19info.live 

https://wuflu.live/

Centers for Disease Control Coronavirus

https://www.cdc.gov/coronavirus/2019-ncov/index.html

The Spectator Covid-19 data tracker (UK)

https://data.spectator.co.uk/city/national

 

Technology Update.

With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported.

Electric Vehicles Get First Battery That Can Charge in 5 Minutes

By Rachel Morison

January 19, 2021, 12:40 PM GMT

·         Fast-charging batteries could help overcome range anxiety

·         It will take years to be scalable with current infrastructure

Israeli company StoreDot Ltd. has manufactured the first battery for electric vehicles that can be charged in just five minutes, a step toward making refueling as fast as cars at a gas station.

The lithium-ion samples were produced by StoreDot’s strategic partner in China, Eve Energy Co., and have been used as a demonstration in a two-wheeled scooter. StoreDot said that rapid charging batteries could overcome range and charging anxiety, a critical barrier to mainstream EV adoption.

However, batteries that charge this quickly probably won’t be achievable at scale for years with existing charging infrastructure. Degradation relating to use of fast-charging also is an under appreciated issue.

“This is a huge positive to the industry, making rapid charging on the go more convenient and reducing a huge barrier to adoption,” David Watson, chief executive officer of EV-charging company Ohme Technologies U.K. Ltd. “But these benefits will take a while to come on stream.”

StoreDot was picked by BloombergNEF as one of its top 10 companies of 2020 leading the low-carbon transition.

https://www.bloomberg.com/news/articles/2021-01-19/electric-vehicles-get-first-battery-that-can-charge-in-5-minutes?srnd=premium-europe

I think that nothing is so important for freedom as recognizing in the law each individual’s natural right to property, and giving individuals a sense that they own something that they’re responsible for, that they have control over, and that they can dispose of.

Milton Friedman.