Baltic Dry Index. 1463 -71 Brent Crude 94.83
Spot Gold 1643 US 2 Year Yield 4.41 +0.15
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 01/11/22 World 635,707,647
Deaths 6,594,730
"This first stage
of the inflationary process may last for many years. While it lasts, the prices
of many goods and services are not yet adjusted to the altered money relation.
There are still people in the country who have not yet become aware of the fact
that they are confronted with a price revolution which will finally result in a
considerable rise of all prices, although the extent of this rise will not be
the same in the various commodities and services. These people still believe
that prices one day will drop. Waiting for this day, they restrict their
purchases and concomitantly increase their cash holdings. As long as such ideas
are still held by public opinion, it is not yet too late for the government to
abandon its inflationary policy.
Ludwig
von Mises.
Australia raised its key interest rate by 25 points.
On to today’s day one of the Fed’s two day meeting where it’s widely
expected that they will raise their key interest rate by another 75 basis
points.
After that, on Thursday the Bank of England is expected to raise their
key interest rate by another 75 points, although some think the might surprise
the markets with a rise of 1 percent.
With UK and EU inflation running above 10 percent and US inflation
running above 8 percent, no central bank is anywhere near bringing inflation
under control.
To this old dinosaur market follower since 1968, stocks are headed for a
crash.
Stock futures
rise as indexes exit winning month and investors look to Fed meeting
UPDATED TUE, NOV 1 2022 12:22 AM
EDT
Stock futures are higher on Tuesday morning as
traders leave behind a winning month and look ahead to the Federal Reserve’s
interest rate decision on Wednesday.
Futures tied to the
Dow Jones Industrial Average were up 104 points, or 0.32%. Futures tied to the
S&P 500 and Nasdaq 100 both added 0.35%.
Monday’s trading
marked the end of what was the best month for the Dow since 1976, ending up
13.95%, as investors rotated out of technology and hedged hopes on stalwarts
like banks. The S&P 500 and Nasdaq Composite added about 8% and 3.9%,
respectively.
Big Tech was in the
spotlight last week as giants saw shares slide on disappointing earnings,
weighing on the Nasdaq at times. Meanwhile, strong performances in earnings
from Dow members such as Caterpillar and McDonald’s sent the index on an upward
ascent over the course of the week.
Earnings season
continues Tuesday with Uber, Pfizer and Fox before the bell and Advanced Micro
Devices and Airbnb after.
Tuesday also brings
the start of the Fed’s November meeting, which many market participants expect
to result in a 75 basis point interest rate hike. Many will look to the central
bank’s statement and Fed Chair Jerome Powell’s question and answer segment for
clues around policymakers’ battle against inflation.
“We’re pretty
confident that the market participants seem to be pricing in a 75 basis point
increase,” said Jason Ray, founder of Zenith Wealth Partners. “But looking
ahead, how they’re going to address [it] and see if they change their language
on inflation or the pace of rate increases in the future will be something that
we keep a keen eye on.”
Investors will also
be watching for economic releases on Tuesday, including job openings data and
construction spending for September, as well as the ISM manufacturing
report for October.
Stock
futures rise as indexes exit winning month and investors look to Fed meeting
(cnbc.com)
Australia raises
25 bps as expected, Hong Kong stocks lead gains in Asia-Pacific markets
UPDATED TUE, NOV 1 2022 1:12 AM
EDT
The Reserve
Bank of Australia raised
interest rates by 25 basis points for the second consecutive
time, in line with expectations. The S&P/ASX 200 rose
1.3%, continuing to rise after the central bank’s announcement.
Stocks in Hong Kong led gains in
the Asia-Pacific session after concluding the month of October with a more than
14% loss, hovering around the lowest levels that it’s seen since April 2009.
The Hang Seng index in
Hong Kong rose more than 3%, with Hang Seng Tech up 5%. Mainland China’s Shanghai Composite gained
0.86% and the Shenzhen Component added
around 1.62% after the Caixin manufacturing PMI for the country came in at
49.2, slightly better than expected.
The Nikkei 225 in
Japan was 0.15% higher while the Topix rose 0.26%.The Kospi in South Korea also
rose 1.29%. MCSI’s broadest index of Asia-Pacific shares outside Japan was
1.75% higher.
Overnight in the U.S., stocks dipped,
but the Dow posted its best
month since 1976 and all the major averages ended the month in
positive territory after two months of losses.
The Federal Reserve’s meeting
begins on Tuesday stateside, where traders are widely expecting a hike interest
rates by 75 basis points this week.
Toyota earnings miss
estimates, stock falls sharply
Japan-listed shares
of Toyota fell
sharply after it reported a 25% drop in its second-quarter operating profit.
The company reported 562.7 billion yen ($3.79
billion) in operating profits for the quarter ending on September 30, a
significant miss from an average estimate of 772.2 billion yen ($5.2 billion)
from a Refinitiv poll and nearly a 25% drop from the same period last year.
Shares of Toyota
dropped more than 2% shortly after the earnings release, as the wider Nikkei
225 index lost some of its earlier gains in the afternoon session.
Asia
markets: Stocks higher ahead of RBA decision; Caixin PMI below 50 (cnbc.com)
Asia's
factory output weakens on global slowdown, China COVID curbs
November 1, 202 25:23 AM GMT
TOKYO, Nov 1
(Reuters) - Asia's factory output weakened in October as global recession fears
and China's zero-COVID policy hurt demand, business surveys showed on Tuesday,
adding to persistent supply disruptions and darkening recovery prospects.
Further
U.S. interest rate hikes are also expected to force most Asian central banks to
prevent sharp capital outflows by tightening their own monetary policies, even
if it means cooling already soft economies, analysts say.
Manufacturing
activity shrank in South Korea, Taiwan and Malaysia in October, and expanded at
the slowest pace in 21 months in Japan, highlighting the pain from slowing Chinese
demand and stubbornly high import costs.
China's Caixin/S&P Global manufacturing purchasing managers'
index (PMI) stood at 49.2 in October, up from 48.1 in September
but remaining below the 50-point mark that separates growth from contraction.
The
private sector survey was in line with an official PMI survey released on Monday
that showed China's factory activity unexpectedly fell in October.
More
Asia's
factory output weakens on global slowdown, China COVID curbs | Reuters
In other news, buy food now for Christmas.
Black Sea deal
suspension will drive up grain and meat prices in Asia-Pacific
Asia-Pacific could face higher prices of grains and meat after Russia
suspended a U.N.-brokered deal that had allowed safe grain shipments out of the
Black Sea.
Over the weekend, the
Russian foreign ministry said it “can no longer guarantee the
safety of civilian dry cargo ships participating in the Black Sea Grain
Initiative and will suspend its implementation from today for an indefinite
period.” This followed an
Ukrainian attack on its fleet in Sevastopol.
Meat production and consumption are key in
Asia and for many Asian countries, grains such as wheat, corn, and soybeans are needed for
animal feed to produce beef, pork, poultry as well as fish,
authors Genevieve Donnellon-May and Paul Teng wrote in a research note
published by Singapore think tank RSIS.
Major Black Sea exporters Russia and Ukraine
account for about a third of the world’s wheat exports, 15% of the world’s corn
exports and about 2.1% of the world’s soybean exports, the
pair said, adding that Asian countries are particularly hit because many import
from the region.
“For consumers in Asia, expect to
pay even higher prices for food, including for meat, due to the prolonged
conflict alongside rising energy costs and inflation,” Donnellon-May told CNBC.
“It’s going to get worse in
Asia-Pacific with countries impacted by higher [priced] fertilizer, fuel, and
food prices, further exacerbating Covid-related disruptions to the supply
chains and climate change-induced extreme weather events, which have impacted
agricultural production and food security.”
“Consumers throughout Asia-Pacific
should expect to pay more for basic foodstuffs and also for meat.”
Before Russia halted its participation, the Black
Sea Grain initiative had unlocked 9 million metric tons of grain worth $3
billion, said Maximo Torero, chief economist of the United Nation’s Food and
Agriculture Organization.
“In practical terms, it means that
1 million metric tons less of cereals in the market could create an increase in
prices of around 0.5%. So, the short-term impact shouldn’t be too big,” Torero
told CNBC’s “Squawk Box Asia” on Monday, adding that the longer the situation
prevailed the higher prices would rise.
Describing the situation in the
Black Sea, Torero said there were 97 loaded vessels waiting to depart, 15
inbound vessels waiting for inspection and another 89 which had applied to join
the initiative.
The latest update of the FAO’s food price index indicated
global food prices had fallen for the sixth month in a row in September. Cereal
prices fell too but leapt in September on fears about the Black Sea Grain
Initiative’s continuation beyond November.
More
Black Sea deal suspension will drive up grain and meat prices in Asia-Pacific (cnbc.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.
Higher Interest Rates Fuel Losses at the Federal Reserve
The
central bank is now paying out more in interest expenses than it earns in
interest income
Oct. 31, 2022 5:30 am ET
The Federal Reserve’s aggressive interest-rate rises to fight inflation are
leading the central bank to do something it has never consistently done before:
lose money.
The central bank’s operating losses have increased in
recent weeks because the interest it is paying banks and money-market funds to
keep money at the Fed now exceeds the income it earns on some $8.3 trillion in
Treasury and mortgage-backed securities it accumulated during bond-buying
stimulus programs over the past 14 years.
The
losses don’t interfere with the Fed’s ability to conduct monetary policy, and
they follow years in which the central bank earned profits of around $100
billion, which it sent to the U.S. Treasury. Those remittances reduced federal deficits, and as they end, the federal
government could face marginally higher borrowing needs.
If
the Fed runs sustained losses, it won’t have to turn to Congress, hat in hand.
Instead, it will simply create an IOU on its balance sheet called a deferred
asset. When the Fed runs a surplus again in future years, it would first pay
off the IOU before sending surpluses to the Treasury.
The arrangement is akin to an institution facing a
100% tax rate and offsetting current losses with future income, said Seth
Carpenter, chief global economist at Morgan Stanley.
The losses stem from some obscure monetary plumbing.
The Fed’s $8.7 trillion asset portfolio is full of mostly
interest-bearing assets—Treasury and mortgage securities—with an average yield
of 2.3%. On the other side of the ledger—the liability side of the Fed’s
balance sheet—are bank deposits held at the Fed known as reserves and overnight
loans called reverse-repurchase agreements.
Before the 2008 financial crisis, the Fed kept its
portfolio relatively small, at less than $1 trillion. Its main liability was
the amount of currency in circulation. The Fed shifted reserves up and down in
incremental amounts if it wanted to lower or raise short-term interest rates.
After the crisis, the Fed cut interest rates to zero
and purchased large quantities of bonds to provide additional economic
stimulus. Those purchases flooded the banking system with reserves. To maintain
control over interest rates with a larger balance sheet, the Fed revamped the
way it manages rates. The new system, which was already in use by many other
central banks, controlled short-term rates by paying interest on bank reserves.
For the past decade, relatively low short-term
interest rates meant the Fed earned more on its securities than it paid out as
interest on reserves or other overnight loans. After covering its expenses, the
Fed last year handed back about $107 billion to the government.
“We’ve returned close to $1 trillion to the
Treasury over the last 10 years. We did not keep that revenue in the Fed,” St.
Louis Fed President James Bullard told reporters last month. “Now,
with the rising rates, the situation is changing.”
In September, when the Fed raised its benchmark rate to a range between
3% and 3.25%, it began earning less on its assets than it pays out on
liabilities. The central bank is expected to raise rates by 0.75 point after
its two-day meeting ends Wednesday.
“The losses can grow over time if they keep raising
short-term interest rates, which it seems like they will, because the mismatch
between interest income and interest expense will rise,” said Mr. Carpenter, a
former senior Fed economist.
More
Higher Interest Rates Fuel Losses at the Federal Reserve - WSJ
Euro zone inflation soars past forecasts to new record high
October
31, 2022
FRANKFURT (Reuters) - Euro zone inflation surged past expectations yet again this month to hit a record high, pointing to further interest rate hikes from the European Central Bank as price pressures appear to be broadening.
Consumer price growth in the 19
countries sharing the euro accelerated to 10.7% in October from 9.9% a month
earlier, beating expectations in a Reuters poll for 10.2% as inflation in
Germany, Italy and France all rose more than forecast, data from Eurostat,
showed on Monday.
Energy prices continued to drive
inflation but food and imported industrial goods all pushed prices sharply
higher even as services played only a marginal role this time.
The ECB has raised rates a combined
200 basis points in the past three months and promised further tightening as
soon as December. But markets have started to anticipate a slowdown in rate
hikes as a recession looms and gas prices have come down from record highs.
But policymakers are likely to be
concerned that underlying price growth, which filters out volatile food and
fuel prices, continued to accelerate, pointing to broadening price pressures,
which raises the risk that high inflation will get entrenched.
Indeed, inflation excluding unprocessed food and energy accelerated to 6.4% from 6.0%, while an even narrower measure that also filters out alcohol and tobacco rose to 5.0% from 4.8%.
Markets priced out some rate hikes last week
after ECB chief Christine Lagarde provided a sombre outlook for economic growth
but a string of grim price data since then turned investor sentiment around at
least partially.
More
Euro zone
inflation soars past forecasts to new record high (msn.com)
MONDAY 31 OCTOBER 2022 7:18 AM
Last week was the fourth successive week of gains
for equity markets in Europe as well as the US, despite some high-profile
earnings misses.
It’s been particularly notable that while there
were some notable earnings misses, especially in the tech sector, by and large
the more traditional areas of the market have performed better.
“While equity markets have been rebounding strongly, we’ve seen the US dollar, as well as bond yields start to go in the opposite direction, with sharp falls in both in recent days, begging the question as to why the sudden about turn,” CMC Markets’ chief market analyst Michael Hewson said this morning.
“We’ve seen evidence that inflation
may be starting to slow in the US, while at the same time there is increasing
concern that the rate rises seen so far are starting to act as a drag on
certain parts of the economy, the housing market more noticeably.”
----There also seems to be a similar debate amongst other
central banks about the balancing act or trade-offs between hiking aggressively
and the longer-term impact on the growth glide path of the economy, with last
week’s ECB meeting a case in point, where the decision to raise rates by 75bps
was not unanimous, with the hawks winning out on this occasion.
---- While US inflation appears to be showing signs of
slowing, the same can’t be said for inflation in Europe which appears to be
continuing to rise, after last week’s hot German inflation numbers for October.
“The sharp rise seen here is likely to manifest
itself in today’s final EU CPI numbers for October which are expected to push
up above 10 per cent to 10.3 per cent,” Hewson noted.
“Core prices are also expected to rise, from 4.8
per cent to 5 per cent, which in turn could continue to exert upward pressure
on rates across Europe,” he said.
“This is the nightmare scenario for the ECB, as the pressure
to hike further will only increase at the same time as the economy continues to
slow,” Hewson pointed out.
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.
Shanghai Disney
shuts over Covid, visitors unable to leave
Shanghai’s Disney Resort
abruptly suspended operations on Monday to comply with Covid-19 prevention
measures, with all visitors at the time of the announcement directed to stay in
the park until they return a negative test for the virus.
The resort said at
11:39 a.m. local time (03:39 GMT) it would immediately shut the main theme park
and surrounding areas including its shopping street until further notice to
comply with virus curbs.
The Shanghai government
said on its official WeChat account the park was barring people from entering
or exiting and that all visitors inside the site would need to await the
results of their tests before they could leave.
Anyone who had
visited the park since Oct. 27 would need to test for Covid-19 three times in
three days, it said.
The theme park
continued to operate rides for visitors stuck in the park during the closure on
Monday, social media users reported.
A Shanghai Disney Resort
spokesperson said the resort was still operating “limited offerings” and that
they were following measures in line with guidelines from Chinese health
authorities.
More
Shanghai
Disney shuts over Covid, visitors unable to leave (cnbc.com)
Fearing Covid,
workers flee from Foxconn’s vast Chinese iPhone plant
After enduring days
of lock-in at Foxconn’s vast facility in central China with 200,000 other
workers, Yuan finally climbed the fences on Saturday night and escaped the
complex, joining others fleeing what they feared was a widening Covid outbreak.
He walked through the
night, keeping to a northerly route, towards his hometown of Hebi, every step
taking him farther away from iPhone maker Foxconn’s Zhengzhou plant, the
Taiwan-based group’s largest in mainland China.
“There were so many
people on the road,” Yuan told Reuters on Monday, declining to give his full
name because of the matter’s sensitivity.
Since mid-October,
Foxconn has been wrestling with a Covid-19 outbreak at its facility in
Zhengzhou, the capital of Henan province in central China. Workers were locked
in to stop the spread of the coronavirus to the outside world. Foxconn has
repeatedly refrained from disclosing the caseload.
“We were shut in on
Oct. 14, and we had to do endless PCR tests, and after about 10 days, we had to
wear N95 masks and were given traditional Chinese medicine,” said Yuan.
Whenever a positive
or suspected case was found at a production line, there would be a public
broadcast, but work would continue, he told Reuters.
“People would be
called away in the middle of work, and if they don’t show up the next day, that
would mean they had been taken away,” Yuan said.
Around 20,000 workers
had been put in quarantine on-site, Yuan had heard, but he could not be sure
how many were infected, as management did not publicize that information.
China typically
isolates vast numbers of people considered close or even potential contacts of
an infected person.
The world’s second-largest economy continues to wage war on Covid
with disruptive lockdowns, mass testing and quarantines while many other
countries have chosen to live with the disease.
More
Fearing
Covid, workers flee from Foxconn's vast Chinese iPhone plant (cnbc.com)
More on Boston University playing Russian Roulette with Covid-19. What could possibly go wrong?
Playing With Fire: A Lab-Made
Frankenstein COVID-19 Virus by Boston University
Are we trying to prove the lab-leak theory by
doing it for real in the United States? Weren’t the lessons from the COVID-19
pandemic serious enough?
Oct 29 2022
The creation of a new
recombinant COVID-19 virus at Boston University, viewed as a “Frankenstein
virus” by many, has raised a public uproar. This is not merely a risky
gain-of-function experiment on “enhanced potential pandemic pathogens (ePPPs)”,
it is a creation of an enhanced pandemic pathogen. NO “potential”
here.
What is the rationale for this
statement? What is the chimeric virus that we talk about here?
A team of researchers at Boston
University’s National Emerging Infectious Diseases Laboratories posted a paper on October 14, 2022, on
BioRxiv, a preprint server for biology, revealing that they had created a
lab-made COVID-19 chimeric virus with reverse genetics technology.
Specifically, they’ve swapped
the S gene of the spike protein in the original SARS-CoV-2 Wuhan strain with
the corresponding S gene from the Omicron variant. So, the lab-made
Chimeric virus (Wuhan-Omi-S chimeric virus) has all the genes from the Wuhan
strain, which is much more pathogenic than the Omicron strain, except the S
gene, which is from the highly transmissible yet relatively mildly pathogenic
Omicron strain.
According to the preprint paper, the Omicron spike-bearing virus is able to effectively and
robustly escape vaccine-induced humoral immunity just like the Omicron variant.
In addition, unlike the naturally occurring Omicron variant, the Wuhan-Omi-S
chimeric virus efficiently replicates in cell lines and primary-like distal
lung cells.
Furthermore, it has killed at least 80 percent of infected K18-hACE2 mice (a type of transgenic mice expressing human ACE2 receptors), whereas the mortality rate of the Omicron variant was zero while the Wuhan strain caused 100 percent death in two weeks in control experiments in the same transgenic mice. This 80 percent mortality in the mice model by the Wuhan-Omi-S chimeric virus was observed in a two-week period. The paper did not provide any further observations on whether the surviving 20 percent of mice eventually died faster than the control mice group infected with Omicron variants.
The
defenders for this risky study stated that the chimeric virus product showed
reduced pathogenicity (100 versus 80 percent mortality) when compared to Wuhan
strains, so it is not a gain-of-function study. However, this is an unjustifiably
optimistic statement. The study did not provide any detailed or
comprehensive pathology exam of different organs in the transgenic mice
infected with the Wuhan-Omi-S virus. For example, do we know that this chimeric
virus has the same neuropathogenesis as the Omicron or Wuhan viruses?
This study did not provide any data on that.
More
Playing With Fire: A Lab-Made Frankenstein COVID-19 Virus by Boston University (theepochtimes.com)
Next, some vaccine links
kindly sent along from a LIR reader in Canada.
NY Times Coronavirus Vaccine
Tracker. https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html
Regulatory Focus COVID-19
vaccine tracker. https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker
Some other useful Covid links.
Johns Hopkins Coronavirus
resource centre
https://coronavirus.jhu.edu/map.html
Centers for Disease Control
Coronavirus
https://www.cdc.gov/coronavirus/2019-ncov/index.html
The
Spectator Covid-19
data tracker (UK)
https://data.spectator.co.uk/city/national
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this
section. Updates as they get reported.
Going, going….
Multi-billion pound
North East battery gigaplant facing collapse 'within days'
Mon,
31 October 2022 at 11:12 am
The multi-billion pound vision of
a vast battery plant near Northumberland with thousands of jobs could be close
to collapse.
Britishvolt has refused to deny
reports today that its vast Gigaplant project has run out of time and money and
may have to go into administration within the next few days.
Sources told the Financial
Times that the company has been unable to bring together the vital bailout
it had been asking for and that there is no one left to turn to.
A company statement this morning
would only say "We are aware of market speculation. We are actively
working on several potential scenarios that offer the required stability.
We have no further comment at this time.”
Only a few weeks ago the
company pledged to stick to its vision of creating thousands of jobs
in Northumberland after we reported it was holding talks with a number of
potential investors after market turmoil led to potential supporters getting nervous
and reining in their plans.
Company spokesman Ben Kilbey said
then: “The Board of Directors supports the company's latest business
plan which has been refocused and sharpened given the negative global economic
situation and continues to have full confidence in the senior management team.
---- The £3.8bn project on a 93-hectare site at
the former Blyth Power Station in Cambois is a major
boost for the whole region, and as well as 3,000 direct
highly-skilled jobs, another 5,000 will be created in the associated supply chains.
Government funding believed to be
around £100million was followed by a long-term partnership with Trixtax and
abrdn that will deliver £1.7bn in private funding to help propel the UK’s
energy transition on the road to net zero.
Then a partnership was announced
with Aston Martin but now the exit of the co-founder, delayed deadlines and
nervous investors is casting a dark shadow over the region.
The collapse of the company
will mean uncomfortable questions about the Government investment from
then Business Secretary Kwasi Kwarteng, who said at the time "In
this global race between countries to secure vital battery production, this
Government is proud to make the investment necessary to ensure UK’s retains its
place as one of the best locations in the world for auto manufacturing.
The
future of the Government's bold Net Zero targets may also be affetced, with
such a large-scale source of batteries taken out of the picture.
Multi-billion pound North East battery gigaplant
facing collapse 'within days' (yahoo.com)
"There is no means of avoiding the final
collapse of a boom brought about by credit expansion. The alternative is only
whether the crisis should come sooner as the result of voluntary abandonment of
further credit expansion, or later as a final and total catastrophe of the
currency system involved."
Ludwig
von Mises.
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