Wednesday 9 November 2022

A Relief Rally Into Recession?

 Baltic Dry Index. 1356 +19     Brent Crude 95.15

Spot Gold 1709           US 2 Year Yield 4.67 -0.05

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

Deaths 53,100

Coronavirus Cases 09/11/22 World 638,463,009

Deaths 6,608,179

“Democracy is a pathetic belief in the collective wisdom of individual ignorance.”

H. L. Mencken.

As I write this morning it looks like the Republicans have taken control of the House but not the Senate which probably leads to two years of political stalemate in US politics.

That likely means scaled back inflationary hard left spending plans, which just might make it easier for the Fed, the US central bank, to scale back its future interest rate hikes or at the least to end them a bit earlier.

But with our new global recession already getting underway, inflation caused strikes underway across Europe, and a couple more interest rate hikes to come in Europe and the USA, any bear market Santa Claus relief rally is likely to be “transitory.”

Coming up next in short order, a debt servicing and repayment problem, plus an all too likely strong dollar currency crisis.

 

Asia markets mixed as U.S. awaits midterm results; China’s producer prices dropped in October

UPDATED WED, NOV 9 2022 12:31 AM EST

Asia-Pacific stocks were mixed as investors await the results of the United States midterm elections and China’s annualized producer prices fell for the first time in October since December 2020.

The Hang Seng index in Hong Kong lost 1.48% In mainland China, the Shanghai Composite shed 0.43% while the Shenzhen Component was 0.625% lower. The Chinese yuan weakened past 7.25-levels after its latest economic data release.

The Nikkei 225 in Japan lost 0.55% and the Topix was 0.49% lower, while the Kospi in South Korea gained 0.96%. In Australia, the S&P/ASX 200 rose 0.58%.

Overnight on Wall Street, U.S. stocks are coming off three-straight days of gains. The bounce for equities may be partly due to the elections, where investors are expecting Republicans to gain ground and create gridlock in Washington.

Asia markets mixed as U.S. awaits midterm results; China's producer prices dropped in October (cnbc.com)

 

European markets head for lower open as investors await U.S. midterm results

UPDATED WED, NOV 9 2022 12:26 AM EST

European markets are heading for a lower open on Wednesday as global investors await the results of the U.S. midterm elections.

The midterm elections will determine whether Democrats keep their slim majorities in the House and Senate, or if Republicans will seize control of one or both chambers of the legislature, an outcome that would mean there’s a significant power shift in Washington and the potential for gridlock.

The outcome could make all the difference for President Joe Biden, whose legislative hopes rest on whether Democrats can push his agenda through a hyper-partisan Congress.

Overnight, U.S. stock futures were basically flat while Asia-Pacific stocks were mixed as investors awaited the results of the midterms.

European markets: Investors watch U.S. midterm results (cnbc.com)

 

China’s Covid controls are hurting more of the economy

BEIJING — China’s Covid situation is only getting worse, preventing the country from stamping out the virus and relaxing controls.

The daily case count surged to six-month highs over the weekend. Guangzhou indefinitely delayed its auto show that was supposed to kick off next week. And schools in Beijing are waffling over whether to shift classes online, according to social media.

As of Monday, China’s Covid controls negatively affected 12.2% of national GDP — up from 9.5% a week ago, according to Nomura’s model. The Japanese bank said more than one-fifth of China’s population was subject to some kind of control measures.

The southern province of Guangdong is the hardest hit, with cases mostly concentrated in one district. Recent Covid infections have been reported in more than 20 of China’s 31 province-level regions.

“One thing is very clear, a lot of business events have been cancelled and postponed,” Klaus Zenkel, vice president at the EU Chamber of Commerce in China and chairman of its South China chapter, said Tuesday.

“People don’t dare to travel. Too many restrictions,” he said, noting how companies from Guangzhou and Shenzhen “cannot even join” China’s international import expo in Shanghai this week. “How to maintain customer relations when we can’t meet face to face?”

It was not immediately clear whether there was any impact on factory production in the South China region. China’s Ministry of Commerce did not immediately respond to a CNBC request for comment.

The heightened impact of Covid on China’s economy came during a week in which many investors speculated that China would soon relax its stringent Covid policy.

Officials dispelled the rumors on Saturday, affirming at a press conference that the current zero-Covid policy remains.

“We continue to believe that, while Beijing may fine-tune some of its Covid measures in coming weeks, those fine-tuning measures could be more than offset by local officials’ tightening of the [zero-Covid strategy],” Nomura’s Chief China Economist Ting Lu and a team said in a report Monday.

More

China's Covid controls are hurting more of the economy (cnbc.com)

In other news, is it finally good night for cryptocurrencies?

Crypto Crash Intensifies Amid Downfall Of Industry's 'White Knight' Bankman-Fried

Nov 8, 2022,04:03pm EST

Bitcoin fell to a two-year low and the crypto market slid after a shocking run on billionaire Sam Bankman-Fried’s FTX cryptocurrency exchange and subsequent pact for an acquisition from rival Binance, as the crypto industry shook from the collapse of one of its foremost institutions.

Binance CEO Changpeng Zhao announced early Tuesday that his company signed a letter of intent to acquire FTX due to a “significant liquidity crunch” at Bankman-Fried’s firm.

 

The instability at one of crypto’s most trusted institutions sent related assets tumbling, and bitcoin tanked 11% to $18,300 Tuesday, a nearly 75% loss from its peak of just under $68,000 last November.

Other currencies crumbled as well, with the second-most valuable crypto token Ethereum falling 16% Tuesday and FTX’s coin falling a whopping 79%, arriving at a market capitalization of just over $1 billion compared to its $14 billion valuation in March.

Publicly-traded crypto stocks tanked, with shares of exchange Coinbase and MicroStrategy, a tech company heavily exposed to bitcoin, each falling 10% or more Tuesday.

The crypto collapse coincides with a generally strong time for the stock market: The S&P 500 rose 0.6% Tuesday and is up 6% over the last month, compared to respective 6% and 1% losses for bitcoin and ethereum.

$6 billion. That’s the amount of withdrawals requested by FTX users between Saturday and early Tuesday, Bankman-Fried wrote in a note to employees viewed by Reuters. The FTX boss promised in a Tuesday tweet “all assets will be covered 1:1” but it “may take a bit to settle.”

KEY BACKGROUND

Binance’s helping hand comes after a bitter back-and-forth between Zhao and Bankman-Fried spurred FTX’s collapse, with Zhao announcing Sunday his firm would sell all of its FTX holdings due to “recent revelations,” which Bankman-Fried dismissed as a “competitor...trying to go after us with false rumors.” The so-called “crypto winter” has loomed over much of 2022, marked by bitcoin’s falter, widespread layoffs and bankruptcies at several notable firms, including Three Arrows Capital and Celsius. But the 30-year-old Bankman-Fried had previously been a massive stabilizing force in the industry, with his FTX extending $650 million to embattled crypto lender BlockFi in July, entering an agreement to acquire the company, and offered a $200 million credit line to Voyager Digital in June.

CRUCIAL QUOTE

“Today is a bad day in crypto,” OANDA analyst Edward Moya wrote in a Tuesday note. “This is a major setback for many investors in cryptos who viewed [Bankman-Fried] as a white knight and one of the leaders in the space that was supposed to thrive once we got beyond this crypto winter.”

TANGENT

Bankman-Fried donated $39.9 million to Democratic causes ahead of Tuesday’s midterm elections, placing him among the 10 largest individual political donors in the country.

Crypto Crash Intensifies Amid Downfall Of Industry's 'White Knight' Bankman-Fried (forbes.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.

Scorching inflation raises fears of Christmas spending slump

TUESDAY 08 NOVEMBER 2022 6:00 AM

Scorching inflation hobbling Brits’ finances has triggered a spending squeeze that could bleed into Christmas, research out today reveals.

Surveys out from Barclaycard and the British Retail Consortium (BRC) show retail sales volumes likely fell in October.

While the organisations measured a jump in consumer spending of 3.5 per cent and 1.6 per cent respectively, when accounting for inflation, which climbed to a 40-year high of 10.1 per cent in October, spending likely dropped.

The increases are “being driven by inflationary pressures and [do] not tell the true picture of sales volumes dropping as consumers purchase fewer products per shop,” Paul Martin, UK head of retail at KPMG, who helped compile the BRC’s report, said.

Discretionary spending is undergoing the biggest pullback, driven by consumers’ budgets being gobbled up by higher food, energy and mortgage bills. Essentials spending climbed 5.5 per cent over the last year, Barclaycard said.

Hospitality businesses are on course to be hit hardest by Brits tightening their belts due to spending on non-essentials typically being the first thing to go to shore up finances.

Bars, pubs and clubs notched a 1.7 per cent rise in demand, but, excluding September’s poor reading, that would have been the smallest jump since March 2021, Barclaycard found.

Businesses hoping for a Christmas spending surge to boost their finances could be disappointed, raising concerns over the health of the UK’s drinking holes, cinemas, theatres and other leisure and hospitality firms, which are still grappling with legacy Covid-19 debt.

---- “Retailers are facing possibly their toughest festive season in a decade as shoppers look to trade down, search out bargains and purchase less to meet the economic challenges ahead,” Martin added.

Experts also said consumers could be mothballing purchases until black Friday on 25 November to bag themselves a bargain. 

“With November black Friday sales just around the corner, many people look to be delaying spending, particularly on bigger purchases,” Helen Dickinson, chief executive of the BRC, said.

More

Scorching inflation raises fears of Christmas spending slump (cityam.com)

Household grocery bills 'rise by almost £40' in a month

8 November, 2022

The cost of the average annual grocery shop has risen by almost £40 in just one month, according to an industry report which is warning it is too early to say when food price inflation will peak.

Kantar Worldpanel reported a fresh record grocery inflation figure of 14.7% for the four weeks to 30 October, saying that shoppers now faced paying an average £682 a year more for their groceries, on a same-selection basis, compared to 12 months ago.

The sum was £643 the previous month, based on a grocery inflation figure of 13.9%.

There was also strong evidence to support a claim by Sainsbury's last week that people were eating at home more to keep costs down as they prepared to face the impact from record winter energy bills.

Kantar reported a 5.2% leap in grocery sales over the 12 weeks to the end of October - the fastest rate of growth since April 2021.

---- Careful budgeting was very clear within Kantar's figures.

Its report said that sales of supermarkets' own label goods sales were 10.3% higher during the past four weeks, while demand for the cheapest ranges was 42% up.

Fraser McKevitt, head of retail and consumer insight at Kantar said: "Yet again, we have a new record high figure for grocery price inflation and it's too early right now to call the top.

"Consumers face a £682 jump in their annual grocery bill if they continue to buy the same items and just over a quarter of all households (27%) now say they're struggling financially, which is double the proportion we recorded last November.

"Nine in 10 of this group say higher food and drink prices are a major concern, second only to energy bills, so it's clear just how much grocery inflation is hitting people's wallets and adding to their domestic worries."

Kantar said that dairy and dog food continued to be among products rising the highest in percentage terms.

Its data also showed that 10% of households purchased a pumpkin ahead of Halloween this October, while 700,000 fewer Christmas puddings were bought in advance of December.

Household grocery bills 'rise by almost £40' in a month (msn.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 Corne 

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. 

Vaccine confidence 'another victim of the COVID-19 pandemic', study finds

Researchers found a fall in confidence in nearly one in four participants since 2020, regardless of their age, gender, religious belief, education or ethnicity.

Confidence in vaccines has declined "significantly" since the start of the COVID pandemic, according to a new study.

Researchers from the University of Portsmouth carried out two anonymous surveys in the winters of 2019 and 2022 to gauge people's attitudes to vaccinations and to look at what factors cause hesitancy and refusal.

After questioning more than 1,000 adults, they found that the post-pandemic group was considerably less confident in vaccines than the pre-pandemic group.

The paper, published in the medical journal Vaccine, showed a fall in confidence in nearly one in four participants since 2020, regardless of their age, gender, religious belief, education or ethnicity.

Dr Alessandro Siani, associate head of the School of Biological Sciences at the University of Portsmouth, said: "While vaccine hesitancy is not a new phenomenon, COVID-19 vaccines have been met with particular hostility despite the overwhelming scientific evidence of their safety and effectiveness.

"This isn't just among conspiracy theorists though, but also those who don't consider themselves 'anti-vaxxers' and had supported other vaccination campaigns in the past."

Participants were asked how much they agreed with statements including "Vaccines are safe", "I think vaccines should be a compulsory practice", "I believe if I get vaccinated it would benefit the wellbeing of others" and "Vaccines are a necessity for our health and wellbeing".

In both surveys participants who held religious beliefs were significantly more vaccine-hesitant than atheist and agnostic ones, and individuals from black and Asian backgrounds were more hesitant than those of white ethnicities.

However, the researchers say that gender showed no association with vaccine confidence.

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.

New charging approach could extend battery life by at least 20%

Loz Blain  November 07, 2022

The many cells that make up a lithium battery pack are not all equal; some will degrade and die faster than others. New research out of Stanford has found that the whole battery can live much longer if each cell gets an individual charging treatment.

There are many reasons why individual cells in a pack might become weaker than others. Maybe there's variances in manufacturing or materials. Maybe some are more exposed to heat sources than others, or located in spots that are harder to cool. Either way, the average single battery cell lasts longer than the average battery pack, and it's these weak cells that take the whole ship down with them.

“If not properly tackled, cell-to-cell heterogeneities can compromise the longevity, health, and safety of a battery pack and induce an early battery pack malfunction,” says Simona Onori, an assistant professor of energy science engineering at the Stanford Doerr School of Sustainability, and author on a new study aiming to keep lithium battery packs useful for longer.

Fast charging and discharging events are stressful for battery cells, and while they're designed to take that stress, these are the moments in which weaker cells suffer and deteriorate the fastest. So the Stanford team wondered whether the standard technique of charging all a battery's cells at the same rate might be accelerating battery death.

The researchers painstakingly designed a computer model to test their theory over an accelerated time frame, resulting in what they believe is an unprecedented level of simulation detail. They attempted to accurately represent the physical and chemical state of a battery, as well as the changes that occur in relation to a range of stresses across its whole lifespan, including both changes that happen in seconds, all the way up to others that might take months or years.

“To the best of our knowledge, no previous study has used the kind of high-fidelity, multi-timescale battery model we created,” says Onori.

Using this model, they ran a number of simulations comparing a standard, set-rate charging approach against other approaches, in which each individual cell's capacity served as an indicator of how much charge it could take. The theory here was that only the strongest cells should be subjected to the highest stresses; cells that had already begun to degrade early – for whatever reason – should be treated much more gently, in the hope of staving off their eventual decline.

The team found that by individually setting the charge rate of each cell, they could minimize temperature increase and cell degradation, to the point where these packs could handle at least 20% more charge/discharge cycles than a battery that charges uniformly – even using frequent fast-charging.

more

New charging approach could extend battery life by at least 20% (newatlas.com)

The ruling power is always faced with the question, ‘In such and such circumstances, what would you do?’, whereas the opposition is not obliged to take responsibility or make any real decisions.”

George Orwell.

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