Baltic
Dry Index. 1757 -042 Brent Crude 89.03
Spot Gold 1664 US 2 Year Yield 4.16 +0.09
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 30/09/22 World 622,406,585
Deaths 6,547,354
The longer I live, the more convinced am I that this planet is used by other planets as a lunatic asylum.
George Bernard Shaw.
We
open today with the terrible news from Florida hit by hurricane Ian. A far
better assessment of the damage will come out later today.
Ian’s
path of ruin: Sanibel bridge severed, Gulf Coast cities flooded, at least 12
dead
Linda Robertson, Joey Flechas, Nicholas Nehamas, David Ovalle,
Miami Herald
30 September 2022
----The snapshots of devastation emerged as Florida began to
assess the damage caused by Ian, which made landfall in Southwest Florida with
punishing winds of 155 miles per hour, churning across the state with
torrential rains before emerging into the Atlantic Ocean as a tropical storm on
Thursday afternoon.
Over 2
million customers in Florida were without electricity. Governments and
insurance companies were bracing for billions in damage — and years of
rebuilding. The death toll was at least 12, according to police departments, but was expected to
rise, with President Joe Biden fearing Ian “could be the deadliest hurricane in
Florida’s history.”
More
Ian’s path of
ruin: Sanibel bridge severed, Gulf Coast cities flooded, at least 12 dead
(msn.com)
In
stock casino news, Britain’s Botched Budget continues to wreak havoc, although
the US, EU and global economies were all poised for a fall due to the cost of
living crisis caused by energy and food price inflation.
Normally
on the last day of the month and quarter, we would expect a dress up stocks
rally. But today, I think we’re more likely to see a dress down decline, as
professional money managers attempt to clean up their final published positions
by getting rid of loss making stocks. Worse, October, “crash month” is just
about to start.
We
have entered a new bear market and in my opinion, a new global recession.
Japan’s Nikkei
falls 2%; Asia-Pacific markets slide after S&P 500 closes at new year-low
UPDATED FRI, SEP 30 2022 12:09 AM EDT
Shares in the Asia-Pacific were lower on Friday,
the last day of the third quarter, following another sell-off on Wall Street
overnight. China’s official factory activity data unexpectedly expanded in August, beating estimates.
In Japan, the Nikkei
225 slipped 2.04%, and the Topix
index fell 1.86%. Australia’s S&P/ASX
200 lost 1.18%.
The Hang Seng
index in Hong Kong was fractionally
lower, while the Hang Seng Tech index dropped 1.23%. Mainland China’s Shanghai
Composite shed 0.21%, and the Shenzhen
Component was 0.553% lower.
The Kospi in South Korea declined 0.14% and the Kosdaq shed
0.24%. MSCI’s broadest index of Asia-Pacific shares outside Japan was down
0.31%.
U.S. stocks tumbled in Thursday’s session, with the S&P 500 hitting a fresh low for the year and
also reaching a new closing low. The
index dropped 2.1% to end the session at 3,640.47. Meanwhile, the Dow Jones
Industrial Average slumped 458.13 points, or 1.54%, to 29,225.61. The
tech-heavy Nasdaq Composite lost 2.84% to 10,737.51.
“Geopolitical and inflation risks are not
subsiding, and risk assets are taking the strain as expectations of lower
growth and higher funding costs continue to permeate,” analysts at ANZ Research
wrote in a Friday note.
Asia stocks fall
after Wall Street slump; China PMI beats estimates (cnbc.com)
Asian
shares head for worst month since pandemic started
September
30, 2022 3:15 AM GMT+1Last Updated 3 hours ago
SYDNEY, Sept 30 (Reuters)
- Asian shares on Friday were headed for the worst month since the onset of the
COVID-19 pandemic, while jitters in currency and bond markets persisted over
hawkish talk from central banks, worries about global recession and rising
geopolitical risk.
MSCI's broadest
index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was
largely flat on Friday, as a bounce in Hong Kong (.HSI) and
among mainland Chinese bluechips (.CSI300) offset
declines elsewhere. Japan's Nikkei (.N225) fell
1.6%
Relief came from
Chinese factory activity data that beat market expectations, with the
manufacturing sector returning to growth in September after contracting for two
months. read more
Still, the Asian
index was set to record a staggering 12.5% drop for the month, the largest
since March 2020 when the COVID-19 pandemic threw financial markets into chaos.
Hong Kong shares
were likely heading for their worst quarter since 2001 and Chinese bluechips
might also finish September by recording their biggest quarterly loss since a
stock market meltdown in 2015.
"The
'troubling triad' of rising rates, slowing growth and strong dollar have all
intensified," said Timothy Moe, chief Asia-Pacific equity strategist at
Goldman Sachs.
More
Asian shares head for worst month since pandemic
started | Reuters
Apple downgrade
sparks tech sell-off, sending Alphabet and Microsoft to one-year lows
PUBLISHED THU, SEP 29 2022 4:27 PM EDTUPDATED
THU, SEP 29 2022 5:01 PM EDT
Shares of large technology companies suffered
heavy losses on Thursday, dragging down many other U.S. stocks along with them,
after analysts at Bank of America lowered Apple’s stock rating.
Tech stocks have been pushed down all year as
investors have rotated out of growth and flocked to more defensive assets to
deal with higher interest rates and to get ahead of a possible recession.
The tech-heavy Nasdaq Composite rose on Tuesday and Wednesday, but
the buying came after the
worst two weeks since the onset of the Covid pandemic. Now the downward
trend is back, with the Nasdaq off 2.8% on Thursday — it’s steepest one-day
setback since Sept. 13. The broader S&P 500 fell 2.1%.
Apple shares declined nearly 5% as Bank of America analysts
led by Wamsi Mohan changed their rating to neutral from buy, straying from the
buy position held by a majority of analysts polled by FactSet.
The analysts pointed to several risks, including a weaker buying cycle associated with the iPhone 14 that
Apple released this month. One day earlier, a report said
Apple had scrapped its plan to boost iPhone production by 6 million units in
the second half of the year.
Apple stock is now worth 20% less than it was at
the end of 2021, while the Nasdaq is down 31% over the same period.
More
Apple sparks tech sell-off; Alphabet, Microsoft hit
52-week lows (cnbc.com)
Stock futures
inch lower following Thursday’s broad sell-off
UPDATED FRI, SEP 30 2022 12:20 AM EDT
Stock futures were lower on Friday morning
following a sharp sell-off that brought the S&P
500 to a new 2022 low.
Futures tied to the S&P 500 were down 0.25%.
Dow Jones Industrial Average futures lost 0.36% or 106 points. Nasdaq 100
futures were 0.26% lower.
The 2022 sell-off resumed in full force during
regular trading on Thursday as investors weighed concerns over future
rate-hiking decisions from the Federal Reserve and the impact on the market.
Apple led Thursday’s decline, closing down 4.9% as the
tech giant has faced reports of declining demand for its new products,
specifically the iPhone 14 series.
Bank of America also downgraded the tech giant, which pressured shares.
At the end of regular trading on Thursday, the
S&P 500 dropped 2.1% to 3,640.47. The Dow was down 1.54% to 29,225.61,
while the Nasdaq Composite fell 2.84% to 10,737.51.
The major indexes
are also on track to end the week — and September — sharply in the red. The
S&P 500 is off 1.4% for the week, while the Dow and the Nasdaq are each
down 1.2%. For September, the S&P 500 is down 7.9%, and the Dow is off
7.2%. The Nasdaq is on track for a loss of 9.1% for the month.
“The market
stinks,” said Jamie Cox, managing partner of Harris Financial Group. “But
that’s basically what the Fed wants: tighten financial conditions, and they
believe that that will help bring down inflation to the levels that they find
acceptable. And they’re using the transmission mechanism of the market to make
that happen.”
More
Stock futures are
lower following Thursday’s broad sell-off (cnbc.com)
SoftBank plans at
least 30% staff cuts to Vision Fund, source confirms
PUBLISHED THU, SEP 29 2022 9:12 AM EDT
SoftBank is planning to cut at least 30% of staff
at its ambitious investment arm, the Vision Fund, a source confirmed to CNBC.
At least 150 out of 500 Vision Fund workers will
be impacted by the cuts, according to Bloomberg, which first reported the news Thursday.
SoftBank founder Masayoshi Son had foreshadowed cost-cutting and a more conservative investment approach this
summer after the company posted a $21.6 billion quarterly loss for the Vision Fund.
Though the fund was created to take big swings, as
it did with companies like Uber and WeWork, Son said last month that he’s had to
learn to become “more systematic” about investments and less swayed by emotions
toward specific companies.
“Rather than aiming for the home run ... (we) try
to aim for the first base or second base hit,” Son said in August.
Still, he said at the time, Vision Fund head count
may need to be “reduced dramatically” with “cost reduction” needed across
units.
SoftBank declined to comment.
SoftBank plans at
least 30% staff cuts to Vision Fund, source confirms (cnbc.com)
In
UK news, nothing good as the UK joins Germany in our new recession.
The jeopardy for banks in Kwarteng’s City chaos
29 September 2022
Banks have been waiting years for a rising interest rate environment to boost revenues and margins. That time has finally come. Just not how they expected.
The Bank of England base rate is already up from 0.25 per cent at the start of the year to 2.25 per cent. Since Kwasi Kwarteng’s “fiscal event” last Friday, markets have been betting it could hit 6 per cent next year.
This should be a bonanza for the big
banks. Analysts are overwhelmingly positive. Investors, however, are not.
The benefit to Britain’s large high
street lenders from higher interest rates is plain enough. Rate rises are
passed on in full to borrowers, but only around half the benefit flows through
to savers. Up until the most recent interest rate increases, banks had been
passing on more like 20 to 30 per cent of the benefit to depositors. For Lloyds
Banking Group, each 0.25 percentage point rise adds around another £175mn to
net interest income. When interest rate expectations have risen by as much as 2
percentage points in a matter of weeks, that means a substantial improvement in
profits.
For the sector, UBS analysts reckon
every 0.5 percentage point upwards move of the rate curve adds something like 3
to 4 per cent to pre-provision profits. The cumulative effect of the recent
change in expectations could add anything from 10-20 per cent to pre-provision
profits even based on cautious assumptions about the proportion of higher rates
passed on to depositors, Jason Napier of UBS noted earlier this week.
There is of course the risk that loan
growth could slow. But, according to Napier, even if loan growth were to
disappear that would hit sector earnings by only around 2 to 3 per cent. Banks
already hold large books of mortgage debt with a low rate of churn.
Yet bank shares have slumped over the
past two weeks. The disconnect between analyst euphoria and investor gloominess
is, of course, over provisions.
The big three UK-focused banks —
Barclays, Lloyds and NatWest — will have to update their forecasts of expected
credit losses when they report third-quarter results in four weeks’ time. The
rise in mortgage rates means that (notwithstanding government support for
energy bills), there will probably be downgrades to the growth outlook and
increases to expected loan losses even if the point at which households are
unable to pay their mortgage debt is years away.
Banks have gone into this downturn
far better capitalised than in the past. The knock-on effect for provisions is
complicated by the hangover from Covid, when banks booked big provisions that
they haven’t ended up having to use and which could provide a cushion.
More
The jeopardy for
banks in Kwarteng’s City chaos (msn.com)
How
the tumbling pound is pushing up prices
29
September 2022
Chris Vincent is a third-generation wood
floorer but he could tell you as much about currency fluctuations and monetary
policy as any City analyst. He is constantly monitoring the pound’s exchange
rate, hoping that his imported raw materials are billed at the
right time.
But with sterling free-falling, there is only the wrong time.
“I’m having many sleepless nights. I keep checking the exchange rate but
it’s so unpredictable. It’s all a gamble. If you forward buy, you worry that
you’re buying at the wrong rate. It’s really, really difficult,” he says.
Like other companies heavily reliant on imports, the sinking pound has
sent input costs surging for Vincent’s £50m wholesaling retailer, V4 Wood
Flooring. He buys raw materials anywhere from China to eastern Europe, meaning
most of his imports are in dollars and sometimes in euros.
While Vincent has offset some of the costs against falling shipping
fees, he has had to pass the rest on.
“You don’t have an option but to put prices up, even if we try to do it
by as little as possible. We also need to try to keep our prices stable,” he
says.
The energy crisis, a strong dollar
and government plans to ramp up borrowing have pushed the pound to
record lows against the dollar. It now buys 21pc less in dollars and 6pc less
in euros than at the start of the year. Manufacturers like Vincent are the
first to feel the hit.
But the costs of the weaker pound will soon
filter through to supermarket shelves and high street shops, squeezing already
tight household budgets. Economists have different views on how quickly and by
how much the depreciating pound pushes up inflation.
More
How the tumbling
pound is pushing up prices (msn.com)
"With the exception only of the
period of the gold standard, practically all governments of history have used
their exclusive power to issue money to defraud and plunder the people."
F. A. von Hayek.
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 first requisite of a sound
monetary system is that it put the least possible power over the quantity or
quality of money in the hands of the politicians."
Henry Hazlitt.
UK already in recession but market chaos
will make it worse, KPMG forecasts
THURSDAY 29 SEPTEMBER 2022 6:00 AM
The UK is already in a recession that is likely to
be intensified by turmoil in financial markets, new forecasts published today
reveal.
Surging inflation – running at a 40-year high
of 9.9 per cent – has squeezed households and businesses,
forcing them to cut spending and likely steering the economy into reverse in
the current quarter, according to consultancy KPMG.
If the economy shrinks in the current quarter, the
UK will meet the official definition of a recession, defined as two
back-to-back quarters of negative growth.
The UK is on course for a long-period of
“stagnation,” the firm said, adding the economy will shrink 0.2 per cent next
year.
The government’s £160bn energy bill freeze and tax
cut package is likely to result in the recession being “shallower compared to
previous downturns,” the KPMG said.
Pegging energy bills at £2,500 for two years is set
to cut the headline rate of inflation five percentage points – to 10.5 per cent
in October – from its previous expected peak.
However, the hefty borrowing and tax cutting
splurge has rocked UK financial markets, forcing borrowing costs higher and the
pound to new lows against the US dollar.
Severe market volatility forced the Bank of England
yesterday to launch an emergency round of bond purchases to bring gilt yields
back down. Prices and yields move inversely.
More
UK already in
recession but market chaos will make it worse (cityam.com)
Next
slashes forecasts as cost of living hits shoppers
THURSDAY 29 SEPTEMBER 2022 7:31 AM
Next has slashed its sales and profit forecasts for
the second half of the year as a cocktail of cost of living pressures squeezes
consumer spending power.
The high street stalwart said sales were now
expected to contract 1.5 per cent compared to last year, while profits would
come in at around £840m, down from an initial forecast of £860m.
It came despite a strong first six months of the
year for Next in which profits jumped 16 per cent to £401m on the same period
last year as sales rose 12.4 per cent.
But the retail group said that economic pressures
has already began to drag on sales in August.
“August trade was below our expectations and cost
of living pressures are set to rise in the coming months. Sales in September
have improved, and we may see benefits from recent Government measures,” Next
said in its half year report.
“It is a very difficult call but, on balance, we
have decided to reduce our forecast for full price sales in the second half
from +1 per cent to -1.5 per cent versus last year.”
Earnings per share at the firm – assuming the
recently announced change in UK corporation tax rate is enacted before the year
end – are forecast to be 545.1p, up 2.7 per cent on 2021.
Next slashes
forecasts as cost of living hits shoppers (cityam.com)
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.
Pfizer
pays almost $120 million for app that detects COVID from a cough
Rich Haridy September 28, 2022
Pharma
giant Pfizer has shelled out nearly US$120 million to acquire a small
Australian company claiming to have developed a smartphone app that can
accurately diagnose COVID-19 by analyzing the sound of a cough.
For around
a decade small Australian digital healthcare company ResApp has been working on
developing an algorithm that can diagnose
respiratory illnesses by simply studying the sound of a patient’s cough. Initially the system was trained to diagnose pneumonia, but by 2019 the researchers had shown the technology
could effectively distinguish asthma, croup and bronchiolitis.
When the pandemic struck in
2020 the team unsurprisingly quickly pivoted to incorporate COVID-19 diagnoses
into its cough-recognition technology. By early 2022 the first data from a pilot trial testing the COVID algorithm revealed impressively good results.
The trial found the system
could accurately detect 92% of positive COVID cases solely from the sound of a
cough. The system also recorded 80% specificity, meaning only two out of every
10 people screened received false positive results.
Soon after ResApp revealed
these results pharma giant Pfizer began circling, initially offering around
$65 million for the technology. Now, in a formal acquisition announcement, a
deal has been finalized for Pfizer to buy ResApp for a massive $116 million.
In a statement, a Pfizer
spokesperson said the preliminary data was encouraging and the deal expands the
company's footprint into the sphere of digital health.
"We believe the COVID-19
screening tool is the next step to potentially provide new solutions for
consumers that aim to quell this disease," the spokesperson said to ABC news. "We look
forward to refining this algorithm further and working with regulators around
the world to bring this important product to consumers as quickly as
possible."
More
Pfizer pays almost
$120 million for app that detects COVID from a cough (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.
Thyssenkrupp may have just cleared the path to bulk
green steelmaking
Loz Blain September 28, 2022
German steel giant Thyssenkrupp is investing US$1.9 billion
in a hydrogen-powered direct-reduction system that can create high-quality
steel without needing the rare, high-grade iron ore required by most green
steel processes. This could open the floodgates.
Every ton of conventionally produced steel puts nearly two
tons of carbon dioxide into the atmosphere, and humankind uses so much of the
stuff that steel production contributes somewhere between 7 to 8% of global
carbon emissions every year. Cleaning up this massive emissions disaster over
the next quarter century is imperative, and a daunting challenge.
But the technology to make green steel is well understood and
already in use. You stop using fossil-fired blast furnaces to release the
oxygen from iron ore, and you stop using baked coal, or coke, as a reductant to
add the critical small percentage of carbon to your iron. Instead, you use
green hydrogen in a direct reduction process, both as your reductant and to
power an electric arc furnace to supply the heat. Instead of tons of carbon
dioxide, this process emits water.
Sweden's H2
Green Steel has the jump on
the green steel market for the time being. Its $3 billion facilities are
expected to pump out some 5 million tons of high-quality zero-emissions steel
annually by 2030. But the mainstream is making moves to catch up; ArcelorMittal, the world's second-largest steel
producer, will be producing 1.6 million tons of green steel a year by 2025 at a
new zero-carbon plant in Spain.
Now Germany's Thyssenkrupp has committed the funds to replace
one of the giant blast furnaces at its Duisburg site with a direct-reduction
system, which will begin producing around 2.5 million tons of
"low-CO2" steel from 2026.
More
Thyssenkrupp may
have just cleared the path to bulk green steelmaking (newatlas.com)
Another weekend and a dodgy weekend
for His Majesty’s Government, Gilts, the Pound, the UK Chancellor and the UK’s
rookie Prime Minister.
The good news for me and other holders
of some gold and silver, gold at least reached all time highs priced in
Sterling.
By Saturday we will have a better
understanding of just how much damage Hurricane Ian caused in Florida. Our
thoughts and prayers go out to those affected.
Have a great weekend everyone.
"You have to choose [as a
voter] between trusting to the natural stability of gold and the natural
stability and intelligence of the members of the government. And with due
respect to these gentlemen, I advise you, as long as the capitalist system
lasts, to vote for gold."
George Bernard Shaw.
