Baltic Dry Index. 2342 -68 Brent Crude 122.35
Spot Gold 1844
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 10/06/22 World 539,189,487
Deaths 6,328,202
Stocks take the escalator up and the elevator down.
Wall Street adage.
In the Asian stock casinos, last orders. The basement next.
In commodities, I suspect we haven’t seen anything yet. In wheat, rice and oil, one spark will trigger a price explosion.
With an unnecessary war in Europe, incompetence in Washington, London and Toronto, rising global interest rates, an unstable global economy, China now starting to crowd out the USA in much of the world, we are spoiled for choice of sparks.
Teams USA, GB, EU, Australia and Canada, are all “lions led by donkeys.”
While the CNBC CFO survey expects recession in 2023, I have every confidence in Biden, Johnson, von der Leyen and Trudeau to manage to bring it on into 2022.
Asia-Pacific stocks trade mixed; Alibaba shares in Hong Kong rebound
SINGAPORE — Shares in Asia-Pacific were mixed in Friday trade as Chinese inflation data for May came in largely in line with expectations. Investors also looked ahead to the release of U.S. inflation data later stateside.
Hong Kong’s Hang Seng index traded 0.17% higher, with shares of Chinese tech giant Tencent climbing 0.71%.
Hong Kong-listed shares of Alibaba turned around, last trading more than 3% higher after falling nearly 4% earlier. That was in contrast to U.S.-listed shares of Alibaba, which dropped 8.13% on Thursday after Jack Ma’s Ant Group and Chinese regulators squashed talk of reviving Ant’s public listing.
In mainland China, the Shanghai Composite gained around 0.6% while the Shenzhen component jumped 1.014%.
Chinese producer inflation in May rose in line with expectations, official data showed Friday. The Chinese producer price index for May jumped 6.4% as compared with a year earlier, according to data by the country’s Bureau of Statistics. That matched expectations in a Reuters poll.
Meanwhile, Chinese consumer inflation in May also saw an increase that was close to expectations. The consumer price index climbed 2.1% from a year ago, just below the forecast in a Reuters poll for a 2.2% increase.
“As [producer price index] inflation is already on a downward trend, inflation is unlikely to be a constraint for further policy easing,” Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, wrote in a Friday note following the data release.
----The rise in Chinese stocks came despite authorities implementing Covid testing in multiple districts of the major Chinese city of Shanghai, just days after a city-wide lockdown was lifted on June 1.
Japan’s Nikkei 225 shed 1.41% as shares of SoftBank Group dropped 2.56%. South Korea’s Kospi fell 1.21%.
The S&P/ASX 200 in Australia dipped 0.8%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.6% lower.
The U.S. is also set to announce its May consumer price index report later Friday stateside.
Stocks fall sharply, Dow drops more than 600 points ahead of pivotal inflation data
Stocks fell sharply on Thursday ahead of a key inflation report as investors worried about the state of the U.S. economy.
The Dow Jones Industrial Average fell 638.11 points, or 1.94%, to close at 32,272.79. The S&P 500 dropped 2.38% to settle at 4,017.82, and the Nasdaq Composite shed 2.75% to come in at 11,754.23.
Major tech stocks struggled, with Meta Platforms sliding 6.4% and Amazon dropping more than 4%. Apple sank 3.6%
Casino stocks were some of the worst performers in the S&P 500, with Las Vegas Sands falling 5.6% and Caesars Entertainment sliding 3.8%. Chinese tech stocks reversed recent gains and dragged on the Nasdaq, with Pinduoduo sinking 9.6%.
Boeing was the worst performer in the Dow, falling more than 4%.
The slide for stocks comes ahead of the May consumer price index report on Friday. Investors are looking to see if inflation has peaked or if the Federal Reserve will need to be even more aggressive to tamp down price increases.
“The fact that people have literally been talking about this report for the last several days illustrates how much of an issue inflation has become for the market over the last six months since Fed Chair Powell first started to take a more hawkish approach to inflation,” Bespoke Investment Group said in a note to clients.
The market was modestly lower for most of the session before selling gained steam in the final hour. The Dow was trading just below 32,700 shortly before 3 p.m. in New York, but the index dropped more than 400 points from there. The Cboe Volatility Index, often called Wall Street’s “fear gauge,” rose more than 2 points to close above 26 for the first time this month.
Investors have been assessing the health of the U.S. economy in recent weeks, as the Fed has started hiking rates in an attempt to cool inflation without tipping the economy into recession.
Higher energy prices and continued supply chain disruptions have kept inflation persistently high in recent months, while some economic data has shown slowing growth in recent weeks.
More
https://www.cnbc.com/2022/06/08/stock-market-futures-open-to-close-news.html
Finally, remaining in the stock casinos, picking up nickels ahead of the steam roller.
The recession will hit in the first half of 2023 and the Dow is headed lower: CNBC CFO survey
Many economic prognosticators and Wall Street stock pickers have made it clear where they stand on inflation and the Federal Reserve policy response: the economy and markets will get worse before they get better. Many chief financial officers at top companies agree with them, according to the results from the latest CNBC CFO Council survey.
Over 40% of chief financial officers cite inflation as the No. 1 external risk to their business, and going deeper into the results from the Q2 survey, the links between geopolitics and food and energy prices, and inflation, are clear from the C-suite ranking of the external factors that are weighing on their current outlook. Almost one-quarter (23%) of CFOs cite Federal Reserve policy as the biggest risk factor, and as the Biden administration struggles for ways to increase oil supply and Russian ships sail with seized Ukrainian wheat amid concerns about a severe global food insecurity crisis, additional CFOs cited supply chain disruptions (14%) and the Russia-Ukraine war specifically as their No. 1 business risk.
CFOs are not uniformly of the view that the Fed won’t ultimately be able to control inflation. A little over half (54%) express confidence in the central bank, but that’s still not enough to alter their view of where current economic conditions and policy decisions are heading: into a recession.
According to the majority (68%) of CFOs responding to the survey, a recession will occur during the first half of 2023. No CFO forecast a recession any later than the second half of next year, and no CFO thinks the economy will avoid a recession.
The CNBC CFO Council Q2 survey is a sample of the current outlook among top financial officers. It was conducted among 22 chief financial officers at major organizations between May 12-June 6.
The 10-year Treasury, which has already doubled this year to roughly 3%, is expected to flirt with 4% by the end of 2022, according to 41% of CFOs. An equal percentage of CFOs expect the 10-year to rise to no higher than 3.49% by year-end. But on the margins, there is concern about rates rising even more rapidly, with a few outliers on the Council forecasting a 10-year that rises above 4% by year-end.
The European Central Bank on Thursday said it will raise rates for the first time in over a decade as its inflation outlook increased significantly.
Growth prospects for the U.S. economy and global economy have dimmed. The Atlanta Federal Reserve’s GDPNow tracker most recent forecast for growth, issued this week, was a negative revision, and indicated the economy could be headed for a second consecutive quarter of negative growth, which meets a classic definition for recession. The World Bank just slashed its global growth outlook, warning that a period of stagflation like the 1970s is possible and with its president David Malpass saying, “For many countries, recession will be hard to avoid.” The Organization for Economic Cooperation and Development also cut its prediction for global growth this year.
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.
Gas prices: 'Demand destruction' has already started, says strategist
Ines FerréMarkets Reporter Wed, June 8, 2022 at 8:54 PM
Gasoline prices at all-time highs may be starting to put a dent on demand at the pump. Yahoo Finance spoke to several strategists to get their take on when consumers start buying less gas amid rising energy costs.
"One could argue that demand destruction for gasoline has already started," Peter McNally, global sector lead for industrials, materials, and energy at Third Bridge, told Yahoo Finance.
"Since the start of March, U.S. gasoline consumption is 6% lower than the corresponding period in 2019," pre-pandemic.
Gasoline prices are just pennies away from hitting $5/gallon nationwide. Roughly 15 states already have oil prices at that level, or higher.
The US Energy Information Administration (EIA) has been tracking a slight dip in gasoline demand when compared to 2021.
"According to the EIA, gasoline demand over the last 4 weeks is about 2.0% less than this time last year. As prices continue to rise, I expect that the demand will continue to fall off compared to 2021," Andy Lipow of Lipow Oil Associates told Yahoo Finance.
The higher prices at the pump corollate with higher costs for crude oil. The problem is exacerbated by limited refineries in the U.S.
West Texas Intermediate (CL=F) crude futures were trading above $122 per barrel on Wednesday. Brent (BZ=F) was trading above $123 per barrel.
"If we broach $125/b on crude oil, and stay there for a while, consumers will change their behavior," said Stewart Glickman, deputy research director and energy equity analyst at CFRA Research.
High energy prices are also impacting the cost of virtually every good, including food. More money spent on gas and food is leaving the average consumers with less money for more discretionary items.
"When transportation costs go into nosebleed territory, it drives up the cost of bringing goods to market too, which induces companies to pass those cost hikes along to consumers," he said. "My guess is that destruction would be concurrent – both for necessities (like filling your tank) and for those more discretionary items," added Glickman.
The big concern is higher energy prices contributing to an economic slowdown as demand destruction kicks in.
"If past practice is any guide, elevated oil prices often induce a recession. So if high prices persist, I see no reason why it would be different this time," he said.
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.
China COVID jitters flare up as parts of Shanghai resume lockdown
June 9, 2022 1:17 PM GMT+1
SHANGHAI/BEIJING, June 9 (Reuters) - Shanghai and Beijing went back on fresh COVID-19 alert on Thursday after parts of China's largest economic hub imposed new lockdown restriction and the city announced a round of mass testing for millions of residents.
The most populous district in the Chinese capital, meanwhile, announced the shutdown of entertainment venues, while news of the lockdown of Shanghai's Minhang district, home to more than 2 million people, pulled down Chinese stocks.
Both cities had recently eased heavy COVID curbs, but the country has stuck with a "dynamic zero-COVID" policy aimed at shutting down transmission chains as soon as possible.
Shanghai residents in particular are on edge as new cases flare up after the city's grinding two-month lockdown ended, with officials on Thursday tracing three infections to the Red Rose, a popular beauty salon in the city centre that reopened when the city did on June 1.
The shop had served 502 customers from 15 of Shanghai's 16 districts in the past eight days, a local media outlet, The Paper, reported.
"When is this ever going to end?," a user of the Twitter-like Weibo commented on the Red Rose, which is in the trendy former French Concession area of the Xuhui district. "I just want to have a normal life."
Authorities said a preliminary investigation found that some of the salon's 16 employees did not undergo daily COVID testing as required, and that 90,000 people linked to Red Rose staff or customers had been tested.
While China's infection rate is low by global standards, President Xi Jinping has doubled down on a zero-COVID policy that authorities say is needed to protect the elderly and the country's medical system, even as other countries try to live with the coronavirus.
Shanghai's two-month lockdown, the shuttering of many malls and venues across Beijing and movement curbs imposed in many cities in recent months have battered the Chinese economy, disrupted supply chains and slowed international trade.
More
https://www.reuters.com/world/china/shanghais-minhang-district-announces-new-lockdown-2022-06-09/
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.
New EU Rules on USB-C Charging Could Force an iPhone Redesign
Jun 7, 2022 6:34 PM
Legislators in the European Union have selected one charging port to rule them all. And that charging port is USB-C.
On Tuesday, EU officials ruled that any mobile electronic devices sold within the EU must come with a USB-C charging port by the fall of 2024. The new mandate applies to rechargeable mobile devices like phones, tablets, laptops, handheld game consoles, headphones, and cameras. This move to standardize charging ports was executed as a way to limit e-waste—consumers will be able to buy devices without a charger in the box if they so choose—but also to make it easier for people to wrangle the energy needs of their many devices.
“This is a bit of a victory for common sense,” says Ben Wood, chief analyst at CCS Insight. “Consumers are fed up with having lots of different chargers, lots of different ports.”
Standardization around USB-C as the tech industry’s main connection interface has been a long time coming, with many manufacturers making the switch years ago. After all, USB-C generally boasts faster charging and transfer speeds than competing standards, and the cables are easy to find and use.
Still, there’s one big player that’s going to really feel this ruling: Apple. All current iPhones and the base model iPad use the proprietary Lighting port, which is exclusive to Apple devices. There are more than 1 billion iPhones in the world, and every model of iPhone Apple has released since 2012 has come with a Lightning port.
The most likely course of action for Apple is to just make the switch to USB-C across all its devices. It’s not like the company hasn’t seen this coming. It already uses USB-C connectors on MacBooks and most iPad models. Last month, Bloomberg reported that Apple has already been testing out new iPhones with USB-C ports.
So with the EU forcing Apple’s hand, there is a chance we may soon see a USB-C iPhone after years of speculation. However, a more radical scenario is just as likely.
“Then there's the nuclear option for Apple,” Wood says, “which would be to kind of pay homage to Jony Ive's obsession with minimalism and get rid of a charging port altogether and go completely wireless.”
Wireless charging is already supported across the whole iPhone lineup. And although countless accessories and dongles attach to iPhones via the Lightning connector, Apple has proven it’s not scared of making big design changes that break that device compatibility; the company faced a huge backlash when it removed the iPhone’s headphone jack, but forged ahead anyway.
Apple has not responded to a request for comment.
More
Another weekend and yet another disgraceful war weekend. Does anyone, anywhere, outside of Biden/Blinken, Johnson, Trudeau, Stoltenberg, still really think this proxy war was a good idea?
Have a great weekend everyone.
There is no hunting like the hunting of man, and those who have hunted armed men long enough and liked it, never care for anything else thereafter.
Ernest Hemingway.
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