Baltic Dry Index. 3210 +11 Brent Crude 74.86
Spot Gold 1798
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 27/07/21 World 195,389,114
Deaths 4,183,299
There are many methods for predicting the future. For example, you can read horoscopes, tea leaves, tarot cards or crystal balls. Collectively, these methods are known as “nutty methods.” Or you can put well-researched facts into sophisticated computer models, more commonly referred to as “a complete waste of time.”
Scott Adams, creator of Dilbert.
Day one of the US central bankster meeting. In the US stock casinos, Great Expectations. The punters have the Fedster’s over a barrel. Do what we want or we’ll blow up the casino.
Chairman Powell and his gang have no option but to keep the Magic Money Tree spigots wide open.
Meanwhile in China the tech and private education crackdown continues.
Did stock mania and the everything bubble just run into its pin?
Asia-Pacific stocks mixed; China tech stocks in Hong Kong remain under pressure
SINGAPORE — Shares in Asia-Pacific were mixed in Tuesday trade as several major Chinese tech stocks in Hong Kong remained under pressure following a tumble on Monday.
By Tuesday afternoon in Hong Kong, shares of Chinese tech giant Tencent fell 4.98% while Alibaba dropped 4.16% and Meituan declined 10.61%. The Hang Seng Tech index slipped 3.17%.
The broader Hang Seng index in Hong Kong fell 1.03%, seeing further losses after a more than 4% plunge on Monday on the back of regulatory fears surrounding China’s technology and private education sector.
Mainland Chinese stocks rose, with the Shanghai composite up 0.14% while the Shenzhen component hovered above the flatline. Industrial firms’ profits in China jumped 20% year-on-year in June, official data showed Tuesday. Still, that was a decline from the 36.4% year-on-year increase seen in May.
Elsewhere, the Nikkei 225 in Japan gained 0.53% while the Topix index advanced 0.67%. South Korea’s Kospi traded 0.61% higher.
In Australia, the S&P/ASX 200 climbed 0.55%.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.43%.
Overnight on Wall Street, the S&P 500 gained 0.24% to 4,422.30 while the Dow Jones Industrial Average edged 82.76 points higher to 35,144.31. The Nasdaq Composite was fractionally higher at 14,840.71. The gains left all three major indexes stateside closing at new record highs.
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Opinion: Big losses ahead for markets? Jeremy Grantham’s terrifying new forecasts
Last Updated: July 25, 2021 at 9:35 p.m. ET First Published: July 23, 2021 at 1:32 p.m. ET
By Brett Arends
If you have a 401(k) and you’re of a nervous disposition, you probably don’t want to look at the chart above.
Even by the standards of GMO, the super-cautious money management firm in Boston best known for its famous co-founder Jeremy Grantham, it’s terrifying.
It shows about the worst medium-term forecasts on record for pretty much all the assets most of us own in our retirement accounts. Large company U.S. stocks like the S&P 500 SPY, +1.03% ? Small company U.S. stocks like the Russell 2000 RUT, +0.46% ? International stocks? U.S. bonds, foreign bonds, inflation-protected bonds? GMO thinks if you buy them now and hold them over the next seven or so years, they will all – all—lose you money in real, purchasing-power terms.
In the case of some of these mainstream investments, the predicted losses are huge. Those 8% and 8.5% annual losses on U.S. large-caps and small-caps? If they happen, they’ll mean your SPDR S&P 500 ETF SPY, +1.03% and Vanguard S&P 500 Trust VOO, +1.00% and Schwab U.S. Small-Cap ETF SCHA, +0.56% lose about half their value, in inflation-adjusted terms, by 2028.
I’ve been following GMO’s forecasts for nearly 20 years. I’ve never seen one this bad, and I’ve seen some that were really bad—like the ones they made in 2000 and 2007, just before the two big crashes.
There is a tendency at certain moments for market followers to roll their eyes whenever anyone mentions the latest gloomy predictions from GMO. “Those guys have been wrong for years,” say skeptics. They point out, for example, that GMO 10 years ago predicted emerging markets would probably do really well and U.S. stocks badly. Instead, the reverse happened.
----But it’s not quite that simple. GMO was among the few firms to predict the 2000-2003 and 2007-2009 crashes. And each time, people laughed. The online chat rooms were different — 20 years ago it was Yahoo and Raging Bull—but the sound was the same.
In the event, the warnings GMO made in the late 1990s were remarkably accurate. It ranked 10 major asset classes by future investment performance, and got them pretty much in line. “The chances of getting that forecast exactly right were less than one in 500,000,” The Economist magazine calculated.
I also remember Grantham warning in the summer of 2007, when the markets were booming, that at least one major Wall Street bank would go bust within the next two years. At the time people thought he’d finally gone off the rails. They probably thought that at Bear Stearns (d. 2008) and Lehman Brothers (d. 2008) too.
Oh, and he turned aggressively bullish on stocks during the depths of the 2007-2009 global financial crisis. As he wrote at the time: If stocks are cheap and you don’t buy them and then they go up, you don’t just look like an idiot, you are an idiot.
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https://www.marketwatch.com/story/granthams-terrifying-new-forecasts-11627061555?mod=home-page
Fed to discuss a pullback in economic aid with inflation up
WASHINGTON (AP) — With inflation uncomfortably high and the COVID-19 Delta variant raising economic concerns, a divided Federal Reserve will meet this week to discuss when and how it should dial back its ultra-low-interest rate policies.
For now, the U.S. economy is growing briskly in the wake of the pandemic recession, and the pace of hiring is healthy, which is why the Fed’s policymakers will likely move closer toward acting soon. In particular, the officials are expected to discuss the timing and mechanics of slowing their $120 billion-a-month in bond purchases — a pandemic-era policy that is intended to keep long-term loan rates low to spur borrowing and spending.
This week’s meeting occurs against the backdrop of a risky policy bet by Fed Chair Jerome Powell. Powell is gambling that the central bank can engineer an exceedingly delicate task: To keep the Fed’s short-term benchmark rate pegged near zero, where it has been since March 2020, until the job market has fully healed, without fueling a sustained bout of high inflation.
Yet the stakes around that bet are rising, with consumer prices having jumped 5.4% in June from a year ago, the biggest increase in 13 years. Last month’s surge marked a fourth straight month of unexpectedly large price increases, heightening fears that persistently higher inflation will erode the value of recent pay raises and undermine the economic recovery.
The main concern is that the Fed will end up responding too late and too aggressively to high inflation by quickly jacking up interest rates and perhaps causing another recession. Last week, Republicans in Congress peppered Powell with questions about inflation, for which they largely blamed President Joe Biden’s $1.9 trillion stimulus package, which was enacted in March.
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In other news, yet more supply chain disruption. Food chain disruption too. Buy your Christmas gifts and stock up on food luxuries now.
Global shipping industry disrupted again, this time by floods in Europe and China
The floods in China and Europe are yet “another body blow” for global supply chains, the CEO of a shipping firm told CNBC on Monday.
“Rarely does a week go past without something new,” says Tim Huxley, CEO of Mandarin Shipping.
Shipping has already seen massive disruptions this year. As parts of the world rebounded from the pandemic, increased spending led to a shortfall of containers, creating delays and driving up prices.
Then in April, one of the world’s largest container ships became wedged in the Suez Canal, halting traffic for nearly a week. The waterway is one of the busiest in the world, with about 12% of trade passing through it.
In June, an uptick of Covid cases in southern China caused more delays at ports in the region, again jacking up shipping prices.
‘Broken railway links’ caused by floods in Europe
Heavy rainfall and flooding have devastated parts of western Europe. Some of the most severe flooding happened in Germany and Belgium. Parts of Switzerland, Luxembourg and the Netherlands have been affected as well.
“This is really going to disrupt the supply chain because the railway links have all been broken,” Huxley told CNBC’s “Squawk Box Asia.”
He said that includes railways coming from the Czech Republic and Slovakia into the German ports of Rotterdam and Hamburg, which have been “seriously disrupted.”
“And so that’s going to delay cargo movements in and out,” he said. “It’s gonna really disrupt the industry.”
Huxley pointed to Thyssenkrupp, noting the German steel making giant could not get raw materials due to the flooding.
“That ultimately will have a knock on effect on industries such as the motor industry, domestic appliances and things like that,” he said.
S&P Global Platts reported, citing a letter to customers, Thyssenkrupp declared force majeure on July 16. A force majeure event occurs when unforeseeable circumstances, such as natural catastrophes, prevent one party from fulfilling its contractual duties, absolving them from penalties.
A source at the firm’s mills told S&P Global Platts that parts of the railway in Hagen are “missing,” adding it’s even more difficult than before to get trucks for delivery. Hagen is a city in Western Germany that is among the worst-hit by the floods.
Flooding in landlocked Henan disrupting supply of wheat, coal
Meanwhile, the disruption caused by the flooding in the Chinese province of Henan is made worse by the fact that the province is landlocked, said Huxley.
The disruption of railways is, again, going to cause a “big impact,” he said.
“Obviously, that will have an impact on shipping, that will force shipping rates up,” Huxley said.
The distribution of wheat and coal has been affected, according to Huxley, who pointed out that Henan is the “bread basket” of China and has produced 38 million tons of wheat this summer.
Finally, “despite Brexit,” to use BBC speak, GB wine drinkers are getting a small Brexit break.
Wine lovers to save £130m as Brexit red tape cut
Monday 26 July 2021 8:18 am
Ministers are set to give British wine-lovers something to celebrate with red tape adding £130m to the naion’s booze bill set to be scrapped.
VI-1 certificates, a post-Brexit document importers were set to be required to fill in when shipping to the UK, will no longer be launched.
Food and Drink Minister Victoria Prentis said, “the British wine industry has increasingly delivered fantastic wines at great value from all around the world.
“Cutting this needless red tape will place our businesses in a stronger position internationally, as they continue to grow, while consumers can raise a glass to great wine from around the world.”
The introduction of the VI-1 certificates post-Brexit has been consistently delayed and came under scrutiny as members of the wine industry said paperwork would create more costs for businesses.
International Trade Minister Ranil Jayawardena said, “through our trade deals, we are making it easier for British consumers to access to top-quality products from around the world – including wine – and we are bringing down foreign trade barriers to open up even more opportunities for British businesses to succeed overseas.”
https://www.cityam.com/wine-lovers-to-save-130m-as-brexit-red-tape-cut/
21st century adage: Is that true, or did you hear it on the BBC?
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
China’s industrial profit growth slows in June on high raw material prices
Profit growth at China’s industrial firms slowed for the fourth straight month in June, as high raw material prices weighed on factories’ margins, pointing to some weakness in the recovery of the world’s second-biggest economy.
Industrial firms’ profits rose 20% year-on-year in June to 791.8 billion yuan ($122.27 billion), data from the National Bureau of Statistics showed on Tuesday, after a 36.4% increase in May.
The Chinese economy has largely recovered from disruptions caused by the coronavirus pandemic, but it has faced new challenges in recent months such as higher raw material costs and global supply chain crunches.
“The unevenness in the recovery of corporate profitability still exists, with private firms and small businesses facing a slow rebound,” said Zhu Hong, a senior statistician at the NBS, adding that this was due to persistently high commodity prices and disruptions in supply chains.
In the first half of 2021, industrial firms’ profits grew a hefty 66.9% from a pandemic-induced slump in the same period a year earlier. Profits in January-June increased 45.5% from the same period in 2019, before the global pandemic started.
Chinese policymakers have stepped up efforts to curb surging commodity prices that have squeezed manufacturers’ margins to prevent the price increases from being passed on to consumers.
While China’s producer price inflation eased in June after the government crackdown on runaway commodity prices, the annual rate continued to hover at an uncomfortably high level. Some analysts expect the factory gate inflation to stay elevated in the second half of this year.
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https://www.cnbc.com/2021/07/27/china-industrial-profits-june.html
As drought cuts hay crop, cattle ranchers face culling herds
STEAMBOAT SPRINGS, Colo. (AP) — With his cattle ranch threatened by a deepening drought, Jim Stanko isn’t cheered by the coming storm signaled by the sound of thunder.
“Thunder means lightning, and lightning can cause fires,” said Stanko, who fears he’ll have to sell off half his herd of about 90 cows in Routt County outside of Steamboat Springs, Colorado if he can’t harvest enough hay to feed them.
As the drought worsens across the West and ushers in an early fire season, cattle ranchers are among those feeling the pain. Their hay yields are down, leading some to make the hard decision to sell off animals. To avoid the high cost of feed, many ranchers grow hay to nourish their herds through the winter when snow blankets the grass they normally graze.
But this year, Stanko’s hay harvest so far is even worse than it was last year. One field produced just 10 bales, down from 30 last year, amid heat waves and historically low water levels in the Yampa River, his irrigation source.
Some ranchers aren’t waiting to reduce the number of mouths they need to feed.
At the Loma Livestock auction in western Colorado, sales were bustling earlier this month even though its peak season isn’t usually until the fall when most calves are ready to be sold. Fueling the action are ranchers eager to unload cattle while prices are still strong.
“Everybody is gonna be selling their cows, so it’s probably smarter now to do it while the price is up before the market gets flooded,” said Buzz Bates, a rancher from Moab, Utah who was selling 209 cow-calf pairs, or about 30% of his herd.
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Below, why a “green energy” economy may not be possible anyway, and if it is, it won’t be quick and it will be very inflationary, setting off a new long-term commodity Supercycle. Probably the largest seen so far.
The “New Energy Economy”: An Exercise in Magical Thinking
https://media4.manhattan-institute.org/sites/default/files/R-0319-MM.pdf
Mines, Minerals, and "Green" Energy: A Reality Check
https://www.manhattan-institute.org/mines-minerals-and-green-energy-reality-check
Covid-19 Corner
This section will continue until it becomes unneeded.
Australia’s Victoria state to lift Covid curbs while cases in Sydney rise
Australia’s Victoria state said on Tuesday it will lift a strict lockdown after curtailing the spread of Covid-19, while neighboring New South Wales faces an extension of restrictions after daily new cases spiked to a 16-month peak.
More than half of Australia’s near 26 million population has been in lockdown in recent weeks after an outbreak of the highly infectious delta variant took hold in the New South Wales capital of Sydney and spread to three states.
New South Wales reported 172 Covid-19 cases in the past 24 hours, up from 145 a day earlier, with at least 60 spending time in the community while infectious.
New South Wales Premier Gladys Berejiklian said a decision whether to extend the five-week lockdown will be taken this week. But with less than 13% of the state’s population fully vaccinated, curbs are expected to remain.
In contrast, Victoria state said most restrictions imposed on July 15 will be removed from Wednesday after recording just 10 infections of people already in quarantine.
“All in all, this is a good day,” Victoria state Premier Daniel Andrews told reporters in Melbourne.
Victoria’s 5 million residents will now be allowed to leave home freely and schools will reopen, though households will not be permitted to have visitors, Andrews said.
Lockdowns have raised the prospect of Australia recording its second recession in as many years, though Treasurer Josh Frydenberg said on Tuesday talk of this was premature.
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UK study detects cognitive deficits in recovered COVID-19 patients
Rich Haridy July 25, 2021
A large new study published in The Lancet journal EClinicalMedicine has detected significant cognitive deficits in recovered COVID-19 patients. The research found the more severe the case, the greater the persistent cognitive problems, with hospitalized patients put on ventilators showing a decline equivalent to seven IQ points.
Early in 2020, before the pandemic kicked off, Imperial College London researcher Adam Hampshire was working with the BBC on a big, UK-wide cognitive survey. Called the Great British Intelligence Test, the project was designed to get a broad overview of the nation’s intelligence.
As the year progressed Hampshire realized the ongoing project afforded him a unique opportunity to investigate how this new disease affected cognition. By May the researchers had incorporated questions regarding COVID-19 into the survey.
As of December 2020 the researchers had collected data from 81,337 subjects. Around 12,000 subjects surveyed reported contracting COVID-19.
After adjusting for a variety of factors the researchers detected a significant relationship between COVID-19 and cognitive deficits. The severity of cognitive problems was directly related to the severity of the acute infection, with the greatest deficits detected in subjects admitted to hospital and put on a ventilator.
Key results of on the association between Covid-19 illness and cognitive abilities in hospitalised & non hospitalised members of the UK general public. 1/7 The severity of respiratory symptoms predicted cognitive performance months post recovery. https://t.co/DMU93E9zBA pic.twitter.com/uXjLLuSc7Q
— Adam Hampshire (@HampshireHub) July 23, 2021
“The scale of the observed deficit was not insubstantial,” the researchers write in the newly published study. “The 0.47 SD [standard deviation] global composite score reduction for the hospitalized with ventilator sub-group was greater than the average 10-year decline in global performance between the ages of 20 to 70 within this dataset. It was larger than the mean deficit of 480 people who indicated they had previously suffered a stroke (-0.24SDs) and the 998 who reported learning disabilities (-0.38SDs). For comparison, in a classic intelligence test, 0.47 SDs equates to a 7-point difference in IQ.”
The greatest cognitive deficits detected in the study were seen in tasks evaluating reasoning, planning and selective attention. The researchers note these findings fit with other long COVID studies citing problems with persistent “brain fog” and difficulties concentrating.
“There is a worrying association between COVID-19 illness and a broad range of higher cognitive function in the early chronic phase,” Hampshire notes on Twitter. “More research is needed to determine how long these deficits last and their biological/physiological basis.”
Mechanisms to explain the cognitive deficits are hypothesized in the study, including the possibility hypoxia is causing neurological damage. But the researchers are cautious to note there is still much to learn about the neurological effects of SARS-CoV-2 infection.
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Covid-19 Pill Race Heats Up as Japanese Firm Vies With Pfizer, Merck
Shionogi starts human trials for a once-a-day drug designed to neutralize the coronavirus in less than a week
July 25, 2021 5:30 am ET
A Japanese company has started human trials of the first once-a-day pill for Covid-19 patients, joining Pfizer Inc. and Merck & Co. in the race to find treatments for the disease.
Osaka-based Shionogi & Co., which helped develop the blockbuster cholesterol drug Crestor, said it designed its pill to attack the Covid-19 virus. It said the once-a-day dosing would be more convenient. The company said it is testing the drug and any side effects in trials that began this month and are likely to continue until next year.
Shionogi is months behind Pfizer and Merck, which have started later-stage tests of pills to treat Covid-19. Pfizer has said its twice-daily pill could be ready to hit the market as soon as this year. It is preparing to enroll more than 2,000 patients in a test of the antiviral pill combined with a booster antiviral drug against a placebo.
All three companies aim to fill one of the biggest gaps in fighting the pandemic. Vaccines remain effective at preventing serious illness from known strains of the Covid-19 virus including the contagious Delta strain, studies have shown. But some people don’t want to get vaccinated, and cases can occur for those who do get their shots.
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Is COVID Vaccine Effective Against DELTA VARIANT? COVID Vaccine breakthrough cases are popping up in the news. Approx. 5 minutes.
https://www.youtube.com/watch?v=hIW73l-DfP8
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.
Are electric cars ‘green’? The answer is yes, but it’s complicated
Published Mon, Jul 26 2021 12:00 AM EDT
The number of electric vehicles on the world’s roads is surging, hitting a record number last year.
That would seem to be good news, as the world tries to wean itself off fossil fuels that are wrecking the global climate. But as electric cars become more popular, some question just how environmentally friendly they are.
The batteries in electric vehicles, for example, charge on power that is coming straight off the electric grid — which is itself often powered by fossil fuels. And there are questions about how energy-intensive it is to build an EV or an EV battery, versus building a comparable traditional vehicle.
Are electric vehicles greener?
The short answer is yes — but their full green potential is still many years away.
Experts broadly agree that electric vehicles create a lower carbon footprint over the course of their lifetime than do cars and trucks that use traditional, internal combustion engines.
Last year, researchers from the universities of Cambridge, Exeter and Nijmegen in The Netherlands found that in 95% of the world, driving an electric car is better for the environment than driving a gasoline-powered car.
Electricity grids in most of the world are still powered by fossil fuels such as coal or oil, and EVs depend on that energy to get charged. Separately, EV battery production remains an energy-intensive process.
A study from the Massachusetts Institute of Technology Energy Initiative found that the battery and fuel production for an EV generates higher emissions than the manufacturing of an automobile. But those higher environmental costs are offset by EVs’ superior energy efficiency over time.
In short, the total emissions per mile for battery-powered cars are lower than comparable cars with internal combustion engines.
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"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”
J. K. Galbraith. The Great Crash: 1929.
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