Baltic Dry Index. 2633 Wed. Brent Crude 117.46
Spot Gold 1868
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 03/06/22 World 534,143,001
Deaths 6,317,470
“It's easier to fool people than to convince them that they have been fooled.”
Mark Twain.
Does history repeat? Well inflation history, anyway.
Yesterday OPEC+ agreed to increase production, but crude oil prices rose anyway. Few think that OPEC+ can make up for the decline in Russia’s production.
If they can’t, energy inflation will be with us for some time, until stagflation moves on into the next recession.
Add to that a food supply crisis that might yet turn into a food supply catastrophe by year end, depending on the northern hemisphere weather and grain harvest outcomes, and inflation looks likely to get far worse before the next recession finally tames it.
With a great Grizzly Bear knocking on the stock casino’s door, stock casino rallies now become profit taking exit rallies.
Asia-Pacific stocks rise after overnight Wall Street jump
SINGAPORE — Shares in Asia-Pacific rose in Friday morning trade following gains overnight on Wall Street. Investors will also be looking ahead to the release of U.S. jobs data for May.
In Japan, the Nikkei 225 gained 0.96% as shares of Fast Retailing soared close to 6%. The Topix index rose 0.12%.
The Kospi in South Korea edged 0.26% higher, while Australia’s S&P/ASX 200 climbed 0.72%.
MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.46% higher.
“It is premature, if not incorrect, to suggest that the bearish sentiment in markets may have peaked. We have argued, in our daily and ad-hoc publications, that bouts of optimism in a bear market are par for the course,” Lavanya Venkateswaran, an economist at Mizuho Bank, wrote in a Friday note.
Markets in mainland China, Hong Kong and Taiwan are closed on Friday for a holiday.
Overnight on Wall Street, the three major indexes stateside snapped two-day losing streaks. The S&P 500 jumped 1.84% to 4,176.82. The Dow Jones Industrial Average climbed 435.05 points, or 1.33%, to 33,248.28. The tech-heavy Nasdaq Composite surged 2.69% to 12,316.90.
U.S. jobs data for May is set to be out at 8:30 p.m. HK/SIN on Friday. Economists surveyed by Dow Jones see 328,000 jobs added in May, a 100,000 decline from April.
More
https://www.cnbc.com/2022/06/03/asia-markets-us-jobs-data-currencies-oil.html
Jamie Dimon says ‘brace yourself’ for an economic hurricane caused by the Fed and Ukraine war
Published Wed, Jun 1 2022 10:27 AM EDT Updated Wed, Jun 1 2022 8:20 PM EDT
JPMorgan Chase CEO Jamie Dimon says he is preparing the biggest U.S. bank for an economic hurricane on the horizon and advised investors to do the same.
“You know, I said there’s storm clouds but I’m going to change it … it’s a hurricane,” Dimon said Wednesday at a financial conference in New York. While conditions seem “fine” at the moment, nobody knows if the hurricane is “a minor one or Superstorm Sandy,” he added.
“You’d better brace yourself,” Dimon told the roomful of analysts and investors. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
Beginning late last year with high-flying tech names, stocks have been hammered as investors prepare for the end of the Federal Reserve’s cheap money era. Inflation at multidecade highs, exacerbated by supply chain disruptions and the coronavirus pandemic, has sown fear that the Fed will inadvertently tip the economy into recession as it combats price increases.
While stocks bounced from a precipitous decline in recent weeks on optimism that inflation may be easing, Dimon seemed to dash hopes that the bottom is in.
“Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said. “That hurricane is right out there, down the road, coming our way.”
There are two main factors that has Dimon worried: First, the Federal Reserve has signaled it will reverse its emergency bond-buying programs and shrink its balance sheet. The so-called quantitative tightening, or QT, is scheduled to begin this month and will ramp up to $95 billion a month in reduced bond holdings.
“We’ve never had QT like this, so you’re looking at something you could be writing history books on for 50 years,” Dimon said. Several aspects of quantitative easing programs “backfired,” including negative rates, which he called a “huge mistake.”
Central banks “don’t have a choice because there’s too much liquidity in the system,” Dimon said, referring to the tightening actions. “They have to remove some of the liquidity to stop the speculation, reduce home prices and stuff like that.”
The other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil “almost has to go up in price” because of disruptions caused by the worst European conflict since World War II, potentially hitting $150 or $175 a barrel, Dimon said.
“Wars go bad, [they] go south in unintended consequences,” Dimon said. “We’re not taking the proper actions to protect Europe from what’s going to happen to oil in the short run.”
More
Oil prices steady on doubts OPEC+ can make up Russian deficit
June 3, 20223:02 AM GMT+1
MELBOURNE, June 3 (Reuters) - Oil prices were roughly unchanged on Friday, clinging to gains made in the previous session on doubts that producers belonging to OPEC+ can hike their crude output enough to make up for lost supply from Russia.
U.S. West Texas Intermediate (WTI) crude futures were up 1 cent at $116.88 a barrel at 0112 GMT, while Brent crude futures were up 7 cents at $117.68 a barrel.
A decision on Thursday by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to boost output by 648,000 barrels per day (bpd) in July and August, instead of by 432,000 bpd as previously agreed, was seen as hardly enough for a tight market. read more
The increases were divided proportionally across the member countries, but with Russia included in the pact and members like Angola and Nigeria already failing to meet their existing targets, analysts said the supply increase was likely to be less than the announced volume.
"The fact that Russia was left in the group suggests that production from the alliance will continue to struggle to meet even this modest increase in quota rises," ANZ Research analysts said in a note.
Russian output has already dropped by 1 million bpd since its invasion of Ukraine, which Moscow calls a "special operation", and is likely to fall even further as the European Union's ban on Russian oil kicks in, ANZ analysts said.
"To put it another way, traders think the incremental increase is too small relative to the growing downside supply risks from the EU embargo amid an expected increased demand from China," said SPI Asset Management Managing Partner Stephen Innes.
More
Investors may be in for this rude surprise: History shows inflation can take years to return to normal even when Fed hikes above 10%
`There are aspects of the historical pattern that are very relevant: Namely, that inflation took a number of years to develop, kept growing, receded, then came back and was hard to get rid of,’ says Mace McCain of Frost Investment Advisors.
History
can be a powerful tool, particularly in a high-inflation environment like this
one in which no suitable economic model seems to apply.
Inflation — running at 8.3% as of April, near a four-decade
high — has stayed stubbornly persistent for a full year to the surprise of
virtually everyone who tracks it. Now there’s a risk that price gains could
take much longer than expected to fall back down, even when the Federal Reserve
is aggressively hiking interest rates.
That risk was highlighted on Thursday by BofA Securities strategists Vadim
Iaralov, Howard Du and others, who point to the period between 1974 and 1988 as
the most comparable time in which the annual headline U.S. consumer-price index
was rising at a pace similar to the U.S.’s pandemic era of 2019-2022.
In 1980, with the Fed’s main policy rate target already above 10% for most of
that year, the annual headline CPI, also in double digits, still did not fall
back below 3% after 36 months “even on the back of unprecedented rate hikes
enacted by Fed Chairman Paul Volcker,” they said.
This was also the case during the pre-Volcker years, when the Fed was led by
Arthur Burns and G. William Miller. In July 1973, when the annual CPI rate was
hovering near 6% but poised to keep climbing, a Burns-led Fed pushed the
fed-funds rate above 10%, FactSet data shows. Policy makers brought interest
rates down to 9% for six months, then pushed them back up again to 10% or
higher through mid-1974. But the CPI rate didn’t fall back below 6% until the
second half of 1976.
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.
Below, more pie in the sky from the Fed.
Fed's Daly: let's get U.S. interest rates to 2.5% as quickly as we can
Wed, June 1, 2022, 5:14 PM
(Reuters) - The Federal Reserve should get interest rates up to a level that no longer stimulates the economy as quickly as possible including 50-basis-point hikes at the central bank's next two meetings, San Francisco Federal Reserve Bank President Mary Daly said on Wednesday.
"I see a couple of 50-basis-point hikes immediately in the next couple of meetings to get there. And then we need to look around and see what else is going on," Daly said in a CNBC interview.
"Let’s get there as quickly as we can," Daly added on getting to a neutral rate - a level which neither revs up nor restricts economic growth - which she estimates at 2.5%.
The central bank is under pressure to begin to decisively curb overly high inflation, which is running at more than three times its 2% goal and has included a surge in the cost of everyday items such as food and gasoline.
Fifty-basis-point hikes at each of the Fed's next two meetings in June and July are all but confirmed, and debate has shifted to the rate hikes required for the rest of the year.
Most policymakers have said they want to wait and see how much inflation comes down over the summer before deciding whether they need to increase or reduce the size of a rate hike in September.
Fed Chair Jerome Powell has said only that the central bank will continue to raise rates until inflation come down in a "clear and convincing" way.
Daly cautioned that the path ahead on inflation once the Fed gets rates up to a neutral level also depends on other factors besides U.S. consumers' willingness to spend, such as the war in Ukraine and lockdowns in China to restrict the spread of COVID-19, which have exacerbated existing supply chain issues.
"I'm looking for both supply to recover somewhat and demand to come back down a little bit. If neither of those things cooperate, then we need to go into restrictive territory,” Daly said, although she noted that policymakers had to be equally open to stopping rate raises if inflation comes down on its own.
Daly said she does not see a recession as the Fed's tightening actions take hold due to the strength of the economy.
"I see restaurants full, airports full. ... People recognize it's hard to afford things and yet they're still spending, so we have to wait for all this to play out. The summer's going to tell us a lot."
https://www.yahoo.com/news/feds-daly-lets-u-interest-161416471.html
Gas prices: 7 U.S. states top $5 per gallon as inflation bites
Wed, June 1, 2022, 4:35 PM
with Illinois becoming the latest to join California, Oregon, Washington, Nevada, Arizona, and Alaska.
California's gasoline prices continue to be significantly higher than the nation's average cost of a gallon of unleaded, sitting at $6.19 on Wednesday.
The national average for a gallon of gas sits at $4.671 for regular unleaded gas as of June 1 while diesel gas prices are at $5.54 per gallon on average nationally, down from the record high of $5.58 per gallon set on on May 18.
Overall, retail gas prices are up 48 cents over the past month and are 32% higher than the day before Russia invaded Ukraine on February 24. Experts think they will continue rising over the coming months.
Even before the invasion, gas prices were on the rise as demand ticked up from pandemic related restrictions. On Tuesday, European leaders agreed to ban 90% of Russian oil imports by the end of the year as part of the ongoing effort to cut ties with Russia and inflict financial pain.
More
https://www.yahoo.com/news/gas-prices-7-us-states-top-5-per-gallon-153556161.html
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.
‘We’re playing with fire’: US Covid cases may be 30 times higher than reported
Thu, June 2, 2022, 7:00 AM
The United States is now in its fourth-biggest Covid surge, according to official case counts – but experts believe the actual current rate is much higher.
America is averaging about 94,000 new cases every day, and hospitalizations have been ticking upward since April, though they remain much lower than previous peaks.
But Covid cases could be undercounted by a factor of 30, an early survey of the surge in New York City indicates. “It would appear official case counts are under-estimating the true burden of infection by about 30-fold, which is a huge surprise,” said Denis Nash, an author of the study and a distinguished professor of epidemiology at the City University of New York School of Public Health.
About one in five – 22% – of adult New Yorkers likely had Covid between 23 April and 8 May, according to the preprint study, which has not been peer-reviewed or published. That would mean 1.5 million adults in the city had Covid in a single two-week period – far higher than official counts during that time.
While the study focused on New York, these findings may be true throughout the rest of the country, Nash said. In fact, New Yorkers likely have better access to testing than most of the country, which means undercounting could be even worse elsewhere.
“It’s very worrisome. To me, it means that our ability to really understand and get ahead of the virus is undermined,” Nash said.
----Gaps in case counts may also explain why many people don’t realize the US is in the midst of a serious surge now, experts said. Even those paying attention to cases likely don’t realize how widespread Covid is right now.
“We’ve always known there were undercounts. We didn’t always know by how much they were under-counted,” he said. But in recent months, the gap appears to be widening.
The team of researchers did a similar survey after the first Omicron surge and estimated that about 1.8 million adults likely had Covid between 1 January until the middle of March.
That estimate was about three to four times greater than the official case count during that time, Nash said – markedly lower than the 30-fold difference the researchers are seeing now.
The huge disparity between estimated and official case counts is likely due to a rise in home testing, which is usually not included in official numbers, and pandemic fatigue or lack of information leading some people not to test at all, even if they have symptoms or exposure to the virus.
There is also a “huge disincentive” for many people to get tested for Covid, said Lara Jirmanus, a family physician and clinical instructor at Harvard Medical School. Americans have been told the virus is mild and won’t affect their lives, she said, but if they test positive, they need to stay home from work and school.
More
https://www.yahoo.com/news/playing-fire-us-covid-cases-060031593.html
Welcome to the Great Reinfection
A repeat encounter with Covid used to be a rarity. But now that Omicron has changed the game, expect reinfections to be the new normal.
Jun 2, 2022 7:00 AM
If you’re unfortunate enough to have had an intimate encounter with the dreaded Sars-CoV-2 virus, I’m afraid your dalliance with it might not have been your last. Get ready for round two (and three, and maybe four—maybe ad infinitum). Welcome to the Great Reinfection.
In the early months of the pandemic, reinfections were a remarkable rarity, even making global news when discovered. “When the pandemic first started, everybody assumed that once you got it, you were done,” says Juliet Pulliam, director of the South African DSI-NRF Centre for Epidemiological Modelling and Analysis at Stellenbosch University.
Two years and some change in, that novelty has largely evaporated. A perfect storm of waning immunity, loosened restrictions, and an extremely transmissible variant making the rounds has meant reinfections are the new normal for many.
More
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.
Blistering data transmission record clocks over 1 petabit per second
Michael Irving June 01, 2022
Researchers in Japan have clocked a new speed record for data transmission – a blistering 1.02 petabits per second (Pb/s). Better yet, the breakthrough was achieved using optical fiber cables that should be compatible with existing infrastructure.
For reference, 1 petabit is equivalent to a million gigabits, meaning this new record is about 100,000 times faster than the absolute fastest home internet speeds available to consumers. Even NASA will “only” get 400 Gb/s when ESnet6 rolls out in 2023. At speeds of 1 Pb/s, you could theoretically broadcast 10 million channels per second of video at 8K resolution, according to the team.
The new record was set by researchers at Japan’s National Institute of Information and Communications Technology (NICT), using several emerging technologies. First, the optical fiber contains four cores – the glass tubes that transmit the signals – instead of the usual one. The transmission bandwidth is extended to a record-breaking 20 THz, thanks to a technology known as wavelength division multiplexing (WDM).
That bandwidth is made up of a total of 801 wavelength channels spread across three bands – the commonly used C- and L-bands, as well as the experimental S-band. With the help of some other new optical amplification and signal modulation technologies, the team achieved the record-breaking speed of 1.02 Pb/s, sending data through 51.7 km (32.1 miles) of optical fiber cables.
This isn’t the first time scientists at NICT have surpassed the 1-Pb/s milestone for data transmission. In December 2020, the team reported a then-record of 1.01 Pb/s, using an optical fiber cable with a single core and data encoded into 15 “modes.” As impressive as the feat was, it required some complex signal processing to unscramble the data, which would mean dedicated integrated circuits would have to be developed and deployed if the tech was ever going to be rolled out on a practical scale.
The new breakthrough is not only faster, but it only transmits data in one mode per core, meaning it can be read by technology already in wide use. To top it all off, the four-core optical fiber cable has the same 0.125-mm diameter as a standard cable, meaning it should be compatible with existing infrastructure and manufacturing processes.
Another weekend and another war weekend. How long must this unnecessary proxy war against Russia go on? How many dead and injured Ukrainians is enough for the Anglo-American War Party? Why?
Have a great summer weekend everyone.
“To do good is noble. To tell others to do good is even nobler and much less trouble.”
Mark Twain.
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