Baltic Dry Index. 1290 -31 Brent Crude 96.54
Spot Gold 1637 US 2 Year Yield 4.71 +0.10
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 04/11/22 World 636,894,241
Deaths 6,601,839
If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.
John Maynard Keynes.
In the stock casinos, disbelief. Disbelief that the 2009-2019 era of ZIRP and
in places NIRP money has ended forever.
Disbelief that the 2020-2021 era of free Magic Money Tree
forest, central bank money has ended forever too.
Disbelief that our current global bout of inflation isn’t
“transitory.”
But a very harsh new reality is fast descending on the
global economy. Look away from the Baltic Dry Index and US inverted yield curve
now.
Think more 1929-1933 than October 1987.
Hong Kong’s Hang
Seng index surges 7%; Asia markets mixed ahead of U.S. jobs report
UPDATED FRI, NOV 4 2022 1:11 AM EDT
Hong Kong
stocks briefly rose 7% in a mixed Asia-Pacific session on Friday as markets
continued to process the Fed’s 75
basis point interest rate hike and looked ahead to the jobs
report.
Hong Kong’s Hang Seng index jumped
7%, while the Hang Seng Tech index soared 9.72%.
″[The rise] is supported by the
rebound from internet platforms electric vehicles, which have suffered
severe sell-off in previous weeks,” said Gary Ng, senior economist at Natixis.
In mainland China, the Shenzhen Component inched
up 2.46%, while the Shanghai Composite
Index climbed
3.317%.
Japan’s Nikkei 225′s fell
1.86% after a holiday on Thursday. The Topix slid 1.42%. In South Korea, the Kospi added
0.58%. MSCI’s broadest index of Asia-Pacific shares outside Japan was 2.68%
higher.
Australia’s S&P/ASX 200 rose
0.54% to close at 6,894.80. The Reserve Bank of Australia released its monetary policy statement Friday.
Asia-Pacific currencies
strengthened as the U.S. dollar index slipped.
Qantas’ shareholders meeting and Singapore’s
retail sales data are also slated for Friday.
The monthly U.S. employment
report is scheduled to be released later. Economists
expect 205,000 jobs were added in October, and forecast the
unemployment rate remained at 3.5%, according to Dow Jones.
Overnight, U.S. stocks declined
for a fourth
consecutive session. The Dow Jones Industrial Average slid 146.51
points, or 0.46%, to close at 32,001.25. The S&P 500 lost 1.06% to finish
at 3,719.89, while the Nasdaq Composite shed 1.73% to settle at 10,342.94.
Japan’s Z Holdings
stock tanks nearly 14% after net income drops
Shares of Z Holdings,
which owns Japanese messaging app Line, fell as much as 13.9% after the company reported a decline in net income for the six months ended
Sept. 30.
Z Holdings on
Wednesday announced its net income fell 25.7% to 40.3 billion yen ($272
million), compared with 54.2 billion yen in the same period a year ago.
The market was
closed for a holiday on Thursday, and dropped sharply in Friday trade. The
stock was last down 13.73%.
Hong
Kong stocks up 7%; Asia markets mixed ahead of U.S. jobs report (cnbc.com)
Hedge fund giant
Elliott warns looming hyperinflation could lead to ‘global societal collapse’
“Investors should not assume
they have ‘seen everything’”
That was from executives at
leading hedge fund Elliott Management, who warned that the world is heading
towards the worst financial crisis since World War II.
In a letter sent to investors,
and seen by the Financial Times, the Florida-headquartered firm
told clients that they believe the global economy is in an “extremely
challenging” situation which could lead to hyperinflation. Elliott did not
respond to MarketWatch’s request for comment.
The firm, led by billionaire Paul Singer and Jonathan
Pollock, told its clients that “investors should not assume they have ‘seen
everything’” because they have been through the peaks and troughs of the 1987
crash, the dot-com boom and the 2008 global financial crisis and previous bear
and bull markets.
They added that the “extraordinary” period of cheap money
is coming to an end and has “made possible a set of outcomes that would be at
or beyond the boundaries of the entire post-WWII period.”
The letter said the world is “on the path to
hyperinflation”, which could lead to “global societal collapse and civil or
international strife.”
They estimated that markets have not fallen enough yet
and equity markets could drop more than 50% would be “normal,” adding that they
couldn’t predict when that would happen. The S&P 500 SPX,
Elliott executives
warned clients that the idea that “‘we will not panic because we have seen this
before’ does not comport with the current facts.”
They blamed central
bank policymakers for the current global economic situation, saying they had
been “dishonest” about the reason for high inflation. They said lawmakers had
shirked responsibility by blaming it on supply chain disruption caused by the
pandemic instead of loose monetary policy imposed two years ago during the
COVID-19 peak.
The
FT reported that the hedge fund is posting 6.4% returns so far this year and
has only lost money for two years in its 45-year history.
In other news, nothing good. More sign of big trouble
arriving.
Bank of England expects UK
to fall into longest ever recession
3 November, 2022
The Bank of England has warned the UK is facing its longest recession since records began, as it raised interest rates by the most in 33 years.
It warned the UK would face a "very challenging" two-year slump with unemployment nearly doubling by 2025.
Bank boss Andrew Bailey warned of a "tough road ahead" for UK households, but said it had to act forcefully now or things "will be worse later on".
It lifted interest rates to 3% from 2.25%, the biggest jump since 1989.
By raising rates, the Bank is trying to bring down soaring prices as the cost of living rises at its fastest rate in 40 years.
Food and energy prices have jumped, in part because of the Ukraine war, which has left many households facing hardship and started to drag on the economy.
A recession is defined as when a country's economy shrinks for two three-month periods - or quarters - in a row.
Typically, companies make less money, pay falls and unemployment rises. This means the government receives less money in tax to use on public services such as health and education.
The Bank had
previously expected the UK to fall into recession at the end of this year and
said it would last for all next year.
But it now believes the economy already entered a "challenging" downturn this summer, which will continue next year and into the first half of 2024 - a possible general election year.
While it will not be the UK's deepest downturn, it will be the longest since records began in the 1920s, the Bank said.
The unemployment rate is currently at its lowest for 50 years, but it is expected to rise to nearly 6.5%.
The interest rate announcement is the first since former Prime Minister Liz Truss and former Chancellor Kwasi Kwarteng unveiled their controversial mini-Budget in September.
Their plans for £45bn worth of unfunded tax cuts - much of which have been reversed - sent the value of the pound tumbling and sparked market turmoil, forcing the Bank of England to step in to restore calm.
Mr Bailey told the BBC he believed that the mini-budget had "damaged" the UK's standing internationally.
He said that at a recent International Monetary Fund gathering in Washington "it was very apparent to me that the UK's position and the UK's standing had been damaged".
That same week, Mr
Kwarteng was sacked as Chancellor.
More
Bank of England expects UK
to fall into longest ever recession - BBC News
Exclusive:
Morgan Stanley to start layoffs in coming weeks as dealmaking slows
November 3, 2022
9:00 AM GMT
HONG KONG, Nov 3 (Reuters) - Wall
Street major Morgan Stanley (MS.N) is
expected to start a fresh round of layoffs globally in the coming weeks, three
people with knowledge of the plan said, as dealmaking business takes a hit due
to rising inflation and an economic downturn.
In Asia Pacific, the bank has drafted
up a list of staff members considered redundant, who will mainly come from
teams that focus on China-related business, two of the sources said. All
declined to be named as the information is confidential.
Some of the cuts will come from capital
markets teams in Hong Kong and mainland China, and most of the rest are
expected to be from other teams focusing on China business, both onshore and
offshore, the third source said.
One of the sources said the bank's
30-plus technology investment banking team in Asia Pacific will also be
affected by the cuts.
The cuts in Asia Pacific will be
greater than the bank's annual staff losses from natural attrition in the
region, the three sources said, adding that a final decision on the size of the
cuts is yet to be taken.
Global cuts will be made around the
same time, they added.
A fourth source said the bank has yet
to make decisions about the scale or timing of any layoffs, adding that layoffs
are not imminent. Any cuts would represent a low-single digit percentage of
staff globally, this person said.
Morgan Stanley, which had 81,567
employees globally at the end of the third quarter, according to a company
filing, declined to comment for the story.
With prospects for arranging and
financing deals drying up, some investment banks are firming up plans to cut
jobs.
Goldman Sachs (GS.N) cut
jobs in September after pausing the annual practice for two years
during the pandemic, Reuters has reported. Deutsche Bank (DBKGn.DE) also cut
staff last month in origination and advisory segments of its
investment banking unit.
More
Exclusive: Morgan Stanley to start layoffs in coming
weeks as dealmaking slows | Reuters
Stripe plans to
lay off 14% of workers
PUBLISHED THU, NOV 3 2022 9:52 AM
EDT
Online payments giant Stripe plans to lay off
roughly 14% of its staff, CEO Patrick Collison wrote in a memo to staff Thursday.
Here’s Collison’s full memo:
Earlier today, Stripe CEO Patrick Collison sent the
following note to Stripe employees.
Hi folks –
Today we’re announcing the hardest change we have had to make at Stripe to date. We’re reducing the size of our team by around 14% and saying goodbye to many talented Stripes in the process. If you are among those impacted, you will receive a notification email within the next 15 minutes. For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it.
We’ll set out more detail later in this email. But first, we want to share some broader context.
The world around us
At the outset of the pandemic in 2020, the world rotated overnight towards e-commerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously. As an organization, we transitioned into a new operating mode and both our revenue and payment volume have since grown more than 3x.
The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. (Tech company earnings last week provided lots of examples of changing circumstances.) On Tuesday, a former Treasury Secretary said that the US faces “as complex a set of macroeconomic challenges as at any time in 75 years”, and many parts of the developed world appear to be headed for recession. We think that 2022 represents the beginning of a different economic climate.
Our business is fundamentally well-positioned to weather harsh circumstances. We provide an important foundation to our customers and Stripe is not a discretionary service that customers turn off if budget is squeezed. However, we do need to match the pace of our investments with the realities around us. Doing right by our users and our shareholders (including you) means embracing reality as it is.
Today, that means building differently for leaner times. We have always taken pride in being a capital efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs.
How we’re handling departures
Around 14% of people at Stripe will be leaving the company. We, the founders, made this decision. We overhired for the world we’re in (more on that below), and it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe.
There’s no good way to do a layoff, but we’re going
to do our best to treat everyone leaving as respectfully as possible and to do
whatever we can to help. Some of the core details include:
More
Stripe
plans to lay off 14% of workers (cnbc.com)
China
Evergrande chairman's Hong Kong mansion seized by bank
November 3, 2022
9:17 AM GMT
HONG KONG, Nov 3 (Reuters) - A mansion belonging
to embattled China Evergrande Group's (3333.HK) chairman
in Hong Kong's prestigious The Peak residential enclave has been seized by
lender China Construction Bank (Asia), records from the Land Registry show.
The bank appointed receivers to take
over the 5,000 sq ft (465 sq m) mansion on Nov. 1, according to a filing.
Evergrande declined comment and
chairman Hui Ka Yan could not be reached. CCB (Asia) did not respond to a
request for comment.
Saddled with more than $300 billion in
total liabilities, the defaulted Chinese property developer has already seen
many of its assets, both in mainland China and Hong Kong, seized by creditors.
Online news outlet HK01 first reported
the foreclosure of the luxury house on Thursday, which it said was now worth
HK$700 million ($89 million). The report added it could be the first known case
of Hui's personal assets in Hong Kong being seized.
The mansion, with sweeping views of the
city's gleaming skyscrapers, had been pledged to raise about HK$300 million to
repay an overdue Evergrande bond, HK01 reported last year.
A filing with Hong Kong's Land Registry
confirmed in October 2021 that the property had been pledged for a loan from
CCB (Asia), although it gave no monetary figure.
Hui owns two other luxury homes in the
same development in The Peak, which were pledged to Orix Asia Capital Ltd in
November 2021 for undisclosed amounts, according to the Land Registry.
More
China Evergrande chairman's Hong Kong mansion seized
by bank | 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.
Where we all are headed thanks to the Magic Money Tree forests discovered back in March 2020.
Turkey's
inflation hits 24-year high of 85.5% after rate cuts
November 3, 2022
9:14 AM GMT
ISTANBUL, Nov 3 (Reuters) - Turkish
annual inflation climbed to a new 24-year high of 85.51% in October, official
data showed on Thursday, slightly below forecast, after the central bank cut
its policy rate despite surging prices.
Inflation has surged since last year,
when the lira slumped after the central bank began cutting its policy rate in
an easing cycle long sought by President Tayyip Erdogan.
In the last three months, the central
bank slashed its policy rate by a total of 350 basis points to 10.5%. It
promised another cut this month as the final move in the current easing cycle,
running counter to the global monetary policy tightening trend.
Month-on-month, consumer prices rose
3.54%, the Turkish Statistical Institute said, below 3.60% forecast in a
Reuters poll. Annually, consumer price inflation (TRCPIY=ECI) was
forecast to be 85.60%.
The annual inflation in October was the
highest since June 1998, when Turkey was working to end a decade of high
inflation.
Haluk Burumcekci, founder of Burumcekci
Consulting, said the October print could be the peak for headline inflation if
the lira does not weaken further.
“We think that the headline inflation
may have seen its peak unless there is a depreciation from the lira's current
level," he said. "A significant decline (in inflation) could only
happen towards the 70-75% range due to the base effect in the last month of the
year."
The lira's 44% decline last year and
29% this year was the main reason behind soaring inflation, in addition to
surging energy prices.
Month-on-month clothing led the price
rises with 8.34%, followed by food prices, which rose 5.09%, and furnishing and
household equipment prices, which rose 4.38%.
Transportation, which includes petrol
prices, led the annual rise with 117.15%, followed by food prices at 99.05% and
furniture and household equipments at 93.63%.
The median forecast for year-end
inflation in the latest Reuters poll was 70.25%, while Turkey's central bank
raised its year-end forecast to 65.20% last week, its fourth upward revision
this year.
The government's economic programme
prioritises low rates to boost production and exports with the aim of achieving
a current account surplus.
The domestic producer price index was
up 7.83% month-on-month in October for an annual rise of 157.69% (TRPPIY=ECI).
Turkey's
inflation hits 24-year high of 85.5% after rate cuts | Reuters
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
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.
Modelling predicts low-COVID Christmas -
but another peak in January
University
College London modelling suggests the next winter peak won't come until after
Christmas and will be bigger than previous ones. But an epidemiologist tells
Sky News the number of Omicron sub-variants seen this year make predictions
impossible.
Monday 31 October 2022
20:24, UK
The
UK could have a relatively COVID-free Christmas this year but faces another
wave of cases in January, according to one model.
According
to researchers at University College London, coronavirus cases are peaking and
starting to fall again.
"The
impending peak in prevalence is anticipated in late October 2022," the
report said.
There
will be a "subsequent peak" in late January.
Professor
Karl Friston, a neuroscientist who led the modelling, said the predictions are
"based on everything that has happened so far".
This
includes infection, hospital, death and vaccination rates and behavioural metrics
such as transport and Google mobility data.
"You
can see a pattern over the past two years of a peak in late October or early
November - and then a large one after Christmas," he told Sky News.
Asked why the winter peak is not predicted to come in December, he said:
"They're usually after Christmas.
"It's not the parties, but the week after Christmas, of being
indoors with the windows closed, with your family, and travelling to see people
you haven't seen in months, when contact rates are really up."
The report notes that its methodology is "more optimistic than
worst-case projections" in other modelling done by the government's
Scientific Pandemic Influenza Group on Modelling (SPI-M).
Two subvariants of Omicron - BQ.1 and XBB - are believed to be behind
the recent spike in cases - having recently surged in France, Germany and
Singapore.
Others say winter wave will come sooner
Dr Stephen Griffin, a virologist at the University of Leeds, said he
thinks the next wave of cases will be sooner than January.
"We peaked at around 1 in 30 people having COVID a few weeks ago,
and it looks like that's coming down," he told Sky News.
"But based on my experience, I think what we're seeing is BA.5
coming down, but one or more of these other variants coming up."
The BA.4 and BA.5 Omicron subvariants drove infections earlier in the
year.
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.
Light-powered catalyst makes profitable hydrogen from
stinky waste gas
Loz Blain November 01, 2022
Hydrogen sulfide famously stinks like rotten eggs, and
contributes that eye-watering, low-hanging punch to the bouquet of the very
worst farts. It's also toxic, corrosive, flammable and produced in large
amounts as an expensive-to-treat by-product at petroleum refineries. Now,
researchers have found an easy, profitable way to turn it into hydrogen.
The current method for dealing with this stuff – an
unavoidable waste product when you're refining oil or natural gas – is to heat
it up with air to between 800-1,100 °C (1,470-2,000 °F), then run it through a
series of condensers, reheaters and catalytic reactors to convert it into
sulfur and water in what's known as the Claus Process. The sulfur can be sold
on, but the high temperatures involved make this an energy-hungry process.
Now, researchers at Rice University say they've found a way to pretty
much eliminate that energy use and its associated emissions, while still
recovering the sulfur and capturing useful hydrogen gas to boot.
The new process uses a nano-engineered silicon dioxide powder catalyst,
each grain speckled with nanoparticles of gold just billionths of a meter wide.
These gold particles respond strongly to a specific wavelength of visible
light, shooting out short-lived electrons known as "hot carriers,"
which carry enough energy to split H2S molecules efficiently into H2 and
S for separate capture.
The process can be entirely powered by sunlight, and thus more or less
free for a refinery in terms of operating costs where sunlight is available.
But according to the research team, it works just fine with artificial light as
well, and could end up being so cheap and efficient that you could roll it out
with its own low-powered LED lighting and harvest hydrogen and sulfur while
cleaning up sewer gas underground.
“Hydrogen sulfide emissions can result in hefty fines for industry, but
remediation is also very expensive,” said Naomi Halas, lead author on the study
and co-founder of Syzygy Plasmonics, which has licensed the new technology for
commercialization. “The phrase ‘game-changer’ is overused, but in this case, it
applies. Implementing plasmonic photocatalysis should be far less expensive
than traditional remediation, and it has the added potential of transforming a
costly burden into an increasingly valuable commodity.”
While this method should actually
reduce carbon emissions due to the significant energy use it obviates in the
refining process, it seems unlikely that the resulting hydrogen will meet the
criteria for "green" classification, since at the end of the day it's
coming from fossil fuel.
Light-powered
catalyst makes profitable hydrogen from stinky waste gas (newatlas.com)
Another weekend and a weekend of worry
and deepening gloom for many buried in debt. So far most of Europe has
benefited from a warmer than usual autumn, but winter is fast approaching and
there’s little sign of relief from food and energy price inflation. I suspect a
harsh economic reality is finally setting in.
Have a great weekend everyone.
"Indeed the temporary
breaks in the market which preceded the crash were a serious trial for those
who had declined fantasy. Early in 1928, in June, in December, and in February
and March of 1929 it seemed that the end had come. On various of these
occasions the [New York] Times
happily reported the return to reality. And then the market took flight again.
Only a durable sense of doom could survive such discouragement. The time was
coming when the optimists would reap a rich harvest of discredit. But it has
long since been forgotten that for many months those who resisted reassurance
were similarly, if less permanently discredited.”
J. K. Galbraith. The Great
Crash: 1929.
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