Baltic Dry Index. 1477 -79 Brent Crude 97.18
Spot Gold 1793 US 2 Year Yield 3.25 +0.02
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 15/08/22 World 595,352,605
Deaths 6,454,789
"There is no means of avoiding the final
collapse of a boom brought about by credit expansion. The alternative is only
whether the crisis should come sooner as the result of voluntary abandonment of
further credit expansion, or later as a final and total catastrophe of the
currency system involved."
Ludwig
von Mises.
In the stock casinos, more misplaced
hopium? At least, that’s what the latest
news out of China’s economy suggests.
But the big news this week may turn out
to be if drought stricken Europe, including the UK, gets rain.
For many crops it’s already to late to
make much of a difference even if we get rain. A winter of higher food prices
lies ahead for much of the G-20.
That is likely to trigger labour unrest,
high wage settlements and to add to cost push inflation into next year.
But with interest rates rising, China’s
economy slowing, America’s Democrats bust turning America into a banana republic,
this is not a time for reckless speculation.
More and more summer of 22 looks like
bunker time, and I don’t mean golf.
European markets
head for higher open, looking to build on cautious gains last week
UPDATED MON, AUG 15 2022 12:38 AM EDT
European markets are
set to open in positive territory on Monday, continuing a positive trend seen
at the close of trading last week.
European stocks closed
higher last Friday as investors digested economic data from the region
including a preliminary U.K. second-quarter GDP reading, July inflation prints
out of France, Spain and Italy, and euro zone industrial production for June.
Data released from the U.K. showed the economy contracted in
the second quarter of 2022 as the country’s cost-of-living
crisis hit home. Official figures showed that gross domestic product shrank by
0.1% quarter on quarter in the second three months of the year, less than the
0.3% contraction expected by analysts.
Also on investors’ minds
was cooler-than-expected U.S.
inflation data out last week. The consumer price index rose
8.5% in July from a year ago, below expectations, due largely to slumping
energy prices.
Oil giant Saudi
Aramco reported a stunning 90% surge in second quarter net income and record
half-year results on Sunday, as high oil prices continue to drive historic
windfalls for “Big Oil.”
Aramco said strong market conditions
helped to push its second quarter net income to $48.4 billion, up from $25.5
billion a year earlier. The result easily beat analysts estimates of $46.2
billion.
“Our record second-quarter results
reflect increasing demand for our products — particularly as a low-cost
producer with one of the lowest upstream carbon intensities in the industry,”
Aramco president and CEO Amin Nasser said.
More
European
markets: Open to close, news, data, earnings (cnbc.com)
Stock futures
fall slightly ahead of a big retail earnings week
UPDATED MON, AUG 15 2022 12:57 AM
EDT
U.S. equity futures
were slightly lower Monday morning after some positive inflation data helped
advance all of the major indexes and ahead of a big earnings week for
retailers.
Futures tied to the
Dow Jones Industrial Average fell 65 points, or 0.19%. S&P 500 futures and
Nasdaq 100 futures fell 0.22% and 0.25%, respectively.
Last week the
S&P 500 advanced 3.25% to notch its fourth positive week in a row and its
longest winning streak since 2021. The Nasdaq Composite ended the week 3.08%
higher, also for its fourth straight week. The Dow added 2.9%.
The gains came
after economic data showed inflation pressures could be easing a bit. The
consumer price index was flat from June to July, the producer price index
showed a surprise decline and import prices fell more than expected.
That helped relax
investors that have been eager to call the mid-June lows the bottom of the
cycle. Just as many have been quick to call out that the data from one month
doesn’t necessarily make it a reliable trend.
“While bulls may be
chalking this week up as another win for an equity rally that has remarkably
lasted almost two months since June’s lows, bears continue to pound the table
on risks to year-end earnings and margins that could spoil the party for those
celebrating too early,” Morgan Stanley said Sunday.
Investors are
looking ahead to a week of earnings from big retailers including Home Depot,
Walmart and Target, and listening for clues on how their businesses have been
affected by inflation and other macro challenges in the most recent quarter.
Retail sales data
is also scheduled to be released this week.
Major U.S. indexes have been in a bear market — or
over 20% off recent peaks — for much of this year, with the S&P posting its worst
first half since 1970. In July, however, stocks have rallied, and many
on Wall Street have been debating if the bear market is over.
On Friday, the
S&P 500 clinched its fourth straight positive week — its
longest weekly winning streak since November 2021.
Hedge fund manager David Neuhauser
says however, that markets are staging a bear market rally that will not last.
He explains why, and reveals how investors can position for it.
More
Stock
futures fall slightly ahead of a big retail earnings week (cnbc.com)
In China news, lookout below. A
miss is a miss but it couldn’t come at a more difficult time.
China’s consumer
and factory data miss expectations in July
BEIJING — China
reported data for July that came in well below expectations.
Retail sales grew by
2.7% in July from a year ago, the National Bureau of Statistics said Monday.
That’s well below the 5% growth forecast by a Reuters poll, and down from
growth of 3.1% in June. Within retail sales, catering, furniture and
construction-related categories saw declines.
Sales of autos, one
of the largest categories by value, rose by 9.7%. The gold, silver and jewelry
category saw sales rise the most, up by 22.1%.
Industrial production
rose by 3.8%, also missing expectations for 4.6% growth and a drop from the
prior month’s 3.9% increase.
Fixed asset
investment for the first seven months of the year rose by 5.7% from a year ago,
missing expectations for 6.2% growth.
Investment into real
estate fell at a faster pace in July than June, while investment into
manufacturing slowed its pace of growth. Investment into infrastructure rose at
a slightly faster pace in July than in June. Fixed asset investment data is
only released on a year-to-date basis.
The unemployment rate
among China’s youth, ages 16 to 24, was a high 19.9%. The unemployment rate
across all ages in cities was 5.4%.
“The national economy
maintained the momentum of recovery,” the statistics bureau said in a
statement. But it warned of rising “stagflation risks” globally and said “the
foundation for the recovery of the domestic economy is yet to be consolidated.”
Analyst forecasts for July were projected to show
a pickup in economic activity from June, as China put the worst of this year’s
Covid-related lockdowns behind it, especially in the metropolis of Shanghai.
Exports
remained robust last month, surging by 18% year-on-year in U.S.
dollar terms despite growing concerns of falling global demand. Imports lagged,
climbing by just 2.3% in July from a year earlier.
However, China’s massive real
estate sector has come under renewed pressure this summer. Many
homebuyers halted their mortgage payments to protest developer
delays in constructing homes, which are typically sold ahead of completion in
China.
More
China's
consumer and factory data miss expectations in July (cnbc.com)
China Crisis Wipes Out
$90 Billion of Developer Market Value
Sun, August 14, 2022 at 6:07 AM
(Bloomberg) --
Chinese developers have suffered a meltdown of at least $90 billion in stocks
and dollar bonds this year, with a bursting housing bubble and an intensifying
debt crisis threatening to inflict even more pain.
The builders
have lost about $55 billion in share value since 2022 began, according to a
Bloomberg Intelligence stock gauge. The sector’s dollar notes have fallen more
than $35 billion, show calculations based on a Bloomberg bond index, the
constituents of which can change over time. The wipeouts have pushed developer
stocks down to levels not seen in a decade and junk dollar notes to record
lows.
Pessimism has become more entrenched
after Beijing signaled that homeowners, not builders, are the priority of
efforts to stabilize China’s slumping housing market. In one recent sign of the
tensions, more than a dozen developers in the central province of Anhui asked
for help from their local government to restore property sales in the face of
protests from disgruntled homebuyers. Longer term, an aging population and a
policy shift that seeks to redefine real estate as a form of public goods means
the sector’s boom era may have already passed.
“The aim of the rescue measures is to
save the property market and household confidence, but not the developers,”
said Gary Ng, senior economist at Natixis SA, referring to Beijing’s recent
moves to ensure completion of stalled projects. “As it is unlikely to see
significant policy changes, the golden age of fast revenue growth and high
leverage for property developers is probably over.”
Chinese builders’ fortunes have
decidedly worsened this year following a relentless official campaign to curb
their debt expansion and a year-long slump in home sales. This has led to an
unprecedented cash crunch that is spreading risks to the financial system and
also threatens social stability.
More
China Crisis Wipes Out $90 Billion of Developer Market
Value (yahoo.com)
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.
The other reason
why food prices are rising
The United Nations’
worst-case scenario calculation is that global food prices will rise by an
additional 8.5% by 2027.
More expensive
fertilizers are contributed to those higher costs, with some fertilizers
spiking 300% since September 2020, according to the American Farm Bureau.
“Last year
[fertilizer] was around $270 per ton and now it’s over $1,400 per ton,” Meagan
Kaiser, of Kaiser Family Farms and farmer-director of the United Soybean Board,
told NBC’s “Nightly News with Lester Holt.”
“It’s scary. It turns
my stomach a little bit to think about the amount of risk that our family farm
is taking right now.”
Farmers are finding
themselves forced to pass some of those costs along to customers, resulting in
higher grocery prices.
Fertilizer is
essential for crops. Without fertilizer, plants may not get the nourishment
they need to result in the yields necessary to meet global demand.
According to the
International Fertilizer Association, we would only be able to feed about half
of the global population without fertilizer.
Farmers are trying to
adjust to this new normal. When surveyed in spring 2022 about what they
intended to plant, farmers said they were turning to more soybean, according to
U.S. Department of Agriculture data, or a record 91 million acres of the
legume. That may be because legumes don’t require as much fertilizer as corn to
grow.
Spikes in fertilizer
prices started when Russia invaded Ukraine in 2022.
“It’s amazing how
dependent the world is on fertilizers from the region that we’re talking about
Russia and Ukraine,” Johanna Mendelson Forman, adjunct professor at American
University’s School of International Service, told CNBC.
The region is
responsible for at least 28% of the world’s fertilizer exports, including
nitrogen-, potassium- and phosphorus-based fertilizers, according to Morgan
Stanley.
Also factoring into
price spikes are rising natural gas costs.
“There’s a direct
relationship with what we’re seeing in fuel prices and fertilizer prices,” Jo
Handelsman, director of the Wisconsin Institute for Discovery at the University
of Wisconsin-Madison, told CNBC.
That’s because fossil
fuels are used in the manufacturing process of fertilizers — and is one of the
reasons that they can contribute to climate change.
More
The
other reason why food prices are rising (cnbc.com)
Oil refiners in Asia's
economic powerhouses aren't snapping up extra crude even with prices below $100
a barrel as inflation bites
Sun,
August 14, 2022 at 9:00 AM
Asian oil refiners are getting
choosier about where they get their crude from, as inflation picks up across
the supply chain, experts told Insider.
State-owned energy giant Saudi
Aramco told at least four North Asian buyers that it will supply full contract
volumes of oil in September, sources with knowledge of the matter told Reuters. When an exporter allocates the full volume of a
contract, traders usually interpret that as supply being roughly in line with
demand. A cut in the allocation would signal a drop in demand, while an
increase would reflect an improvement.
The oil price has fallen below
$100 a barrel and is around 30% below the multi-year highs of early March,
right after Russia invaded Ukraine.
But this is the second month in a
row that Aramco has allotted the full amount to its North Asian customers,
which include China, suggesting any tightness in the market may be easing.
Data last month showed Russia's
oil exports to China and India were 30% below their wartime peak, as buyers in
the two countries reeled in their purchases.
"Crude demand is clearly
weakening as widespread inflation leads to further declines in purchasing power
for Asian buyers," Ed Moya, senior analyst at OANDA said in response to
Saudi Aramco allocating the full amount of crude.
Saudi Arabia raised prices for Asian buyers to near record highs for August deliveries,
reflecting some of the squeeze on supply as producers everywhere rush to fill
any gaps left by a dropoff in Russian exports after Western sanctions.
As refiners face lower margins
for products such as gasoline, diesel and jet fuel, they're getting choosier
about where they get their crude. Reports this week showed Asian buyers are snapping up cheap
US crude as traditional
Middle Eastern blends are starting to look a little pricier by comparison.
South Korea and Indian refiners purchased
about 16 million barrels of US crude so far this month, roughly double what
they bought the previous month.
Asian oil demand ramped up after
Russia invaded Ukraine with countries like China and India taking advantage of
super-cheap Russian exports that had fallen out of favor with lifelong European
customers. But this has in turn raised the value of Russia's oil and buyers are
once again in search of a better deal elsewhere.
In mid-July, a surge in China's oil imports put Saudi Arabia on track to reach its highest
level of total exports since April 2020, as China's COVID-19 measures began to
ease. But with strict restrictions back in play, with millions under lockdown,
it is taking denting crude demand together with inflationary pressures.
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.
The Truth
About Long Covid – And The Search For A Cure
Sunday August 14 2022, 12.01am, The Sunday Times
----The Covid-19 pandemic has claimed the lives of more
than 180,000 people in the UK. While restrictions to curb the death toll have
now been lifted, the shadow of the virus looms large in the form of long Covid
— a nebulous term for a baffling range of long-lasting symptoms that are being
reported by millions of people. The Office for National Statistics (ONS)
estimates that at the beginning of July nearly 1.8 million people — 2.8 per cent
of the population — reported suffering from symptoms that persist for more than
four weeks after
The ONS shows that 1.4 million people still have
self-reported symptoms at 12 weeks. By 12 months that number reduces to
761,000, and 380,000 people say they have had symptoms not explained by
anything other than Covid for two years or more. Recent research by the
Institute for Fiscal Studies revealed that 110,000 people are missing from work
as a result of long Covid, at a cost of £1.5 billion a year in lost earnings.
The most common symptom of the condition is fatigue (54 per cent, according to
the ONS), followed by shortness of breath (31 per cent), loss of smell (23 per
cent) and muscle ache (22 per cent). Yet people such as Antony and Claire are
also being diagnosed with new illnesses that their doctors believe are linked
to Covid. After being referred to a haematologist, Antony was diagnosed with
neutropenia, a condition that causes a low number of white blood cells, and
postural orthostatic tachycardia syndrome, an abnormal increase in heart rate
that causes fainting. Prior to catching Covid he was so healthy that he
qualified to be a kidney donor — his kidney went to a stranger in need in 2018
and Anthony recovered from the surgery so quickly that he went skydiving four
weeks later.
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.
Outlook on the Graphene
Global Market to 2027 - Rising Purchasing Power and Increased Consumer
Electronics Demand is Driving Growth
Fri, August 12, 2022 at 5:30 PM
DUBLIN, Aug. 12, 2022 /PRNewswire/ -- The "Global Graphene Market: Analysis By Type,
Application, End-User, By Region, By Country (2022 Edition): Market Insights
and Forecast with Impact of COVID-19 (2017-2027)" report has been added to ResearchAndMarkets.com's offering.
e global graphene market is valued
at USD 1192.49 Million in the year 2027 with the Asia
Pacific leading the regional market share.
Graphene is considered the world's
thinnest, strongest, and most electrically and thermally conductive substance.
All of these features excite researchers and businesses throughout the world
because graphene has the potential to transform various sectors in the realms
of electricity, conductivity, energy generation, batteries, sensors, and more.
Continuous R&D initiatives around
the world, as well as large-scale graphene production from renewable sources,
including the utilization of value-added compounds, are expected to provide the
industry with huge growth potential.
Due to the COVID-19 pandemic, the graphene market has seen a dip in growth in
2020. This lethal virus has wreaked havoc around the globe, particularly
in North America and Europe. Companies shut down their
operations and production facilities to prevent the virus from spreading
further and as a result, graphene utilization in the industrial automobile and
transportation, aerospace, electronics, and other industries has decreased.
However, due to its superior conductivity, flexibility, antibacterial, and
antiviral potency, graphene technology and its uses accelerated dramatically
during COVID-19. To counteract COVID-19, graphene-based protective equipment,
biosensors, medicine delivery, and therapy systems are being developed.
Growing purchasing power and increased consumer electronics demand, such as
tablets and mobile phones, are likely to propel the graphene market forward.
Furthermore, transparent conductive films made of graphene oxide are employed
as raw material in automobiles to make them safer and lighter.
More
“Other inflationists realize very well that an increase in the
quantity of money reduces the purchasing power of the monetary unit. But they
endeavour to secure inflation none-the-less, because of its effect on the value
of money; they want depreciation, because they want to favour debtors at the
expense of creditors and because they want to encourage exportation and make
importation difficult.”
Ludwig von Mises, The Theory of Money and Credit.
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