Baltic Dry Index. 2681 -252 Brent Crude 119.43
Spot Gold 1854
Under capitalism, man exploits man. Under communism, the reverse is true.
Polish adage from the Soviet days.
In the stock casinos, another whipsaw relief rally, one among many more to come, as the stock casinos adjust to the harsh reality that a bear market is arriving for most stocks.
Higher interest rates are here to stay, along with high inflation, moderated only by statistical year on year effects, a mirage to fool the unwary.
But higher interest rates will quickly uncover who has built up unrepayable debt, who must cut back to service their debt, how much consumers must alter their spending allocations. In reality we are only in the first phase of the process of adjustment.
Look away from the crude oil price now. Up 7 dollars on the week.
S&P 500, Dow snap losing streaks for best week since November 2020
Investors got a reprieve from a painful sell-off as the Dow Jones Industrial Average and the S&P 500 rallied to close their best weeks since November 2020.
The Dow jumped 575.77 points, or nearly 1.8%, to 33,212.96. The S&P 500 rose about 2.5% to 4,158.24. The tech-heavy Nasdaq Composite was the outperformer, helped by strong earnings from software companies and a fall in the 10-year Treasury yield. It was ended the day up 3.3% to reach 12,131.13.
All three of the major averages closed the week higher. The Dow finished up 6.2% for the week and snapped its longest losing streak, eight weeks, since 1923. The S&P 500 is 6.5% higher and the Nasdaq is up 6.8% on the week. Both indexes ended seven-week losing streaks. A chunk of the week’s gains came Thursday and Friday, when all three of the averages rallied as strong retail earnings and a slowing inflation report lifted sentiment.
“We’re taking a breather here and making some adjustments in the market to allow for that,” Tom Martin, senior portfolio manager at Globalt Investments, told CNBC. “We have come a long way down pretty fast and if we can stabilize here then the declines we’ve seen might be all that’s needed, or something close to that.”
A report showing inflation slowing a bit helped give stocks a boost on Friday. The core personal consumption expenditures price index rose 4.9% in April, down from the 5.2% pace seen the previous month. This particular report is watched closely by the Federal Reserve when setting policy.
Investors on Friday also continued to parse through retail earnings. Ulta Beauty shares were up nearly 12.5% after the company reported better-than-expected quarterly results, while Gap added 4.3% despite slashing its profit guidance.
“The consumer appears to have a ‘barbell’ approach to spending: low-end necessities and higher-end experiences/luxury items are doing fine, while general merchandise spending is being delayed, i.e., getting one more year out of that worn-down patio furniture is okay,” Wells Fargo’s Christopher Harvey said Friday.
“This week, various retailers started to balance the macro narrative, with the demise of the consumer now appearing to have been greatly exaggerated,” he added.
Tech stocks were among the top gainers Wednesday. Software company Autodesk rose 10.3% after reporting strong earnings for its most recent quarter. Dell Technologies jumped 12.8% on earnings, and chipmaker Marvell advanced 6.7%. Zscaler and Datadog were also higher Friday, up about 12.6% and 9.4%, respectively.
The moves came as investors assessed the sustainability of this week’s rally, and whether it’s a relief bounce or does it mark the bottom of this year’s long sell-off.
Still, the averages are well off their highs, with the Nasdaq Composite still solidly in bear market territory and the S&P 500 having briefly dipped more than 20% below its record last week.
The Nasdaq now sits about 25.2% from its record, while the S&P 500 and Dow are off by 13.7% and 10.1%, respectively.
Jeff Kilburg, chief investment officer of Sanctuary Wealth, said he looks to the Treasury market as a “beacon of light” for the stock market. The 10-year Treasury yield has fallen below 2.75% from a peak that exceeded 3% this year.
More
https://www.cnbc.com/2022/05/26/stock-market-futures-open-to-close-news.html
But away from the central bankster, fiat money fuelled stock casinos, a hurricane of rising interest rates is fast approaching the global economy.
We are in for a summer or more of false dawn, whipsaw relief rallies.
Worry about stagflation, a flashback to ’70s, begins to grow
May 29, 2022
WASHINGTON (AP) — Stagflation. It was the dreaded “S word” of the 1970s.
For Americans of a certain age, it conjures memories of painfully long lines at gas stations, shuttered factories and President Gerald Ford’s much-ridiculed “Whip Inflation Now” buttons.
Stagflation is the bitterest of economic pills: High inflation mixes with a weak job market to cause a toxic brew that punishes consumers and befuddles economists.
For decades, most economists didn’t think such a nasty concoction was even possible. They’d long assumed that inflation would run high only when the economy was strong and unemployment low.
But an unhappy confluence of events has economists reaching back to the days of disco and the bleak high-inflation, high-unemployment economy of nearly a half century ago. Few think stagflation is in sight. But as a longer-term threat, it can no longer be dismissed.
Last week, Treasury Secretary Janet Yellen invoked the word in remarks to reporters:
“The economic outlook globally,” Yellen said, “is challenging and uncertain, and higher food and energy prices are having stagflationary effects, namely depressing output and spending and raising inflation all around the world.”
---- For now, economists broadly agree that the U.S. economy has enough oomph to avoid a recession. But the problems are piling up. Supply chain bottlenecks and disruptions from Russia’s war against Ukraine have sent consumer prices surging at their fastest pace in decades.
The Federal Reserve and other central banks, blindsided by raging inflation, are scrambling to catch up by aggressively raising interest rates. They hope to cool growth enough to tame inflation without causing a recession.
It’s a notoriously difficult task. The widespread fear, reflected in shrunken stock prices, is that the Fed will end up botching it and will clobber the economy without delivering a knockout blow to inflation.
More
https://apnews.com/article/russia-ukraine-covid-health-63a9d0ec0ee778dcdd8355b3ffebb99e
Column: Another leg lower? Markets not yet braced for recession
May 27, 2022 11:00 AM GMT+1
LONDON, May 27 (Reuters) - One of the worst starts to a year in decades might lead you to think investors are already braced for an economic storm ahead, but it's far from clear recession risks have been taken on board or are fully priced.
Reasons for this year's 15-20% slide in benchmark stock indices are well documented - rising interest rates to rein in soaring post-pandemic inflation rates that have been exaggerated by a Ukraine-related energy and food price shock that has also pummelled household incomes and corporate margins.
Throw in heightened geopolitical risks more generally, China's growth-sapping "zero COVID" lockdowns, persistent supply-chain problems and chip shortages - and skies darken further. And while a Northern summer might alleviate the immediate energy pressure, there's little clarity in Europe about what happens coming next winter if Russian gas supplies are cut off.
No great surprise then that economists are warning of a global recession ahead even as many parts of the world appeared to be just surfing the crest of a post-pandemic reopening wave.
The main policy debate hinges on whether the U.S. Federal Reserve and other central banks will feel the need to tighten monetary policy to "restrictive" territory that deliberately slows economies to drag inflation back down - or whether growth will roll over before they even need to consider getting above so called "neutral" rates still 150 basis points up from here.
Either way, it's not a great picture of activity ahead.
----Washington's Institute for International Finance halved its world growth forecast to just 2.3% for this year and said "global recession risk is elevated". read more
Commercial banks such as Deutsche Bank and Wells Fargo now forecast a U.S. recession at some point over the next 12-18 months, while many houses see Europe there this year.
Economic data surprises are turning sour, with U.S. and China indexes rolling over again and now more negative than they've been seen the Omicron variant first hit six months ago. And this time with world oil prices 50% higher than they were last Autumn and, at almost 3%, 10-year dollar borrowing rates more than twice November levels.
And U.S. housing markets are beginning to creak under the weight of rising mortgage rates and searing materials costs.
So, on many levels, the outsize drop in stock prices is more than well founded - the only question is whether it's enough.
The problem is there's been little or no downgrade of aggregate 12-month forward or full-year 2023 earnings forecasts yet despite darkening outlooks from many tech, digital and subscription-based firms as well as those exposed to China and chip shortages - or indeed energy rationing in Europe.
And even though we've seen a cheapening of the most expensive Wall St stock valuations since the dot.com bubble 20 years ago, they are still above 30-year averages and only back to where they were on the eve of the pandemic. The picture is slightly better in Europe, though not much.
But unfazed earnings projections are perhaps the most alarming aspect of current valuations.
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.
This weekend, Rabobank covers what the LIR has covered since February and our disastrous unnecessary war in the Ukraine. Shame that no one in the Anglo-American-NATO War Party knew.
Russian-Ukrainian War Could Spark Global Food Crisis, Recession: Report
By May 27, 2022
The world should ready itself for a possible global food crisis in the coming months amid the fallout of the Russian-Ukrainian conflict, according to a new report (pdf) from agricultural financial advisory Rabobank.
Over the past 20 years, Russia, Belarus, and Ukraine have become major suppliers in global grain and agricultural markets, producing between 20 to 30 percent of a range of primary products, including wheat, corn, barley, canola, sunflower oil, pulses, nitrogen-based fertiliser and potash.
Rabobank noted that given the impossibility of estimating how much grain and other agricultural products Ukraine will be able to produce in the coming growing season—even with conservative modelling estimates—it was likely there would be a shortfall of grain and feed, which could pose a severe threat to global food security.
“The world has not yet fully the heavy absence of Ukraine’s supplies,” the report said. “However, this is about to change from July onward.”
“In years when global grain supply has fallen 40 to 50 [million] metric tonnes below trend consumption in one season, the historical trend has been that the global food price index rises to very high levels. The most recent Ukrainian crisis has pushed the FAO Food Price Index to a record high, as heavy supply losses in the world market have been expected.”
The financial advisory said they expected “elevated global grain and oilseed prices to persist throughout the year—and for years to come.”
Food Shortage Could Spark Political Instability
On May 13, Indian authorities said it would ban the export of wheat, effective immediately, to shore up its own food security.
The news was met with cynicism from import-reliant countries, with Germany’s Agriculture Minister Cem Ozdemir arguing the move could exacerbate the current crisis, especially if other countries follow suit, reported Aljazeera.
“If everyone starts to impose export restrictions or to close markets, that would worsen the crisis,” he said. “We call on India to assume its responsibility as a G20 member.”
Matt Dalgleish from market analysis firm Thomas Elder Markets in Australia, said that the Ukrainian-Russian conflict has definitely pushed some import-reliant countries to the point of desperation.
“Countries that are on our doorstep, like Indonesia, that have a huge population and are struggling for self-sufficiency in terms of their [own] self-sufficiency, they could have problems,” Dalgleish told The Epoch Times. “In the Middle East and North African area—like Algeria, Libya and Egypt—they are all countries are susceptible to food risk and food insecurity.”
Dalgleish said due to the lower income levels in those countries; much of the population already spends a higher proportion of income on food-related matters, and as grain supplies drop, prices could rise as countries compete for supply.
“When people become food insecure, that’s a very quick way to get civil disobedience and instability within a country,” he said.
Dalgleish noted that countries like Australia—not dependent on imported food supplies—would instead feel inflationary pressures as prices ramp up for basics like fuel and fertiliser, due to the sanctions placed on Russia. This could have a flow-on effect and cause prices to rise in staples like flour, milk, vegetables, and meat.
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.
Scientists identify ‘trigger molecule’ for Covid-related changes to smell
Molecule found in coffee typically described by people with parosmia as disgusting or repulsive
Wed 25 May 2022 17.20 BST
Scientists have identified the “trigger molecule” that makes pleasant aromas smell like burning rubbish or sewage in people whose sense of smell is disrupted by Covid.
The loss of smell is a defining symptom of Covid-19, with about 18% of adults in the UK estimated to have been affected. Some people also experience disturbances in their sense of smell – a condition known as parosmia – but the biological basis for this has remained a mystery.
Now scientists have identified a highly potent odour molecule that appears to be a trigger for the sense of disgust experienced by many of those with parosmia. The molecule, called 2-furanmethanethiol, found in coffee, was described by those with a normal sense of smell as being coffee- or popcorn-like, but those with parosmia typically described its scent as disgusting, repulsive or dirty.
Dr Jane Parker, the director of the Flavour Centre at the University of Reading and co-author of the research, said: “This is solid evidence that it’s not ‘all in the head’, and that the sense of disgust can be related to the compounds in the distorted foods. The central nervous system is certainly involved as well in interpreting the signals that it receives from the nose.”
---- Some of the most common triggers for parosmia include coffee, chocolate, meat, onion and toothpaste. The latest study investigated whether there were particular compounds within these substances that were to blame.
By trapping the aroma of coffee, the team were able to test individual coffee compounds on volunteers who had parosmia and compare their reaction with those who didn’t. From the hundred or so aroma compounds present in coffee, people with parosmia could point to those responsible for the sense of disgust. Among the 29 volunteers, scientists found 15 commonly identified compounds that triggered parosmia, with the prime culprit being a chemical called 2-furanmethanethiol, which 20 of the volunteers said had a horrible smell.
More
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
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.
Cheap gel film pulls buckets of drinking water per day from thin air
Michael Irving May 24, 2022
Water scarcity is a major problem for much of the world’s population, but with the right equipment drinking water can be wrung out of thin air. Researchers at the University of Texas at Austin have now demonstrated a low-cost gel film that can pull many liters of water per day out of even very dry air.
The gel is made up of two main ingredients that are cheap and common – cellulose, which comes from the cell walls of plants, and konjac gum, a widely used food additive. Those two components work together to make a gel film that can absorb water from the air and then release it on demand, without requiring much energy.
First, the porous structure of the gum attracts water to condense out of the air around it. The cellulose, meanwhile, is designed to respond to a gentle heat by turning hydrophobic, releasing the captured water.
Making the gel is also fairly simple, the team says. The basic ingredients are mixed together then poured into a mold, where it sets in two minutes. After that it’s freeze-dried, then peeled out of the mold and ready to get to work. It can be made into basically any shape needed, and scaled up fairly easily and at low-cost.
In tests, the gel film was able to wring an astonishing amount of water out of the air. At a relative humidity of 30 percent, it could produce 13 L (3.4 gal) of water per day per kilogram of gel, and even when the humidity dropped to just 15 percent – which is low, even for desert air – it could still produce more than 6 L (1.6 gal) a day per kilogram.
That’s a huge improvement over other water harvesters we’ve covered over the years. The highest previously was 8.66 L (2.3 gal), but that was in air with much higher humidity. Others have topped out at 5.87 L (1.55 gal) at 30 percent humidity, or as little as 1.3 L (0.3 gal).
And the new gel film's efficiency could be improved even further, the team says, by creating thicker films, absorbent beds, or other array formations of the material. Perhaps most importantly, the material is extremely inexpensive to produce, costing as little as US$2 per kilogram. That’s another major factor in scaling up the technology and getting it to remote areas and developing countries, where it’s needed the most.
The research was published in the journal Nature Communications.
Source: UT Austin
This weekend’s musical diversion. Germany’s very underrated Herr Fasch again. Approx. 15 minutes.
Johann Friedrich Fasch - Violin Concerto in D-major, FWV L D4:a
https://www.youtube.com/watch?v=mYBrlAQi7vA
This weekend’s chess update. Approx. 12 minutes.
The Incredible Praggnanandhaa
https://www.youtube.com/watch?v=q3UVlCrPdXg
This week’s maths update. Approx. 10 minutes.
Take Any Square Root by Hand - Easy to Learn!
https://www.youtube.com/watch?v=HBdVVFqTrUU
Finally. Peanuts. Approx. 12 minutes.
The Crazy History of Peanuts and Peanut Butter
https://www.youtube.com/watch?v=yw5vL7ndowQ
They pretend to pay us! We pretend to work.
USSR Adage.
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