Baltic Dry Index. 4714 -18 Brent Crude 84.60
Spot Gold 1774
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 20/10/21 World 242,335,622
Deaths 4,928,965
Note: due to switching ISP, there won’t be a LIR update on Thursday the 21st.
Due to switching ISP tomorrow I’m posting this update early. Sadly, inflation looks set to rip into 2022. But if the IMF is right, they aren’t often, stagflation is right ahead.
Updated 6.00 am BST, 20 October, 2021
Asian shares advance on earnings optimism, yen slips to 4-yr low
October 20, 20213:16 AM BST
TOKYO, Oct 20 (Reuters) - Asian shares advanced and U.S. long-dated bond yields edged up to a five-month high on Wednesday on rising optimism about the global economy and corporate earnings while the yen slipped to a four-year low on the dollar.
Japan's Nikkei (.N225) rose 0.8% while MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.3%, led by 0.9% gains in Australia (.AXJO).
---- In New York, the benchmark S&P 500 index (.SPX) gained 0.74% to finish just 0.4% below its early September record close while the CBOE market volatility index (.VIX) fell 0.6 point after earlier hitting 15.57, its lowest level since mid-August.
"Tech shares and other high-growth shares that would have been sold on rising bond yields are rallying, which clearly shows that there is now strong optimism on upcoming earnings," Fujito said.
Earning reports will be in full swings in many countries over coming weeks. Dutch chip-making machine maker ASML Holdings (ASML.AS) and Tesla (TSLA.O) are among those that will release results later on Wednesday.
The positive mood saw U.S. bond yields rising further, with the 10-year U.S. Treasuries yield climbing to 1.662% , a high last seen in May.
Shorter yields dipped, however, with the two-year yield slipping to 0.404% from Monday's peak of 0.448% as traders took profits for now from bets that the U.S. Federal Reserve will turn hawkish at its upcoming policy meeting in early November.
Investors expect the Fed to announce tapering of its bond buying and money markets futures are pricing in one rate hike later next year.
More
https://www.reuters.com/business/global-markets-wrapup-1-2021-10-20/
Fed's Waller: 'More aggressive' response may be needed if inflation stays high
October 19, 2021
IMF dwngrades its growth forecast for Asia, says Covid still ‘ravaging’ the region
The International Monetary Fund on Tuesday downgraded its 2021 economic growth forecast for Asia after the highly infectious Covid-19 delta variant caused a spike in cases in parts of the region.
IMF said that it expects Asia’s economy to grow by 6.5% in 2021, compared with its April forecast for a 7.6% expansion.
“The global COVID-19 pandemic is still ravaging the region,” the Fund said in its Regional Economic Outlook report for Asia and the Pacific.
Asian countries were relatively successful in containing Covid last year. But this year, some — including India, Malaysia and Vietnam — had to fight fresh waves of infections while vaccination rollouts were slow to take off.
The resurgence in Covid infections prompted stricter containment measures, which weighed down the services sector and led some factories to temporarily shut. That dampened Asia’s economic outlook even as demand for exports was strong, said the IMF.
Within the region, developing economies suffered the largest economic growth downgrades by the IMF.
----Despite the downgrade, Asia will remain the fastest growing region globally this year, the IMF said.
The region’s growth will be led by China and India, the Fund added. The IMF expects China to grow 8% this year and India by 9.5% in the fiscal year that ends next March.
More
https://www.cnbc.com/2021/10/19/imf-downgrades-2021-growth-forecast-for-asia-on-covid-concerns.html
Diapers to yogurt, global firms face higher costs amid supply-chain woes
October 19, 20214:56 PM BST
Oct 19 (Reuters) - Results from companies Procter & Gamble Co (PG.N) and Danone SA (DANO.PA) as well as phone maker Ericsson (ERICb.ST) on Tuesday show higher costs and supply chain disruptions, signaling more margin pressure for global firms and higher prices for shoppers.
Panic-buying at the start of the pandemic led to mass shortages of everything from toilet paper to packaged foods. Global lockdowns and labor shortages crimped supply chain movement and caused lasting log-jams at ports from China to California.
Many companies have leaned on price increases to offset higher prices for materials needed to make and ship essential necessities like diapers and bottled water. Executives and analysts have said price increases will linger into next year.
Procter & Gamble, which noted its first-quarter operating margins were squeezed, now expects a hit of about $2.3 billion in expenses this fiscal year, compared with a prior forecast of about $1.9 billion.
The company is blaming higher raw material costs as well as diesel and energy prices, and said it does not expect those issues to ease up anytime soon. read more
Danone, which sells Activa yogurt and Evian bottled water, warned of growing inflationary pressures next year after sticking by its 2021 outlook on Tuesday, pledging its operating margins will be protected by productivity gains and price increases. read more
"Like just about everyone across the sector and beyond, we see inflationary pressures across the board. What started as increased inflation on material costs evolved into widespread constraints impacting our supply chain in many parts of the world," said Danone's finance chief Juergen Esser.
Sweden's Ericsson (ERICb.ST) told investors on Tuesday global supply chain issues will still be a major hurdle.
"Late in Q3 we experienced some impact on sales from disturbances in the supply chain, and such issues will continue to pose a risk," Chief Executive Officer Börje Ekholm said in a statement.
The company was not able to deliver certain hardware to its customers due to a chip shortage at suppliers, coupled with logistics problems, it said. read more
More
‘People Are Hoarding’: Food Shortages Are The Next Supply-Chain Crunch
October 19, 2021, 1:00 PM
(Bloomberg) -- In Denver, public-school children are facing shortages of milk. In Chicago, a local market is running short of canned goods and boxed items.
But there’s plenty of food. There just isn’t always enough processing and transportation capacity to meet rising demand as the economy revs up.
More than a year and a half after the coronavirus pandemic upended daily life, the supply of basic goods at U.S. grocery stores and restaurants is once again falling victim to intermittent shortages and delays.
“I never imagined that we’d be here in October 2021 talking about supply-chain problems, but it’s a reality,” said Vivek Sankaran, chief executive officer of Albertsons Cos., who echoed the laments of other retailers. “Any given day, you’re going to have something missing in our stores, and it’s across categories.”
In Denver, broken parts at the milk supplier’s plant affected shipments of half-pint cartons, on top of disruptions at one time or another in cereal, tortillas and juice.
“We’ve been struggling with supply-chain issues with different items since school started,” said Theresa Hafner, the executive director of food services at Denver Public Schools. “It just continues to pop up. It’s like playing whack-a-mole.”
In Chicago, Dill Pickle Food Co-Op ran out of certain dry goods because its two main distributors haven’t been sending orders in full in recent weeks.
More
https://finance.yahoo.com/news/people-hoarding-food-shortages-next-120000053.html
In energy news, is it already too late to save Europe from the northern hemisphere winter? But next year the world’s largest windmill should help a little.
Energy crunch hits global recovery as winter approaches
Power shortages are turning out streetlights and shutting down factories in China. The poor in Brazil are choosing between paying for food or electricity. German corn and wheat farmers can’t find fertilizer, made using natural gas. And fears are rising that Europe will have to ration electricity if it’s a cold winter.
The world is gripped by an energy crunch — a fierce squeeze on some of the key markets for natural gas, oil and other fuels that keep the global economy running and the lights and heat on in homes. Heading into winter, that has meant higher utility bills, more expensive products and growing concern about how energy-consuming Europe and China will recover from the COVID-19 pandemic.
The biggest squeeze is on natural gas in Europe, which imports 90% of its supply — largely from Russia — and where prices have risen to five times what they were at the start of the year, to 95 euros from about 19 euros per megawatt hour.
It’s hitting the Italian food chain hard, with methane prices expected to increase sixfold and push up the cost of drying grains. That could eventually raise the price of bread and pasta at supermarkets, but meat and dairy aisles are more vulnerable as beef and dairy farmers are forced to pay more for grain to feed their animals and pass the cost along to customers.
“From October we are starting to suffer a lot,” said Valentino Miotto of the AIRES association that represents the grain sector.
Analysts blame a confluence of events for the gas crunch: Demand rose sharply as the economy rebounded from the pandemic, while a cold winter depleted reserves. Europe’s chief supplier, Russia’s Gazprom, held back extra summer supplies beyond its long-term contracts to fill reserves at home for winter. China’s electricity demand has come roaring back, vacuuming up limited supplies of liquid natural gas, which moves by ship, not pipeline. There also are limited facilities to export natural gas from the United States.
Costlier natural gas has even pushed up oil prices because some power generators in Asia can switch from using gas to oil-based products. U.S. crude is over $83 per barrel, the highest in seven years, while international benchmark Brent is around $85, with oil cartel OPEC and allied countries cautious about restoring production cuts made during the pandemic.
More
Vestas to install prototype of world’s ‘tallest and most powerful wind turbine’ in 2022
Published Mon, Oct 18 2021 8:57 AM EDT Updated Mon, Oct 18 2021 9:03 AM EDT
Vestas has announced plans to install a prototype of its 15 megawatt offshore wind turbine at a facility in Denmark.
In a statement, the company said the prototype, known as V236-15 MW, would be installed in the second half of 2022 at a test center in Western Jutland, Denmark. It is expected to start generating electricity in the fourth quarter of 2022.
The scale of the V236-15 MW is considerable. According to Vestas, it will stand 280-meters tall, with prototype blades measuring 115.5 meters in length. The prototype will be installed onshore in order to make access easier when it comes to testing.
The turbine’s production output is expected to be 80 gigawatt hours a year. Vestas said this would be able to power roughly 20,000 European households, displacing over 38,000 metric tons of carbon dioxide in the process.
While Vestas claims its prototype “will be the tallest and most powerful wind turbine in the world once installed,” other companies are also developing their own massive turbines.
In August, MingYang Smart Energy released details of a huge new offshore wind turbine. Dubbed the MySE 16.0-242, MingYang’s turbine will have a height of 264 meters, a rotor diameter of 242 meters and a blade length of 118 meters. Its capacity will be 16 MW.
The Chinese company is aiming to install a prototype in 2023 before starting commercial production the year after.
Meanwhile, at the beginning of October, GE Renewable Energy said its Haliade-X prototype, which has been installed in the Dutch city of Rotterdam, had started to operate at 14 MW.
“The ability to produce more power from a single turbine means fewer turbines need to be installed at each wind farm,” the company said at the time. “In addition to less capital expenditure, this also simplifies operations and maintenance.”
more
https://www.cnbc.com/2021/10/18/vestas-to-install-prototype-of-most-powerful-wind-turbine.html
In a large Swiss bank a would be customer whispered: “I want to open a bank account for 2 million dollars.”
The Swiss Banker replied: “You can say it out loud, sir. In our bank poverty is not a crime.”
Global Inflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Procter & Gamble to Raise Prices on More Staples
Company says cost of materials and freight jumped more than expected, cutting into profit
Oct. 19, 2021 7:06 am ET
Procter & Gamble Co. PG -2.10% is raising prices on a host of household staples as costs for freight and raw materials rise faster than the consumer-product giant anticipated.
The maker of Tide detergent and Gillette razors said it would start charging more for certain beauty, oral care and grooming products such as razors. The price increases come in addition to earlier moves to start charging more for staples from diapers to toilet paper.
P&G, which released quarterly financial results on Tuesday, said the moves, along with increased demand for its products, should help offset added costs.
U.S. inflation is at its highest level in a decade as price increases from pandemic-related labor and materials shortages ripple through the economy.
“We do not anticipate any easing of costs,” P&G Finance Chief Andre Schulten said in an interview. “We continue to see increases week after week, though at a slower pace.”
----Costs are rising faster than P&G forecast. P&G now expects to spend $2.1 billion more on transportation and raw materials such as pulp and resin for the fiscal year ending June 2022. The company in July predicted a $1.9 billion increase.
Mr. Schulten said the company’s higher spending is wide ranging, particularly as it works to ensure it has products in stock as consumers increasingly encounter sparse shelves at stores.
He said P&G is enlisting backup suppliers, changing up shipping routes to get around bottlenecks, reformulating products and, in some cases, limiting how much any one retailer can buy at a time to avoid stockpiling.
More
https://www.wsj.com/articles/procter-gamble-to-raise-prices-on-more-staples-11634641561
Global bond allocation drops to record low on inflation scare -BofA
October 19, 2021 10:17 AM
MILAN, Oct 19 (Reuters) - Investor allocations to bond markets dropped to the lowest level on record in October, BofA Securities’ monthly fund manager survey showed, as pessimism on inflation and China further clouded the outlook for the global economy.
“Investors are now very overweight inflation assets (i.e. commodities, banks) relative to history while at the same time very underweight assets that are vulnerable to interest rate hikes (i.e. bonds, EM, utilities),” the investment bank said on Tuesday.
Pension, health costs to dwarf COVID debt legacy in long term -OECD
October 19, 2021 10:23 AM By Reuters Staff
PARIS (Reuters) - The costs of repaying debt raised to help households and businesses through the COVID-19 crisis will be dwarfed by those from long-term trends like funding pensions and health services as societies age, the OECD said in a report on Tuesday.
Examining the economic outlook out to 2060, the Organisation for Economic Cooperation and Development said governments will increasingly have to contend with the costs associated with aging populations and rising prices for public services.
That is on top of servicing the huge debts left by COVID-19, which will take decades to repay.
Many of the 38 mostly wealthy countries belonging to the Paris-based OECD saw their budget deficits blow out to record levels during the pandemic as they propped up their economies during lockdowns.
If current historically low interest rates persist, most OECD countries could afford to cover the extra strain on their budgets by adding to their debt piles, the report said.
But fiscal pressure on the median OECD country could reach 8 percentage points of GDP by 2060 as governments try to keep public service standards and benefits at current levels, the OECD calculated.
The increased strain on public finances was seen highest in Slovakia at 17%, followed by Poland at 14%, Spain and the Czech Republic at 13% and France and Japan at 12%.
But a permanent 1 percentage point increase in global interest rates from current historically low levels would raise fiscal pressure by as much as 1-1.5% in countries with the most debt, such as Greece, Italy and Japan, the OECD said.
To ease fiscal pressure there was little countries could do other than adopt reform packages to boost employment, which would in turn boost per capita GDP.
That could raise living standards by nearly 7% by 2060 while those countries with the furthest to go down the path of reform - identified by the OECD as Belgium, France and Italy - could see gains of 9-10%.
Such packages would ease fiscal pressure by about 1.75 percentage points of GDP by 2060 in the median OECD country, the report estimated.
Historically, gold has always been a safe haven against inflation and a safe haven in times of political instability.
John
Paulson.
Covid-19 Corner
This section will continue until it becomes unneeded.
J&J sells more than $500 million worth of its COVID-19 vaccine in third quarter
Oct. 19, 2021 / 8:40 AM
Oct. 19 (UPI) -- Johnson & Johnson said Tuesday that it sold more than $500 million worth of its COVID-19 vaccine during the third quarter, surpassing what most experts anticipated.
The drugmaker said reported total sales of $23.3 billion and net earnings of $3.66 billion. About $502 million of that was through sales of the coronavirus vaccine.
The company's pharmaceutical business, which developed the one-shot vaccine, saw an increase of nearly 14% over the third quarter of 2020, it said.
Johnson & Johnson also said sales in its consumer health division increased 5.7% and medical devices saw a 7.6% rise.
Last week, the Food and Drug Administration's advisory committee recommended a booster shot for all adults who'd received the vaccine, partly because data indicate that it didn't provide as much protection as the two-dose vaccines from Pfizer and Moderna.
https://www.upi.com/Top_News/US/2021/10/19/johnson-covid-vaccine-sales/6971634644157/
Why COVID boosters weren’t tweaked to better match variants
More COVID-19 booster shots may be on the way -- but when it’s your turn, you’ll get an extra dose of the original vaccine, not one updated to better match the extra-contagious delta variant.
And that has some experts wondering if the booster campaign is a bit of a missed opportunity to target delta and its likely descendants.
“Don’t we want to match the new strains that are most likely to circulate as closely as possible?” Dr. Cody Meissner of Tufts Medical Center, an adviser to the Food and Drug Administration, challenged Pfizer scientists recently.
“I don’t quite understand why this is not delta because that’s what we’re facing right now,” fellow adviser Dr. Patrick Moore of the University of Pittsburgh said last week as government experts debated whether it’s time for Moderna boosters. He wondered if such a switch would be particularly useful to block mild infection.
The simple answer: The FDA last month OK’d extra doses of Pfizer’s original recipe after studies showed it still works well enough against delta -- and those doses could be rolled out right away. Now the FDA is weighing evidence for boosters of the original Moderna and Johnson & Johnson vaccines.
“It’s less churn and burn on the manufacturing” to only switch formulas when it’s really necessary, said FDA vaccine chief Dr. Peter Marks.
But Pfizer and Moderna are hedging their bets. They’re already testing experimental doses customized to delta and another variant, learning how to rapidly tweak the formula in case a change eventually is needed -- for today’s mutants or a brand new one. The tougher question for regulators is how they’d decide if and when to ever order such a switch.
What we know so far:
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.
Nuclear Fusion Edges Toward the Mainstream
Long-shot money is flowing into start-ups that seek the energy of the stars. Driving the investments is a rising alarm about global warming.
Oct. 18, 2021, 5:00 a.m. ET
ABINGDON, England — Harnessing fusion energy into something commercially viable — and maybe, ultimately, a clean source of power that replaces fossil fuels for centuries to come — has long been considered by some as the ultimate moonshot.
But investor interest in fusion energy continues to slowly rise and the number of start-ups in the field is multiplying, with an estimated 1,100 people in several countries making their living at these firms. An industry is taking shape, with a growing network of companies that supply highly specialized equipment, like the components of the powerful magnets that fusion devices require.
The British government even recently saw the need to issue regulations for fusion energy — a kind of milestone for a burgeoning industry.
No one knows when fusion energy will become commercially viable, but driving the private investments is a rising alarm about global warming.
“Nobody has a better plan to deal with the climate crisis,” said David Kingham, one of the three co-founders of a company called Tokamak Energy that has raised about $200 million, mostly from private sources.
At Tokamak Energy, a goal is to eventually heat isotopes of hydrogen hot enough so that their atoms combine in a reaction that releases enormous amounts of energy. This is the essence of fusion, often described as the energy behind the sun and stars.
At the company’s laboratory in a business park outside Oxford, there is a warning on the public address system every 15 to 20 minutes that a test is coming and everyone should stay out of the room with the fusion device, which is 14 feet high with thick steel walls. There is a whirring sound that lasts about a second. Then a monitor shows an eerie pulsing video of the inside of the device as a powerful beam blasts into superheated gas known as a plasma.
During the test, Tokamak’s prototype machine, which cost 50 million pounds to build, reached 11 million degrees Celsius. The scientists figure they need to reach 100 million degrees Celsius, or about seven times the temperature at the core of the sun. They expect to get there by year’s end.
More
https://www.nytimes.com/2021/10/18/business/fusion-energy.html
A 90 year old farmer went to the bank for a loan to buy land.
The bankster had some concerns due to the
farmers age.
"What happens if you die before the loan is paid off?" The bankster
asked.
"Then I'll send you a check from heaven,
because God would want that all my obligations are taken care of," the old
farmer answered.
"But what if you go the other
direction?" the bankster queried.
"Then I'll deliver it to you in person. When you arrive"
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