Baltic Dry Index. 5526 -124 Brent Crude 82.59
Spot Gold 1756
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 11/10/21 World 238,652,927
Deaths 4,867,295
There is no doubt that the end of Bretton Woods discipline gave way to the “financialization” phenomenon that has overwhelmed our world for the last four decades.
So the world at large welcomed the collapse of Bretton Woods as a “liberation.” In reality, though, the world was not free. It became more and more dependent on financial markets which are now the financiers and decision makers of our system.
https://www.nysun.com/national/beyond-bretton-woods-when-it-comes-to-money-we/91684/
My apologies for today’s length but as you read on you’ll see why.
As another round of earnings reports gets underway in the stock casinos, today’s more immediate focus will be on China and whether China Evergrande will miss yet another payment to its creditors.
The near crash of China Nevergrande is now spreading contagion into the wider Chinese property sector.
Almost as important this week, did the Bank of England just signal over the weekend that it’s ready to take the lead in G-7 central bank rate hikes? If it did, and that’s a big if, our stock casinos are headed for a mighty comeuppance.
The US bond vigilantes, missing for roughly three decades, will be making a rapid comeback if the BOE is ready to put some action behind its words. A three decade long bond yield bear market will be ending.
Given that most professional money managers have never known anything else and have never seen the ravages of inflation, there’ll be many hopelessly out of their depth.
US stock futures lead Asia lower, dollar gains on yen
October 11, 20213:07 AM BST
SYDNEY, Oct 11 (Reuters) - Asian shares slipped on Monday as global inflation angst favoured commodities as a hedge over U.S. equities, while rising U.S. bond yields lifted the dollar to two-and-a-half year peaks against the Japanese yen
Nasdaq futures and S&P 500 futures were both down around 0.5% in early trade, as oil prices extended their bull run.
"Bond yields continue to push higher, inflation expectations are rising and monetary tightening in various guises is becoming more prevalent," said ANZ analysts in a note.
"The global chips shortage will extend well into next year, adding further uncertainty to uneven recoveries," they said. "Add in energy shortages, and the economic landscape is materially more sober than the optimism that accompanied the early stages of global recovery."
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) eased 0.2%, and Australia (.AXJO) 0.9%. Japan's Nikkei (.N225) lost 0.5%, after shedding 2.5% last week.
The earnings season kicks off this week and is likely to bring tales of supply disruptions and rising costs. JPMorgan reports on Wednesday, followed by BofA, Morgan Stanley and Citigroup on Thursday, and Goldman on Friday.
The focus will also be on U.S. inflation and retail sales data, and minutes of the Federal Reserve's last meeting which should confirm that a November tapering was discussed.
While the headline U.S. payrolls number on Friday disappointed, it was a partly due to reopening problems in state and local education while private sector employment was firmer.
----Yields on 10-year notes were trading up at 1.61%, having jumped 15 basis points last week in the biggest such rise since March.
Bonds also sold off in Asia and Europe, with short-term yields in Britain hitting their highest since February 2020.
Analysts at BofA warned the global inflationary pulse would be aggravated by energy costs with oil potentially topping $100 a barrel amid limited supply and strong re-opening demand.
The winners in such a scenario would be real assets, real estate, commodities, volatility, cash, and emerging markets, while bonds, credit and stocks would be affected negatively.
More
https://www.reuters.com/business/global-markets-wrapup-1-pix-2021-10-11/
China Evergrande bondholders brace for Monday's coupon deadline
October 11, 20215:23 AM BST
SHANGHAI, Oct 11 (Reuters) - Offshore bondholders of beleaguered developer China Evergrande Group (3333.HK) were on Monday bracing for news on more than $148 million in looming bond coupon payments after the company missed two coupon deadlines last month.
Expectations that the company will make the semi-annual payments on its April 2022, April 2023 and April 2024 notes due Oct. 11 are slim as it prioritises onshore creditors and remains silent on its dollar debt obligations.
That has left offshore investors worried about the risk of large losses at the end of 30-day grace periods as the developer wrestles with more than $300 billion in liabilities. read more
Evergrande's troubles have sent shockwaves across global markets and the firm has already missed payments on dollar bonds, worth a combined $131 million, that were due on Sept. 23 and Sept. 29.
Advisers to offshore bondholders said on Friday that they want more information and transparency from the cash-strapped property developer.
The offshore bondholders are also demanding more information about Evergrande's plan to divest some businesses and how the proceeds would be used, the advisers said. read more
----Evergrande contagion worries affecting the broader Chinese property sector spilled into heavy selling of Chinese high-yield dollar debt last week, particularly after smaller developer Fantasia Holdings Group Co (1777.HK) missed the deadline on a $206 million international market debt payment on Oct. 4.
More
Fundraising by China property trust products slump amid Evergrande woes - media
October 11, 20212:47 AM BST
SHANGHAI, Oct 11 (Reuters) - Fundraising by Chinese property trust products tumbled over 40% in September from a month earlier, official Shanghai Securities News reported on Monday, as China Evergrande Group's troubles further dampen investor appetite toward the struggling sector.
Newly-launched real estate trust products raised 16.2 billion yuan from investors in September, down 44.8% from the previous month, the newspaper said, citing data from investment advisory Usetrust. That follows a 24% decline in August, and a 25% fall in July.
Evergrande's (3333.HK) financial woes deepened in September, as the developer, wrestling with debts of more than $300 billion, missed payments on wealth management products, commercial bills and dollar bonds.
Chinese developers are already struggling amid government's lending curbs and surging cost of bond issuance. A rapidly shrinking market of property trust products could further squeeze funding channels of a sector suffering from slower home sales.
In contrast, trust products that channel money into capital markets saw a jump in popularity and fundraising, the Shanghai Securities News said.
In other news, supply chain chaos will continue into 2022 says the US National Retail Federation. Buy now for Christmas, New Year, and before 2022 – 2023 prices.
Inbound containers staying elevated into 2022, congestion limiting ‘larger gains’
NRF says retail imports will be up again in January and February
Todd Maiden Friday, October 8, 2021
The National Retail Federation expects imports to the nation’s largest retail container ports to continue at a high clip through at least February. In a Thursday update, the group said its forecasts would have been even higher but congestion, capacity and labor headwinds are limiting throughput.
“The cargo is there for larger gains at several ports but congestion issues are impacting fluid operations,” said Jonathan Gold, NRF’s vice president of supply chain and customs policy.
Final numbers for August didn’t produce a new monthly record as expected. The ports tracked by the NRF handled 2.27 million twenty-foot equivalent units in August, up 3.5% sequentially and 7.8% year-over-year. That was tied for the second-busiest month in the dataset’s 20-year history.
May produced the highest monthly throughput on record at 2.33 million TEUs.
Congestion and bottlenecks were the reasons for the August shortfall.
“Just when we thought things couldn’t get any worse with the logistics supply chain, we’ve been proven wrong,” said Ben Hackett, founder at Hackett Associates, which works with the NRF to forecast future container throughput at the ports. Hackett called out numerous issues from port shutdowns in Asia to congestion and a lack of drivers and equipment in the U.S. as the reasons.
For months now, ships have been waiting longer for berths at the ports and freight is being further delayed once it has landed. A lack of equipment, truck capacity and labor have impacted fluidity throughout the supply chain. Delays unloading containers at warehouses as well as a lack of industrial space to store them have caused most points in the flow of goods to consumers to become pinched.
Further, a high level of consumer spending and retailers still catching up on and pulling forward inventory has the NRF calling for the current dynamic to remain in place through at least February, its last month forecasted.
The group’s preliminary expectation for September, as numbers are not yet final, calls for a 6.7% year-over-year increase to 2.25 million TEUs. October is forecast to decline 0.3% compared to a very strong comp from 2020, “when imports surged dramatically … and retailers rushed to meet pent-up consumer demand.” That would be the first monthly decline since July 2020.
November (+2.9%) and December (-0.2%) round out the forecasts for the year.
More
Finally, will the Old Lady of Threadneedle Street be the first major central bank to blink in the face of serious and rising inflation?
Are they really about to blow up the London stock casino or is this just more smoke and mirrors from our global central banksters? Run a flag up the flagpole and see who salutes.
Either way, our global central banksters are far behind stopping our new accelerating age of rising inflation, and if President Biden gets his way, trillions more monetary oil is about to be poured on the fire.
Bank of England's Saunders says get ready for early rate rise
October 9, 2021 8:16 PM By Reuters Staff
LONDON (Reuters) - Bank of England policymaker Michael Saunders told households to get ready for “significantly earlier” interest rate rises as inflation pressure mounts in the British economy, the Telegraph newspaper said on Saturday.
Saunders said investors were right to bet on faster increases in borrowing costs with consumer price inflation heading above 4%, adding to signs the BoE might become the first major central bank to raise rates since the pandemic struck.
“I’m not in favour of using code words or stating our intentions in advance of the meeting too precisely. The decisions get taken at the proper time,” Saunders said.
“But markets have priced in over the last few months an earlier rise in Bank Rate than previously and I think that’s appropriate.”
Last month the nine-member Monetary Policy Committee voted unanimously to keep rates at 0.1%.
But Saunders and Deputy Governor Dave Ramsden voted to halt the BoE’s government bond purchases ahead of schedule.
Saunders said markets had fully priced in a February rate hike by the British central bank and had half priced in a December increase in borrowing costs.
“I’m not trying to give a commentary on exactly which one, but I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously,” he said.
The comments by Saunders came shortly after BoE Governor Andrew Bailey said inflation running above the central bank’s 2.0% target was concerning and had to be managed to prevent it from becoming permanently embedded.
More
Cycles are today determined by the monetary impulses given by a few important central banks and are heavily dependent on the reactions of capital markets to monetary policy. In such an environment it would seem reasonable to assess the validity of monetary impulses and to examine their likely consequences on financial stability.
https://www.nysun.com/national/beyond-bretton-woods-when-it-comes-to-money-we/91684/
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Mainstream media finally gets it.
An energy crisis is gripping the world, with potentially grave consequences
October 9, 2021
Energy is so hard to come by right now that some provinces in China are rationing electricity, Europeans are paying sky-high prices for liquefied natural gas, power plants in India are on the verge of running out of coal, and the average price of a gallon of regular gasoline in the United States stood at $3.25 on Friday — up from $1.72 in April.
As the global economy recovers and global leaders prepare to gather for a landmark conference on climate change, the sudden energy crunch hitting the world is threatening already stressed supply chains, stirring geopolitical tensions and raising questions about whether the world is ready for the green energy revolution when it’s having trouble powering itself right now.
The economic recovery from the pandemic recession lies behind the crisis, coming after a year of retrenchment in coal, oil and gas extraction. Other factors include an unusually cold winter in Europe that drained reserves, a series of hurricanes that forced shutdowns of Gulf oil refineries, a turn for the worse in relations between China and Australia that led Beijing to stop importing coal from Down Under, and a protracted calm spell over the North Sea that has sharply curtailed the output of electricity-generating wind turbines.
“It radiates from one energy market to another,” said Daniel Yergin, author of “The New Map: Energy, Climate, and the Clash of Nations.”
“Governments are scrambling to get subsidies in place to avoid a tremendous political backlash,” Yergin said. “There’s a pervasive anxiety about what may or may not happen this winter, because of something we have no control over, which is the weather.”
As global leaders prepare to gather in Glasgow, Scotland, at the end of the month for a climate conference, advocates for renewable energy say the crisis shows the need to move further away from coal, gas and oil as prices for those commodities spike. Their critics contend just the opposite — that wind and solar have been tested and came up lacking. Analysts also worry that the shortages and high prices worldwide will severely crimp the economic recovery.
In the United States, which as an energy producer has been spared the worst consequences of the crisis even as gasoline prices have hit their highest mark since 2014, Energy Secretary Jennifer Granholm suggested Wednesday that the Biden administration might sell off part of the country’s Strategic Oil Reserve or ban exports of crude oil.
----One leader who appears to see an opportunity in the crisis is Russian President Vladimir Putin, whose vast energy reserves the country often taps as leverage during times of energy stress. On Wednesday, Putin suggested that Russia’s European customers could solve their problem if they imported more Russian gas.
Analysts doubt it would make much of a difference right away, because at the moment Russia does not have a great deal to spare, but Deputy Prime Minister Alexander Novak said that even a small additional amount of exported gas could dampen what Moscow characterizes as a speculative frenzy in Europe.
Tension in Europe
This seemingly minor nudge comes against the background of sharp disagreements within the European Union over a response to the crisis. Leaders are looking to the E.U. as either scapegoat or savior, with some premiers asking the bloc for a standardized solution to the crisis and others blaming the price hikes on its sweeping policies to combat climate change and reduce emissions.
Hungarian Prime Minister Viktor Orban, who has friendly relations with Putin, said Wednesday that the E.U. was partly to fault for the increases and that the bloc “must change its policy.”
----Energy analysts argue that Europe moved too quickly away from fossil-fueled power, before ensuring that sufficient renewable sources could take up the slack in an emergency. Caught halfway in a transition that should take decades, they say, Europe is now scrambling to find coal and gas to burn in its remaining traditional plants.
As winter approaches, European fuel stocks are at a relative low point.
An important factor is the new Nordstream 2 pipeline, which connects Russia and Germany by way of the Baltic Sea but has yet to go into operation. Russian officials have urged Germany to speed up its regulatory approval, suggesting that it would provide a long-term solution to the country’s energy problems.
But politicians from Germany’s Greens, the environmentally conscious party currently in discussions to become part of a new coalition government following elections in late September, have accused Russia of manipulating the price of gas to create a sense of urgency around the pipeline.
If the Russian energy giant Gazprom does not adhere to regulatory requirements without “any ifs or buts” it is “a further indication that power politics is being pursued with gas,” Oliver Krischer, deputy head of the Greens parliamentary group, told German outlet RND on Wednesday.
Exiting the pandemic
When the coronavirus pandemic first swept the world in early 2020, gas reserves were abundant and the price was at rock bottom. But production of both gas and oil was sharply curtailed as economies shattered, and reserves were eaten up by the unusually cold weather in Europe last winter.
The energy crisis first emerged in China, the world’s manufacturer, as global demand for its products suddenly and unexpectedly shot upward this year. Coal stocks were low, and an unofficial Chinese ban on Australian lignite meant they couldn’t quickly be replenished. Power companies turned to the spot market for liquefied natural gas (LNG) instead, and its price soared.
In Asia, the spot price, measured in a million British thermal units, went from less than $5 in September 2020 to more than $56 this October.
As a result curbs on power consumption have been implemented across two-thirds of China, disrupting factory production and daily life.
Some factories have shut down altogether. China’s power cuts will further disrupt international supply chains already stretched by the pandemic. Factories have had to reduce production at a time when they are usually ramping up for the December holiday season.
In Guangdong, China’s most populous province, authorities have banned the use of elevators in office buildings for the third floor and below, encouraged residents to use natural light as much as possible, and asked for air conditioners to be adjusted to higher temperatures. Beijing and Shanghai canceled annual light shows during the Golden Week holiday that spanned the first week of October.
The energy shortage has been exacerbated by continued severe weather. In northern Shanxi province, 27 coal mines were closed last week due to flooding. In China’s southern Yunnan province, hydropower has been crimped for much of the year by drought — much as it has in California.
----A similar power crunch is unfolding in India, which saw a glut of electricity supply earlier this year when a devastating coronavirus surge left factories idle and streets empty. Since then, economic activity in the world’s second fastest-growing major economy — and its thirst for electricity — have bounced back faster than expected.
Now, India is staring at the reverse prospect: power shortages and potential blackouts hitting its rebounding manufacturing sector and households during the festive season beginning this month.
Power plants have failed to secure coal shipments and are reluctant to buy imports now because of the high price, according to Indian officials who have been urging utilities to purchase what they need. The country’s Central Electricity Authority warned Tuesday that nearly half of India’s coal power plants — 63 out of 135 — have two days or less of coal supplies, while stocks have been exhausted at 17 facilities.
Rahul Tongia, an expert on energy and sustainability at the Brookings Institution, said the coal shortage was likely to extend for five months and the Indian government would soon face difficult choices. Already, Indian aluminum producers have complained about power shortages bringing smelters to a halt.
More
Covid-19 Corner
This section will continue until it becomes unneeded.
Dispense in haste, repent at leisure? Does no one at Merk or the FDA remember the dispense in haste tragedy of Thalidomide?
Merck’s Covid Pill Could Pose Serious Risks, Scientists Warn
Updated October 8, 2021 / Original October 5, 2021
Merck‘s announcement that its antiviral molnupiravir had halved hospitalizations in a trial of high-risk Covid-19 patients was met with enthusiasm on Friday, inspiring a vision of a world in which treating a Covid-19 infection could be as trivial as swallowing a few pills.
Some scientists who have studied the drug warn, however, that the method it uses to kill the virus that causes Covid-19 carries potential dangers that could limit the drug’s usefulness.
More. Subscription required.
https://www.barrons.com/articles/merck-covid-pill-risks-51633398722
"Proceed With Caution At Your Own Peril" - Merck's COVID 'Super Drug' Poses Serious Health Risks, Scientists Warn
Friday, Oct 08, 2021 - 09:56 AM
As it turns out, all the scientists and doctors who insisted that Merck's "revolutionary" COVID drug molnupiravir is extremely safe weren't faithfully adhering to "the science" after all. Because according to a report published Thursday by Barron's, some scientists are worried that the drug - which purportedly cut hospitalizations in half during a study that was cut short - could cause cancer or birth defects.
So much for having a "strong safety profile," as Dr. Scott Gottlieb claimed in an interview on the day Merck first publicized the research.
According to Barron's, some scientists who have studied the drug believe that its method of suppressing the virus could potentially run amok within the body.
Some scientists who have studied the drug warn, however, that the method it uses to kill the virus that causes Covid-19 carries potential dangers that could limit the drug’s usefulness.
Molnupiravir works by incorporating itself into the genetic material of the virus, and then causing a huge number of mutations as the virus replicates, effectively killing it. In some lab tests, the drug has also shown the ability to integrate into the genetic material of mammalian cells, causing mutations as those cells replicate.
If that were to happen in the cells of a patient being treated with molnupiravir, it could theoretically lead to cancer or birth defects.
In particular, Raymond Schinazi, a professor of pediatrics and the director of biochemical pharmacology at Emory who studied the drug while it was being developed, and published a number of papers on NHC, the compound that's the active ingredient in the drug. He published a paper that showed the drug can produce a reaction like the one described above, and insisted it shouldn't be given to young people - especially pregnant women - without more data.
Schinazi told Barron’s that he did not believe that molnupiravir should be given to pregnant women, or to young people of reproductive age, until more data is available. Merck’s trials of molnupiravir have excluded pregnant women; the scientists running the trial asked male participants to “abstain from heterosexual intercourse” while taking the drug, according to the federal government website that tracks clinical trials.
Barron's even shared a paper published in the Journal of Infectious Diseases in May by Schinazi and scientists at the University of North Carolina which reported that NHC can cause mutations in animal cell cultures in a lab test designed to detect such mutations - something Merck claims it has tested for. The paper's authors concluded that the risks for molnupiravir "may not be zero".
More
7% of Israel’s serious COVID cases had three vaccine shots - Health Ministry
Israel’s ‘Green Classroom’ COVID outline to start on Sunday in more schools * 16-year-old dies of post-COVID syndrome
By MAAYAN JAFFE-HOFFMAN OCTOBER 9, 2021 17:08
Some 7% of Israel’s serious and critical COVID-19 cases were vaccinated with three shots of the coronavirus vaccine, according to data released Friday morning by the Health Ministry.
However, the number of new daily cases is declining and the government voted to roll out the Green Class outline in several green cities on Sunday to help keep children out of isolation.
“I cannot say that 7% is a lot,” Health Minister Director-General Prof. Nachman Ash told The Jerusalem Post. “The vaccine, even the third shot, does not work at 100%. It is 95% effective.”
He said that there are also always a small percentage of people for whom the vaccine does not work as well, such as those who are immunosuppressed.
More than three million Israelis have been fully vaccinated with two shots and a booster. There were around 460 serious and critical cases on Friday, so 7% is around 32 people, meaning less than 0.00001% of people who have had a third shot are in serious condition.
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.
How flawed diamonds 'lead' to flawless quantum networks
Date: October 1, 2021
Source: Tokyo Institute of Technology
Summary: Lead-based vacancy centers in diamonds that form after high-pressure and high-temperature treatment are ideal for quantum networks, find scientists. The modified crystal system could also find applications in spintronics and quantum sensors.
The color in a diamond comes from a defect, or "vacancy," where there is a missing carbon atom in the crystal lattice. Vacancies have long been of interest to electronics researchers because they can be used as 'quantum nodes' or points that make up a quantum network for the transfer of data. One of the ways of introducing a defect into a diamond is by implanting it with other elements, like nitrogen, silicon, or tin.
In a recent study published in ACS Photonics, scientists from Japan demonstrate that lead-vacancy centers in diamond have the right properties to function as quantum nodes. "The use of a heavy group IV atom like lead is a simple strategy to realize superior spin properties at increased temperatures, but previous studies have not been consistent in determining the optical properties of lead-vacancy centers accurately," says Associate Professor Takayuki Iwasaki of Tokyo Institute of Technology (Tokyo Tech), who led the study.
The three critical properties researchers look for in a potential quantum node are symmetry, spin coherence time, and zero phonon lines (ZPLs), or electronic transition lines that do not affect "phonons," the quanta of crystal lattice vibrations. Symmetry provides insight into how to control spin (rotational velocity of subatomic particles like electrons), coherence refers to an identicalness in the wave nature of two particles, and ZPLs describe the optical quality of the crystal.
The researchers fabricated the lead-vacancies in diamond and then subjected the crystal to high pressure and high temperature. They then studied the lead vacancies using photoluminescence spectroscopy, a technique that allows you to read the optical properties and to estimate the spin properties. They found that the lead-vacancies had a type of dihedral symmetry, which is appropriate for the construction of quantum networks. They also found that the system showed a large "ground state splitting," a property that contributes to the coherence of the system. Finally, they saw that the high-pressure high-temperature treatment they inflicted upon the crystals suppressed inhomogeneous distribution of ZPLs by recovering the damage done to the crystal lattice during the implantation process. A simple calculation showed that lead-vacancies had a long spin coherence time at a higher temperature (9K) than previous systems with silicon and tin vacancies.
"The simulation we presented in our study seems to suggest that the lead-vacancy center will likely be an essential system for creating a quantum light-matter interface -- one of the key elements in the application of quantum networks," concludes an optimistic Dr. Iwasaki.
This study paves the way for the future development of large (defective) diamond wafers and thin (defective) diamond films with reliable properties for quantum network applications.
Is there any form of such an international framework? The answer is “no.” Is it worrisome? The answer is, as I see it, “yes.”
Indeed when real interest rates are kept negative for decades, when global borrowing has reached the record of three times world GDP, when asset bubbles proliferate, when the very notion of stable money has disappeared from the computer screens of our central bankers, there are good reasons to get worried.
https://www.nysun.com/national/beyond-bretton-woods-when-it-comes-to-money-we/91684/
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