Baltic Dry Index. 3272 -71 Brent Crude 75.15
Spot Gold 1778
Inflation is not all bad. After all, it has allowed every American to live in a more expensive neighborhood without moving.
Alan Cranston.
The real gem in this weekend’s special update, lies in this weekend’s music update. See one genius perform another genius's piano music. You might also want to brush up on fractions and percentages, too. Enjoy.
My apologies too, for the length of today’s update, Thursday’s phone outages in my early morning, meant to get the update out at all, I had to hold over some items for use at the weekend.
To no one’s great surprise, (outside of the Fed and US Treasury that is,) US inflation is back with attitude, and if measured by the standards of the 1970s and early 80s, US inflation wouldn’t be coming in at 6.8% but would be coming in in double digits, my guess is probably between 12% and 14%.
Not to worry though, failures Fed Chairman Powell and Treasury Secretary Yellen are unlikely to do anything much about it for fear of triggering a year-end stock market sell-off.
Below, the return of what, among many other disasters, turned President Carter into a one term President. I wonder if anyone’s told President Biden?
Prices climbed 6.8% in November compared with last year, largest rise in nearly four decades, as inflation spreads through economy
December 10, 2021
Prices rose at the fastest pace in nearly 40 years last month, increasing 6.8 percent over the same period a year ago, as inflation continues to squeeze households and businesses nationwide and complicates the political environment for Congress and the White House.
Consumer price index data released Friday by the Bureau of Labor Statistics showed that prices rose 0.8 percent in November compared with October, with inflation spreading further throughout the economy, including to areas that had not been as affected by the coronavirus pandemic.
The November data marked the largest 12-month increase since June 1982, during a period when inflation was more of a scourge on daily life than most millennials have ever known. Current inflation dynamics have been spurred by a devastating pandemic that roiled the global economy, upsetting the workforce and supply chains, while stimulus measures helped unleash high demand for goods.
The broad-based increases span just about every sector, from pork, poultry and produce to housing and sporting goods. Companies large and small are raising prices or making tough decisions to make up for the rising costs of hiring, transportation and basic goods. Even Dollar Tree, which has long sold items for $1, is hiking prices to $1.25.
In time, it is possible that lower gas and energy prices or unclogged supply chains will help steer prices back down to more-sustainable levels. But it is unclear when that will happen, and in the meantime, businesses and consumers could start to change their expectations of what is still to come. Plus, the more persistent and embedded high prices become, the harder it will be for policymakers to rein them in.
“Yes, inflation can abate, but what [policymakers] care about is: Is it significant or insignificant to peoples’ lives and decision-making?” said Diane Swonk, chief economist at Grant Thornton. “This is inflation that’s not likely to be insignificant anytime soon, and that’s a problem.”
Inflation has emerged as a top political concern ahead of the 2022 midterms, with the cost of food or gas often a test for how people perceive the economy.
More
Wall St Week Ahead Investors await faster taper, inflation view at Fed meeting
December 10, 2021 11:05 PM GMT
NEW YORK, Dec 10 (Reuters) - Investors are bracing for the last Federal Reserve meeting of the year, with market participants hungry to learn how quickly the central bank plans to finish unwinding its bond-buying program and pick up signs of when it may start to raise rates in 2022.
Stocks are back at record highs following last week’s selloff – a market spasm brought on by worries over the Omicron variant of the coronavirus and comments from Fed Chairman Jerome Powell, who said the central bank may discuss speeding up the reduction of its $120 billion per month bond buying program at next week's meeting. read more
There is potential for renewed volatility, however, if the Fed takes a more hawkish than expected view on rolling back the easy money policies that have helped stocks more than double from their March 2020 lows, including a rapid reduction in bond buying that clears the way for the central bank to raise rates sooner.
Markets could also be roiled if the Fed signals greater worry about inflation, which Powell said can no longer be described as "transitory." Data on Friday showed consumer prices last month notched their largest annual gain in nearly four decades, bolstering the case for higher rates. read more
“The biggest factor in the equity market remains and will remain to be interest rates," said Jack Ablin, chief investment officer at Cresset Capital Management.
Higher yields - which can rise on expectations of tighter monetary policy - can dim the allure of stocks by creating a greater discount for companies' future cash flows, potentially pressuring valuations that are already elevated by historical standards.
The S&P 500 (.SPX), which has climbed 25% this year, is trading at 20.5 times forward 12-month earnings estimates, compared with its historic valuation average of 15.5 times, according to Refinitiv Datastream.
The yield on the benchmark 10-year Treasury note has climbed about 15 basis points from the start of the month to 1.49%, but is below the 1.776% it reached in March.
More
Finally, are more China sanctions coming? But isn’t this a double-edged sword? Suppose China retaliates by banning key exports to the west. Besides, who “won” the last USA v China trade war?
U.S. considers banning key exports to Chinese chipmaker SMIC - WSJ
December 10, 2021 5:15 AM GMT
Dec 9 (Reuters) - U.S. officials are considering discussing a Defense Department proposal this month to close regulatory loopholes that have allowed Chinese chipmaker SMIC (0981.HK) to buy critical U.S. technology, the Wall Street Journal reported on Thursday.
Some Commerce Department officials are trying to block the Defense Department's proposal, the Journal added, citing people familiar with the matter.
Semiconductor Manufacturing International Corp (SMIC) was added to a U.S. blacklist last year that denies it access to advanced manufacturing equipment from U.S. suppliers due to its alleged ties to China's military, claims that the company rejects. read more
SMIC, China's largest contract chipmaker, did not immediately respond to a request for comment on the report.
In the coming months, U.S. officials are also considering adding more Chinese technology companies to the Commerce Department's entity list and to the Treasury list banning U.S. investment, the Journal added.
On Wednesday, the U.S. House of Representatives passed legislation to ban imports from China's Xinjiang region over concerns about forced labor. read more
The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.
Frederic Bastiat.
Global Inflation/Stagflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Next, something all the King’s horses and men plus the inept Fed can’t fix. Cream cheese price rationing perhaps?
Cream Cheese Is the Latest Casualty of Cyberattacks
By Elizabeth Elkin and Deena Shanker10 December 2021, 12:00 GMT
A cream cheese shortage has been sending bagel shops and bakeries scrambling for supplies, and it’s due in part to a cyberattack on the biggest U.S. cheese manufacturer.
Schreiber Foods in Wisconsin, a top maker of cream cheese, closed for days in October after hackers compromised plants and distribution centers. The company is big enough that the lost production shook U.S. markets. (Read the full story here.)
The attack took place during the peak season for cream cheese demand. Americans are doing more holiday baking and buying more cakes, and cream cheese is a common dessert ingredient. Add to that all the labor constraints and logistics headaches caused by the pandemic.
Cyberattacks have added to the chaos afflicting global food supply chains in the Covid-19 era, with inflation driving prices to around decade highs. Hackers also targeted meat giant JBS and an Iowa grain cooperative this year.
Key Ingredients
Cream cheese happens to be particularly vulnerable to the supply chain issues. Some manufacturers have had problems getting starch, a thickening agent, as well as packaging like plastic film and cardboard boxes, according to Andrew Novakovic, an agricultural economist at Cornell University.
Cream cheese is a fresh product, meaning that keeping a large inventory on hand isn’t plausible. On top of the widespread labor shortage across industries, finding truck drivers is hitting the dairy industry particularly hard because of the extra license needed to pick up milk from farms.
Meanwhile, demand keeps soaring. Schreiber Foods was running at full capacity at the time of the cyberattack. Cream cheese production in October fell 6.9% from a year ago, according to government data.
At-home cream cheese consumption is up 18% compared with 2019, and food service demand in November was up 75% compared to last year, said Kathy Krenger, spokesperson for Kraft Heinz.
Elevated Coffee
More risks including downpours in Brazil keep prices near decade highs
----High-end coffee stayed near the highest prices in a decade with downpours in Brazil and omicron threatening in-store consumption. The La Niña weather pattern, caused by warming of the Pacific waters, is currently in play and is also bullish for coffee. There’s a 90% chance it will continue through the northern hemisphere winter, and a 50% it will last into May, according to a U.S. forecast.
Note: El Nino warms the Pacific La Nina cools it, just don't tell anyone at Bloomberg.
Germany’s Exporters Are Ending 2021 on Weak Footing
By Carolynn Look9 December 2021, 12:00 GMT
German exporters have painstakingly recovered their pandemic losses after months of supply disruptions held back their ability to produce, but there’s a rough road to full economic health still ahead.
October sales abroad were up 3.8% from February 2020, the month before Covid-related restrictions were introduced in Germany, data on Thursday showed. In the same month, however, new orders for manufactured items declined amid weak demand for investment goods, especially from outside the euro area.
The latest figures suggest Europe’s largest economy finds itself on weak footing during the final months of the year — especially as new worldwide restrictions pop up related to the Omicron variant.
Germany’s reliance on domestic manufacturing was already being challenged by a squeeze on raw materials and transportation, and by rising inflationary pressures. While services have managed to keep the economy afloat recently, that sector’s activity is likely to be more muted over the winter as Covid-19 infections surge.
To top it off, German consumers are facing a once-in-a-generation cost-of-living pinch as inflation reached 6% in November — the highest since the early 1990s.
The latest economic challenges are among the most immediate headaches for Chancellor Olaf Scholz, who was sworn in on Wednesday and is also facing pressure from the U.S. over the controversial Nord Stream 2 gas pipeline connecting Russia with Germany’s north coast.
Scholz warned Russian President Vladimir Putin late on Wednesday that an invasion of Ukraine would trigger reprisals from Western leaders, though he declined to specify if halting the gas pipeline would be part of any response.
Edging Back Up
Spot container rates for ocean freight crept higher over the past week
---- Under Pressure. Spot rates for shipping containers from Asia to the U.S. and Europe rose over the past week, indicating sustained pressure on capacity. The cost for a 40-foot container to Los Angeles from Shanghai rose to $10,138, up 5% from the previous week, while Shanghai-to-Rotterdam edged up to $13,564, according to the Drewry World Container Index released Thursday. The composite index, reflecting rates on eight major East-West routes, rose to $9,262, a 2% increase from the previous week that was the biggest weekly advance since September.
Below, why a “green energy” economy may not be possible, and if it is, it won’t be quick and it will be very inflationary, setting off a new long-term commodity Supercycle. Probably the largest seen so far.
The “New Energy Economy”: An Exercise in Magical Thinking
https://media4.manhattan-institute.org/sites/default/files/R-0319-MM.pdf
Mines, Minerals, and "Green" Energy: A Reality Check
https://www.manhattan-institute.org/mines-minerals-and-green-energy-reality-check
"An Environmental Disaster": An EV Battery Metals Crunch Is On The Horizon As The Industry Races To Recycle
by Tyler Durden Monday, Aug 02, 2021 - 08:40 PM
Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.
Frederic Bastiat.
Covid-19 Corner
This section will continue until it becomes unneeded.
Denmark's Omicron surge is a warning to the rest of world
Sat, Dec 11, 2021 - 9:33 AM
[STOCKHOLM] Denmark is seeing the number of people infected with the Omicron variant of Covid-19 double every second day, offering a glimpse of a development that is probably unfolding throughout Europe.
The Nordic country can offer valuable insights into what to expect from Omicron, as it has Europe's most rigorous screening programme, with a high level of testing, and variant-screening of all positive PCR tests.
That explains why Denmark has reported the highest number of Omicron cases in the European Union, Troels Lillebaek, chair of the Danish Sars-CoV-2 variant assessment committee, said.
"Denmark is not a hotspot for Omicron compared with any other European country," Lillebaek said in an interview on Friday (Dec 10). "I'm quite sure that what we are seeing now in Denmark is also happening in neighbouring countries, and in other European countries."
The first Omicron infection in Denmark was detected in a sample from Nov 22. Since then, 1,280 cases have been recorded, and Omicron represented 4.5-5 per cent of all Covid-19 infections in the country in the beginning of this week.
While based on limited data that could be skewed, the information from Statens Serum Institut also shows that almost 75 per cent of those infected by Omicron had received 2 doses of Covid-19 vaccine.
South Korea reports its worst virus surge since pandemic
SEOUL, South Korea (AP) — New coronavirus infections in South Korea exceeded 7,000 for the third consecutive day on Friday, as the worst surge since the start of the pandemic overwhelmed hospitals and depleted health care workforce.
Critics have blamed the spread on complacency by the government, which dramatically lowered social distancing rules at the start of November in what officials described as the first step toward restoring pre-pandemic normalcy.
Even as cases began to soar in recent weeks, officials were initially hesitant to tighten social distancing, citing exhaustion and frustration by the public with restrictions and their impact on livelihoods. But as the contagious delta variant reduced the effectiveness of vaccines and most people in their 60s or older are still waiting for their booster shoots, and the first cases of omicron were discovered, the sense of urgency became apparent.
Prime Minister Kim Boo-kyum, the No. 2 behind President Moon Jae-in, said during a virus meeting that the country could be forced to take further “extraordinary” measures if it fails to slow the spread of the virus soon.
Officials issued administrative orders requiring hospitals around the country to designate 2,000 more beds combined for COVID-19 treatment.
The increased capacity will be used to ease the crush on hospitals in Seoul and the nearby metropolitan region, where around 90% of intensive care units are already occupied. Officials said more than 1,200 virus patients in the greater capital area who required hospitalization were being forced to wait at home as of Friday morning because of bed shortages.
More
Long COVID patients and doctors detail the growing 'mass disabling event' in America
Thu, December 9, 2021, 5:20 PM
As the world nears year three of the coronavirus pandemic, there have been 267.8 million confirmed cases globally and more than 49.5 million confirmed cases in the U.S.
And while many have been fortunate enough to recover from the effects of COVID-19, millions of people are still suffering from long COVID — that is, long-term side effects of the virus.
"This is a mass disabling event, and we in the U.S. are not prepared," Rachel Bean, a 34-year-old based out of Minneapolis who suffers from long COVID, told Yahoo Finance.
Long COVID symptoms can range anywhere from fatigue, "brain fog," and heart palpitations to autoimmune conditions, according to the CDC.
“We know that after other viral illnesses, people can have a post-viral constellation of symptoms like this,” Dr. Wes Ely, co-director of the Critical Illness, Brain Dysfunction, and Survivorship Center at Vanderbilt University, said on Yahoo Finance Live (video above). “It can happen from the flu. We haven’t seen this magnitude of problems.”
Read more: A COVID-19 long-hauler details his year of 'hell'
In December 2020, Congress allocated $1.15 billion over four years to the National Institutes of Health (NIH) to study the prolonged health consequences of COVID-19.
“We’ve had [pandemics] before but never to the point where it’s been an absolute public health crisis where 10 to 20 million people in the United States are going to be suffering from this for months and years,” Ely said. “It’s something that our medical community and society at large really were not prepared to handle, this issue of long COVID.”
An estimated 14.5 million Americans are struggling with long COVID, according to the American Academy of Physical Medicine and Rehabilitation (AAPMR), which uses a model that assumes 30% of all COVID-19 surviving cases result in long COVID.
More
https://www.yahoo.com/news/long-covid-patients-doctors-america-172004184.html
Next, some very useful 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 more useful Covid links.
Johns Hopkins Coronavirus resource centre
https://coronavirus.jhu.edu/map.html
Rt Covid-19
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.
Dreams of energy transition face harsh reality
In a perfect world, the fossil fuels causing the planet to warm would steadily be replaced by wind turbines and nuclear plants, creating a seamless transition from one form of energy to another.
But humanity rarely moves so easily. And six years after world leaders meeting in Paris agreed to rapidly reduce greenhouse gas emissions in an attempt to avoid the most cataclysmic consequences of climate change, disruptions in global energy markets are drawing scrutiny on how government officials and the private sector are managing the transition from fossil fuels.
Oil and natural gas prices, already at their highest level in years as COVID-19 restrictions lift, could be headed much higher, as oil executives and government officials warn of a chronic under-investment in the industry at the same time that clean energy fails to expand fast enough to meet global needs.
At the World Petroleum Congress in Houston this week, there is growing concern among attendees that a recent shift by investors away from fossil fuels could lead to supply shortages and skyrocketing energy prices, costing consumers more and slowing the nation’s economic recovery from the pandemic. The recent spike in oil and gas prices is a case in point, they say, as lagging production following recent oil busts can’t keep up with the sharp rise in demand for energy.
“There’s this sense of demand stagnation because of the energy transition,” ConocoPhillips CEO Ryan Lance said Tuesday. “There’s this big uncertainty around what the demand trajectory is going to look like for this business, and that’s creating some uncertainty in the business. We all know that uncertainty leads to reduced capital investment.”
Earlier this year, the International Energy Agency, which advises governments on energy trends, made news when it said in order to meet governments’ targets of achieving net-zero greenhouse gas emissions by mid century, oil and gas development needed to stop immediately, sending shock waves through Texas’ oil and gas sector.
As it stands now, however, there simply isn’t enough available clean energy coming online to allow oil and gas exploration to stop. To do that, nations would need to sharply reduce fossil fuel consumption through policies such as carbon taxes or cap-and-trade systems, said Keisuke Sadamori, director of energy markets and security for the IEA.
---- In the meantime, oil companies and government officials are left to try to balance growing demand for energy with a shift away from the fossil fuels that supply 80 percent of the world’s energy needs. Investment in oil exploration and production was estimated at $300 billion last year, compared with $700 billion in 2014. At the same time, clean-energy investment needs to triple to $4 trillion per year by 2030, IEA reported earlier this year, to achieve the net-zero goal.
More
https://dash2.gridmonitor.com/news/articles/?id=6385
Winter Watch.
More on the new winter watch section. Northern hemisphere snow and the Arctic ice cover. Usually by about mid-November both give a pretty good indication of the European winter to come.
The Eur-Asian snow cover this November was extensive, far more than last year which came off of an unusual Siberian summer heatwave that probably affected both the snow cover and Arctic ice.
The Arctic sea ice extent this mid-November was slightly below normal. Taken together this more often than not suggests much of Europe is headed for a colder than normal winter, although given the Arctic sea ice extent, not a harsh winter.
U.S. and Northern Hemisphere Snow Cover
https://www.nohrsc.noaa.gov/nh_snowcover/
Read scientific analysis on Arctic sea ice conditions.
http://nsidc.org/arcticseaicenews/
This weekend’s musical diversion. L. V. Beethoven’s Piano Concerto number 4. Approx. 37 minutes.
After a genius 1st movement, Ludicrous van B. sort of loses it in the 2nd but regains genius again shortly into the 3rd movement. Probably the best P.C. No. 4 version on Youtube albeit with an overly dramatic conductor!
Includes the unintended wristwatch commercials about 5 and 8 minutes in, plus a lot of orchestra eyebrow raising and an old geezer in the front row who seems dropped off by about the 20th minute.
Hélène Grimaud: Beethoven - Piano Concerto No. 4, Op. 58 (Orchestre de Paris, Christoph Eschenbach)
https://www.youtube.com/watch?v=8siki1iGkU0
This weekend’s maths updates. Approx. 5 minutes.
Fractions made easy - adding three fractions fast
https://www.youtube.com/watch?v=1EGy_58LFTk
Approx. 4 minutes.
Easy Percentage Trick you were Never Taught at School!
https://www.youtube.com/watch?v=bBzJykqSTvQ
Approx. 5 minutes.
Mixed number fraction trick - Imagine how much time you could have saved!
https://www.youtube.com/watch?v=hxMANQxG5Dw
When plunder becomes a way of life, men create for themselves a legal system that authorizes it and a moral code that glorifies it.
Frederic Bastiat.
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