Baltic Dry Index. 2633 Wed. Brent Crude 120.62
Spot Gold 1856
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 06/06/22 World 535,450,586
Deaths 6,320,455
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
Henry Hazlitt.
In the stock casinos, more shift from bull… to bear.
Inflation may be showing no sign of any easing, but there are increasing signs that the global economy is transitioning from stagflation into a new recession.
As always in professional gambling, getting out early always beats getting wiped out last.
Asia-Pacific stocks mixed; private survey shows Chinese services activity contracted in May
SINGAPORE — Shares in Asia-Pacific were mixed in Monday trade, as a private survey showed another contraction in China’s service sector activity for May.
Chinese stocks led gains among the region’s major markets, with the Shanghai Composite up 1.05% while the Shenzhen Component surged 2.521%. Hong Kong’s Hang Seng index advanced 1.09%.
China’s Caixin Services Purchasing Managers’ Index released Monday came in at 41.4, better than April’s reading of 36.2 but still in contraction territory.
The release comes on the back of last week’s official non-manufacturing PMI print of 47.8 for May, an improvement over April’s reading of 41.9 but still below the 50 mark that separates expansion from contraction.
PMI readings are sequential and represent month-on-month expansion or contraction.
In Japan, the Nikkei 225 climbed 0.7% as shares of Fast Retailing jumped 2.87%. The Topix index traded 0.35% higher.
Australia’s S&P/ASX 200 fell 0.33%.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose fractionally.
JPMorgan Asset Management’s Tai Hui said the firm is currently watching signs of U.S. momentum “clearly starting to decelerate” as well as the impact of tighter monetary conditions.
“I think that’s where we’re monitoring very closely but we’re not quite there yet when it comes to [being] bearish on … Asia markets,” he told CNBC’s “Squawk Box Asia” on Monday.
Markets in South Korea are closed on Monday for a holiday.
In other geopolitical developments, U.S. Commerce Secretary Gina Raimondo told CNN that President Joe Biden’s administration is “looking at” potentially lifting some tariffs on China to fight inflation.
“The president has asked us on his team to analyze that, and so we’re in the process of doing that for him and he will have to make that decision,” Raimondo said, adding that it “may make sense” to consider easing levies on certain products such as household goods and bicycles.
More
https://www.cnbc.com/2022/06/06/asia-markets-caixin-services-pmi-china-economy-currencies-oil.html
A paradigm shift has begun in markets, says Morgan Stanley’s Ted Pick. Here’s what to expect
Global markets are in the beginning of a fundamental shift after a nearly 15-year period defined by low interest rates and cheap corporate debt, according to Morgan Stanley co-President Ted Pick.
The transition from the economic conditions that followed the 2008 financial crisis and whatever comes next will take “12, 18, 24 months” to unfold, according to Pick, who spoke this week at a New York financial conference.
“It’s an extraordinary moment; we have our first pandemic in 100 years. We have our first invasion in Europe in 75 years. And we have our first inflation around the world in 40 years,” Pick said. “When you look at the combination, the intersection of the pandemic, of the war, of the inflation, it signals paradigm shift, the end of 15 years of financial repression and the next era to come.”
Wall Street’s top executives making the rounds at financial conferences this week delivered dire warnings about the economy, led by JPMorgan Chase CEO Jamie Dimon, who said that a “hurricane is right out there, down the road, coming our way.” That sentiment was echoed by Goldman Sachs President John Waldron, who called the overlapping “shocks to the system” unprecedented. Even regional bank CEO Bill Demchak said he thought a recession was unavoidable.
Instead of just raising alarms, Pick — a three-decade Morgan Stanley veteran who leads the firm’s trading and banking division — gave some historical context as well as his impression of what the tumultuous period ahead will look and feel like.
Fire and Ice
Markets will be dominated by two forces – concern over inflation, or “fire,” and recession, or “ice,” said Pick, who is considered a front-runner to eventually succeed CEO James Gorman.
“We’ll have these periods where it feels awfully fiery, and other periods where it feels icy, and clients need to navigate around that,” Pick said.
For Wall Street banks, certain businesses will boom, while others may idle. For years after the financial crisis, fixed income traders dealt with artificially becalmed markets, giving them less to do. Now, as central banks around the world begin to grapple with inflation, government bond and currency traders will be more active, according to Pick.
----Low or even negative interest rates have been the hallmark of the previous era, as well as measures to inject money into the system including bond-buying programs collectively known as quantitative easing. The moves have penalized savers and encouraged rampant borrowing.
By draining risk from the global financial system for years, central banks forced investors to take more risk to earn yield. Unprofitable corporations have been kept afloat by ready access to cheap debt. Thousands of start-ups have bloomed in recent years with a money burning, growth-at-any-cost mandate.
That is over as central banks prioritize the battle against runaway inflation.
The impact of their efforts will touch everyone from credit-card borrowers to employees of struggling corporations to the aspiring billionaires running Silicon Valley start-ups. Venture capital investors have been instructing start-ups to preserve cash and aim for actual profitability. Interest rates on many online savings accounts have edged closer to 1%.
More
In commodities news, to no one’s great or small surprise, yet another scandal in China. Looks like the usual over re-hypothecation scandal. When will lenders ever learn?
More LME nickel scandal fallout. Great news for the English Law tort bar.
The Saudis up the oil price for Asia.
'Fake' Aluminum Stocks Put Perils of China's Commodities Funding in Spotlight
· Regular operations in some warehouses have been suspended
· Traders point to similarities with the Qingdao scandal in 2014
6 June 2022 at 00:00 BST
The opaque world of funding commodities trading in China is again under the spotlight.
This time, metals markets are fixated on an incident in the southern province of Guangdong, in which several traders claim they were duped into providing credit against fictitious quantities of aluminum. More than 500 million yuan ($75 million) may have been loaned, backed by stockpiles of the metal stored in a warehouse in the city of Foshan that turned out to be worth significantly less than that.
More, paywall.
Elliott Associates sues LME for $456 mln over nickel trading halt -HKEX
June 6, 2022 5:58 AM GMT+1
HONG KONG, June 6 (Reuters) - Fund manager Elliott Associates has sued London Metal Exchange (LME) for $456 million following the suspension and cancellation of nickel trades on the platform owned by Hong Kong Exchanges and Clearing Ltd (0388.HK), the Hong Kong bourse said on Monday.
LME and LME Clear Limited have been named as defendants in a judicial review claim filed in a British court by Elliott Associates and Elliott International in early June, LME's parent HKEX said in a filing.
The hedge fund seeks to challenge LME's decision to cancel its trades in nickel contracts executed on or after 00:00 British time on March 8, the filing says.
The LME suspended activity and cancelled nickel trades on March 8 due to volatility that saw prices double to more than $100,000 a tonne within hours.
A spate of technical glitches after trading resumed on March 16 left traders fuming. read more
Elliot Associates claims the trade cancellation was "unlawful on public law grounds" and "constituted a violation" of its rights, according to the filing.
HKEX said the LME dismissed the claim in its statement. "The LME management is of the view that the claim is without merit and the LME will contest it vigorously," HKEX said.
The LME has come under spotlight from European regulators following the nickel trading debacle. It has led regulators and industry players to call for greater scrutiny on opaque corners of the commodities market.
Last month, the LME proposed measures that it said would improve transparency and stability in the over-the-counter (OTC) metals market, including more frequent disclosures of all positions.
Its rival CME Group has started talking to market participants about the idea of a cash-settled nickel contract for companies, sources told Reuters last month. read more
Saudi Arabia hikes July crude prices surprisingly high for Asia buyers
June 6, 2022 5:54 AM GMT+1
June 6 (Reuters) - Saudi Arabia, the world's top oil exporter, raised July crude oil prices for Asian buyers to higher-than-expected levels amid concerns about tight supply and expectations of strong demand in summer.
The official selling price (OSP) for July-loading Arab Light to Asia was hiked by $2.1 a barrel from June to $6.5 a barrel over Oman/Dubai quotes, just off an all-time-high recorded in May.
That was much higher than most market forecasts for an increase around $1.5. Only one respondent of six in a Reuters poll had predicted a jump of $2. read more
"The price jump is unexpected, especially the Arab Light. We are puzzled by the decision," said an Asian oil trader.
The hike by state oil producer Saudi Aramco (2222.SE) came despite an agreement by OPEC+ states to boost output by 648,000 barrels per day (bpd) in July and a similar amount in August in an effort to offset Russian supply losses. That compares with an initial plan to add 432,000 bpd a month over three months until September. read more
But the increases have been divided across member countries including Russia and states such as Angola and Nigeria which struggle to meet their targets, leading to fears that the actual boost to supply may fall short of official plans.
Countries in the northern hemisphere, such as the United States, typically kick off their driving seasons in July sending demand for gasoline surging. China, the world's No.1 oil importer, is also re-opening some cities such as Shanghai after lengthy COVID-19 lockdowns.
More
Finally, a crypto doomsday lies ahead say some crypto “experts.” Why are there more than 19,000 cryptocurrencies, anyway?
Crypto firms say thousands of digital currencies will collapse, compare market to early dotcom days
Published Fri, Jun 3 2022 2:27 AM EDT Updated Fri, Jun 3 2022 8:12 PM EDT
Several cryptocurrency industry players have told CNBC that thousands of digital tokens are likely to collapse while the number of blockchains in existence will also fall over the coming years.
There are more than 19,000 cryptocurrencies in existence and dozens of blockchain platforms that exist. A blockchain platform, such as Ethereum, is the underlying technology that many of these different cryptocurrencies are built upon.
The recent collapse of so-called algorithmic stablecoin terraUSD and its associated digital token luna, which sent shockwaves through the market, has thrust a spotlight on the thousands of cryptocurrencies in existence and whether they will all survive.
“One of the effects of what we’ve seen last week with the Terra issue is we’re at the stage where basically there are far too many blockchains out there, too many tokens. And that’s confusing users. And that’s also bringing some risks for the users,” Bertrand Perez, CEO of the Web3 Foundation, told CNBC at the World Economic Forum in Davos, Switzerland, last week.
“Like at the beginning of the internet, you were having lots of dotcom companies and lots of them were scams, and were not bringing any value and all that got cleared. And now we have very useful and legit companies.”
Brad Garlinghouse, CEO of cross-border blockchain payments company Ripple, said there is likely to be “scores” of cryptocurrencies that remain in the future.
“I think there’s a question about whether or not we need 19,000 new currencies today. In the fiat world, there’s maybe 180 currencies,” Garlinghouse said.
Guggenheim Chief Investment Officer Scott Minerd added further pessimism last week when he said that most crypto is “junk” but that bitcoin and ethereum would survive.
The comments from the industry come as the cryptocurrency market continues to feel pressure. Bitcoin is off more than 50% from its record high it hit in November, with many other digital tokens sharply lower from their all-time highs.
More
https://www.cnbc.com/2022/06/03/crypto-firms-say-thousands-of-digital-currencies-will-collapse.html
Global Inflation/Stagflation Watch.
Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.
But are there enough truck drivers, Danube pilots, grain transport trains and crews to get to any meaningful alternatives to closed ports? Shame that no one thought of this back in Washington, London, or NATO Brussels back in December-February before squashing President Macron’s desperate attempt at diplomacy to prevent this unnecessary Ukraine War.
Ukraine's Agriculture Minister on Wheat Exports "We Have To Overcome the Blockade of Our Ports – Immediately"
Ukraine's seaports have been occupied, blocked or destroyed, with millions of tons of wheat and grains waiting to be shipped to Europe. In an interview, Ukrainian Agriculture Minister Mykola Solskyi describes the consequences for the global market.
Interview Conducted by Thore Schröder 03.06.2022, 17.02 Uhr
DER SPIEGEL: Minister Solskyi, before the war, 95 percent of Ukraine’s grain was exported through Odessa, Mykolaiv, Mariupol and other seaports. These ports have since been destroyed, occupied or blocked. How is it possible to get the grain out of the country?
Solskyi: There are three ways: Since the blockade, we have been exporting smaller quantities to Europe, 40 percent via Danube River ports, 40 percent by train and 20 percent by truck.
DER SPIEGEL: But can the grain be transported quickly out of the country using those routes? Before the war, an average of 5 to 6 million tons were exported on ships each month.
Solskyi: In March, we were able to export only 200,000 tons using alternative routes, but by April, we had increased it to about 1 million. And in May, we expect 1.5 million. If we exhaust all means available to us, we will hopefully reach a monthly export of 2 to 2.5 million tons.
DER SPIEGEL: How can that total be reached?
Solskyi: We need more trains carrying only cereals, and these must have priority on European railways. To achieve this, the transfer of grain from Ukrainian wide-gauge trains onto European narrow-gauge trains must be accelerated. We need longer operating times on the Danube Canal, higher travel speeds for ships and faster customs clearance at the borders.
DER SPIEGEL: There are currently around 25 million tons of grain in Ukrainian silos and storage facilities. What should be done with it?
Solskyi: We need 5 million tons for ourselves. The rest has to go. We do have a storage capacity of 50 million tons, but the main harvest starts in July, and then 70 million tons of winter wheat comes after that.
DER SPIEGEL: What if the farmers are left sitting on the grain?
Solskyi: So far, many have still been able to cover their operating costs, including sowing and fertilizing, from their reserves. According to our forecasts, however, those reserves will be exhausted in July. If the farmers don’t sell anything, they don’t earn anything, and then the farms come to a standstill.
----DER SPIEGEL: Will wheat prices continue to rise?
Solskyi: Prices on the world market are already very high, but they will grow really extreme in July. Many people in Asian, Arab and North African countries still believe that the problem of this war will somehow take care of itself. Some countries also have grain reserves. But these will be used up in two months and the war will still be going, with no new grain coming from us. The pressure will increase significantly around the world.
More
But, thankfully, the wheat harvest is already underway in Texas and Oklahoma. Below a glimpse of how it’s done US style. Approx. 10 minutes.
Wheat Harvest 2022 is Underway
https://www.youtube.com/watch?v=6a4WgEIyFk0
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.
Call me sceptical of the methodology.
Most people who died of COVID in 2020 had something essential in common, study finds
Sat, June 4, 2022, 11:00 AM
Most working-age Americans who died of COVID-19 during the first year of the pandemic were so-called essential workers in labor, service and retail jobs that required on-site attendance and prolonged contact with others, according to a recently published study led by a University of South Florida epidemiologist.
The study looks back on COVID-19 deaths in 2020 and affirms what many had already known or suspected — that Americans who could not work from home and who labored in low-paying jobs with few or no benefits, such as paid sick leave and health insurance coverage, bore the brunt of deaths during the pandemic’s first year, said Jason Salemi, an associate professor in USF’s College of Public Health and co-author of the study.
Salemi said the finding, while perhaps expected, left him with two takeaways: That essential workers need more protections during an infectious disease pandemic, and that society’s desire to “return to normal” will mean different things for different people — with inequitable consequences.
“If I say I want things to return to normal, I’m in a position of advantage,” Salemi said. “I can work from home most days. I have access to a primary care physician, and paid sick leave. There are people in this study for whom that may not be the case.”
To conduct the study, Salemi and his colleagues analyzed nearly 70,000 death certificates for people ages 25 to 64 years old and who had died of COVID-19 in 2020, nearly all of which occurred before the first vaccine was authorized in December of that year.
But death certificates do not always include a decedent’s occupation, Salemi said. Instead, researchers used education attainment level, which is listed on all death certificates, as a proxy for an individual’s socioeconomic position. No education beyond high school was “low” while some college education was “intermediate” and anyone with at least a bachelor’s degree was “high.”
Researchers then used U.S. Census data on occupations held by adults in 2020 to calculate the possibility of remote work for the different groups, which were further divided by race, ethnicity, gender and age.
The study found:
▪ The death rate of low socioeconomic position adults — those whose education attainment level did not go beyond a high school diploma — was five times higher when compared to high socioeconomic position adults, and the mortality rate of intermediate socioeconomic position adults was two times higher.
▪ White women made up the largest population group considered high socioeconomic position. By comparison, nearly 60% of Hispanic men were in a low socioeconomic position.
▪ The death rate of low socioeconomic position Hispanic men was 27 times higher than high socioeconomic position white women.
Salemi said the finding that stood out for him was that among all 25- to 64-year-old adults in 2020, people in a low socioeconomic position made up about one-third of the working-age population but accounted for two-thirds of COVID-19 deaths for the same age group.
More
https://www.yahoo.com/news/most-people-died-covid-2020-100000339.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.
Metals costs could slow race for cheaper electric cars, researchers say
Rising prices for lithium, cobalt and nickel could mean it will take longer for EVs to reach cost parity with combustion engines.
June 02, 2022 05:43 AM
One measure of lithium prices has spiked more than fivefold over the past year, while cobalt and nickel prices also have climbed.
More
The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects - his laziness, incompetence, improvidence, or stupidity.
Henry Hazlitt. [That’s more than a single sentence, Henry.]
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