Baltic Dry Index. 1560 -43 Brent Crude 94.92
Spot Gold 1776 US
2 Year Yield 3.24 +0.21
UK inflation June 2021 – 2.5 percent.
UK inflation June 2022 – 9.4 percent.
The
US Employment Report Friday blew apart the idea that the Fed is about to U-turn
on raising their key interest rate anytime soon.
In
fact, it creates the probability that the Fed will have to raise interest rates
far higher for far longer than the stock casinos have priced in.
With
that employment report comes the prospect of labour demanding far higher wage
increases and a much larger share of the pie.
We
are in for much longer stagflation, as the Fed and the other central banks fumble
their way to eventually getting on top of inflation, before eventually global
inflation ends in a new global recession.
Of course, this assumes that the employment report was accurate and not some statistical contrivance.
Look
away from that US yield curve and the Baltic Dry [shipping] Index now.
But
this also assumes the war in Ukraine grinds to a halt and a new war doesn’t erupt over
Taiwan.
Given
the bellicose war of words between the US Secretary of State and China’s
Foreign Minister at the ASEAN Conference yesterday in Cambodia, a “mistake”
seems all too likely.
S&P 500, Nasdaq fall Friday, but notch weekly gains
after blowout July jobs report
UPDATED FRI, AUG 5 20228:10 PM EDT
Stocks
wavered Friday in a volatile trading session after the July jobs report was
much better than expected, as investors assessed what a strong labor market
would mean for the Federal Reserve’s rate tightening campaign.
The Dow Jones
Industrial Average gained 76.65 points, or 0.23%, to end at 32,803.47. Even
with Friday’s gains, however, it fell on the week. The S&P 500 shed 0.16%
to end at 4,145.19, and the Nasdaq Composite lost 0.50% Friday, falling to
12,657.56. Still, both the S&P 500 and the Nasdaq ended the first week of
August higher.
Losses were
offset by bank stocks, which rose on hopes that interest rate hikes will
continue at a solid clip. Energy stocks also gained, but technology companies
slumped.
The
labor market added 528,000 jobs in July, easily beating
a Dow Jones estimate of a 258,000 increase. The unemployment
rate ticked down to 3.5%, below the 3.6% estimate. Wage growth also rose more
than estimated, up 0.5% for the month and 5.2% higher than a year ago, signaling
that high inflation is likely still a problem.
Stocks opened
lower following the report, even as it seemed to indicate the
economy was not currently in a recession. Job growth was expected to slow as
the Fed continues to hike interest rates to tame inflation, but this report
shows a labor market still running hot. That means the central bank may act more
aggressively at its next meeting.
“Anybody that jumped on the ‘Fed
is going to pivot next year and start cutting rates’ is going to have to get
off at the next station, because that’s not in the cards,” said Art Hogan,
chief market strategist at B. Riley Financial. “It is clearly a situation where
the economy is not screeching or heading into a recession here and now.”
Friday’s jobs report is a crucial
one as it’s one of two the central bank will see before it decides how much to
raise rates at its September meeting. Indeed, traders are already betting on a tougher stance from the Fed. Policy makers
will have another jobs report and two more consumer
price index numbers to weigh before the central bank makes its
next rate decision.
Major averages posted their best
month since 2020 in July on the hope the Fed would slow the pace of its hikes.
The S&P 500 added 9.1% last month.
S&P
500, Nasdaq fall Friday, but notch weekly gains after blowout July jobs report
(cnbc.com)
Danger
ahead: The U.S. economy has yet to face its biggest recession challenge
You’d be hard-pressed now to find a recession in
the rearview mirror. What’s down the road, though, is another story.
There is no historical precedent to
indicate that an economy in recession can produce 528,000
jobs in a month, as the U.S. did during July. A 3.5% unemployment
rate, tied for the lowest since 1969, is not consistent with contraction.
But that doesn’t mean there isn’t a recession ahead, and, ironically
enough, it is the labor market’s phenomenal resiliency that could pose the
broader economy’s biggest long-run danger. The Federal Reserve is trying to
ease pressures on a historically tight jobs situation and its rapid wage gains
in an effort to control inflation running at its highest
level in more than 40 years.
“The fact of the matter is this gives the Fed
additional room to continue to tighten, even if it raises the probability of
pushing the economy into recession,” said Jim Baird, chief investment officer
at Plante Moran Financial Advisors. “It’s not going to be an easy task to
continue to tighten without negative repercussions for the consumer and the
economy.”
Indeed, following
the robust job numbers, which included a 5.2% 12-month gain for average hourly
earnings, traders accelerated their bets on a more aggressive Fed. As of Friday
afternoon, markets were assigning about a 69% chance of the central bank
enacting its third straight 0.75 percentage point interest rate hike when it
meets again in September, according to CME Group data.
So while President
Joe Biden celebrated the big jobs number on Friday, a much more unpleasant data
point could be on the way next week. The consumer price index, the most widely
followed inflation measure, comes out Wednesday, and it’s expected to show
continued upward pressure even with a sharp drop in gasoline prices in July.
That will
complicate the central bank’s balancing act of using rate increases to temper
inflation without tipping the economy into recession. As Rick Rieder, chief
investment officer of global fixed income at asset management giant BlackRock,
said, the challenge is “how to execute a ‘soft landing’ when the economy is
coming in hot, and is landing on a runway it has never used before.”
“Today’s print, coming in much stronger than
anticipated, complicates the job of a Federal Reserve that seeks to engineer a
more temperate employment environment, in keeping with its attempts to moderate
current levels of inflation,” Rieder said in a client note. “The question
though now is how much longer (and higher) will rates have to go before
inflation can be brought under control?”
More recession signs
Financial markets
were betting against the Fed in other ways.
The 2-year Treasury
note yield exceeded that of the 10-year note by the highest margin in about 22
years Friday afternoon. That phenomenon, known as an inverted yield curve, has
been a telltale recession sign particularly when it goes on for an extended
period of time. In the present case, the inversion has been in place since
early July.
But that doesn’t mean a recession is imminent,
only that one is likely over the next year or two. While that means the central
bank has some time on its side, it also could mean it won’t have the luxury of
slow hikes but rather will have to continue to move quickly — a situation that
policymakers had hoped to avoid.
More
The
U.S. economy has yet to face its biggest recession challenge (cnbc.com)
Finally,
we get to end the week’s update with a little good news.
Three new ships with grain leave
Ukraine under landmark deal
August
5, 2022
KYIV/ISTANBUL (Reuters) - Three ships loaded
with grain under a recently concluded deal have left Ukrainian ports, the
Turkish defenсe ministry and Reuters witnesses said on Friday.
The Joint Coordination Centre in Istanbul, which groups Russian,
Ukrainian, Turkish and U.N. personnel, said two ships were setting off from
Chornomorsk and one from Odesa.
The three vessels carrying a total of about 58,000 tonnes of corn have
been authorised to leave Ukrainian ports as part of a deal to unblock grain
exports.
The Turkish Defence Ministry said on Twitter the Panama-flagged
Navistar, carrying 33,000 tonnes of corn and going from Ukraine to Ireland,
departed from Odesa Port. The ship will be inspected by the Joint Coordination
Centre to the north of Istanbul.
The second ship, the Maltese-flagged
Rojen, carrying 13,000 tonnes of corn departed from Chornomorsk port bound for
Britain. The Joint Inspection Team was monitoring it.
The Turkish-flagged ship Polarnet set off from Chornomorsk for the
Turkish Black Sea port of Karasu. Before the ship carrying 12,000 tonnes of
corn reaches Karasu, it will be inspected by the Joint Inspection Team to the
north of Istanbul.
The Razoni, the first ship loaded with Ukrainian grain to set off from a
Ukrainian port since the beginning of the Russian invasion, departed this week.
Ukraine is a major grain exporter but its shipments have slumped since
the beginning of the war because its Black Sea ports - a key route for its
shipments - have been largely closed, driving up global food prices and prompting
fears of shortages in Africa and the Middle East.
Three new ships
with grain leave Ukraine under landmark deal (msn.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.
This
weekend, something a little different while we wait to see what happens in
Ukraine and Taiwan.
Matthew
Lau: Happy birthday, Milton Friedman!
Many of society’s worst economic
problems are the result of disregarding Friedman’s vision
Matthew LauAug
03, 2022
Free-marketers tend to look askance at centralized hierarchical
institutions so a comparison to the Catholic Church may not be apt, but if
modern free-marketers have had anything like a pope it was Milton Friedman.
Just as the anniversary of the election of the reigning pope is a public
holiday in Vatican City, disciples of the late free-market economist may well
have marked Friedman’s 110th birthday this past Sunday by re-reading one or
more of his many books and columns.
Of his books, the most popular among lay readers is “Free to
Choose,” co-authored with his wife Rose. Free to Choose is a clear exposition
of the power of the free market. In it the Friedmans attack: restrictions on
trade, the welfare state, government-induced inflation and economic crises,
attempts to equalize economic outcomes, centralized control of education,
regulations that restrict consumer and worker freedom (often under the guise of
“protecting” them) and many other government failures. The book was accompanied
by a PBS television series of the same name and
a lecture series titled “Milton
Friedman Speaks.” Both are well worth watching.
Friedman wrote a weekly column for Newsweek magazine from 1966
to 1984, always making the case for reducing government control. One of his
greatest successes was the elimination of military conscription in the United
States, in which he played an instrumental role through his work on a
government commission and his writing in books and columns. The power of
Friedman’s ideas was also evident in the free-market victories of the Ronald
Reagan and Margaret Thatcher governments in the 1980s. In addition, the
enormously successful economic liberalizations of Chile in the 1970s and 1980s following Marxist failures and
of Estonia in the 1990s after the fall of
Communism can be directly attributed to Friedman’s influence.
Today, unfortunately, Friedman’s ideas seem to hold little sway
with politicians. Seemingly everywhere, government spending and regulation are
marching upwards. Even putative conservatives generally have a greater appetite
for expanding government economic control than curtailing it. Some examples: the
current love affair between many Canadian conservatives and monopolistic labour
unions; the climate alarmism and related policy disasters perpetrated by Boris
Johnson in the U.K.; the enthusiasm for restrictions on trade and immigration
among many in the Republican Party in the United States; and the refusal of
anyone anywhere to take a much-needed hatchet to government spending.
----Wherever we look, many of society’s worst economic problems
are the result of disregarding Friedman’s vision. High inflation is causing
significant distress; the government-run health care system is in a shambles;
doctors and other professionals with overseas training sit unemployed or
underemployed as a result of occupational licensing; public school systems
underperform and test scores are trending down, as unions, not parents, call
the shots; a broken welfare system traps too many in poverty; minimum wage laws
and other labour regulations discriminate against the most disadvantaged
members of the labour force; and high taxes, useless government programs and
the politicization of commercial activity reduce economic growth and increase
poverty.
More
Matthew
Lau: Happy birthday, Milton Friedman! | Financial Post
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.
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.
Nano-sponges on graphene make
efficient filters of industrial wastewater
Michael Irving August 05, 2022
Engineers
at the University of Vienna have developed a new composite material that makes
an efficient filter for removing organic pollutants from water. The system uses
super-porous “nano-sponges” embedded on a sheet of graphene.
The key to
the new filters is a class of material called covalent organic frameworks
(COFs). These structures are extremely porous, giving them a massive
surface area contained within a small space, which
means they’re effective at grabbing onto large amounts of molecules. Related
materials known as metal-organic frameworks (MOFs) are being investigated for
use in carbon
capture, desalination or pulling
drinking water from thin air, and COFs could have a
similar set of functions.
For the new study, the researchers focused on using
a COF to remove organic dyes from water. These chemicals are a common pollutant
of industrial wastewater, and can be toxic and carcinogenic – not to mention
difficult to remove.
The team tweaked the COF to make it selectively
grab hold of organic dye molecules. That involves making the pores the right
shape and size – between 0.8 and 1.6 nanometers – and giving the surface a
negative charge, to attract the positively charged dye molecules.
But there
was another hurdle to overcome. When the material is used in its powdered form,
the pores at the outer edges fill up with molecules first, leaving those in the
center empty and essentially useless. So the team developed a way to spread out
the COF by growing it on a sheet of graphene.
The end
result was a two-nanometer-thick layer of COF on a single-atom layer of
graphene, which increased the maximum capacity of the material for holding organic
dye molecules. The graphene itself has fairly large pores, allowing the water
to flow through quickly while the COF does its work.
"The large pores of the
graphene network in combination with the ultra-thin COF layer and its large
number of adsorption sites therefore enable particularly fast and efficient
wastewater treatment," said the researchers.
The technique should also be
fairly inexpensive, according to the team. Not much graphene needs to be used,
and the COF can be cleaned out and reused.
The research was published in
the journal Angewandte Chemie.
Source: University of Vienna
Nano-sponges on
graphene make efficient filters of industrial wastewater (newatlas.com)
This
weekend’s music diversion. Vivaldi again, with his over the top, warm up “introduction” to his Gloria RV 588, his
lesser known or liked Gloria to the RV 589. Both, in the fashion of the time,
borrowed from other composers works and are thought to have been composed
almost simultaneously about 1715.
The
intro by modern standards is stand out work in itself. Approx. 6 minutes.
Antonio
Vivaldi: Jubilate, o amoeni chori [Introduction] in D major (RV 639)
Antonio
Vivaldi: Jubilate, o amoeni chori [Introduction] in D major (RV 639) - YouTube
What
was being introduced. Approx. 3 minutes.
Vivaldi:
Gloria, RV588 - 1. Gloria in excelsis Deo
Vivaldi:
Gloria, RV588 - 1. Gloria in excelsis Deo - YouTube
This
weekend’s chess update. Approx. 14
minutes.
What
an Incredible Discovery!! || Smirnov vs Carlsen || Chess Olympiad (2022)
What
an Incredible Discovery!! || Smirnov vs Carlsen || Chess Olympiad (2022) -
YouTube
This
week’s maths update. Approx. 13 minutes.
Secrets
of the NOTHING GRINDER
Secrets
of the NOTHING GRINDER - YouTube
World War One was the most colossal, murderous,
mismanaged butchery that has ever taken place on earth. Any writer who said
otherwise lied. So the writers either wrote propaganda, shut up, or fought.
Ernest Hemingway.
No comments:
Post a Comment