Baltic Dry Index. 2462 +75 Brent Crude 119.02
Spot Gold 1844 US 2 Year Yield 3.14 -0.06
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 17/06/22 World 543,109,988
Deaths 6,338,064
“Only when the tide goes out do you discover who's been swimming naked.”
Warren Buffett
In the stock casinos, fear has overtaken greed. Even with the baby step interest rate increases far behind what’s needed to stop inflation, the punters have finally realised that higher interest rates are here to stay, recession or not.
There’s a summer, at the least, of more stock casinos pain to come.
Japan’s Nikkei 225 slides more than 2% in mixed Asia-Pacific trading as investors weigh recession concerns
Published Thu, Jun 16 2022 7:40 PM EDT Updated An Hour Ago
SINGAPORE — Shares in Asia-Pacific struggled for direction Friday morning, following sharp declines on Wall Street as investors weigh the possibility of aggressive monetary policy tightening leading to a recession.
The Nikkei 225 in Japan fell 2.17% as shares of conglomerate SoftBank Group plunged more than 4% while the Topix index shed 2.03%. South Korea’s Kospi declined 1.23%.
In Hong Kong, the Hang Seng index recovered from earlier losses to rise 0.76%, with shares of life insurer AIA climbing more than 2%. Mainland China stocks also turned around, with the Shanghai Composite up about 0.3% while the Shenzhen Component gained 0.627%.
Over in Australia, the S&P/ASX 200 slipped 2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.37% lower.
“We still maintain our overweight view on equities versus bonds,” said Suresh Tantia, senior investment strategist at the APAC chief investment office of Credit Suisse.
“You can’t rule out further downside because right now markets are very volatile, they are trading on news flow and based on the expectations of Fed but at current levels, it doesn’t really make sense to sell. I think once the expectations of Fed rate hikes stabilize, then we should start to see a recovery in the equity market,” he said.
Shares on Wall Street fell sharply overnight, with the S&P 500 dropping 3.25% to 3,666.77. The Dow Jones Industrial Average shed 741.46 points, or 2.42%, to 29,927.07. The Nasdaq Composite lagged, falling 4.08% to 10,646.10.
The Bank of Japan on Friday said it would maintain its ultra-easy monetary policy.
Following that decision, the Japanese yen weakened more than 1.5% to 134.34 per dollar, though it was still stronger as compared with levels above 135 seen against the greenback earlier this week.
The Japanese central bank’s decision stands in sharp contrast to that of its global peers. Earlier this week, the U.S. Federal Reserve, Bank of England and Swiss National Bank all raised their benchmark rate hikes.
“The contradiction is: Whereas the markets are saying that central banks have to do more to control inflation, the more the central banks do to control inflation, the more they shock the markets. Now you’re in that state at the moment,” David Roche, president and global strategist at Independent Strategy, told CNBC’s “Squawk Box Asia” on Friday.
A day after Powell’s assurances about the economy, markets are worried that ‘the Fed breaks something’
Published Thu, Jun 16 2022 1:43 PM EDT Updated Thu, Jun 16 20224:52 PM EDT
Federal Reserve Chairman Jerome Powell’s insistence that the central bank is not deliberately trying to cause a recession and that the economy is on solid footing is exactly what someone in his position would be expected to say.
The trouble is, the Fed’s likely to get a recession anyway as data shows the economy is a far cry from stable.
Consequently, markets whipsawed Thursday, going from a positive reaction on Wednesday to Powell’s post-meeting comments to a rout as worries fester over what effect higher interest rates and tighter monetary policy will have on a fragile state of affairs.
Federal Reserve Chairman Jerome Powell’s insistence that the central bank is not deliberately trying to cause a recession and that the economy is on solid footing is exactly what someone in his position would be expected to say.
The trouble is, the Fed’s likely to get a recession anyway as data shows the economy is a far cry from stable.
Consequently, markets whipsawed Thursday, going from a positive reaction on Wednesday to Powell’s post-meeting comments to a rout as worries fester over what effect higher interest rates and tighter monetary policy will have on a fragile state of affairs.
More specifically, two comments the Fed chair made stand out from the news conference: First, that the Fed is not trying to “induce a recession now. Let’s be clear about that.” Also: “There’s no sign of a broader slowdown that I can see in the economy.”
In fact, there are myriad signs of a slowdown.
On Thursday alone, real estate data for May showed a 14.4% monthly slowdown in housing starts at a time when there is a chronic shortage of homes. A Fed manufacturing reading showed continued contraction in the Philadelphia region. Weekly jobless claims were higher than expected as well.
More specifically, two comments the Fed chair made stand out from the news conference: First, that the Fed is not trying to “induce a recession now. Let’s be clear about that.” Also: “There’s no sign of a broader slowdown that I can see in the economy.”
That data piles onto other recent points: Inflation at 41-year highs, consumer confidence at historic lows, and retail spending falling amid dramatically higher prices.
“At minimum, growth was going to slow even before the Fed started pressing on the brakes,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets. “The evidence on that is seemingly growing on a pretty consistent basis now ... With all due respect to [Powell’s] comment, it’s just not consistent with the data on the ground.”
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Swiss National Bank raises rates in shock move, ready for more
June 16, 2022 11:51 AM GMT+1
BERN, June 16 (Reuters) - The Swiss National Bank raised its policy interest rate for the first time in 15 years in a surprise move on Thursday and said it was ready to hike further, joining other central banks in tightening monetary policy to fight resurgent inflation.
The central bank increased its policy rate to -0.25% from the -0.75% level it has deployed since 2015, sending the safe-haven franc sharply higher. Nearly all the economists polled by Reuters had expected the SNB to keep rates steady. L8N2Y31U7 read more
It was the first increase by the SNB since September 2007, and followed a 0.75 percentage point hike in borrowing costs by the U.S. Federal Reserve on Wednesday.
Other central banks are also raising interest rates as they attempt to cool inflation driven higher by surging fuel and food prices that are straining budgets for households and businesses.
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Europe's central banks jack up interest rates to fight inflation surge
June 16, 2022 5:06 PM GMT+1
· SNB unexpectedly hikes by half a percent
· Bank of England raises rates by 25 bps
· Hungary unexpectedly lifts one-week deposit rate
· Inflation painfully high and not yet peaking
BERN/LONDON, June 16 (Reuters) - Central banks across Europe raised interest rates on Thursday, some by amounts that shocked markets, and hinted at even higher borrowing costs to come to tame soaring inflation that is eroding savings and squeezing corporate profits.
Such levels have not been seen in some places since the aftermath of the oil crisis of the 1970s.
Fuelled initially by soaring oil prices in the wake of Russia's invasion of Ukraine, inflation has broadened out to everything from food to services with double digit readings in parts of the continent.
The Swiss National Bank and the National Bank of Hungary both caught markets off guard with big upward steps, just hours after their U.S. counterpart the Federal Reserve lifted rates by the most in almost three decades. read more
The Bank of England meanwhile lifted borrowing costs by the quarter point markets had expected. read more
The moves come just a day after the European Central Bank agreed plans in an emergency meeting to contain borrowing costs in the bloc's south so it could forge ahead with rates rises in both July and September. read more
"We are in a new era for central banks, where lowering inflation is their only objective, even at the expense of financial stability and growth," George Lagarias, Chief Economist at Mazars Wealth Management 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.
‘We could be facing years, not months, of fewer home sales,’ says Redfin CEO announcing 8% layoffs
Aarthi Swaminathan Wed, June 15, 2022 at 4:52 PM
As the U.S. housing sector cools off, housing companies are slashing jobs left, right and center. One CEO of a real estate company said that job cuts were necessary, given how bad things are about to get.
“A layoff is always an awful shock, especially when I’ve said that we’d go through heck to avoid one…But mortgage rates increased faster than at any point in history,” Redfin RDFN, -1.23% CEO Glenn Kelman said in a blog post announcing that he’d asked 8% of the company’s employees to leave. “We could be facing years, not months, of fewer home sales, and Redfin still plans to thrive.”
Mortgage rates are up on the back of rising inflation, with the average on the 30-year fixed-rate rising 14 basis points to 5.23% for the week ending June 9, according to weekly data from Freddie Mac. New data is expected on Thursday morning.
On Wednesday, the U.S. Federal Reserve raised the benchmark interest rate by 0.75 percentage point, the biggest increase since 1994 as it tries to tame rising inflation from a 40-year high.
Redfin and another real-estate company, Compass COMP, -4.23%, have both announced that they’re cutting jobs, MarketWatch’s Tomi Kilgore reported on Tuesday. Redfin said it was shedding 470 employees. Compass said it was cutting 10% of its workforce, around 450 jobs.
Rocket Mortgage RKT, -0.29% began offering voluntary buyouts to about 8% of its employees earlier this year.
In November last year, Zillow Z, +4.44% laid off a quarter of its workforce as it shut down its house-flipping operation.
Meanwhile, housing data reported on Wednesday morning signaled further weakness in the sector, one economist said.
‘Early stages of the housing rollover’
One economist said that more pain was to be expected in the housing sector, given the rapidly changing environment
The home builder confidence index dropped by two points in the month of June — for the sixth straight month.
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.
N. Korea reports another disease outbreak amid COVID-19 wave
Thu, June 16, 2022 at 6:26 AM
SEOUL, South Korea (AP) — North Korea on Thursday reported the eruption of another infectious disease in addition to its ongoing COVID-19 outbreak, saying leader Kim Jong Un has donated his private medicines to those stricken with the new disease.
It’s unclear how serious the new epidemic is, but some outside observers say North Korea likely aims to burnish Kim’s image as a leader caring about public livelihoods as he needs greater public support to overcome pandemic-related hardships.
Kim on Wednesday offered his family’s reserve medicines for those diagnosed with “an acute enteric epidemic” in the southwestern Haeju city, the official Korean Central News Agency reported. The North’s main Rodong Sinmun newspaper separately carried a front-page photo showing Kim and his wife Ri Sol Ju reviewing saline solutions and other medicines that they were donating.
KCNA didn’t elaborate on exactly what the epidemic is and how many people have been infected.
Some observers say the “an enteric epidemic” in North Korea refers to an infectious disease like typhoid, dysentery or cholera, which are intestinal illnesses caused by germs via contaminated food and water or contact with feces of infected people.
Such diseases routinely occur in North Korea, which lacks good water treatment facilities and whose public healthcare infrastructure largely remains broken since the mid-1990s.
After North Korea last month reported a rising number of patients with feverish symptoms following its admission of the coronavirus outbreak, South Korea’s spy agency said that “a considerable number” of those fever cases included those sick with diseases like measles, typhoid and pertussis.
“The outbreak of measles or typhoid isn’t uncommon in North Korea. I think it’s true there is an outbreak of an infectious disease there but North Korea is using it as an opportunity to emphasize that Kim is caring for his people,” said Ahn Kyung-su, head of DPRKHEALTH.ORG, a website focusing on health issues in North Korea. “So it’s more like a political message than medical one.”
More
https://www.yahoo.com/news/n-korea-reports-another-disease-052634886.html
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.
Can they make graphite from coal? Researchers start by finding new carbon solid
Date: June 10, 2022
Source: Ohio University
Summary: As the world's appetite for carbon-based materials like graphite increases, researchers presented evidence this week for a new carbon solid they named 'amorphous graphite.'
As the world's appetite for carbon-based materials like graphite increases, Ohio University researchers presented evidence this week for a new carbon solid they named "amorphous graphite."
Physicist David Drabold and engineer Jason Trembly started with the question, "Can we make graphite from coal?"
"Graphite is an important carbon material with many uses. A burgeoning application for graphite is for battery anodes in lithium-ion batteries, and it is crucial for the electric vehicle industry -- a Tesla Model S on average needs 54 kg of graphite. Such electrodes are best if made with pure carbon materials, which are becoming more difficult to obtain owing to spiraling technological demand," they write in their paper, "Ab initio simulation of amorphous graphite," that published today in Physical Review Letters.
Ab initio means from the beginning, and their work pursues novel paths to synthetic forms of graphite from naturally occurring carbonaceous material. What they found, with several different calculations, was a layered material that forms at very high temperatures (about 3000 degrees Kelvin). Its layers stay together due to the formation of an electron gas between the layers, but they're not the perfect layers of hexagons that make up ideal graphene. This new material has plenty of hexagons, but also pentagons and heptagons. That ring disorder reduces the electrical conductivity of the new material compared with graphene, but the conductivity is still high in the regions dominated largely by hexagons.
Not all hexagons
"In chemistry, the process of converting carbonaceous materials to a layered graphitic structure by thermal treatment at high temperature is called graphitization. In this letter, we show from ab initio and machine learning molecular dynamic simulations that pure carbon networks have an overwhelming proclivity to convert to a layered structure in a significant density and temperature window with the layering occurring even for random starting configurations. The flat layers are amorphous graphene: topologically disordered three-coordinated carbon atoms arranged in planes with pentagons, hexagons and heptagons of carbon," said Drabold, Distinguished Professor of Physics and Astronomy in the College of Arts and Sciences at Ohio University.
"Since this phase is topologically disordered, the usual 'stacking registry' of graphite is only statistically respected," Drabold said. "The layering is observed without Van der Waals corrections to density functional (LDA and PBE) forces, and we discuss the formation of a delocalized electron gas in the galleries (voids between planes) and show that interplane cohesion is partly due to this low-density electron gas. The in-plane electronic conductivity is dramatically reduced relative to graphene."
The researchers expect their announcement to spur experimentation and studies addressing the existence of amorphous graphite, which may be testable from exfoliation and/or experimental surface structural probes.
More
Another weekend and more war, higher interest rates, a slowing global economy, inflation, and new bear markets in the stock casinos. An interesting summer lies ahead. Have a great weekend everyone.
“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold.”
Warren Buffett.
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