Baltic Dry Index. 2043 55 Brent Crude 101.18
Spot Gold 1745 US 2 Year Yield 2.97 +0.15
Coronavirus Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 07/07/22 World 557,705,836
Deaths 6,367,021
“Don't
join the book burners. Don't think you're going to conceal faults by concealing
evidence that they ever existed. Don't be afraid to go in your library and read
every book...”
Inexplicably, Blogger censored yesterday’s LIR.
This post was unpublished because it violates Blogger's community guidelines. To republish, please update the content to adhere to the guidelines.
I have no idea why Google, the owner of Blogger would find yesterday’s update on recession and inflation offensive, but such are the times we live in.
If it was the reference to Russia retaliating via oil and gas pricing, no less than JP Morgan published a note to that affect, speculating that crude oil might reach 380 dollars a barrel if Russia took about half their oil production off the market.
Judging by the action in the crude oil price, gold and commodities in general, I would say the recession is now winning out over inflation.
Below, Asia attempts a bounce in an otherwise weak market.
South Korea stocks lead gains in Asia as investors react to Fed minutes
SINGAPORE — Asia-Pacific markets were mostly higher on Thursday as investors watch for market reaction to the latest Fed minutes.
In South Korea, the Kospi advanced 1.83% after closing more than 2% lower on Wednesday, and the Kosdaq climbed around 1.43%.
Samsung Electronics shares rose 3.19% after the company released earnings guidance for the second quarter of 2022. Operating profit likely rose to 14.1 trillion won ($10.8 billion) in the April to June quarter, up from 12.57 trillion won a year ago.
Japan’s Nikkei 225 gained 1.44%, and the Topix index rose 1.39%.
The S&P/ASX 200 was up 0.45%. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.88% higher.
Mainland China markets were higher. The Shanghai Composite rose 0.51%, and the Shenzhen Component climbed around 1%. Both indexes fell on Wednesday as Covid concerns came back into focus.
Beijing city said Covid vaccinations would be required to enter sports centers, entertainment venues and more starting next week.
Hong Kong’s Hang Seng index was one of the few losers in the region, slipping 0.41%.
Federal Reserve officials recognized that a “more restrictive stance” in policy could be suitable if inflation doesn’t ease, even if it slows the economy, the meeting minutes said.
“Participants recognized that policy firming could slow the pace of economic growth for a time, but they saw the return of inflation to 2 percent as critical to achieving maximum employment on a sustained basis,” the document said.
Fed officials also said a hike of 50 or 75 basis points would be likely at the July meeting.
The Federal Open Market Committee is concerned about inflation expectations becoming unanchored, a ANZ research note said on Thursday.
“The Fed is understandably eager to reinforce to the public that it has got this, and hiking 75bp [and signaling many more hikes to come] certainly reinforces the message,” the note said.
Anthony Raza of UOB Asset Management told CNBC’s “Squawk Box Asia” on Thursday that the Fed’s “hands are tied at this point.”
“It’s really just clear they’re on this rate hiking path purely until inflation cools off,” said Raza, who is head of multi-asset strategy. “I think that’s going to be a slow process,” he added, estimating that it will take around a year.
U.S. markets gained slightly on Wednesday stateside.
The Dow Jones Industrial Average rose 69.86 points, or 0.23%, to 31,037.68. The S&P 500 advanced 0.36% to 3,845.08, and the Nasdaq Composite traded 0.35% higher to close at 11,361.85.
More
https://www.cnbc.com/2022/07/07/asia-markets-fed-minutes-currencies-oil.html
Stocks in the doldrums as euro founders on recession fears
July 7, 2022 4:39 AM GMT+1
SINGAPORE, July 7 (Reuters) - The euro huddled at a two-decade low on Thursday and oil nursed losses as investors fretted about a looming recession, while equities were caught between growth worries and relief that a slowdown might put the brakes on interest rate hikes.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged up from a two-month low and rose 0.3% in early trade. Japan's Nikkei (.N225) advanced 0.7%. The Australian and New Zealand dollars scraped themselves from two-year lows.
S&P 500 futures were flat. Overnight the index (.SPX) rose 0.4% and Treasuries dropped as traders grappled with generally positive U.S. economic data, with solid job openings, and hawkish minutes from the June Federal Reserve meeting.
"The coincidence of fairly hot job market data and far more resilient ISM services ... further underpins the point that the Fed is unlikely to step-down the pace and intensity of tightening," said Mizuho economist Vishnu Varathan.
Two-year Treasury yields shot up 14 basis points overnight and hovered at 2.9691% in the Asia session. That is above the 10-year yield of 2.9206%, showing the bond market is pointing to a slowdown in growth as rate hikes hit.
The U.S. data showed job openings higher than expected and the services sector holding up. The next big data point is on Friday when broader labour market numbers can provide a fuller picture of the state of the world's biggest economy.
More
https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-07-07/
Brent bounces above $101/bbl as focus returns to supplies
July 7, 2022 5:50 AM GMT+1 Last Updated 13 min ago
July 7 (Reuters) - Oil prices regained a footing on Thursday from steep falls in the previous two sessions, as investors returned their focus to tight supplies even as fears persisted over the demand outlook amid risks of a global recession.
Brent crude futures rose 67 cents, or 0.7%, to $101.36 a barrel by 0402 GMT after tumbling more than $2 to a session low of $98.50 earlier. WTI crude futures climbed 59 cents, or 0.6%, to $99.12 a barrel, bouncing from an intraday low of $96.57.
"Recession fears continue to grow and that obviously does raise some concerns for the demand outlook," Warren Patterson, ING's head of commodity research said.
"However, supportive fundamentals should mean that further downside is relatively limited."
He added that it's hard to be overly bearish on oil prices as the Brent monthly spreads remain in wide backwardation, indicating tight supplies. Prompt-month prices are higher than those in future months in a backwardated market.
More
In dodgy crypto-land nothing good seems to lie ahead, assuming crypto survives at all.
Crypto’s Free Rein May Be Coming to a Close
Lawmakers in the US and Europe are considering ways to regulate crypto and crack down on money-laundering and other illicit activities.
JUL 5, 2022 10:36 AM
REGULATION IS COMING for crypto. After more than a decade when cryptocurrencies and related technologies have surged, boomed, and busted in a regulatory vacuum, lawmakers in both the US and Europe are writing new rules for a sector that has grown dangerously large in both value and reach, touching $2.9 trillion at its peak in November 2021. The ongoing crash on crypto markets has only strengthened rule-makers’ resolve.
On Thursday, EU institutions announced an agreement on two landmark pieces of regulation: the Market in Crypto-Asset Act (aka MiCA), regulating most providers of cryptocurrency services, and an anti-money-laundering package imposing robust checks on cryptocurrency transfers. In the US, several proposals have been put forward over the past few months. One notable example is the wide-ranging bipartisan bill sponsored by Republican senator Cynthia Lummis and Democratic senator Kirsten Gillibrand, which the crypto industry has saluted as beneficial, while others have condemned it as a capitulation to the crypto lobby’s requests. On the other end of the spectrum is Democratic senator Elizabeth Warren, a fierce crypto critic who sponsored a bill calling for robust checks on cryptocurrency transactions in order to stop the evasion of sanctions against Russia.
While none of these changes will come to pass in the immediate future, and some may never materialize, the age of untrammeled crypto experimentation (and bald-faced crypto scams) might be on the way out. The EU’s MiCA Act is “quite frightening for the crypto industry, actually,” says William O’Rorke, a Paris-based lawyer from ORWL Avocats, who specializes in crypto assets compliance. “We’ve never seen a financial sector being regulated so quickly.”
More
Crypto’s Free Rein May Be Coming to a Close | WIRED
Crypto lender Voyager Digital files for bankruptcy
Wed, July 6, 2022 at 6:42 AM
(Reuters) -Voyager Digital said on Wednesday it has filed for bankruptcy, a week after the crypto lender suspended withdrawals, trading and deposits to its platform as it sought additional time to explore strategic alternatives.
In its Chapter 11 bankruptcy filing on Tuesday, New Jersey-based Voyager estimated that it had more than 100,000 creditors and somewhere between $1 billion and $10 billion in assets, and liabilities worth the same value.
Chapter 11 bankruptcy procedures put a hold on all civil litigation matters and allow companies to prepare turnaround plans while remaining operational.
"The prolonged volatility and contagion in the crypto markets over the past few months, and the default of Three Arrows Capital on a loan from the company's subsidiary, Voyager Digital, LLC, require us to take deliberate and decisive action now," Voyager Chief Executive Officer Stephen Ehrlich said in a statement.
Last week, Voyager said it had issued a notice of default to Singapore-based crypto hedge fund Three Arrows Capital (3AC) for failing to make required payments on a loan of 15,250 bitcoin (approximately $324 million) and $350 million worth of USDC, a stablecoin.
Later that week, 3AC filed for chapter 15 bankruptcy, which allows foreign debtors to shield U.S. assets.
Three Arrows is one of the highest-profile investors hit by the sharp sell-off in crypto markets and is being liquidated, Reuters reported last week, citing a person familiar with the matter.
More
Crypto lender Voyager Digital files for bankruptcy (yahoo.com)
Finally, more crude oil supply restriction? Hopefully not. Still it’s safer to keep the car fully topped up.
Russian court orders halt to Caspian oil pipeline but exports still flow
July 6, 2022 10:25 AM GMT+1
MOSCOW, July 6 (Reuters) - Caspian Pipeline Consortium (CPC), which takes oil from Kazakhstan to the Black Sea via one of the world's largest pipelines, has been told by a Russian court to suspend activity for 30 days, although sources said exports were still flowing.
CPC, which handles about 1% of global oil, said the ruling to suspend operations related to paperwork on oil spills and said the consortium, which includes U.S. firms Chevron and Exxon (XOM.N), had to abide by Tuesday's court ruling.
Two trading sources familiar with the terminal operations told Reuters oil exports from the CPC terminal on the Black Sea were continuing on Wednesday morning.
Three other industry sources said oil supplies from fields to the CPC pipeline were uninterrupted as of Wednesday morning.
CPC declined further comment on its activity and operations.
Any major disruption to the CPC would put further strain on the global oil market which is facing one of its the worst supply crunches since the Arab oil embargo in the 1970s.
Oil prices climbed on Wednesday, up more than 1% at over $104 a barrel, helped higher by supply concerns.
The CPC pipeline has been in the spotlight since Russia calls a "special military operation" in Ukraine, which has restricted Russian exports amid Western sanctions and led to an oil price spike.
Elsewhere, Russia has already reduced gas flows via the Nord Stream 1 gas pipeline, which supplies Russian gas to Germany and other European states. That pipeline has been operating at 40% capacity because of a dispute over equipment repairs.
---- A terminal situation report seen by Reuters showed oil loadings from CPC terminal were continuing as of midday on July 5 but it was not clear if operations were continuing on July 6.
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.
These major economies are headed into recession in the next 12 months, Nomura says
Published Tue, Jul 5 2022 2:18 AM EDT Updated Tue, Jul 5 2022 4:45 AM EDT
Many of the world’s leading economies will fall into a recession within the next 12 months as central banks move to aggressively tighten monetary policy to fight surging inflation, according to the chief economist at brokerage firm Nomura holdings.
“Right now central banks, many of them have shifted to essentially a single mandate — and that’s to get inflation down. Monetary policy credibility is too precious an asset to lose. So they’re going to be very aggressive,” Rob Subbaraman, who is also head of global markets research, Asia ex-Japan, told CNBC’s “Street Signs Asia” on Tuesday.
“That means front loading rate hikes. We have been pointing for several months about the risks of a recession and we’ve bitten the bullet. And now we have many of the developed economies actually falling into recession,” he added.
In addition to the U.S, Nomura expects recessions in the euro zone, the U.K., Japan, South Korea, Australia and Canada next year, the brokerage firm said in a research note.
The central banks around the world kept “super loose monetary policy” in place for too long, hoping that inflation would be transitory, Subbaraman said. Now governments have to play catch up and try to regain control of the inflation narrative, he told CNBC.
“One other thing I point out when you have many economies weakening, you can’t rely on exports for growth. That’s another reason why we think this recession risk is very real and will likely happen,” Subbaraman said.
U.S. recession: shallow but long
In the U.S., Nomura forecasts a shallow but long recession of five quarters starting from the final quarter of 2022.
“The U.S will fall into recession — so negative quarter-on-quarter GDP growth starting in Q4 this year. It is going to be a shallow recession but a long one. We have it lasting for five quarters in a row,” Subbaraman said.
The U.S. Federal Reserve and the European Central Bank are among those seeking to tamper record inflation with rate hikes.
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.
With Covid-19 starting to become only endemic, this section is close to coming to its end.
Shanghai, Beijing order new round of mass COVID-19 testing
Residents of parts of Shanghai and Beijing have been ordered to undergo further rounds of COVID-19 testing following the discovery of new cases in the two cities
6 July 2022
Residents of parts of Shanghai and Beijing have been ordered to undergo further rounds of COVID-19 testing following the discovery of new cases in the two cities, while tight restrictions remain in place in Hong Kong, Macao and other Chinese cities.
Shanghai has only just emerged from a strict lockdown that confined most of its 24 million residents to their homes for weeks and the new requirements have stirred concerns of a return of such harsh measures.
The latest outbreak in China's largest city, a key international business center, has been linked to a karaoke parlor that failed to enforce prevention measures among employees and customers, including the tracing of others they came into contact with, according to the city health commission. All such outlets have been ordered to temporarily suspend business, the city's department of culture and tourism said.
Shanghai's lockdown prompted unusual protests both in person and online against the government's harsh enforcement, which left many residents struggling to access food and medical services and sent thousands to quarantine centers.
Beijing has also seen a recent outbreak linked to a nightlife spot. It has been conducting regular testing for weeks and at least one residential compound in the suburb of Shunyi, which is home to many foreign residents, has been locked down with a steel fence installed over its entrance to prevent residents from leaving.
Enforcement in China's capital has been far milder than in Shanghai, although officials continue to require regular testing and prevention measures.
In the northern city of Xi’an, whose 13 million residents endured one of China’s strictest lockdowns over the winter, restaurants have been restricted to takeout only and public entertainment spots closed for a week starting Wednesday.
A notice on the city government's website said the measures were only temporary and intended to prevent the chance of a renewed outbreak. It said supermarkets, offices, public transport and other facilities are continuing to operate as normal, with routine screening including temperature checks and people being required to show an app proving they are free of infection.
More
https://www.independent.co.uk/news/shanghai-ap-beijing-chinese-macao-b2116713.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.
World's first commercial sand battery begins energy storage in Finland
Loz Blain July 05, 2022
Wind and solar power are intermittent, generating power when it's available rather than when it's needed, so the green energy transition will require huge amounts of energy storage. This could end up taking many forms, from conventional lithium-based "big battery" installations, to flow batteries, silicon phase-change batteries, molten salt batteries, iron-air batteries, gravity batteries, carbon dioxide expansion batteries, and other more unusual ideas like buoyancy batteries.
Each has its own advantages and disadvantages in terms of efficiency, size, location, installation costs, operating costs, input and output power ratings, longevity and how long it can store the energy for. That's good, since different solutions will fill different needs – some backing up the power grid during instantaneous demand spikes, others smoothing out the mismatched daily curves between demand and renewable supply, and others still helping to address seasonal supply drops, like when solar drops off through the winter.
Here's another for the pile, coming out of Finland. Polar Night Energy says it's just opened its first commercial sand battery at the premises of "new energy" company Vatajankoski, a few hours out of Helsinki.
This is a thermal energy storage system, effectively built around a big, insulated steel tank – around 4 metres (13.1 ft) wide and 7 metres (23 ft) high – full of plain old sand. When this sand is heated up, using a simple heat exchanger buried in the middle of it, this device is capable of storing an impressive 8 megawatt-hours of energy, at a nominal power rating of 100 kW, with the sand heated to somewhere around 500-600 degrees Celsius (932-1112 °F).
When it's needed, the energy is extracted again as heat in the same way. Vatajankowski is using this stored heat, in conjunction with excess heat from its own data servers, to feed the local district heating system, which uses piped water to transmit heat around the area. It can then be used to heat buildings, or swimming pools, or in industrial processes, or in any other situation that requires heat.
This helps make it extremely efficient, the company tells Disruptive Investing in a video interview. "It's really easy to convert electricity into heat," says Polar Night CTO Markku Ylönen. "But going back from heat to electricity, that's where you need turbines and more complex things. As long as we're just using the heat as heat, it stays really simple." The company claims an efficiency factor up to 99 percent, a capability to store heat with minimal loss for months on end, and a lifespan in the decades.
There's nothing special about the sand – the company says it just needs to be dry and free from combustible debris. Indeed, the company sees it as a super-low or even zero-cost storage medium. The whole thing's so simple and cheap that Polar Night Energy claims the setup costs are less than €10 (US$10.27) per kilowatt-hour, and it runs itself in a fully-automated fashion, using no consumables, at a minimal cost as well.
More
World's first commercial sand battery begins energy storage in Finland (newatlas.com)
“Once a government is committed to the principle of silencing
the voice of opposition, it has only one way to go, and that is down the path
of increasingly repressive measures, until it becomes a source of terror to all
its citizens and creates a country where everyone lives in fear."
[Special Message to the Congress on the Internal Security of the United
States, August 8, 1950]”
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