Monday 29 November 2021

Did We Just Enter Interesting Times?

Baltic Dry Index. 2767 +89 Brent Crude 75.15

Spot Gold 1793

Coronavirus Cases 02/04/20 World 1,000,000

Deaths 53,100

Coronavirus Cases 29/11/21 World 261,778,924

Deaths 5,217,700

May you live in interesting times!

Alleged Chinese curse.

So will it be Rebound Monday or Black Monday?

The futures markets are betting on Rebound Monday, at least in Europe and the USA. Have the central banks asked their cronies to step in and buy stocks? 

Probably, but any rebound to last requires the Omicron virus to be largely benign. Perhaps more infectious but less severe. Out competing Delta, but more mild, putting the planet on a pathway out of the pandemic.

If it turns out to be more infectious and more severe, rebound Monday will just lead to more panicky selloffs down the road. 

If it turns out to be as bad as was hyped on Friday, our global and national economies are about to return to March 2020, but with our central banksters and bent politicians virtually out of ammo.

Most updates so far, have suggested few hospitalisations and no deaths, though that might just be because compared to Delta it takes longer to develop into severe Covid-19.

The Associated Press report in the Covid section is not encouraging. 

Time for the prudent to let the rash fight it out in the casinos this week. 

Asia-Pacific stocks slip as investors watch omicron Covid variant; oil prices rebound more than 4%

Published Sun, Nov 28 2021 6:41 PM EST

SINGAPORE — Shares in Asia-Pacific largely fell in Monday trade as investors continue to monitor developments surrounding the recently discovered omicron Covid variant.

Hong Kong’s Hang Seng index slipped 0.52% by the afternoon. Hong Kong-listed shares of Chinese tech giant Meituan lost more than 7% after the firm on Friday posted a loss of about 10 billion Chinese yuan ($1.56 billion) for the three months ended Sept. 30.

Shares of Sun Entertainment Group in Hong Kong sank more than 23% after the South China Morning Post reported that controlling shareholder Alvin Chau Cheok-wa was among a group arrested over alleged gambling offences. Shares of Suncity Group, where Chau is CEO, were suspended on Monday “pending the release of an announcement in relation to news coverage” about Chau.

Mainland Chinese stocks were mixed, also paring some losses, with the Shanghai composite fractionally lower and the Shenzhen component nudging 0.275% higher.

In Japan, the Nikkei 225 declined 0.8% while the Topix index dipped 1.13% lower after falling more than 1% earlier. South Korea’s Kospi shed 0.47%.

Shares in Australia also slipped as the S&P/ASX 200 fell 0.25%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.07% lower.

Elsewhere, U.S. stock futures moved higher following Friday’s big sell-off, as investors stateside also watched for the latest developments related to the omicron variant.

Global markets tumbled late last week as the World Health Organization (WHO) labeled the omicron Covid strain a “variant of concern.” In Asia, the Nikkei 225 in Japan and Hang Seng index in Hong Kong both fell more than 2% on Friday.

“Things definitely will be a little bit more dicey going forward,” John Vail, chief global strategist at Nikko Asset Management, told CNBC’s “Squawk Box Asia” on Monday.

“This variant, as it seems, might not be as horrible as the market thought it might be on Friday, but still it’s got to shake out some of the excess risk taking and perhaps some of the excess consumption out there in the world too as people grow a bit more cautious,” Vail said.

The WHO said in a Sunday statement that it was still unclear whether infection with the omicron Covid variant causes more severe disease as compared with other strains, including delta.

Travel stocks fall

Travel stocks took a hit in Monday trade, adding to losses seen Friday.

In Japan, shares of Japan Airlines fell 3.84% while ANA Holdings declined 3.66%. Australia’s Qantas Airways slipped 1.7% while shares of Cathay Pacific in Hong Kong dropped 2.96%. In Singapore, shares of Singapore Airlines declined 2.18%.

Those losses came as multiple countries, including the U.S. and U.K., have announced restrictions on travelers from southern Africa following the discovery of the omicron variant. In Asia, Japanese Prime Minister Fumio Kishida said Monday that the country will bar entry to foreign visitors from Nov. 30, Reuters reported.

https://www.cnbc.com/2021/11/29/asia-markets-omicron-covid-variant-currencies-oil.html

European markets set to soar at the open despite global concern over omicron variant

Published Mon, Nov 29 2021 12:35 AM EST

LONDON — European stocks are expected to start the new trading week far higher, despite extensive concerns over the newly discovered omicron Covid variant.

The U.K.’s FTSE index is seen opening 97 points higher at 7,137, Germany’s DAX 191 points higher at 15,437, France’s CAC 40 up 99 points at 6,824 and Italy’s FTSE MIB up 324 points at 26,167, according to data from IG.

European markets are set to soar at the open despite pressing concerns about the omicron variant that the World Health Organization labeled as a “variant of concern” last Friday.

While scientists continue to research the variant, omicron’s large number of mutations has raised alarm. Preliminary evidence suggests the strain has an increased risk of reinfection, according to the WHO.

The variant has been found in the U.K., Israel, Belgiumthe NetherlandsGermany, Italy, Australia and Hong Kong, but not yet in the U.S. Many countries, including the U.S., moved to restrict travel from southern Africa.

Vaccine makers have announced measures to investigate omicron with testing already underway. While it remains to be seen how omicron responds to current vaccines or whether new formulations are required, Moderna’s Chief Medical Officer Paul Burton said Sunday the vaccine maker could roll out a reformulated vaccine against the omicron variant early next year.

U.S. stock futures moved higher in overnight trading Sunday following Friday’s big sell-off as investors look ahead to key economic data set to be released this week, including the November jobs report on Friday which is expected to show solid jobs growth. Economists surveyed by Dow Jones expect 581,000 jobs added in November.

More

https://www.cnbc.com/2021/11/29/european-markets-omicron-covid-variant-fears.html

Finally, in response to my restarting a slightly modified inflation, gold v fiat money algo from the late 70s early 80s, due to current inflation, a kind reader sent me a link to this most interesting, if very long and complicated, but excellent article touching upon historical over valuations in stocks. 

It’s far to long and complicated to use in the LIR, but I do recommend reading the whole comprehensive article.

The question before us now is, did last week’s arrival of the new Nu, Xi,  Omicron variant just destroy the Fed and other central banks game plan in shoring up rampant stock speculation, over valuations, and a massive mountain of unrepayable debt? 

And that, I think, will come down to just how bad the omicron variant of concern turns out to be. If it’s bad and starts closing down the global economies again, our “genius” central banksters can try repeating paying people not to work, issuing trillions more of unearned fiat currency, but only at the cost of blowing up the fiat currency, or alternately letting stocks and the global economies slump, and try picking up the pieces later.

Either way, I think I’ll add a little more physical gold and silver for an interesting ride directly ahead.

The Wealth Is In The Denominator

John P. Hussman, Ph.D.
President, Hussman Investment Trust

October 2021

----The fact is that neither information about the Federal Funds rate nor the size of the Fed’s balance sheet materially improves the ability to project subsequent changes in the real economy. Knowing the stance of Fed policy, however extreme it might be, contributes virtually nothing to those projections. Extraordinary Fed liquidity certainly has a role to play during banking crises, provided that bank reserves are actually constrained. In the midst of the pandemic, the most important aspect of the Fed’s policy was simply the assurance of that liquidity (its illegal foray into uncollateralized corporate securities – treating them as their own collateral – was both an abuse of public funds and a violation of section 4003(c)(3)(b) of the CARES Act). Aside from crisis response, to the extent that Fed policy has any material effect on the real economy, it’s embedded in the “systematic” component (Fed responses that can be fitted using current and past values of non-monetary variables – much like the Taylor Rule), not in the “activist” component.

----The main object that Fed policy affects is yield-seeking financial speculation, and even then only in periods when investors are inclined to speculate. That’s exactly how we got the mortgage bubble. Conversely, the tendency of valuations to collapse amid risk aversion and divergent market internals – regardless of Fed easing – is how we got the global financial crisis. The Fed has proven itself quite good at amplifying speculation and encouraging excessive issuance of low grade securities when investors are inclined to speculate, and then feigning heroism when the bubbles of its own making collapse amid periods of investor risk-aversion. While an improvement in our gauges of market internals would suggest fresh speculative pressures, the current deterioration and divergence of market internals substantially increases the downside risk of record valuations.

Fed purchases of Treasury securities can certainly enable Congress to run enormous fiscal deficits. It’s also true that extraordinary issuance of government liabilities, particularly in the face of output constraints, can provoke revulsion toward both government bonds and currency, with a corresponding loss of value (which we observe in the form of rising interest rates and inflation). What the Fed emphatically does not control is some manageable “tradeoff” between inflation and unemployment. Instead, the Fed has become almost entirely reliant on a narrative that its actions “support” the financial markets. When that narrative breaks – because it is in fact a narrative, not a mechanistic relationship – all hell will break loose, as it did in 2000-2002 and 2007-2009 despite persistent Fed easing. The outcome will be even worse if the Fed is itself constrained by inflation pressures.

More

https://www.hussmanfunds.com/comment/mc211015/

The only thing standing between me and greatness, is me.

Fed Chairman Powell, with apologies to Woody Allen. 

 

Global Inflation/Stagflation Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians,  inflation now needs an entire section of its own.

No update today, normal service resumes tomorrow.

 

Covid-19 Corner

This section will continue until it becomes unneeded.

South African scientists brace for wave propelled by omicron

JOHANNESBURG (AP) — Worried scientists in South Africa are scrambling to combat the lightning spread across the country of the new and highly transmissible omicron COVID-19 variant as the world grapples with its emergence.

In the space of two weeks, the omicron variant has sent South Africa from a period of low transmission to rapid growth of new confirmed cases. The country’s numbers are still relatively low, with 2,828 new confirmed cases recorded Friday, but omicron’s speed in infecting young South Africans has alarmed health professionals.

“We’re seeing a marked change in the demographic profile of patients with COVID-19,” Rudo Mathivha, head of the intensive care unit at Soweto’s Baragwanath Hospital, told an online press briefing.

“Young people, in their 20s to just over their late 30s, are coming in with moderate to severe disease, some needing intensive care. About 65% are not vaccinated and most of the rest are only half-vaccinated,” said Mathivha. “I’m worried that as the numbers go up, the public health care facilities will become overwhelmed.”

She said urgent preparations are needed to enable public hospitals to cope with a potential large influx of patients needing intensive care.

“We know we have a new variant,” said Mathivha. “The worst case scenario is that it hits us like delta ... we need to have critical care beds ready.”

What looked like a cluster infection among some university students in Pretoria ballooned into hundreds of new cases and then thousands, first in the capital city and then to nearby Johannesburg, South Africa’s largest city.

Studying the surge, scientists identified the new variant that diagnostic tests indicate is likely responsible for as many as 90% of the new cases, according to South Africa’s health officials. Early studies show that it has a reproduction rate of 2 — meaning that every person infected by it is likely to spread it to two other people.

https://apnews.com/article/coronavirus-pandemic-joe-biden-science-health-lifestyle-83cad19ead1725137bd7c3a371792ab7

Merck's COVID-19 pill significantly less effective in new analysis

by Reuters Friday, 26 November 2021 16:59 GMT

Nov 26 (Reuters) - Merck & Co said on Friday updated data from its study of its experimental COVID-19 pill showed the drug was significantly less effective in cutting hospitalizations and deaths than previously reported.

The drugmaker said its pill showed a 30% reduction in hospitalizations and deaths, based on data from 1,433 patients. In October, its data nL1N2QX0QJ showed a roughly 50% efficacy, based on data from 775 patients. The drug, molnupiravir, was developed with partner Ridgeback Biotherapeutics.

The lower efficacy of Merck's drug could have big implications in terms of whether countries continue to buy the pill. Interim data from 1,200 participants in Pfizer Inc's trial for its experimental pill, Paxlovid, showed an 89% reduction in hopsitalizations and deaths.

----Merck released the data before the U.S Food and Drug Administration published a set of documents on Friday intended to brief a panel of outside experts who will meet on Tuesday to discuss whether to recommend authorizing the pill.

The agency's staff did not make their own recommendation as to whether the pill should be authorized.

FDA staff asked the panel to discuss whether the benefits of the drug outweigh the risks and whether the population for whom the drug should be authorized should be limited.

They also asked the committee to weigh in on concerns over whether the drug could encourage the virus to mutate, and how those concerns could be mitigated.

Pills like molnupiravir and Paxlovid could be promising new weapons in the fight against the pandemic, as they can be taken as early at-home treatments to help prevent COVID-19 hospitalizations and deaths. They could also become important tools in countries and areas with limited access to vaccines or low inoculation rates.

More

https://news.trust.org/item/20211126165720-2gs9t

Japan bans entry of foreign visitors as omicron spreads

TOKYO (AP) — Japan announced Monday it will suspend entry of all foreign visitors from around the world as a new coronavirus variant spreads, prompting an increasing number of countries to tighten their borders.

“We are taking the step as an emergency precaution to prevent a worst-case scenario in Japan,” Prime Minister Fumio Kishida said. He said the measure will take effect Tuesday.

The decision means Japan will restore border controls that it eased earlier this month for short-term business visitors, foreign students and workers.

Kishida urged people to continue with mask wearing and other basic anti-virus measures until further details of the new omicron variant are known.

Many countries have moved to tighten their borders even as scientists warn it’s not clear if the new variant is more alarming than other versions of the virus.

The variant was identified days ago by researchers in South Africa, and much is still not known about it, including whether it is more contagious, more likely to cause serious illness or more able to evade the protection of vaccines. But many countries rushed to act, reflecting anxiety about anything that could prolong the pandemic that has killed more than 5 million people.

Israel decided to bar entry to foreigners, and Morocco said it would suspend all incoming flights for two weeks starting Monday — among the most drastic of a growing raft of travel curbs being imposed by nations around the world as they scrambled to slow the variant’s spread. Scientists in several places — from Hong Kong to Europe to North America — have confirmed its presence. The Netherlands reported 13 omicron cases on Sunday, and both Canada and Australia each found two.

Noting that the variant has already been detected in many countries and that closing borders often has limited effect, the World Health Organization called for frontiers to remain open.

More

https://apnews.com/article/coronavirus-pandemic-health-japan-fumio-kishida-82e53a7a17d1a4c30031065d389bda37

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 vaccineshttps://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines

NY Times Coronavirus Vaccine Trackerhttps://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html

Regulatory Focus COVID-19 vaccine trackerhttps://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

https://rt.live/

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.

Israel, Jordan agree US-brokered solar power for water deal
by AFP Staff Writers  Dubai (AFP) Nov 22, 2021

Jordan will provide solar power to Israel, which will in turn supply desalinated water to its desert neighbour, under a declaration of intent the two countries signed Monday.

Ministers from the neighbouring countries inked the US-brokered agreement at a Dubai Expo event joined by John Kerry, the US Special Presidential Envoy for Climate.

"The Middle East is on the frontline of the climate crisis," Kerry said in a statement. "Only by working together can countries in the region rise to the scale of the challenge."

The United Arab Emirates, which last year normalised relations with Israel, will reportedly build the solar power plant, the value of which was not disclosed.

Israeli Energy Minister Karine Elharrar said the Israel-Jordan agreement was the "most significant" since the formers enemies signed a peace treaty in 1994.

"The benefit of this agreement is not only in the form of green electricity or desalinated water, but also the strengthening of relations with the neighbour that has the longest border with Israel."

Feasibility studies for the project are due to start next year.

Jordan is one of the world's most water-deficient nations and its cooperation on water with Israel dates back to before the two established formal relations.

Israel is also a hot, dry country, but its advanced desalination technology has opened opportunities for selling fresh water.

The declaration of intent says the Jordan photovoltaic plant with a capacity of 600 MW will export green power to Israel, which will supply Jordan with up to 200 million cubic metres of desalinated water.

- Water diplomacy -

Jordan, nearly landlocked, faces dire water prospects as its population expands and temperatures rise.

Experts say the future cooperation could help improve relations, which Jordan's King Abdullah has described as a "cold peace".

Under their 1994 peace treaty, the Jewish state recognises Jordan's oversight of Muslim holy sites in east Jerusalem, which has since 1967 been occupied by Israel and was later annexed.

But there are often demonstrations in Jordan in solidarity with the Palestinians.

The recent deals come after relations had cooled under Israel's former prime minister Benjamin Netanyahu.

Israeli Prime Minister Naftali Bennett, who took over in June, has made strengthening ties with Amman a priority.

Even when Israel and Jordan were enemies following the 1948 war that led to Israel's creation, they held water cooperation meetings that helped shape their peace deal.

They announced in July that Israel would sell 50 million cubic metres of water a year to Jordan, doubling what it already supplies, and in October agreed to raise the amount further.

https://www.solardaily.com/reports/Israel_Jordan_agree_US-brokered_solar_power_for_water_deal_999.html

All I know is just what I read in the papers, and that's an alibi for my ignorance.

Will Rogers.

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