Monday, 31 October 2022

Dress Up Monday. Rate Hikes Week. Wheat.

 Baltic Dry Index. 1534 -78      Brent Crude 95.00

Spot Gold 1642           US 2 Year Yield 4.41 +0.11

Coronavirus Cases 02/04/20 World 1,000,000

Deaths 53,100

Coronavirus Cases 31/10/22 World 635,472,882

Deaths 6,593,723

“Those who don't know history are destined to repeat it.”

Edmund Burke.

In the stock casinos, the last trading day of the month. Time to dress up stocks and stock indexes for the all important money manager month-end bonuses.

But with the Fed and Bank of England both about to raise their key interest rates this week and inflation still rising everywhere except Japan, it’s way to early to start bottom fishing in stocks.

Asia-Pacific stocks rise despite China’s factory and services activity contracting

UPDATED MON, OCT 31 20221 2:33 AM EDT

Shares in the Asia-Pacific were mostly higher on Monday as China factory activity missed expectations, and markets look ahead to the U.S. Fed meeting later this week.

Hong Kong’s Hang Seng index was up 0.89% while gaming stocks rebounded following news of an e-visa system for Chinese residents traveling to Macao. In mainland China, the Shanghai Composite was little changed and the Shenzhen Component gained 0.654%.

The Nikkei 225 rose 1.68%, and the Topix gained 1.41%. South Korea’s Kospi added about 1% and the Kosdaq was 1.02% higher.

In Australia, the S&P/ASX 200 increased 1.04%. MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.03% higher.

China’s National Bureau of Statistics released its Purchasing Managers’ Index data, with the official manufacturing print coming in at 49.2, missing expectations.

Later this week, the Federal Reserve will hold its policy meeting and announce its interest rate decision. Several countries will report inflation data this week.

On Friday in the U.S., major stock indexes jumped 2% each on optimism that inflation may be slowing.

Hong Kong stocks volatile, Asia markets mixed; China PMI shrinks into contraction (cnbc.com)

 

Stock futures slightly lower with Dow on track for best month since 1976

UPDATED MON, OCT 31 2022 12:19 AM EDT

Stock futures were slightly lower early on Monday morning ahead of the final day of October, with the Dow Jones Industrial Average poised to clinch its best month in decades.

S&P 500 futures were 0.12% lower, while Nasdaq 100 futures dipped 0.2%. Dow futures ticked down 14 points, or less than 0.1%.

The Dow is up 14.4% in October, which would be its best month since 1976. The S&P 500 and Nasdaq Composite are also up for the month, putting Wall Street on track to snap a two-month losing streak.

The gains have come despite a mixed third-quarter earnings season from major companies, which has shown slowing growth and a few major disappointments from large tech companies.

Earnings season continues this week, with Uber, Pfizer and Advanced Micro Devices among the biggest names to report.

Traders will be preparing for the latest Federal Reserve meeting, which begins Tuesday. The central bank is expected to hike rates by three quarters of a percentage again on Wednesday, but many on Wall Street are looking for a signal from the statement or chairman Jerome Powell’s press conference that the Fed could pause its hikes in the near future.

“If J Powell gives the green light next week and doesn’t deliver a Jackson Hole type performance, there is very little to stop this move from a technical standpoint. A body in motion stays in motion,” Matt Fleury of Goldman Sachs wrote in a note on Saturday.

Goldman Sachs expects Fed rates to peak at 5%

Economists at Goldman Sachs expect the Federal Reserve funds rate to peak at 5%, after raising its forecast for the central bank to hike 75 basis points in this week’s upcoming meeting.

Economists led by Jan Hatzius said in a Saturday note that they are adding another 25 basis points to their forecasts — now calling for a 50 bps hike in December, a 25 bps hike in February, and another 25 bps hike in March.

“Inflation is likely to remain uncomfortably high for a while, which could make continuing to hike in small increments the path of least resistance,” the note said.

Stock futures slightly lower with Dow on track for best month since 1976 (cnbc.com)

Finally, that food price crisis might soon become a food availability crisis for many. First this year,  it was the Rhine disrupting shipping, now it’s the great Mississippi creating supply disruption.

Next, Russia says it will block an extension of the soon to expire Ukraine grain deal? What will Russia do after November 19th? How high will the wheat price rise?

Drought-stricken Mississippi River creates woes across US region

October 28, 2022.

Adam Thomas starts harvesting soybeans on his farm in the US state of Illinois when the dew burns off in the morning. This year, dry weather accelerated the work, allowing him to start early. His problem was getting the soybeans to market.

About 60 percent of the Midwest and northern Great Plain states are in a drought. Nearly the entire stretch of the Mississippi River — from Minnesota to the river’s mouth in Louisiana — has experienced below average rainfall over the past two months.

As a result, water levels on the river have dropped to near-record lows, disrupting ship and barge traffic, which is critical for moving recently harvested agricultural goods such as soybeans and corn downriver for export.

Although scientists say climate change is raising temperatures and making droughts more common and intense, a weather expert says this latest drought affecting the central United States is more likely a short-term weather phenomenon.

The lack of rain has seriously affected commerce. The river moves more than half of all US grain exports, but the drought has reduced the flow of goods by about 45 percent, according to industry estimates cited by the federal government. Prices for rail shipments, an alternative to sending goods by barge, are also up.

“It just means lower income, basically,” said Mike Doherty, a senior economist with the Illinois Farm Bureau.

---- Thousands of visitors last weekend walked across a typically submerged riverbed to Tower Rock, a protruding formation about 160km (100 miles) southeast of St Louis. It’s the first time since 2012 that people could make the trek and stay dry. On the border of Tennessee and Missouri where the river is 0.8km (a half-mile) wide, four-wheeler tracks snake across vast stretches of exposed riverbed.

In a badly needed break from the dry weather, the region finally received some rain this week. “It is kind of taking the edge off the pain of the low water, but it is not going to completely alleviate it,” said Kai Roth of the Lower Mississippi River Forecast Center, adding that the river needs several rounds of “good, soaking rain”.

Barges are at risk of hitting bottom and getting stuck in the mud. This month, the US Coast Guard said there had been at least eight such groundings.

Some barges touch the bottom but don’t get stuck. Others need salvage companies to help them out. Barges are cautioned to lighten their loads to prevent them from sinking too deep in the water, but that means they can carry fewer goods.

More

Drought-stricken Mississippi River creates woes across US region (msn.com)

 

U.N., Turkey, Ukraine press ahead with Black Sea grain deal despite Russian pullout

KYIV/NEW YORK, Oct 31 (Reuters) - The United Nations, Turkey and Ukraine pressed ahead to implement a Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward, despite Russia's withdrawal from the pact that has allowed the export of Ukrainian agricultural products to world markets.

Russia, which invaded Ukraine on. Feb 24, on Saturday halted its role in the Black Sea deal for an "indefinite term", cutting shipments from one of the world's top grain exporters, because it said it could not "guarantee safety of civilian ships" travelling under the pact after an attack on its Black Sea fleet.

The move has sparked an outcry from Ukraine, NATO, the European Union and the United States, while the United Nations and Turkey, two main brokers of the July deal, scrambled on Sunday to save it.

U.N. Secretary-General Antonio Guterres was deeply concerned about Russia's move and delayed a foreign trip to try and revive the agreement that was intended to ease a global food crisis, his spokesperson said.

Following Russia's move, Chicago wheat futures jumped more than 5 percent on Monday as both Russia and Ukraine are among the world's largest wheat exporters, analysts said.

More than 9.5 million tonnes of corn, wheat, sunflower products, barley, rapeseed and soy have been exported since July. Under the deal, a Joint Coordination Centre (JCC) - made up of U.N., Turkish, Russian and Ukrainian officials - agrees on the movement of ships and inspects the vessels.

No ships moved through the established maritime humanitarian corridor on Sunday. But the United Nations said in a statement that it had agreed with Ukraine and Turkey on a movement plan for 16 vessels on Monday - 12 outbound and 4 inbound.

More

U.N., Turkey, Ukraine press ahead with Black Sea grain deal despite Russian pullout | 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.

Bank of England set to hike rates in blow for mortgages: Biggest interest increase for 30 years on cards

29 October 2022

The Bank of England is set to implement the biggest interest rate rise for 30 years this week in a new blow to millions of borrowers. 

As central banks around the world step up their fight against inflation, rates in the UK are expected to jump from 2.25 to 3 per cent. That would be the biggest increase since Black Wednesday in September 1992, when the UK had to leave the European Exchange Rate Mechanism. And it would push the cost of mortgages ever higher. 

Borrowing costs have been rising for nearly a year as the Bank battles to get rising prices back under control. 

Inflation in the UK is at a 40-year high of 10.1 per cent – more than five times its 2 per cent target. 

The Bank's Monetary Policy Committee has raised rates at each of its last seven meetings, taking them from a record low of 0.1 per cent in December to 2.25 per cent now, though never by more than half a percentage point in one go. 

But a 0.75 percentage point rise is firmly on the cards on Thursday. In the wake of Kwasi Kwarteng's mini-Budget, it was thought the Bank could raise rates by as much as 1 percentage point amid chaos on financial markets. 

The junking of tax cuts and the stabilisation of the pound now make that unlikely. 

More

Bank of England set to hike rates in blow for mortgages: Biggest interest increase for 30 years on cards (msn.com)

European Central Bank warns interest rate rises 'like a runaway train' as inflation soars

Daily Mail City & Finance Reporter – October 28, 2022

Europe's cost of living crunch intensified as prices soared in Germany, France and Italy, sparking warnings that interest rates will rise 'like a runaway train'. 

On another bleak day for the eurozone, inflation in its three biggest economies rose more than was previously feared. 

The figures came amid fresh warnings from the European Central Bank (ECB) that more interest rate rises are coming as it battles to put a lid on inflation. 

The ECB this week doubled interest rates – hiking them from 0.75 per cent to 1.5 per cent. 

ECB official Peter Kazimir warned the rises were 'like a runaway train' yesterday, adding: 'It will go even higher in December and the first months of next year.' 

Inflation in Italy hit 12.8 per cent this month – the highest since current records began in 1996 – while in Germany it was 11.6 per cent and France 7.1 per cent. 

The figures sent borrowing costs across Europe higher on expectations of further rises from the ECB. 

'The truth is that the outlook of rate hikes remains very uncertain as it is data-dependent,' Massimiliano Maxia, of Allianz Global Investors, added.

'It wouldn't surprise me if the ECB had to raise rates more than expected in December.'

European Central Bank warns interest rate rises 'like a runaway train' as inflation soars (msn.com)

Pending home sales fell 10% in September, much worse than expected

PUBLISHED FRI, OCT 28 2022 10:00 AM EDT UPDATED FRI, OCT 28 2022 4:56 PM EDT

Pending home sales, a measure of signed contracts on existing homes, dropped a much worse-than-expected 10.2% in September from August, according to the National Association of Realtors.

Economists had predicted a 4% decline. Sales were down 31% year over year.

This marks the lowest level on the pending sales index since June 2010, excluding April 2020, when the Covid pandemic was in its early days.

Realtors point squarely to sharply higher mortgage rates, which had sat at record lows for the first two years of the pandemic. The average rate on the popular 30-year fixed mortgage was right around 3% at the start of this year, but then rose swiftly, crossing 6% in June, according to Mortgage News Daily. It pulled back a bit in July and August, but then began rising again, crossing 7% in September, when these contracts were signed.

More

Pending home sales fell 10% in September from August (cnbc.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

https://www.zerohedge.com/markets/environmental-disaster-ev-battery-metals-crunch-horizon-industry-races-recycle

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. 

CDC Pushed for COVID-19 Boosters Without Clinical Trials: Emails

Oct 26 2022

The U.S. Centers for Disease Control and Prevention (CDC) pressured U.S. regulators to clear COVID-19 boosters without clinical trial data, according to newly released emails.

CDC officials relayed to counterparts at the Food and Drug Administration (FDA) in early August 2021 that they wanted authorization for Moderna and Pfizer boosters as data began showing that the vaccines weren’t working as well as initially promoted.

 

The conversation took place on a call that was described by Dr. Phil Krause, a top FDA official, to several other FDA workers.

 

“Take a deep breath before reading this next paragraph. On that call, the CDC evidently stated that they will assemble all the data they are aware of on third dosing in this setting and send it to us in the hope that we will (very soon) authorize the third dose for immunocompromised as part of the EUA,” Krause wrote in the Aug. 5, 2021, email (pdf).

EUA stands for emergency use authorization.

 

All of the COVID-19 vaccines were authorized under emergency conditions at that time.

No boosters had been authorized and no clinical data were available for the boosters.

 

The emails show that “the CDC wanted the booster approved without a trial,” Dr. Jay Bhattacharya, a professor of medicine at Stanford University, wrote on Twitter.

 

The CDC didn’t respond to a request for comment.

 

Krause was responding to Doran Fink, who also works for the FDA’s Center for Biologics Evaluation and Research, charged with evaluating vaccines.

 

Fink sent along a post that had been made to an infectious diseases forum regarding whether doctors should be giving additional vaccine doses to patients with compromised immune systems despite the lack of authorization.

 

Dr. Richard Nathan of Idaho had written that other countries, including Israel, had cleared boosters.

 

“Pfizer recommends it and I trust their guidance over the turmoil at our federal agencies. With millions of doses of vaccine set to expire, you should do what you think is best for your patients. I can’t believe you would get pushback from anyone. Keep in mind, nearly everyone in this group is six to seven months out from the second dose of the vaccine and many have significant daily exposure to the virus,” Nathan wrote.

 

Fink said the post “accurately reflects more widespread thinking that I am hearing in other forums as well,” including among doctors who advise the CDC on vaccines.

 

“Providers are losing confidence in FDA/CDC to do the right thing for their patients,” Fink said.

 

Less than two weeks later, the FDA authorized boosters for certain people, including immunocompromised persons.

More

CDC Pushed for COVID-19 Boosters Without Clinical Trials: Emails (theepochtimes.com)

Next, some vaccine links kindly sent along from a LIR reader in Canada.

NY Times Coronavirus Vaccine Trackerhttps://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html

Regulatory Focus COVID-19 vaccine trackerhttps://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.

The tough calculus of emissions and the future of EVs

From materials and batteries to manufacturing, calculating the real carbon cost of EVs is just getting started

Mark Mills@MarkPMills 4:00 PM GMT+1August 22, 2021

Investors and politicians embracing a vision of an all-electric car future believe that path will significantly reduce global carbon dioxide emissions. That’s far from clear.

A growing body of research points to the likelihood that widespread replacement of conventional cars with EVs would likely have a relatively small impact on global emissions. And it’s even possible that the outcome would increase emissions.

The issue is not primarily about the emissions resulting from producing electricity. Instead, it’s what we know and don’t know about what happens before an EV is delivered to a customer, namely, the “embodied” emissions arising from the labyrinthine supply chains to obtain and process all the materials needed to fabricate batteries.

All products entail embodied emissions that are “hidden” upstream in production processes, whether it’s a hamburger, a house, a smartphone or a battery. To see the implications at the macro level, credit France’s High Climate Council for a study issued last year. The analysis found that France’s claim of achieving a national decline in carbon dioxide emissions was illusory. Emissions had in fact increased and were some 70% higher than reported once the embodied emissions inherent in the country’s imports were counted.

Embodied emissions can be devilishly difficult to accurately quantify, and nowhere are there more complexities and uncertainties than with EVs. While an EV self-evidently emits nothing while driving, about 80% of its total lifetime emissions arise from the combination of the embodied energy in fabricating the battery and then in “fabricating” electricity to power the vehicle. The remaining comes from manufacturing the non-fuel parts of the car. That ratio is inverted for a conventional car where about 80% of lifecycle emissions come directly from fuel burned while driving, and the rest comes from the embodied energy to make the car and fabricate gasoline.

Virtually every feature of the fuel cycle for conventional cars is well understood and narrowly bounded, significantly monitored if not tightly regulated and largely assumption-free. That’s not the case for EVs.

---- The goal for any vehicle is to have the fuel system take as small a share of total weight as possible, leaving room for passengers or cargo. Lithium batteries, as revolutionary and Nobel Prize worthy as they are, still constitute a distant second place in the metric of merit for powering untethered machines: energy density.

The inherent energy density of lithium-class chemicals (i.e., not a battery cell, but the raw chemical) can be theoretically as high as about 700 watt-hours per kilogram (Wh/kg). While that’s roughly fivefold greater than the energetics of lead-acid battery chemistry, it’s still a small fraction of the 12,000 Wh/kg available in petroleum.

---- Earlier this year, the agency issued a major report on the challenges of supplying ETMs to build batteries as well as solar and wind machines. The report reinforces what others have earlier pointed out. Compared to conventional cars, EVs require using, overall, about 500% more critical minerals per vehicle. Thus, the IEA concludes that current plans for EVs, along with plans for wind and solar, will require a 300% to 4,000% increase in global mine output for the necessary suite of key minerals.

The fact that an EV uses, for example, about 300% to 400% more copper than a conventional car has yet to impact global supply chains because EVs still account for less than 1% of the total global auto fleet. Producing EVs at scale, along with plans for grid batteries as well as for wind and solar machines, will push the “clean energy” sector up to consuming over half of all global copper (from today’s 20% level). For nickel and cobalt, to note two other relevant minerals, “transition” aspirations will push clean energy use of those two metals to 60% and 70%, respectively of global demand, up from a negligible share today.

More, much, much more.

The tough calculus of emissions and the future of EVs | TechCrunch

A permanent Governor of the Bank of England [your central bank here] would be one of the greatest men in England [your country here.] He would be a little 'monarch' in the City; he would be far greater than the 'Lord Mayor.' He would be the personal embodiment of the Bank of England; he would be constantly clothed with an almost indefinite prestige. Everybody in business would bow down before him and try to stand well with him, for he might in a panic be able to save almost anyone he liked, and to ruin almost anyone he liked. A day might come when his favour might mean prosperity, and his distrust might mean ruin. A position with so much real power and so much apparent dignity would be intensely coveted.

Walter Bagehot. Lombard Street. 1873.

Saturday, 29 October 2022

Special Update 29/10/22 Economic Winter Looms.

 Baltic Dry Index. 1534 -78   Brent Crude 95.77

Spot Gold 1645       U S 2 Year Yield 4.41 +0.11

Covid-19 cases 02/04/20 World 1,000,000

Deaths 53,100

Covid-19 cases 22/10/22 World 635,070,183

Deaths 6,592,651

"When you provide free money into a system, manias will build," he said. "Now that we've taken money out of the system, these manias will end, and you will find the market-clearing price for a lot of securities."

Chamath Palihapitiya.

Billionaire investor Chamath Palihapitiya says the Fed warped markets with easy money - and a US recession is looming (msn.com)

In the stock casinos, more exit rallies, probably helped along by next Monday’s dress up stocks and indexes for the all important, month-end money manager bonuses.

But next week brings yet another interest rate hike by the Fed adding to upward dollar pressure.

As winter looms, an economic winter also looms, especially across most of continental Europe.

This year, the old adage, sell in May go away, don’t come back till Labor Day, looks like meaning Labor Day 2023.

Dow closes 800 points higher on Friday, registers fourth straight week of gains

OCT 28 2022 5:33 PM EDT

Stocks rose on Friday despite a tumble in Amazon shares after economic data pointed to slowing inflation and a steady consumer.

The Dow Jones Industrial Average closed 828.52 points, or about 2.6%, higher at 32,861.80. The S&P 500 added nearly 2.5%, to close at 3,901.06. The Nasdaq Composite ended up about 2.9%, to close at 11,102.45.

On a weekly basis, the major indexes made notable gains. It was the fourth positive week in a row for the Dow, a first since a five-week streak ending in November 2021. The 30-stock index is up 5.7% this week in its best performance since May. It’s also on track for its best month since January 1976.

The S&P 500 and the Nasdaq are up 3.9% and 2.2%, respectively, for the week.

Stocks rose on Friday despite a tumble in Amazon shares after economic data pointed to slowing inflation and a steady consumer.

The Dow Jones Industrial Average closed 828.52 points, or about 2.6%, higher at 32,861.80. The S&P 500 added nearly 2.5%, to close at 3,901.06. The Nasdaq Composite ended up about 2.9%, to close at 11,102.45.

On a weekly basis, the major indexes made notable gains. It was the fourth positive week in a row for the Dow, a first since a five-week streak ending in November 2021. The 30-stock index is up 5.7% this week in its best performance since May. It’s also on track for its best month since January 1976.

The S&P 500 and the Nasdaq are up 3.9% and 2.2%, respectively, for the week.

More

Dow closes 800 points higher on Friday, registers fourth straight week of gains (cnbc.com)

Big Tech falters on dreary earnings and forecasts for Q4— Meta has worst week ever, Amazon tumbles 13%

PUBLISHED FRI, OCT 28 2022 5:08 PM EDT

Other than Apple, it was a brutal earnings week for Big Tech.

AlphabetAmazonMeta and Microsoft combined lost over $350 billion in market cap after offering concerning commentary for the third quarter and the remainder of the year. Between slowing revenue growth — or declines in Meta’s case — and efforts to control costs, the tech giants have found themselves in an unfamiliar position after unbridled growth in the past decade.

Third-quarter results this week came against the backdrop of soaring inflation, rising interest rates and a looming recession. Apple bucked the trend after beating expectations for revenue and profit. The stock on Friday had its best day in over two years.

On the opposite end of the spectrum was Meta, which has seen its stock price collapse in 2022. Facebook’s parent came up short on earnings, recorded its lowest average revenue per user in two years and said sales in the fourth quarter will likely decline for a third straight period.

“There are a lot of things going on right now in the business and in the world, and so it’s hard to have a simple ‘We’re going to do this one thing, and that’s going to solve all the issues,’” Meta CEO Mark Zuckerberg said on the company’s earnings call on Wednesday.

Meta’s stock had its worst week since the company’s IPO in 2012, plunging 24% over the past five days. Microsoft fell 2.6% for the week, due to a 7.7% decline on Wednesday after the company gave weak guidance for the year-end period and missed estimates for cloud revenue.

Things were also bleak at Amazon, which dropped 13%. A gloomy fourth-quarter forecast along with a dramatic slowdown in its cloud-computing unit were largely to blame for the sell-off.

More

Big Tech falters on Q3 2022 results as Meta has worst week ever (cnbc.com)

Wall St Week Ahead Hopeful U.S. stock rally set for date with Federal Reserve reality

NEW YORK, Oct 28 (Reuters) - A bounce in U.S. stocks that has defied a barrage of major earnings disappointments faces a key test in the coming week, when the Federal Reserve's next meeting could shed light on how long it will stick to the aggressive monetary policies that have crippled asset prices in 2022.

Betting on a less hawkish Fed has been a dangerous undertaking this year. Stocks have repeatedly rebounded from lows on expectations of a so-called Fed pivot, only to be crushed anew by fresh evidence of persistent inflation or a central bank bent on maintaining its pace of rate increases.

Pockets of softness in the U.S. economy have fueled recent hopes of a tempering of rate hikes, along with signs that some of the world’s central banks may be nearing the end of their rate hiking cycles. Meanwhile, cash-heavy investors afraid of missing out on a sustained rally have contributed to the bullish move, market participants said.

“The market is starting to believe that there is an endgame in sight for this huge global tightening cycle,” said Keith Lerner, co-chief investment officer at Truist Advisory Services.

More

Wall St Week Ahead Hopeful U.S. stock rally set for date with Federal Reserve reality | Reuters

In other news, time to prepare for economic winter.

Nobel laureate Paul Krugman warns the US economy's rebound won't last - and flags housing and exports as key worries

October 28, 2022

Paul Krugman has shrugged off data showing US growth rebounded last quarter, as he expects a housing-market slump and weaker exports to shrink the economy down the line.

"While this report made all the people who screamed 'recession!' look as foolish and partisan as they were, it was not, if you look under the hood, a sign that the worst is over," he said in a  Twitter thread on Thursday.

"It suggests, at least to me, that there's a lot of contraction still in the pipeline," Krugman added.

The Nobel Prize-winning economist noted that a smaller trade deficit fueled the 2.6% annualized increase in US gross domestic product (GDP) in the third quarter. He expects that growth driver to disappear as the US dollar's surge this year has made American exports less competitive, and overseas recessions could sap demand for US products.

Krugman pointed to the Federal Reserve hiking interest rates from near zero in March to above 3% today as the key reason why he's still worried about an economic downturn. He noted that higher rates have created a trade headwind by boosting the dollar, and eaten into Americans' finances and their ability to buy houses by raising mortgage costs.

----The New York Times columnist and economics professor added that real residential investment has only fallen by 12.5% since the fourth quarter of last year. He deemed that a fairly small decline when mortgage rates have soared and mortgage applications have plunged.

"So there's probably a significant amount of housing contraction still ahead," he said.

Krugman recently argued the Fed has already done enough to beat back inflation, as the impact of its hikes on housing demand and trade will relieve upward pressure on prices. He warned any further hikes would increase the risk of a painful recession.

The veteran economist has also pointed to a shrinking ratio of job vacancies to workers as evidence the US economy is "just at the beginning of a large Fed-induced cooling/contraction."

Nobel laureate Paul Krugman warns the US economy's rebound won't last - and flags housing and exports as key worries (msn.com)

Larry Summers Says Consensus View That Inflation Will Come Way Down Is 'Outside Range Of Normal Historical Experience'

October 28, 2022

Former Treasury Secretary Lawrence H. Summers believes if one looks at the history of developed nations in the 1970s, it is clear that prospects of bringing down inflation are not very encouraging.

What Happened: “The history of developed countries since 1970 is very discouraging about the prospects of bringing down 8 percent inflation,” Summers tweeted.

Historical Experience: The former Treasury Secretary also explained how historical experience may be too optimistic a guide to current times, especially when labor markets are very tight. 

"Populism has never been stronger. Labor markets are super tight. Government debt ratios are at peak levels. Globalization is certainly no longer spreading and may be receding,” Summers said in his tweet.

The U.S. Federal Reserve is set to announce its monetary policy next week, and market participants have already started factoring in a relatively less aggressive central bank. 

The SPDR S&P 500 ETF Trust (NYSE: SPY) has gained 2.55% over the last month, while the Vanguard Total Bond Market Index Fund ETF (NASDAQ: BND) has shed over 1.61%.

On Consensus: Summers also cited a chart to explain how consensus about inflation coming down in present times is outside the range of normal historical experience.

The former Treasury Secretary believes inflation will persist for some time. “We don’t have any experience with soft landings from high inflation without recessions,” Summers said.

Larry Summers Says Consensus View That Inflation Will Come Way Down Is 'Outside Range Of Normal Historical Experience' (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.

U.S. inflation still running hot, key PCE price gauge shows

Last Updated: Oct. 28, 2022 at 8:39 a.m. ET

The numbers: A key gauge of U.S. inflation rose a mild 0.3% in September, aided by the lower cost of gas. Yet prices are still going up even if they aren’t climbing as fast as they were earlier in the year.

 

Another measure of inflation that omits volatile food and energy costs rose a sharp 0.5% last month. Wall Street had forecast a 0.5% increase in the so-called core personal consumption expenditures price index.

 

The Federal Reserve views the PCE index as the best barometer of inflation trends. What it’s shown lately are easing but still-high price pressures.

Key details: The cost of gasoline fell in September for the third month in a row, though prices have started to rise again. That could show up in future inflation reports.

 

Food prices increased in September, as did the cost of housing and transportation.

The overall rate of inflation in the past year was unchanged at 6.2% compared to the prior month.

The core rate of inflation in the past 12 months climbed to 5.1% from 4.9%. That leaves it just a few ticks below a 40-year high of 5.4% in February.

Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their behavior due to rising prices.

They might substitute cheaper goods such as ground beef for more expensive ones like ribeye to keep their costs down. Or stay at a cheaper “airbnb” instead of a hotel.

The CPI showed inflation rising at a 8.2% yearly rate in September.

U.S. inflation still running hot, key PCE price gauge shows - MarketWatch

Discontent Rises in Europe as Economic War With Russia Pushes Up Cost of Living

Governments fear protests against high energy prices could weaken public support for Ukraine

Updated Oct. 27, 2022 10:01 am ET

A wave of protests triggered by rocketing living costs and a looming recession is sweeping across Europe, testing the resolve of governments that have so far maintained unity in their costly economic war with Russia.

The public backlash against high prices for electricity and heating as temperatures begin to fall is also fueling tensions between European capitals over richer nations’ larger relief packages, which poorer neighbors say are distorting the market and compounding the crisis.

On Thursday, thousands of people took to the streets across France to demand higher wages. Striking teachers, railway and health workers staged marches in dozens of cities, including Paris, snarling traffic and disrupting public transport.

In Belgium, the Czech Republic, Hungary and Germany, tens of thousands have marched in recent weeks, demanding pay rises to offset inflation, more state support, government intervention in the energy market and, in some instances, an end to sanctions against Russia.

Despite measures to support households and businesses totaling 264 billion euros, equivalent to $266 billion, according to Brussels-based think tank Bruegel—by far the largest such package in Europe—Germany has seen weekly protest rallies since the end of the summer, many of them concentrated in the country’s former communist east.

Popular support for Ukraine remains high across Europe and the protests in France haven’t targeted Paris’s Ukraine policy. Yet demonstrators in eastern Germany have been more political, demanding an end to Western sanctions against Russia in a warning to Europe about the political risks it could face should Moscow’s war on Ukraine drag on.

----- The German protests have so far been widespread but comparatively small. Yet some moderate parties and union leaders have begun organizing rallies in the rest of the country to demand more state aid for people, in a sign that economic discontent—if not opposition to supporting Ukraine—is spreading despite the government’s relief measures.

“This is merely the silence before the storm—the discontent is great, and people do not have any sense that the government has a plausible strategy to master the crisis,” said Manfred G├╝llner, head of Forsa, a pollster.

----- The German economy is facing a difficult winter, said Clemens Fuest, head of the Ifo Institute, an economic think tank that advises the government. Every fourth company is considering layoffs and the prospect of permanently high energy prices is forcing industrial investors to consider whether it is still sensible to invest in Europe, Mr. Fuest said.

More

Discontent Rises in Europe as Economic War With Russia Pushes Up Cost of Living - WSJ

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

https://www.zerohedge.com/markets/environmental-disaster-ev-battery-metals-crunch-horizon-industry-races-recycle

Covid-19 Corner

This section will continue until it becomes unneeded.

China Covid: Millions back in lockdown as Beijing doubles down on zero-Covid

28 October, 2022

Dozens of cities across China, including Wuhan where the coronavirus was first recorded, have gone into lockdown - as the country pursues leader Xi Jinping's zero-Covid policy.

More than 800,000 people in one district in Wuhan were told to stay at home until 30 October.

"We feel numb to it all. We feel more and more numb," one local told Reuters.

The city of Zhengzhou, home to the world's largest iPhone manufacturing plant, was also affected.

It comes as China reported a third straight day of more than 1,000 cases.

Earlier this month Mr Xi signalled that there would be no easing up of the zero-Covid policy, calling it a "people's war to stop the spread of the virus".

As of Oct 24, some 28 cities across the country were implementing some degree of lockdown measures, analysts Nomura told news agency Reuters - with around 207 million people affected in regions responsible for almost a quarter of China's GDP, it added.

Across the country, around 200 lockdowns have been implemented in recent days - the majority of this affecting communities that have been marked as high or medium risk. Residents in different areas are subject to different rules, depending on whether they are in a low, medium or high-risk zone.

Wuhan reported up to 25 new infections a day this week, with more than 200 cases over the past two weeks.

In Zhengzhou, a "small number of employees" from Foxconn - a major manufacturer for Apple - have been "affected by the pandemic", the manufacturer told the BBC, adding that quarantined employees were being provided with "material supplies, psychological comfort and responsive feedback". It comes at a critical period for Apple - which is now making the new iPhone 14.

Earlier this week, in-person schooling and dining in at restaurants were suspended in the southern Chinese hub of Guangzhou - which on Thursday reported 19 new virus cases, Some neighbourhoods in the city also remain subject to various control measures.

Even further-flung regions such as Tibet have been affected, after footage emerged earlier this week showing rare large-scale protests against strict zero-Covid measures in the regional capital Lhasa.

The city has been under lockdown for nearly three months as it battles the virus - local officials on Thursday had said eight new Covid cases were reported in Lhasa.

Multiple videos on social media showed hundreds demonstrating and clashing with police. They were said to be mostly ethnic Han Chinese migrant workers. A Lhasa resident confirmed to the BBC that the demonstration had taken place in the city on Wednesday.

Though seen as relatively small outbreaks in other parts of the world, China adheres to a strict zero-Covid policy, where authorities try to wipe out outbreaks.

The adherence to the policy comes despite increasing public fatigue and anger over lockdowns and travel restrictions. The country's economy has also taken a hit as a result - with GDP falling by 2.6% in the three months to the end of June from the previous quarter.

China Covid: Millions back in lockdown as Beijing doubles down on zero-Covid - BBC News

World Health Organization - Landscape of COVID-19 candidate vaccineshttps://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines

NY Times Coronavirus Vaccine Trackerhttps://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html

Regulatory Focus COVID-19 vaccine trackerhttps://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.

 Kamikaze drone Iran Shahed 136 | How it Works

Kamikaze drone Iran Shahed 136 | How it Works - YouTube

This weekend’s music diversion. The music of Sir William Herschel, The King’s astronomer, discoverer of the planet Uranus. Approx.  11 minutes.

William Herschel (1738-1822) - Symphony No.12 in D

William Herschel (1738-1822) - Symphony No.12 in D - YouTube

 

This weekend’s chess update. Approx. 12 minutes.


KNIGHTZ ARE TRICKY BASTARDS!

KNIGHTZ ARE TRICKY BASTARDS! - YouTube

 

This week’s maths update. Approx. 16 minutes.

The Kakeya needle problem (the squeegee approach)

The Kakeya needle problem (the squeegee approach) - YouTube