Baltic Dry Index. 3267 +91 Brent Crude 72.51
Spot Gold 1786
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 18/06/21 World 178,201,262
Deaths 3,857,872
Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.
Milton Friedman.
In another sign that the Fed led central banksters may be wrong about the current bout of rising inflation being transitory, commodities volatility has returned. With probably more to come as many of the free money for not working programs start coming to their end.
But as we covered in “Fun & Games in Unicorn Trading” back on May 20,
https://londonirvinereport.blogspot.com/2021/05/fun-games-in-unicorn-trading.html
While bitcoins like unicorns, only exist in some people’s imagination, any losses wracked up by feckless gambling in imaginary assets, are all too real. In “hard” fiat money terms, any losses or profits have to be paid off, or banked.
If this action was taking place in the very much larger stock casinos, I would say it was sign of an approaching end to the stock mania. Bubble over or just about to be.
If this action was taking place in the wild west commodity markets, I would say that it was just the normal action of an inflation fear driven, commodity bull market. Commodities in such markets often traded limit up, limit up, limit up, limit down. Or even limit down, limit up in a day.
Either way, we are about to find out the hard way if the Fed and the other central banks are right predicting inflation over by year end.
But what if they’re wrong and the commodity bulls are right, which I think they are?
Is the Fed’s plan B, if they have one, a Volker style blitz on interest rates, blowing up the everything bubble, taking out nearly everyone with them?
I doubt that Chairman Powell is a Volker in sheep’s clothing. I think we’ll see US inflation in the teens before this spineless led Fed gets forced into action.
Asia-Pacific stocks mixed; mining stocks lower after commodity prices tumble
SINGAPORE — Shares in Asia-Pacific were mixed in Friday morning trade as investors monitored moves in the commodities space.
In Japan, the Nikkei 225 gained 0.17% while the Topix index slipped 0.56%.
South Korea’s Kospi traded 0.16% higher.
Mainland Chinese stocks slipped, with the Shanghai composite 0.49% lower while the Shenzhen component sat below the flatline. Hong Kong’s Hang Seng index traded 0.59% higher.
The S&P/ASX 200 in Australia advanced 0.34%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded little changed.
Commodities watch
Investors watched for market moves in the commodities sector after a recent tumble in prices.
Shares of major Australian miners were lower: Rio Tinto declined 0.23% and BHP dropped 1.45% while Fortescue Metals Group shed 0.27%.
Oil prices were lower in the morning of Asia trading hours, adding to losses seen Thursday. International benchmark Brent crude futures slipped 0.9% to $72.42 per barrel. U.S. crude futures declined 0.83% to $70.45 per barrel.
Meanwhile, spot gold rose 0.71% to $1,785.87 per ounce, after seeing sharp declines earlier this week from above $1,840 an ounce.
Bank of Japan holds steady on policy
The Bank of Japan on Friday announced its decision to hold steady on monetary policy as well as an extension of the duration of its pandemic relief program.
“For the time being, the Bank will closely monitor the impact of COVID-19 and will not hesitate to take additional easing measures if necessary, and also it expects short- and long-term policy interest rates to remain at their present or lower levels,” the Japanese central bank said in its monetary policy statement.
Following that announcement, the Japanese yen traded at 110.18 per dollar, stronger than levels above 110.5 against the greenback seen yesterday.
More
https://www.cnbc.com/2021/06/18/asia-markets-bank-of-japan-currencies-oil.html
Port delays may be a risk to China’s growth outlook, global strategy analyst says
Published Thu, Jun 17 2021 1:29 AM EDT Updated Thu, Jun 17 2021 1:45 AM EDT
Supply chain disruptions may be a threat China’s growth outlook, according to a senior global strategy analyst at an investment management firm.
Julia Hermann of Cartica Management said, however, that even if growth slows in the second half of the year, it “doesn’t concern me in terms of the country’s trajectory” for this year.
She added that China is still the “country to beat” in terms of economic growth this year. China was the only major economy to register growth last year.
China’s gross domestic product grew 18.3% in the first quarter of 2021 compared to the same period a year ago. That’s in part due to the low base in the first quarter last year, as Covid-19 took hold and business activity slowed due to lockdowns.
Hermann pointed to forecasts predicting that the Chinese economy would expand around 8% in 2021, but acknowledged that risks remain.
“I do think that a threat to that growth outlook could be on the trade side,” she told CNBC’s “Street Signs Asia” on Wednesday. “We’ve obviously … seen some major port capacity constraints emanating from these general supply chain bottlenecks.”
More
Finally, UBS’s CEO goes out on a very thin limb. While Ralph is entitled to his opinion, I think AI plus quantum computers will likely replace the CEO as well.
Artificial intelligence won’t replace the role of financial advisors, UBS CEO says
Published Thu, Jun 17 2021 6:27 AM EDT
LONDON — One of the world’s biggest wealth managers doesn’t think artificial intelligence can replace the role of financial advisors.
Ralph Hamers, the CEO of UBS, said Wednesday that technologies like AI were better suited to handling day-to-day functions like opening an account or executing trades than advising clients.
“There is no added value for client advisors to be engaged in a process like that,” Hamers told CNBC’s Geoff Cutmore at the virtual CNBC Evolve Global Summit. “They’re advisors. They should advise.”
“Our financial advisors actually should be supported by the technology,” Hamers said, adding that AI could be used to make sense of the research and other data that advisors don’t have time for.
“That is what artificial intelligence can do, because even our client advisors can’t read all the research that is there,” he said. “Our client advisors can’t comprehend all the product options that are out there.”
Europe’s banking industry has seen radical change over the last decade, with new entrants like Monzo, Revolut and N26 emerging to take on incumbents with slick, digital-only services.
More
https://www.cnbc.com/2021/06/17/ai-wont-replace-financial-advisors-ubs-ceo-says.html
“A financial advisor is someone who invests other people’s money until it is all gone.”
With apologies to Woody Allen and stockbrokers.
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Americans' inflation fears reach a fever pitch as consumer prices rise
June 17, 2021
As the economy quickly picks up steam in the wake of the Covid pandemic, Americans expect inflation to jump in the months ahead.
Overall, the expectation is that the inflation rate will be up to 4% one year from now — a new high for one-year-ahead inflation expectations — and at 3.6% three years from now, the highest level since August 2013, according to the Federal Reserve Bank of New York's Survey of Consumer Expectations for May.
Expectations for how much more consumers will spend on homes, food, rent, gas and the cost of a college education all rose in the most recent report.
At the same time, consumers surveyed by the New York Fed also expected household income and spending to increase, particularly among households with annual income of more than $100,000, the central bank said.
The New York Fed survey is based on about 1,300 households.
The inevitable reopening of the economy will generate some pick-up in inflation, experts say.
Already, the May consumer price index jumped 5% from a year earlier, according to a separate report by the Labor Department, the fastest pace since just before the 2008-09 financial crisis.
"Workers could start to ask for higher wages and speed up their big-ticket purchases, prompting companies to raise prices and creating the very phenomenon of inflation itself," said Bankrate.com analyst Sarah Foster.
More
Analysis: Shaken but not stirred: bond markets may weather hawkish Fed for now
June 17, 2021 11:37 AM By Dhara Ranasinghe
LONDON (Reuters) - A hawkish shift at the U.S. Federal Reserve has ended a weeks-long rally in bond markets, but don’t bet on a repeat of the sharp selloff seen earlier this year just yet.
U.S. 10-year bond yields are back above 1.5%, near two-week highs, while Germany’s Bund yield hit a three-week peak at around -0.15% on Thursday.
Investors scarred by a sharp bond selloff in February, which also hit stocks, have reason to be uneasy.
Yet unusual short-term supply and demand dynamics and strong global demand for safe-haven bonds, squeezed by an acceleration of money-printing in the past year, could limit a larger selloff.
Such forces may also help explain why bond markets have proven resilient as inflation, the enemy of fixed income, rises. U.S. inflation hit 5% in May, its highest level since 2008, while in Britain and the euro zone inflation has shot above targets of roughly 2% as economies emerge from lockdowns.
And even with tapering, central banks’ heavy presence will remain significant.
“The spike in yields is not amplified this time around because positioning is cleaner and the fundamentals have not changed - the Fed will be buying bonds for a long time,” said Pictet Wealth Management strategist Frederik Ducrozet.
The pool of available top-rated debt to buy in global reserve currencies has certainly been shrinking, presenting a powerful downward force on yields in Europe and the United States.
In the euro area, the European Central Bank has been hoovering up bonds under its 1.85 trillion euro ($2.21 trillion)pandemic-fighting programme - it now owns almost a third of the German, Dutch and Finnish bond markets.
Analysts estimate this has helped push the free-float of bonds in benchmark issuer Germany to sub-20%, historic lows.
The ECB is buying roughly 80 billion euros of bonds a month for emergency stimulus alone, and new debt supply is slowing; ING estimates gross euro zone government bond supply at around 293 billion euros in the third quarter versus 364 billion euros in the second.
Bond-buying by euro zone, Japanese and UK central banks relative to underlying fiscal deficits is 161%, 110% and 129% respectively, Eurizon SLJ Capital estimates. They are effectively removing more bonds than governments sell.
In contrast, the Fed’s equivalent buying ratio is 37% of U.S. deficits - the impact has been to almost double the share of Treasuries in the past decade in global “free float” bond indices of the four top reserve currencies to 60%.
“The continuous reduction of the free float has an important impact on the yield level,” said Patrick Krizan, an economist at Allianz Research.
More
French Finance Minister reaffirms he has no plans to raise taxes
June 17, 2021 7:52 AM
(Reuters) - French Finance Minister Bruno Le Maire reaffirmed on Thursday that he had no plans to raise taxes, even as the government faces pressure to reduce its deficit.
“We will not raise taxes,” Le Maire told BFM Business radio.
France, the euro zone’s second-biggest economy, currently plans to gradually reduce the deficit to less than 3% of GDP by 2027 after it hits a post-war record of 9.4% of gross domestic product this year.
France’s national public auditor said earlier this week that France should focus on gradually withdrawing COVID-19 crisis support measures for the economy this year and next, and only turn to cutting its budget deficit from 2023.
Covid-19 Corner
This section will continue until it becomes unneeded.
WHO warns of fresh Indonesia surge fed by virus variants
JAKARTA, Indonesia (AP) — Indonesia’s president ordered authorities to speed up the country’s vaccination campaign as the World Health Organization warned Thursday of the need to increase social restrictions in the country amid a fresh surge of coronavirus infections caused by worrisome variants.
“We need vaccination acceleration in order to achieve communal immunity, which we hope can stop the COVID-19 spread,” President Joko Widodo said in a remarks while visiting a vaccination center just outside the capital, Jakarta.
Widodo said he ordered his cabinet ministers and local governments to increase the number of people vaccinated each day to 1 million by next month. He said Indonesia is currently vaccinating half a million people a day.
Indonesia, the world’s fourth most populous country, aims to inoculate more than 181 million of its 270 million people by March 2022, but authorities have only fully vaccinated 11.8 million people and partially vaccinated another 9.6 million others.
National COVID-19 task force spokesman Wiku Adisasmito said the slow progress can be put down to limited global vaccine supply, the unpreparedness of the national health system and vaccine hesitancy. The government has received 92.2 million vaccine doses so far.
Indonesia saw its number of confirmed new cases climb to more than 12,600 on Thursday, an increase blamed on travel during last month’s Eid al-Fitr holiday as well as the arrival of new virus variants, such as the the Delta version first found in India. In Jakarta the number of hospital beds occupied has shot up to 75% this week from 45% last week, government data shows.
The WHO in its situation report Thursday noted that Indonesia’s drastic increase in bed occupancy rates is a major concern and necessitates in the implementation of stricter public health and social measures, including large-scale social restrictions.
More
The fast-spreading delta Covid variant could have different symptoms, experts say
Published Thu, Jun 17 2021 7:05 AM EDT
The Covid-19 delta variant originally discovered in India is now spreading around the world, becoming the dominant strain in some countries, such as the U.K., and likely to become so in others, like the U.S.
On Wednesday, the World Health Organization said the variant had been detected in more than 80 countries and it continues to mutate as it spreads.
The variant now makes up 10% of all new cases in the United States, up from 6% last week. Studies have shown the variant is even more transmissible than other variants.
Scientists have warned that the data suggests the delta variant is around 60% more transmissible than the “alpha” variant (previously known as the U.K. or Kent variant which was itself a much more transmissible than the original version of the virus) and is more likely to lead to hospitalizations, as has been seen in countries like the U.K.
WHO officials said Wednesday there were reports that the delta variant also causes more severe symptoms, but that more research is needed to confirm those conclusions.
Still, there are signs that the delta variant could provoke different symptoms than the ones we’ve been advised to look out for when it comes to Covid-19.
Throughout the pandemic, governments around the world have warned that the main symptoms of Covid-19 are a fever, persistent cough and loss of taste or smell with some domestic variations and additions as we’ve learned more about the virus.
The CDC’s updated list of symptoms, for example, includes fatigue, muscle or body aches, headache, a sore throat, congestion or runny nose, nausea or vomiting and diarrhea as possible symptoms of infection. There there are of course the millions of people who have had Covid-19 with no symptoms at all with the extent of asymptomatic transmission still being investigated by scientists.
But the delta variant appears to be provoking a different range of symptoms, according to experts.
More
https://www.cnbc.com/2021/06/17/covid-delta-variant-symptoms-spread-and-what-to-look-out-for.html
Can you mix and match COVID-19 vaccines?
Can you mix and match two-dose COVID-19 vaccines?
It’s likely safe and effective, but researchers are still gathering data to be sure.
The authorized COVID-19 shots around the world are all designed to stimulate your immune system to produce virus-fighting antibodies, though the way they do so varies, noted Dr. Kate O’Brien, director of the World Health Organization’s vaccine unit.
“Based on the basic principles of how vaccines work, we do think that the mix-and-match regimens are going to work,” she said.
Scientists at Oxford University in the United Kingdom are testing combinations of the two-dose COVID-19 vaccines made by AstraZeneca, Moderna, Novavax and Pfizer-BioNTech. Smaller trials are also ongoing in Spain and Germany.
“We really just need to get the evidence in each of these (vaccine) combinations,” O’Brien said.
So far, limited data suggests an AstraZeneca shot followed by the Pfizer shot is safe and effective. The combination also appears to come with a slightly higher likelihood of temporary side effects like aches and chills.
That might be because mixing and matching different types of vaccines can often produce a stronger immune response, said Lawrence Young, a virologist at the University of Warwick in the United Kingdom.
In some places, health officials already suggest mixing in select circumstances.
After the AstraZeneca vaccine was linked to extremely rare blood clots, many European countries including Germany, France and Spain recommended people who got it as a first dose get a Pfizer or Moderna shot as a second dose instead.
In Britain and Canada, officials say people should aim to get the same vaccine for their second dose if possible. If they got AstraZeneca as their first shot, they’re advised to get another vaccine only if they have a history of blood clots or other conditions that might put them at higher risk of clots.
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
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.
ENERGY TRANSITION: Solar power capacity growth requires guaranteed supply of minerals and metals
Davide Ghilotti June 17, 2021 08:40 GMT
Enabling large-scale expansion of solar power production capacity is a crucial part of the transition to a sustainable future for energy, but its prospects of growth rest on the current and future availability of key minerals and metals.
Governments and organizations the world over are busy setting ambitious targets to cut carbon footprints and restrict global warming to less than 2 degrees Celsius above pre-industrial levels, in line with the Paris Agreement commitments on climate, and solar photovoltaic (PV) power production is crucial in these plans.
Among renewable energy sources, solar has been identified as a cornerstone of energy transition.
In its roadmap released in March, the International Renewable Energy Agency (IRENA) forecast that renewables will dominate the power generation mix by 2050. Electricity would be the main energy carrier with an over 50% share of direct energy use by then, more than double today.
As much as 90% of total electricity demand would be supplied by renewables, of which solar would be the single largest component of capacity.
In its sustainable development scenario, the International Energy Association (IEA) estimated solar PV capacity globally will increase more than fourfold in the next decade, from around 750GW in 2020 to over 3,00GW in 2030.
The large-scale deployment of PV power systems will require financial backing to enable it. Estimates for funding vary depending on the metrics used, but what is common is the magnitude of the forecasts.
BloombergNEF reported in February at least $14 trillion must be invested in the electricity grid worldwide by 2050 to support new energy usages.
IRENA estimated the solar sector alone will require as much as $237 billion in investment per year between today and 2050 to achieve its <1.5C scenario. That is a 106% increase from the $115 billion earmarked yearly in 2017-19.
At the same time, none of this will be possible unless supply of raw materials can keep up with the pace of demand. This is the crux of the matter, and where bottlenecks can arise on multiple fronts.
Demand
for minerals and metals employed in solar and other energy applications will
surge.
At the current pace of demand growth, energy sector mineral demand is set to
double by 2040, according to the IEA. But to reach net-zero carbon targets
globally by 2050, it
would increase as much as sixfold.
The organization warned of “a looming mismatch” between the climate targets sets by governments and private players globally and the current and future supply scenario of raw materials.
This is a pressing issue for mining commodities employed in solar PV, which span from several minor metals to base metals including copper and aluminium, and minerals such as silicon carbide.
Copper prices have reached record highs in 2021 to date, amid lingering concerns over future supply due to a lack of investment in new projects over the past decade.
Fast-rising
demand from China, the single largest consumer of the metal, supported the
surge, until authorities
in Beijing stepped in to try to shore up increases of
costs to consumers.
Industry estimates state up to 20 million tonnes of copper will be needed for
solar alone by 2050, with solar as the single fastest-rising application
driving demand for the metal.
In its May report, the IEA saw a shortfall of 20% in copper production by 2030.
More
Another weekend and the Grand Tour over, President Biden returns to US politics as usual, which in the 21st century means no fawning crowds of European Great Leaders, just angry crowds of polarised voters expectantly awaiting more free cash and goodies from the newly discovered Magic Money Tree forests in Washington, District of Crooks.
Toss in a worsening North American drought, together with rising food supply chain disruption, (more on that tomorrow,) and it will take close to a miracle to avoid significant food price inflation ahead. Have a great weekend everyone.
I’m normally not a praying man, but if you're up there, please save me, Superman.
Fed Chairman Powell, with apologies to Homer Simpson.
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