Baltic Dry Index. 4235 +40 Brent Crude 72.70
Spot Gold 1818
Powell sees taper by the end of the year, but says there’s ‘much ground to cover’ before rate hikes
Federal Reserve Chairman Jerome Powell indicated Friday that the central bank is likely to begin withdrawing some of its easy-money policies before the end of the year, though he still sees interest rate hikes off in the distance.
In a much-anticipated speech as part of the Fed’s annual Jackson Hole, Wyoming, symposium, Powell said the economy has reached a point where it no longer needs as much policy support.
That means the Fed likely will begin cutting the amount of bonds it buys each month before the end of the year, so long as economic progress continues. Based on statements from other central bank officials, a tapering announcement could come as soon as the Fed’s Sept. 21-22 meeting.
However, it does not mean that rate increases are looming.
“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell said in prepared remarks for the virtual summit.
He added that while inflation is solidly around the Fed’s 2% target rate, “we have much ground to cover to reach maximum employment,” which is the second prong of the central bank’s dual mandate and necessary before rate hikes happen.
Markets reacted positively to Powell’s comments, sending major stock indexes to record highs while government bond yields moved lower.
Later in the day, Fed Vice Chairman Richard Clarida said he agrees with Powell’s remarks and expects tapering to being this year so long as the pace of labor gains continues, though neither official set a specific date for when the process will begin.
----Powell also devoted an extensive passage in the speech to explaining why he continues to think the current inflation rise is transitory and will drop eventually to the target level.
----At last year’s Jackson Hole summit, also held virtually, Powell outlined a bold new policy initiative in which the Fed committed to full and inclusive employment even if it meant allowing inflation to run hot for a while. Critics have charged that the policy is partially to blame for current price pressures at their highest levels in about 30 years.
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China to Sell 150,000 Tons of Metals From Reserves on Sept. 1
Bloomberg News
China said it would release its third batch of metals from state reserves on Sept. 1 as part of its ongoing campaign to control prices and prevent commodities inflation from hurting growth.
The National Food and Strategic Reserves Administration said Friday it will sell 70,000 tons of aluminum, 50,000 tons of zinc, and 30,000 tons of copper, quantities in line with the two earlier auctions that took place in July.
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A key jobs report in the week ahead could drive the next big market move
With Jackson Hole in the rear-view mirror, August’s employment report could be the next driver for markets.
Stocks gained in the past week, surging again to new highs Friday after a speech by Federal Reserve Chairman Jerome Powell. The chairman acknowledged that Fed officials expect to taper back their $120 billion a month bond-buying program this year, a first step toward reversing easy policy.
Powell was speaking at the Kansas City Fed’s annual Jackson Hole, Wyo. symposium, held virtually this year. He said the Fed has seen sufficient progress on inflation, but the labor market has not yet improved enough to start the taper.
----Powell’s speech was widely anticipated to clarify the Fed’s position on its $120 billion monthly bond purchases, after a number of Fed officials called for the start of a wind down.
Now, market focus shifts even more fiercely to jobs data, with the release Friday of the August employment report.
“For sure, the market is going to react,” said Jim Caron, head of macro strategies for global fixed income at Morgan Stanley Investment Management. “I think it’s important. I think the issue that they’re going to have is unemployment benefits don’t really run out until the beginning of September. It’s really not until you get the October jobs number that you get a more free look at September.”
The dollar index sank after Powell’s Friday morning speech, as stocks rallied to new highs and Treasury yields fell. Other data in the coming week includes consumer confidence Tuesday and Wednesday’s release of Institute for Supply Management manufacturing data and ADP’s private sector payroll data, a kind of preview for Friday’s government jobs report.
----Some market pros had expected an announcement on tapering from the Fed at its September meeting, but that view has now mostly changed to a November or December announcement. “Because of the uncertainty of delta, I think it will take more than the next jobs report,” said Diane Swonk, chief economist at Grant Thornton. “The disruption to jobs in particular is if schools have to close again.”
Economists polled by Dow Jones expect 750,000 jobs were created in August and the unemployment rate fell to 5.2%.
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Next, anything China can do we can do too, says India. But is a digital currency needed or wise? China began a partial test of a digital Yuan about two months ago.
India could begin trials for a digital rupee by December, central bank governor says
Published Fri, Aug 27 2021 4:18 AM EDT
The Reserve Bank of India may launch its first digital currency trial programs by December, central bank governor Shaktikanta Das told CNBC.
Central banks including those in China, Europe and the U.K. are exploring digital currencies that would be issued by them, either to commercial lenders or to the public directly.
They are called central bank digital currencies, or CBDC — legal tender in digital form, and are essentially the online version of their respective fiat currencies. In India’s case, that would be the digital rupee.
“We are being extremely careful about it because it’s completely a new product, not just for RBI, but globally,” Das told CNBC’s Tanvir Gill in a pre-recorded interview on Thursday.
The RBI is studying various aspects of a digital currency including its security, impact on India’s financial sector as well as how it would affect monetary policy and currency in circulation, according to the governor.
Das added that the central bank is also exploring the choice between having a centralized ledger for the digital currency or the so-called distributed ledger technology (DLT).
DLT refers to a digital database that allows multiple participants to access, share and record transactions simultaneously. A centralized ledger means the database is owned and operated by a single entity — in this case, the central bank.
“I think by the end of the year, we should be able to — we would be in a position, perhaps — to start our first trials,” Das told CNBC.
His deputy, T Rabi Shankar, last month said the central bank was working toward a “phased implemental strategy” for a digital currency.
---- The People’s Bank of China is leading the way, with real-world trials already in place across several cities.
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Finally, as the USA and NATO end a 20 year war in Afghanistan, and on a weekend that Britain is expected to pull out its troops from Kabul Airport, remembering the world’s shortest, least costly war.
Personally, I prefer “shortest least costly wars” to wars like WW1, WW2, and longest of all Afghanistan, not that I’m volunteering, of course!
Anglo-Zanzibar War
The Anglo-Zanzibar War was a military conflict fought between the United Kingdom and the Zanzibar Sultanate on 27 August 1896. The conflict lasted between 38 and 45 minutes, marking it as the shortest recorded war in history.[3] The immediate cause of the war was the death of the pro-British Sultan Hamad bin Thuwaini on 25 August 1896 and the subsequent succession of Sultan Khalid bin Barghash. The British authorities preferred Hamud bin Muhammed, who was more favourable to British interests, as sultan.
In the agreement of 14 June 1890 instituting a British protectorate over Zanzibar, a candidate for accession to the sultanate should obtain the permission of the British consul,[4] and Khalid had not fulfilled this requirement. The British considered this a casus belli and sent an ultimatum to Khalid demanding that he order his forces to stand down and leave the palace. In response, Khalid called up his palace guard and barricaded himself inside the palace.
The ultimatum expired at 09:00 East Africa Time (EAT) on 27 August, by which time the British had gathered three cruisers, two gunboats, 150 marines and sailors, and 900 Zanzibaris in the harbour area. The Royal Navy contingent were under the command of Rear-Admiral Harry Rawson and the pro-Anglo Zanzibaris were commanded by Brigadier-General Lloyd Mathews of the Zanzibar army (who was also the First Minister of Zanzibar).
Around 2,800 Zanzibaris defended the palace; most were recruited from the civilian population, but they also included the sultan's palace guard and several hundred of his servants and slaves. The defenders had several artillery pieces and machine guns, which were set in front of the palace sighted at the British ships. A bombardment, opened at 09:02, set the palace on fire and disabled the defending artillery. A small naval action took place, with the British sinking the Zanzibari royal yacht HHS Glasgow and two smaller vessels. Some shots were also fired ineffectually at the pro-British Zanzibari troops as they approached the palace. The flag at the palace was shot down and fire ceased at 09:46.
More
https://en.wikipedia.org/wiki/Anglo-Zanzibar_War
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
U.S. inflation gauge rose in July to highest level in 30 years
Aug. 27, 2021 / 10:42 AM
Aug. 27 (UPI) -- A key statistic the Federal Reserve uses to measure inflation increased by 3.6% in July, its largest increase in 30 years, the Commerce Department said Friday.
The department said the near 4% increase is compared to July 2020 and is the highest level since 1991.
The data comes from the department's core personal consumption expenditures price index, excluding food and energy prices.
The increase was in line with most analysts' expectations.
"The increase in personal income in July primarily reflected increases in government social benefits and compensation of employees," the department's report said.
"Within government social benefits, an increase in 'other' social benefits was partly offset by a decrease in unemployment insurance, reflecting a decrease in payments from the Pandemic Unemployment Compensation program."
More
https://www.upi.com/Top_News/US/2021/08/27/inflation-commerce-report/1071630072920/
German Import Prices Surge Most in Four Decades on Supply Woes
By Jana Randow27 August 2021, 10:51 BST
· Energy was nearly twice as expensive as in previous year
· Imported inflation jumped to 15% in July, more than forecast
Germany is seeing its biggest surge in imported inflation since the early 1980s, putting a price tag on the difficulties businesses are facing to secure inputs amid a worsening supply squeeze.
supply squeeze.
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Stagflation: German import prices rose 15 per cent in July – the fastest clip in 40 years. The increase, the highest year-on-year-change since September 1981, increase from +12.9 per cent in June and +11.8 per cent in May. Excluding the energy component, prices rose 9 per cent.
Poor Monsoon May Hurt India Oilseed and Cotton Output, NCML Says
By Pratik Parija27 August 2021, 09:02 BST
Production of oilseeds and cotton in India will probably drop this year as deficient monsoon rains in main growing areas have hit plantings, according to Siraj Chaudhry, managing director and chief executive officer of National Commodities Management Services Ltd.
“We started this monsoon season with high hopes and a lot of optimism,” Chaudhary said in an interview with Bloomberg Television’s Haslinda Amin and Rishaad Salamat, Friday. The country received good rainfall in June, the start of the four-month rainy period, but there have been disappointments after that, he said.
There are some specific crops that have got affected, he said. Oilseed and cotton will see a drop in production as weaker rains have reduced their sowing areas, said Chaudhary, the head of the provider of post-harvest solutions such as procurement, storage, transportation, inspection and testing.
Rains in some areas of the western Gujarat state, a key producer of cotton, have been 50% lower than average during the monsoon season so far, while showers in parts of both Punjab and Rajasthan have been 22% below normal, according to the India Meteorological Department. Similarly, parts of Madhya Pradesh, a major soybean grower, have received 17% lower than average rainfall, it said.
The monsoon, which waters more than half of the country’s farmland, is critical for agriculture as it also fills reservoirs for crops sown in the winter. It shapes the livelihood of millions of rural people and influences food prices. Patchy rainfall in the country, the second-largest producer of rice and wheat and top buyer of palm oil, often leads to lower crop output, higher imports of edible oils, firmer food prices and weaker economic growth.
Chaudhary said the current rain situation doesn’t warrant panic, but requires caution. The price management, especially of food items, was important, he said.
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
by Tyler Durden Monday, Aug 02, 2021 - 08:40 PM
“I don’t like country music, but I don’t mean to denigrate those who do. And for the people who like country music, ‘denigrate’ means ‘put down.’”
Bob Newhart.
Covid-19 Corner
This section will continue until it becomes unneeded.
Does the FDA think these data justify the first full approval of a covid-19 vaccine?
August 23, 2021
The FDA should demand adequate, controlled studies with long term follow up, and make data publicly available, before granting full approval to covid-19 vaccines, says Peter Doshi
On 28 July 2021, Pfizer and BioNTech posted updated results for their ongoing phase 3 covid-19 vaccine trial. The preprint came almost a year to the day after the historical trial commenced, and nearly four months since the companies announced vaccine efficacy estimates “up to six months.”
But you won’t find 10 month follow-up data here. While the preprint is new, the results it contains aren’t particularly up to date. In fact, the paper is based on the same data cut-off date (13 March 2021) as the 1 April press release, and its topline efficacy result is identical: 91.3% (95% CI 89.0 to 93.2) vaccine efficacy against symptomatic covid-19 through “up to six months of follow-up.”
The 20 page preprint matters because it represents the most detailed public account of the pivotal trial data Pfizer submitted in pursuit of the world’s first “full approval” of a coronavirus vaccine from the Food and Drug Administration. It deserves careful scrutiny.
The elephant named “waning immunity”
Since late last year, we’ve heard that Pfizer and Moderna’s vaccines are “95% effective” with even greater efficacy against severe disease (“100% effective,” Moderna said).
Whatever one thinks about the “95% effective” claims (my thoughts are here), even the most enthusiastic commentators have acknowledged that measuring vaccine efficacy two months after dosing says little about just how long vaccine-induced immunity will last. “We’re going to be looking very intently at the durability of protection,” Pfizer senior vice president William Gruber, an author on the recent preprint, told the FDA’s advisory committee last December.
The concern, of course, was decreased efficacy over time. “Waning immunity” is a known problem for influenza vaccines, with some studies showing near zero effectiveness after just three months, meaning a vaccine taken early may ultimately provide no protection by the time “flu season” arrives some months later. If vaccine efficacy wanes over time, the crucial question becomes what level of effectiveness will the vaccine provide when a person is actually exposed to the virus? Unlike covid vaccines, influenza vaccine performance has always been judged over a full season, not a couple months.
And so the recent reports from Israel’s Ministry of Health caught my eye. In early July, they reported that efficacy against infection and symptomatic disease “fell to 64%.” By late July it had fallen to 39% where Delta is the dominant strain. This is very low. For context, the FDA’s expectation is of “at least 50%” efficacy for any approvable vaccine.
Now Israel, which almost exclusively used Pfizer vaccine, has begun administering a third “booster” dose to all adults over 40. And starting 20 September 2021, the US plans to follow suit for all “fully vaccinated” adults eight months past their second dose.
Delta may not be responsible
Enter Pfizer’s preprint. As an RCT reporting “up to six months of follow-up,” it is notable that evidence of waning immunity was already visible in the data by the 13 March 2021 data cut-off.
“From its peak post-dose 2,” the study authors write, “observed VE [vaccine efficacy] declined.” From 96% to 90% (from two months to <4 months), then to 84% (95% CI 75 to 90) “from four months to the data cut-off,” which, by my calculation (see footnote at the end of the piece), was about one month later.
But although this additional information was available to Pfizer in April, it was not published until the end of July.
And it’s hard to imagine how the Delta variant could play a real role here, for 77% of trial participants were from the United States, where Delta was not established until months after data cut-off.
Waning efficacy has the potential to be far more than a minor inconvenience; it can dramatically change the risk-benefit calculus. And whatever its cause—intrinsic properties of the vaccine, the circulation of new variants, some combination of the two, or something else—the bottom line is that vaccines need to be effective.
Until new clinical trials demonstrate that boosters increase efficacy above 50%, without increasing serious adverse events, it is unclear whether the 2-dose series would even meet the FDA’s approval standard at six or nine months.
---- Despite the reference to “six month safety and efficacy” in the preprint’s title, the paper only reports on vaccine efficacy “up to six months,” but not from six months. This is not semantics, as it turns out only 7% of trial participants actually reached six months of blinded follow-up (“8% of BNT162b2 recipients and 6% of placebo recipients had ≥6 months follow-up post-dose 2.”) So despite this preprint appearing a year after the trial began, it provides no data on vaccine efficacy past six months, which is the period Israel says vaccine efficacy has dropped to 39%.
It is hard to imagine that the <10% of trial participants who remained blinded at six months (which presumably further dwindled after 13 March 2021) could constitute a reliable or valid sample to produce further findings. And the preprint does not report any demographic comparisons to justify future analyses.
---- Prior to the preprint, my view, along with a group of around 30 clinicians, scientists, and patient advocates, was that there were simply too many open questions about all covid-19 vaccines to support approving any this year. The preprint has, unfortunately, addressed very few of those open questions, and has raised some new ones.
I reiterate our call: “slow down and get the science right—there is no legitimate reason to hurry to grant a license to a coronavirus vaccine.”
FDA should be demanding that the companies complete the two year follow-up, as originally planned (even without a placebo group, much can still be learned about safety). They should demand adequate, controlled studies using patient outcomes in the now substantial population of people who have recovered from covid. And regulators should bolster public trust by helping ensure that everyone can access the underlying data.
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Can what you eat save you from COVID-19?
“We have two epidemics: obesity and COVID-19,” said Dr. Mariela Glandt, a Harvard University and Columbia University-trained endocrinologist.
By MAAYAN JAFFE-HOFFMAN AUGUST 22, 2021 21:24
Could good nutrition save people from developing severe COVID-19?
According to experts in the field, nutrition is the biggest coronavirus risk factor that not enough people are talking about.
“We have two epidemics: obesity and COVID-19,” said Dr. Mariela Glandt, a Harvard University and Columbia University trained endocrinologist and nutritionist who now lives in Israel and runs a clinic for diabetics in Ramat Aviv.
She said, “As long as the pandemic is still going on, anyone who cares about their health should do everything they can to improve the risk factors that they control” – among them diet.
While eating right cannot prevent contracting coronavirus, optimal metabolic health can help prevent the negative impact of infection, several studies have shown. That’s because “good nutrition and maintenance of a healthy body weight is essential for adequate immune function, supporting resistance to infectious disease and reducing adverse outcomes in the event of illness,” according to Prof. Mona Boaz of the Department of Nutrition Sciences in the School of Health Sciences at Ariel University.
“A poor diet, like the modern American diet, with its junk food, ultra-processed starches and cheap fats, causes metabolic dysfunction that can be a disaster when it’s combined with the coronavirus,” Glandt wrote in an eBook titled How to Eat in the Time of COVID-19 that she recently published with Ross Wollen and Jessica Apple.
The book was published by ASweetLife, which describes itself as “the Internet’s trusted authority on the art of living well with diabetes.”
Severe COVID-19 – hospitalization, treatment in an intensive care unit, mechanical ventilation and even death – has been associated with higher body mass index, the Centers for Disease Control has said.
Specifically, obesity defined by BMI increases the odds of hospitalization by 76%, Boaz showed in a paper that is soon to be published but has not yet been peer reviewed. She said the likelihood of ICU admission increases by 67%, mechanical ventilation by 119% and death by 37% – all according to recent studies.
Moreover, a study that was published in the peer-reviewed journal PLOS One at the end of last month showed that people with high sugar values but who were not diagnosed with diabetes were also at risk of severe COVID-19 morbidity or mortality.
More
https://www.jpost.com/health-science/can-what-you-eat-save-you-from-covid-19-analysis-677426
Next, some very useful 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
FDA information. https://www.fda.gov/media/139638/download
Regulatory Focus COVID-19 vaccine tracker. https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker
Some more useful Covid links.
Johns Hopkins Coronavirus resource centre
https://coronavirus.jhu.edu/map.html
Rt Covid-19
The Spectator Covid-19 data tracker (UK)
https://data.spectator.co.uk/city/national
“A gentleman is someone who knows how to play the banjo – and doesn’t.”
Mark Twain.
Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported.
Remarkable density of new lithium battery promises massive range for EVs
Nick Lavars August 24, 2021
For electric planes to really take off and for electric cars to travel far longer distances between charges, we'll need batteries that pack far more energy without becoming prohibitively heavy. A team in Germany has now demonstrated a new lithium-metal battery with a density well beyond the significant 500-Wh/kg benchmark and an ability to retain its performance across hundreds of cycles.
Today's lithium-ion batteries do a wonderful job of keeping the modern world running, from electric vehicles to smartphones, to laptop computers, but scientists see a lot of potential that could be unlocked through tweaks to their architecture. One of the more promising possibilities is swapping out the graphite used in one of the battery's electrodes for pure lithium metal, a material that can hold as much as 10 times the energy.
For this reason, lithium metal is hailed as a "dream material" by some battery researchers and may well help us break through a key bottleneck in energy storage, but stability issues have plagued the technology so far. Much of this relates to adverse reactions between the electrolyte solution, which carries the lithium ions, and the battery's two electrodes, the cathode and anode.
Among the many research groups working to solve this problem is a team at Karlsruhe Institute of Technology and Helmholtz Institute Ulm (HIU), who have come up with a design that largely sidesteps this problem. The researchers started off with what's described as a cobalt-poor, nickel-rich layered cathode (NCM88) and a commercially available organic electrolyte called LP30. While the cathode reached high energy density, instability soon took hold and storage capacity decreased as the battery was cycled.
“In the electrolyte LP30, particles crack on the cathode," explains Professor Stefano Passerini, Director of HIU. "Inside these cracks, the electrolyte reacts and damages the structure. In addition, a thick mossy lithium-containing layer forms on the anode.”
So the team swapped out the LP30 electrolyte for an alternative, and one that brought about profound gains in performance. Described as a non-volatile, poorly-flammable, dual-anion ionic liquid electrolyte (ILE), this ingredient proved to largely avoid the structural defects on the cathode and saved the battery from the fatal electrochemical reactions.
“With the help of ILE, structural modifications on the nickel-rich cathode can be reduced significantly,” says Dr. Guk-Tae Kim.
And the results are rightly described as "remarkable." The lithium-metal battery with this architecture had an energy density of 560 Wh/kg. For context, there are research consortiums dedicated to breaking through the 500-Wh/kg density threshold in order to power next-generation electric vehicles, while today's best-in-class lithium-ion batteries have energy densities of 250 to 300 Wh/kg.
Earlier this year we reported on a record-setting lithium metal battery with an energy-density of 350 Wh/kg, which retained 76 percent of its capacity over 600 cycles. In terms of longevity, the new lithium metal battery design also performed remarkably well, starting out with an initial storage capacity of 214 mAh/g in the cathode material and retaining 88 percent of that across 1,000 cycles.
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Lady: “About how much money do you boys average a street?”
Oliver Hardy:
“I would say about 50 cents a street.”
Woman:
“There’s a dollar. Move down a couple of streets.”
When Laurel and Hardy play street musicians in Below Zero.
This weekend’s musical diversion. Albinoni, the son of a rich Venetian paper merchant who largely composed in his spare time, which was most of it.
The antidote to the Reading “Music” Festival taking place this weekend. Approx. 9 minutes.
T. G. Albinoni: Concerto for trumpet, 3 oboes, bassoon & b.c. in C major / Symphonia Perusina
https://www.youtube.com/watch?v=dzgi12eSvyo
This weekend’s chess update. Approx. 16 minutes.
Control the Center, They Said
https://www.youtube.com/watch?v=4c1o6QIm1xI
There's no maths update this weekend. This weekend, that unfathomable English language spelling!
Typos, tricks and misprints
Why is English spelling so weird and unpredictable? Don’t blame the mix of languages; look to quirks of timing and technology
“I love to sing, and I love to drink scotch. Most people would rather hear me drink scotch.”
George Burns.
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