Monday 13 December 2021

WIN - Whip Inflation Now 2.0 NIM!

 Baltic Dry Index. 3272 -71  Brent Crude 76.08

Spot Gold 1786

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

Deaths 53,100

Coronavirus Cases 13/12/21 World 270,431,174

Deaths 5,322,096

The Battle of the River Plate was fought in the South Atlantic on 13 December 1939 as the first naval battle of the Second World War. The Kriegsmarine heavy cruiser Admiral Graf Spee, commanded by Captain Hans Langsdorff, engaged a Royal Navy squadron,[1][2] commanded by Commodore Henry Harwood,[3] comprising the cruisers HMS Ajax, HMS Achilles (on loan to the New Zealand Division) and HMS Exeter.[4]

https://en.wikipedia.org/wiki/Battle_of_the_River_Plate

 

Despite the return of serious, probably permanent, inflation in the US economy, plus four of the biggest central banks holding meetings this week at which they could adjust their artificially rigged low interest rates, the global stock casinos are betting heavily that they’ll do no such thing. 

They wouldn’t dare crash the casinos ahead of Christmas and the New Year!

The casinos are also betting heavily that Russia has no intention of invading the corrupt Ukraine.  Well not this week anyway. 

Our stock casinos are also ignoring the corona virus news out of China and a worsening economic outlook in Japan.  What could possibly go wrong?

Below, “buy more,” say the punters heavily invested in sky high stocks, “we’ve got the central banksters trapped over their own barrel.”

Asia-Pacific markets trade higher across the board as investors focus on central bank meetings

SINGAPORE — Asia-Pacific markets jumped on Monday as investors turn their focus to a number of monetary policy meetings happening this week.

In Japan, the Nikkei 225 rose 0.91% while the Topix index added 0.37%. South Korea’s Kospi added 0.55% and Australia’s benchmark ASX 200 rose 0.57%.

Hong Kong’s Hang Seng index rose 1.1%. Reuters reported that Chinese artificial intelligence start-up SenseTime Group will withdraw its $767 million Hong Kong initial public offering after it was placed on a U.S. investment blacklist.

Chinese mainland shares also advanced: The Shanghai composite was up 0.68% and the Shenzhen component added 0.6%.

A number of high profile central banks are due to hold their monetary policy meetings this week, including the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank.

“Accelerated Fed tapering seems assured when the [Federal Open Market Committee] meets this week,” ANZ Research analysts wrote in an early morning note.

They said they anticipate the U.S. central bank to reduce its monthly bond purchases by $30 billion a month starting in January compared with $15 billion currently.

“The Fed’s guidance around transitory inflation will be dropped, and the new inflation guidance is likely to reflect a clear determination to act accordingly to bring inflation under control,” the analysts added.

On Friday, data showed inflation in the United States accelerated at its fastest pace since 1982. Investors shrugged off the print and markets reacted positively to the report.

“Markets were evidently braced for even worse news,” said Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, in a morning note.

Attrill said that the test for markets this week, apart from the various central bank meetings, is whether the latest developments around the new Covid strain omicron can “derail risk sentiment.”

More

https://www.cnbc.com/2021/12/13/asia-markets-central-bank-meetings-omicron-variant-oil.html

Some Chinese companies suspend production in Zhejiang province on virus outbreak

SHANGHAI, Dec 13 (Reuters) - More than a dozen Chinese-listed companies said they had suspended production in coronavirus-hit parts of China's eastern Zhejiang province in response to local government's tightened COVID-19 curbs, causing their share prices to plunge.

Zhejiang reported a total of 173 locally transmitted cases with confirmed symptoms during the Dec. 6-12 period, official numbers showed on Monday, marking the province's first domestic cluster outbreak this year.

In October, the province reported just one local case.

A slew of companies, including Ningbo Homelink Eco-Itech Co Ltd (301193.SZ), Zhejiang Zhongxin Fluoride Materials Co Ltd (002915.SZ), Zhejiang Jingsheng Mechanical & Electrical Co Ltd (300316.SZ) and Zhejiang Fenglong Electric Co Ltd (002931.SZ), announced the production suspension through exchange filings over the weekend.

Their shares fell sharply in early trading on Monday. Zhejiang Chunhui Intelligent Control Co Ltd (300943.SZ) and Zhejiang Yankon Group Co (600261.SS) suffered the biggest losses, with their shares falling more than 7% each.

China reported 80 new locally-transmitted cases with symptoms on the mainland for Dec. 12, including 74 identified in Zhejiang.

Ningbo Homelink, which makes plastic products, said in an exchange filing late on Sunday that it had halted production in its home city Ningbo at the request of local authorities, and is taking measures to minimise the negative impact on its business.

Zhejiang Jindun Fans Co (300411.SZ), a Chinese maker of ventilation system equipment, said on Sunday that production at its subsidiary in Zhejiang's Shaoxing city had been suspended due to local government's anti-virus measures.

The company said there would be some delay in product deliveries and a hit to business this month, but that the fallout on this year's annual results would be limited.

All the companies that announced production halt vowed to fully cooperate with the local government, which will decide when production can be resumed.

https://www.reuters.com/world/china/some-chinese-companies-suspend-production-zhejiang-virus-outbreak-2021-12-13/

Japan's service-sector mood improves; Omicron, rising costs cloud outlook

TOKYO, Dec 13 (Reuters) - Japan's service-sector mood improved to a two-year high but the recovery among manufacturers stalled, a closely watched central bank survey showed, a sign rising raw material costs was weighing on the economy's recovery from the pandemic.

Big firms expect conditions to worsen ahead as high fuel prices and a weak yen push up import costs, reinforcing expectations Japan will maintain massive fiscal and monetary support to underpin a fragile economy.

"Non-manufacturers' sentiment got a boost from the end to pandemic curbs, while supply constraints hit manufacturers," said Toru Suehiro, an analyst at Daiwa Securities.

"Overall, business confidence lacks strength with both manufacturers and non-manufacturers expecting conditions to worsen," he said.

The headline index gauging big manufacturers' sentiment stood at plus 18 in the final quarter of 2021, unchanged from the previous quarter and below a market forecast for plus 19, the Bank of Japan's (BOJ) tankan survey showed on Monday.

Rising costs and auto output disruptions hit industries such as non-ferrous metals, chemicals and machinery, it showed.

More

https://www.reuters.com/markets/europe/japan-service-sector-firms-mood-perks-up-omicron-clouds-outlook-boj-tankan-2021-12-13/ 

Finally, yet another cybersecurity problem surfaces.

German cybersecurity watchdog issues red alert warning on software 

Sun, December 12, 2021, 1:00 PM

FRANKFURT (Reuters) - Germany's federal cybersecurity watchdog, the BSI, on Saturday issued a red alert warning, its highest, on a flawed piece of widely-used software, saying it posed an "extremely critical threat" to web servers.

A vulnerability in a Java-based library known as Log4j can be exploited to allow a complete takeover of the affected system, the BSI said in a statement on its website.

"The reason for this assessment is the very wide distribution of the affected product and the associated impact on countless other products. The vulnerability is also easily exploitable, and a proof-of-concept is publicly available," the BSI said.

"The BSI is aware of world- and Germany-wide mass scans as well as attempted compromises. Initial successful compromises are also being publicly reported," it added.

The BSI said that although there was a security update for Log4j all products using it also needed to be adapted, recommending that companies and organisations implemented the measures outlined in the cyber security warning.

https://www.yahoo.com/news/german-cybersecurity-watchdog-issues-red-130042093.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.

Are the “good old days” of Fed Chairman Arthur Burns and G. William Miller back?

Don’t look now but guess who’s hedging against future food price inflation.

The US Treasury Yield Curve sends an unwanted warning.

Whip inflation now

Whip Inflation Now (WIN) was a 1974 attempt to spur a grassroots movement to combat inflation in the US, by encouraging personal savings and disciplined spending habits in combination with public measures, urged by U.S. President Gerald Ford. The campaign was later described as "one of the biggest government public relations blunders ever".[2]

People who supported the mandatory and voluntary measures were encouraged to wear "WIN" buttons,[3][dead link] perhaps in hope of evoking in peacetime the kind of solidarity and voluntarism symbolized by the V-campaign during World War II.

Ford had taken office in August 1974 amidst one of the worst economic crises in US history, marked by high unemployment and inflation rising to 12.3% that year following the 1973 oil crisis.[2] As a Republican, Ford favored the WIN campaign's emphasis on addressing the problem through voluntary actions of citizens, instead of price restrictions imposed centrally by a big government bureaucracy.[2]

The campaign began in earnest with the establishment by the 93rd Congress of the National Commission on Inflation, which Ford closed with an address to the American people, asking them to send him a list of ten inflation-reducing ideas.[4] Ten days later, Ford declared inflation "public enemy number one" before Congress on October 8, 1974, in a speech entitled "Whip Inflation Now", announcing a series of proposals for public and private steps intended to directly affect supply and demand to bring inflation under control. Suggested actions for citizens included carpooling, turning down thermostats, and starting their own vegetable gardens.[2]

"WIN" buttons immediately became objects of ridicule; skeptics wore the buttons upside down, explaining that "NIM" stood for "No Immediate Miracles," "Nonstop Inflation Merry-go-round," or "Need Immediate Money."

Alan Greenspan, as the Chairman of the Council of Economic Advisors during the Ford administration, went along reluctantly with the "Whip Inflation Now" campaign,[2] but would later recall in his book The Age of Turbulence that he was thinking, "This is unbelievably stupid" when the concept was first presented to the White House. According to historian Yanek Mieczkowski, the public campaign was never meant to be the centerpiece of the anti-inflation program.[5]

More.

https://en.wikipedia.org/wiki/Whip_inflation_now#:~:text=Whip%20Inflation%20Now%20%28%20WIN%29%20was%20a%201974,public%20measures%2C%20urged%20by%20U.S.%20President%20Gerald%20Ford.

Exclusive-China snaps up large volumes of French, Ukrainian feed grain

Fri, December 10, 2021, 12:15 PM

PARIS (Reuters) - Chinese buyers have been making large purchases of French wheat and barley along with Ukrainian corn and barley in the last week, trade sources said, taking advantage of a pause in surging prices to cover some of their feed grain needs.

While the total volumes bought were not yet clear, the sources said importers had secured at least several hundred thousand tonnes of grain from France and Ukraine.

The Chinese buyers also made major purchases of Australian feed wheat that again represented at least several hundred thousand tonnes, some of the sources added.

The deals point to China's continued major grain import requirement, despite the arrival of its domestic corn crop and difficulties in its pig industry, and further illustrate the readiness of buyers to seize on falls in international prices.

Wheat futures soared to a nine-year high in the United States and a record peak in Europe last month, fuelled by concern about rain damage to Australia's harvest and Russian export curbs, before retreating sharply since last week. [GRA/] [GRA/EU]

For French wheat, buyers were understood to have booked between six and 10 vessels, or potentially up to 600,000 tonnes, for shipment mainly between January and March, six traders said.

That followed smaller deals for French wheat in mid-November for two or three vessels for shipment this month, they said.

The French wheat was expected to be used mainly for livestock feed, although some may be for milling markets, the traders added.

"French wheat is currently looking attractive in price to the Chinese after falling from its peaks," a European trader said. [GRA/EU]

"China is also believed to have been making large purchases of wheat from Australia recently with China’s economic recovery generating demand."

The latest sales would bring cumulative exports of French wheat to China in 2021/22 to 2 million tonnes, surpassing already large volumes in the past two seasons, traders said.

----Traders estimated prices for Ukrainian corn for January-February shipment to China this week at around $270-$273 a tonne, free on board.

As in a previous round of purchases last month, Ukrainian corn appeared more expensive than U.S. supplies. Traders suggested Chinese buyers may be put off by a U.S. requirement to disclose large sales that can lead to price rises.

China is traditionally a major importer of Ukrainian corn and barley. Traders estimate Ukraine could ship 5 million tonnes of corn to China from what is expected to be a record 2021 Ukrainian crop.

https://www.yahoo.com/news/exclusive-china-snaps-large-volumes-121524486.html

Stock-Market Bravado Tested as Bonds Flash Fed Policy Danger

December 11, 2021

Bloomberg) -- The fastest inflation print in nearly 40 years is rattling nerves on Wall Street where economically sensitive trades are hitched to an ultra-accommodative Federal Reserve. 

The spread between five- and 30-year Treasury yields has narrowed relentlessly this quarter, with that curve now near the flattest since March 2020. It’s a sign bond traders are betting faster rate hikes will undercut the red-hot economic expansion, possibly disrupting the business cycle in the name of inflation-fighting credibility.

A slew of stock market corners beneath a heady S&P 500 are channeling bond-market angst, with stimulus fading, still-clunky supply chains and a new coronavirus variant spreading.

Yet it’s far from clear-cut. Many say the bond warning is a head fake with plenty of juice left in stock trades hitched to the robust recovery. 

“It’s the expectation that short-term rates are going to increase and a risk that by moving too aggressively the Federal Reserve and other central banks could choke off the recovery,” said Brian O’Reilly, head of market strategy at Mediolanum International Funds. “That’s what the bond market is saying. I don’t necessarily agree.”

----Caution has crept back into cross-asset markets this quarter as the Fed sends its clearest signal yet it will hasten monetary tightening. In the wake of the hawkish turn, swaps are pricing in close to three quarter-point rate hikes in 2022. That’s more than the majority of Fed officials indicated in their most recent forecasts from September, although that is likely to shift when new projections are released on Wednesday.

The Bloomberg Dollar Spot Index is up for a second straight quarter and emerging-market stocks plunged to the lowest level versus their developed peers in 17 years.

----The yield curve is too flat,” said Gene Tannuzzo, the global fixed-income head at Columbia Threadneedle. “Quantitative easing and asset purchases have both become very significant portions of what central banks do. Because of that longer-return yields are less of a natural signal.” 

With little conviction, flip-flopping is everywhere. The 20-day volatility of both long-short value and momentum factors jumped to the highest since April this week as risk appetite swung like a pendulum depending on omicron headlines. 

More

https://www.bnnbloomberg.ca/stock-market-bravado-tested-as-bonds-flash-fed-policy-danger-1.1694378

 

Covid-19 Corner

This section will continue until it becomes unneeded.

New CDC data shows first-known omicron Covid patient in U.S. had symptoms starting Nov. 15

The Centers for Disease Control and Prevention on Friday said the first-known case of omicron Covid in the U.S. was found in a person who had traveled internationally and started presenting symptoms on Nov. 15.

The new infection timeline means omicron arrived in the U.S. earlier than first thought. California had reported what was believed to be the first confirmed case on Dec. 1. An international traveler returned to San Francisco from South Africa on Nov. 22, developed symptoms three days later and tested positive on Nov. 29.

The CDC said 22 states have confirmed at least one omicron case, and some of those cases indicate community spread is underway. Among 43 omicron Covid patients, 33% reported international travel during the 14 days before symptom onset or testing positive, according to the CDC.

Case investigations have identified exposures associated with international and domestic travel, large public events and household transmission. 

One vaccinated person was hospitalized for two days, but there haven’t been any deaths reported to date among the patients who have been followed by health officials, according to the CDC.

Among the cases, 58% of the patients were between 18 and 39 years of age, and 79% were fully vaccinated at least 14 days before symptom onset or testing positive. Fourteen people had received booster doses and six had recovered from previous Covid infections, according to the CDC. Five received their booster dose less than 14 days before symptom onset.

The most common reported symptoms were cough, fatigue and congestion, or a runny nose.

“Many of the first reported cases of omicron variant infection appear to be mild, although as with all variants, a lag exists between infection and more severe outcomes, and symptoms would be expected to be milder in vaccinated persons and those with previous SARS-CoV-2 infection than in an unvaccinated person,” the CDC said in its weekly Morbidity and Mortality report on Friday.

More

https://www.cnbc.com/2021/12/10/new-cdc-data-shows-first-known-omicron-patient-in-us-had-symptoms-starting-nov-15.html

Most reported U.S. Omicron cases have hit the fully vaccinated - CDC

Fri, December 10, 2021, 6:26 PM

(Reuters) - Most of the 43 COVID-19 cases caused by the Omicron variant identified in the United States so far were in people who were fully vaccinated, and a third of them had received a booster dose, according to a U.S. report published on Friday. 

  The U.S. Centers for Disease Control and Prevention (CDC) said that of the 43 cases attributed to Omicron variant, 34 people had been fully vaccinated. Fourteen of them had also received a booster, although five of those cases occurred less than 14 days after the additional shot before full protection kicks in. 

  While the numbers are very small, they add to growing concerns that current COVID-19 vaccines may offer less protection against the highly transmissible new variant. 

  The Omicron variant of the coronavirus has been found through testing in about 22 states so far after first being identified in southern Africa and Hong Kong in late November. 

  Among the Omicron cases, 25 were in people aged 18 to 39 and 14 had traveled internationally. Six people had previously been infected with the coronavirus. 

  Most of them only had mild symptoms such as coughing, congestion, and fatigue, the report said, and one person was hospitalized for two days. Other symptoms reported less frequently including nausea or vomiting, shortness of breath or difficulty breathing, diarrhea and loss of taste or smell. 

  The CDC said that while many of the first reported Omicron cases appear to be mild, a lag exists between infection and more severe outcomes. Symptoms would also be expected to be milder in vaccinated persons and those with previous SARS-CoV-2 infection. 

  The first known U.S. Omicron case was identified https://reut.rs/31M6TyW on Dec 1 in a fully vaccinated person who had traveled to South Africa. The CDC said that the earliest date of symptom onset was Nov. 15 in a person with a history of international travel. 

  The Delta variant still accounts for more than 99% of all U.S. cases. But reports from South Africa show that the Omicron variant is very transmissible. 

  Even if most cases are mild, a highly transmissible variant could result in enough infections to overwhelm health systems, the CDC cautioned. 

  Laboratory studies released this week suggest that the Omicron variant will blunt the protective power of two doses of Pfizer and BioNTech's COVID-19 vaccine, although a third dose https://www.reuters.com/business/healthcare-pharmaceuticals/biontech-pfizer-say-test-shows-3-doses-vaccine-neutralise-omicron-2021-12-08 may restore that protection. 

https://news.yahoo.com/most-reported-u-omicron-cases-182642515.html

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.

Resolving the puzzles of graphene superconductivity

Discovery of superconductivity in trilayer graphene

Date:  December 10, 2021

Source:  Institute of Science and Technology Austria

Summary:  Since superconductivity in three-layered graphene was discovered in September, the physics community has been left puzzled. Now, three months later, physicists can successfully explain the results by drawing from a theory of unconventional superconductivity.

A single layer of carbon atoms arranged in a honeycomb lattice makes up the promising nanomaterial called graphene. Research on a setup of three sheets of graphene stacked on top of one another so that their lattices are aligned but shifted -- forming rhombohedral trilayer graphene -- revealed an unexpected state of superconductivity. In this state electrical resistance vanishes due to the quantum nature of the electrons. The discovery was published and debated in Nature, whilst the origins remained elusive. Now, Professor Maksym Serbyn and Postdoc Areg Ghazaryan from the Institute of Science and Technology (IST) Austria in collaboration with Professor Erez Berg and Postdoc Tobias Holder from the Weizmann Institute of Science, Israel, developed a theoretical framework of unconventional superconductivity, which resolves the puzzles posed by the experimental data.

The Puzzles and their Resolution

Superconductivity relies on the pairing of free electrons in the material despite their repulsion arising from their equal negative charges. This pairing happens between electrons of opposite spin through vibrations of the crystal lattice. Spin is a quantum property of particles comparable, but not identical to rotation. The mentioned kind of pairing is the case at least in conventional superconductors. "Applied to trilayer graphene," co-lead-author Ghazaryan points out, "we identified two puzzles that seem difficult to reconcile with conventional superconductivity."

----The Benefits of Graphene Superconductivity

While superconductivity has been observed in other trilayer and bilayer graphene, these known materials must be specifically engineered and may be hard to control because of their low stability. Rhombohedral trilayer graphene, although rare, is naturally occurring. The proposed theoretical solution has the potential of shedding light on long-standing problems in condensed matter physics and opening the way to potential applications of both superconductivity and graphene.

https://www.sciencedaily.com/releases/2021/12/211210103127.htm?utm_source=feedburner&utm_medium=email

The true costs of very low interest rates

Artificial distortions can cause ‘clusters of errors’ by businesses

Caitlin Long  August 11, 2010

---- Interest rates are the most important prices in the economy, according to Nobel laureate F.A. Hayek, because they reflect the collective time preference of individuals to consume either now or later. Accordingly, interest rates co-ordinate allocation of capital across the economy by signalling to businesses whether they should invest. Distortions in interest rates can cause “clusters of errors” in which large swathes of businesses unwittingly miscalculate at the same time.

Hayek observed that interest rate stimulus interfered with economic calculations, causing managers to invest in projects that would not otherwise have appeared profitable. Losses can subsequently materialise as customer demand fails to meet forecasts that were, in retrospect, optimistic. Long-term projects are highly sensitive to interest rates and are therefore more susceptible to such distortions. Pension obligations and long-term, capital-intensive projects are at high risk of miscalculation based on artificially low rates.

---- Hayek observed that “clusters of errors” tended to happen after monetary stimulus sparked an investment boom. When boom turned to bust he urged quick recognition of losses to free capital trapped in bad investments so markets could redeploy it to better uses. Any further rounds of monetary stimulus to cushion the bust would only prolong the inevitable adjustment and distort economic calculation anew.

More

Caitlin Long is head of Corporate Strategy, Capital Markets at Morgan Stanley.

https://www.ft.com/content/2838c142-a560-11df-a5b7-00144feabdc0

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