Baltic Dry Index. 3104 -13 Brent Crude 109.15
Spot Gold 188
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 16/05/22 World 521,266,608
Deaths 6,288,475
“It is slowly dawning that the cost of living crisis is not going away,” said Dieter Helm, professor of economic policy at Oxford University and a former energy policy adviser to the government. “And that of all the bills which citizens face, the energy bills are the ones that really stick out.”
Don’t look now but a global hard landing is arriving even as global inflation is surging. Even gold and oil are falling or struggling. Food prices though are at or near record highs.
Whose idea was it to force Russia into starting a new European war in the breadbasket of the world?
Up first, China’s lockdown’s might be doing very little to counter Covid, but they’re wreaking havoc on the health of China’s economy.
Time to return politics and central banking to adults.
Most Asia markets give up gains, China stocks fall after economic numbers disappoint
Published Sun, May 15 2022 7:56 PM EDT Updated 20 Min Ago
SINGAPORE — Shares in the Asia-Pacific gave up early gains on Monday, after China reported disappointing economic numbers as a result of Covid restrictions.
Tech stocks in Hong Kong surged before paring some gains following bad news from China on the economic front. The Hang Seng Tech index was up more than 2% at one point, before dropping by about 0.28%. Meituan’s shares in Hong Kong dropped 3.58%, while Tencent fell 1.13%.
The broader Hang Seng index fell 0.37% after an early positive start.
Mainland Chinese stocks were lower, with the Shanghai Composite down 0.51% and the Shenzhen Component fell 0.53%.
China’s economic data for April missed expectations, hurt by strict Covid limits in parts of the country.
Retail sales for April dropped 11.1% compared to a year ago, more than the 6.1% fall that analysts expected, according to a Reuters poll. Industrial production fell 2.9% from the same period in 2021. It was expected to inch up 0.4%.
China’s 31 largest cities saw unemployment rates rise to a new high of 6.7% in April, according to data going back at least to 2018.
Shanghai authorities said on Sunday that some businesses will begin to resume in-store operations, Reuters reported.
----Elsewhere in Asia, Japan’s Nikkei 225 gained 0.47%, while the Topix struggled for direction and was last up 0.1%.
The Kospi in South Korea fell 0.26% after rising earlier in the session, and the Kosdaq was 0.31% higher.
In Australia, the S&P/ASX 200 climbed 0.2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was near flat.
Stock indexes in Asia and around the world were volatile last week over inflation concerns. Tech stocks and cryptocurrencies were hit hard, though bitcoin has since pared some losses. U.S. stocks rebounded on Friday, but still posted losses for the week.
Markets in Singapore, Malaysia, Indonesia and Thailand are closed for a holiday on Monday.
More
https://www.cnbc.com/2022/05/16/asia-markets-china-economic-data-covid-inflation.html
Goldman’s Blankfein Says US at 'Very, Very High Risk' of Recession
15 May 2022, 17:25 BST Updated on15 May 2022, 20:23 BST
Goldman Sachs Senior Chairman Lloyd Blankfein urged companies and consumers to gird for a US recession, saying it’s a “very, very high risk.”
“If I were running a big company, I would be very prepared for it,” Blankfein said on CBS’s “Face the Nation” on Sunday. “If I was a consumer, I’d be prepared for it.”
A recession is “not baked in the cake” and there’s a “narrow path” to avoid it, he said. The Federal Reserve has “very powerful tools” to tamp down inflation and has been “responding well,” the former Goldman chief executive officer said.
With high fuel prices and a shortage of baby formula tangible measures of Americans’ unease, US consumer sentiment declined in early May to the lowest level since 2011. US consumer prices rose 8.3% in April from a year ago, slowing slightly from March but still among the fastest rate in decades.
Goldman Lifts Yield Forecasts, Sees 10-Year Treasuries at 3.3%
Blankfein’s comments were broadcast the same day as the firm’s economists cut their U.S. growth forecasts for this year and next to reflect the recent shake-out in financial markets.
Goldman’s economic team, led by Jan Hatzius, now expects U.S. gross domestic product to expand 2.4% this year, down from 2.6%. It reduced its 2023 estimate to 1.6% from 2.2%.
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$11 Trillion and Counting: Global Stock Slump May Not Be Over
· MS, Citi strategists see growth woes pressuring stocks further
· Key technical indicators show room for more declines
By Sagarika Jaisinghani and Michael Msika15 May 2022, 07:30 BST
A mass exodus of money, an $11 trillion wipeout, and the worst losing streak for global stocks since the 2008 financial crisis. The bad news is that it may not be over yet.
The selloff in the MSCI ACWI Index has dramatically lowered valuations of companies across the US and Europe, but strategists ranging from Michael Wilson at Morgan Stanley to Robert Buckland at Citigroup Inc. expect stocks to fall further amid worries of high inflation, hawkish central banks and slowing economic growth, especially in the US.
Money is continuing to leave every asset class and the exodus is deepening as investors rush out of names like Apple Inc., according to Bank of America Corp. Historically significant technical levels for the S&P 500 show the index has room to fall nearly 14% more before hitting key support levels, while the share of companies that have so far hit a one-year low is still a far cry from the number during the economic growth scare that slammed stocks in 2018.
“Investors continue to reduce their positions, particularly in technology and growth stocks,” said Andreas Lipkow, a strategist at Comdirect Bank. “But sentiment needs to deteriorate significantly more to form a potential floor.”
----Goldman Sachs Group Inc.’s Peter Oppenheimer has been among the most high-profile strategists to say it’s time to buy the dip, while Thomas Hayes, chairman at Great Hill Capital LLC, said “old school tech” stocks including Intel Corp and Cisco Systems Inc. were now trading at attractive multiples.
But amid the morsels of value, the broader market looks to be buckling as recession creeps more and more into the conversation. And even as growth worries mount, the inflation focus at the Federal Reserve and other central banks means investors can’t count any more on the monetary elixir that’s helped to keep alive the long-running bull market.
The MSCI ACWI has fallen for six straight weeks, the Stoxx Europe 600 is down 6% since late March, while the S&P 500 has dropped more than twice as much.
Here are some key metrics showing the potential downside for stock markets.
Falling Fast
The S&P 500 is still about 14% above its 200-week moving average, a level that’s previously been a floor during all major bear markets, except for the tech bubble and the global financial crisis. Strategists at Canaccord Genuity say there could be further declines on Monday on forced margin selling after yet another red week for the US benchmark.
More
Up next, commodities. As the London Metal Exchange tries to recover from its earlier nickel fiasco, maybe the London Bullion Market Association might want to take notes.
LME Boss Wants to Unlock Commodity Trading’s Black Box
Proposal marks the first major move to expand visibility of global commodity markets after wild price swings spooked regulators.
By Mark Burton 15 May 2022, 10:00 BSTThe London Metal Exchange’s demand for details of private deals between its members and their clients marks a line in the sand by chief Matthew Chamberlain, as he seeks to repair the market’s reputation and avoid a repeat of this year’s nickel-market chaos.
Yet it’s likely to reverberate far beyond the metals world. The LME’s proposal represents the first major move to increase oversight of global commodity markets as wild price swings following Russia’s invasion of Ukraine leave regulators increasingly uneasy. There’s a growing worry about the risks hidden in opaque corners of the trade in natural resources — and the vast ecosystem of privately negotiated over-the-counter derivatives deals is a prime example.
In the nickel crisis in early March, most of the massive short bet at the center of the squeeze was held in OTC deals with banks, so the LME didn’t grasp the scale and potentially systemic nature of the position. Prices spiked 250% over two days, bringing a handful of dealers to the brink of failure before the LME suspended the market and controversially canceled billions of dollars of trades.
While Bloomberg reported this week that the “ big short” has been reduced by more than half, Friday’s proposal that members submit weekly reports on OTC positions is the latest evidence that the crisis will leave an indelible mark on the London metals market. The changes would dramatically expand the LME’s surveillance abilities, going beyond its regulatory obligations and setting it apart from other commodity exchanges.
The experience in nickel shows that reform is needed now, Chamberlain said, and he’s committed to seeing it through.----Chamberlain, a former banker who became CEO in 2017, announced plans earlier this year to leave for a new job in the crypto industry but has agreed to stay and steer the LME through the fallout of the nickel squeeze. The crisis has cast the exchange into the global spotlight, eliciting investigations from UK regulators as well as concern and criticism from institutions including the International Monetary Fund and the US Federal Reserve.
----The LME has allowed two weeks to discuss the proposed changes with its dealers, some of whom have strongly — and successfully — opposed similar moves in the past. In the OTC market, miners, commodity trading houses and manufacturers like carmakers can hedge pricing risk on the metals they buy and sell, while financial investors like hedge funds take bets on prices. The banks can offer more complex and tailor-made products than are available on the LME and the bilateral nature means the deals don’t go through the exchange’s clearinghouse and margin requirements.
More
Column: China lifts metals exports as Western supply chains buckle: Andy Home
May 13, 2022 1:00 AM GMT+1
LONDON, May 15 (Reuters) - China exported 45,260 tonnes of primary aluminium in March, the highest monthly total since April 2010, with almost half of it to the Netherlands.
The month before 20,000 tonnes of metal left China destined for Montenegro and another 5,000 tonnes for Italy.
Exports of unwrought aluminium are subject to China's 15% export duty, which has acted as a significant barrier to outbound flows in the past. Chinese producers prefer to process their metal into semi-manufactured form (semis)to reap the rewards of a tax rebate on value-add product exports.
The current highly unusual flow of Chinese unwrought aluminium to Europe attests to the extreme dislocation in global supply chains resulting from the war in Ukraine.
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Finally, that UST crypto scandal (fraud?) grows. Fools and their money, comes to mind. Should have bought gold, no wait a moment, see today’s technology section!
Whereabouts of Terra’s Bitcoin Reserve a Mystery After Transfers
· Bitcoin moved to accounts on Gemini, Binance, Elliptic says
· Researcher wasn’t able to track tokens after move to exchanges
15 May 2022, 00:31 BST
The $3.5 billion in Bitcoin purchased as a reserve by the foundation set up by the creators of the failed Terra blockchain became untraceable after it was moved to two cryptocurrency platforms, according to blockchain forensics firm Elliptic.
What happened to the cryptocurrency held in reserve may become a key question if investors seek to recoup losses suffered in the wake of the collapse of the blockchain.
Between January and March, the Luna Foundation Guard, or LFG, bought $3.5 billion of Bitcoin, Elliptic said, according to its blockchain analytics tracking tools.
When the value of Terraform Lab’s TerraUSD, or UST, stablecoin began to fall on May 9, the foundation said it would use Bitcoin from the reserve to purchase UST in order to maintain its one-to-one peg with the dollar. Over the next day, the crypto wallets used to hold the reserves were emptied, Elliptic said.
About $1.7 billion was sent on May 9 from LFG wallets to a new address through two transactions after Terra co-founder Do Kwon said the funds would be used to support the peg. Within hours, the entire amount was moved to a single account on the Gemini crypto exchange through several transactions and it was not possible to trace the assets from that point, Elliptic wrote.
The remain Bitcoin reserves were moved on May 10 in a single transaction to an account on the Binance exchange, Elliptic said. The blockchain analytics firm isn’t able to identify whether the assets were sold or moved to other wallets at that point.
Read More: Terra $45 Billion Face Plant Creates Crowd of Crypto Losers
Is this another tech bubble bursting?
And should you, a normal person, care?
That screaming sound you hear? That’s the stock market tumbling, led by a collapse in tech stocks: The overall market is down 18 percent this year, and tech shares are down about 30 percent.
That sound is also a chorus of “I told you so” from people who’ve been comparing the bull market investors have enjoyed for many years to the dot-com bubble of the late 1990s — and who say things are going to get worse. In the dot-com bust that kicked off in March 2000, tech stocks eventually dropped nearly 80 percent. That’s the kind of collapse that could affect everyone, even if they don’t work in tech and don’t bet on stocks (or, more accurately, they don’t think they bet on stocks).
And there are certainly lots of parallels: Like the dot-com era, the stock boom, which began in 2009 and then super-sized during the pandemic, has been fueled in large part by very low to nonexistent interest rates, which made investors more interested in companies that promised to deliver outsized returns. And like the dot-com era, we’ve seen plenty of companies promise products and results they can’t deliver, like hydrogen-powered trucks.
----It’s also worth pointing out that while the tech industry employs a lot of people — an estimated 5.8 million in 2021, according to the Computing Technology Industry Association — that represents only about 4 percent of total US employment.
One wild card in this compare-and-contrast is the deflation of the crypto bubble, which is separate but very much related to the overall tech and stock bubble. On the one hand, the price of bitcoin and other crypto-related currencies and products seems to be evaporating very quickly: Last fall, a single bitcoin was worth $67,000; now it’s worth around $28,000. On the other hand, if you bought a bitcoin back in 2014, when it cost around $700, you’re still well off today.
The main questions for crypto-watchers: Is this a complete collapse or one of the many up-and-down swings the tech world has seen for the last decade? The question for everyone else: If crypto does collapse, will that only affect people who’ve bought or used dogecoin, Bored Ape NFTs, or some other kind of crypto — a group that supposedly represents 16 percent of Americans — or could it create a “contagion” that could wreck the global economy? If we knew, we’d tell you.
In the meantime, here are three charts that lay out some of the reasons it feels a lot like 2000 right now — and some of the reasons it doesn’t.
More
Global Inflation/Stagflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Dollar’s Strength Pushes World Economy Deeper Into Slowdown
ByEnda Curran and Amelia Pollard 14 May 2022, 22:00 BSTThe soaring dollar is propelling the global economy deeper into a synchronized slowdown by driving up borrowing costs and stoking financial-market volatility -- and there’s little respite on the horizon.
A closely watched gauge of the greenback has risen 7% since January to a two-year high as the Federal Reserve embarks on an aggressive series of interest-rate increases to curb inflation and investors have bought dollars as a haven amid economic uncertainty.
A rising currency should help the Fed cool prices and support American demand for goods from abroad, but it also threatens to drive up the import prices of foreign economies, further fueling their inflation rates, and sap them of capital.That’s especially worrying for emerging economies, which are being forced to either allow their currencies to weaken, intervene to cushion their slide, or raise their own interest rates in a bid to buttress their foreign exchange levels.
Both India and Malaysia made surprise rate hikes this month. India also entered the market too to prop up its exchange rate.
Advanced economies haven’t been spared either: In the past week the euro hit a new five-year low, the Swiss franc weakened to hit parity with the dollar for first time since 2019 and Hong Kong’s Monetary Authority was forced to intervene to defend its currency peg. The yen also recently toughed a two-decade low.
“The Fed’s rapid pace of rate hikes is causing headaches for many other economies in the world, triggering portfolio outflows and currency weakness,” said Tuuli McCully, head of Asia-Pacific economics at Scotiabank.
While the combination of slowing US growth and an expected cooling in America’s inflation will ultimately see the dollar’s ascent slow -- which in turn will take pressure off other central banks to tighten -- it may take months to find that new equilibrium.
So far at least, traders are reluctant to call a peak in the dollar rally. That in part reflects bets at the end of 2021 that the greenback’s gains would fade as rate hikes were already priced in. Those views have since been shredded.
Developing economies are in danger of a “currency mismatch,” which occurs when governments, corporations or financial institutions have borrowed in US dollars and lent it out in their local currency, according to Clay Lowery, a former US Treasury assistant secretary for international affairs who’s now executive vice president at the Institute for International Finance.
Global growth will essentially flatline this year as Europe falls into recession, China slows sharply and US financial conditions tighten significantly, according to a new forecast from the IIF. Economists at Morgan Stanley expect growth this year to be less than half of the pace in 2021.
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
Covid-19 Corner
This section will continue until it becomes unneeded.
CDC: No Documents Supporting Claim Vaccines Don’t Cause Variants
By May 13, 2022 Updated: May 13, 2022
The Centers for Disease Control and Prevention (CDC) says it does not have documents backing its claim that COVID-19 vaccines do not cause variants of the virus that causes COVID-19.
The CDC’s website calls it a myth that the vaccines cause variants.
“FACT: COVID-19 vaccines do not create or cause variants of the virus that causes COVID-19. Instead, COVID-19 vaccines can help prevent new variants from emerging,” the website states.
“New variants of a virus happen because the virus that causes COVID-19 constantly changes through a natural ongoing process of mutation (change). As the virus spreads, it has more opportunities to change. High vaccination coverage in a population reduces the spread of the virus and helps prevent new variants from emerging,” it also says.
The Informed Consent Action Network (ICAN), a nonprofit, asked the CDC in Freedom of Information Act requests for documentation supporting the claim.
In one request, the group asked for “All documents sufficient to support that COVID-19 vaccines do not create or cause variants of the virus that causes COVID-19.”
Another requested “All documents sufficient to support that the immunity conferred by COVID-19 vaccines does not contribute to virus evolution and the emergence of variants.”
The CDC has now responded to both requests, saying a search “found no records responsive” to them.
The first response came in January (pdf); the second came on May 4 (pdf).
If the CDC is making declaratory statements, the agency should have documents supporting them, Aaron Siri, an attorney representing ICAN, told The Epoch Times.
The responses are “very troubling,” Siri said. “I thought the CDC was a data-driven organization, that they made their decisions based on the studies and the science and the data.”
The CDC did not respond to a request for comment.
ICAN has been one of the more prolific requesters of information from the CDC during the pandemic. Many requests have yielded information. Others have not.
In this case, the CDC should act to ensure continued public trust, Siri says.
“Remove the language or provide the evidence,” he said. “There obviously are going to be instances where recommendations from the CDC might prove helpful or useful. And I think they do a disservice to everybody by hurting their own credibility by making statements that they either don’t have support or won’t produce the support for.”
More
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
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.
No technology update today.
Today, the curious case of Guinea’s missing gold. If you owned serious gold, would you entrust it to London? In an early heads up to Washington, London stole Venezuela’s gold long before Washington set about stealing Russia’s dollars and gold. And yes, in the 2020s everyone seems to have perfected larceny.
Well at least the missing gold hasn’t (yet) become a non-fungible token (NFT.)
“The gold is there, but it’s no longer physical, it’s in digital form in the bank’s accounts with Affinor.”
Central Bank Digital Currencies anyone.
Where Is Guinea’s Gold? A London Laundering Case May Hold Clues
A murky deal stretching across three continents raises questions about the city’s bullion market.
By Eddie Spence, Jonathan Browning, and Katarina Hoije13 May 2022, 05:01 BSTUpdated on13 May 2022, 12:43 BST
The government of Guinea wants to know what happened to three tons of its gold. The answer may lie in London.
In March, Guinean authorities arrested a former head of the central bank and charged him with embezzlement after the custodian of the gold, Belgian refiner Affinor BVBA, said it was unable to return it.
The arrest of Lounceny Nabe cast a new light on a previously unreported court ruling in London that showed the refiner, which held and sold the gold, had already faced scrutiny by UK police in a money-laundering case. Millions of euros the firm said it made from trading Guinea’s gold was transferred to bank accounts around the world, some of which could be linked back to the refiner. It prompted prosecutors to say there was “overwhelming evidence that the money was unlawfully obtained from international money laundering.” And it led to the seizure last year of 34 million euros ($35.2 million) in the country’s biggest forfeiture of crime proceeds.
Now, worry is building in Guinea about the safety of its gold. And a murky deal stretching across three continents is raising questions about money laundering in London’s bullion market, where trillions of dollars in precious metals trade each year.
Affinor sold the gold to the Dubai-based trading arm of Turkey’s Istanbul Gold Refinery, according to court documents, and then transferred 50 million euros to London accounts of a South African law firm, where it was held in escrow for a Cypriot investment company. The money appeared to be far more than Affinor could have expected to make from the trade, Judge John Zani wrote in his 2020 ruling, raising concerns about its origin.
-----The law firm, Du Toit & Co. LLP, and the investment company, Xiperias, agreed to surrender the remaining 34 million euros without admitting wrongdoing. An Affinor spokesman said the refiner was neither a suspect nor a party in the London case and that it had provided the court with an audit trail of the gold and its purchase from Guinea’s central bank. Istanbul Gold Refinery, known as IGR, confirmed it bought the gold but said it didn’t have a direct link with the central bank and denied any wrongdoing.
Refiners such as IGR that are accredited by the London Bullion Market Association, or LBMA, are mostly small firms purifying ore and scrap gold that they then feed into the global financial system. They’re expected to keep out dirty money, and LBMA sets rules on what material they can accept to ensure bullion tainted by crime doesn’t creep in.
But the requirements often aren’t enforced, said Mark Pieth, founder of the Basel Institute on Governance, who reviewed the court’s findings. “Most of these refiners aren’t doing serious compliance at all,” he said.
More
The world is a place that’s gone from being flat to round to crooked.
Mad Magazine.
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