Baltic Dry Index. 1996 +131 Brent Crude 93.52
Spot
Gold 1724 US 2 Year Yield
4.10 -0.02
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 06/10/22 World 624,919,704
Deaths 6,555,425
People of the same trade seldom meet
together, even for merriment and diversion, but the conversation ends in a
conspiracy against the public, or in some contrivance to raise prices…. But
though the law cannot hinder people of the same trade from sometimes assembling
together, it ought to do nothing to facilitate such assemblies, much less to
render them necessary.
Adam Smith The
Wealth Of Nations, 1776.
The big news yesterday was OPEC+ agreeing to cut their oil production by 2 million barrels a day starting in November.
President Biden responded by extending sales from the US strategic petroleum reserve through November and coincidentally past the early November mid-term elections.
At some point next year the USA is going to be a massive purchaser of crude oil to begin restocking the depleted strategic reserve. And doesn’t OPEC+ know it.
Don’t look now, but the US national debt shot over 31 trillion dollars in figures published on Monday. US GDP for 2022 is estimated to be about 24 to 25 trillion provided the US economy doesn’t drop into recession until 2023.
With recession hitting in Germany and the UK,
interest rates rising globally, food and energy inflation soaring everywhere, a
never ending proxy war in Europe set to expand, something big is likely to
break.
OPEC+ to cut oil
production by 2 million barrels per day to shore up prices, defying U.S.
pressure
A group of some of
the world’s most powerful oil producers on Wednesday agreed to impose deep
output cuts, seeking to spur a recovery in crude prices despite calls from the
U.S. to pump more to help the global economy.
OPEC and non-OPEC
allies, a group often referred to as OPEC+, decided at their first face-to-face
gathering in Vienna since 2020 to reduce production by 2 million barrels per
day from November.
Energy market participants had
expected OPEC+, which includes Saudi Arabia and Russia, to impose output cuts
of somewhere between 500,000 barrels and 2 million barrels.
The move represents a major reversal in production
policy for the alliance, which slashed output by a record 10 million barrels
per day in early 2020 when demand plummeted due to the Covid-19 pandemic. The
oil cartel has since gradually unwound those record cuts, albeit with several
OPEC+ countries struggling to fulfill their quotas.
Oil prices have fallen to roughly
$80 a barrel from more than $120 in early June amid growing fears about the
prospect of a global economic recession.
The production cut for November is
an attempt to reverse this slide, despite repeated pressure from U.S. President Joe Biden’s
administration for the group to pump more to lower fuel prices ahead of midterm
elections next month.
International benchmark Brent crude
futures traded at $92.82 a barrel during Wednesday afternoon deals in London,
up around 1.1%. U.S. West Texas
Intermediate futures,
meanwhile, stood at $87.37, almost 1% higher.
OPEC+ will hold its next meeting on
Dec. 4.
More
Oil:
OPEC+ imposes deep production cuts in a bid to shore up prices (cnbc.com)
Asia-Pacific
markets trade mixed after U.S. stocks slip
UPDATED THU, OCT 6 2022 12:33 AM EDT
Shares in the Asia-Pacific were mixed on
Thursday after Wall Street’s two-day rally fizzled.
Japan’s Nikkei 225 gained
0.98%, while the Topix added 0.79%. The Kospi in
South Korea rose 1.25% and the Kosdaq was 2.69% higher.
In Australia, the S&P/ASX 200 was
about flat. Hong Kong’s Hang Seng index slipped
0.43% after surging around 6% on Wednesday. The Hang Seng Tech index was 0.91%
lower. MSCI’s broadest index of Asia-Pacific shares gained 0.47%.
Mainland China markets are closed
for a holiday this week.
U.S. stocks slipped overnight after
seeing sharp gains for the previous two sessions. The Dow Jones Industrial
Average shed 42.45 points, or 0.14%, to 30,273.87 after falling nearly 430
points earlier in the day. The S&P 500 dipped 0.2% to close at 3,783.28,
and the Nasdaq Composite declined 0.25% to 11,148.64.
“The optimism that buoyed
financial markets earlier this week receded as U.S. data continued to
articulate the need for further, decisive central bank policy action,” according
to an ANZ Research note Thursday.
September’s ISM services
index and the private payrolls report by ADP both beat estimates
overnight. Investors will be looking ahead to the Bureau of Labor Statistics’
nonfarm payrolls report at the end of the week.
Asia-Pacific
markets trade mixed after U.S. stocks slip (cnbc.com)
Stock futures
rise on Thursday after two-day market rally ends
UPDATED THU, OCT 6 2022 12:32 AM EDT
U.S. stock futures were higher Thursday morning
after falling in the regular trading session and breaking a massive two-day
rally.
Dow Jones
Industrial Average futures rose by 118 points, or 0.39%. S&P 500 and Nasdaq
100 futures climbed 0.43% and 0.55%, respectively.
Stocks fought to
hold onto the winning streak Wednesday but ultimately fell short. The Dow
closed about 42 points lower, or 0.14%, rebounding from the session’s low of
nearly 430 points. The S&P 500 and the Nasdaq Composite slid 0.20% and
0.25%, respectively.
Rising yields added
pressure to stocks Wednesday. The rate on the 10-year U.S. Treasury topped
3.7%, rising from 3.6% a day earlier.
“Few are convinced
that the recent move is more than a bear market rally, with skepticism over the
durability,” said Mark Hackett, chief of investment research at Nationwide.
“Confidence remains weak, ranging from CEOs, small businesses, consumers, and
investors. Universal pessimism is bullish from a contrarian perspective, though
timing of the pendulum swing is difficult to predict.”
Investors continue
to monitor economic data to see if inflation is cooling off, or if the Federal
Reserve’s rate hikes are pushing the U.S. closer to a recession.
Data from ADP
showed that the labor market remained strong among private companies in
September, when businesses added 208,000 jobs. That beat the 200,000 job
estimate from Dow Jones. On Friday, the September jobs report from the Bureau
of Labor Statistics will be released, giving the central bank and investors
another piece of data.
More
Stock futures rise on Thursday after two-day market rally ends (cnbc.com)
Stock Market Poised For Bigger Losses As Economy Enters ‘Danger Zone,’ Morgan Stanley Warns
October
5, 2022
The stock market broke a historic two-day rally on Wednesday as analysts warned it's still too early to celebrate given a rash of looming risks—including incoming corporate reports that are likely to show just how badly deteriorating economic conditions are affecting company earnings.
The Dow Jones Industrial Average fell nearly 200 points, or 0.6%, to 30,125 by 12:30 p.m. ET, paring a massive two-day gain of nearly 6%, while the S&P 500 and tech-heavy Nasdaq slumped 0.9% and 1.3%, respectively.
"The primary question on many investors' minds has once again shifted to when the Federal Reserve pivots—not if," Morgan Stanley strategist Michael Wilson wrote in a note, saying the economy has entered a "danger zone" in which Fed policy has become restrictive enough that financial and economic stress is bound to occur.
Wilson says "it's only a matter of time" before
a "fast and furious" market event convinces the Fed to back off on
interest rate hikes, which help tame inflation by undercutting demand, but he
cautions no one yet knows what type of event that will be.
Once the Fed reverses course, stocks and other risk
assets (like cryptocurrencies) should rally again, but Wilson says it's a
"bad idea" to assume the gains will be long-lived because a slew of
emerging risks—including economic weakness in
Europe, the dollar's strength and
China reopening uncertainty—will
likely hamper company earnings in the next two quarters.
In a Wednesday note, Wedbush analyst Dan Ives wrote that
earnings over the next month will be "crucial" for technology giants
in particular—either exposing the negative fundamentals and causing
"massive" earnings cuts into next year or instead proving that many
pockets of tech are holding up well despite the deteriorating economic
conditions.
Morgan Stanley projects the S&P will ultimately hit a bear-market low of between 3,000 and 3,400 points—suggesting the index, which is already down 21.5% this year, could still plummet another 10% to 20%
More
U.S.
national debt surpasses $31T for first time
OCT. 5, 2022 / 1:30 AM
Oct. 5 (UPI) -- America's borrowing binge has pushed the country's national debt
over $31 trillion for the first time ever amid record inflation, rising
interest rates and fears of a possible recession.
The United
States' public debt closed at $31.1 trillion on Monday,
according to Treasury Department data published Tuesday. The milestone comes as
the Federal Reserve continues
to hike interest
rates to fight the highest
inflation in 40 years, and as the government continues to borrow money to fight
the pandemic and finance tax cuts.
"So many of the concerns we've had about our growing debt path are starting to show themselves as
we both grow our debt and grow our rates of interest," said Michael
Peterson, chief executive officer of the Peterson Foundation, which promotes deficit reduction. "Too many people were complacent
about our debt path in part because rates were so low."
The
national debt has climbed nearly $8 trillion since the start of the pandemic and
has added another trillion in just the last eight months, according to Treasury
numbers.
The United
States has borrowed more in the last decade than at any other time. When former
President Barack
Obama took office in 2009,
the public debt stood at $10.6 trillion. It was $19.9 trillion when former
President Trump took office in 2017 and grew to almost $28 trillion when Biden
took office four years later, according to the Treasury Department.
"Excessive
borrowing will lead to
continued inflationary pressures, drive the national debt to a new record as
soon as 2030 and triple federal interest payments over the next decade -- or
even sooner if interest rates go up faster or by more than expected," the
Committee for a Responsible Federal Budget wrote.
More
U.S. national debt surpasses $31T for first time - UPI.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.
Job
openings fall by more than 1M in August; hit worst levels since 2020
OCT. 4, 2022 / 12:25 PM
Oct. 4 (UPI) -- Job openings in the U.S. plunged in August to their lowest levels
since 2020, as the Federal
Reserve continues to seek to
lower demand for workers.
Available
positions dropped from 11.17 million in July to 10.05 million in August, according to the Bureau of Labor Statistics.
The
decline in openings was the biggest since April 2020, according to Bloomberg.
The
Federal Reserve has tried to walk a tightrope by decreasing job vacancies to
cool the labor market without an ensuing jump in unemployment.
The
largest decreases in job openings were in health care and social assistance,
other services and retail trade.
Nearly 4.2
million Americans quit their jobs in August, which is an increase from July.
The number of voluntary job leavers was steady at 2.7%.
"The
ratio of job vacancies to unemployed persons fell sharply in August -- such a
large drop usually implies a recession," Eliza Winger, an economist told
Bloomberg. "If this pace of decline continues, the labor market will be in
a much cooler state by early next year, giving the Fed space to end its current
tightening cycle."
A United
Nations report published on Monday criticized the Federal
Reserve's policy of raising interest rates to cool inflation.
"The
world is headed towards a global recession and prolonged stagnation unless we
quickly change the current policy course of monetary and fiscal tightening in
advanced economies," the report said.
Job openings fall by more than 1M in August; hit worst
levels since 2020 - UPI.com
‘We must change
course’: UN warns that the world is on the brink of recession
PUBLISHED TUE, OCT 4 2022 4:49 AM EDT UPDATED
TUE, OCT 4 2022 4:01 PM EDT
The United Nations has sounded off a warning that the world is “on the edge of a recession” and
developing nations like those in Asia could bear the brunt of it.
Monetary and fiscal policies in advanced economies
— including continued interest rate hikes — could push the world toward a
global recession and stagnation, the UN Conference on Trade and Development
(UNCTAD) said on Monday.
A global slowdown could potentially inflict worse
damage than the financial crisis in 2008 and the Covid-19 shock in 2020, warned
the UNCTAD in its Trade and Development Report 2022.
“All regions will be affected, but alarm bells are ringing
most for developing countries, many of which are edging closer to debt
default,” the report said.
Asian and global economies are headed for a
recession if central banks continue raising interest rates without also using
other tools and looking at supply-side economics, the UNCTAD said adding that a
desired soft landing would be unlikely.
“Today we need to warn that we may be on the edge
of a policy-induced global recession,” Secretary-General of UNCTAD Rebeca
Grynspan said in a statement.
----The prognosis is grim across the region, according to the
UNCTAD report.
This year’s interest
rate hikes in the U.S. will cut an estimated $360 billion of future
income for developing nations excluding China, while net capital flows to
developing countries have turned negative.
“On net, developing
countries are now financing developed ones,” the report said.
“Interest rate hikes
by advanced economies are hitting the most vulnerable hardest. Some
90 developing countries have seen their currencies weaken against the dollar
this year.”
East and Southeast
Asia are set to post growth rates below those in the five years prior to the
pandemic. UNCTAD expects East Asia to grow at 3.3% this year, compared to 6.5%
last year.
More
UNCTAD warns that
Asia, global economy headed for a recession (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
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.
Nothing new to add today. More
tomorrow, hopefully.
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.
China
turns on the world's largest compressed air energy storage plant
Loz Blain October 04, 2022
The world's largest and, more importantly,
most efficient clean compressed air energy storage system is up and running,
connected to a city power grid in northern China.
The clean energy revolution
will require huge amounts of energy storage, to buffer against the intermittent
power delivered by solar and wind. Some of that will come in the form of big
battery installations – but there's a huge
lithium supply shortage coming that'll
raise the price of lithium-based batteries and make it very tough for
Tesla-style operations to handle a big chunk of the work.
China has diversified its efforts, and indeed
just this week it switched on the world's
largest flow battery, a 100-MW, 400-MWh vanadium flow battery
installed in Dailan that offers relatively low-cost energy storage without
using any lithium. But according to Asia Times,
China is planning to lean heavily on compressed air energy storage (CAES) as
well, to handle nearly a quarter of all the country's energy storage by 2030.
Now, after several years of development by the
Chinese Academy of Sciences, it has connected the world's first 100-MW advanced
CAES system to the grid, ready to begin commercial service in the city of
Zhangjiakou in northern China. By designating it as "advanced," the
Academy is distinguishing it from the McIntosh Plant that's
been online since 1991 in Alabama – a 110-MW CAES facility that burns its
stored air with natural gas to recover energy, and is thus not a green energy
storage solution.
The new Zhangjiakou plant does away with fossil
fuels, using advances in supercritical thermal storage, supercritical heat
exchange, high-load compression and expansion technologies to boost system
efficiency. According to China
Energy Storage Alliance, the new plant can
store and release up to 400 MWh, at a system design efficiency of 70.4%.
That's huge; current compressed air systems are
only around 40-52% efficient, and even the two
larger Hydrostor CAES plants scheduled to open in California in 2026 are only reported to be around 60% efficient.
More
China turns on the
world's largest compressed air energy storage plant (newatlas.com)
To widen the market and to narrow the
competition, is always the interest of the dealers…The proposal of any new law
or regulation of commerce which comes from this order, ought always to be
listened to with great precaution, and ought never to be adopted till after
having been long and carefully examined, not only with the most scrupulous, but
with the most suspicious attention. It comes from an order of men, whose
interest is never exactly the same with that of the public, who have generally
an interest to deceive and even oppress the public, and who accordingly have,
upon many occasions, both deceived and oppressed it.
Adam Smith, The
Wealth Of Nations, 1776.
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