Fed – Bubble On! Inflation Released.

 Baltic Dry Index. 2892 -295 Brent Crude 81.39

Spot Gold 1775

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

Deaths 53,100

Coronavirus Cases 04/11/21 World 248,824,620

Deaths 5,037,026

An optimist is presented with a problem and sees an opportunity. A pessimist is presented with an opportunity and sees a problem.

Harry S. Truman.

So now we know, the front running Fedster’s are still long stocks. 

Fed Chairman Powell will tinker with his “no billionaire left behind” stock bubble program, by tapering the Fed’s 120 billion a month bond and mortgage buying support scheme, but only by an irrelevant 15 billion a month.

Like Admiral Nelson, he then raised his telescope to his blind eye and declared that in his view inflation is “expected to be transitory.” A much less confident version of his previous belief inflation WAS transitory.

So now it’s official, the stock bubble is back on. Unfortunately, so is the return of former Fed Chairman Arthur Burns inflation policy of denial, do nothing, and let’s hope something turns up.

What turned up was 1970s double digit inflation, which is very likely what turns up for the rest of this decade.

Fiat currency anyone? Dollars, Pounds, Euros, Yen, Yuan, Bolivars ?

Smart gamblers in the Central Bankster funded stock casinos might do well to sell out into this as the Fedster’s exit bubble, and move most of the proceeds into non-corporate tangible assets.

Asia-Pacific stocks rise after Fed announces plans to start tapering bond purchases

Published Wed, Nov 3 2021 7:43 PM EDT

SINGAPORE — Shares in Asia-Pacific rose in Thursday trade following the U.S. Federal Reserve’s announcement that it will start tapering the pace of its bond purchases later in November.

The Nikkei 225 in Japan gained 0.78% while the Topix index advanced 0.98%. South Korea’s Kospi also climbed 0.46%.

In mainland China, the Shanghai composite edged 0.64% higher while the Shenzhen component jumped 1.204%. Hong Kong’s Hang Seng index was up 0.27%.

Australian stocks rose in trade as the S&P/ASX 200 gained 0.38%.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.36%.

Markets in Singapore, Malaysia and India were closed on Thursday for a holiday.

Fed announces tapering plans

The Fed announced Wednesday it will begin reducing the pace of monthly bond purchases later this month. The move was in line with market expectations following a series of earlier signals from the U.S. central bank that it would begin winding down a program that accelerated in March 2020 as a response to the Covid pandemic.

The major indexes on Wall Street climbed to new records on Wednesday following the Fed announcement, with the Dow Jones Industrial Average rising 104.95 points to 36,157.58 while the S&P 500 advanced 0.65% to 4,660.57. The Nasdaq Composite jumped 1.04% to 15,811.58.

More

https://www.cnbc.com/2021/11/04/asia-markets-us-federal-reserve-currencies-oil.html

Fed sings the 'transitory' inflation refrain, unveils bond-buying 'taper'

November 3, 2021 5:15 AM

WASHINGTON (Reuters) - The Federal Reserve threw its weight back behind the drive for a full U.S. jobs recovery on Wednesday, restating its belief that current high inflation is “expected to be transitory” and, despite risks to that view, arguing that price pressures will ease and pave the way for stronger employment and economic growth in the months to come.

Even as the U.S. central bank announced it was tucking away one of its main pandemic-fighting tools, by trimming here its massive bond-buying program beginning this month, its latest policy statement and Fed Chair Jerome Powell's remarks in a news conference signaled it would stay patient - and wait for more job growth - before raising interest rates.

“Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizeable price increases in some sectors,” the Fed said in its latest policy statement, adding that “an easing of supply constraints (is) expected to support continued gains in economic activity and employment as well as a reduction in inflation.”

Powell emphasized what he said is the Fed’s intent to push labor markets further with low interest rates, and to withhold judgment about the limits of job creation until further outbreaks of the coronavirus have been contained.

---- Yet inflation was uncomfortably high, Powell acknowledged, blaming it on “turmoil” in global supply chains that is likely to last until perhaps the second half of next year, posing a challenge in the meantime to families on fixed incomes or those earning lower wages.

Inflation for the last five months has been running at twice the Fed’s 2% target, and moving in a way Powell said could well satisfy the central bank’s benchmark for a rate increase - once maximum employment is reached.

But for now, he said, the Fed would be “patient” in deciding when to raise its benchmark overnight interest rate from the near-zero level, a counter to rising bets in financial markets that inflation would prompt the central bank to end its pandemic-era support for the economy sooner than later.

More

https://www.reuters.com/article/usa-fed/fed-sings-the-transitory-inflation-refrain-unveils-bond-buying-taper-idUSKBN2HO0AD

Analysis-As Fed kicks off taper, some investors seek to dial down risk

November 4, 2021 5:15 AM

NEW YORK (Reuters) - The Fed’s well-telegraphed taper announcement has done little to soothe the nerves of some investors, who remain on edge about stubbornly persistent inflation and are looking to trim risk as they prepare for rockier times.

The Federal Reserve on Wednesday said it will begin paring back its monthly bond purchases this month with plans to end them in 2022, marking the beginning of its tightening cycle. But it stuck to its long-held view that high inflation would prove “transitory” and likely not require a fast rise in interest rates, prompting investors to call it a “dovish taper”.

Market reaction immediately after the announcement was muted, with the dollar falling while U.S. stocks gained. Investors said that may not be sustained long-term.

“As inflation persists in a very strong way ... people will become a little more nervous. That’s when you’ll see investors maybe dialing back on their risk exposures,” said Lon Erickson, portfolio manager at Thornburg Investment Management, Santa Fe, New Mexico, who said this could set in during the first half of 2022.

Erickson favors shorter-duration assets in the fixed income space to protect from looming volatility as inflation continues to surge.

The central bank’s easy money policies have been a source of significant support for financial markets, with the S&P 500 more than doubling since its March 2020 low during the onset of the pandemic. However, that has raised concerns about stretched valuations and a piling into comparatively risky assets, such as stocks.

“It’s a dangerous game when financial conditions are this loose, the economy is doing this well and inflationary pressures are this high, to be running monetary policy for a crisis-like environment,” said Troy Gayeski, chief market strategist for FS Investments. He advises investors seek products with inflation protection and avoid investments like long-duration U.S. Treasuries which see their value erode with inflation. “But it could be setting us up for a really tough 2022.”

More

https://www.reuters.com/article/usa-fed-investor-outlook/analysis-as-fed-kicks-off-taper-some-investors-seek-to-dial-down-risk-idUSL1N2RU3JD

Next COP26, whatever can Zhang Jun mean?

China's U.N. ambassador slams 'empty slogans' at COP26

November 3, 20211:31 AM GMT

SHANGHAI, Nov 3 (Reuters) - Tackling global climate change needs more than "empty slogans" and big entourages, China's senior envoy to the United Nations Zhang Jun said on Wednesday, amid criticism of Chinese President Xi Jinping's failure to attend climate talks in Glasgow.

"Responding to climate change requires unbending determination and sustained action, not empty slogans, unchanging policies, luxury motorcades and crowded entourages, or even irresponsibly letting people get infected!" wrote Zhang, China's Permanent Representative to the United Nations.

President Xi is not attending the COP26 talks in person, and delivered only a written statement to the heads of state session on Monday. His U.S. counterpart Joe Biden told reporters in Glasgow that Xi's absence was a "big mistake". read more

But Zhang wrote on Twitter that China had announced new action plans and policy targets ahead of COP26, and had a delegation on the ground. He also criticised the United States' record on climate, saying Beijing "has never withdrawn from the Paris Agreement."

"The U.S. government must earnestly meet its responsibilities and come up with specific emission reduction measures, and not try to divert attention and blame others," he said.

https://www.reuters.com/business/cop/chinas-un-ambassador-slams-empty-slogans-cop26-2021-11-03/

Finally, get ready for some big global trade changes ahead.

World’s largest trade deal will come into force in January. The U.S. won’t be part of it

Published Wed, Nov 3 2021 3:16 AM EDT

The world’s largest trade deal — which includes China and excludes the U.S. — will come into force in January next year.

It comes as Australia and New Zealand announced they have ratified the agreement.

The Regional Comprehensive Economic Partnership or RCEP was signed last year by 15 Asia-Pacific countries. The countries are the 10 members of the Association of Southeast Asian Nations and five of their largest trading partners China, Japan, South Korea, Australia and New Zealand.

Australia said in a statement on Tuesday that its ratification — together with New Zealand’s — paved the way for the deal to enter into force on Jan. 1, 2022, and allowed RCEP to reach a “milestone.”

New Zealand confirmed its ratification in a separate statement on Wednesday.

RCEP will be in force 60 days after a minimum of six ASEAN members and three non-ASEAN signatories ratify the agreement.

ASEAN countries that have ratified the deal so far are Brunei, Cambodia, Laos, Singapore, Thailand and Vietnam, according to the website of Australia’s Department of Foreign Affairs and Trade. In addition to Australia and New Zealand, other countries outside ASEAN that have also ratified RCEP are China and Japan.

RCEP covers a market of 2.2 billion people and $26.2 trillion of global output. The partnership will create a trade grouping that covers about 30% of the world’s population, as well as the global economy.

It is also larger than other regional trading blocs such as the United States-Mexico-Canada Agreement (USMCA) and the European Union.

Analysts have said that economic benefits of RCEP are modest and would take years to materialize.

Still, the deal was widely seen as a geopolitical victory for China at a time when U.S. economic influence in Asia-Pacific has waned.

https://www.cnbc.com/2021/11/03/worlds-largest-trade-deal-rcep-to-come-into-force-in-january-2022.html

 

Global Inflation/Stagflation Watch.

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

Will the Old Lady of Threadneedle Street pull the interest rate trigger later today? The first of the G-7 to act?

Below, on the one hand, while on the other…

“Give me a one-handed Economist. All my economists say 'on one hand...', then 'but on the other...”

Harry Truman.

Bank of England could be about to hike rates in the face of surging inflation

Published Wed, Nov 3 2021 6:29 AM EDT

LONDON — The Bank of England’s Monetary Policy Committee will meet Thursday to decide whether to pull the trigger on interest rate hikes.

Policymakers have intimated that a hike is imminent, but the nine-member MPC will need to determine whether to tighten policy this week or wait until its mid-December meeting, in light of persistent above-trend inflation and moderating growth.

Markets are uncertain about the timing, with analysts suggesting the vote is likely to be split. Some BOE policymakers, such as Governor Andrew Bailey and renowned hawk Michael Saunders, have hinted that they could back an immediate hike, while others have seemed more reluctant.

Silvana Tenreyro signaled recently that she would need to see further labor market data following the end of the U.K.’s furlough scheme on Sept. 30 before voting to begin the path toward policy normalization.

At Monday’s close, market data showed that derivatives traders were pricing in a 64% probability of a 15 basis point rate hike this week, Berenberg highlighted in a note Tuesday. Senior Economist Kallum Pickering said that while his team considers a first hike in December “slightly more likely,” a move this week would not come as a surprise.

Pickering noted that an increase to the base rate of 15 basis points from its current historic low of 0.1% would keep monetary policy ultra loose, but may have a significant impact on rate expectations, which have shifted dramatically over the past month.

“Having brought forward the first hike from March 2022 to November 2021 since the start of October, the market now looks for the Bank Rate to rise to 1.25% by end-2022 followed by 40 bps in cuts from mid-2023 to end-2025,” he said.

“In essence, the market seems to expect a BoE policy error in the coming years in the form of an over tightening in 2022 that needs to be corrected with modest rate cuts thereafter.”

As such, Berenberg believes a first move on December 16 and an increase to 0.75% by the end of 2022, with further hikes in 2023 taking the Bank Rate to 1.25% around a year later than current market expectations.

More

https://www.cnbc.com/2021/11/03/bank-of-england-could-be-about-to-hike-rates-in-the-face-of-surging-inflation.html

Food prices in China climbed every week of October, commerce ministry says

Published Thu, Nov 4 2021 1:11 AM EDT

 

BEIJING — Prices in China are rising quickly for food and other commodities, increasing pressure for policymakers tasked with keeping growth stable.

Food prices in China rose every week in October, according to data on edible agricultural products from the country’s Ministry of Commerce.

A basket of 30 vegetables hit 5.99 yuan per kilogram ($2.06 a pound) in the week ended Oct. 31, up 6.6% from the prior week. In the week ended Sept. 26, the price per kilogram had been 4.39 yuan ($1.51 a pound).

The inflationary pressure and the tightening trajectory of other countries’ monetary policy will limit the scope China has to ease its monetary policy, said Bruce Pang, head of macro and strategy research at China Renaissance.

Limited ability to ease monetary policy means China will require more support from fiscal and industrial policies to prevent stagflation, Pang said. He expects the economy can still grow by about 4% to 5% in the fourth quarter.

Stagflation is an economic phenomenon in which prices rise but business activity stagnates, leading to high unemployment and reduced consumer spending power.

---- The latest weekly report from China’s Commerce Ministry confirmed a trend of rising food prices. But the data released Tuesday afternoon was deleted from the ministry’s site as of Wednesday morning.

It had shown that the week ended Oct. 31 saw a food price increase of 3.7% from the prior week, with pork prices rising by 10.6% and that of chicken eggs up by 6.4%, according to a report of the data available on the Chinese Communist Party’s newspaper People’s Daily. The overall food price gains followed a 4.3% increase the prior week.

The commerce ministry did not respond to a CNBC request for comment. Official inflation data for October is due out Nov. 10.

More

https://www.cnbc.com/2021/11/04/food-prices-in-china-up-every-week-of-october-commerce-ministry-says.html

UK businesses jack up prices at record pace amid cost onslaught

Wednesday 3 November 2021 9:45 am

UK businesses are hiking prices at the fastest pace in history to cope with an onslaught of swelling costs.   

A vortex of soaring energy, fuel and staffing costs lured services firms to jack up prices in a bid to survive an assault on their margins, according to a closely watched survey.

Inflationary pressures emanating from the workforce indicates price rises are more entangled in the UK economy than feared. 

Businesses tend to hike prices to offset intensifying staffing costs, which magnifies inflationary headwinds, and can trigger workers to demand even higher pay, generating a damaging wage/price spiral.

Elevated wage costs were one of the key factors driving inflation in the services industry, according to IHS Markit, who compiles the survey.

“Evidence of momentum in services activity went hand-in-hand with more signs of burgeoning cost pressures,” according to Martin Beck, chief economic advisor to the EY Item Club.

“Costs were pushed up by supply-chain challenges and higher wages as companies responded to a shortage of staff.”

The record input and output inflation print – the highest since IHS Markit started tracking data in 1996 – will agitate officials at the Bank of England, who are preparing to reveal their latest interest rate decision tomorrow.

The Old Lady is expected to raise interest rates 15 basis points and possibly end the final leg of its QE programme to hose down inflation.

Governor Andrew Bailey has pinpointed a de-anchoring of medium inflation expectations as one of the central threats to the UK economy. 

He has signalled the Bank will “have to act” if expectations for price rises take off.

Tim Moore, economics director at IHS Markit, said: “Average prices charged increased at a survey-record pace, reflecting across the board pressures on operating expenses.” 

“Some 59 per cent of the survey panel reported an increase in their average costs during October, compared with only 15 per cent at the same time in 2020.”

Despite the uptick in inflation, IHS Markit’s purchasing managers’ index for the services industry climbed to its highest level since July, rising to 59.1 in October, up from 55.4 in September. 

A reading above 50 indicates the industry is expanding.

https://www.cityam.com/uk-businesses-jack-up-prices-at-record-pace-amid-cost-onslaught/?utm_source=newsletter&utm_medium=email&utm_campaign=Midday+newsletter+Nov+2020

Covid-19 Corner

This section will continue until it becomes unneeded.

China, is it here we go again? Or is this the beginning of the end?

China's COVID-19 cases spike ahead of Communist Party conclave

November 3, 2021 6:29 AM GMT

BEIJING, Nov 3 (Reuters) - China's new locally transmitted COVID-19 cases spiked to a near three-month high and tighter curbs to contain the spread are expected in the capital Beijing ahead of a key gathering of the highest-ranking members of the Communist Party next week.

The National Health Commission confirmed on Wednesday 93 new local symptomatic cases for Nov. 2, up from 54 a day earlier and the highest daily count since Aug. 9 at the peak of China's last major outbreak.

Beijing reported nine new local infections, the biggest one-day increase in the capital this year.

While new daily cases in Beijing since late October have remained very modest compared to outside of China, the country's zero-tolerance policy has meant the imposition of strict measures to contain the spread of the virus at all costs.

Temperature screening has been set up at entrances of shopping malls, supermarkets, hotels, cinemas and subway stations, while a legion of personnel on the ground check the health codes of visiting individuals on their mobile phones.

Beijing authorities have also repeatedly told residents to refrain from travelling out of the city, postpone weddings, simplify funeral arrangements, and cut back on all non-essential gatherings.

Of the flights scheduled on Wednesday at Beijing Daxing Airport, 60.4% have been cancelled as of the morning, while 49.8% of flights at Beijing Capital International Airport (0694.HK) have been scrapped.

Air China (601111.SS) is offering free cancellations for flights to and from Beijing until Dec. 1.

The rise in Beijing infections comes as the 300-plus members of the Communist Party's Central Committee prepare to gather in a major closed-door meeting on Nov. 8-11. It will be the committee's sixth and penultimate so-called plenum of its five-year term before the next big Party Congress in 2022.

At the plenum, President Xi Jinping is expected to push through a resolution that will cement his authority and legacy and strengthen his case for a precedent-breaking third term starting next year. read more

Outside of Beijing, new local infections were reported in the north, northeast and northwest in provinces and areas including Heilongjiang, Hebei, Gansu, Inner Mongolia, Ningxia and Qinghai.

New cases were also seen the southwest of China, in the municipality of Chongqing as well as the provinces of Sichuan and Yunnan.

The southern province of Jiangxi reported two new cases.

More

https://www.reuters.com/business/cop/china-covid-19-cases-spike-ahead-communist-party-conclave-2021-11-03/

Analysis: Country by country, scientists eye beginning of an end to the COVID-19 pandemic

November 3, 2021 10:16 AM GMT

CHICAGO, Nov 3 (Reuters) - As the devastating Delta variant surge eases in many regions of the world, scientists are charting when, and where, COVID-19 will transition to an endemic disease in 2022 and beyond, according to Reuters interviews with over a dozen leading disease experts.

They expect that the first countries to emerge from the pandemic will have had some combination of high rates of vaccination and natural immunity among people who were infected with the coronavirus, such as the United States, the UK, Portugal and India. But they warn that SARS-CoV-2 remains an unpredictable virus that is mutating as it spreads through unvaccinated populations.

None would completely rule out what some called a "doomsday scenario," in which the virus mutates to the point that it evades hard-won immunity. Yet they expressed increasing confidence that many countries will have put the worst of the pandemic behind them in the coming year.

"We think between now and the end of 2022, this is the point where we get control over this virus ... where we can significantly reduce severe disease and death," Maria Van Kerkhove, an epidemiologist leading the World Health Organization's (WHO) COVID-19 response, told Reuters.

More

https://www.reuters.com/business/healthcare-pharmaceuticals/country-by-country-scientists-eye-beginning-an-end-covid-19-pandemic-2021-11-03/

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

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.

Presented without comment.

Now about my plan to put a giant reflector on the moon to turn darkness into sunlight during Earthling’s night.

UK, India plan to connect world's green power grids

November 2, 202110:12 PM GMT

GLASGOW/BOSTON, Nov 2 (Reuters) - Britain and India introduced a plan on Tuesday to improve connections between the world's electricity power grids to accelerate the transition to greener energy.

Linking the grids would allow parts of the world with excess renewable power to send it to areas with deficits. For instance, countries where the sun has set could draw power from others still able to generate solar electricity.

The "Green Grids Initiative" at the COP26 climate talks in Glasgow, Scotland, was backed by more than 80 countries and could set a model for how rich countries help poorer ones to reduce their emissions and meet the goal of capping global warming at 1.5 degrees Celsius (2.7 Fahrenheit) above pre-industrial norms.

"If the world has to move to a clean and green future, these interconnected transnational grids are going to be critical solutions," Indian Prime Minister Narendra Modi said in a statement.

U.S. independent energy expert Matthew Wald said the plan underscored how renewable energy sources need more transmission lines since they must often be built far from cities, unlike coal or gas-fired plants whose fuel can be shipped in.

But Wald said planners in various countries - including the former Soviet Union - have long dreamed of cheap transmission across time zones with limited progress. Although powerline technology has improved in recent years, Wald and others said the plan would require spending large sums.

"We're talking about transmission networks that will need to be undersea. They will need to cross mountain ranges. They'll need to cross deserts" said Kartikeya Singh, senior associate at Washington-based Center for Strategic and International Studies,

The official announcement of the trans-national grid plan did not include cost figures or funding details.

More

https://www.reuters.com/business/environment/uk-india-launch-plan-connect-worlds-power-grids-climate-summit-2021-11-02/

Always be sincere, even if you don't mean it.

Harry S. Truman.