Tuesday, 18 October 2022

A Relief Exit Rally. Winter and Recession Loom.

 Baltic Dry Index. 1843 +05    Brent Crude 92.33

Spot Gold 1661           US 2 Year Yield 4.45 -0.03

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

Deaths 53,100

Coronavirus Cases 18/10/22 World 630,319,096

Deaths 6,572,850

“You are a slow learner, Truss."
"How can I help it? How can I help but see what is in front of my eyes? Two and two are four."
"Sometimes, Truss. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder.

With apologies to George Orwell 1984.  The G-20, 2022.

In the stock casinos today, more dead cat bounce exit rallies. But the outlook for the rest of 2022 and 2023 doesn’t look good, to use old fashioned British understatement.

In the UK, finally a little political and economic realism, but I suspect that the damage has already occurred and has yet to surface.

We have reached mid-October with the northern hemisphere winter just about to start. Anything less than a much warmer than usual winter will present big problems for most of continental Europe, with a big spill over impact on GB if Europe has to start drawing electricity from GB rather than acting as a backup electricity supplier.

All in all, not a coming winter for most punters to be risk on.

 

Australia’s stocks lead gains in Asia after Wall Street’s jump; yen hovers near 149-levels

UPDATED TUE, OCT 18 2022 12:12 AM EDT

Shares in the Asia-Pacific traded higher on Tuesday after Wall Street’s rally overnight.

In Australia, the S&P/ASX 200 gained 1.68%, leading gains in the wider region. The Reserve Bank of Australia released its meeting minutes for its October meeting. The Nikkei 225 was 1.38% up, while the Topix added 1.11%. Japan’s yen touched 149.08 against the dollar and was last trading near 148.80.

The Hang Seng index in Hong Kong rose 1.03%, with the Hang Seng Tech index up 2.49%. In mainland China, the Shanghai Composite ticked 0.16% higher and the Shenzhen Component added 0.582%.

China was due to report gross domestic product data, but has delayed that and a slew of economic releases for the third quarter, according to an updated calendar posted on the National Bureau of Statistics’ website. The unusual move comes as the Communist Party of China holds its 20th National Congress.

South Korea’s Kospi was 0.86% higher and the Kosdaq was 1.67% up. MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.17%.

Overnight in the U.S., major indexes jumped following some better-than-expected earnings reports.

The Dow Jones Industrial Average added 550.99 points, or 1.86%, to close at 30,185.82. The S&P 500 popped 2.65% to 3,677.95. The tech heavy Nasdaq Composite jumped 3.43% for its best day since July, finishing at 10,675.80.

Asia-Pacific markets rise after Wall Street jump; yen near 149-levels (cnbc.com)

 

Microsoft confirms job cuts after calling for growth to slow

Microsoft spokesperson on Monday confirmed that the company let go of additional workers as the software maker’s revenue is expected to slow, thanks to weaker sales of Windows licenses for PCs.

The move aligns with efforts at technology companies big and small to lower costs. Meta Platforms and Salesforce are among those in Silicon Valley that have slowed their pace of hiring this year, even as CoinbaseNetflix and others have resorted to layoffs.

“Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly,” a Microsoft spokesperson told CNBC. “We will continue to invest in our business and hire in key growth areas in the year ahead.”

Monday’s announcement comes three months after Microsoft said it trimmed less than 1% of employees.

In July, Microsoft called for about 10% revenue growth in the fiscal first quarter, slower than it’s been in more than five years. The company will be announcing earnings on Oct. 25.

Axios, which reported the layoffs earlier on Monday, said the cuts impacted fewer than 1,000 people and cited an unnamed person.

Microsoft confirms job cuts after calling for growth to slow (cnbc.com)

Forecast for US Recession Within Year Hits 100% in Blow to Biden

Josh Wingrove – October 17, 2022  3:02 PM

(Bloomberg) -- A US recession is effectively certain in the next 12 months in new Bloomberg Economics model projections, a blow to President Joe Biden’s economic messaging ahead of the November midterms.

The latest recession probability models by Bloomberg economists Anna Wong and Eliza Winger forecast a higher recession probability across all timeframes, with the 12-month estimate of a downturn by October 2023 hitting 100%, up from 65% for the comparable period in the previous update.

The forecast will be unwelcome news for Biden, who has repeatedly said the US will avoid a recession and that any downturn would be “very slight,” as he seeks to reassure Americans the economy is on solid footing under his administration. 

But tightening financial conditions, persistent inflation and expectations of a hawkish Federal Reserve pressing ahead with rate hikes are raising the risk of a contraction.

The model is more certain of a recession than other forecasts. A separate Bloomberg survey of 42 economists predicts the probability of a recession over the next 12 months now stands at 60%, up from 50% a month earlier. 

The forecasts provide a sharp contrast to Biden’s upbeat tone. The president has focused on strong job growth as he campaigns to help Democrats retain their House and Senate majorities in elections three weeks from now. 

But inflation, which has hovered near a four-decade high, has been a drag on Democrats’ prospects in an election where polls indicate the economy is voters’ top issue.

The Bloomberg Economics model uses 13 macroeconomic and financial indicators to predict the chance of a downturn at horizons of one month to two years. 

While the chance of a recession within 12 months has reached 100% under the model, the odds of a recession hitting sooner are also up. The model forecasts the likelihood of a recession within 11 months at 73%, up from 30%, and the 10-month probability rose to 25% from 0%.

The deterioration in the outlook was driven by a broad-based worsening in the economic and financial indicators used as inputs to the model, Bloomberg Economics found.

Forecast for US Recession Within Year Hits 100% in Blow to Biden (msn.com)

Dozens of LNG-laden ships queue off Europe's coasts unable to unload

LONDON/MADRID, Oct 17 (Reuters) - Dozens of ships carrying liquefied natural gas (LNG) circling off the coasts of Spain unable to secure slots to unload have prompted grid operators for the country to warn they may have to suspend loading to deal with this "exceptional situation".

Europe is facing an energy supply squeeze as Russia has progressively cut gas flows after the West imposed sanctions in response to Russia's invasion of Ukraine in late February.

The region has had to find alternative supplies, including LNG, but the arrival of multiple cargoes of the superchilled fuel has exposed Europe's lack of "regasification" capacity, as plants that convert the seaborne fuel back to gas are operating at maximum limit.

If the backlog is not cleared soon those ships may start looking for alternative ports outside Europe to offload their cargo.

There are more than 35 LNG-laden vessels drifting off Spain and around the Mediterranean, with at least eight vessels anchored off the Bay of Cadiz alone, traders, analysts and sources at LNG terminals familiar with the situation said on Monday.

Spain is offering just six slots at its regasification terminals for cargoes this week, an industry source said, less than a fifth of the number of vessels queuing off its coasts. The country has six terminals in total.

"Floating storage levels in LNG shipping is at all time high levels with slightly more than 2.5million tonnes tied up in floating storage," said Oystein Kalleklev, chief executive of shipowner FLEX LNG Management.

The shortage of regasification plants, or pipelines connecting countries that have those facilities to other European markets, means that the LNG floating offshore cannot be used. "We have seen a high number of cargoes waiting offshore in southern Spain or circling in the Med, as well as some cargoes waiting off the UK," said Alex Froley, LNG analyst at data intelligence firm ICIS.

More

Dozens of LNG-laden ships queue off Europe's coasts unable to unload | 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.

Truss and Hunt to oversee protracted recession, EY Item Club forecasts

MONDAY 17 OCTOBER 2022 6:00 AM

The UK is on course for a long recession that will last from this winter through to next summer, underscoring the tough challenge facing prime minister Liz Truss and her new chancellor Jeremy Hunt.

Rising inflation compounded by higher interest rates will force the economy into reverse in the current quarter until the summer of 2023, according to the EY Item Club.

Consumers and businesses are being squeezed by higher prices, forcing them to cut activity. As a result, the economy is expected to shrink 0.3 per cent next year.

Brits are facing the biggest hit to their living standards since the 1970s, the EY Item Club said. Pay is set to trail price rises until 2024.

Hywel Ball, chair of EY UK, said: “There’s no doubt the UK economy faces a difficult period ahead, with global headwinds adding to domestic pressures.”

Financial market turmoil sparked by Truss and her former chancellor, Kwasi Kwarteng, launching £45bn of unfunded tax cuts and ramping up government borrowing.

Truss dumped Kwarteng last Friday, jettisoned Hunt into Number 11 and reversed plans to scrap the six percentage point corporation tax rise.

However, the move failed to tame markets. UK gilt yields, which rise inversely to prices, fired higher and the pound fell.

Governor Andrew Bailey last week said a steeper rate rise to deal with the government’s fiscal mishaps is likely necessary at the Bank’s next meeting on 3 November.

Higher borrowing costs could trigger a 10 per cent fall in house prices, Martin Beck, chief economic adviser to the EY Item Club, predicted.

Truss and Hunt to oversee protracted recession, EY Item Club forecasts (cityam.com)

UK economy to enter recession until summer 2023, financial experts warn

Mon, 17 October 2022 at 12:01 am

Britain’s economy is expected to shrink around 0.2% each quarter from October through to June next year, economists have warned.

This prolonged economic decline will result in a 0.3% fall in gross domestic product (GDP) for 2023 as a whole, the EY Item Club predicted in its autumn forecast.

The economic forecasting group has significantly downgraded its previous summer forecast which estimated the economy would grow by 1% in 2023.

A combination of high energy prices, surging inflation, rising interest rates and global economic weakness have driven up the likelihood that the UK economy will face a recession until the middle of next year.

An economy enters a technical recession when its GDP falls for two or more consecutive quarters.

However, the risk of a severe downturn has been reduced by the Government’s energy bills cap, EY Item Club said, meaning that it will not be as bad as previous recessions.

The Government intervened in early September to put a ceiling on energy bills at £2,500 a year for the typical household, and has since pledged to cover a proportion of rocketing electricity costs for businesses as well.

The move is set to ease the pressure on household incomes and prevent the collapse of businesses that would otherwise be unable to afford the mounting bills.

Furthermore, once high inflation eases, the weaker pound boosts exports and the Bank of England’s interest rate hikes end, GDP should return to growth in the second half of 2023, EY said.

The economy is then expected to expand 2.4% in 2024 and 2.3% in 2025.

But the group warned that there is a risk that growth could be dragged down by further economic shocks.

More

UK economy to enter recession until summer 2023, financial experts warn (yahoo.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. 

Unique study links specific gene variant to COVID vaccine efficacy

Rich Haridy  October 16, 2022

Compelling new research from the University of Oxford has homed in on a specific genetic variant that seems to play a significant role in how well people generate an immune response to COVID-19 vaccines and their chances of experiencing a breakthrough infection in the year following vaccination.

For years, scientists have known not everyone responds to vaccination the same way. Some can develop strong immune responses quickly, while others may still be relatively susceptible to a pathogen despite several vaccine shots.

Prior studies have found one particular complex of genes, known as the human leukocyte antigen (HLA) system, may play some kind of role in how effectively a person responds to vaccinations. There is evidence HLA gene variants are associated with antibody responses to tetanus, measles and hepatitis B vaccines, but actual real-world evidence of efficacy in regards to infections hasn't ever been robustly investigated.

The COVID-19 pandemic offers researchers a unique real-world experiment with billions of people participating. A novel virus spreads amongst an immunologically naive population. A new vaccine is administered en masse. And then thousands of people are tracked for over a year to see what characteristics correlate with those most likely to get infected despite vaccination.

Focusing firstly on people enrolled in early clinical trials for COVID-19 vaccines, the researchers discovered one specific gene variant – HLA-DQB1*06 – correlated with higher antibody responses following vaccination. Between 30% and 40% of the UK population are estimated to carry this particular gene variant. That same cohort was then followed for nearly 18 months and the researchers report those with the HLA-DQB1*06 gene variant were less likely to report a PCR-confirmed case of COVID compared to those without the gene variant.

"From this study we have evidence that our genetic makeup is one of the reasons why we may differ from each other in our immune response following COVID-19 vaccination," said Julian Knight, chief investigator on the study. "We found that inheriting a specific variant of an HLA gene was associated with higher antibody responses but this is only the start of the story."

Understanding exactly how this particular genetic variant could be heightening a person's immune response to vaccination offers researchers important clues to improving future vaccines. Here, the researchers can only hypothesize what could be going on, but the study does speculate this gene variant helps bind immune cells more effectively to the coronavirus spike protein antigens in vaccines. This can lead to better memory B call activation and improved T-cell proliferation.

More

Unique study links specific gene variant to COVID vaccine efficacy (newatlas.com)

Moderna COVID-19 Vaccine Effectiveness Turns Negative Within Months: Study

By Zachary Stieber  October 10, 2022 Updated: October 11, 2022

The effectiveness of Moderna’s COVID-19 vaccine against infection turns negative over time, according to a new study that was funded by the vaccine maker.

The effectiveness of three doses—a primary series and a booster—against infection remained above 50 percent after 150 days against BA.1, a subvariant of the Omicron virus variant, researchers estimated.

However, against more recent strains, including the currently dominant BA.5, the effectiveness turned negative. Against BA.2, BA.4, and BA.5, the effectiveness went negative after 150 days; against BA.1.12.1, the effectiveness turned negative after 91 days.

Negative effectiveness means that a vaccinated person is more likely to contract COVID-19, the disease caused by the virus, than an unvaccinated person.

Researchers with Moderna and Kaiser Permanente, which carried out the study, also found that people who received three Moderna doses were more likely to become infected when compared to people who received just two doses.

Researchers said that they attempted to reduce potential bias by taking actions such as adjusting for comorbidities, but that some confounding may remain.

They said that some of the negative effectiveness estimates “could be due to differential risk behaviors among vaccinated and unvaccinated individuals when protection from antibodies becomes minimal.”

Hung Fu Tseng, a researcher with Kaiser Permanente Southern California and the study’s corresponding author, declined to provide evidence for the statement or otherwise comment on the negative effectiveness estimates.

“The manuscript is under review by a journal. I can’t comment on your questions now. I can, however, answer your question[s] when it is accepted,” Tseng told The Epoch Times in an email.

The study was published ahead of peer review on medRxiv, a preprint server. Researchers reached the numbers after analyzing data from Kaiser Permanente Southern California, which provides health care and insurance to millions of members.

Moderna officials didn’t respond to a request for comment.

More

Moderna COVID-19 Vaccine Effectiveness Turns Negative Within Months: Study (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.

Rooftop wind system delivers 150% the energy of solar per dollar

Loz Blain  October 16, 2022

Aeromine says its unique "motionless" rooftop wind generators deliver up to 50% more energy than a solar array of the same price, while taking up just 10% of the roof space and operating more or less silently. In independent tests, they seem legit.

Distributed energy generation stands to play a growing part in the world's energy markets. Most of this currently comes in the form of rooftop solar, but in certain areas, wind could definitely play a bigger part. Not every spot is appropriate for a bladed wind turbine, though, and in this regard, University of Houston spinoff Aeromine Technologies has designed a very different, very tidy form of rooftop wind energy capture that looks like it could be a real game-changer.

As with traditional wind turbines, size is key. So while Aeromine's wind energy boxes take up a relatively small footprint on your roof, they're still pretty bulky. The wings themselves are maybe 10 feet (3 m) high, at a rough guess, and looking at the latest imagery they're now sitting on top of boxes that might add another 6 ft (1.8 m) or more to their height – so they're no shrinking violets. On the other hand, they don't create the noise, or the constantly moving visual distraction of a regular, bladed turbine, so they may prove to be less unwelcome in populated areas.

They work differently too – kind of like a set of race-car spoiler wings sandwiched together facing each other, with a round pole in between them. Angled into the wind, these stationary wings generate a low pressure vacuum in the center of the device, which sucks air through perforations either in the wings themselves or in the round pole, which also aids in accelerating the ambient airflow over the wings.

So where's the turbine? Depending on the installation, it can either be at the bottom of that central pole, surrounded by a duct, or in more compact designs that sit right down on the roof instead of up on top of a box, the fan can be down in the roof of the building itself, in a pipe connecting either to that central pole or to hollow chambers in the perforated wings. Either way, the wings create a low-pressure zone, air is sucked through a tube to fill that low-pressure zone, and Aeromine places a relatively small, cheap internal propeller (perhaps 36 inches/91 cm in diameter) in that tube to run a generator.

It's very quiet, very safe and very cheap to build; you don't need any fancy materials like carbon fiber, there's nothing special about the fan itself, and the whole thing comes apart for transport and a relatively simple construction process on site.

More

Rooftop wind system delivers 150% the energy of solar per dollar (newatlas.com)

The market, like the Lord, helps those who help themselves. But, unlike the Lord, the market does not forgive those who know not what they do.

Warren Buffett.

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