Baltic Dry Index. 4056 -201 Brent Crude 85.98
Spot Gold 1790
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 27/10/21 World 245,287,597
Deaths 4,978,828
Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.
Milton Friedman.
We open today with rising global inflation fears, renewing concerns that the US Fed may be forced into a hawkish U-turn at their meeting next week.
I wish I knew how Fed Chairman Powell was trading or how the rest of the Fed Board was positioned.
Up first, more skittishness following an inflation surge in Australia and an unusually honest inflation prediction by President Barack Obama’s chief of global development.
Stocks slip, short-term yields leap with inflation
SINGAPORE (Reuters) - Tech shares slipped and short-term Treasury yields jumped on Tuesday as investors expect inflation to prompt interest rate hikes, with a hotter-than-forecast reading in Australia the latest sign of prices pressuring central bankers to act.
The Australian dollar also rose about 0.4% and short-dated Aussie government bonds sold heavily after the data release, which showed Australian core inflation hitting a six-year high.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5% - although it remains on course for its best month of the year - led by tech shares falling in Hong Kong. Japan’s Nikkei fell 0.6%.
Strong earnings had earlier propelled Wall Street indexes to fresh records and U.S. stock futures were flat in early trade.
“There are a couple of things that are of concern to investors, and inflation news is everywhere,” said Khoon Goh, head of Asia research at ANZ Bank in Singapore.
“This is where expectations of when the Fed might start to lift interest rates is starting to come in to focus. The announcement of tapering next week is pretty much a done deal - markets have moved past tapering and are focused on tightening.”
Two-year U.S. Treasury yields leapt nearly 5 basis points to 0.4970%, a 19-month high. The Federal Reserve meets next Tuesday and Wednesday with crude oil and soft commodity prices hovering near multi-year peaks.
More
Former Obama Economic Chief: Inflation is Here to Stay
Oct 26th, 2021, 3:23 pm
Former President Barack Obama’s chief of global development on Tuesday predicted inflation was here to stay, despite the Biden administration’s protestations to the contrary.
Prices “will go higher, and the Fed has misread the inflation dynamics in a big way,” former Global Development Council Chairman Mohamed El Erian said in an
afternoon interview with Fox News’ Sandra Smith, adding that the Federal Reserve was “still hostage to this notion that it’s transitory.”
“The first thing it should do is stop injecting $120 billion every month,” he said, referencing the Fed’s monthly purchase of Treasury securities and mortgage-backed bonds aimed at encouraging heightened levels of consumer borrowing and spending. “It should stop that. Do we really need the Fed to buy $40 billion of mortgages and push house prices even higher? No!”
Biden administration officials have vacillated between denying inflation will persist into the future and offering other arguments in its defense, including one offered by former Obama economist Jason Furman, who stoked controversy this month when he commented on Twitter that inflation was a “high-class problem.”
More
https://www.mediaite.com/news/former-obama-economic-chief-inflation-is-here-to-stay/
The big news today though, comes from the America v China economic war, where the Biden administration is extending President Trump’s attack on China’s telcos.
How will China respond? Sanctions on AT&T? More tariffs on US products? Rare earths?
FCC revokes authorization of China Telecom's U.S. unit
October 27, 20212:07 AM BST
WASHINGTON, Oct 26 (Reuters) - The U.S. Federal Communications Commission (FCC) on Tuesday voted to revoke the authorization for China Telecom's (0728.HK) U.S. subsidiary to operate in the United States, citing national security concerns.
The decision means China Telecom Americas must now discontinue U.S. services within 60 days. China Telecom, the largest Chinese telecommunications company, has had authorization to provide telecommunications services for nearly 20 years in the United States.
The FCC found that China Telecom "is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight."
The U.S. regulator added that Chinese government ownership and control "raise significant national security and law enforcement risks by providing opportunities" for the company and the Chinese government "to access, store, disrupt, and/or misroute U.S. communications."
"The FCC’s decision is disappointing. We plan to pursue all available options while continuing to serve our customers," a China Telecoms America spokesperson told Reuters.
China Telecom served more than 335 million subscribers worldwide as of 2019 and claims to be the largest fixed line and broadband operator in the world, according to a Senate report, and also provides services to Chinese government facilities in the United States
More
In other China news, China’s property crisis continues growing.
China Evergrande shares fall on persistent pressure from debt travails
October 27, 2021 3:09 AM BST
HONG KONG, Oct 27 (Reuters) - Shares of cash-strapped China Evergrande Group (3333.HK) and its electric vehicle unit (0708.HK) fell early on Wednesday, as the country's state planner called on companies in "key sectors" to "optimise" offshore debt structures.
Evergrande and China Evergrande New Energy Vehicle Group Ltd both fell less than 1% by 0155 GMT. The Hang Seng Index (.HSI) slumped 1.7%.
China Evergrande Group is reeling under more than $300 billion in liabilities, fuelling worries about the impact of its fate on global markets.
Late on Tuesday, China's National Development and Reform Commission said that it and the State Administration for Foreign Exchange had met with foreign debt issuers, advising them to use funds for approved purposes and "jointly maintain their own reputations and the overall order of the market".
Evergrande said on Tuesday it has resumed work on some projects in the Pearl River Delta region and it would deliver 31 real estate projects by the end of 2021. That number will rise to 40 by the end of June 2022.
Many of Evergrande's construction projects across the country have been suspended as it was unable to pay contractors. The developer has some 1,300 real estate projects across China.
https://www.reuters.com/business/shares-china-evergrande-fall-early-trade-2021-10-27/
Chinese developer Modern Land defaults on bond; property shares drop
October 26, 2021 10:06 AM BST
HONG KONG/SHANGHAI, Oct 26 (Reuters) - Modern Land (1107.HK) has missed a bond payment, the latest Chinese property developer to do so, adding to worries about the wider impact of the debt crisis at behemoth China Evergrande Group (3333.HK), and dragging on shares in the sector.
China's state planner was set to meet property firms carrying large dollar-denominated debts on Tuesday to take stock of their total issuance volume and repayment capability, amid mounting concern about liquidity.
Modern Land (China) Co Ltd said in a filing that it had not repaid principal and interest on its 12.85% senior notes that matured on Monday due to "unexpected liquidity issues".
The missed payment comes days after the company, a smaller developer, scrapped plans to seek investor consent to extend the maturity date of its bond by three months, saying doing so was not in the best interests of it and its stakeholders. read more
Ratings agency Fitch earlier this month cut Modern Land's rating to "C" from "B" over the consent solicitation to change bond terms, saying it considered the move a distressed debt exchange.
Developers are defaulting "one by one", said an investor with exposure to Chinese high-yield debt, who asked not to be identified as he is not authorised to speak to media.
"The question is always, who's next?"
This month, Fantasia Holdings Group (1777.HK) defaulted on a maturing dollar bond that heightened concerns in international debt markets, already roiled by worries over whether Evergrande would meet its obligations.
Evergrande, which narrowly averted a costly default last week, is reeling under more than $300 million in liabilities and has a major payment deadline on Friday. read more
Shares of property developers extended losses, hurt also by concern over China's plans to introduce a real estate tax.
More
More Chinese developers could default, but analyst says real estate troubles have not spilled over
Investors could expect more Chinese property developers to default on bond payments, but troubles in the real estate sector have not spilled over to other industries, an analyst said Tuesday.
Financial distress among Chinese real estate firms came to forefront in the last few months as Evergrande and other developers struggled to repay their debt. Evergrande appeared to have averted a default after reportedly remitting funds for an interest payment last week.
“Most likely we are going to see more defaults ... of these developers,” Bo Zhuang, senior analyst at investment firm Loomis Sayles, told CNBC’s “Street Signs Asia.”
The analyst said the increase in bond defaults should be gradual, with Chinese authorities marginally easing some policy measures that have weighed down the real estate sector.
He noted that housing sales in China have stopped declining in the last two weeks, which is “a good sign.” That has made the valuation of some developers “appealing” to investors, he added.
Future of China’s property sector
Chinese property developers make up a large portion of the Asian high-yield bond market.
Those firms have grown rapidly following years of excessive borrowing. Chinese authorities have ramped up efforts to rein in excesses in the sector, such as by limiting rampant borrowing among developers and tightening rules for mortgage lending.
“From the market perspective, all these high-yield Chinese property names have gone through this roller coaster. But if you look at the other non-property names in China, of the companies that have issued bonds, they seem to be doing fine,” said Zhuang.
---- The Chinese property sector will likely look different in the next five to 10 years, said Zhuang.
He predicted that the government would play a bigger role in the sector to control housing prices and development projects. That means the market share of private firms would decline, with many developers going bust or merging with other companies, added the analyst.
Finally, is cryptocurrency really a sophisticated scam?
Bitcoin Is Still Concentrated in Few Hands, Study Finds
Mon, October 25, 2021, 9:07 PM
Bitcoin’s surging popularity hasn’t changed one of its original attributes. Its ownership is still concentrated in just a few hands.
The top 10,000 individual investors in Bitcoin control about one-third of the cryptocurrency in circulation, according to a study by the National Bureau of Economic Research.
Crypto enthusiasts have long pondered who the largest owners of Bitcoin are since the early days of the its existence. It can be especially difficult to determine the concentration of ownership, as many of the largest addresses don’t often represent individuals, but exchanges and other entities that hold Bitcoin on behalf of other investors.
However, by using a data collection method that differentiated between addresses belonging to intermediaries and individuals, NBER researchers were able to find the former controlled about 5.5 million Bitcoin at the end of last year while the latter controlled about 8.5 million. Additionally, the top 1,000 individual investors controlled about 3 million, and the concentration could be even greater.
“This measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity,” researchers Igor Makarov and Antoinette Schoar wrote.
For instance, the data did not not assign the ownership of early Bitcoins held in about 20,000 addresses to one person (Satoshi Nakamoto) and considered them as belonging to 20,000 different individuals.
The concentration of miners is even more profound, data show. NBER found that the top 10% of miners control 90% of the Bitcoin mining capacity, and just 0.1% (about 50 miners) control 50% of mining capacity.
Such a high concentration could make the Bitcoin network vulnerable to a 51% attack, where a colluding set of miners or one miner is able to take control of a majority of the network. NBER found the concentration also decreases following sharp increases in the Bitcoin price, meaning the probability the network is vulnerable to a 51% attack is higher when Bitcoin’s price drops sharply.
More
https://finance.yahoo.com/news/bitcoin-still-concentrated-few-hands-194718070.html
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Aussie jumps as inflation data sparks rate hike talk, yen becalmed before BOJ
October 27, 2021 5:00 AM BST
HONG KONG/TOKYO, Oct 27 (Reuters) - The Aussie dollar jumped on Wednesday as surprisingly strong inflation data raised the possibility of sooner-than-planned rate hikes, while the yen was calm as Japan's central bank is seen retaining its easy monetary policy stance later this week.
Traders are also looking to policy announcements this week from the European and Canadian central banks for clues on the outlook for rates amid the backdrop of supply-side driven global inflation pressures.
The Australian dollar was last up 0.35% at $0.7525 heading back towards a four-month top of $0.7546 hit last week, after data showed Australian core inflation rose at its fastest annual pace since 2015 in the September quarter, and quicker than the Reserve Bank of Australia's projections.
The data backed markets' view that the RBA is behind the curve on inflation and may have to tighten monetary policy earlier than it has been publicly planning for.
More
Centrica boss warns of extra £100 energy costs facing UK households
Tuesday 26 October 2021 1:24 pm
UK households will face £100 in extra costs following the collapse of multiple small energy firms, warns Chris O’Shea, chief executive of British Gas owner Centrica.
Speaking to a House of Lords committee, O’Shea said, “The current retail market failures will put £100 on the bills of every single home in the UK.
The CEO argued that if these costs on bills were put on households at a flat rate then the energy transition will hit the poorest people the hardest.
He explained, “Whether that is a house in Belgravia or a studio flat in a deprived area of Glasgow, it will be the same amount – and that is the same with the policy costs at the moment.
He also called for “regressive” taxes related to the green energy transition to be scrubbed from bills.
https://www.cityam.com/centrica-boss-warns-of-extra-100-energy-costs-facing-uk-households/
Prepare for Propane Sticker Shock
Exports have drained domestic supply ahead of heating season and prices have surged
Oct. 25, 2021 5:30 am ET
Propane prices haven’t been so high heading into winter in a decade, which is bad news for the millions of rural Americans who rely on the fuel to stay warm.
At $1.41 a gallon at the Mont Belvieu trading hub in Texas, on-the-spot prices are about triple those of the past two Octobers. Of the two main U.S. propane futures contracts, one hit a high earlier this month and the other doesn’t have far to climb to eclipse the record it set during the blizzard of 2014. The average residential price tracked by the U.S. Energy Information Administration has jumped by 50% from a year ago, to $2.69 a gallon.
All manner of heating fuels are heading into winter at their highest prices in years and could climb more if the weather is cold. But propane is expected to take the biggest bite out of household budgets.
Most U.S. households and businesses are heated with natural gas or electricity, highly regulated markets in which consumers are insulated from price swings in the commodities and usually given time to catch up on payments before they go cold.
Buying propane is more like filling up a car. The fuel is paid for upon receipt and priced in the free market. Residential propane is delivered by truck, often by small firms over big swaths of countryside. Domestic inventories have been so drained by exports that it isn’t out of the question that some could be left for periods without propane no matter what they are able to pay.
“You have no alternative for heat,” said Robert Stier, lead petrochemicals analyst at S&P Global Platts. “Your options: Turn down the thermostat, put on a sweater or burn wood in a fireplace.”
About 5% of American households are heated with propane. Outside of residential uses, propane fuels forklifts, heats hotel pools and is consumed in huge quantities to make polypropylene, a plastic.
More
https://www.wsj.com/articles/prepare-for-propane-sticker-shock-11635026109
Target CEO: Supply-chain bottlenecks won't be resolved overnight
Brian SozziMon, October 25, 2021, 4:38 PM
Target CEO Brian Cornell said the discounter is well-prepared in the lead-up to the holiday shopping season to navigate the supply-chain challenges weighing on retailers and manufacturers of all kinds.
All it took was very, very careful forward planning.
"We have become much more agile. We have taken the steps we have had to take," Cornell said at Yahoo Finance's All Markets Summit.
For its part, Target ended the second quarter with inventory up $2.5 billion, compared to a year ago as it brought in merchandise early to ensure against products being out of stock. The company has also chartered its own cargo ship to keep goods flowing to its 1,900 stores and distribution centers.
Despite the increased efforts, Cornell concedes that supply-chain challenges will be around for some time.
"I think we have been seeing supply-chain challenges. Whether that is closures in Asia or the slowdown of ports, the challenges with driver shortages in the United States. I don't think these issues are resolved overnight. Obviously we are very focused on making sure we play our role and move through the system. We are currently hiring 30,000 additional team members in our supply-chain system. I think this is going to take quite a bit of time to sort out," Cornell added.
Target and rival Walmart are receiving high marks on Wall Street for their careful supply-chain planning. It also helps that both are heavyweights in the retail space that command much of the attention of key vendors.
More
Inflation outlook key for timing of Polish interest rate rise - central banker says
October 26, 20218:58 AM BST
WARSAW, Oct 26 (Reuters) - Poland's November inflation projection may be crucial for the country's central bank in deciding whether interest rates rise again this year, Eryk Lon, one of the most dovish members of the Monetary Policy Council (MPC), said.
In an unexpected move, the bank raised its benchmark interest rate in October by 40 basis points to 0.5%, acting sooner than analysts had expected to try to curb an inflation spike.
"Whether there will be another interest rate hike this year will depend on the November projection. I believe that the October interest rate hike will gradually bring down inflation," Lon wrote in response to Reuters' questions.
Polish inflation rose to 5.9% in September, well above the central bank's target range of 2.5% plus or minus one percentage point.
More
Covid-19 Corner
This section will continue until it becomes unneeded.
COVID-19 cases spike in Belgium; govt poised for action
October 26, 2021
BRUSSELS (AP) — Coronavirus indicators are shooting upward in Belgium, pushing the government on Tuesday to consider re-imposing some pandemic measures that it only relaxed a few weeks ago.
Daily infections in the nation of 11 million increased 75% to reach 5,299 case on a daily basis last week. Hospitalizations have increased by 69% to reach 102 daily cases. Deaths have increased slightly, with an average of 13 a day.
To turn around this trend, the government and regional officials are set to decide later Tuesday to boost measures again, although stopping well short of a going into a lockdown. Indications are that authorities are looking at increased mandatory use of face masks and virus passports.
The urgency is such that the meeting has already been brought forward three days.
Requirements for the use of masks and some other measures were only relaxed early this month, and the easing could be partly turned back. Health Minister Frank Vandenbroucke, however, said that drastic restrictions were still out of the question.
“Bars and restaurants will remain open. Kids must go to school — it’s important. But maybe we will be going back to more face masks,” he told VRT network late Monday.
Even though over 85% of Belgian adults are vaccinated, a complicating factor has emerged in the high transmission rate in primary schools.
The government research institute Sciensano found that more that one in four pupils there have antibodies to the virus. Although children generally do not get so ill that they have to be hospitalized, they can easily transmit the disease to others.
More
In other news, flu season is arriving in the northern hemisphere. Hmmm.
Rise in human bird flu cases in China shows risk of fast-changing variants: experts
October 26, 20218:50 AM BST
BEIJING, Oct 26 (Reuters) - A jump in the number of people in China infected with bird flu this year is raising concern among experts, who say a previously circulating strain appears to have changed and may be more infectious to people.
China has reported 21 human infections with the H5N6 subtype of avian influenza in 2021 to the World Health Organization (WHO), compared with only five last year, it said.
Though the numbers are much lower than the hundreds infected with H7N9 in 2017, the infections are serious, leaving many critically ill, and at least six dead.
"The increase in human cases in China this year is of concern. It's a virus that causes high mortality," said Thijs Kuiken, professor of comparative pathology at Erasmus University Medical Centre in Rotterdam.
Most of the cases had come into contact with poultry, and there are no confirmed cases of human-to-human transmission, said the WHO, which highlighted the rise in cases in a statement on Oct. 4.
It said further investigation was "urgently" required to understand the risk and the increase in spill over to people.
Since then, a 60-year-old woman in Hunan province was admitted to hospital in a critical condition with H5N6 influenza on Oct. 13, according to a Hong Kong government statement.
While human H5N6 cases have been reported, no outbreaks of H5N6 have been reported in poultry in China since February 2020.
China is the world's biggest poultry producer and top producer of ducks, which act as a reservoir for flu viruses.
More
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
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.
As we approach the start of the very leftist COP-26 eco junket in rainy Glasgow Scotland; whose idea was it to pick rainy, gale prone west Scotland in November anyway, there’s a flaw in the plan for European solar power from the Sahara. Approx. 18 minutes.
The Problem with Solar Energy in Africa
https://www.youtube.com/watch?v=7OpM_zKGE4o
UK's Queen Elizabeth pulls out of COP26 following advice to rest
October 26, 20217:17 PM BST
LONDON, Oct 26 (Reuters) - Britain's Queen Elizabeth has pulled out of the COP26 conference in Glasgow next week after she was advised by doctors to rest, Buckingham Palace said on Tuesday, in a blow to the United Nations climate summit.
A palace source said the decision not to attend had been taken as a "sensible precaution" and to let everyone know in advance. The 95-year-old queen remains in good spirits and wants COP26 to be a success, the source added.
"Following advice to rest, The Queen has been undertaking light duties at Windsor Castle," Buckingham Palace said.
"Her Majesty has regretfully decided that she will no longer travel to Glasgow to attend the Evening Reception of COP26 on Monday, 1st November."
The world's oldest and longest-reigning monarch stayed overnight in hospital on Wednesday after undergoing "preliminary investigations" for an unspecified but not COVID-19 related ailment.
More
Inflation is the one form of taxation that can be imposed without legislation.
Milton Friedman.
No comments:
Post a Comment