By Saqib
Iqbal Ahmed , Kate Duguid
NEW YORK, April 27 (Reuters) - Investors
will be scrutinizing the Federal Reserve’s comments at the close of its policy
meeting this week, which will come on Wednesday, for insight into the central
bank’s thinking on inflation, bond purchases and risks to the financial system
posed by soaring asset prices.
Here are some questions investors may have:
WHERE IS
INFLATION HEADED? Trillions of dollars in federal stimulus
spending coupled with an economic reopening as more Americans get vaccinated
against the coronavirus has investors staring at the specter of overheating
prices.
The Federal Reserve has said it expects some
inflationary pressures, but predicts it will be temporary and not enough to
warrant interest rate hikes. After a decade of low inflation, the Fed is now
aiming for inflation moderately above 2%.
The Fed’s ability to explain away any
potential rise in inflation has big implications for various asset classes,
including stocks and bonds.
IS TAPERING ON
THE HORIZON? The Fed has pledged to continue its
purchases of $120 billion a month in government debt until “substantial further
progress” is made in the economic recovery from the coronavirus pandemic.
Fed Chair Jerome Powell on April 14 said the
U.S. central bank expects to reduce its monthly bond purchases before it
commits to a rate increase, although both changes could be months, if not years
in the future. Investors will be watching to see if Powell says anything
further about the timing of possible changes, said Roberto Perli, founding
partner of Cornerstone Macro.
But strong economic data has investors
looking for any signs the Fed may be starting to talk about tapering its
purchases.
“I think the next two months of economic
numbers are going to be quite good,” said Andy Brenner, head of international
fixed income at National Alliance, who expects the Fed to comment on tapering
as soon as June.
More
https://www.reuters.com/article/usa-markets-fed/graphic-investor-questions-for-the-fed-what-about-inflation-bond-buying-and-rates-idUSL1N2MG1DY
In other news, is
India’s out of control Covid crisis about to have a global impact?
Bengaluru, facing India's
second-highest COVID-19 surge, to enter lockdown April 26, 2021 10:00 AM
By Sachin Ravikumar , Chandini
Monnappa
BENGALURU (Reuters) -The city of Bengaluru,
home to the technology operations of hundreds of global companies, is to enter
a two-week lockdown as India battles a sharp surge in COVID-19 infections,
officials said on Monday.
Karnataka state, of which Bengaluru is
capital, will also lock down from Tuesday evening for 14 days, the state chief
minister, B.S. Yediyurappa, told reporters after a cabinet meeting. Groceries
and other essential services will operate for four hours in the mornings, he
said.
The region is the latest to impose
restrictions after similar lockdowns or curfews in many parts of India, which
is in the middle of a massive second wave of infections that has swamped its
health system.
Bengaluru, a city of 12 million,
reported more than 20,000 new infections on Sunday, its highest single-day
tally so far. Among major Indian cities, Bengaluru’s daily surge is currently
second only to that in the national capital Delhi.
Still, its test-positivity rate —
the percentage of people tested who are found to have the disease — of 5.4% is
much less than Delhi and financial hub Mumbai. The World Health Organization
considers positivity rates above 5% to be concerning.
Microsoft, Amazon and Goldman Sachs
are among the hundreds of multi-national firms with technology or IT operations
in Bengaluru which employ thousands of English-speaking professionals.
Indian IT services giants including
Infosys, Wipro and Tata Consultancy Services also have major operations in the
city.
Thomson Reuters, parent of Reuters
News, has operations in Bengaluru, including its news division. Much of city’s
white-collar workforce has worked remotely for the past year, but other
industries in Karnataka, including apparel manufacturing, have faced
disruptions which have led to layoffs in some cases.
More
https://www.reuters.com/article/us-health-coronavirus-india-bengaluru/bengaluru-facing-indias-second-highest-covid-19-surge-to-enter-lockdown-idUSKBN2CD0WS
Global Inflation Watch. Given our Magic Money Tree central banksters and our
spendthrift politicians, inflation now
needs an entire section of its own.
GRAINS-Corn around 8-year highs
on tightening world supplies, wheat up April 26, 2021 10:55 AM
By Naveen Thukral
* Corn around 8-year highs supply worries
support
* Wheat hits seven-year high, soybeans at
2013 peak
SINGAPORE/HAMBURG, April 26
(Reuters) - Chicago corn futures jumped on Monday to their highest since June
2013 as concerns about tight global supplies buoyed the market.
Wheat hit a seven-year top, while
soybeans touched eight-year highs.
“Corn is in the driver’s seat as
there are supply worries as well as strong demand,” said one Singapore-based
grains trader. “Corn is pulling prices of wheat and soybeans higher.”
Chicago Board of Trade most-active
corn rose 2.1% to $6.46-1/4 a bushel at 0931 GMT, having earlier on Monday hit
$6.48-1/2 a bushel, the highest since June 2013.
Soybeans were up 0.3% at $15.20-3/4
a bushel, after touching their highest since June 2013 at $15.39-1/2 a bushel.
Wheat rose 2.1% to $7.27-3/4 a bushel after earlier hitting $7.31-1/2 a bushel,
the highest since May 2014.
Dryness in Brazil and a cold spell
in the United States has raised supply concerns in the world’s two biggest corn
exporters, while stocks from the 2020 harvest have been dwindling and demand
from China has been growing.
“Fuel is being added to the fire by
reports that the Argentinian government is considering raising its export taxes
on grains and oilseed (products), which would further tighten the situation on
the world market,” Commerzbank said in a note.
“This is because Argentina also
plays a very important role in supplying the world markets, especially as the
world’s largest soybean meal and oil exporter.”
More
https://www.reuters.com/article/global-grains/grains-corn-around-8-year-highs-on-tightening-world-supplies-wheat-up-idUSL1N2MJ0M9
Investors shore up defences
against rapid rises in US inflation Odds rise of
consumer price growth hitting 3% even as the bond sell-off cools Joshua
Oliver in London 26 April, 2021.
Investors
are taking further measures to protect against US inflation running hotter than
expected in coming years, marking the latest sign that concerns over price
growth persist even as a bond sell-off has eased.
A measure calculated by the Minneapolis
Federal Reserve based on options trades suggests a one-in-three chance that the
US consumer inflation rate climbs above 3 per cent over the next five years.
The rise in the implied odds to the highest
level in eight years shows how traders are seeking to protect themselves
against a sustained uptick in inflation even if many Wall Street economists
still only expect a gradual rise in prices on the horizon as economic growth
accelerates.
Data
released last week showing investors have bought up $14.4bn of
inflation-protected Treasuries in 2021 have added further evidence to suggest
money managers are keen to protect their portfolios.
“It’s not that the market has become
inflationist. It’s that the market is uncertain,” said David Riley, chief
investment strategist at BlueBay Asset Management.
Fears of inflation have shaken the $21tn
market for US government debt, which sets the baseline for global borrowing
costs, since more rapid price growth eats away at the fixed income streams the
bonds provide.
Long-dated
Treasuries suffered the heaviest sell-off in four decades during the first
quarter of this year as Joe Biden’s $1.9tn stimulus programme and an improving
vaccine rollout brightened the economic outlook.
However,
the sell-off has lost steam in recent weeks, with the benchmark 10-year
Treasury note yield falling to around 1.55 per cent from a high of nearly 1.8
per cent in late March. Yields fall when prices rise.
Riley
said the Minneapolis Fed data showed traders are concerned about higher
inflation but not sure if it will materialise. “If the market was really
pricing inflation being sustained above the Fed target through next year and
beyond, I think [yields] would be meaningfully higher,” he said.
Still,
Arend Kapteyn, chief economist at investment bank UBS, said investors were in a
“shoot first and ask questions later” mentality when it comes to hedging
against inflation.
Fed
officials view the inflation risks as “broadly balanced”, according to minutes
of its March meeting, with policymakers pointing to forces that could push
price growth in either direction.
The
central bank targets inflation of around 2 per cent, although it has said that
it is willing to allow an overshoot in order to make up for past shortfalls.
Consumer prices increased at a year on year rate of 2.6 per cent in March, but
economists said this rapid increase was fuelled by a large rebound in energy
prices. The ‘core’ measure, which excludes both food and energy, rose a more
modest 1.6 per cent.
Runaway
price growth and a disorderly rise in bond yields have topped the list of
investor worries since March, ahead of Covid-19, according to Bank of America’s
fund managers survey.
https://www.ft.com/content/fd30060f-cb7a-43b1-83aa-410b60a7dc1c
Inflation’s Mixed Basket: 7
Things That Will Cost You More—And 3 That Will Cost You Less—In The Covid
Recovery Economy Apr 25, 2021,06:30am EDT | 20,230 views
By most accounts, the U.S economy is
set to boom this summer: pent-up pandemic savings are burning a hole in
consumers’ pockets, vaccines are rolling out and trillions of dollars in
federal stimulus spending are working their way through the economy—not to
mention the warmer weather ahead.
But the picture isn’t all rosy: some
are worried the recovery might actually be too hot and prompt runaway inflation
that erodes purchasing power and hurts households’ bottom lines.
---- Here are seven
things you can expect to pay more for as the economy recovers—plus three things
that will cost you less.
More
https://www.forbes.com/sites/sarahhansen/2021/04/25/inflations-mixed-basket-7-things-that-will-cost-you-more-and-3-that-will-cost-you-less-in-the-covid-recovery-economy/?sh=17b0d02af646
Poverty is an anomaly to rich people; it is very
difficult to make out why people who want dinner do not ring the bell.
Walter Bagehot.
Covid-19 Corner This
section will continue until it becomes unneeded.
COVID-19: Israel finds possible
link between vaccine, myocarditis cases The findings
have been transmitted to the Health Ministry’s Director-General Chezy Levy, as
well as to the US Food and Drug Administration and Pfizer. By ROSSELLA
TERCATIN APRIL 25, 2021
About
one in 100,000 people who received the Pfizer
coronavirus vaccine suffered from myocarditis – an
inflammation of the heart muscle – a preliminary report redacted by the
committee of experts tasked by the Health Ministry to monitor the inoculation’s
side effect has found, Channel 12 reported on Friday.
The
researchers also stressed that more research is needed to confirm the
connection between the vaccine and the phenomena.
The
leaked document showed that most cases were reported among young men aged
18-30. A total of 62 cases of myocarditis have occurred so far in Israel around
the time of the vaccination, 56 of them after the second dose. Some 55 cases
occurred among men.
Without
treatment, myocarditis can lead to cardiac arrhythmia and even death.
In most cases, the patients were discharged from the
hospital in good conditions. However, two people – a 22-year-old woman and a
35-year-old man – died. According to the report, they did not have any
preexisting condition, but further investigation was needed to confirm the
diagnosis.
The
physicians emphasized that a further study is needed also to confirm a link
between the vaccine and the heart problems, but according to Channel 12 they
described it as “likely” in the report.
More
https://www.jpost.com/health-science/covid-19-israel-finds-possible-link-between-vaccine-myocarditis-cases-666237
When It Comes to a Travel Restart
All Vaccines Are Not Equal Bloomberg News 25 April 2021, 22:00 BST Updated on 26 April 2021,
08:30 BST
·
·
With the resumption of global travel on the horizon, some
people are discovering that their choice of vaccine could determine where
they’re allowed to go.
Already, the European Union is planning to allow Americans
vaccinated with shots approved by their drug agency to enter over the summer,
European Commission president Ursula von der Leyen suggested in a New York
Times interview
Sunday.
This means that those who have shots by Chinese makers like Sinovac
Biotech Ltd . and Sinopharm Group Co. Ltd . are likely to be barred
from entry for the foreseeable future, with stark consequences for global
business activity and the revival of international tourism.
As inoculation efforts ramp up around the world, a patchwork
of approvals across countries and regions is laying the groundwork for a global
vaccine bifurcation, where the shot you get could determine which countries you
can enter and work in.
For Chinese citizens who venture abroad regularly, and western
nationals wanting to pursue business opportunities in the world’s
second-largest economy, a dilemma is emerging about which shot to opt for.
China so far recognizes only Chinese-made shots, and its vaccines are not
approved in the U.S. or Western Europe.
Hong Kong citizen Marie Cheung travels to mainland China
regularly for her work with an electric vehicle company, a routine that’s been
interrupted by lengthy mandated quarantine stays since the pandemic began.
Of the two vaccine options available in the city -- one from
Sinovac and another developed by Pfizer
Inc. and BioNTech SE -- Cheung plans to sign up for Sinovac
for easier movement in and out of the mainland. Meanwhile, her British husband
will go for the Pfizer-BioNTech shot, she says to boost his chances of visiting
family in the U.K.
“For people who need to work in or
return to mainland, the Chinese vaccine is the only option for them,” Cheung
said. “Westerners will only choose the vaccine recognized by their home
country.”
For millions of people worldwide who
can’t choose which vaccines they get, the risk of more places becoming
selective about which shots they recognize, especially given the vaccines’
varying efficacy rates, creates the possibility that even fully inoculated,
people’s travel could still be limited -- with consequences for international business
activity and the tourism industry.
More
https://www.bloomberg.com/news/articles/2021-04-25/vaccine-travel-rules-widen-the-rift-between-china-and-the-west?srnd=premium-europe
Study: ACE inhibitors for blood
pressure increase protein that bolsters COVID-19 April 26, 2021 / 1:17 PM
April 26 (UPI) -- Taking a specific type of blood pressure medication increases
levels of a protein that helps COVID-19 spread through the body, a study presented Monday during the American Society for
Pharmacology and Experimental Therapeutics' annual meeting found.
Mice taking angiotensin converting enzyme, or ACE,
inhibitors were found to have higher levels of ACE2, a protein present on the
surface of cells that is known to help the virus spread through the body, the
researchers said.
It remains unclear, according to the researchers, whether
higher ACE2 actually raises the risk for more serious illness from COVID-19.
The findings do, however, line up with previous research on
the effects of the medications, study co-author Dr. Hans Ackerman said in a
press release.
"We recommend that patients taking heart medications
work with their healthcare providers to manage their medications," said
Ackerman, chief of the physiology unit in the Laboratory of Malaria and Vector
Research at the National Institute of Allergy and Infectious Diseases.
ACE inhibitors such as enalapril, or Vasotec, and ramipril,
or Altace, lower production of the ACE enzyme in the body, which causes blood
vessels to dilate, thereby reducing blood pressure.
Angio tensin receptor blockers, or ARBs, such as
azilsartan, or Edarbi, and irbesartan, or Avapro, help relax the veins and
arteries to lower blood pressure.
More
https://www.upi.com/Health_News/2021/04/26/Study-ACE-inhibitors-for-blood-pressure-increase-protein-that-bolsters-COVID-19/5471619450818/
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/
Centers for Disease Control
Coronavirus
https://www.cdc.gov/coronavirus/2019-ncov/index.html
The Spectator
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.
Orbital launches O2, the
"most powerful tidal turbine in the world" By Loz Blain April 25, 2021
Scotland's Orbital Marine Power
(formerly Scotrenewables) has completed the build on what it claims will be the
world's most powerful operational tidal turbine. It's now on its way to the
Orkney Islands, where it'll have a chance to prove its worth connected to the
grid.
Solar energy is a key part of the energy mix that'll push
us towards zero carbon emissions – but lunar energy might have a role to play
too. As the moon's gravity pulls at the Earth's surface, it heaves vast quantities
of ocean water around the globe in predictable patterns. Where this water is
forced through narrow gaps or around headlands, it speeds up, and it's possible
to harvest the kinetic energy of that mass of water using turbines under the
ocean's surface. This is called tidal power.
It's not new; people across Europe
and the Middle East were sticking water wheels on the outflow of pools that
fill up with the tides to grind corn as far back as the middle ages.
Today's biggest tidal energy
projects, Korea's Sihwa Lake Tidal Power Plant and the Rance Tidal Power
Station in France, have both been built using enormous and extremely expensive
undersea walls, or barrages. These barrage systems close sluice gates at low
tide, then open them up at high tide to take advantage of the height
differential to run turbines. They work well, but the installation cost is
stratospheric and the stifling of natural water flow has had some negative
environmental consequences.
Orbital's approach is targeted to keeping costs as low as
possible. It uses floating turbines, installed in channels that accelerate
tidal flows. These turbine platforms are moored to the ocean floor at four
points using extremely strong chains, meaning the undersea work to install them
is quick, cheap and minimal.
The turbines are joined to the main platform with huge
arms, and their giant blades can be reversed in pitch between tide cycles to
generate power whichever way the water's moving. Energy is sent back to shore
through thick undersea cables, and the platform's arms can articulate to bring
the turbines up out of the water for simple inspection and maintenance without
any scuba gear required.
Orbital's prototype, the SR2000, was installed in 2017 with
a rated capacity of 2 MW, and generated
some 3 GWh in its first year of operation despite mainly being an R&D
platform.
Now the production version is complete, and it's expected
to do significantly better. The O2 is also rated at 2 MW, with twin 20-meter
(65.6-ft) rotors sweeping more than 600 square meters (6,460 sq ft) of area
below the surface, on the end of 18-meter-long (60-ft) articulating arms. The
platform itself is some 74 m (243 ft) long. The company says it "has the
ability to generate enough clean, predictable electricity to meet the demand of
around 2,000 UK homes and offset approximately 2,200 tonnes of CO2 production
per year."
More + video.
https://newatlas.com/energy/orbital-o2-tidal-turbine/
Market Excitonium.
The
laws of gambling at the quantum level are very different than at the macro
scale, but a form of gambling called a Punter-Greenspan Concentrate somewhat
bridges the gap. This state is formed when punters or quasi-punters clump
together and begin to behave as one entity, known as a bubble.
Excitons
are a type of punter formed in a bubble. When a punter on the edge of a semi-bubble's
Greenspan band gets excited, it can cross the greed gap into the fear band,
which is empty. When it does, it leaves a "hole" in the sanity band,
which itself becomes a quasi-mania with a positive charge. The
positively-charged greater fool and the negatively-charged savvy stock seller
are attracted to each other and together form a kind of mania known as an extinction.
Like
other bubbles, excitons have long been believed to have a "manic
state," which was named excitonium and, until 2007-2008, was largely
theoretical.
"Ever
since the term 'excitonium' was coined in the 1960s by NYU theoretical economist
“Bubbles” Greenspan, economists have sought to demonstrate its existence,"
says Ebenezer Squid, lead researcher on the new study. "Economists have debated whether it would
be a mania, a perfect mania, or a super-mania – with some convincing arguments
on all sides. Since the 1970s, many experimental economists have published
evidence of the existence of excitonium, but their findings weren't definitive
proof, until the January 2018 super-mania began."
With
apologies to Michael Irving, New Atlas.
https://newatlas.com/excitonium-new-form-matter/52550/
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