Baltic Dry Index. 4410 -243 Brent Crude 86.22
Spot Gold 1798
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 25/10/21 World 244,429,112
Deaths 4,963,769
"Never believe anything in politics until it has been officially denied."
Otto von Bismarck.
US Treasury Secretary Yellen said yesterday that she doesn’t think US inflation will subside before the middle of next year. So not transitory at all then.
If Secretary Yellen is right, with a big emphasis on that IF, US inflation will have lasted for one and a half years. Maybe in the US Treasury and at the Fed that is their definition of “transitory, but in the real world calling it transitory is dissembling. Misleading the public for whatever political reason.
Not that there’s very much reason to think that US and global inflation will be abating by the middle of next year.
A new La Nina climate development in the Pacific threatens, more often than not, to unleash a new round of food price inflation on the world.
Supply chain disruption is still rising rather than falling as is the price of crude oil.
Europe and China are both facing a winter energy crisis, or rather lack of energy crisis. India is facing a lack of coal crisis.
The SARS-CoV-2 pandemic shows little sign of receding despite all of the very expensive vaccines now sending big pharma profits to the moon.
All of the trillions upon trillions of new global Magic Money Tree fiat money, created since the central banksters discovered the Magic Money Tree forests in March 2020, are still adding demand pull inflation on top of cost push inflation.
Once upon a time in a land far away…. Secretary Yellen wouldn’t be telling fairy tales would she? Did they all live happily ever after?
I think I’m with Otto on this one.
Asia-Pacific stocks mixed as HSBC earnings beat expectations; oil prices rise
SINGAPORE — Shares in Asia-Pacific were mixed in Monday trade as investors reacted to the release of HSBC earnings.
Hong Kong’s Hang Seng index rose around 0.1% by the afternoon. Hong Kong-listed shares of HSBC rose 0.54%, with the bank on Monday reporting a pre-tax profit in the third quarter of 2021 that bested expectations.
Shares of embattled developer China Evergrande Group jumped around 4% after the firm announced Sunday it had resumed work on more than 10 projects, according to Reuters.
Mainland Chinese stocks were also higher, with the Shanghai composite gaining 0.38% while the Shenzhen component advanced 0.377%.
Japan’s Nikkei 225 slipped 0.82% while the Topix index shed 0.25%. South Korea’s Kospi gained 0.43%.
Stocks in Australia edged higher, with the S&P/ASX 200 up 0.35%.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.09%.
Meanwhile, the Covid-19 situation in China could weigh on investor sentiment after an official warned that the outbreak could spread further, Reuters reported Sunday.
Oil prices rise
Oil prices were higher in the afternoon of Asia trading hours, with international benchmark Brent crude futures rising 0.85% to $86.26 per barrel. U.S. crude futures gained 1% to $84.60 per barrel.
Looking ahead, U.S. tech giants including Apple, Microsoft and Alphabet are set to announce their earnings results this week.
More.
https://www.cnbc.com/2021/10/25/asia-markets-us-big-tech-earnings-covid-in-china-currencies-oil.html
Yellen says U.S. is not losing control of inflation
October 24, 2021
WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen said on Sunday that the United States was not losing control of inflation, and that she expected inflation levels to return to normal by the second half of next year.
Yellen, in an interview on CNN, said spending in President Joe Biden’s domestic infrastructure and Build Back Better packages would be allocated over the next 10 years, but she did not say whether that would exacerbate inflation.
“I don’t think we’re about to lose control of inflation,” Yellen said.
“On a 12-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement by the middle to end of next year - second half of next year,” Yellen said.
Supply chain snags have bedeviled the United States and other countries as economic reopenings spur a surge in demand.
“As we make further progress on the pandemic, I expect these bottlenecks to subside. Americans will return to the labor force as conditions improve,” she said.
The Federal Reserve has promised to keep its benchmark overnight interest rate at the current near-zero level until the economy has returned to full employment and inflation has reached the central bank’s 2% goal and is on track to stay moderately above that level for some time.
Next, has the Fed left it too late to raise interest rates? Has the Fed ineptly backed itself into a no-win corner?
It can start raising interest rates now, but only at the risk of putting the US economy into a recession. Or it can leave its key interest rate unchanged and turn a cantering inflation into a full galloping inflation.
Either way an unpleasant choice lies ahead for the Fed.
My guess, the Fed won’t dare put the economy into recession ahead of next year’s mid-term elections, blowing up the Democrats iffy control of the House and Senate, so a galloping inflation is likely, or at best, a classic stagflation all the way out to mid-2023.
The U.S. economy may have just suffered its biggest hiccup since the pandemic erupted
Last Updated: Oct. 23, 2021 at 12:26 p.m. ET First Published: Oct. 22, 2021 at 1:29 p.m. ET
The U.S. economy hasn’t exactly fallen into a rut, but the U.S. may have just suffered its biggest hiccup since the coronavirus pandemic erupted in early 2020.
Gross domestic product, the sum of everything that goes on in the economy, likely grew in the third quarter at the slowest pace in a year and half, Wall Street predicts. Third quarter GDP data will be released next Thursday.
The nation’s economic growth is expected to be cut by more than half to a 3.1% annualized pace in the period covering July through September, according to economists polled by The Wall Street Journal. The U.S. expanded at a 6.7% annualized clip in the second quarter.
Other economic fortune tellers say even slower growth is in the cards. IHS Markit, the gold standard among Wall Street DJIA, +0.21% forecasters, estimates GDP is on track to grow just 1.5%.
The Atlanta Federal Reserve’s GDPNow forecast is even weaker: 0.5%.
The big story was the surge in coronavirus cases tied to the delta variant during the third quarter.
Toward the end of the summer Americans went out less and traveled less to avoid catching the virus. That meant reduced spending at hotels, restaurants, theaters, vacation resorts and the like.
The result: Consumer spending, the biggest engine of the economy, may have grown a tepid 1% or less.
By contrast, spending soared by a 12% annual rate in the spring and 11.4% in the first three months of the year.
The delta variant wasn’t the only source of reduced spending. Massive government stimulus provided by the federal government had mostly dried up by the end of the third quarter. Huge stimulus payments to individuals and families boosted spending earlier in the year.
More
The Federal Reserve’s next interest rate-hike cycle is coming but may not look like what officials have been projecting
Published: Oct. 23, 2021 at 8:30 a.m. ET
The Federal Reserve’s first cycle
of interest rate hikes since 2015-2018 is coming into view, with liftoff
anticipated sometime next year, though it may look different from what policy
makers have imagined, according to investors and analysts.
Traders are now factoring in a more aggressive start to the central bank’s
likely monetary policy tightening campaign given persistently stubborn
inflation, and in some cases a relatively quick end to rate hikes too. In one
of two scenarios gaining the most momentum among Eurodollars traders, some
think the fed funds rate target may not get above 1% out to 2028. As of Friday,
a bit more than two 25 basis point hikes from the Fed was being priced in by
the end of 2022.
Many in financial markets are already looking past a likely
announcement at the Fed’s Nov. 2-3 meeting that
officials will start tapering their $120 million in monthly bond purchases.
With the multi-month tapering process considered a foregone conclusion, the
focus is now on the Fed’s most likely path forward with interest rate rises as
expectations also build for the Bank of England to
move rates higher by December.
Remarks made by Fed Chairman Jerome
Powell, during a discussion sponsored by South Africa’s
central bank on Friday, suggested the Fed may be moving away from an emphasis
on the transitory nature of high inflation. He said that elevated inflation is
likely to last into 2022, and “we need to make sure that our policy is
positioned to adjust to a range of possible outcomes.”
The reaction in markets was swift, with yields on long-dated maturities falling more quickly than short-term yields briefly did in a so-called bull-flattening of the Treasurys curve. Meanwhile, the S&P 500 SPX, -0.11% pulled back from a record and Nasdaq Composite indexes COMP, -0.82% slid nearly 1% Friday, but both still notched weekly gains while the Dow industrials DJIA, +0.21% finished at a record high. Earlier in the day, traders’ expectations for inflation over the next five years topped 3% for the first time on record.
----When it comes to thinking about
how to price the Fed’s policy path, “the market seems to be increasingly of two
minds,” Cohn said via e-mail.
One involves a scenario in which the central bank commits a “policy mistake,”
he said, where the “Fed feels pressured into an earlier-than-projected, and
ultimately poorly timed, set of hikes that hinders the recovery and thereby
cuts the hiking cycle short.” The other scenario, albeit one that traders deem
less likely, is a reflationary one in which the Fed is able to keep raising
rates until the fed funds target range is above 3%, a level not seen since early
2008.
More
“The most effective way to destroy people is to deny and obliterate their own understanding of their history.”
George Orwell.
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Twitter and Square CEO Jack Dorsey says ‘hyperinflation’ will happen soon in the U.S. and the world
Published Sat, Oct 23 2021 10:12 AM EDT Updated Sat, Oct 23 2021 10:32 AM EDT
Twitter co-founder Jack Dorsey weighed in on escalating inflation in the U.S., saying things are going to get considerably worse.
“Hyperinflation is going to change everything,” Dorsey tweeted Friday night. “It’s happening.”
The tweet comes with consumer price inflation running near a 30-year high in the U.S. and growing concern that the problem could be worse that policymakers have anticipated.
----In addition to overseeing a social media platform that has 206 million active daily users, Dorsey is a strong bitcoin advocate. He has said that Square, the debit and credit card processing platform that Dorsey co-founded, is looking at getting into mining the cryptocurrency. Square also owns some bitcoin and facilitates trading in it.
Responding to user comments, Dorsey added Friday that he sees the inflation problem escalating around the globe. “It will happen in the US soon, and so the world,” he tweeted. Dorsey is currently both the CEO of Twitter and Square.
It’s one thing to call for faster inflation, but it may be surprising to some that Dorsey used the word hyperinflation, a condition of rapidly rising prices that can ruin currencies and bring down whole economies.
Billionaire investor Paul Tudor Jones and others have called for a period of rising inflation. Jones told CNBC earlier in the week that he owns some bitcoin and sees it as a good inflation hedge.
“Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment,” Jones said Wednesday.
But most of the major investors have not gone so far as to call for hyperinflation like Dorsey.
Jeffrey Gundlach says inflation will stay above 4% through 2022
Published Fri, Oct 22 2021 1:27 PM EDT
Billionaire bond investor Jeffrey Gundlach said Friday that inflation in consumer prices likely will remain elevated through 2021 and stay above 4% through at least 2022.
Citing pressures from shelter costs and rising wages, the head of DoubleLine Capital told CNBC that he sees the current inflation run as non-transitory and instead likely to persist well into the future.
“We believe that it’s almost certain that 2021 will end with a 5-handle on the [consumer price index], and it’s going higher in the next couple of readings, thanks primarily to the price of energy,” Gundlach said on CNBC’s “Halftime Report.” “And we don’t think inflation is going below 4% anytime in 2022.”
His comments come with the CPI, which measures a broad basket of consumer goods prices, increasing at a 5.4% annual pace when including food and energy costs, the fastest in 30 years. The Federal Reserve’s preferred gauge, which measures personal consumption expenditures excluding food and energy, is at a 3.6% year over year pace, well ahead of the central bank’s 2% target.
Fed officials insist that the current price increases are transitory and driven by supply-chain shocks, extraordinary demand for goods over services, and a labor shortage, all related to the Covid-19 pandemic.
While Gundlach conceded that some of the increases, such as lumber and some other commodities, are temporary, others are not.
One factor he cited is shelter costs, which make up about one-third of the CPI and have been rising steadily this year, though not a pace equal to the headline surge.
“It’s almost certain that we’re going to get persistently high inflation thanks to the shelter component going up, and perhaps the wages, too,” he said.
The result, he said, has been negative real interest rates as government bond yields remain low while inflation runs high. He called the negative rates “wickedly unattractive” from an investing standpoint.
Federal Reserve Chair Powell’s five measuring sticks on inflation aren’t holding up very well
Published Tue, Oct 19 2021 2:43 PM EDT Updated Tue, Oct 19 2021 6:12 PM EDT
Federal Reserve Chairman Jerome Powell, during his August speech at the annual Jackson Hole symposium, laid out five reasons supporting his view that the current run of high inflation will go away. So far, they aren’t holding up very well.
In fact, there are weaknesses in each of the five planks that, if not thwarting it altogether, at least undermine the Fed’s inflation position and give markets and consumers plenty to watch.
“In the period ahead, wage growth outside low-paid high-touch sectors and indicators of longer-term inflation expectations … will play an important role in determining whether the Fed shifts more decisively in a hawkish direction or ends up being vindicated,” Krishna Guha, head of global policy and central bank strategy for Evercore ISI, said in a recent note.
“The risk for the Fed is that even if the transitory story
is ultimately right, it could face a crunch point
(end this year/early next?) when these tests too come under stress,” he added.
At Jackson Hole, Powell mentioned “inflation” 89 times in a speech titled “Monetary Policy in the Time of COVID.
----Powell’s five-point inflation checklist goes like this: Lack of broad-based pressures; lower moves in high-inflation items; low wage pressures; tepid inflation expectations, and long-lasting forces that have kept inflation low globally.
Since the speech, the data has pointed mostly to continuing and in some respects escalating price pressures. Markets have responded by pushing up the yield on the benchmark 10-year Treasury note by about a quarter percentage point.
To be sure, there’s plenty of time for Powell to be right, and many professional economists also hold the “transitory” position.
But consumer expectations for inflation continue to surge, rising to 5.3% over the next year and 4.2% over the next three years, according to the New York Fed. Both are the highest in the history of a data series that goes back eight years.
Moreover, in recent days traders have upped their bets that the Fed will move faster than anticipated on rate hikes. Market pricing now implies a first increase coming in September 2022, followed by at least one more 25 basis point move before the end of the year, according to the CME’s FedWatch tracker. Current Fed forecasts are for a slightly better than even chance of one rate hike next year.
More
Inflation is not all bad. After all, it has allowed every American to live in a more expensive neighborhood without moving.
Senator Alan Cranston.
Covid-19 Corner
This section will continue until it becomes unneeded.
Covid-19 cases recorded in eastern Europe hit 20 million
Published Sun, Oct 24 2021 8:09 AM EDT
The number of coronavirus infections recorded so far in eastern Europe surpassed 20 million on Sunday, according to a Reuters tally, as the region grapples with its worst outbreak since the pandemic started and inoculation efforts lag.
Countries in the region have the lowest vaccination rates in Europe, with less than half of the population having received a single dose.
Hungary tops the region’s vaccination rates with 62% of its population having gotten at least one shot, whereas Ukraine has given just 19% of its residents a single dose, according to Our World in Data.
New infections in the region have steadily risen and now average over 83,700 new cases per day, the highest level since November last year, Reuters data through Friday showed. Although it has just 4% of the world’s population, eastern Europe accounts for roughly 20% of all new cases reported globally.
According to a Reuters analysis, three of the top five countries reporting the most deaths in the world are in eastern Europe - Russia, Ukraine and Romania.
More
https://www.cnbc.com/2021/10/24/covid-19-cases-recorded-in-eastern-europe-hit-20-million.html
Russian COVID spike persists, setting new death record
MOSCOW (AP) — Russia is reporting a record high number of coronavirus infections and COVID-19 deaths as the country approaches a week of nonworking days aimed at stemming the sharp surge in cases.
The national coronavirus task force said Saturday that 1,075 people had died from the virus in the past day and that 37,678 new infections were tallied — the largest single-day numbers of the pandemic.
The daily death toll is about 33% higher than that recorded in late September and infection cases have risen by about 70% in the past month.
Only about one-third of Russia’s 146 million people have been vaccinated, frustrating officials and placing a strain on the country’s health-care system.
Facing widespread resistance to vaccination, President Vladimir Putin has responded to the worsening situation by ordering Russians to stay away from work between Oct. 30 and Nov. 7.
More
Ukraine sees new record high in virus deaths, infections
KYIV, Ukraine (AP) — Ukraine’s coronavirus infections and deaths reached all-time highs for a second straight day Friday, in a growing challenge for the country with one of Europe’s lowest shares of vaccinated people.
Ukrainian health authorities reported 23,785 new confirmed infections and 614 deaths in the past 24 hours.
Authorities in the capital, Kyiv, shut schools for two weeks starting Friday, and similar measures were ordered in other areas with high contagion levels.
Authorities have blamed surging infections on a sluggish pace of vaccination in the nation of 41 million. Ukrainians can freely choose between Pfizer, Moderna, AstraZeneca and Sinovac vaccines, but only about 15% of the population is fully vaccinated, Europe’s lowest level after Armenia.
Overall, the country has registered over 2.7 million infections and about 63,000 deaths.
The steep rise in contagion has prompted the government to tighten restrictions. Starting Thursday, proof of vaccination or a negative test is required to board planes, trains and long-distance buses.
In Rivne, 300 kilometers (190 miles) west of Kyiv, the city hospital is swamped with COVID-19 patients and doctors say the situation is worse than during the wave of infections early in the pandemic that severely strained the health system.
“The ... course of the disease is certainly more severe and more aggressive than last year. The patients have become younger,” said Valentyn Koroliuk, head of the hospital’s intensive-care unit. “Unfortunately, those patients who are in our department are not vaccinated.”
----A black market for counterfeit vaccination certificates has blossomed amid the restrictions, and Ukrainian President Volodymyr Zelenskyy chaired a meeting earlier this week on ways of combating the illegal practice.
More
U.S. officials keep close watch on the ‘delta plus’ Covid mutation as it spreads in the U.K.
Published Fri, Oct 22 2021 12:52 PM EDT
U.S. health officials are keeping a close eye on an emerging Covid-19 subvariant, dubbed “delta plus,” that some scientists say may be more contagious than the already highly transmissible delta variant.
Formally known as AY.4.2, delta plus includes two new mutations to the spike protein, A222V and Y145H, which allow the virus to enter the body. Those mutations have been found in other Covid variants, so it’s unclear how dramatically those changes affect the virus.
Francois Balloux, director of the Genetics Institute at University College London, said it could be 10%-15% more contagious than delta, which first appeared in India and spreads easier than Ebola, SARS, MERS and the 1918 Spanish flu, according to the Centers for Disease Control and Prevention.
Delta has an R-naught, or reproductive rate, of eight or nine, according to CDC Director Dr. Rochelle Walensky, meaning that every person who has Covid will spread it to up to nine other people. The “wild type” or original strain of Covid had an estimated R-naught of about three. Someone infected with the delta variant carries 1,000 times the viral load of the original Covid strain.
India’s Ministry of Health reported in June that delta plus was more transmissible than the delta variant, adding that the subtype binds more strongly to lung cell receptors and could even reduce the effectiveness of monoclonal antibody treatments.
The mutation has been detected in the U.S., but there hasn’t been a noticeable uptick in delta plus cases nationwide, Walensky said at a White House Covid briefing Wednesday.
“We particularly monitor for sublineages that could impact therapeutics, such as monoclonal antibodies and vaccines,” Walensky said. “At this time, there is no evidence that the sublineage AY.4.2 impacts the effectiveness of our current vaccines or therapeutics.”
The AY.4.2 subvariant has been detected in at least five cases in the U.S. since August: in Washington, D.C., California, North Carolina, Washington state and Massachusetts, according to Outbreak.info. The website collects data from GISAID, a global genomic database on Covid and influenza cases.
Top health authorities have cautioned for weeks that more powerful and potentially vaccine-resistant Covid variants could develop as long as widespread outbreaks continue to occur, fueled by billions of people worldwide who remain unvaccinated. White House chief medical advisor Dr. Anthony Fauci said in August that the U.S. could be “in trouble” if another mutation surpassed delta, asking the unvaccinated to get their shots in hopes of curbing a surge that crushed the nation’s health-care systems this summer.
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.
Controlling light with a material three atoms thick
Date: October 22, 2021
Source: California Institute of Technology
Summary: Thin structures made of black phosphorus can tune the properties of light, with implications for science and technology.
Most of us control light all the time without even thinking about it, usually in mundane ways: we don a pair of sunglasses and put on sunscreen, and close -- or open -- our window blinds.
But the control of light can also come in high-tech forms. The screen of the computer, tablet, or phone on which you are reading this is one example. Another is telecommunications, which controls light to create signals that carry data along fiber-optic cables.
Scientists also use high-tech methods to control light in the laboratory, and now, thanks to a new breakthrough that uses a specialized material only three atoms thick, they can control light more precisely than ever before.
The work was conducted in the lab of Harry Atwater, the Otis Booth Leadership Chair of the Division of Engineering and Applied Science, Howard Hughes Professor of Applied Physics and Materials Science, and director of the Liquid Sunlight Alliance (LiSA). It appears in a paper published in the October 22 issue of Science.
To understand the work, it is helpful first to remember that light exists as a wave and that it has a property known as polarization, which describes the direction in which the waves vibrate. Imagine being in a boat bobbing on the ocean: Ocean waves have a vertical polarization, which means that as the waves pass under the boat, it goes up and down. Light waves behave in much the same way, except these waves can be polarized at any angle. If a boat could ride waves of light, it might bob from side to side, or on a diagonal, or even in a spiraling fashion.
Polarization can be useful because it allows light to be controlled in specific ways. For example, the lenses in your sunglasses block glare (light often becomes polarized when it reflects off a surface, like the window of a car). The screen of a desk calculator creates legible numbers by polarizing light and blocking it in areas. Those areas where the polarized light is blocked appear dark, while areas where the light is not blocked appear light.
In the paper, Atwater and his co-authors describe how they used three layers of phosphorus atoms to create a material for polarizing light that is tunable, precise, and extremely thin.
The material is constructed from so-called black phosphorus, which is similar in many ways to graphite, or graphene, forms of carbon that consist of single-atom-thick layers. But whereas the layers of graphene are perfectly flat, black phosphorus's layers are ribbed, like the texture of a pair of corduroy pants or corrugated cardboard. (Phosphorus also comes in red, white, and violet forms, distinct because of the arrangement of the atoms within it.)
----The paper describing the work is titled, "Broadband electro-optic polarization conversion with atomically thin black phosphorus." The lead author is Souvik Biswas, graduate student in applied physics. Other co-authors are Meir Y. Grajower, postdoctoral scholar research associate in applied physics and materials science, and Kenji Watanabe and Takashi Taniguchi of the National Institute for Materials Science in Japan.
"These are exciting times for new materials discovery that can shape the future of photonic devices, and we have barely scratched the surface," Biswas says. "It would be gratifying if some day you could buy a commercial product constructed out of such atomically thin materials, and that day might not be very far."
Funding for the research was provided by the U.S. Department of Energy; Japan's Ministry of Education, Culture, Sports, Science and Technology; the Japan Society for the Promotion of Science; and the Japan Science and Technology Agency.
People never lie so much as after a hunt, during a war or before an election.
Otto von Bismarck.
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