Baltic Dry Index. 1788 -06 Brent Crude 89.03
Spot Gold 1650 US 2 Year Yield 4.07 -0.23
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 29/09/22 World 621,831,522
Deaths 6,545,405
If all else fails, immortality
can always be assured by spectacular error.
John Kenneth
Galbraith.
The big news later today will be the damage reports coming
in from Florida as hurricane Ian made landfall and is slowly progressing across
the Florida peninsula.
The big story in the markets is the Bank of England
having to prop up UK bonds from the fallout of last Friday’s misjudged mini-budget
attempting to go for growth by cutting taxes paid for by borrowing billions
more.
A high risk gamble when interest rates are low and stable
or falling, inflation is below the BOE’s 2 percent target and the global
economy is expanding.
But the global economy, led by Germany and others is
headed into recession, interest rates are rising just about everywhere with
more interest rate rises to come. UK inflation is at 9.9 percent, the BOE’s key
interest rate lags at a mere 2.25 percent.
What on Earth are they thinking or drinking in His Majesty’s
Treasury?
Billionaire
investor Ray Dalio says UK’s economic plan ‘suggests incompetence’
PUBLISHED WED, SEP 28 20229:43 AM EDT
The financial market turmoil resulting from the U.K. government’s spending plan
“suggests incompetence,” according to billionaire investor Ray Dalio.
“I can’t imagine that this is intended – and if
it’s not intended then it’s an understanding question,” Dalio said on BBC Radio
4′s “Today” program Wednesday.
His comments referred
to the market turbulence that followed Finance Minister Kwasi Kwarteng’s fiscal
announcements late last week. The measures included large swathes of unfunded
tax cuts that have drawn global criticism, including from the International
Monetary Fund.
The Bank of England on Wednesday stepped in to try to calm markets, saying it would purchase government bonds on a temporary
basis to help “restore orderly market conditions.”
Dalio has joined a growing list of economists
criticizing the measures proposed by Liz Truss’ administration.
The founder of Bridgewater, one of the world’s
largest hedge funds, said it isn’t possible to make wealth by running large
deficits because a country needs lenders willing to own that debt.
“It doesn’t stimulate the economy, productivity is
what stimulates the economy over the long run,” Dalio said.
“I would think there would be an understanding of
the mechanics of that by the government and that’s why it’s concerning,” Dalio
said.
Speaking via Twitter, Dalio said the panic selling
driving the plunge in U.K. bonds, sterling and financial assets was “due to the
recognition that the big supply of debt that will have to be sold by the
government is much too much for the demand.”
“That makes people want to get out of the debt and
currency. I can’t understand how those who were behind this move didn’t understand
that. It suggests incompetence,” he added.
A Downing Street spokesperson was not immediately
available to comment when contacted by CNBC.
The U.K. Treasury said Monday that the government
would set out its medium-term fiscal plan on Nov. 23.
More
Ray Dalio says UK’s economic plan suggests
incompetence (cnbc.com)
BoE: Will carry out temporary
purchases of long-dated UK government bonds
The Bank of England announced
on Wednesday that it will carry out temporary purchases of long-dated UK government bonds from September 28, as reported by Reuters.
"The purpose of these
purchases will be to restore orderly market conditions," the BoE
explained.
Key takeaways from the announcement
"The purchases will be
carried out on whatever scale is necessary to effect this outcome."
"BoE stands ready to
restore market functioning and reduce any risks from contagion to credit
conditions for UK households and businesses."
"Financial Policy
Committee noted the risks to UK financial stability from dysfunction in the
gilt market."
"These purchases will be
strictly time-limited."
"Auctions will take place from
today until 14 October."
"The purchases will be unwound
in a smooth and orderly fashion once risks to market functioning are judged to
have subsided."
"MPC annual target of £80
billion stock reduction is unaffected."
BoE: Will carry
out temporary purchases of long-dated UK government bonds (fxstreet.com)
Pension
funds crisis forces £65bn bailout by Bank
28 September 2022
Britain’s pension funds were on Wednesday at the centre of the
financial crisis sparked by the mini-budget forcing the Bank of England to launch a £65 billion emergency
bailout.
The Bank warned of a “material risk to UK financial
stability” and stepped in to buy long-term gilts, as plunging
markets for UK debt sent borrowing costs spiralling and forced
pension funds to dump their assets. Economists compared the crisis to the run of withdrawals
that led to the collapse of Northern Rock in the financial crisis.
On
Wednesday night pressure was mounting on the Chancellor to take more action to
reassure markets, as Downing Street dismissed any suggestion that he will
resign. Senior bankers warned Mr Kwarteng
in a crisis meeting Wednesday morning that his scheduled
announcement of “medium-term fiscal plan” to bring public borrowing under
control was “way too far away”.
Lord Clarke, Chancellor under John Major, told ITV’s
Peston programme on Wednesday night: “I've never known a Budget cause a
financial crisis like this, and I think the Government and the Bank of England
are still going to have to act to calm it down and get us back to normality.”
Both
Liz Truss and Mr Kwarteng are planning to speak publicly for the first
time in days on Thursday when they give brief TV interviews. Downing Street was
moved to dismiss speculation that the Chancellor's job could be at risk after
the tumultuous market reaction to his tax-slashing mini-Budget reaction on
Friday.
In a
further attempt at reassurance, the Treasury let it be known they will be sending letters to all government
department heads saying they must find efficiencies and stick within spending
limits.
Amid
pressure on the Government to help lower income families, Chris Philp, the
Chief Secretary to the Treasury, refused to confirm whether benefits would be
uprated in line with inflation - a promise Rishi Sunak made as Chancellor.
Asked
on ITV on Wednesday night whether he would commit to a 10 per cent rise in
universal credit and pensions, Mr Philp said: "I'm not going to make
policy commitments on live TV".
Tory
MPs publicly and privately spoke of their deep alarm at the financial fallout
on Wednesday, with the Conservative MP Simon Hoare saying: “This inept madness
cannot go on.”
More
Pension
funds crisis forces £65bn bailout by Bank (msn.com)
IMF
and Moody's censure UK policy that sparked market turmoil
September
28, 2022 10:58 AM GMT+1
LONDON, Sept 28
(Reuters) - The International Monetary Fund and ratings agency Moody's ramped
up pressure on Britain to reverse a new economic strategy that was roiling
financial markets for a fourth day on Wednesday and has sparked growing alarm
about the UK housing market.
The rare
intervention in a G7 country from the IMF, the global lender of last resort,
underscored the severity of the situation facing Britain. The value of the
pound and British bonds have collapsed since Friday, when finance minister
Kwasi Kwarteng laid out his plans to boost economic growth, forcing the Bank of
England to signal a "significant" rate hike ahead.
In mid-morning
London trading on Wednesday the pound was down 0.4% at $1.0688, 30-year
government bond yields pushed past 5% to hit a 20-year high, and bond
strategists warned that markets were becoming close to untradeable due to
volatility.
Raymond Thomas
Dalio, co-chief investment officer of the world's largest hedge fund,
Bridgewater Associates, said he could not believe the mistakes being made by
new Prime Minister Liz Truss's government.
"The panic
selling you are now seeing that is leading to the plunge of UK bonds, currency,
and financial assets is due to the recognition that the big supply of debt that
will have to be sold by the government is much too much for the demand,"
he said on Twitter.
Julian Jessop, an
economist who provided informal advice to Truss during her leadership campaign,
said the economy was at risk of falling into a "doom loop". read more
More
IMF and Moody's censure UK policy that sparked market
turmoil | Reuters
In other stock casino news, more relief dead cat bounce.
Stocks rebound
from 2022 low, Dow closes up more than 500 points and snaps six-day losing
streak
UPDATED WED, SEP 28 2022 5:42 PM
EDT
The Dow Jones Industrial Average mounted a big
comeback from its 2022 low as the Bank of England said it would buy bonds to
stabilize its financial markets, a stunning reversal in the monetary tightening
policies implemented this year by most central banks to stifle inflation.
The move stabilized the British
pound, which became the center of attention in markets this week as it tumbled
to a record low against the U.S. dollar. U.S. Treasury yields retreated from
their highest levels in more than a decade, easing concerns that higher rates
were choking the economy.
The Dow jumped 548.75 points, or
1.88%, to 29,683.74. The S&P 500 rose 1.97% to 3,719.04, one day after notching
a new bear market low. The Nasdaq Composite was up 2.05%, ending the
session at 11,051.64.
The Dow and the S&P 500
snapped a six-day losing streak. The Dow is now 19.7% off its 52-week high,
while the S&P 500 is 22.8% below its record. The Nasdaq is down 31.8%.
More
Stocks
rebound from 2022 low, Dow closes up more than 500 points (cnbc.com)
10-year yield
drops the most since 2020 after touching 4%
The benchmark 10-year Treasury yield dropped the
most since 2020 on Wednesday, despite briefly topping 4% earlier in the
session, after the Bank of England announced a bond-buying plan to stabilize
the British pound.
The yield on the 10-year Treasury fell
25 basis points or the most it’s declined since 2020. It yielded 3.705%.
It hit a high of about 4.019%, or the highest level since October
2008, earlier in the session before erasing those gains.
More
10-year yield drops the most since 2020 after touching 4% (cnbc.com)
Asia-Pacific
markets rise after Wall Street rebounds overnight
UPDATED WED, SEP 28 2022 10:10 PM EDT
Shares in the Asia-Pacific rose on Thursday
following a rebound on Wall Street overnight. The rally in the U.S. came after
the Bank of England said it would intervene
in the bond market to stabilize conditions.
Hong Kong’s Hang Seng index jumped
1.33% in early trade. In South Korea, the Kospi added
1.31% and the Kosdaq was 2.38% higher.
The Nikkei 225 in
Japan advanced around 1% and the Topix index gained 0.37%. Australia’s S&P/ASX 200 jumped
1.53%.
In mainland China, the Shanghai Composite rose
0.88% and the Shenzhen Component added
around 1%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose
1.06%.
Overnight in the U.S., the Dow
Jones Industrial Average popped 548.75 points, or 1.88%, to 29,683.74. The
S&P 500 gained 1.97% to 3,719.04, staging a comeback after notching
a new bear market low the previous session. The Nasdaq
Composite was 2.05% higher at 11,051.64 at the close.
Asia
markets rise, Hang Seng index up 2% after Wall Street rebound (cnbc.com)
European stocks
set to rebound after Bank of England placates markets
UPDATED THU, SEP 29 2022 12:17 AM
EDT
European
stocks are heading for a higher open on Thursday after the Bank of England said
it would purchase bonds in an effort to steady its financial markets and the
cratering British pound.
Sterling has stooped to record
lows against the U.S. dollar in recent days.
Global markets saw another
volatile trading day on Wednesday, with stocks trading sharply lower as global
markets sold off on economic concerns surrounding inflation and the growth
outlook.
Market turmoil continued to hit
the U.K., prompting the Bank
of England to suspend the planned start of its gilt selling
next week and begin temporarily buying long-dated bonds in order to calm the
market chaos unleashed by the new government’s so-called “mini-budget.”
That move calmed markets in the
U.S. yesterday, and that, in turn, pacified
indices in Asia-Pacific overnight. U.S. stock futures inched
lower in overnight trading Wednesday.
European
markets rebounds after BoE steps in to calm markets (cnbc.com)
World Bank's Malpass
sees risk of stagflation, likely recession in Europe
Thu, 29 September 2022 at 1:52 am
WASHINGTON (Reuters) -World Bank
President David Malpass on Wednesday warned that it could take years for global
energy production to diversify away from Russia after its invasion of Ukraine,
prolonging the risk of stagflation, or a period of low growth and high
inflation.
In a speech at Stanford University,
Malpass said there was an increased likelihood of recession in Europe, while
China's growth was slowing sharply and U.S. economic output had contracted in
the first half of the year.
Those developments would have grave
consequences for developing countries, Malpass said, citing what he called
"consequential" and "worsening" challenges facing
development.
Addressing the current "perfect
storm" of rising interest rates, high inflation and slowing growth required
new macro- and microeconomic approaches, including better targeted spending
and clearly messaged efforts to increase supplies, Malpass said.
Malpass said the bank's upcoming
"Poverty and Shared Prosperity" report showed that decades of
progress in reducing poverty had slowed by 2015, even before the COVID-19
pandemic, which sent an additional 70 million people into extreme poverty.
The report, due out next week, also
showed a 4% decline in the global median income, the first decline since the
bank began measuring that indicator in 1990, he said.
per capita income levels at a time of
heightened climate change risks.
Malpass said it was unclear if there
would be enough global capital to meet the needs of advanced economies - which
had adopted fiscal policies favoring higher debt levels - and still have enough
leftover to fund the investment needs of developing countries. "The
developing world is facing an extremely challenging near-term outlook shaped by
sharply higher food fertilizer and energy prices, rising interest rates and
credit spreads, currency depreciation and capital outflows," Malpass said.
"A pressing danger for the
developing world is that the sharp slowdown in global growth deepens into
global recession," he said, noting that many of these countries were still
struggling to return to pre-pandemic
More
World
Bank's Malpass sees risk of stagflation, likely recession in Europe (yahoo.com)
Soaring
power costs leave Slovakia economy at risk of collapse, PM tells FT
September
28, 2022 5:31 AM GMT+1 Last Updated 6 hours ago
Sept 28 (Reuters)
- Slovakia's Prime Minister Eduard Heger said that soaring electricity costs
had left the country's economy at risk of "collapse", the Financial
Times reported on Wednesday.
Heger said that
the increase in prices following Russia's invasion of Ukraine would
"kill" the country's economy unless it received billions of euros of
support from Brussels, FT quoted Heger as saying in an interview.
Heger also warned
he would be forced to nationalise the country's power supplies if this was not
forthcoming, the report added.
Soaring power costs leave Slovakia economy at risk of
collapse, PM tells FT | Reuters
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.
Food
inflation hits highest rate ever recorded
WEDNESDAY 28 SEPTEMBER 2022 7:17 AM
FOOD inflation surged to its highest rate on record
since the index started in 2005, according to freshly published data.
According to the British Retail Consortium (BRC)
and NielsenIQ shop price index, food inflation hit 10.6 per cent in September,
up from 9.3 per cent in August.
For fresh food, inflation swelled to 12.1 per cent,
up from 10.5 per cent in August, also the highest rate in the category ever
recorded.
Prices of animal feed, fertiliser and vegetable oil
were amped up further this month due to the warin Ukraine, Helen Dickinson OBE,
BRC chief executive, said.
This has then caused fresh food inflation to soar
over the past few months, especially for items like margarine.
“While the summer drought diminished some harvests,
other produce benefitted from the prolonged sunshine, helping to bring down
prices for fruits such as strawberries, blueberries, and tomatoes,” Dickinson
added.
Overall, shop price annual inflation accelerated to
5.7 per cent in September. This marks an increase from the 5.1 per cent in
August and another record for shop price inflation.
Non-food inflation also stood at 3.3 per cent this
month, which was slightly above a three month average rates of 3.1 per cent.
More
Food inflation hits highest rate ever recorded (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.
Rising
Covid-19 cases in the UK may be a warning for the US
September 27, 2022
There are signs that the United Kingdom could
be heading into a fall Covid-19 wave, and experts say the United States may not
be far behind.
A recent increase in Covid-19 cases in England
doesn’t seem to be driven by a new coronavirus variant, at least for now,
although several are gaining strength in the US and across the pond.
“Generally, what happens in the UK is
reflected about a month later in the US. I think this is what I’ve sort of been
seeing,” said Dr. Tim Spector, professor of genetic epidemiology at Kings
College London.
Spector runs the Zoe Health Study,
which uses an app to let people in the UK and US report their daily symptoms.
If they start to feel bad, they take a home Covid-19 test and record those
results. He says that about 500,000 people are currently logging their symptoms
every day to help track trends in the pandemic.
Spector says the study, which has been running
since the days of the first lockdown in England in 2020, has accurately
captured the start of each wave, and its numbers run about one to two weeks
ahead of official government statistics.
After seeing a downward trend for the past few
weeks, the Zoe study saw a 30% increase in reported Covid-19 cases within the
past week.
“Our current data is definitely showing this
is the beginning of the next wave,” Spector said.
On Friday, that increase
was reflected in official UK government data too, although it was not as large
as the increases reported by Zoe loggers.
More
Rising Covid-19
cases in the UK may be a warning for the US (msn.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.
Oil
giant Shell snaps up African solar provider Daystar Power
September
28, 2022 10:20 AM GMT+1
Shell is one of the most influential oil producers in Africa,
but the Daystar purchase is its first power acquisition on the continent,
underscoring its mandate to cut its greenhouse gas emissions in half by 2030.
"As we do this, we're helping to address a critical energy
gap for many who currently rely on diesel generators for backup power,"
Thomas Brostrøm, Shell's vice president for renewable generation, said in a
statement.
Neither Shell nor
Daystar commented on the sale price. Shell earmarked $2-3 billion in capital
expenditure for renewables and energy solutions in 2022.
Daystar,
headquartered in Lagos, provides off-grid power to commercial and industrial
clients in Nigeria, Ghana, Togo and Senegal, offering solar and hybrid power
solutions with battery storage.
It has 300 power
installations with installed solar capacity of 32 megawatts, but aims to boost
capacity to 400 MW by 2025.
It also plans to
expand to eastern and southern Africa, a goal that Daystar chief executive
Jasper Graf von Hardenberg said would be easier to reach with Shell.
"For the
next stage - really becoming a pan-Africa power provider - it requires an
investor with the same vision. Someone really with sufficient firepower to
finance this growth," he told Reuters.
Pending
regulatory approvals, Shell will fully own Daystar, but von Hardenberg and the
management team will continue to run the company.
More
Oil giant Shell snaps up African solar provider
Daystar Power | Reuters
Nothing is so admirable in
politics as a short memory.
John Kenneth Galbraith.
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