Baltic Dry Index. 2186 -18 Brent Crude 116.15
Spot Gold 1816 US 2 Year Yield 3.06 -0.04
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 30/06/22 World 551,819,640
Deaths 6,356,292
1886 - The construction of Tower Bridge began on 22 April.
1894 - Tower Bridge was opened by the Prince and Princess of Wales with great celebrations, on 30 June.
We have arrived at the end of month, end of quarter and end of half year. Normally, an occasion to dress up the stock casinos and especially the stock indexes to boost money managers all important bonuses.
But this year no amount of dressing up stocks will alter the fact that most stocks have entered a new bear market. Central banksters everywhere outside of Japan and China are raising interest rates and have ended a 40 year era of ever lower interest rates.
While it’s unlikely to be a 40 year era of rising interest rates, it’s all too likely to be a 1 to 2 year period of rising interest rates, crashing many companies that gorged on debt to buy back their stock to boost the CEO’s remuneration package.
The era of low interest rates grossly distorted investment decisions into mis and mal-investments.
We are only in the early stage of finding out just how much mis and mal-investment occurred. I suspect we are on the cusp of several new Lehman Brothers disasters hitting over the next two years.
But for today, time to try to dress up stocks and cryptocurrencies.
Time to take some profits in those commodities that haven’t already crashed ahead of our arriving new global recession.
Time to seek safe haven in the fiat dollar as interest rates rise globally. Time to add some fully paid up physical gold and silver ahead of the central banksters folding as the new recession spawns social discontent and yet more Magic Money Tree excess.
What comes next is a financial hurricane of excitement and pain.
China’s Shenzhen stocks rise nearly 2% as data shows factory activity grew in June; Asia stocks slip
SINGAPORE — Chinese markets rose on Thursday as government data showed factory activity grew in June, but most other Asia-Pacific indexes fell.
The Shenzhen Component gained nearly 2%, and the Shanghai Composite advanced 1.31%.
The Hang Seng index in Hong Kong was up fractionally. Shares of artificial intelligence software company SenseTime plunged as much as 50.5% on Thursday after a six-month lock-up period for some of its shares ended. The stock was last 44.22% lower.
The Nikkei 225 in Japan dropped 1.49%, while the Topix slipped 1.21%.
In Australia, the S&P/ASX 200 fell 0.92%.
South Korea’s Kospi declined 1%, while the Kosdaq was 1.33% lower.
MSCI’s broadest index of Asia-Pacific shares was down 0.48%.
In economic news, China’s official manufacturing Purchasing Managers’ Index for June was at 50.2, slightly lower than the expected 50.5, according to a Reuters poll.
The 50-point mark separates growth from contraction on a monthly basis, and the index has been under 50 since March.
South Korea’s factory output grew mildly in May, government data showed. Industrial production increased 0.1% from April’s figure. Service sector output grew 1.1% in May.
Japan’s industrial production dropped 7.2% in May, according to government data. That figure was much lower than market consensus and could have been affected by lockdowns in China, Rob Carnell, ING’s regional head of research in Asia-Pacific, wrote in a Thursday note.
----Overnight in the U.S., stocks fluctuated on Wednesday after the major averages made a failed attempt at a bounce in the previous session, and as the market prepares to close out the worst first half of the year since 1970.
The Dow Jones Industrial Average ended the session up 82.32 points, or 0.27%, to 31,029.31, while the other benchmarks closed slightly lower. The S&P 500 dipped 0.07% to 3,818.83, and the tech-heavy Nasdaq Composite edged down by 0.03% to 11,177.89.
Rate hikes, recession fears and inflation concerns have plagued the market.
ANZ Research in a Thursday note said markets have been “cautious and lacking strong conviction” as central bankers say they will prioritize tackling inflation.
“The bottom line is that until the inflation data show a sustainable moderation, it remains risky to jump on softer economic data and declare that the peak in central bank interest rates for this cycle has been priced in,” the note said.
More
https://www.cnbc.com/2022/06/30/asia-markets-china-pmi-data-stocks-currencies-oil.html
A lesson from the past long ago discarded.
The true costs of very low interest rates
Artificial distortions can cause ‘clusters of errors’ by businesses
Caitlin Long August 11, 2010
Markets tend to cheer falling interest rates. Low interest rates, however, can entail real economic costs that become evident over time.
During the earlier period of monetary stimulus, from 2001-04, many businesses made economic calculation errors that later led to losses. Examples include investments in housing, commercial real estate and mining exploration, as well as the provision of defined benefit pensions to employees.
Interest rates are the most important prices in the economy, according to Nobel laureate F.A. Hayek, because they reflect the collective time preference of individuals to consume either now or later. Accordingly, interest rates co-ordinate allocation of capital across the economy by signalling to businesses whether they should invest. Distortions in interest rates can cause “clusters of errors” in which large swathes of businesses unwittingly miscalculate at the same time.
Hayek observed that interest rate stimulus interfered with economic calculations, causing managers to invest in projects that would not otherwise have appeared profitable. Losses can subsequently materialise as customer demand fails to meet forecasts that were, in retrospect, optimistic. Long-term projects are highly sensitive to interest rates and are therefore more susceptible to such distortions. Pension obligations and long-term, capital-intensive projects are at high risk of miscalculation based on artificially low rates.
To illustrate, capital expenditures accelerated in such long-term businesses as residential real estate, commercial real estate and mining exploration after the monetary stimulus that began in 2001, but losses materialised after interest rate stimulus was withdrawn.
According to the Bureau of Economic Analysis, investment in residential real estate grew by 2.8 per cent in the fourth quarter of 2000, before monetary stimulus began in January 2001. Then growth accelerated to 6.6 per cent, 10.0 per cent and 16.9 per cent during the fourth quarters of 2001, 2002 and 2003, respectively.
On June 30 2004 the Federal Reserve began to reverse the monetary stimulus just as residential investment growth was peaking at 21.1 per cent. It then decelerated and two years later home prices peaked and housing sector losses began to materialise.
Another area in which many businesses unwittingly underestimated costs is defined benefit pension plans. The widespread pension problem facing markets today is mostly attributable to the decline in interest rates amid waves of monetary stimulus during the past decade. Pension liabilities grow as interest rates fall, reflecting higher present values of future benefit obligations. A dollar of pension benefit granted in 2000 is currently worth approximately $1.32, solely reflecting the drop in interest rates. When managers calculated the costs of providing defined-benefit pensions in 2000, they could not have anticipated that a series of interest rate stimulus programmes in the intervening decade would drive costs up by 32 per cent.
Companies generally set aside funds to cover these pension obligations. However, even if a company funded its entire pension cost in 2000, for example, its asset portfolio returns would probably not have kept pace with its rising obligation. The average S&P 500 pension portfolio earned a cumulative return of 22 per cent since 2000. In the example, the pension plan would hold assets valued at $1.22 to cover an obligation worth $1.32. The company bears responsibility to pay the difference.
Hayek observed that “clusters of errors” tended to happen after monetary stimulus sparked an investment boom. When boom turned to bust he urged quick recognition of losses to free capital trapped in bad investments so markets could redeploy it to better uses. Any further rounds of monetary stimulus to cushion the bust would only prolong the inevitable adjustment and distort economic calculation anew.
If Hayek were alive he would caution businesses to be alert for the formation of new bubbles, especially in long-term businesses in which losses may not yet be fully recognised and price signals may still be distorted. He would agree with the investment caution that businesses have exhibited in the face of artificially low interest rates, and advise corporate decision makers to be alert if a project appeared profitable solely based on interest rate assumptions.
Where might the costs of the current loose money show up over time? It is impossible to predict with certainty. But low interest rates for a longer period increase the likelihood that businesses will miscalculate. Early signs of an investment recovery are showing up in such long-term businesses as industrial and transportation equipment and machinery. We will soon find out whether this recovery is real or the beginning of another bubble.
Caitlin Long is head of Corporate Strategy, Capital Markets at Morgan Stanley.
https://www.ft.com/content/2838c142-a560-11df-a5b7-00144feabdc0
Finally, as we arrive at the month-end, what did the secretive Bilderbergers decide at their unreported secret meeting in Washington, District of Crooks, June 2-5 at the start of the month? Nothing good for the rest of us, I’ll bet.
Global Inflation/Stagflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
FOREX Euro under pressure as inflation fears send investors to dollar haven
June 30, 2022 4:43 AM GMT+1
SINGAPORE/HONG KONG, June 30 (Reuters) - The euro struggled to regain a footing on Thursday, having tumbled overnight against a resurgent U.S. dollar, which benefited from safe-haven demand on renewed worries about higher rates and a global recession.
The euro was at $1.044, after losing 0.75% on the dollar the day before, and heading for a monthly decline of 2.7%.
It also dropped to a fresh 7-1/2-year low versus the Swiss franc at 0.99663 francs, with the Alpine currency another beneficiary of safe-haven flows and also still basking in the afterglow of the Swiss National Bank's surprise rate hike two weeks ago. read more
Christopher Wong, senior FX strategist at Maybank, attributed the euro's fall against the dollar to the market moving away from riskier assets after "central bankers warned of lasting inflation and that they would prioritise combating (it), resulting in broad dollar rebound overnight."
A steady and aggressive global switch to tighter policy has stoked recession worries and shaken financial markets in recent months.
Speaking at the European Central Bank's annual conference in Sintra, Portugal, U.S. Federal Reserve Chair Jerome Powell said it was important to bring down inflation, even if it meant economic pain, with similar remarks from ECB President Christine Lagarde. read more
Lower German inflation figures also briefly weighed on the euro, said Ray Attrill head of FX strategy at National Australia Bank, before "the market realised that there was some special factors there, it wasn't a genuine downside surprise."
"The bigger picture worry is what happens with energy supplies in the eurozone as we head towards the winter... We're quite cautious about the euro," Attrill added.
The dollar was also on the front foot against other majors, with sterling hunkered down at $1.21225, with losses this week leaving it set for a 3.8% monthly decline, while the Australian dollar was struggling at $0.6873
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.
With Covid-19 starting to become only endemic, this section is close to coming to its end.
Could Llamas Hold the Key to Fighting COVID-19?
June 29, 2022, at 6:49 a.m.
WEDNESDAY, June 29, 2022 (HealthDay News) -- Llamas are more than beautiful creatures -- they could also help protect humans from COVID-19 and a large array of similar viruses.
Contained in their blood samples are tiny, robust immune particles that could protect against every COVID-19 variant, including Omicron and 18 similar viruses, a team of researchers reported.
The findings suggest that these "super-immunity" molecules, known as nanobodies, could be precursors to a fast-acting, inhaled antiviral treatment or spray. This could potentially be stockpiled and used in the ongoing, evolving pandemic and against future virus spread.
Llamas, along with camels and alpacas, have unique immune systems, the researchers explained. They produce antibodies that have a single polypeptide chain instead of two chains. Therefore, their antibodies are roughly one-tenth the size of typical antibodies, are exceptionally stable, and can firmly bind to viruses.
"Because of their small size and broad neutralizing activities, these camelid nanobodies are likely to be effective against future variants and outbreaks of SARS-like viruses," said study author Yi Shi, director of the Center of Protein Engineering and Therapeutics at the Icahn School of Medicine at Mount Sinai in New York City.
"Their superior stability, low production costs, and the ability to protect both the upper and lower respiratory tracts against infection mean they could provide a critical therapeutic to complement vaccines and monoclonal antibody drugs if and when a new COVID-19 variant or SARS-CoV-3 emerges," Shi said in a Mount Sinai news release.
The team researched this theory by immunizing a llama named Wally with the short fragment or spike of the coronavirus that latches onto the protein on the surface of human cells to gain entry and spread infection.
Repeatedly immunizing Wally caused the llama to produce nanobodies that recognized COVID-19 and many other coronaviruses. This gave him super-immunity.
The team was able to isolate and validate a large number of highly potent antiviral nanobodies effective against a broad spectrum of SARS-like viruses.
More
Could Llamas Hold the Key to Fighting COVID-19? | Health News | US News
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.
Interesting, but how will it make money?
Work begins on Mammoth, the world's largest CO2 direct air capture plant
Nick Lavars June 29, 2022
The ultimate contribution that direct air capture might make in helping us address climate change remains to be seen, but there's no shortage of startups, governments and research groups driving the technology forward. Chief among them is Swiss outfit Climeworks, which has today broken ground on its second direct air capture (DAC) plant in Iceland, and one that marks significant progress in its ambitions of removing gigatons of CO2 from the atmosphere each year by 2050.
Climeworks has operated at the cutting edge of direct air capture technology for some time, switching on the world's first "negative emission" power plant in 2017. This came about through a collaboration with carbon storage company CarbFix, which in 2016 made a major breakthrough in this area by demonstrating how CO2 can be mineralized in less than two years, rather than the hundreds or even thousands that it traditionally takes.
That pilot plant was capable of safely stowing 12.5 tons of CO2 every three months, and paved the way for Climeworks' first proper direct air capture plant, which began operation in Iceland last year. Orca, as the plant is called, is capable of absorbing 4,000 tons of CO2 each year and features a modular design consisting of stackable units, which will be key to the company's plans of scaling up its operations.
Climeworks has now broken ground on its second commercial direct air capture plant, which will also employ a modular architecture and is designed to soak up 36,000 tons of CO2 each year. Construction is expected to take 18 to 24 months, with CarbFix to store the captured carbon once operations begin. As with Orca, renewable energy will be used to run the direct air capture and storage systems.
More
Work begins on Mammoth, the world's largest CO2 direct air capture plant (newatlas.com)
