Baltic Dry Index. 2578 +116 Brent Crude 113.12
Spot Gold 1839
Economics is extremely useful as a form of employment for economists.
John Kenneth Galbraith.
Finally, we have reached the end of one era and the start of another.
Forty years of falling interest rates ended in Zirp and in parts of Europe NIRP, negative interest rates.
We are now entering the new era of rising interest rates, rising inflation, unrepayble debt, fiat currency chaos.
Things are about to get very extreme.
Wall St Week Ahead: Cloudy valuations give investors pause in buying beaten-up U.S. stocks
June 17, 2022 10:49 PM GMT+1
NEW YORK, June 17 (Reuters) - Whipsawing bond yields, surging oil prices and a Federal Reserve bent on squashing the worst inflation in four decades are hampering investors' ability to assess U.S. stock valuations, even as the market's tumble creates potential bargains.
Without a doubt, stocks are far cheaper than at the start of the year, following a 23% year-to-date decline in the S&P 500 (.SPX) that confirmed a bear market for the index earlier this week.
Whether they are cheap enough, however, is less certain. Market volatility and a rapidly changing macroeconomic landscape have clouded metrics that investors typically use to value stocks, such as corporate earnings and Treasury yields, keeping some potential buyers on the sideline. read more
"Until we see some better visibility on the rates outlook and some better visibility on the earnings outlook, the fair value for equities is a little bit elusive," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. The institute recently started recommending clients reduce equity risk and move funds into fixed income.
But while S&P 500 earnings are expected to rise nearly 10% in 2022, according to Refinitiv IBES, some market participants doubt those estimates will hold up in the face of surging inflation and tightening financial conditions. read more
Wells Fargo institute strategists forecast positive but slowing earnings growth this year and a contraction in 2023, as they expect a recession in late 2022 and early 2023.
"We are advocating to investors to consider an economy and an earnings backdrop that may be more challenging ... so just don't be fooled by where valuations are based off of today's expectations," said Chad Morganlander, portfolio manager at Washington Crossing Advisors, who is recommending clients continue to underweight equities.
More
European markets close slightly higher to end tumultuous week; tech stocks up 1.4%
Published Fri, Jun 17 2022 2:11 AM EDT Updated Fri, Jun 17 2022 11:34 AM EDT
LONDON — European markets closed slightly higher on Friday, bringing an end to a volatile week as global stocks reacted to policy tightening from major central banks.
The pan-European Stoxx 600 provisionally ended 0.1% higher, with tech stocks up 1.4% to lead gains as most sectors traded in positive territory. Oil and gas stocks tumbled over 4%.
In terms of individual share price movement, ABN Amro surged more than 5.6% after Bloomberg reported that France’s BNP Paribas is interested in acquiring the Dutch bank.
Finland’s Nokian Tyres jumped over 10% after raising its net sales guidance for 2022.
The European blue chip index closed Thursday’s session down 2.5% amid a global stock sell-off, as aggressive interest rate hikes enacted by central banks to rein in surging inflation fueled fears of a recession. Shares across the continent are down more than 4% on the week.
The U.S. Federal Reserve on Wednesday raised its benchmark funds rate by 75 basis points, its largest hike since 1994, before the Swiss National Bank surprised markets with its first hike since 2007 and the Bank of England implemented its fifth rate rise in a row.
The European Central Bank announced following an emergency meeting on Wednesday that it plans to create a new tool to tackle the risk of euro zone fragmentation, a move aimed at assuaging fears of a fresh debt crisis for the common currency bloc.
ECB policymaker Klaas Knot reportedly told Dutch radio broadcaster BNR on Friday that several 50 basis point interest rate hikes could be on the table if inflation worsens in the euro zone.
Data on Friday confirmed euro zone inflation at a record high of 8.1% year-on-year in May.
“The more aggressive line by central banks adds to headwinds for both economic growth and equities. The risks of a recession are rising, while achieving a soft landing for the U.S. economy appears increasingly challenging,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
Stateside, the S&P 500 is poised for its worst week since March 2020 after several key pieces of economic data fell short of forecasts this week, ranging from May retail sales to housing starts, compounding the Fed-induced recession fears.
More
"In economics, hope and faith coexist with great scientific pretension."
John Kenneth Galbraith.
Global Inflation/Stagflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
Bank of England accused of going soft on inflation
UK central bank moves less aggressively than the Fed despite predicting price rises will hit 11% this year
17
June 2022
The Bank of England has been accused of going soft on its core mandate after
adopting a less aggressive stance on monetary policy than the US Federal
Reserve — despite expecting inflation to hit 11 per cent this year.
The UK central bank on Thursday dropped guidance that more interest rate rises were likely in the months ahead, even as it warned inflation would reach a high in October. It raised rates by an expected 0.25 percentage points to 1.25 per cent, as three Monetary Policy Committee members who called for a 0.5 percentage point increase were outvoted.
Ruth Gregory, of Capital Economics, said core UK inflation was likely to be above the US until mid-2023 and therefore “the MPC will need to move policy to a restrictive stance relatively quickly”.
But the bank’s stance reflected its view that the UK economy will barely grow in the next three years and therefore there is less scope — or need — to raise rates as aggressively as elsewhere.
By contrast, the Fed had exploded a grenade under financial markets a day earlier with a 0.75 percentage point rise in its benchmark interest rate to a target range of 1.5 to 1.75 per cent, even when the US has a smaller inflation problem than the UK.
Fed chair Jay Powell was unequivocal about the intention that lay behind the move. “We’re strongly committed to bringing inflation back down and we’re moving expeditiously to do so,” he said. The BoE’s relative passivity proved contentious, even among former members of its MPC.
Andrew Sentance, now a senior adviser at Cambridge Econometrics, said: “Actions speak louder than words. The action from MPC . . . was woefully short of what is needed to curb the biggest inflationary surge for 40 years.”
By contrast, professor Danny Blanchflower of Dartmouth College in the US, criticised the BoE for tightening policy at all. Accusing the BoE of “incompetence”, he took to Twitter to say: “We are likely already in recession . . . made worse by the rate rise.”
There is no doubt that the two central banks view the outlooks of their respective economies differently.
More
https://www.ft.com/content/fb2188d1-d1a9-41d0-8dfa-52766ae6c261
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.
Early Omicron infection unlikely to protect against current variants
June 17, 202210:11 PM GMT+
NEW YORK, June 17 (Reuters) - People infected with the earliest version of the Omicron variant of the coronavirus, first identified in South Africa in November, may be vulnerable to reinfection with later versions of Omicron even if they have been vaccinated and boosted, new findings suggest.
Vaccinated patients with Omicron BA.1 breakthrough infections developed antibodies that could neutralize that virus plus the original SARS-CoV-2 virus, but the Omicron sublineages circulating now have mutations that allow them to evade those antibodies, researchers from China reported on Friday in Nature.
Omicron BA.2.12.1, which is presently causing most infections in the United States, and Omicron BA.5 and BA.4, which now account for more than 21% of new U.S. cases, contain mutations not present in the BA.1 and BA.2 versions of Omicron.
Those newer sublineages "notably evade the neutralizing antibodies elicited by SARS-CoV-2 infection and vaccination," the researchers found in test-tube experiments.
More
World Health Organization - Landscape of COVID-19 candidate vaccines. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines
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 more useful Covid links.
Johns Hopkins Coronavirus resource centre
https://coronavirus.jhu.edu/map.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, I’ve added this section.
Solving the puzzle of 2D disorder
An interdisciplinary team developed a new method to characterize disorder in 2D materials
Date: June 16, 2022
Source: Northwestern University
Summary: An interdisciplinary team developed a new method to characterize disorder in 2D materials, which is crucial to understanding and improving their performance.
When players try to solve word games, they attempt to put together clues to find the solution. Sure, it helps to have a strong vocabulary, but finding the right answers to those puzzles is as much about logic and strategy as it is about being a wordsmith.
Using a surprisingly comparable process, an interdisciplinary team of Northwestern Engineering researchers pieced together a method to determine how different 2D materials respond to disorder -- testing some materials that could possibly replace silicon in new transistors and sensors.
"The analysis method will lead to a better understanding of disorder potentials in 2D materials to help make faster transistors, as well as better gas sensors that can more easily discriminate different gases," said Matthew Grayson, professor of electrical and computer engineering at the McCormick School of Engineering, and one of the study's authors.
In the paper "Field-effect Conductivity Scaling for Two-dimensional Materials with Tunable Impurity Density" published June 16 in the journal 2D Materials, the investigators developed a method to determine the fingerprint of the neighboring disorder as seen by a 2D material.
---- "The impressive continuity of this picture when all the puzzle pieces were in place inspired us to dig deeper into the physics to understand what the underlying reason must be for this behavior," Grayson said. "The same mentality that the general public uses to solve their daily Wordle or crossword puzzle is applied here."
These findings also have implications for 2D materials research moving forward.
"Instead of seeing individual devices made from the same 2D materials as a bunch of puzzle pieces that each have to be studied independently, you can now locate where a given sample fits into the previously solved puzzle," Grayson said, "so that each individual piece is instantly recognized as part of a greater picture.
More
This weekend’s music diversion. Approx. 11 minutes.
Fasch - Concerto for 3 Trumpets in D major, FWV L: D3 | Il Gardellino
https://www.youtube.com/watch?v=rWundntPugY
This weekend’s chess update. Approx. 12 minutes.
Blast From The Past || Rajabov vs Carlsen || Linares (2008)
https://www.youtube.com/watch?v=aF1vuncvASE
This week’s maths update. Approx. 7 minutes.
A Nice and Symmetric Equation | Polish Mathematical Olympiad Second Round
https://www.youtube.com/watch?v=aF1vuncvASE
Finally, tomatoes. Approx. 14 minutes.
The Dangerous History of Tomatoes
https://www.youtube.com/watch?v=AG9Oc6TxDXU
"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”
J. K. Galbraith. The Great Crash: 1929.
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