Baltic Dry Index. 1082 -41 Brent Crude 104.34
Spot Gold 1736 US 2 Year Yield 3.42 +0.05
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 30/08/22 World 606,675,567
Deaths 6,490,103
"The global economy seems to be on the cusp of a historic
change as many of the aggregate supply tailwinds that have kept a lid on
inflation look set to turn into headwinds,"
Agustín Carstens, the head of the Bank of International
Settlements.
In
the Asian stock casinos tis morning, an attempt at stabilisation, possibly
related to the coming month-end and the need to dress up stocks and stock
indexes.
To
this old dinosaur market watcher and commodities trader, any rallies from here
are merely exit rallies and a good time to get back into cash and with the
recent sell-off in gold and silver, a good time to park some of that cash in
fully paid up physical precious metals as insurance against desperate
politicians attempting to monetise the coming global recession.
Look
away from that rising oil price now.
Asia-Pacific
markets mixed after sharp falls in previous session
UPDATED MON, AUG 29 2022 10:39 PM EDT
Shares in the
Asia-Pacific were mixed on Tuesday after sharp falls to start the week
following Fed Chair Jerome Powell’s hawkish speech in Jackson Hole.
Japan’s Nikkei
225 rose 0.87% and the Topix index gained 1%.
The Kospi in
South Korea added 0.3% and the Kosdaq increased 0.85%. In Australia, the S&P/ASX
200 was 0.45% higher.
Hong Kong’s Hang
Seng index declined 1.52% with the Hang Seng Tech Index trading 2.3%
lower, while mainland China markets were mixed. The Shanghai Composite was
fractionally higher, and the Shenzhen Component shed 0.246% at the
open.
MSCI’s broadest
index of Asia-Pacific shares outside Japan was 0.37% lower.
Overnight in the U.S., the S&P 500 shed
0.67% to 4,030.61, and the Nasdaq Composite lost 1.02% to 12,017.67.
The Dow Industrial Average dipped
184.41 points, or 0.57%, to 32,098.99. The Dow fell more than 300 points
earlier in the session and briefly rose at one point. U.S.
futures inched upward following a second-straight decline for
the major averages.
“It seems investors are still
digesting the consequences from Fed Chair [Powell’s] hawkish speech where he
not only refuted the notion of a dovish pivot but emphasized the need for rates
to head higher and remain restrictive in order to bring inflation to heel,”
Rodrigo Catril, a strategist at National Australia Bank, wrote in Tuesday note.
More
Asia
markets: Stocks mixed after sharp falls in previous session (cnbc.com)
Elsewhere,
despite the coming dress up stocks for the month-end statistics, nothing but
gloom and possibly doom ahead, say most experts.
Worst is yet to
come: Economist Stephen Roach says U.S. needs ‘miracle’ to avoid recession
Negative economic
growth in the year’s first half may be a foreshock to a much deeper downturn
that could last into 2024.
Stephen Roach, who
served as chair of Morgan Stanley Asia, warns the U.S. needs a “miracle” to
avoid a recession.
“We’ll definitely have a recession as the lagged impacts of this
major monetary tightening start to kick in,” Roach told CNBC’s “Fast Money” on Monday. “They haven’t kicked in at all right
now.”
Roach, a Yale University senior fellow and former
Federal Reserve economist, suggests Fed Chair Jerome Powell has no choice but
to take a Paul Volcker approach to tightening. In the early 1980′s, Volcker
aggressively hiked interest rates to tame runaway inflation.
“Go back to the type of pain Paul
Volcker had to impose on the U.S. economy to ring out inflation. He had to take
the unemployment rate above 10%,” said Roach. “The only way we’re not going to
get there is if the Fed under Jerome Powell sticks to his word, stays focused
on discipline, and gets that real Federal funds rate into the restrictive zone.
And, the restrictive zone is a long ways away from where we are right now.”
Despite the Fed’s sharp interest
rate hike trajectory, the
unemployment rate is at 3.5%. It matches the lowest level since
1969. That could change on Friday when the Bureau of Labor Statistics releases
its August report. Roach predicts the rate is bound to start climbing.
More
U.S.
needs miracle to avoid recession, economist Stephen Roach warns (cnbc.com)
Steve Hanke says
we’re going to have one ‘whopper’ of a recession in 2023
The U.S. economy is going to fall into a recession
next year, according to Steve Hanke, a professor of applied economics at Johns
Hopkins University, and that’s not necessarily because of higher interest
rates.
“We will have a recession because
we’ve had five months of zero M2 growth, money supply growth, and the Fed isn’t
even looking at it,” he told CNBC’s “Street Signs Asia” on
Monday.
Market watchers use the broad M2 measure as an indicator of total money
supply and future inflation. M2 includes cash, checking and savings deposits
and money market securities.
In recent months, money
supply has stagnated and that’s likely to lead to an economic
slowdown, Hanke warned.
“We’re going to have one whopper of
a recession in 2023,” he said.
Meanwhile, inflation is going to
remain high because of “unprecedented growth” in money supply in the United
States, Hanke said.
Historically, there has never been
“sustained inflation” that isn’t the result of excess growth in money supply,
and pointed out that money supply in the U.S. saw “unprecedented growth” when
Covid began two years ago, he said.
“That is why we are having
inflation now, and that’s why, by the way, we will continue to have inflation
through 2023 going into probably 2024,” he added.
More
Steve
Hanke: We're going to have one whopper of a recession in 2023 (cnbc.com)
Fed rate hikes
won’t bring down inflation as long as government spending stays high, paper
says
Federal Reserve Chair Jerome Powell proclaimed
Friday that the central bank has an “unconditional” responsibility to ease
inflation and expressed confidence that it will “get the job done.”
But a paper released at the same Jackson
Hole, Wyoming, summit where Powell spoke suggests policymakers can’t do the job
by themselves and actually could make matters worse with aggressive interest
rate increases.
In the current case, inflation is
being driven largely by fiscal spending in response to the Covid crisis, and
simply raising interest rates won’t be enough to bring it back down,
researchers Francesco Bianchi of Johns Hopkins University and Leonardo Melosi
of the Chicago Fed wrote in a white paper released Saturday morning.
“The recent fiscal
interventions in response to the Covid pandemic have altered the private
sector’s beliefs about the fiscal framework, accelerating the recovery but also
determining an increase in fiscal inflation,” the authors said. “This increase
in inflation could not have been averted by simply tightening monetary policy.”
The Fed, then, can
bring down inflation “only when public debt can be successfully stabilized by
credible future fiscal plans,” they added. The paper suggests that without
constraints in fiscal spending, rate hikes will make the cost of debt more
expensive and drive inflation expectations higher.
More
Fed
rate hikes won't curb inflation if spending stays high, paper says (cnbc.com)
Finally,
there’s absolutely nothing central banksters can do about food price inflation
caused by drought or flooding or other natural disaster.
Spain's
olive oil producers devastated by worst ever drought
By Mark Lowen Andalucia, BBC News 29 August,
2022
Francisco Elvira picks his way through his scorched olive grove, stopping to inspect the stunted fruit on almost-bare trees.
"Look at them," he says in desperation. "They ought to be bursting with olives now, close to the harvest. But they're empty. And this is the crop that should produce the oil in supermarkets next year."
The fertile plains full of olive trees that stretch across southern Spain have made this country the world's biggest producer of olive oil, accounting for around half of the global supply.
But devastated by its worst drought ever recorded, Spain's so-called "green gold" is becoming rarer. This year's yield is down by around a third already - and there's still no sign of rain.
At the Interóleo factory in Jaén, a province that generates half of all Spanish oil, pumps spurt it into glass and plastic bottles, which pass along the conveyor belt to be labelled "product of Spain".
But the plant, which exports to countries including the UK, is seeing production plummet and prices soar, exacerbating the global food crisis.
"Shoppers are already paying a third higher than last year - but the drought will increase that even more," says Juan Gadeo, the head of the cooperative, who believes this vital sector for Spain is now in danger.
"With the
downturn, we may have to lay off some workers. There's a feeling of depression
and uncertainty. Another year like this would be a complete catastrophe."
It's a similar picture across the agricultural sector, with recent research finding that parts of the Iberian peninsula are their driest in 1,200 years.
Spanish farmers have been planting more sunflowers since the start of the year, in an attempt to offset the loss of sunflower oil from Ukraine - the world's largest producer, where the war has led to a drastic drop in production.
But a flower that worships the sun also needs the blessing of rain - and there is none, leading to a mass of shrivelled crops producing neither seeds nor oil.
----A recent report by the Global Drought Observatory concluded that Europe is suffering its worst drought in 500 years.
Several countries across the continent have been battling wildfires and heatwaves, with Spain particularly badly hit. More than 270,000 hectares here have been burnt this year, according to the European Forest Fire Information System
The extreme heat and lack of rainfall have led to a dramatic drop in levels of Spain's natural water reserves. The Vinuela reservoir near Malaga is at just over 10% of its capacity.
Elsewhere, medieval waterfront villages, long buried beneath rivers, have been exposed as the water evaporates.
More
Spain's olive oil producers
devastated by worst ever drought - BBC News
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its
own.
Analysis:
Pain of breaking inflation will reverberate around the globe
August 29, 202212:16 PM GMT+1
JACKSON HOLE, Wyo.,
Aug 29 (Reuters) - The message from the world's top finance chiefs is loud and
clear: rampant inflation is here to stay and taming it will take an
extraordinary effort, most likely a recession with job losses and shockwaves
through emerging markets.
That price is still
worth paying, however. Central banks spent decades building their credibility
on inflation fighting skills and losing this battle could shake the foundations
of modern monetary policy.
"Regaining and
preserving trust requires us to bring inflation back to target quickly,"
European Central Bank board member Isabel Schnabel said. "The longer
inflation stays high, the greater the risk that the public will lose confidence
in our determination and ability to preserve purchasing power."
Banks should also
keep going even if growth suffers and people start to lose their jobs.
"Even if we
enter a recession, we have basically little choice but to continue our policy
path," Schnabel said. "If there were a deanchoring of inflation
expectations, the effect on the economy would be even worse."
Inflation is near
double-digit territory in many of the world's biggest economies, a level not
seen in close to a half century. With the notable exception of the United
States, a peak is still months away.
The complication is
that central banks for the most part appear to have only limited control.
For one, high
energy prices, a function of Russia's war in Ukraine, is creating a supply
shock on which monetary policy has little effect.
Copious spending
by governments, also outside central bank control, exacerbates the problem. One
study presented at Jackson Hole argues that half of U.S. inflation is fiscally
driven and the Fed will fail to control prices without government
cooperation. read more
Lastly, a new
inflation regime may be setting in that will keep upward pressure on prices for
an extended period.
Deglobalisation,
the realignment of alliances due to Russia's war, demographic changes and more
expensive production in emerging markets could all make supply constraints more
permanent. read more
"The global economy seems to be on the cusp of a historic
change as many of the aggregate supply tailwinds that have kept a lid on
inflation look set to turn into headwinds," Agustín Carstens, the head of
the Bank of International Settlements, said.
More
Analysis: Pain of
breaking inflation will reverberate around the globe | Reuters
Gloomy
UK economic outlook pushes battered sterling to fresh lows
August 29, 202211:09 AM
GMT+1
LONDON, Aug 29
(Reuters) - The British pound fell to its lowest level since March 2020 on
Monday as mounting concern about the economic outlook gave traders added reason
to dump the currency against the broadly robust U.S. dollar.
A fresh downgrade
to British economic forecasts from Goldman Sachs, added to the downbeat mood towards
sterling - which has slumped over 13% against the dollar this year.
In a note
published on Monday, Goldman said it expected a British recession to begin in
the fourth quarter of 2022, and forecast the economy would contract by 0.6% in
2023. read more
London markets were
closed for a public holiday, meaning trade was generally subdued.
Still, sterling
came under fresh selling pressure and fell to as low as $1.16495 - the lowest
since March 2020. It was last down 0.3% at $1.1690 in Europe.
The pound was also
down around 0.4% at 85.25 pence per euro , having hit its lowest level in over
a month at 85.32 pence.
Inflation in
Britain has hit a 40-year high and the Bank of England (BoE) has warned of a
lengthy recession. Soaring energy bills have exacerbated concern about the
economic outlook.
British energy
bills will jump 80% to an average of 3,549 pounds ($4,188) a year from October,
the regulator said on Friday, the latest example of what politicians have
called a "cost-of-living crisis". read more
"The weak
pound is mostly dollar-related but losses are twice as bad as the euro and
sentiment is really bearish," said Kenneth Broux, a currency strategist at
Societe Generale.
"Investors
are more nervous about inflation in the UK than anywhere else; can the BoE
bring it under control?"
Gloomy UK economic
outlook pushes battered sterling to fresh lows | Reuters
Irish
monthly retail sales down 1.6%; fall for third straight month
August 29, 202211:21 AM
GMT+1
DUBLIN, Aug 29
(Reuters) - Irish retail sales volumes fell 1.6% month-on-month in July,
dropping for the third successive month, and were 8.1% lower than the same
period a year ago, Central Statistics Office data showed on Thursday.
Excluding car
sales, which were 4.9% lower on the month and 16.2% year-on-year, retail sales
fell by 3.5% compared with July 2021. Volumes were at the same level as
February 2020, before the COVID-19 pandemic began, the CSO said.
Despite inflation reaching almost 10% last month, the value of
retail sales were 0.1% lower than in June and 0.4% lower on the year.
Irish monthly
retail sales down 1.6%; fall for third straight month | Reuters
French
firms ready to curb energy use to avoid rationing - lobby group
August 29, 202211:43 AM GMT+1
PARIS, Aug 29
(Reuters) - French firmswill play their part in meeting a government demand to
cut energy consumption by 10% to avoid rationing amid concerns about power
shortages and spiraling prices as the war in Ukraine grinds on, a leading
business lobby group said on Monday.
The government is
urging companies to save power through dimming lights, closing external doors
when running air conditioning units or heating systems, and switching off
illuminated advertising hoardings at night among other means.
For energy
intensive industries, the challenge is greater.
"It is not
impossible. It is a significant effort but absolutely necessary because we want
to avoid rationing and power cuts that stop production," Geoffroy Roux de
Bezieux, head of the Medef lobby group, told France Inter radio.
Asked about the
threat of a temporary windfall tax companies making bumper profits on the back
of the energy crisis, Roux de Bezieux said he was firmly opposed to the idea.
----Medef
holds its annual post-summer conference this week.
Borne is expected
later on Monday to urge businesses to step up their efforts to save energy as
prices spiral higher on power markets, shaken by the war abroad and nuclear
production problems in France.
French year-ahead
baseload power hit a record high of 1,200 euros/megawatt hour (MWH) on Monday.
French consumers
have been relatively shielded for soaring power and gas prices so far thanks to
government-imposed caps that run until the end of the year.
More
French firms ready
to curb energy use to avoid rationing - lobby group | Reuters
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.
No covid today, just another
example of todays hyped up modern media getting another scare story all wrong.
How
the media got its “tomato flu” coverage so very wrong
Rich Haridy August 28, 2022
Did you hear about a new virus
sweeping through kids in India? It’s called “tomato flu,” and according to some
reports we all should be very concerned. But it turns out “tomato flu” is not
new, has potentially been around in some form for at least 15 years, and is
probably just a relatively novel manifestation of a common childhood virus.
On August
17th, a correspondence letter was published in the journal The
Lancet Respiratory Medicine. The
letter, titled "Tomato flu outbreak in India," reported on the
potential emergence of a “new virus,” with 82 children diagnosed with a mystery
illness between early May and late July.
Red flags could be found in
the letter's very first paragraph as its authors described this viral illness
as “new”, “emerging” and “endemic” – terms one researcher described as
entirely contradictory. How can a virus be new and emerging but also
simultaneously in an endemic state?
The letter went on to
characterize tomato flu as an illness similar to COVID-19 – with symptoms of
fever, fatigue and body aches - but also presenting with large and painful
blisters that can reach the size of tomatoes. Hence the name, tomato flu.
Although the letter did
speculate the illness could potentially be anything from a new form of a common
childhood infection to a type of post-viral condition, it essentially framed
the whole idea of “tomato flu” as a “new virus.” However, no actual laboratory
data was offered to back up this suggestion and the main references to “tomato
flu” cited in the letter were news reports from local Indian websites.
These kinds of correspondence
letters to journals are not peer-reviewed, despite coming with the veneer of
being in a journal such as The Lancet. They are published without any
oversight and often serve as valuable sirens to other scientists, highlighting
things that are worthy of closer investigation. But in a post-COVID world, news
of a potential “new virus” could never stay quiet for the few weeks scientists
would need to actually verify the suggestion.
Within days the story was
amplified via hundreds of articles, and tomato flu had become a real thing
based on this single correspondence with no actual lab-verified evidence.
Headlines loudly declared, "India on Alert as Rare Viral Illness Tomato Flu Spreads," and other outlets warned the “mysterious new illness” was likely to spread to your country and infect
your children.
While these hyperbolic
stories were spreading, several researchers began to question the veracity of
this initial research letter. Australian epidemiologist Gideon Meyerowitz-Katz
quickly published a response to
the letter, arguing there is no evidence these illnesses in India are caused by
a new virus and that the current news cycle seems mostly based on “hot air.”
“All of the news is
essentially based on a single case-report from a public official describing an
outbreak of something that is apparently locally called 'tomato flu,'” explained Meyerowitz-Katz.
“But that’s … really not a lot to go on. The authors don’t even provide
evidence that this is, indeed, a virus, leaving the door open to other
pathogens that might cause a similar rash.”
Meyerowitz-Katz and other
researchers quickly pointed to a letter published in the Pediatric Infectious Disease Journal, two days
after The Lancet correspondence. This letter, from a team of
infectious disease researchers in the United Kingdom, reported on two suspected
“tomato flu” cases.
The two children, a
five-year-old boy and a 13-month-old girl, developed signs of the mystery
“tomato flu” illness a week after returning from a family holiday in Kerala,
India. Lab testing revealed the children did not have a mystery new virus, but
in fact were infected with a common childhood enterovirus named coxsackie A16.
“Coxsackie A16 causes hand,
foot and mouth disease (HFMD), so-called because the patient has blisters on
the palms of their hands, soles of their feet and in their mouth,” explained
microbiologist Sarah Pitt in The Conversation. “So it
seems that tomato flu is actually HFMD. It is not a type of influenza, has
nothing to do with tomatoes and is not a new disease at all.”
Not only that, but the UK
researchers indicated the particular viral strain wasn’t even especially
unique. Genomic testing connected the viral samples to a strain of coxsackie
A16 previously identified in China a decade ago.
More
How the media got
its “tomato flu” coverage so very wrong (newatlas.com)
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.
Tiny
quantum cascade laser could help astronauts find water on the Moon
Michael Irving August 26, 2022
Engineers
at NASA’s Goddard Space Flight Center have developed a tiny but powerful laser
that could one day help astronauts find water
on the Moon. Smaller than a US quarter, the laser makes
use of quantum mechanical effects to produce a beam in the terahertz (THz)
range, which can highlight hidden water.
For over a
decade we’ve known for sure that there’s water
on the Moon, thanks to missions like Chandrayaan-1. This
orbiter imaged the lunar surface with a spectrometer that measured the
reflection and absorption of different wavelengths of light, which can reveal
the composition of the material present, including water molecules.
As useful as these
instruments were, they didn't have the sensitivity to differentiate between
water and similar forms like free hydrogen ions and hydroxyl. More precise
instruments called heterodyne spectrometers focus on tighter frequency ranges,
by combining the incoming light with that from a laser in the device, then
measuring the difference between the two light sources.
The Goddard
engineers designed one of these devices that could tune in to the THz
frequencies of water. Existing oscillators and lasers that generate THz waves
are bulky, heavy and energy-hungry systems, but they managed to shrink their
design down to the size of a coin. To do so, the team tapped into some strange
quantum quirks.
----The team says that
even with its power supply, processor and spectrometer hardware, the whole
system could fit into a device the size of a teapot. That means it’s in the
realm of possibility that future astronauts could use a handheld version to
dowse for water on the Moon, Mars or other bodies.
While there’s still work to
be done, the researchers plan to build a flight-ready version for NASA’s
upcoming Artemis
program, which will see humans return to
the Moon by 2024.
Source: NASA
Tiny quantum
cascade laser could help astronauts find water on the Moon (newatlas.com)
In any
great organization it is far, far safer to be wrong with the majority than to
be right alone.
John Kenneth
Galbraith.
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