Baltic Dry Index. 3218 -49 Brent Crude 73.91
Spot Gold 1775
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 21/06/21 World 179,258,244
Deaths 3,882,091
To me, a wise and humane policy is occasionally to let inflation rise even when inflation is running above target.
Janet Yellen.
Spooked by the Fed last week and Fed Governors sowing confusion, the Asian stock casinos are very skittish this morning.
Probably rightly so since we have a gaggle of very talkative Fed Governors due to speechify this week. But will any of them trigger Black Monday [Tuesday, Wednesday, Thursday or Friday?]
I suspect that inflation is here to stay for a lot longer the Fed Chairman Powell and US Treasury Secretary Yellen are willing to let on in public.
As the masses get freed from all the lockdowns next month or the month after, I suspect that a formerly repressed public are going to splurge out on travel, pleasure and consumption.
It will be a very brave and foolish central bankster or politician that tries to stand in their way.
Below, Asian casinos under pressure. To head off a rout this week, the central banksters need to tread and talk very carefully
Japan’s Nikkei 225 plunges 4%, leading losses across major markets in Asia
SINGAPORE — Shares in Asia-Pacific dropped in Monday morning trade, as Japan’s markets plummeted. Meanwhile, China kept its benchmark lending rate unchanged.
Japanese stocks led losses regionally, with the Nikkei 225 falling 4%. The Topix index shed 2.86%.
Losses were seen in most sectors in Japan, with shares of automakers such as Nissan and Honda falling more than 4% each. Shares of Fanuc slumped nearly 6%. Among financials, Mitsubishi UFJ Financial Group shares fell 2.85% and Mizuho Financial Group declined 2.12%.
Elsewhere in Asia-Pacific, Hong Kong’s Hang Seng index dropped 1.39%. Mainland Chinese stocks were mixed as the Shanghai composite declined 0.22% and the Shenzhen component edged fractionally higher.
South Korea’s Kospi declined 1.25%. Shares in Australia slipped, with the S&P/ASX 200 shedding 1.81%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 1.45% lower.
“Markets continue their post-FOMC slump as concerns over rate normalisation continues to keep a lid on risk sentiment,” analysts at Singapore’s OCBC Bank wrote in a note dated Monday.
----China on Monday announced that the one-year Loan Prime Rate (LPR) was kept unchanged at 3.85% while the five-year LPR was also held steady at 4.65%. That was in line with expectations of majority of analysts in a snap Reuters poll, who had predicted no change to the one-year Loan Prime Rate as well as the five-year LPR.
----Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.49% to $73.87 per barrel. U.S. crude futures advanced 0.6% to $72.07 per barrel.
https://www.cnbc.com/2021/06/21/asia-markets-china-loan-prime-rate-currencies-oil.html
Beware of inflation ‘headwinds’: It could take a year to break even after a 10% to 20% market correction, economist Mark Zandi warns
Moody’s Analytics Mark Zandi has a message for investors: Brace for a significant market correction.
The firm’s chief economist expects a more hawkish Federal Reserve will spark a 10% to 20% pullback.
And, unlike the sharp drops over the past several years, Zandi anticipates a quick recovery won’t be in the cards particularly because the market is richly valued. He estimates it could take a year to return to break even.
“The headwinds are building for the equity market,” Zandi told CNBC’s “Trading Nation” on Friday. “The Federal Reserve has got to switch gears here because the economy is so strong.”
He suggests the correction may already be underway because investors are starting to get spooked.
The Dow just saw its biggest weekly loss since October 2020, tumbling 3.45%.The broader S&P 500 saw its worst week since late February. The tech-heavy Nasdaq also had a losing week, but it’s just 1.28% off its all-time high.
Despite his market warning, Zandi believes the economy will avert a recession because the downturn is more about risk asset prices getting overextended than a serious fundamental issue.
“The economy is going to be rip-roaring,” he said. “Unemployment is going to be low. Wage growth is going to be strong.”
Zandi has been ringing the alarm on inflation for months.
On “Trading Nation” in early March, Zandi asserted inflation was “dead ahead” and investors weren’t fully grasping the risks. According to Zandi, it’s still a problem affecting stock market and bond investors. Zandi sees little chance the benchmark 10-year Treasury Note yield will keep falling.
“I wouldn’t count on rates staying at 1.5% for very long
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Inflation breakout will drive 10-year Treasury yields above 2% in coming months, Wells Fargo predicts
Treasury yields may be about to break out.
Even though yields temporarily fell after this week’s Federal Reserve decision on interest rates, Wells Fargo Securities’ Michael Schumacher expects the benchmark 10-year Treasury Note rate to end the year as high as 2.20%.
“The 10-year yield is going up a fair bit through the remainder of the year,” the firm’s head of macro strategy told CNBC’s “Trading Nation” on Thursday. “Not a steady rise to be sure. But we do think there’s a pretty strong bear case to be made over the next six [to] seven months.”
Schumacher attributes the inflation comeback for his forecast — with an emphasis on the next 12 months.
“Core PCE which the Fed likes to look at is above 3% for the next year. It’s an amazing number. We have not seen inflation like that in the U.S. on a sustained basis for a very long time,” he said. “This really gets at what the people in the market are focused on: Just how long is that inflation spike going to last? Is it transient? Is it transitory? I don’t know. But it’s troubling, that’s pretty clear.”
In his post-Fed decision research note, Schumacher said the Fed is still coming to terms with the inflation spike. According to Schumacher, the biggest risk facing the bond market and economy is the Fed’s potential response to the strong economic comeback. If the Fed gets spooked, it would likely hike rates next year instead of waiting until at least 2023.
So far, Schumacher’s bond market outlook is on target.
Coming into 2021, Schumacher predicted the 10-year yield would hit 1.15% to 1.35% by this year’s halfway point — with the caveat it could reach as high as 1.50%. He made the forecast when the yield was below 1% and months before the Covid-19 vaccines were widely available.
On Thursday, the 10-year yield closed at 1.51%. It’s up almost 4% over the past week, but down 8% over the past three months.
He also doubts the dollar, which initially surged on a more hawkish Fed, will continue to extend its gains.
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Finally, there’s no quick fix for global shipping, says someone who should know. Get your Christmas gifts now.
Flexport CEO says resolving global shipping delays ‘may take a while’
Published Fri, Jun 18 2021 6:51 PM ED
Flexport CEO Ryan Petersen told CNBC on Friday there’s no single fix to resolve the shipping delays that have disrupted the global economy.
That’s because one key reason they are happening — consumers buying more physical products during the Covid pandemic as they spent less on services — will not revert right away, Petersen said in a “Mad Money” interview.
“The real, probably, solution here is: Wait it out. No one likes to hear that,” said Petersen, whose company is a freight forwarder that uses cloud computing and machine learning to help modernize the global shipping industry. Privately held Flexport was No. 41 on CNBC’s Disruptor 50 in 2021.
“I think you’re going to see dollars shift back [to services] and the decline in goods, but it may take a while, especially with the Christmas season coming up,” Petersen said.
Numerous challenges — from congestion at ports to shortages of shipping containers — have arisen during the coronavirus pandemic, leading to higher costs and delays. Home Depot even bought its own container ship to try mitigating problems.
Demand for goods returning to normal, pre-Covid levels is unlikely to be enough to deliver reprieve to the shipping industry, Petersen said. “Until we somehow get the flow to get below normal, it’s really going to be very hard to resolve,” he said.
Petersen said some near-term improvements can be made, adding that Flexport’s technology is designed to do just that.
For example, he said the company recently used machine learning to analyze the roughly 400,000 containers it’s shipping right now and found “they’re only 70% full.”
“So, we can put more stuff in the containers. Very simple solution.
https://www.cnbc.com/2021/06/18/flexport-ceo-resolving-global-shipping-delays-may-take-a-while.html
Toy companies are keeping an eye on China shipping delays as key holiday season nears
Published Fri, Jun 18 2021 10:22 AM EDT Updated Fri, Jun 18 2021 12:00 PM EDT
There may be fewer boxes under the tree this holiday season, as toymakers grapple with the possibility of a massive shortage in everything from dolls and action figures to vehicles and puzzles.
The coronavirus pandemic created a bottleneck in the global transportation pipeline, which was later worsened by the blockage of the Suez Canal in March. These shipping delays have hit almost every industry, including electronics, apparel and food.
Exacerbating these troubles is a fresh wave of Covid outbreaks in China. All the while, inventory continues to pile up, leading to manufacturing delays. With shipping containers scarce — or worse, more than double pre-pandemic prices — toymakers are faced with tough decisions ahead of the industry’s most important sales season.
“We’re not seeing any panic yet about the flow of holiday goods,” said Jefferies analyst Stephanie Wissink.
She noted that toy companies are just entering the ramp-up period of production for products that ship in September and October for the holidays.
“If we see persistent constraints into late-summer, then we will start to worry a bit more,” Wissink said.
Currently, the industry is seeing delays of two to three weeks, Wissink said. This is consistent with a report from Davidson analyst Linda Bolton Weiser that was published Friday, although Weiser said delays could be as long as a month.
Weiser told CNBC that the toy industry has faced shipping challenges in the past and persevered. She noted that several years ago, there was a workers strike at the Port of Los Angeles that threatened holiday sales.
“Toy stocks tanked, but [Christmas] went off without a hitch,” she said. “Toy companies were able to get their toys loaded on the tops of freighters and unloaded the fastest.”
----Toy companies are keeping a careful eye on developments overseas, hoping that pressure on the ports will loosen as vaccines are more widely distributed globally, outbreaks are more isolated and more air traffic routes reopen.
For now, toy companies have not passed on additional shipping costs to the customer, Wissink said. However, there is always a possibility that this could change if the shipping situation does not alleviate.
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Satellite images show backlog of containers awaiting export at Port of Yantian after Covid outbreak
Published Thu, Jun 17 2021 10:11 AM EDT Updated Thu, Jun 17 2021 11:54 AM EDT
The backlog of containers stacking up at the Port of Yantian, the world’s fourth-largest container port, can be seen from space as a Covid-19 outbreak in the south China city of Shenzen, where the port is located, has delayed operations.
Approximately 160,000 40-foot containers, the equivalent of 300,000 TEUs, or 20-foot equivalent units, are waiting to be exported, according to logistics companies with operating knowledge of the port.
The port was partially shut down from May 25-27 after five crew members aboard a container ship docked at the port tested positive for Covid. Additional positive cases among port workers and in the surrounding area had carriers such as Maersk characterizing the situation in its customer alerts as deteriorating.
The port terminal serves 100 ships every week and is a pivotal export location for both the United States and Europe. In 2020, the Port of Yantian processed 13.3 million containers. But operations were still stalled as of last week with few ships seen docking at the port in satellite photos provided to CNBC by Planet Labs.
SEKO Logistics, which has operations in Asia, said the port is slowly reopening but the container congestion will take a while to unwind.
“Port operations are getting better and assumed to be closer to 50% to 60% percent productivity,” said Akhil Nair, VP Global Carrier Management & Ocean Strategy at SEKO Logistics-Hong Kong, said in an email. “However, there is a long waiting list of ships that must perform both discharge and load operations. It will take a while. If all the extra containers are forty feet in length, you are looking at roughly 160,000 physical containers that need to be exported.”
---- Over 90% of the world’s electronics are exported out of the Port of Yantian. According to FreightWaves SONAR data, the largest-named consignee for the port is TV maker TTE Technologies. Other major exporters include Tesla, Williams-Sonoma, QVC, JoAnn Fabrics, Home Depot, Walmart, Amazon, Ikea, Walgreens and Hasbro.
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Top toy inflation: To infinity and beyond?
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
HEAD OF CARGILL'S TRADING GROUP EXPECTS
HIGH GRAIN PRICES TO LAST TWO-FOUR YEARS
Jun. 18, 2021
Bloomberg
writers Andy Hoffman and Vanessa Dezem reported this week that, "Two of
the world's top agricultural traders said crop markets are in a
'mini-supercycle' that could last half a decade, driven by increased demand for
biofuels and continued grains buying from China.
"The high prices could last for two to four
years, said Sanfeliu. Rising demand for biofuels will drive a massive jump in
vegetable oil and waste feed stock demand of 15 million to 16 million tons over
the next five years."
The Bloomberg article noted that, "After
spiking in 2020 and 2021, growth in China's corn demand will likely slow to 1%
to 2% a year, the Cargill executive said.
"David Mattiske, chief executive officer of
Viterra, Glencore Plc's food-trading arm, agreed agricultural markets are in a
mini-supercycle, with strong demand for plant-based fuels and grains lasting
four to five years."
Meanwhile, after recent news articles pointed to
lower hog prices in China, Reuters writer Dominique Patton reported this week
that, "China's pig herd rose 23.5% in May from a year earlier, state media
said on Wednesday citing the Ministry of Agriculture and Rural Affairs.
"The sow herd increased 19.3% during the same
period, according to the CCTV report, reaching 98.4% of the stocks at the end
of 2017."
The Reuters article added that, "'We can now
say with complete confidence that the original three-year mission for the
restoration of pig production has been completed ahead of schedule,' Xin
Guochang, an official with the agricultural ministry's Animal Husbandry and
Veterinary Bureau told CCTV."
----In a closer look at U.S. feed grain export variables, the USDA's Foreign Agricultural Service (FAS) released a report on Wednesday stating that, "Sharply lower second-crop corn supplies in Brazil and continued strong foreign demand have brightened U.S. [corn] export prospects for 2020/21 (Oct-Sep). Exports are currently forecast at 73.0 million tons (estimated value of $17.9 billion), which if realized, would be the largest in history."
https://www.agrimarketing.com/s/136754
First U.S. Cruise in 15 Months Set to Sail as Restrictions Ease
Jonathan Levin June 20, 2021
Guests lined up to board Royal Caribbean Cruises Ltd.’s Freedom of the Seas on Sunday, marking the first cruise from a U.S. port since the pandemic suspended operations 15 months ago.
Passengers filed into PortMiami with suitcases in tow, a sight last seen in the world’s largest cruise port in March 2020. Freedom of the Seas can carry around 4,500 guests, and it’s expected to take about 650 on this first two-night loop, all of them Royal Caribbean employees who volunteered and were allowed to bring an 18-and-over guest.
“I feel really safe with my mask, I’m vaccinated, everyone’s vaccinated, so I feel really good about it,” said Carolina Jimenez, a 25-year-old law student who was invited along as a plus-one. “It’s unfortunate how long it’s taken to come back, but I think that’s something no one could have controlled, and I’m just glad that now we’re here and getting back to it.”
The trip is being dubbed a “simulated voyage,” a concept designed by the Centers for Disease Control and Prevention to essentially prove the ships are safe to sail with Covid-19 still circulating around the globe.
For the past year and three months, the companies have been in a state of suspended animation. They have been essentially banned from the U.S., the world’s largest cruise market, and were saddled with the massive costs of maintaining their fleets in a zero-revenue environment. But the federal government’s caution around the industry came after dramatic outbreaks at sea last year that killed passengers and crew, and taxed public-health resources.
The “vaccine obviously is a key player here, and a game-changer for us and for the entire society,” said Captain Patrik Dahlgren, senior vice president of Global Marine Operations for Royal Caribbean, who spoke from the cruise terminal on Sunday.
The CDC created a two-pronged approach for cruise lines to sail again: they can run the simulated voyages, or they can restart revenue cruises right away if they verify a 95% vaccination rate among passengers and crew. Royal Caribbean is following both paths more or less simultaneously, with the first revenue cruise set for Saturday.
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Covid-19 Corner
This section will continue until it becomes unneeded.
More Than 2.62 Billion Shots Given: Covid-19 Tracker
In the U.S., 318 million doses have been administered
Updated:
The biggest vaccination campaign in history is underway. More than 2.62 billion doses have been administered across 180 countries, according to data collected by Bloomberg. The latest rate was roughly 39.7 million doses a day.
In the U.S., 318 million doses have been given so far. In the last week, an average of 1.24 million doses per day were administered.
Enough doses have now been administered to fully vaccinate 17.1% of the global population—but the distribution has been lopsided. Countries and regions with the highest incomes are getting vaccinated more than 30 times faster than those with the lowest.
While the best vaccines are thought to be 95% effective, it takes a coordinated campaign to stop a pandemic. Anthony Fauci, the top infectious-disease official in the U.S., has said that vaccinating 70% to 85% of the U.S. population would enable a return to normalcy.
On a global scale, that’s a daunting level of vaccination. At the current pace of 39.7 million a day, it would take another year to achieve a high level of global immunity. The rate, however, is steadily increasing, and new vaccines by additional manufacturers are coming to market.
In the U.S., the latest vaccination rate is 1,243,711 doses per day, on average. At this pace, it will take another 4 months to cover 75% of the population.
Israel was first to show that vaccinations were having a nationwide effect. The country has led the world in vaccinations, and by February more than 84% of people ages 70 and older had received two doses. Severe covid cases and deaths declined rapidly. A separate analysis in the U.K. showed similar results.
It’s now a life-and-death contest between vaccine and virus. New strains threaten renewed outbreaks. In the early stages of a campaign, the effect of vaccinations are often outweighed by other factors of transmissibility: virus mutations, seasonality, effectiveness of mask use and social distancing. In time, higher vaccination rates should limit the Covid-19 burden around the world.
More
https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/?srnd=coronavirus
Five years before a vaccine can ‘hold the line’ against Covid variants, England’s medical chief says
Published Fri, Jun 18 2021 3:12 AM EDT Updated Fri, Jun 18 2021 5:37 AM EDT
LONDON — England’s top medical officer has warned that the coming winter will continue to be difficult for the country’s health system despite the country’s successful coronavirus vaccination program.
A further easing of lockdown restrictions in England was delayed this week due to a surge in cases of the delta variant first discovered in India.
In a speech to the NHS Confederation Thursday, Chief Medical Officer Chris Whitty said the current wave of Covid infections due to the delta variant would likely be followed by another surge in the winter.
He said that Covid-19 “has not thrown its last surprise at us and there will be several more [variants] over the next period,” according to Sky News. He added that it would likely take five years before there are vaccines that could “hold the line” to a very large degree against a range of coronavirus variants.
And until then, he said that new vaccination programs and booster shots would be needed.
In the U.K., where the delta variant is now responsible for the bulk of new infections, cases have spiked among young people and the unvaccinated, leading to a rise in hospitalizations in those cohorts.
It’s hoped that Covid-19 vaccination programs can stop the spread of the delta variant and so the race is on to protect younger people who might not be fully vaccinated.
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COVID-19 surging in Russia; weekly world deaths drop 10%, cases 5%
June 20, 2021 / 3:27 PM / Updated at 12:59 AM
June 20 (UPI) -- As coronavirus subsides through much of the world, the pandemic is surging in Russia with a record daily cases increase last week and the most deaths in three months.
Globally, fatalities dropped 10% and infections were down 5% compared with an 8% rise in deaths and 37% cases in Russia.On Sunday, the death toll was 3,881,920 and cases were at 179,245,918, according to Worldometers.info.
The United States has the most deaths at 601,826 and cases with 33,541,889. Brazil passed 500,000 on Saturday and stood at 501,918 for second place on with India third with 386,713. India is second in cases with 29,881,965 but its 58,419 increase Sunday was lowest in 81 days. Brazil is third with 17,927,928 cases, including a record 98,135 Friday.
Brazil added the most deaths (14,510) and cases (469,573) in the past week.
Russia, meanwhile in the past week, passed Britain and Italy to sixth place in deaths at 129,361. And Russia is sixth in cases with 5,316,826.
Russia now heads Europe for the most fatalities but is behind France for cases.
Russia set a daily cases record with 17,906 Saturday, followed by 17,611 Sunday. In deaths, the 466 Saturday was the most since 475 March 13 and behind the record 635 Dec. 24. Sunday's increase was 450.
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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.
The World Relies on One Chip Maker in Taiwan, Leaving Everyone Vulnerable
Taiwan Semiconductor Manufacturing Co.’s dominance poses risks to the global economy, amid geopolitical tensions and a major chip shortage
June 19, 2021 12:03 am ET
Taiwan Semiconductor Manufacturing Co. ’s chips are everywhere, though most consumers don’t know it.
The company makes almost all of the world’s most sophisticated chips, and many of the simpler ones, too. They’re in billions of products with built-in electronics, including iPhones, personal computers and cars—all without any obvious sign they came from TSMC, which does the manufacturing for better-known companies that design them, like Apple Inc. and Qualcomm Inc.
TSMC has emerged over the past several years as the world’s most important semiconductor company, with enormous influence over the global economy. With a market cap of around $550 billion, it ranks as the world’s 11th most valuable company.
Its dominance leaves the world in a vulnerable position, however. As more technologies require chips of mind-boggling complexity, more are coming from this one company, on an island that’s a focal point of tensions between the U.S. and China, which claims Taiwan as its own.
Analysts say it will be difficult for other manufacturers to catch up in an industry that requires hefty capital investments. And TSMC can’t make enough chips to satisfy everyone—a fact that has become even clearer amid a global shortage, adding to the chaos of supply bottlenecks, higher prices for consumers and furloughed workers, especially in the auto industry.
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I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.
Friedrich
August von Hayek.
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