BEIJING, March 24 (Reuters) - Asian shares fell on
Thursday, while the sell-off in U.S. Treasuries paused and oil prices rose, as
investors and traders weighed the latest developments in the Ukraine war and
more hawkish comments from U.S. Federal Reserve officials.
U.S. President Joe Biden arrived
in Brussels for a series of summit meetings on the Ukraine War, with Biden set
to announce a U.S. package of Russia-related sanctions on political figures and
oligarchs on Thursday. read
more
Oil prices held firm. Russia President Vladimir Putin
said on Wednesday that Moscow, which calls its actions in Ukraine a
"special operation", will seek payment in roubles for gas sold to
"unfriendly" countries. read
more
Brent futures were up about 45
cents, or 0.4%, at $122.05 a barrel and U.S. West Texas Intermediate futures
were up about 15 cents, or 0.2%, at $115.07 a barrel.
Russia plans to demand ruble payments for natural gas
purchases from European nations, deepening its standoff with the west and
potentially aggravating Europe’s worst energy crunch since the 1970s.
More
https://www.bloomberg.com/news/articles/2022-03-23/putin-wants-hostile-states-to-pay-rubles-for-gas-interfax-says
Explainer: Challenges arise as
Russia calls for gas payments in roubles March 24,
2022 1:31 AM GMT
HOUSTON, March 23 (Reuters) -
Russian President Vladimir Putin on Wednesday said the world's largest natural
gas producer would soon require "unfriendly" countries to pay for
their fuel in Russia's currency, the rouble.
The requirement raised new hurdles
for the mostly European gas purchasers that buy Russian gas. Europe gets about
40% of its gas from Russia, paying largely the 200 million to 800 million euro
($880 million) per day bill in euros and dollars.
Putin gave the Russian central bank
and government officials one week to come up with a way to shift payment to the
Russian currency. State gas company Gazprom also was ordered to revise its
contracts to accommodate the move.
WHAT IS BEHIND THE CHANGE?
The European Union is considering
sanctions and the United States, Britain and Canada slapped sanctions on
Russia's central bank and energy imports, dealing a blow to the country's
economy to punish Moscow for its invasion of Ukraine.
If Russia gets paid for gas in
roubles, it could avoid some of those financial sanctions. Nearly all Russian
gas purchase contracts are denominated in euros or U.S. dollars, according to
consultancy Rystad Energy.
Since Russia's invasion of Ukraine,
which the country has called a "special operation", the rouble has
plummeted as much as 85% against the U.S. dollar. It has since rebounded
against the dollar and briefly spiked on Wednesday's announcement.
WHY DOES IT MATTER?
Europe depends heavily on Russian
gas for heating and power generation and European Union members are split on
whether they can sanction Russia's energy sector.
The European wholesale gas futures
benchmark, TTF, briefly topped $44 per million British thermal units on
Wednesday in response to Putin's call for payments in roubles.
Eastbound gas flows via the
Yamal-Europe pipeline from Germany to Poland declined sharply, data from the
Gascade pipeline operator showed on Wednesday.
HOW POSSIBLE IS THE TRANSITION?
It is unlikely Russia has the power
to unilaterally change the terms of contracts already in existence, said legal
experts.
"Contracts are made between two
parties, and it is usually in U.S. dollars or euros. So if one party
unilaterally says 'no, you're going to pay in this' Well, there's no
contract," said Tim Harcourt, chief economist at the Institute for Public
Policy and Governance at the University of Technology Sydney.
"It is not clear how serious a
demand this is," said Susan Sakmar, a visiting law professor at the
University Houston and a liquefied natural gas business consultant.
Wednesday's rise in the
rouble-dollar exchange and jump in European wholesale gas prices may be the
point, she said. "It would take a long time for something like this to
happen. In the meantime, Putin can keep prices elevated. That's serving his
interests well."
IS THERE A MECHANISM AVAILABLE?
Bulgarian Energy Minister Alexander Nikolov
said a financial counterparty in Sofia could handle transactions in roubles.
"We're expecting all kinds of
actions on the verge of the unusual but this scenario has been discussed, so
there's no risk for the payments under the existing contract," he said.
Claudio Galimberti, a senior vice
president at Rystad, said it is possible for Russia to devise new contracts
that require payment in roubles, but it would require governments to hold
roubles in their central banks or buy them on the open market.
More
https://www.reuters.com/business/challenges-arise-russia-calls-gas-payments-roubles-2022-03-24/
Japan unsure how Russia will
execute rouble payments for energy sold to 'unfriendly' nations March 24, 2022 3:36 AM GMT
TOKYO, March 24 (Reuters) - Japan
does not know how Russia will handle the required rouble payments for its
energy sold to "unfriendly" countries, the finance minister said on
Thursday.
Japan accounted for 4.1% of Russia's
crude oil exports and 7.2% of its natural gas exports in 2021.
"Currently, we're looking into
the situation with relevant ministries as we don't quite understand what is
(Russia's) intention and how they would do this," Finance Minister
Shunichi Suzuki said in a parliament session.
The government will also coordinate with Japanese
companies to collect information about the move, Chief Cabinet Secretary
Hirokazu Matsuno told a Thursday news conference.
Russia's President Vladimir
Putin said on Wednesday his country would seek payment in roubles for gas sales
to "unfriendly" countries in retaliation for Western sanctions
against its invasion of Ukraine. read
more
Russia has put Japan on its
"unfriendly" nation list along with the United States, European Union
member states and others.
More
https://www.reuters.com/world/asia-pacific/japan-says-not-sure-how-russia-will-execute-rouble-payments-energy-sold-2022-03-24/
Column: Economic war pushes
business cycle to tipping point March 23, 2022 11:11 AM GMT
LONDON, March 23 (Reuters) -
"The longer the war goes on, the greater the chance of an economic
recession," the chief executive of commodity trader Vitol said on Tuesday
at a business leaders' conference organised by the Financial Times.
Recession risks were already
elevated before Russia's invasion of Ukraine and the subsequent surge in
commodity prices and disruption of supply chains has worsened the adverse
economic trends.
Recessions have proved notoriously
difficult to predict, or identify when they first start, even for the most
learned researchers of the business cycle.
For the most part, recessions are
caused by a complex interaction of output, employment, prices, costs,
productivity, interest rates and credit, among other variables, rather than a
single external shock such as a spike in oil prices.
But a sudden rise in the price of
oil, or some other shock, can act as the tipping point if the business cycle
has already become susceptible to a downturn, as was probably the case at the
start of 2022.
----Real
personal incomes less transfers (PILT) had fallen by 0.3% between October and
January, according to data from the U.S. Bureau of Economic Analysis, as wages
failed to keep up with the rise in prices.
PILT is one of a suite of indicators
the National Bureau of Economic Research's Business Cycle Dating Committee uses
to identify peaks and troughs in the business cycle.
The three-month fall in PILT put the
indicator in just the 14th percentile for all months since 1990, which helps
explain why consumer sentiment has tumbled even as job growth has continued.
PILT growth has fallen to rates that
heralded the onset of a recessions in 1990, 2001, 2007 and 2020 and mid-cycle
slowdowns in 1995, 2005, 2012 and 2015.
More
https://www.reuters.com/markets/commodities/economic-war-pushes-business-cycle-tipping-point-2022-03-23/
In the unnecessary
European war news, how long before our puffed up politicians widen the war into
World War Three?
Putin’s Ukraine invasion is
turning into a ‘grinding war’ where nobody wins Published Wed, Mar 23 2022 2:55 AM EDT
As Russia’s unprovoked invasion of Ukraine drags close to a
fourth week it’s becoming clear to both Moscow and Kyiv that the conflict will
not be easily won, or lost, by either side.
Russian President Vladimir Putin is widely
believed to have started his invasion of Ukraine expecting a quick victory,
having miscalculated and underestimated the resistance Ukrainian forces and
thousands of volunteer civilian fighters would mount to fight for their
homeland.
So far, Russian forces have only captured one city,
Kherson, while a much-feared assault on the capital Kyiv has yet to begin, the
second-largest city Kharkiv continues to resist and the western city of Lviv
has been relatively unscathed.
The Russian invasion has nonetheless
unleashed widespread destruction on parts of the country and cities that are
vital for Ukraine’s economic wellbeing, like Mariupol — a key port city for Ukraine
from which it exports grain and steel among other goods — which is still under
siege and heavily destroyed.
With Russia making little headway in
its wider overall invasion and Ukraine battling to concede as little territory
and vital infrastructure as possible, the conflict quickly risks becoming a
“war of attrition,” analysts say — essentially, a prolonged struggle in which
both sides seek to exhaust the opponent through the gradual loss of personnel,
equipment and supplies.
“The war in Ukraine is likely
heading towards a grinding war scenario — a stalemate phase during which both
sides have limited ability to conduct offensive operations while the
devastation and human suffering continues,” Andrius Tursa, Central and Eastern
Europe advisor at Teneo Intelligence, said in a note this week.
More
https://www.cnbc.com/2022/03/23/russias-war-of-attrition-with-ukraine-where-nobody-wins.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.
UK inflation climbs to more than
triple Bank of England’s target Wednesday 23
March 2022 10:11 am
UK inflation has soared to more than
triple the Bank of England’s target, piling more pressure on the central bank
to launch further rate hikes.
Threadneedle Street is likely to
pivot away from the dovish tone it set at its meeting last week after new
figures published today by the Office for National Statistics (ONS) revealed
inflation climbed to a new 30-year high of 6.2 per cent last month.
Experts had been
expecting a reading of 5.9 per cent.
Rate setters at the Bank last week
hiked interest rates for the third meeting in a row, but softened the wording
of their forward guidance in a bid to temper market expectations for the pace
of rate hikes this year.
However, the latest set of inflation
data came in above the Bank’s expectations, marking another blemish on the
monetary policy committee’s record of forecasting the rate of price rises.
“With inflation now more than three
times the Bank of England’s two per cent target, the Bank may reassess its
dovish tone after it raised interest rates to 0.75 per cent last week,” Paul
Dales, chief UK economist at Capital Economics, said.
---- Historically high
inflation, compounded by tax hikes and swelling energy bills is forecasted to
deal the worst hit to living standards since the 1970s, slowing the UK’s
economic recovery from the pandemic in the process.
More
https://www.cityam.com/uk-inflation-climbs-to-more-than-triple-bank-of-englands-target/
Traders
warn of looming global diesel shortage Loss of Russian supplies could lead to
‘systemic shortfall’ in Europe, says Vitol chief
22 March, 2022
The heads of three of the largest commodity traders — Vitol,
Gunvor and Trafigura — estimated that as much as 3mn barrels of oil and its
products a day could be lost from Russia as a result of sanctions, following
the country’s invasion of Ukraine. The corporate leaders were speaking at the
FT Commodities Global Summit in Lausanne, Switzerland.
“Europe imports about half of its diesel from Russia and
about half of its diesel from the Middle East,” said Russell Hardy, chief of
Switzerland-based oil trader Vitol. “That systemic shortfall of diesel is
there.”
These Russian
imports account for roughly 15 per cent of Europe’s diesel consumption, while
crude oil from Russia is also processed by refineries on the continent.
Hardy said the shift to more diesel consumption over petrol
in Europe had created shortages of the fuel. He added that refineries could
boost their diesel output in response to higher prices at the expense of other
oil-derived products to shore up supply, but acknowledged that rationing was a
possibility.
Torbjorn Tornqvist, co-founder and chair of
Geneva-headquartered Gunvor Group, said: “Diesel is not just a European
problem, this is a global problem. It really is.”
Amrita Sen, chief oil analyst at Energy Aspects, said
“diesel is by far the worst affected” of the oil products because Europe imports
close to 1mn barrels a day of Russian diesel and the world entered the conflict
with near record low stocks of oil.
French oil major TotalEnergies said, unless it received
instructions to the contrary from European governments, it would terminate its
Russian diesel purchase contracts “as soon as possible and by the end of 2022
at the latest”.
“TotalEnergies will import petroleum products from other
continents, notably its share of gasoil produced by the Satorp refinery in
Saudi Arabia,” the company said in a statement.
Jeremy Weir, chief executive of Singapore-based Trafigura,
said that 2mn-2.5mn barrels of Russian oil production would go missing from the
global market, split between crude and refined products. “The diesel market is
extremely tight. It’s going to get tighter,” he added.
Tornqvist said that
European gas markets were no longer functioning properly, as traders faced huge
demands from banks for cash to cover hedging positions.
“I think it’s broken,” he said. “I never thought that somebody
could say ‘ah, gas has fallen below 100 per megawatt hours [and that] is really
cheap’.”
Europe’s largest
energy traders last week called on governments and central banks to provide
emergency liquidity support to keep gas and power markets functioning, as sharp
price moves triggered by the Ukraine crisis have strained dealings in
commodities.
Gas futures linked to TTF, Europe’s wholesale gas price,
have whipsawed from about €80 a megawatt hour ahead of Russia’s invasion of
Ukraine to more than €300 earlier this month, before sliding below €100 again
this week. Two years ago, European gas prices were below €20 a megawatt hour.
Commodity traders face soaring margin requirements, the
percentage of a security’s price that banks demand traders hold in cash. Hardy
said participation in the spot market for gas had dwindled because the cost of
trading had risen so high. To move a cargo equivalent to 1 megawatt hour of
liquefied natural gas priced at €97, traders must provide €80 in cash,
straining their capital requirements, he added. Tornqvist said European
utilities would struggle to fill gas storage for next winter given the
“paralysed” state of the spot market for gas, unless policymakers stepped in to
provide guarantees to protect buyers against price swings.
https://www.ft.com/content/31f73f95-d914-46a1-b610-0c7fc5da493c
Covid-19 Corner
This
section will continue until it becomes unneeded.
Omicron’s ‘stealth’ subvariant
BA.2 could go ‘wild’ in Europe before going global, top epidemiologist says Published Wed, Mar 23 2022 8:14 AM EDT
LONDON — While war rages in Ukraine,
not much attention is being paid to surging Covid-19 cases across Europe that
could soon start to filter out to the rest of the world.
The rise in cases across the
continent, from the U.K. and France to Italy and Austria, is being driven by
several factors: The lifting of most — if not all — Covid restrictions, waning
immunity from vaccines and booster shots, and the spread of the more
transmissible omicron subvariant, BA.2.
“We all hoped and expected a
different turn now at the beginning of spring,” Ralf Reintjes, professor of
epidemiology at the Hamburg University of Applied Sciences, told CNBC this
week.
“But the situation in Europe is a
bit bumpy at the moment, and in Germany ... the [case] numbers are at a very,
very high level, and they’re still increasing and have been increasing for
quite some time.”
Germany is seeing a surge in cases
and has reported daily tallies of new infections of between 200,000 to 300,000
a day in the last week.
Reintjes said that the combination
“of everyone thinking and expecting somehow that the pandemic is over now” and
the relaxation of what he saw as protective Covid measures gives the BA.2
subvariant “a really good chance to spread extremely wild in many parts of
Europe.”
“It’s difficult to predict but
personally I think it’s very likely that this is going to continue its tour
around the globe as well,” he added. “That’s what viruses in a pandemic usually
do.”
“There are also quite a few reports
that people who have got an omicron infection, or BA.1 variant, then a few
weeks later got BA.2 infection,” he noted, adding that there is a good chance
that this new variant will spread and act like “some sort of new wave of a new
pandemic like seasonal flu.”
Public health officials and
scientists are closely monitoring BA.2, a subvariant of the already highly
transmissible omicron variant, as it is accounting for a growing number of new
cases in Europe.
To a somewhat lesser extent it is
also accounting for a growing number of infections in the U.S. and Asia.
The
subvariant is estimated to be 1½ times more transmissible than omicron and is
likely to usurp it as the globally dominant variant.
More
https://www.cnbc.com/2022/03/23/omicrons-subvariant-bapoint2-could-spread-wildly-in-europe-epidemiologist.html
S.Korea's total COVID cases top
10 million as crematoria, funeral homes overwhelmed March 23,
2022 8:31 AM GMT
SEOUL, March 23 (Reuters) - South Korea's total
coronavirus infections topped 10 million, or nearly 20% of its population, authorities
said on Wednesday, as surging severe cases and deaths increasingly put a strain
on crematories and funeral homes nationwide.
The country has been battling a record COVID-19 wave
driven by the highly infectious Omicron variant even as it largely scrapped its
once aggressive tracing and quarantine efforts and eased social distancing
curbs. read
more
The Korea Disease Control and
Prevention Agency (KDCA) reported 490,881 cases for Tuesday, the second highest
daily tally after it peaked at 621,205 on March 16. The total caseload rose to
10,427,247, with 13,432 deaths, up 291 a day before.
The country's infection and death rates
are still far below those recorded elsewhere, as almost 87% of its 52 million
residents are fully vaccinated and 63% have received booster shots.
But the death toll nearly doubled in
just about six weeks, with daily fatalities peaking at 429 last Friday,
fuelling demand for funeral arrangements.
The health ministry on Monday
instructed the 60 crematories nationwide to operate for longer hours to burn up
to seven bodies from five, and the 1,136 funeral parlours capable of storing
some 8,700 bodies to expand their facilities.
Authorities have already boosted the
combined daily cremation capacity from about 1,000 to 1,400 per day starting
last week. But a large backlog of bodies and a long wait continued to be
reported in the densely populated greater Seoul area, Son said.
Health ministry data showed that the
28 crematories in Seoul city were operating at 114.2% capacity as of Monday,
while the ratio stood at about 83% in other regions such as Sejong and Jeju.
More
https://www.reuters.com/world/asia-pacific/skoreas-total-covid-cases-top-10-million-crematoria-funeral-homes-overwhelmed-2022-03-23/
New Zealand sports to welcome
back crowds as COVID rules eased March 23,
2022 4:39 AM GMT
March 23 (Reuters) - New Zealand sports will welcome
full-capacity crowds when COVID-19 rules ease this weekend after a bruising
period for revenues.
New Zealand capped crowds at 100 people for outdoor
events while battling an outbreak of the Omicron variant, but will lift the
curbs from Saturday, along with the need for fans to wear masks, the government
said on Wednesday. read
more
"While Omicron is transmissible the natural
ventilation of an outdoor seating reduces the risk," Prime Minister
Jacinda Ardern said.
Women's Cricket World Cup organisers
put more tickets on sale for weekend matches and for the semi-finals starting
March 30.
"We had sold out what we had
available under the previous restrictions so it's great to offer full
capacity," tournament boss Andrea Nelson said in a statement.
Crowds will also be back for Super
Rugby Pacific matches, though the change will come too late for Moana
Pasifika's clash against the Wellington Hurricanes in Auckland on Friday.
----
Over 95% of New Zealand's population
over the age of 12 has received two vaccination shots.
Authorities expect COVID-19
infections to peak in the country in the next two weeks.
https://www.reuters.com/lifestyle/sports/new-zealand-sports-welcome-back-crowds-covid-rules-eased-2022-03-23/
Next, some vaccine links
kindly sent along from a LIR reader in Canada.
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
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.
New Quantum-Based Technology
Could Make Charging of Electric Cars As Rapid As Pumping Gas Quantum
charging is the new technology capable of charging electric cars as rapidly as
pumping gas. Quantum charging will minimize electric vehicles’ charging time
from 10 hours to 3 minutes.
Mar 21 2022
---- In contrast to conventional cars which derive energy from the burning of
hydrocarbon fuels, electric vehicles depend on batteries as the storage source
for their energy. For quite a while, batteries had a much lower energy density
than those provided by hydrocarbons, which caused very low ranges in the
initial electric vehicles.
Nevertheless, steady improvement in
battery technologies finally enabled the drive ranges of electric cars to be
within satisfactory levels in comparison to gasoline-combusting cars. It is no
underestimation that upgrading to battery storage technology was one of the key
technical holdups which had to be sorted so as to renew the present electric
vehicle revolution.
However, in spite of the massive
improvements in battery technology, present-day consumers of electric vehicles
face another struggle — the slow speed of battery charging. At present, cars
require around 10 hours to completely recharge at home. Even the most rapid
superchargers at the charging stations necessitate up to 20-40 minutes to
completely recharge the cars. This creates extra costs and inconvenience to the
car owners.
To resolve this issue, researchers
sought answers in the cryptic domain of quantum physics. Their hunt has
resulted in the detection that quantum technologies may promise new mechanisms
to charge batteries at a quicker rate.
The notion of “quantum battery” was
first suggested in a seminal article published by Alicki and Fannes in 2012. It
was hypothesized that quantum resources, like entanglement, can be used to
greatly accelerate the battery charging method by charging all cells inside the
battery concurrently in a collective way.
This is quite exciting as advanced
large-capacity batteries can hold several cells. Such collective charging
cannot be achieved in standard batteries, where the cells are charged in
parallel individually. The benefit of this collective versus parallel charging
can be assessed by the ratio known as the “quantum charging advantage.”
Later, in around 2017, it was observed that there can be
two potential sources underlying this quantum benefit — specifically “global
operation” (in which all the cells interact with all others concurrently, i.e.,
“all sitting at one table”) and “all-to-all coupling” (every cell can interact
with every other, but a single cell, i.e., “many discussions, but every
discussion has only two participants”).
However, it is indistinct whether these two sources are
essential and whether there are any restrictions to the charging speed that can
be accomplished.
In recent times, researchers from the Center for
Theoretical Physics of Complex Systems within the Institute for Basic Science
(IBS) further investigated these questions. The article, which was selected as
an “Editor’s Suggestion” in the journal Physical Review Letters ,
illustrated that all-to-all coupling is inapt in quantum batteries and that the
presence of universal operations is the only element in the quantum advantage.
The team went on to highlight the precise source of this
benefit while excluding any other likelihoods and even provided a clear way of
engineering such batteries.
Furthermore, the team could precisely compute how much
charging speed can be accomplished in this arrangement. While the maximum
charging speed grows linearly with the number of cells in standard batteries,
the study revealed that quantum batteries utilizing universal operation can
accomplish quadratic scaling in charging speed.
More
https://www.azocleantech.com/news.aspx?newsID=31400
Inflation is a form of tax, a tax that we all collectively must
pay.
Henry Hazlitt.
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