Baltic Dry Index. 2239 +97 Brent Crude 107.22
Spot Gold 1952
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 22/04/22 World 507,854,253
Deaths 6,236,48
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
Extraordinary Popular Delusions & the Madness of Crowds.
Fed Chairman Burns Powell came
to his senses yesterday and spoke saying he was serious about ending inflation.
He even said the Fedsters might raise their key interest rate next month by a
half of one percent, as if that might make any difference to being so far
behind the inflation curve.
At least he’s lost his delusion that this inflation run is transitory. Well better late than never I suppose. One year late, as the LIR has been covering.
Bond yields jumped, stocks fell, and more Democrat incumbents started considering their position ahead of the November mid-term elections.
If Chairman Powell walks as well as
he talks, come November, taming inflation by meaningful higher interest rates
will have brought on US stagflation. US voters will not be likely to be blaming
long gone President Trump. Bring on
WW3.
Asia-Pacific stocks slide as major indexes in the region fall at least 1% each
Published Thu, Apr 21 2022 7:42 PM EDT Updated 3 Hours Ago
SINGAPORE — Shares in Asia-Pacific fell in Friday morning trade as investors watch for market reaction to overnight remarks from U.S. Federal Reserve Chairman Jerome Powell.
The Nikkei 225 in Japan led losses among the region's major markets, declining 1.99% as shares of conglomerate SoftBank Group dropped more than 3%. The Topix index shed 1.39%.
Hong Kong's Hang Seng index pared some losses after earlier falling more than 2%. It last traded 1.23% lower as shares of Chinese tech giants Tencent and Alibaba dropped 2.93% and 3.7%, respectively.
Mainland Chinese stocks also declined, with the Shanghai composite down 0.26% while the Shenzhen component dipped 0.761%.
South Korea's Kospi traded 1.07% lower. Australian stocks declined as the S&P/ASX 200 dipped 1.74%.
MSCI's broadest index of Asia-Pacific shares outside Japan traded 1.18% lower.
Fed watch
Powell hinted at more aggressive rate hikes ahead by the central bank as it seeks to bring down inflation. He said the Fed is committed to hiking rates "expeditiously" to tame inflation.
"I would say 50 basis points will be on the table for the May meeting," Powell said. Following those comments, expectations for a 50 basis point move in May rose to 97.6%, according to the CME Group's FedWatch Tool.
"The long of the short of it is: rates are going to go up, the Fed wants to keep pushing them up a lot and they will keep doing so until something breaks. The question is: what will break and when?" said Michael Every, global strategist at Rabobank.
U.S. Treasury yields also jumped on the back of Powell's comments. The yield on the benchmark 10-year Treasury note, which started the year near 1.5%, last stood at 2.9425%.
Stocks on Wall Street fell overnight stateside, with the S&P 500 slipping about 1.48% to 4,393.66. The Dow Jones Industrial Average shed 368.03 points, or 1.05%, to 34,792.76. The tech-heavy Nasdaq Composite lagged, dropping 2.07% to 13,174.65.
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Powell says taming inflation ‘absolutely essential,’ and a 50 basis point hike possible for May
Federal Reserve Chairman Jerome Powell affirmed the central bank’s determination to bring down inflation and said Thursday that aggressive rate hikes are possible as soon as next month.
“It is appropriate in my view to be moving a little more quickly” to raise interest rates, Powell said while part of an International Monetary Fund panel moderated by CNBC’s Sara Eisen. “I also think there is something to be said for front-end loading any accommodation one thinks is appropriate. ... I would say 50 basis points will be on the table for the May meeting.”
Powell’s statements essentially meet market expectations that the Fed will depart from its usual 25 basis point hikes and move more quickly to tame inflation that is running at its fastest pace in more than 40 years. A basis point equals 0.01 percentage point.
However, as Powell spoke, market pricing for rate increases got somewhat more aggressive.
Expectations for a 50 basis point move in May rose to 97.6%, according to the CME Group’s FedWatch Tool. Traders also priced in an additional hike equivalent through year’s end that would take the fed funds rate, which sets the overnight borrowing level for banks but also is tied to many consumer debt instruments, to 2.75%.
Stocks also fell, sending the Dow industrials down more than 400 points and the Nasdaq, with its rate-sensitive tech stocks, lower by more than 2%. Treasury yields pushed higher, with the benchmark 10-year note most recently at 2.9%.
At its March meeting, the Fed approved a 25 basis point move, but officials in recent days have said they see a need to move more quickly with consumer inflation running at an annual pace of 8.5%.
“Our goal is to use our tools to get demand and supply back in synch, so that inflation moves down and does so without a slowdown that amounts to a recession,” Powell said. “I don’t think you’ll hear anyone at the Fed say that that’s going to be straightforward or easy. It’s going to be very challenging. We’re going to do our best to accomplish that.”
“It’s absolutely essential to restore price stability,” he added. “Economies don’t work without price stability.”
The Fed had resisted raising rates through 2021 even though inflation was running well above the central bank’s 2% longer-run target. Under a policy framework adopted in late 2020, the Fed said it would be content with letting inflation running hotter than normal in the interest of achieving full employment that was inclusive across income, racial and gender demographics.
Until several months ago, Powell and Fed officials had insisted that inflation was “transitory” and would dissipate as Covid pandemic-related factors such as clogged supply chains and outsized demand for goods over services abated. However, Powell said those expectations “disappointed” and the Fed has had to change course.
----These will be Powell’s last remarks before the May 3-4 meeting of the Federal Open Market Committee, which sets interest rates. He is the latest Fed official to say rapid action is needed to take down inflation.
Along with the rate hikes, the Fed is expected soon to start reducing the amount of bonds it is holding. The central bank’s balance sheet now stands at close to $9 trillion, primarily consisting of Treasurys and mortgage-backed securities.
Discussions at the March meeting indicated the Fed eventually will allow $95 billion of proceeds from maturing bonds to roll off each month.
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In other news, China’s supply chain disruption keeps going from bad to worse.
Containers Pile Up in Shanghai Port on China's Covid Lockdowns
· Goods are now being held at the port for 12 days on average
· Ships divert away from Shanghai in response to truck shortages
By Ann Koh 22 April 2022, 04:38 BSTThe strictest Covid-19 lockdown in China since the pandemic began has resulted in container goods sitting at Shanghai’s port for nearly two weeks, according to supply chain data provider project44.
Imported containers are waiting on average for 12.1 days before they are picked up by truck and delivered to destinations inland, according to p44’s data for April 18. That’s up from 4.6 days on March 28.
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Many factory workers in Shanghai can’t get back to work, even after Covid controls ease
BEIJING — Foreign businesses are struggling to bring workers back to factories after weeks of lockdowns in Shanghai, as the country battles its worst Covid outbreak since the pandemic began.
Nearly a month since Covid restrictions began in earnest in Shanghai, U.S. and European businesses say that less than half of their employees are able to return to work.
Since March, mainland China has imposed travel restrictions and stay-home orders in economic hubs from the southern city of Shenzhen to the northern province of Jilin. The extent of Covid controls has varied by region.
Lockdowns in the southeastern metropolis of Shanghai, which began at scale in late March, have been among the most disruptive — to daily life, and to foreign businesses and their supply chains. The city accounts for about 3.8% of China’s GDP but is home to the world’s busiest port.
Last Friday, China’s Ministry of Industry and Information Technology announced it sent a team to Shanghai. The ministry called for prioritizing resumption of work at 666 major businesses in industries such as chips, biopharma and auto and equipment manufacturing.
A “significant” number of members of the European Union Chamber of Commerce in China are on the whitelist, particularly in sectors of manufacturing, chemicals and autos, said Bettina Schoen-Behanzin, the chamber’s vice president and Shanghai chair.
But “many companies still face the challenges of labor shortages and logistical difficulties,” she told CNBC in a statement, estimating that less than 30% of members’ workforce are eligible to return to work due to lockdowns.
Being on the list means a factory could resume operations if workers live at the production site and contact is limited to people with valid negative virus tests — what’s known locally as “closed-loop management.”
“Some estimate that with the re-opening whitelist, the requirements to achieve closed-loop status may not be attainable, or maybe can only recall 30-40% of staff back to manufacturing facilities,” Matthew Margulies, senior vice president of China operations for the US-China Business Council, said in an email.
The difficulty of getting workers into factories means companies cannot easily bring in new staff for other shifts, foreign business organizations said.
----Another challenge for workers who do get permission to leave their apartments is Covid-related restrictions on travel, at which point the process of returning to work “usually fails,” he said.
Transport restrictions can also affect delivery of parts.
There’s a “fear among truck drivers, if you risk a 14-day quarantine going to that factory maybe you skip that delivery and do something else,” Annell said.
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Global Inflation/Stagflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Nestlé warns of further price rises over the year amid rampant inflation
Thursday 21 April 2022 7:41 am
Nestlé has cautioned more price rises could be on the horizon for consumers as cost inflation leaps.
In a three month trading update, the Kit Kat owner said it had already “stepped up pricing in a responsible manner” and seen “sustained consumer demand.”
Nestlé CEO Mark Schneider added: “Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year. The Nestlé team addressed these headwinds and advanced our long-term strategy and sustainability objectives with agility and determination.”
In a forecast for the 2022 full year, the consumer brand said it anticipates organic sales growth around five per cent and underlying trading operating profit margin between 17 per cent and 17.5 per cent.
In the first three months of the year, Nestlé saw total reported sales up 5.4 per cent to 22.2 bn in Swiss currency (£17.9bn).
Organic growth was 7.6 per cent in the period with pricing increased to 5.2 per cent.
The company said its organic growth now excludes the Russia region, after “significantly disrupted trading conditions” and a decision from the company to pull back operations to only “focus on providing essential food.”
The firm has suspended sales of brands including KitKat and Nesquik in Russia.
“We are focused on providing essential foods such as baby food and medical/hospital nutrition products. This means we will suspend the vast majority of our pre-war volume in Russia,” a Nestlé spokesperson said earlier this year.
It comes after the world’s largest consumer goods firm faced criticism for not halting sales in the country following its invasion of Ukraine.
https://www.cityam.com/nestle-warns-of-further-price-rises-over-the-year-amid-rampant-inflation/
David Stockman on Inflationary Hell That’s About to Break Loose
It is only a matter of time before Kiev surrenders to the Russians, with or without their clown-car president signing the armistice. But that deal will be so onerous from Washington’s perspective that it will not mark the end of the sanctions war, but will be an excuse for its actual intensification and indefinite prolongation.
When that becomes the reality, however, inflationary hell will break out all over the place. And the Fed’s decades-long experiment in egregious, inflationary money-pumping will splatter ignominiously all over the Eccles Building (Fed headquarters).
It now appears that commodities markets have been so drastically roiled by the action to date that Washington’s war on the global trading and payments system is now open-ended and can theoretically go on for years.
That’s because the Russian-loathing, Putin-demonizing Dems now in charge of policy in Washington cannot even see straight when it comes to the real issues of the conflict.
There is absolutely nothing wrong with partitioning Ukraine and Crimea, nor with Putin’s proposed new security arrangement that would have NATO move its missile bases to the pre-1999 status quo and the re-garrisoning of US and Western military forces to the old NATO territories.
But these plausible solutions are so far removed from the war fevers now raging on the Potomac that there is no chance of Washington embracing a negotiated solution to the Ukrainian war. It will actually take a historic GOP sweep in the 2024 elections to clear the decks of Putin/Russian demonization, and even that would not make a difference if the blood-thirsty neocons and military hawks retained control of the GOP.
Meanwhile, just like that, the price of oil recently hit $130 per barrel.
Here’s the thing.
Double-digit inflation is now guaranteed and it will be long-lasting.
That’s because the Fed is occupied by what amounts to anti-Volckers. These group-think addicted Keynesian crackpots are clueless about the dire inflationary fires now raging and are still buying bonds (QE) and planning only tepid 25 basis point rate increases when actually hundreds of basis points of rate increases are needed ASAP.
Here is just one example. Nickel spot prices are up nearly 5X, and this is merely illustrative of the inflationary firestorm now gathering a head of steam.
Wheat prices have skyrocketed more than 60% recently as the war effectively shut off more than 30% of the world’s wheat supply, which ordinarily trades out of the Black Sea ports for Ukraine and Russian producers.
The commodity, in turn, is used in everything from bread to cookies and noodles. Accordingly, those soaring upstream costs will rapidly work their way down the processing pipeline until they arrive on the grocery shelves. When? Just in time for American consumers to be paying $6 per gallon to drive to Kroger’s to pick up an inflated-priced loaf of bread.
And there is far more to come.
Editor’s Note: The Fed has already pumped enormous distortions into the economy and inflated an “everything bubble.” The next round of money printing is likely to bring the situation to a breaking point.
More
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
“We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first.”
Extraordinary Popular Delusions & the Madness of Crowds.
Covid-19 Corner
This section will continue until it becomes unneeded.
UK patient had COVID-19 for 505 days straight, study shows
A U.K. patient with a severely weakened immune system had COVID-19 for almost a year and a half, scientists reported, underscoring the importance of protecting vulnerable people from the coronavirus.
There’s no way to know for sure whether it was the longest-lasting COVID-19 infection because not everyone gets tested, especially on a regular basis like this case.
But at 505 days, “it certainly seems to be the longest reported infection,” said Dr. Luke Blagdon Snell, an infectious disease expert at the Guy’s & St. Thomas’ NHS Foundation Trust.
Snell’s team plans to present several “persistent” COVID-19 cases at an infectious diseases meeting in Portugal this weekend.
Their study investigated which mutations arise — and whether variants evolve — in people with super long infections. It involved nine patients who tested positive for the virus for at least eight weeks. All had weakened immune systems from organ transplants, HIV, cancer or treatment for other illnesses. None were identified for privacy reasons.
Repeated tests showed their infections lingered for an average of 73 days. Two had the virus for more than a year. Previously, researchers said, the longest-known case that was confirmed with a PCR test lasted 335 days.
Persistent COVID-19 is rare and different from long COVID.
“In long COVID, it’s generally assumed the virus has been cleared from your body but the symptoms persist,” Snell said. “With persistent infection, it represents ongoing, active replication of the virus.”
Each time researchers tested patients, they analyzed the genetic code of the virus to make sure it was the same strain and that people didn’t get COVID-19 more than once. Still, genetic sequencing showed that the virus changed over time, mutating as it adapted.
The mutations were similar to the ones that later showed up in widespread variants, Snell said, although none of the patients spawned new mutants that became variants of concern. There’s also no evidence they spread the virus to others.
The person with the longest known infection tested positive in early 2020, was treated with the antiviral drug remdesiver and died sometime in 2021. Researchers declined to name the cause of death and said the person had several other illnesses.
Five patients survived. Two cleared the infection without treatment, two cleared it after treatment and one still has COVID-19. At the last follow-up earlier this year, that patient’s infection had lasted 412 days.
Researchers hope more treatments will be developed to help people with persistent infections beat the virus.
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
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, among other things, I’ve added this section. Updates as they get reported.
Guiding a superconducting future with graphene quantum magic
Date: April 19, 2022
Source: Nagoya University
Summary: Superconductors are materials that conduct electrical current with practically no electrical resistance at all. This ability makes them extremely interesting and attractive for a plethora of applications such as loss-less power cables, electric motors and generators, as well as powerful electromagnets that can be used for MRI imaging and for magnetic levitating trains. Now, researchers have detailed the superconducting nature of a new class of superconducting material, magic-angle twisted bilayer graphene.
For a material to behave as a superconductor, low temperatures are required. Most materials only enter the superconducting phase at extremely low temperatures, such as -270°C, lower than those measured in outer space! This severely limits their practical applications because such extensive cooling requires very expensive and specialized liquid helium cooling equipment. This is the main reason superconducting technologies are still in their infancy. High temperature superconductors (HTS), such as some iron and copper-based ones, enter the superconducting phase above -200°C, a temperature that is more readily achievable using liquid nitrogen which cools down a system to ?195.8°C. However, the industrial and commercial applications of HTS have been thus far limited. Currently known and available HTS materials are brittle ceramic materials that are not malleable into useful shapes like wires. In addition, they are notoriously difficult and expensive to manufacture. This makes the search for new superconducting materials critical, and a strong focus of research for physicists like Prof. Hiroshi Kontani and Dr. Seiichiro Onari from the Department of Physics, Nagoya University.
Recently, a new material has been proposed as a potential superconductor called magic-angle twisted bilayer graphene (MATBG). In MATBG, two layers of graphene, essentially single two-dimensional layers of carbon arranged in a honeycomb lattice, are offset by a magic angle (about 1.1 degrees) that leads to the breakage of rotational symmetry and the formation of a high-order symmetry known as SU(4). As temperature changes, the system experiences quantum fluctuations, like water ripples in the atomic structure, that lead to a novel spontaneous change in the electronic structure and a reduction in symmetry. This rotational symmetry breaking is known as the nematic state and has been closely associated with superconducting properties in other materials.
In their work published recently in Physical Review Letters, Prof. Kontani and Dr. Onari use theoretical methods to better understand and shine light on the source of this nematic state in MATBG. "Since we know that high temperature superconductivity can be induced by nematic fluctuations in strongly correlated electron systems such as iron-based superconductors, clarifying the mechanism and origin of this nematic order can lead to the design and emergence of higher temperature superconductors," explains Dr. Onari.
More
Another weekend and for poor Ukraine another war weekend and for what?. But will Russia pause for the Orthodox Easter? Unlikely. Have a great inflation weekend everyone. Buy now for Christmas only about 300+ days away!
“Nations,
like individuals, cannot become desperate gamblers with impunity. Punishment is
sure to overtake them sooner or later.”
Extraordinary Popular Delusions and the Madness of Crowds.
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