Baltic Dry Index. 2484 -112 Brent Crude 111.07
Spot Gold 1826 US 2 Year Yield 3.21 +0.04
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 22/06/22 World 545,788,600
Deaths 6,343,588
I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.
Friedrich August von Hayek.
In the stock casinos, more churn and burn whiplash.
The only good news, commodity inflation seems to be peeking as higher prices curb demand. But be careful what you wish for.
A sudden global demand implosion will make the Bitcoin implosion look like a picnic in the park.
House prices in much of the G-7 seem to have already reacted to the baby step increase of interest rates, suggesting that the global economy is already heading into the next recession.
As for ending food price inflation, that all comes down to ending the Ukraine war and reopening their ports and to what the outcome of the northern hemisphere wheat and rice crops turns out to be.
All in all, a good time to be in cash, although not Japan’s Yen where central bank bond policy is collapsing the value of the Yen, gold and silver, albeit it’s a little early, and probably wheat futures on any dip below 10 dollars a bushel.
South Korea slips as it leads Asia-Pacific losses; oil drops more than 3%
SINGAPORE — Shares in the Asia-Pacific region mostly traded lower on Wednesday, as economic fears continue to weigh on the market.
Oil futures declined more than 3% in Asia trade. International benchmark Brent crude futures slipped 3.27% to $110.90 per barrel. U.S. crude futures also dropped by 3.57% to $105.61 per barrel.
Reuters reported that U.S. President Joe Biden plans to call for a temporary suspension of the 18.4-cents a gallon federal tax on gasoline in a bid to bring down soaring energy costs.
Among regional stock indexes, South Korea led losses, with the Kospi falling 1.73%, and the Kosdaq dropping 2.58%. SK Hynix was down 2.52% and Naver dropped 3.97%.
Markets in mainland China slid. The Shanghai Composite declined 0.33%, and the Shenzhen Component was down 0.44%.
In Hong Kong, the Hang Seng index fell 1.24%, and the Hang Seng Tech index dropped 2.5%. Alibaba slipped 2.27%.
Japan’s Nikkei 225 slipped 0.15%, while the Topix was fractionally higher.
The S&P/ASX 200 in Australia declined 0.18%. MSCI’s broadest index of Asia-Pacific shares outside Japan declined 1.34%.
Major indexes in the U.S. jumped on Tuesday after weeks of declines. The Dow Jones Industrial Average gained 641.47 points or 2.15% to 30,530.25, while the S&P 500 rose 2.45% to 3,764.79. The tech-focused Nasdaq advanced 2.51% to 11,069.302.
“The rebound in U.S. equities overnight … will be taken with a pinch of salt as elevated inflation and risks to growth persist,” Lavanya Venkateswaran, an economist at Mizuho Bank, said in a note.
---- The Bank of Japan, after maintaining its ultra-low interest rates last week, released the minutes from its April monetary policy meeting on Wednesday morning.
“Many members expressed the view that underlying inflation, measured by the CPI excluding such factors as energy, remained relatively low,” the minutes said.
Most members of BOJ policy board expect short-term and long-term interest rates to remain at their present levels or lower, the minutes added.
The Japanese yen crossed the 136 level on Tuesday and was last at 136.18 against the greenback. The currency has been weakening as the Bank of Japan’s monetary policy diverges from that of the Fed.
Experts previously told CNBC that the main focus of the central bank is not exchange rates but inflation.
https://www.cnbc.com/2022/06/22/asia-pacific-markets-wall-street-bank-of-japan-currencies-oil.html
Dow rises 641 points as markets rally from losing week
June 21, 2022 / 5:43 PM
June 21 (UPI) -- U.S. markets rallied on Tuesday as markets continued to process the Federal Reserve's aggressive efforts to combat inflation.
The Dow Jones Industrial Average gained 641.47 points, or 2.15%, while the S&P 500 climbed 2.45% and the Nasdaq Composite rose 2.51% at the end of Tuesday's session after markets were closed on Monday in observance of the Juneteenth holiday.
Major indexes posted their 10th losing session in their past 11 last week with the S&P 500 turning in its worst week since 2020 as investors weighed the possibility of a recession after the Fed ordered a rare .75% interest rate hike.
Tuesday's rebound saw 464 members of the S&P 500 finish the day in the green, with energy as the best performing sector -- up 5.2%.
"The outstanding question is whether this is simply a bounce or the bottom," Sam Stovall, chief investment strategist at CFRA Research said. "I think that this could certainly be a bounce but not the bottom because the one missing ingredient is a fear-based capitulation sell-off."
---- Major tech stocks were also on the rise Tuesday with Google parent, Alphabet, rising 4.11% while Apple gained 3.28% and Amazon climbed 2.32%.
Bitcoin rose back above $21,000 Tuesday after having fallen below $18,000 for the first time since December 2020 over the weekend.
The 10-year treasury yield also rose to nearly 3.33%.
RELATED Janet Yellen says recession not 'inevitable' as White House battles inflation
Fed Chairman Jerome Powell is set to testify before Congress in his semi-annual address Wednesday and Thursday, providing a look at the central bank's plans to slow down inflation.
More
In other news, get ready for the next recession after our arriving bout of stagflation.
Germany risks recession as Russian gas crisis deepens
June 21, 2022 11:57 AM GMT+1
BERLIN/COPENHAGEN, June 21 (Reuters) - Germany faces certain recession if already faltering Russian gas supplies completely stop, an industry body warned on Tuesday, as Sweden joined a growing list of European nations rolling out emergency plans to cope with a deepening energy supply crisis.
European Union countries from the Baltic Sea in the north to the Adriatic coast in the south have been outlining measures to cope with a supply crisis after Russia's invasion of Ukraine.
The EU relied on Russia for as much as 40% of its gas needs before the war - rising to 55% for Germany - leaving a huge gap to fill in an already tight global gas market. Some states have temporarily reversed plans to shut coal power plants in response. read more
Global gas prices have sky-rocketed, driving surging inflation higher still and creating a bigger headache for policy makers trying to haul Europe back from an economic precipice.
Germany's BDI industry association slashed its economic growth forecast for 2022 on Tuesday to 1.5%, revising it down from 3.5% expected before the war. It said a halt in Russian gas deliveries would make recession inevitable. read more
Russian gas is still being pumped via Ukraine but at a reduced rate and the Nord Stream 1 pipeline under the Baltic, a vital supply route to Germany, is working at just 40% capacity, which Moscow says is because Western sanctions are hindering repairs. Europe says this is a pretext to reduce flows.
Germany, like Denmark, Austria, the Netherlands, Italy and others, has activated the first early warning stage of its three-stage plan to cope with a gas supply crisis.
As part of contingency plans, the German gas regulator, the Bundesnetzagentur, unveiled details of a new auction system that will start in coming weeks to encourage manufacturers - particularly those using gas in high-temprerature processes - to consume less.
But regualator said it was not time to declare an all-out emergency, or the third stage of its crisis plan, that would see the country ration gas to industry to protect vital services and households.
"I am very much in favour of carefully examining when the right time is for the highest alert level," Bundesnetzagentur chief Klaus Mueller told German broadcaster BR.
Europe has been racing to refill gas storage facilities, now about 55% full, to meet an EU-wide target of 80% by October and 90% by November, a level that would help see the bloc through winter if supplies slowed further or were halted.
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Europe may shift back to coal as Russia turns down gas flows
June 20, 2022 6:20 PM GMT+1
FRANKFURT/MILAN, June 20 (Reuters) - Europe's biggest Russian gas buyers raced to find alternative fuel supplies on Monday and could burn more coal to cope with reduced gas flows from Russia that threaten an energy crisis in winter if stores are not refilled.
Germany, Italy, Austria and the Netherlands have all signalled that coal-fired power plants could help see the continent through a crisis that has sent gas prices surging and added to the challenge facing policymakers battling inflation.
The Dutch government said on Monday it would remove a cap on production at coal-fired energy plants and will activate the first phase of an energy crisis plan. read more
Denmark has also initiated the first step of an emergency gas plan due to the Russian supply uncertainty.
Italy moved closer to declaring a state of alert on energy after oil company Eni (ENI.MI) said it was told by Russia's Gazprom (GAZP.MM) that it would receive only part of its request for gas supplies on Monday.
"But if we don't do it, then we run the risk that the storage facilities will not be full enough at the end of the year towards the winter season. And then we are blackmailable on a political level," he said.
Russia on Monday repeated its earlier criticism that Europe had only itself to blame after the West imposed sanctions in response to Moscow's invasion of Ukraine, a gas transit route to Europe as well as a major wheat exporter.
The Dutch front-month gas contract , the European benchmark, was trading around 124 euros ($130) per megawatt hour (MWh) on Monday, down from this year's peak of 335 euros but still up more than 300% on its level a year ago.
FILLING INVENTORIES SLOWLY
Markus Krebber, CEO of Germany's largest power producer RWE (RWEG.DE), said power prices could take three to five years to fall back to lower levels.
Russian gas flows to Germany through the Nord Stream 1 pipeline, the main route supplying Europe's biggest economy, were still running at about 40% of capacity on Monday, even though they had edged up from the start of last week.
Ukraine said its pipelines could help to fill any gap in supply via Nord Stream 1. Moscow has previously said it could not pump more through the pipelines that Ukraine has not already shut off.
Eni and German utility Uniper (UN01.DE) were among European companies that said they were receiving less than contracted Russian gas volumes, although Europe's gas inventories are still filling - albeit more slowly.
They were about 54% full on Monday against a European Union target of 80% by October and 90% by November.
Germany's economy ministry said bringing back coal-fired power plants could add up to 10 gigawatts of capacity in case gas supply hit critical levels. A law related to the move goes to the upper house of parliament on July 8.
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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.
Labor market ‘worse than the 1970s’ as strikes hit UK, Nobel Prize-winning economist says
Published Tue, Jun 21 2022 4:56 AM EDT
LONDON – The labor market is “worse than the 1970s,” with massive rail strikes in the U.K. offering a sign of things to come, according to Nobel Prize-winning economist Christopher Pissarides.
Britain’s RMT Union confirmed Monday that planned railway strikes will go ahead this week after talks with train companies failed to reach an agreement over jobs, pay and conditions. Around four-fifths of trains are cancelled, with further strikes planned later this month and in July.
Pissarides, Regius professor of economics at the London School of Economics, told CNBC on Tuesday that labor markets are going through “some of the most difficult periods” he has seen.
“It’s even worse than the 1970s, in the sense that we need to make bigger adjustments in labor markets. We have new technologies bringing on automation and, in fact, the trade union leaders are complaining about job losses, about ticket offices – that’s due to the new technologies,” he said.
What’s more, economies around the world are facing soaring inflation, particularly when it comes to food and energy, in large part due to the war in Ukraine.
Pissarides, who won the Nobel Prize for economics for his work analyzing job markets, said there is “no way we can avoid the pain from that,” but that it needs to be distributed throughout the economy.
“There aren’t many sectors of the economy which have strong unions. We don’t have big nationalized industries like we had in the ’70s when the whole of manufacturing was going on strike, and therefore that makes it very difficult to say: ‘Those of you who have strong unions, we’re going to give you full compensation for these external shocks, and let the others bear all the burden’,” Pissarides explained.
Inflation spiral
Along with the external shocks facing the whole of the global economy, the U.K. is also dealing with what Pissarides termed “domestically manufactured” inflation, after the government’s furlough scheme and other fiscal support programs propped up demand throughout the pandemic, but drove public debt to record highs.
Global government debt is expected to soar to a record in 2022 as borrowing also remains broadly elevated.
Pissarides said a key concern in the long run was the “second-round effects” of inflation that are beginning to take shape. He said inflation expectations were becoming de-anchored and leading to wage rises, forming a “self-fulfilling prophecy” and an upward spiral for inflation.
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Old is gold: sky-high cost of ageing ships sounds inflation SOS
June 21, 2022 6:21 AM GMT+1
· Old container ships sold and chartered at record prices
· Bumper long-term charters lock in costs for consumers
· High shipping costs driving up inflation worldwide
· Wave of huge new container ships due in next two years
SINGAPORE, June 21 (Reuters) - Shipping companies are transforming rust buckets into gold mines in a modern-day alchemy that could fuel already rampant inflation for years to come.
The disruption to world trade caused by pandemic lockdowns and a shortage of new cargo vessels has pushed freight rates for ageing container ships to record highs.
Cashing in on the boom, shipping firms are locking in long-term leases lasting three to four years, which means consumers could carry on paying the price for the surge in costs until hundreds of new ships on order come into service.
Take the Synergy Oakland, a mid-sized vessel flagged in Cyprus that can carry more than 4,200 20-foot steel containers.
Greek firm Euroseas bought it in 2019 for $10 million when it was already a decade old. As world trade spiralled into chaos last year, it raked in $21 million in just over 100 days at the highest daily freight rate in history for a ship of its size.
It squeezed in one more short-term charter earning around $10 million in the space of two months before going out on a four-year lease for $61 million in May, a six-fold return in itself on the purchase price three years ago.
----The world's container ship fleet continued to grow in terms of capacity during the pandemic, rising 2.9% in 2020 after increases of 4% in 2019 and 5.6% in 2018, according to Clarksons Research, a shipping analytics firm.
But the surge in demand for consumer goods during lockdowns, congestion at ports that tied up ships for longer than expected, and a slowdown in new shipbuilding, partly due to uncertainty about whether vessels would comply with new environmental rules, all contributed to the shipping crunch and record freight costs.
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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.
Only major news will be reported.
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.
Germany rejects EU plan to ban new fossil-fuel cars from 2035
Finance Minister Christian Lindner said there would continue to be niches for combustion engines so a ban was wrong.
June 21, 2022 09:50 AM
Speaking at an event hosted by Germany's BDI industry association on Tuesday, Lindner said there would continue to be niches for combustion engines so a ban was wrong and said the government would not agree to this European legislation.
Lindner, a member of the pro-business Free Democrats, which shares power with the Social Democrats and Greens, said Germany would still be a leading market for electric vehicles.
https://europe.autonews.com/automakers/germany-rejects-eu-plan-ban-new-fossil-fuel-cars-2035
Finally, weather permitting, a chance to see one of God’s spectaculars.
Epic alignment of 5 planets, moon to peak after summer solstice
This rare planetary parade has not been seen since 2004 and won't happen again like this until 2040 -- and the best time to catch it will be just days after the summer solstice.
Published Jun. 15, 2022 7:32 PM BST | Updated Jun. 20, 2022 3:14 PM BST
A rare planetary alignment that won't occur again for nearly two decades has taken shape in the night sky, and while it will remain visible through the end of June, viewing the spectacle may be tricky and could require losing some sleep.
Mercury, Venus, Mars, Jupiter and Saturn have lined up in the early morning sky, a planetary procession that can be seen above the eastern horizon every morning through the end of June. This long-lasting event will give early risers plenty of opportunities to enjoy the sights of the planetary quintet.
The last time that all five of these planets were visible in the night sky at the same time was in 2004, the same year that Facebook was created and three years before the first iPhone was released, according to Sky & Telescope magazine.
A telescope is not required to see this month's unique grouping of planets, but it could still be difficult to spot all five, even if the weather is perfect.
The parade of planets will be best seen about 45-60 minutes before sunrise on cloud-free mornings through the end of the month. Since June features some of the earliest sunrises of the entire year, this translates to heading outside before 5 a.m., local time, to look skyward.
More
https://www.accuweather.com/en/space-news/5-planets-to-align-with-moon-in-june-night-sky/1201835
'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded.
Friedrich August von Hayek.
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