Baltic Dry Index. 2944 +87 Brent Crude 73.12
Spot Gold 1862
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 15/06/21 World 177,034,414
Deaths 3,827,761
Published Mon, Jun 14 2021 8:18 AM EDT
As the Fed begins the
start of its two day mission to deliberately be asleep at the wheel of the
Great Inflation car crash, it seems highly probable to me and many other more exalted
market watchers, that the Fedster’s have already missed the inflation
boat. Pardon the mangled metaphor.
Under pressure from the Covid-19 pandemic and over six trillion and counting of just US Magic Money Tree money, probably 10+ trillion and counting globally, the Fed’s Great Dollar Inflation Boat set sail unnoticed in the second half of 2020.
The Fedster’s led by Chairman Jerome Powell have now painted themselves into a no-win corner.
Suddenly announce a U-turn on inflation not being “temporary” or “transitory” and announce interest rate rises for later this year; that way stops a giant inflation rollout in the US and global economy but crashes stocks, bonds and some if not most commodities.
Or, continue doing more of the same, pretending the Giant Rising Inflation is temporary, is nothing, and will be ignored all the way out to 2023. That way lies an explosion of global and US money into commodities, foodstuffs, precious metals and anything else with intrinsic value.
This week the Fed stands at a critical crossroads, I expect them to dither for months at this crossroads, unable to choose the lesser evil. For the ditherers, inflation is the lesser evil.
Hopefully, if the weather in Canada and the USA cooperates, we will get a summer food price inflation pause, but sadly, we haven’t seen anything yet.
Jamie Dimon says JPMorgan is hoarding cash because ‘very good chance’ inflation is here to stay
Jamie Dimon believes cash is king – at least for the time being.
JPMorgan Chase has been “effectively stockpiling” cash rather than using it to buy Treasuries or other investments because of the possibility higher inflation will force the Federal Reserve to boost interest rates, Dimon said Monday during a conference. The biggest U.S. bank by assets has positioned itself to benefit from rising interest rates, which will let it buy higher-yielding assets, he said.
“We have a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory,” said Dimon, longtime JPMorgan CEO.
“If you look at our balance sheet, we have $500 billion in cash, we’ve actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates,” Dimon said. “I do expect to see higher rates and more inflation, and we’re prepared for that.”
Dimon waded into the ongoing debate on whether higher inflation is a result of temporary aspects of the reopening, like raw material shortages or supply chain issues, or if it could be more lasting. Fed officials have called the current spike in inflation transitory, meaning temporary and short-lived. But there are increasingly voices, including Deutsche Bank economists and hedge fund billionaires, who warn of consequences should the Fed ignore inflation.
How long will rising inflation last? We polled 30 market strategists, and here’s what they said
Later Monday, Morgan Stanley CEO James Gorman told CNBC’s Wilfred Frost on Closing Bell that he, too thinks that higher inflation may be lasting and the Fed may be forced to hike rates earlier than expected.
“The question is when does the Fed move?” Gorman said. “It has to move at some point, and I think the bias is more likely earlier than what the current dots suggest, rather than later.″
More
Another shipping crisis looms on Covid fears in southern China
- Businesses and consumers are bracing for another shipping crisis, as a virus outbreak in southern China disrupts port services and delays deliveries, threatening to drive up costs again.
- “The disruptions in Shenzhen and Guangzhou are absolutely massive. Alone, they would have an unprecedented supply chain impact,” said Brian Glick, founder and CEO at supply chain integration platform Chain.io.
- Waiting times for vessels to berth at the Yantian International Container Terminal in Shenzhen have “skyrocketed” from an average waiting time of 0.5 days to 16 days, according to Shehrina Kamal at Everstream Analytics
First, it was a critical shortage of shipping containers due to the pandemic. Then came a massive blockage in the Suez Canal.
Now, businesses and consumers are bracing for yet another shipping crisis, as a virus outbreak in southern China disrupts port services and delays deliveries, driving up costs again.
The Chinese province of Guangdong has faced a sudden uptick in Covid-19 cases. Authorities have moved to shut down districts and businesses to prevent the virus from spreading rapidly.
That’s causing massive shipping delays in major Chinese ports, and jacking up already-high shipping costs as waiting times at berth “skyrocketed,” according to analysts and those in the shipping industry.
“The disruptions in Shenzhen and Guangzhou are absolutely massive. Alone, they would have an unprecedented supply chain impact,” said Brian Glick, founder and CEO at supply chain integration platform Chain.io, told CNBC.
However, combined with the challenges that the global supply chain has faced since this year, shipping is in “absolutely uncharted waters,” said Glick.
Guangdong, a major shipping hub, accounts for about 24% of China’s total exports. It is also home to the Shenzhen port and the Guangzhou port — which are the third largest and the fifth largest in the world by container volume, according to the World Shipping Council.
The first local case of the Delta variant, first detected in India, was found in Guangzhou in May and has since spiked to over 100 cases. Authorities have imposed lockdowns and other measures that constrain the processing capacity at ports.
Global supply chain at risk again
As different parts of the world bounced back from the pandemic late last year, there was a buying boom which led to containers falling critically short. That caused massive delays in the shipping of goods from China to Europe and the U.S. and drove up prices for businesses and consumers.
Then one of the largest container ships in the world, the Ever Given, got stuck in the Suez Canal and blocked the key trading route for nearly a week. About 12% of global trade passes through the Suez Canal, where more than 50 ships a day on average pass through.
The incident sparked a global shipping crisis and held up $9 billion in international trade a day.
Now, the most recent crisis, in southern China, is disrupting the global supply chain again.
“I think the risk of supply chain disruption is rising, and export prices/shipping costs will likely rise further. Guangdong province plays a critical role in the global supply chain,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
JP Wiggins, vice president of corporate development at shipping software firm 3GTMS, told CNBC the port crisis in China will cause much more disruption for the American consumer as many of the affected shipments are destined for North America. In comparison, the Suez blockage had a greater impact on European trade as a lot of the delayed deliveries were destined for Europe.
Wiggins also said consumer expectations will need to remain in “Covid mode.”
“Expect shortages and out-of -stock of all the Asian-made products,” he explained.
Shipping costs ‘at all-time highs’
Spiking shipping costs have been a direct effect from the crisis.
“Many small- and mid-sized shippers are throwing up their hands as the cost of shipping is surpassing the margins on the products they’re trying to move,” Glick said. “Shipping costs are at all-time highs with anecdotal quotes coming in at 5 to 10 times historical norms. We’ve broken through so many price ceilings that nobody can say where this will peak.”
https://www.cnbc.com/2021/06/15/china-covid-cases-causing-higher-shipping-costs-delayed-goods.html
Finally, more on that G-7 “selfie summit.” You can please some of the people all of the time, some of the people some of the time and some of the people none of the time. Politicians, the centrist public, the extreme left and the greens, green on the outside red on the inside.
Well, what did the world expect when you assemble 7 of the world’s vainglorious, vacuous leaders led by Emmanuel Macron and a supporting class of lesser leaders, plus hundreds of flunkies, fetch-its and yes men, in 5 star luxury all expenses paid?
‘The selfie summit’: Why some economists and activists are disappointed with the G-7
Published Mon, Jun 14 20214:56 AM EDT
LONDON — A three-day meeting between the leaders of some of the world’s richest nations was nothing short of a failure, according to some economists and campaigners, who argue the group fell short of its own standards to agree on comprehensive action to tackle the climate crisis and Covid-19 pandemic.
The leaders of the G-7, a group of the world’s largest so-called advanced economies, issued a joint statement on Sunday promising to enact measures on Covid-19 vaccines, China and global corporate tax.
After meeting at the coastline resort of Carbis Bay in Cornwall, England, the leaders promised to secure a further 1 billion Covid vaccine doses over the next 12 months either directly or via the World Health Organization’s COVAX scheme.
Sunday’s communique also called on China “to respect human rights and fundamental freedoms, especially in relation to Xinjiang and those rights, freedoms and high degree of autonomy for Hong Kong enshrined in the Sino-British Joint Declaration and the Basic Law.”
The G-7 pledged to wipe out their contribution to the climate emergency, reaffirming their commitment to reach net zero greenhouse gas emissions by 2050 and vowing to eliminate most coal power. It also backed a minimum tax of at least 15% on large multinational companies to stop firms from using tax havens to avoid taxes, an initiative led by the U.S.
The announcements were heralded as significant by groups including COVAX and the Confederation of British Industry, the latter of which said the summit had “reignited a belief that the international community can come together in a spirit of collaboration to tackle the big issues of our age. ”
But critics say the promises were not new, lacked in detail and some were plainly insufficient.
“G7 leaders have utterly failed to face up to the challenges facing the world,” said Nick Dearden, director of campaign group Global Justice Now. “After a weekend of diplomacy all they have done is repeat their own inadequate climate targets and fail to meet their own inadequate targets for global vaccination.”
“This G7 has been a pointless exercise in grandstanding without making any substantive progress towards tackling the crises of our lifetimes. This summit proves beyond all doubt that the G7 is not fit for purpose,” Dearden said.
---- The communique did not set out a detailed country-by-country commitment or a timetable to act on the global Covid vaccination campaign, and many of the commitments had been agreed in advance.
In a note Monday, Paul Donovan, chief economist at UBS Global Wealth Management, referred to the G-7 as a “selfie summit.”
“The main focus of the G7 meeting (the photo opportunity) seemed to go well. The rest of the meeting expertly papered over the cracks in opinion,” he wrote.
More
My daughter asked me when she came home from school, "What's the financial crisis?" and I said, it's something that happens every five to seven years.
Jamie Dimon
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Paul Tudor Jones says the Fed’s credibility is at risk with inflation view
Published Mon, Jun 14 2021 9:23 AM EDT
The Federal Reserve is risking its credibility by keeping policy so loose and allowing inflation to grow in a way that may not be temporary, billionaire hedge fund manager Paul Tudor Jones told CNBC on Monday.
This week could see “the most important meeting in [Chairman] Jay Powell’s career, certainly the most important Fed meeting of the past four or five years,” Jones told CNBC’s Andrew Ross Sorkin during a “Squawk Box” interview.
That statement comes even though the policymaking Federal Open Market Committee is not expected to change its approach to interest rates, which are near zero, or its $120 billion a month asset purchase program.
The Fed’s bond-buying program was intended to create liquidity during the pandemic and keep interest rates low.
When the two-day meeting concludes Wednesday, the market expects that at most Fed officials may address the idea of when it will start pulling back on its bond buying.
“The reason why [the meeting is so important] is because we’ve had so much incoming data that challenges both their mission and their model,” Jones said. “So how they react to that will be extraordinarily important and I think for investors as to how they should deal with their portfolios going forward.”
Specifically, Jones said consecutive consumer price index readings put price pressures well ahead of the Fed’s 2% inflation goal. Fed officials, though, continue to insist that the current readings are transitory and unlikely to persist.
“It’s an intellectual incongruity that risks damaging their forecasts if they’re wrong on inflation,” he said.
He also cited current trends that show a record 9.3 million jobs are available, a development that he said could allow the Fed to “declare victory” on its employment mandate.
“At the same time, right now we’re instead quantitative easing and juicing an economy that’s already red hot,” Jones said.
All the Fed easing has come along with more than $5 trillion in congressional stimulus and the possibility of even more coming in infrastructure spending.
The consumer price index for May showed headline inflation increasing at a 5% annual clip, the fastest since the financial crisis, while core inflation rose the most since 1992.
“You’ve got the craziest mix of fiscal and monetary policy since the Federal Reserve Board was created,” Jones said.
“It turned economic orthodoxy upside down, and that’s why this meeting is so important. Things are actually ‘bat-s’ crazy,” he added. “At some point, we have to say, ‘OK, let’s slow down. We’re going to get back in the lane and we’re going to drive like we used to.’”
The investment implications are important, he said.
Specifically, Jones pointed to the rise of special purpose acquisition companies as well as surges in bitcoin and gold prices, all while the stock market also hovers around record highs.
The Fed’s messaging surrounding inflation will be critical for the road ahead, he said.
“If they treat these numbers with nonchalance, then I think it’s just a green light to bet heavily on every inflation trade,” Jones said.
New auto plants source of sticker shock
June 11, 2021
Manufacturers are having to dig a bit deeper to pay for new factories these days. It's not merely the ever-rising costs of construction — it's also the changing nature of what's being built and how it's getting built.
Automotive plants have always been expensive. But the price tags for the latest crop of North American investments would make an auto executive from the 1990s blush.
Mazda and Toyota are spending $2.3 billion to construct a vehicle assembly plant in Huntsville, Ala. Mazda's last investment in North America was a plant opened in 2013 in Salamanca, Mexico, for $500 million. General Motors is investing $2 billion just to upgrade its plant in Spring Hill, Tenn., and introduce electric vehicles. Spring Hill was one of the nation's most expensive auto projects when contractors converted a vast piece of farmland into an integrated vehicle assembly operation, engine plant and aluminum foundry. Its price tag to open in 1990: a then jaw-dropping $1.9 billion.
In addition to the upgrade, GM will spend $2.3 billion at Spring Hill just to erect an electric-vehicle battery plant next door with partner LG Energy.
Alexandra Segers, a veteran industry plant consultant who is currently working with a number of automotive site searches, said that what seems like a rapid inflation in price tags partly reflects what's being built. A decade ago, there were no EV battery plants.
More
https://www.plasticsnews.com/news/new-auto-plants-source-sticker-shock
All-star investor Rich Bernstein warns bitcoin is a bubble, sees oil as the most ignored bull market
Institutional Investor Hall of Famer Richard Bernstein is sounding the alarm on bitcoin.
He warns bitcoin is a bubble and crypto fever is pushing investors away from the market groups positioned to grab the biggest gains, particularly oil.
“It’s pretty wild,” the CEO and CIO of Richard Bernstein Advisors told CNBC’s “Trading Nation” on Monday. “Bitcoin has been in a bear market, and everybody loves the asset. And, oil has been in a bull market, and it’s basically, you never hear anything about it. People don’t care.”
Bernstein, who has spent decades on Wall Street, calls oil the most ignored bull market.
“We’ve got this major bull market going on in commodities, and all people are saying is that it doesn’t matter,” he said.
WTI crude oil is trading around its highest levels since October 2018. It settled at $70.88 on Monday and is up 96% over the past year.
Bitcoin may be up 13% over the past week, but it’s still down 35% over the past two months.
More
Euro zone production stronger than expected in April
June 14, 2021 10:09 AM By Reuters Staff
BRUSSELS (Reuters) - Euro zone industrial production was stronger than expected in April, driven by a more than doubling of durable consumer goods output from a year earlier as economies steadily reopened after COVID-19 pandemic lockdowns, data showed on Monday.
The European Union’s statistics office Eurostat said industrial output in the 19 countries sharing the euro rose 0.8% month-on-month for a 39.3% year-on-year surge.
Economists polled by Reuters had expected a 0.4% monthly and a 37.4% annual jump.
The biggest production gain in April against March was in durable consumer goods, where output rose 3.4% after 1.2% monthly declines in both February and March.
In year-on-year terms, the gain in durable consumer goods output was a spectacular 117.3% after a 34.5% annual rise in March, with capital goods also surging 65.4% year-on-year and intermediate goods up 38.7%.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
Alan
Greenspan.
Covid-19 Corner
This section will continue until it becomes unneeded.
Pfizer, Astra Shots Keep Delta Patients Out of Hospitals
By Katharine Gemmell and James PatonUpdated on 14 June 2021, 18:53 BST
Covid-19 vaccines from Pfizer Inc. and AstraZeneca Plc are highly effective after two doses at preventing hospitalization of those infected with the delta variant, underscoring the urgency in getting people fully protected, according to health authorities in England.
The Pfizer and BioNTech SE shot is 96% effective against hospitalization after two doses, while the AstraZeneca and University of Oxford Covid inoculation is 92% effective, according to an analysis announced Monday by Public Health England. Those results are comparable with the protection offered against the alpha variant, which first emerged in Britain, the data show.
The U.K. is in a race to vaccinate its population as the variant first detected in India spreads. Prime Minister Boris Johnson pushed back his plan to lift England’s restrictions for at least another four weeks to try to prevent thousands of additional deaths. Although Covid cases have been rising rapidly, fueled by the highly transmissible variant, the latest results will help ease concerns over increased pressure on hospitals.
“The vaccines are the most important tool we have against Covid-19,” Mary Ramsay, PHE’s head of immunization, said in a statement. “It is absolutely vital to get both doses as soon as they are offered to you, to gain maximum protection against all existing and emerging variants.”
Findings in May showed the effectiveness of both vaccines against symptomatic disease from the delta variant was 33% three weeks after the first dose. That study found the Pfizer shot was 88% effective two weeks after the second dose, and that two doses of the AstraZeneca vaccine were 60% effective.
No comments:
Post a Comment