The Wrong Sort Of Attention. Sell In May.

Baltic Dry Index. 2809 -72  Brent Crude 68.63

Spot Gold 1906

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

Deaths 53,100

Coronavirus Cases 26/05/21 World 168,529,175

Deaths 3,499,734

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.

For more on the coming land of the not so free, and attracting the wrong sort of attention, scroll down to the last article in this section on the coming digital dollar.

Perhaps it is time to sell in May and go away. The world’s leading central bank is sending out oily mixed messages. Like the famous two faced Janus Jug, the Fed seems to be trying to face two ways at the same time.

My guess is that the central banksters plan to let inflation rip through the US and global economy leaving US rates unchanged and low.

I suspect Chairman Powell will the try to force the digital dollar cryptocurrency onto the world to attempt to get a few more years life out of the Great Nixonian Error of fiat money.

I suspect that flawed plan will likely fail, under the pressure of a world trying to go carbon neutral, nearly all electric.

PRECIOUS-Gold rises above $1,900/oz as dollar weakens, inflation jitters persist

May 26, 2021 4:53 AM  By Brijesh Patel

    * Dollar wallows at multi-month lows 

    * Platinum rises more than 1%

    * U.S. Treasury yields at two-week low

    By Brijesh Patel

    May 26 (Reuters) - Gold prices rose above the key psychological level of $1,900 per ounce on Wednesday, helped by a weaker dollar and growing inflation concerns after Federal

Reserve officials maintained a dovish stance over rates.

    Spot gold        rose 0.4% to $1,906.99 per ounce by 0032 GMT, its highest level since Jan.8.     U.S. gold futures        gained 0.5% to $1,906.60 per ounce.

    "A weaker dollar is helping and growing inflation risks are outweighing everything right now. This is about hedge against inflation right now," said Stephen Innes, managing partner at SPI Asset Management.

"Even if inflation is high, they're (the Fed) going to be very, very dovish. What really matters for gold is front end real rates. The Feds will continue to keep front-end rates low, which is going to weaken the dollar and gold is going to do quite well."

    The dollar index was pinned near a 4-1/2-month low against its rivals, making gold cheaper for other currency holders.       

     Benchmark U.S. Treasury yields were hovering near a two-week low, reducing the opportunity cost of holding non-interest bearing gold.      

    Gold, often used as a hedge against inflation, has benefited from recent data showing a rise in prices in the United States and the United Kingdom.

   Richard Clarida, the Fed's vice chair, said on Tuesday the U.S. central bank can curb any possible outbreak of inflation without throwing economic recovery off track.  

          Meanwhile, U.S. Senate Republicans plan to unveil a counteroffer to President Joe Biden's $1.7 trillion infrastructure proposal on Thursday, though one of their leaders said on Tuesday the two sides remain far apart.  

          Elsewhere, palladium        rose 1% to $2,797.89 per ounce, silver        climbed 0.6% to $28.16 and platinum  jumped 1.3% to $1,207.73.    

https://www.reuters.com/article/global-precious/precious-gold-rises-above-1900-oz-as-dollar-weakens-inflation-jitters-persist-idUSL2N2ND02V

Next, mixed signals from the Fed. Perhaps the Fedsters are more worried about inflation than they let on. Perhaps it’s not temporary after all. But how can they raise interest rates without blowing up bonds and the stock casinos? Sell in May looks good in 2021.

Fed policymakers edge closer to opening debate around taper

May 25, 2021 5:29 PM  By Ann Saphir, Howard Schneider

WASHINGTON (Reuters) -Federal Reserve policymakers have begun to acknowledge they are closer to debating when to pull back some of their crisis support for the U.S. economy, even as they say it is still needed to bolster the recovery and employment.

“We are talking about talking about tapering,” San Francisco Federal Reserve Bank President Mary Daly told CNBC on Tuesday, referring to the potential reduction of the Fed’s $120 billion in monthly asset purchases. Those bond buys, together with near-zero interest rates, are aimed at easing borrowing costs and encouraging hiring and investment.

“I want to make sure that everyone knows that it’s not about doing anything now,” Daly added. She noted that while she is “bullish” about the fall, the economy is still more than 8 million jobs short of where it was before the pandemic, which is still not over. “Right now, policy is in a very good place....we need to be patient.”

Earlier Tuesday, Vice Chair Richard Clarida also opened the door to talking about the Fed doing less - at some point. “It may well be...there will come a time in upcoming meetings we will be at the point where we can begin to discuss scaling back the pace of asset purchases,” Clarida said on Yahoo Finance. “That was not the focus of the April meeting. It is going to depend on the flow of data.”

This suggestion that talking about tapering could become appropriate is a shift from just a month ago when Chair Jerome Powell said it was “not yet” time to even contemplate having that conversation.

Fed policymakers have promised to give markets plenty of notice before changing policy, to avoid a repeat of the “taper tantrum” spike in bond yields after former Fed Chair Ben Bernanke surprised markets by flagging a reduction to the Fed’s bond-buying in 2013.

Since their April meeting, two regional Federal Reserve bank presidents have publicly urged that the discussion begin soon, and others have highlighted the risks should a current round of price increases become a more embedded cycle of inflation.

More

https://www.reuters.com/article/us-usa-fed-clarida/fed-policymakers-edge-closer-to-opening-debate-around-taper-idUSKCN2D6266

White House says rising home prices are a concern

May 25, 2021 6:59 PM  By Nandita Bose, Trevor Hunnicutt

WASHINGTON (Reuters) - The Biden administration is monitoring rising U.S. home prices, which it is concerned are increasingly making housing unaffordable, a White House spokeswoman said on Tuesday.

“The increase in housing prices we’ve seen does raise concerns for us about housing affordability and access to the housing market,” White House press secretary Jen Psaki told reporters.

“We recognize there is a need for new housing supply, particularly on the affordable end of the market.”

Home prices are sharply rising across the country, as people increasingly working from home during the pandemic struggle to find more spacious accommodation.

The rising prices also come amid shortages for goods like lumber and laborers in the aftermath of a coronavirus pandemic that disrupted normal supplies. Those signs of inflation threaten the United States’ staggering economic recovery.

Psaki described these as “supply-and-demand issues” that are pushing prices higher.

Economic data from several sources on Tuesday pointed to sharply rising housing prices. The S&P CoreLogic Case-Shiller house price index, for instance, rose 13.2% in March from a year ago, the largest increase since December 2005, after rising 12.0% in February.

More

https://www.reuters.com/article/us-usa-economy-housing-whitehouse/white-house-says-rising-home-prices-are-a-concern-idUSKCN2D62E2

Up next 100 to 1 leverage, [British English gearing,] and Bitcoin trading, what could possibly go wrong?

Never mind, if they lose big enough the Fed and others will bail them out as usual, or will they?

Bitcoin traders using up to 100-to-1 leverage are driving the wild swings in cryptocurrencies

Published Tue, May 25 2021  7:19 AM EDT

Bitcoin’s aggressive moves are being driven by much more than the next China crackdown or Elon Musk headline.

Traders taking excessive risk in the unregulated cryptocurrency market being forced to sell when prices go down were in large part responsible for last week’s 30% drop in prices and outages for major exchanges, according to analysts. A burgeoning bitcoin lending market is also adding to the volatility.

The price of cryptocurrencies tanked last week, with bitcoin losing roughly a third of its value in a matter of hours. Bitcoin popped to nearly $40,000 on Monday but is still down about 33% from its high.

When traders use margin, they essentially borrow from their brokerage firm to take a bigger position in bitcoin. If prices go down, they have to pay the brokerage firm back in what’s known as a “margin call.” As part of that, there’s often a set price that triggers selling in order to make sure traders can pay the exchange back.

Brian Kelly, CEO of BKCM, pointed to firms in Asia such as BitMEX allowing 100-to-1 leverage for cryptocurrency trades. Robinhood does not allow traders to use margin for cryptocurrency, and Coinbase only allows it for professional traders.

“You get this crowd factor — everybody’s liquidation price tends to be somewhat near everyone else’s-- when you hit that, all of these automatic sell orders come in, and the price just cascades down,” Kelly, told CNBC.

Bitcoin traders liquidated roughly $12 billion in levered positions last week as the price of the cryptocurrency spiraled, according to bybt.com. This mass exodus wiped out about 800,000 crypto accounts.

More

https://www.cnbc.com/2021/05/25/bitcoin-crashes-driven-by-big-margin-bets-new-crypto-banking.html

Finally, Big Brother wants to keep total track of your spending. Well, keep track of you, actually.

You better not have undeclared income, hidden wealth, overseas properties, etc., or you better have a very good attorney or some very good high connections, preferably both.

Not to worry though, the Fedster’s only want you to have “access to well-regulated digital money.” So that’s alright then but remember to keep voting the right way. You wouldn’t want to lose access to digital dollars, now would you?

Coming soon, the land of the not so free, and try not to be too brave as it attracts the wrong sort of attention.  It’s all for your own good, no really it is.

As always, central banksters have the little people’s best interest at heart, though the results sometimes [often] don’t quite work out that way.

Fed’s Lael Brainard pushes digital dollar as central bank currency race heats up

Published Mon, May 24 20219:41 AM EDT Updated Mon, May 24 20218:24 PM EDT

Federal Reserve Governor Lael Brainard pressed the case for a digital dollar, saying Monday that a cryptocurrency backed by the central bank could provide a variety of benefits.

Providing financial services to the nearly 1 in 5 Americans considered “underbanked” is one of the advantages Brainard cited in a speech to a conference presented by Coindesk.

She also cited the safety of a Fed-backed system, as well as improvements in efficiency and cross-border payments, or transactions between people in different countries.

While stressing the importance of moving forward carefully, Brainard said the Covid-19 pandemic strengthened the need for a system in which a broad swath of the public has access to well-regulated digital money.

“The Federal Reserve remains committed to ensuring that the public has access to safe, reliable, and secure means of payment, including cash,” she said. “As part of this commitment, we must explore — and try to anticipate — the extent to which households’ and businesses’ needs and preferences may migrate further to digital payments over time.”

Those comments come days after Fed Chairman Jerome Powell announced that the central bank this summer would be releasing a working paper that addresses multiple issues involving Central Bank Digital Currencies.

The Boston Fed and MIT have launched a joint project in which they will set up a hypothetical model, and several other Fed districts also are involved with research of their own.

Essentially, the development of the CBDC would give consumers broader access to electronic currency, the likes of which have been popularized with the use of bitcoin and its myriad peers. China’s central bank has been moving forward with its own project as have various others around the world.

Brainard said the pandemic presented an example of how important developing a Fed-backed currency could be.

More

https://www.cnbc.com/2021/05/24/feds-lael-brainard-pushes-digital-dollar-as-central-bank-currency-race-heats-up.html

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

John Kenneth Galbraith.

Global Inflation Watch.          

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

Strategist says copper’s ‘raging bull’ run is just beginning, and picks four stocks to cash in

Published Tue, May 25 2021  10:42 PM EDT

The copper bull run could be just beginning, according to investment research firm CFRA, as Chinese demand, the push toward decarbonization and South American supply risks converge.

Copper has been trading near all-time highs in recent weeks and, after slipping on a warning from China over speculation earlier this week, prices picked up again on Tuesday.

In a note to investors Friday, CFRA argued it remains bullish on the red metal, echoing the likes of Bank of America and Goldman Sachs, which recently characterized copper as “the new oil” and projected a multi-year bull market fueled by a surge in green capital expenditure and a dearth of mining projects.

CFRA suggested the copper bull run might be in the “early to middle innings,” with significantly more upside potential.

More

https://www.cnbc.com/2021/05/26/copper-stocks-to-buy-bull-run-just-beginning-cfra-says.html

U.S. home prices rose more than expected in March - S&P Case-Shiller

May 25, 2021 2:10 PM

(Reuters) - U.S. single-family home prices in 20 key urban markets rose in March from a year earlier by the most in more than seven years, a closely watched survey said on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 13.3% through the 12 months ended in March on a seasonally adjusted basis, the largest annual price increase since December 2013. A Reuters poll of economists had forecast a 12.3% increase.

On month-to-month basis, the 20-city composite index rose 1.6% from February. Economists polled by Reuters had been expecting a 1.2% increase.

U.S. existing home sales fell for a third straight month in April as an acute shortage of properties drove prices to a record high, data from the National Association of Realtors showed on Friday.

https://www.reuters.com/article/us-usa-economy-homes/u-s-home-prices-rose-more-than-expected-in-march-sp-case-shiller-idUSKCN2D61KC

Summer boom beckons for German economy after winter COVID blues

May 25, 2021 9:58 AM  By Michael Nienaber, Rene Wagner

BERLIN (Reuters) - German business morale brightened to hit a two-year high in May as COVID-19 curbs were eased and infections fell, heralding a swift summer recovery after the economy shrank more than expected in the first quarter.

With many firms reporting a build-up of supply bottlenecks, Tuesday’s Ifo business climate index readout showed a jump to 99.2, up from April’s revised 96.6 and beating the 98.2 forecast in a Reuters poll of analysts.

“The German economy is picking up speed,” Ifo President Clemens Fuest said.

The survey among some 9,000 firms in manufacturing, the service sector, trade and construction showed that businesses were more satisfied with their current situation and optimistic regarding the coming six months.

It pointed to a quarterly growth rate of 2.6% from April to June and 2.8% from July to September, Ifo economist Klaus Wohlrabe told Reuters.

In the first quarter, GDP contracted by 1.8% quarter on quarter and by 3.1% on the year, significantly weaker readings than the euro zone average, Federal Statistics Office data showed earlier on Tuesday.

Coronavirus curbs in force during those months also spurred consumers to put more money than ever into savings, with the savings rate ballooning to an unprecedented 23.2%.

German households’ disposable income increased slightly as the government ploughed billions of euros into job protection schemes and extra child benefits, but household spending fell by 5.4% on the quarter as curbs linked to containing the pandemic crimped consumption.

---- Company investments in machinery and equipment fell slightly in the first quarter, though construction activity rose, the GDP data showed.

Wohlrabe said rising costs due to supply bottlenecks in manufacturing and construction were now increasingly being passed on.

In construction, two out of five firms reported difficulties procuring raw materials, and “more and more companies indicate that they want to increase their sales prices,” he said.

More

https://www.reuters.com/article/us-germany-economy-ifo/summer-boom-beckons-for-german-economy-after-winter-covid-blues-idUSKCN2D60VV

Andrew Bailey says there are some 'hot spots for prices' but plays down inflation fears

Monday 24 May 2021 6:32 pm

Bank of England governor Andrew Bailey has warned there are some “very hot spots in terms of prices”, but that he is confident inflation won’t run well above the UK’s two per cent target in the long-term.

Annual CPI increased from 0.7 per cent to 1.5 per cent in April, creating fears among some that inflation could be a future problem as the UK economy recovers.

Bailey told a parliamentary committee that the Bank has to “watch this very carefully”, but that there was already an expectation CPI would rise like this as restrictions are shedded.

Bank of England chief economist Andy Haldane said battling inflation was the largest challenge facing the UK economy and that he believed it could be more persistent long-term.

Economists at the central bank have said they expect inflation will eventually hit, and slightly exceed, its two per cent inflation target as the economy recovers.

Its recent report said this may mean a “modest” increase of interest rates, by around 0.5 per cent, in around two years’ time.

However, some pundits have said UK inflation could run rampant thanks to the hundreds of billions of pounds of Covid stimulus from the UK government.

Bailey downplayed the prospects of inflation causing a serious problem in the medium to long-term.

More

https://www.cityam.com/boes-bailey-says-there-are-hot-spots-but-plays-down-uk-inflation-fears/

UPDATE 1-Mexico swings to trade surplus in April, powered by record exports

May 25, 20211  2:42 PM  By Reuters Staff

MEXICO CITY, May 25 (Reuters) - Mexico swung to a bigger-than-expected trade surplus in April powered by record exports, as U.S. demand helped to fuel a recovery in Latin America’s second largest economy, official data showed on Tuesday.

National statistics agency INEGI said that adjusted for seasonal swings, Mexico posted a $249 million trade surplus last month after logging a deficit of nearly $3.4 billion in March.

In unadjusted terms, Mexico’s trade surplus was just over $1.5 billion in April. That compared with a Reuters poll forecast for an unadjusted surplus of $850 million.

A breakdown of the INEGI figures showed that Mexico sold $40.3 billion worth of exports in April in adjusted terms, 0.2% higher than the previous month, which was also a record.

April’s exports were up by more than 74% from the same month in 2020, when the coronavirus pandemic hammered the economy and brought much of Mexican manufacturing output to a halt.

More

https://www.reuters.com/article/mexico-economy-trade/update-1-mexico-swings-to-trade-surplus-in-april-powered-by-record-exports-idUSL2N2NC0UL

Inflation destroys savings, impedes planning, and discourages investment. That means less productivity and a lower standard of living.

Kevin Brady

Covid-19 Corner                       

This section will continue until it becomes unneeded.

Malaysia now has more Covid cases per million people than India

Published Wed, May 26 2021  12:36 AM EDT

SINGAPORE — Malaysia’s daily Covid-19 cases are climbing rapidly and have surpassed India’s on one critical measure, according to statistics site Our World in Data.

India has been experiencing a devastating second wave since April and has the world’s second largest Covid caseload. The country’s daily case count, while trending downward, has remained elevated at hundreds of thousands of infections — far exceeding Malaysia’s few thousands a day.

But Malaysia’s daily Covid infections per million people — on a seven-day rolling basis — have exceeded that of India since Sunday, data compiled by Our World in Data showed. Latest statistics showed that Malaysia reported on Monday 194.4 cases per million people on a seven-day rolling basis, compared with India’s 178.04 cases.

---- Generally, the actual number of Covid-19 cases are higher than reported cases around the world, mainly due to the lack of testing. In India, several studies found that cases were likely severely underreported.

Still, that’s not the first time that Malaysia has overtaken India on the measure. Our World in Data showed that Malaysia’s daily cases per million people were also higher than that of India between Nov. 15 last year and March 27 this year.

More

https://www.cnbc.com/2021/05/26/covid-malaysia-now-has-more-cases-per-million-people-than-india.html

Moderna says its Covid vaccine is 100% effective in teens, plans to seek FDA OK in early June

Published Tue, May 25 2021 8:00 AM EDT

Moderna said Tuesday its Covid-19 vaccine was 100% effective in a study of adolescents ages 12 to 17, making it the second shot behind Pfizer’s to demonstrate high efficacy in younger age groups.

The company said it plans to ask the Food and Drug Administration to expand the emergency use of its Covid-19 vaccine for teens early next month. If approved, it would likely dramatically expand the number of shots available to middle and high school students ahead of next school year. Pfizer and German partner BioNTech were cleared to use their vaccine for 12- to 15-year olds earlier this month.

“We are encouraged that mRNA-1273 was highly effective at preventing COVID-19 in adolescents,” Moderna CEO Stephane Bancel said in a press release. “We remain committed to doing our part to help end the COVID-19 pandemic.”

The two-dose vaccine, which is given four weeks apart, is already authorized for adults.

The phase 2/3 study the company is citing Tuesday included more than 3,700 adolescents. No cases of Covid-19 were observed in participants who received two doses of the vaccine, while four cases were observed in the placebo group, according to the company.

No significant safety concerns have been identified to date, with side effects generally consistent with those seen in an earlier trial of adults, the company said. The most common side effects after the second dose were headache, fatigue, muscle pain and chills, Moderna said.

More

https://www.cnbc.com/2021/05/25/covid-vaccine-moderna-says-shot-is-100percent-effective-in-teens-plans-to-seek-fda-ok-in-june.html

 

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 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.

Morphing computer chip repels hundreds of professional DARPA hackers

By Michael Irving  May 24, 2021

Engineers have designed a computer processor that thwarts hackers by randomly changing its microarchitecture every few milliseconds. Known as Morpheus, the puzzling processor has now aced its first major tests, repelling hundreds of professional hackers in a DARPA security challenge.

In 2017, DARPA backed the University of Michigan’s Morpheus project with US$3.6 million in funding, and now the novel processor has been put to the test. Over four months in 2020, DARPA ran a bug bounty program called Finding Exploits to Thwart Tampering (FETT), pitting 525 professional security researchers against Morpheus and a range of other processors.

The goal of the program was to test new hardware-based security systems, which could protect data no matter how vulnerable the underlying software was. Morpheus was mocked up to resemble a medical database, complete with software vulnerabilities – and yet, not a single attack made it through its defenses.

There’s basically no such thing as bug-free software, and in many cases these bugs can be exploited by hackers. Software developers will usually patch them up when they find them, but that often doesn’t happen until after an attack, and hackers will just move onto the next vulnerability. The cycle continues in a never-ending arms race between hackers and developers.

More recently, computer scientists are realizing that hardware can play an important role in security. To design a piece of malware, hackers need to understand the microarchitecture of a processor, so they can figure out where to inject their malicious code. Locking down the system at the hardware level could potentially end the arms race once and for all.

That was the design philosophy behind Morpheus. Essentially, the processor starts by encrypting key information, such as the location, format and content of data. But that’s not enough on its own – a dedicated hacker could still crack that code within a few hours.

And that’s where Morpheus gets clever – the system shuffles that encryption randomly every few hundred milliseconds. That way, even if a hacker somehow manages to get a picture of the entire processor, it’ll completely change before they have a chance to act on it.

“Imagine trying to solve a Rubik’s Cube that rearranges itself every time you blink,” says Todd Austin, lead researcher on the Morpheus project. “That’s what hackers are up against with Morpheus. It makes the computer an unsolvable puzzle.”

Importantly, this difficulty doesn’t apply to programmers or users, because the card shuffling happens at a level that legitimate users of the system don’t directly interact with. The main side effect is that apparently Morpheus runs about 10 percent slower than an otherwise equivalent system would, but that’s a pretty good trade-off for a virtually unhackable processor. Plus, the team says that further refinement could speed the system up.

With its tough shell now proven, the Morpheus team says that the next steps for the project are to adapt the technology to use it to try to protect data in the cloud.

Sources: University of Michigan via The Conversation, IEEE Spectrum

https://newatlas.com/computers/morpheus-processor-secure-darpa-hackers/

I think the inflation prospects for the U.S. over the next five or six, seven years, are quite serious. You cannot have a bumper crop in apples without the value or the price of each apple falling. The Fed has had the largest increase in the monetary base in the history of the U.S., from colonial times to the present, times ten.

Arthur Laffer.