Baltic Dry Index. 2148 +44 Brent Crude 118.11
Spot Gold 1971 Wheat 12.09 +75
Stocks slide, commodities spike as Ukraine war shakes markets
- Ukraine overshadows solid U.S. jobs data
- Commodities 'melt up' further, on par with 1915
- European shares sink into correction territory
- Euro heads for worst week vs dollar in nearly 2 years
NEW YORK, March 4 (Reuters) - Data showing a vibrant U.S. jobs market strengthened the dollar and spurred commodity prices higher, but the war in Ukraine overshadowed the blowout report as the euro plunged on the worsening outlook for slower European economic growth.
The U.S. unemployment rate fell to a two-year low of 3.8% as job growth surged in February, a bright spot for an economy that faces mounting headwinds from rising inflation, tighter monetary policy by the Federal Reserve and geopolitical tensions.
The euro tumbled below $1.10 for the first time in almost two years and hit a fresh seven-year low against the safe-haven Swiss franc as Russian forces seized the largest nuclear power plant in Europe and fighting raged elsewhere in Ukraine. read more
----The major U.S. stock indices declined less as Europe's dependence on Russian energy and its proximity to Ukraine has slammed the continent more than other parts of the globe.
If it were not for Russia's invasion of Ukraine, the Federal Reserve would likely raise interest rates by 50 basis points at its policy meeting in two weeks, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.
The jobs data is a blowout number but it doesn't ease Fed Chair Jerome Powell's job as he raises interest rates to tame inflation as the economy slows, Kinahan said.
"He has a tough needle to thread here, in terms of making sure that tighter money doesn't upset what's already a very fragile situation," he said.
On Wall Street, the Dow Jones Industrial Average (.DJI) fell 0.53%, the S&P 500 (.SPX) lost 0.79% and the Nasdaq Composite (.IXIC) dropped 1.66%.
----Commodity markets headed to their biggest weekly gains in years as the shuttering of Ukrainian ports and sanctions against Russia sent energy, crop and metal buyers scrambling for replacement supplies. read more
Crude oil, which has hit its highest level in a decade this week, soared again in a volatile session as the disruption of Russian exports outweighed hopes for more Iranian supply if Washington reaches a nuclear deal with Tehran.
U.S. crude futures posted their biggest weekly gain since April 2020, up 25.9%. U.S. crude settled up $8.01 at $115.668 a barrel, while Brent rose $7.65 to $118.11.
Aluminum touched a fresh record high in London, heading to its biggest weekly gain on record amid fears of a squeeze on the metal from Russia. Nickel reached an 11-year high for similar reasons.
Palladium prices rose above $3,000 per ounce for the first time since May 2021 as concerns over supply shortages from top producer Russia mounted and the war in Ukraine bolstered demand for safe-haven gold.
U.S. gold futures settled 1.6% higher at $1,966.60 an ounce.
More
https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-03-04/
European stocks log worst week since March 2020, down 7%, as Ukraine war roils global markets
The pan-European Stoxx 600 closed down 3.6%, with banks plunging 6.7% to lead losses as all sectors and major bourses fell into negative territory.
For the week, the benchmark lost 7% and suffered its worst week since March 2020, the onset of the coronavirus pandemic.
A fire broke out at a training facility at Ukraine’s Zaporizhzhia nuclear power plant after an attack by Russian forces early Friday morning. Ukraine’s nuclear agency said Russian troops have now taken control of the facility.
International leaders have condemned the bombardment and U.K. Prime Minister Boris Johnson told Ukrainian President Volodymyr Zelenskyy that he would call for an emergency United Nations Security Council meeting to discuss the attack.
More
https://www.cnbc.com/2022/03/04/europe-markets-russia-attacks-ukraine-power-plant.html
U.S. weighs cutting Russian oil imports amid broad public support
March 4, 2022 10:31 PM GMT
WASHINGTON, March 4 (Reuters) - The Biden administration is weighing cutting U.S. imports of Russian oil and ways to minimize the impact on global supplies and consumers, the White House said on Friday, as lawmakers fast-track a bill that would ban Russian energy imports entirely.
"We are looking at ways to reduce the import of Russian oil while also making sure that we are maintaining the global supply needs out there," White House spokeswoman Jen Psaki told reporters at a briefing. The White House remains in contact with U.S. lawmakers over the issue, she said.
U.S. Senators Joe Manchin, a West Virginia Democrat, and Lisa Murkowski, an Alaska Republican, on Thursday proposed bipartisan legislation to ban Russian energy imports in response to the invasion of Ukraine, calling it a counter to Russia “weaponizing” energy.
The bill is getting fast-tracked in the Senate, and the White House could rely on the legislation to ban imports, a move that would help share the blame for any price spikes.
A broad bipartisan majority of Americans think the United States should stop buying Russian oil, according to a Reuters/Ipsos poll completed on Friday. Some 80% of Americans - including solid majorities of Republicans and Democrats - support the measure. read more
Still, the White House is proceeding cautiously, concerned about a spike in gasoline prices that would add to decades-high inflation.
More
The world could be on the brink of an energy crisis rivaling the 1970s, says IHS Markit’s Yergin
Published Thu, Mar 3 2022 10:12 AM EST Updated Thu, Mar 3 2022 12:00 PM EST
Russia’s Ukraine invasion could have set in motion an energy market disruption on the scale of major oil crises in the 1970s, according to Daniel Yergin, vice chairman of IHS Markit.
Moscow is one of the world’s largest oil exporters. Sanctions by the U.S. and allies on Russia’s financial system have already set in motion a backlash against Russian crude from banks, buyers and shippers.
Yergin, also an author and energy market historian, said even though Russian energy was not sanctioned by the U.S. and other countries, there could be a large loss of Russian barrels from the market. The country exports about 7.5 million barrels a day of oil and refined products, he noted.
“This is going to be a really big disruption in terms of logistics, and people are going to be scrambling for barrels,” Yergin said. “This is a supply crisis. It’s a logistics crisis. It’s a payment crisis, and this could well be on the scale of the 1970s.”
He said strong communications between governments imposing the sanctions and the industry could head off a worst-case scenario. “Governments need to provide clarity,” Yergin said.
He noted that members of NATO receive about half of Russia’s exports. “Some share of that is going to be disrupted,” Yergin said.
Yergin said there are “de facto” sanctions working to keep Russian oil from the market, even though energy was not specifically sanctioned. Buyers are wary of Russian oil because of pushback from banks, ports and shipping companies that do not want to run afoul of sanctions.
JPMorgan estimates that 66% of Russian oil is struggling to find buyers, and that crude prices could reach $185 by the end of the year if Russian oil remains disrupted.
“This could be the worst crisis since the Arab oil embargo and the Iranian revolution in the 1970s,” Yergin said. Both events were major oil shocks in that decade.
In 1973, Middle Eastern oil producers cut off supply from the U.S. and other Western countries in retaliation for assisting Israel during the Arab-Israeli war that year. Oil was immediately in short supply, and Americans lined up at gas stations to buy skyrocketing gasoline. The other shock was the result of the 1978-1979 Iran revolution, which led to the overthrow of the Shah of Iran.
More.
A recession and stagflation could be coming and the Fed is handcuffed in what they can do about it, says legendary Pimco co-founder Bill Gross
Thu, March 3, 2022, 3:31 PM
The Federal Reserve waited too long before raising interest rates, and now there isn't much they can do to prevent a mild recession, according to Pimco co-founder Bill Gross.
A recession was on the way even before the Russia-Ukraine war started and the subsequent spike in oil prices, he told CNBC Thursday. While the Fed is due to start hiking rates this month, it should have raised them much earlier and now it might not have the ability to navigate the current landscape without inducing a recession, he warned.
"I think they're sort of handcuffed in terms of what they can do, they went so low," Gross said of Fed policymakers. "And inflation now is so high on a historical basis that it's going to be difficult raising interest rates too much."
He noted that the Federal Reserve and other central banks are "stuck in a low-interest-rate world," which increases the likelihood of stagflation, as well as inflation of "about 3-4%" for an extended period of time.
After cofounding Pimco in 1971, Gross left the investment management firm in 2014 and joined Janus Henderson Investors. He retired from active fund management in 2019 and now focuses on charity and his personal assets.
As for his own portfolio, the 77-year-old said he owns "a lot of oil pipeline partnerships," among other investments in large companies.
But he said he wouldn't recommend buying into stocks right now. Instead, he recommended investors remain cautious and taper their expectations of the same generous returns of the last two years when the Fed kept rates near zero.
https://www.yahoo.com/news/recession-stagflation-could-coming-fed-153157861.html
Inflation in 19 nations using euro sets record for 4th month
Wed, March 2, 2022, 10:04 AM
LONDON (AP) — Surging energy costs have driven inflation in Europe to another record high, raising questions about when the central bank should step in to ease the pain to people's wallets while Russia's invasion of Ukraine rattles the global economy.
Consumer prices in the 19 countries that use the euro currency increased by an annual rate of 5.8% in February, the European Union statistics agency, Eurostat, reported Wednesday.
The inflation reading smashed the record of 5.1% set last month — the fourth straight month it has hit an all-time peak — to reach the highest level since recordkeeping for the euro started in 1997. In comparison, U.S. consumer prices rose 7.5% from a year earlier, the biggest jump in four decades.
----Inflation in Europe, as in other major economies, has been fueled by surging energy prices, and the problem will be complicated by Russia's war in Ukraine.
Russia, a major oil and gas producer, has been hit with sanctions and export restrictions that have raised worries that supplies could be cut off, pushing crude prices above $110 a barrel. Energy prices had already been rising before the war as supplies shrank because of increased demand from economies recovering from the depths of the COVID-19 pandemic.
Before the conflict erupted, the head of the European Central Bank had said record inflation could linger for “longer than expected” and appeared to open the door at least a crack for an interest rate increase this year. But that is now in question.
----Energy costs rose faster last month, up by 31.7% compared with 28.8% in January, Eurostat said. In contrast, other categories saw smaller but still notable gains. Food, alcohol and tobacco costs rose 4.1%, goods costs rose 3% and service prices rose 2.5%.
https://www.yahoo.com/news/inflation-19-nations-using-euro-100411912.html
Global Inflation/Stagflation Watch.
Wheat Mounts Historic Week as War Sparks Deepening Supply Fears
Fri, March 4, 2022, 6:49 PM
(Bloomberg) -- This week will go down in wheat-trading history.
Chicago futures for the grain have soared more than 40% -- the most ever -- as Russia’s war in Ukraine upends global grain supplies. That puts prices at a 14-year high, and milling wheat in Paris reached an unprecedented 400 euros ($438 per ton).
The war is stalling shipments from one of the world’s most vital breadbaskets. Ukraine and Russia together account for a quarter of global trade of the staple, used in everything from bread to couscous and noodles. The conflict has closed major ports in Ukraine, and severed logistics and transport links. Trade with Russia has also been stifled by the complexity of navigating sanctions and soaring insurance and freight costs.
----Wheat futures jumped by the exchange limit in Chicago on Friday for a fifth straight day, rising 6.6% to $12.09 a bushel. Some forecasts point to prices moving even higher, and volatility in the options market has run wild.
Hard red winter wheat futures touched the highest since 2008 on Friday. Prices were on course for a gain of more than 30% this week, the biggest jump in records going back to 1970.
The gains are accelerating global food inflation and raising concerns for countries reliant on foreign supply. That includes Egypt, which already had been struggling to maintain bread subsidies used by about 70 million people in the face of a pandemic.
In another sign of the rising pressures, McDonald’s Holdings Co. Japan announced higher prices for burgers and chicken nuggets because of surging costs for ingredients, labor and transport.
The fighting in Ukraine also threatens planting of crops in the coming months. Farmers would usually be gearing up for sowing everything from corn to sunflowers and barley. The military invasion and hurdles securing inputs now pose a huge challenge.
Corn futures also rose by the exchange limit. The grain is up more than 13% this week, and soybeans were also poised for a weekly gain. China is said to have booked multiple cargoes of U.S. corn and soybeans, Bloomberg reported.
More
https://finance.yahoo.com/news/wheat-surges-fresh-14-high-010456673.html
Food Protectionism Is Spreading as Hungary Bans Grain Exports
Fri, March 4, 2022, 7:26 p.m.
(Bloomberg) -- Governments around the world are taking steps to safeguard domestic food supplies after Russia’s invasion of Ukraine roiled trade and sent prices of key staples soaring.
Hungary is banning grain exports, its agriculture minister told television channel RTL on Friday. Argentina and Turkey also made moves this week to increase their control over local products. And Moldova, albeit a small shipper, temporarily halted exports of wheat, corn and sugar from this month.
Protectionist measures -- which already picked up in recent years as the Covid-19 pandemic sparked worries about local supplies and high prices -- could spell more bad news for global food trade. The war in Ukraine has brought crop shipments from much of the crucial Black Sea region to a halt, heightening fears of shortages of grain and sunflower oil.
That’s adding to soaring global food inflation, increasing the chance of export restrictions, said Abdolreza Abbassian, an independent analyst. Harvest setbacks have exacerbated tight supply, with global grain stockpiles expected to drop for a fifth year.
More
https://ca.finance.yahoo.com/news/governments-step-protect-food-supplies-162829874.html
Russia Invasion: Likely “Biggest Grain Supply Shock in Living Memory,” Wheat Prices Continue to Surge
Mar. 3, 2022 by Keith Good, U Of Illinois' FarmDoc project
David L. Stern, Alex Horton, John Hudson and Kareem
Fahim reported on the front page of today's Washington Post that,
"Russian forces laid siege to key urban areas across Ukraine on Wednesday,
advancing on the strategic port city of Kherson and bombarding Kharkiv, the
nation's second-largest city, while facing fierce resistance and resupply
challenges in other areas."
Meanwhile, Bloomberg writer Elizabeth Elkin reported
"Russia's invasion of Ukraine could devastate global grain markets so
deeply that it's likely to be the biggest supply shock in living memory."
"Tens of millions of acres of grain production
are at stake.
I am convinced it is going to be the biggest supply
shock to global grain markets in my lifetime,' Scott Irwin, an agricultural
economist at the University of Illinois.
The Bloomberg article indicated that, "The
world 'desperately' needs farmers to plant more acres in 2022, he said, but
'basically nothing can be done in the short-run except to run up the price of
grain high enough to ration demand.'"
In his Twitter thread on Wednesday, Irwin stated:
"So my simple proposal is to let every CRP [Conservation Reserve Program]
acre be eligible for cropping for 2022 and only 2022. No interruption of
payments or contracts. Just change the rules on an emergency basis so it can be
cropped if a farmer wants to risk it this year."
Similar themes have emerged from the European Union.
Reuters News reported on Wednesday that, “The European Union should let farmers cultivate fallow land and offer aid for rising fertiliser prices so the bloc can help replace millions of tonnes of Ukrainian wheat that may be lost due to war, French agricultural group InVivo said.”
The Reuters article stated that, “The ongoing conflict could have lasting effects on Ukraine’s grain supply, with some estimates suggesting the country’s wheat output could drop by at least half and leave the world market short of 20 million tonnes of wheat, InVivo Chief Executive Thierry Blandinieres told reporters on Wednesday.
“‘We’re asking for the production potential of the European Union to be unleashed,’ he said during a news conference at the Paris farm show.
Poole added that, “The shortages are likely to spill over to next season, or potentially even longer. Bumper harvests in North America and other parts of Europe will be critical this summer to curb more price increases. With flows from the Black Sea region snarled by the war, buyers are considering forward contracts for Australian grain as far out as the third quarter, said top shipper CBH Group.”
And Bloomberg writer Jen Skerritt reported on Wednesday that, “One of the world’s top wheat exporters won’t be able to fill supply shortfalls caused by Russia’s invasion of Ukraine after drought withered its own grain inventories.
“Dry conditions zapped as much as 40% of Western Canada’s grain output, and finding additional supplies to export would be a ‘struggle,’ said Phil Speiss, commodity futures broker for RBC Dominion Securities in Winnipeg, Manitoba. Stockpiles of wheat in Canada dwindled to 15.6 million tons at the end of December, down 38% from a year earlier, government data show.”
A detailed report on Ukraine's blood, sweat, and tears
Russia’s attack on Ukraine could last another week.
By Iurii Mykhailov 3/2/2022
---- According to some Ukrainian military analysts, Russian attacks may last one more week. As explained, the reason is the petering out of fuel, ammunition, food, etc. So, the peace negotiation has already started (although the first round was absolutely fruitless). But as the goal of Russian troops will not be achieved in a couple of days, there certainly will be a second meeting, and its outcome will be more positive.
Under the severe Western sanctions the Russian economy will collapse in a couple of months.
There are reports that the 60 kilometers (30 miles) long column of the Russian tanks, armored vehicles, and fuel tankers is about only 20 kilometers (10 miles) from Kyiv. They are not moving supposedly because of a blown bridge.
There is no information about the scale of the damage done to the agribusiness. There are only scattered reports about problems.
For example, one dairy processing plant in Kharkiv has closed not because of some blast damage but because personnel, who were mostly of inhabitants of nearby villages, were unavailable. Plant managers had to give raw milk and the processed dairy with the short shelf-life away for free.
Another report said there is a horse farm that has no feed left, and animals are starving.
Thus, animal husbandry is maybe the most affected agricultural sector. Some animal farms already are on the occupied territories and may be cut off from processors. Some processors may be cut off from producers. Some producers are cut off from consumers, etc.
There are also logistical problems in some areas because of damaged roads and destroyed bridges. The situation, at least in the zones of hostilities, is dire.
The more intriguing situation is with crop production.
Of the total grain crop of 107 million tons harvested in 2021, Ukraine has exported about 40 million tons before the Russian invasion. By the previous forecasts, Ukraine planned to export 45 million tons of grains in 2021/2022 marketing year. At the moment, all Ukrainian ports are closed. In Kherson port, five Ukrainian and 12 foreign vessels are blocked. In Mykolaiv port, there are 17 blocked foreign vessels.
This means that about 5 million tons of grain stalled somewhere with no likely prospect to be exported. And ports certainly will not open until the war is over. One trading company claimed that it will destroy its port terminal in Odessa in case Russia has occupied South Ukraine.
There is also one more factor to consider: What condition will the port infrastructure be in when the war ends.
On March 1, Russian troops took the railway station and port in Kherson, which is one of the four major Ukrainian ports on the Black Sea. (The others are Mykolaiv, Odessa, and Illichivsk.)
Before the Russian invasion, Ukrainian agricultural producers planned to get up to 120 million tons of grains and oilseeds. Now this figure looks highly dubious. Even if Russia will have taken Ukrainian sea ports, they still will not be operational because there certainly will be an international embargo on shipments from these ports.
The Russian invasion of Ukraine introduced a lot of uncertainties to everything. The agricultural production under the state of war will depend on a number of factors:
● How long will the war last?
● What areas and regions will fall under Russian control?
● Will there be enough supply of inputs, e.g. fuel, fertilizers, pesticides, etc.?
● What will infrastructure conditions be in, e.g. roads, railways, river terminals, storage facilities etc.?
● Will credits be available for producers?
● Will Ukrainian ports that are now shut start operating, and if yes, when?
● Will there be enough labor force?
More
https://www.agriculture.com/news/crops/a-detailed-report-on-ukraines-blood-sweat-and-tears
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
Covid-19 Corner
This section will continue until it becomes unneeded.
No update this weekend, given everything else.
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.
Coming soon to a solar panel near you, “beware of falling robots.”
Automated solar-panel-cleaning system doubles down on drones
Ben Coxworth March 03, 2022
In order to keep running at peak efficiency, solar panels regularly have to be cleaned of accumulated dust and other debris. Such panels can often be difficult to reach, though, which is why the Helios system uses not one but two drones to get the job done.
First of all, we have already heard of proposed setups that utilize aerial drones to spray soapy water onto dirty panels. Unfortunately, those drones would use their batteries up quite quickly. Additionally, by not making direct contact with the panels, they likely wouldn't get all the dirt off.
Developed by Belgian startup ART Robotics, Helios addresses these problems by incorporating both a flying hexacopter and a panel-crawling rubber-tracked robot. The system is designed for use by Helios business operators, who would be called out to service small residential rooftop installations.
Initially, the copter would take off and fly up to the roof, carrying the robot with it on a tilting bottom-slung platform. Using a computer vision system, it would then spot the photovoltaic array, touch down on it, and allow the robot to roll off of its platform and onto the panels.
The copter would subsequently head back to its takeoff point and perform a landing, while the robot would set about moving back and forth across the panels, working its way from one side to the other. It wouldn't have any problem crossing between adjacent panels, and would clean them using a rotating brush and a vacuum.
Once the robot was finished, it would send a wireless signal to the copter. It would proceed to fly back to the roof, pick up the robot, then bring it back to the ground. All aspects of the entire panel-cleaning process would be performed autonomously, although the operator would remain onsite to supervise, and to take manual control if necessary.
According to ART Robotics, the system already exists in fully-functional prototype form. The developers have now turned to Kickstarter, in order to finance commercial development. Instead of offering the actual drones, they are instead offering panel-cleaning packages to Belgium-based backers, to be redeemed when and if the system is available. Pledges start at €120 (about US$133) for a package that covers up to 20 panels – the planned commercial price for that one is €150 (US$166).
The following animation illustrates how the Helios system will work.
More
This weekend’s musical diversion. Italy’s opera maestro. Approx. 9 minutes.
Sadly, this clip ends before the men in white coats arrived to retake custody of the overly animated, if brilliant, conductor.
Rossini: Ouverture "La Gazza Ladra" / Videnoff - Mannheimer Philharmoniker
https://www.youtube.com/watch?v=KYfaKAIf-SU
This weekend’s chess update. Approx. 15 minutes.
Sicilian Just Got A Lot More Fun!
https://www.youtube.com/watch?v=eYpnXx2jrtw
Next, more easy Sudoku. Approx. 18 minutes.
Episode #4: How to Solve an Easy Sudoku Puzzle - Follow Along
https://www.youtube.com/watch?v=Ziln6zPJYSw
No maths update today. Today a question that’s puzzled the French for decades. Approx. 5 minutes.
Why does Belgium Exist? (Short Animated Documentary)
https://www.youtube.com/watch?v=6eGEX_LTqhQ
Belgium is a country invented by the British to annoy the French.
Charles de Gaulle.
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