Baltic
Dry Index. 1321 -56 Brent Crude 95.88
Spot Gold 1637 US 2 Year Yield 4.61 +0.07
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 03/11/22 World 636,453,766
Deaths 6,599,291
"It's strange that men should take up crime when there are
so many legal ways to be dishonest. “
Al Capone,
In the stock casinos, reality returns. Higher interest rates hurt. Prepare for a hard landing if not a crash landing.
Later today, the Bank of England is expected to join in the Great Global Interest Rate Hike Festival with its biggest interest rate hike in 33 years.
Bunker time. Bad thigs lie directly ahead. Look away from the inverted US yield curve now.
We are shortly about to find out who has unserviceable debt and worse, unrepayable debt.
“Terrain, terrain! Pull up! Pull up! Terrain, terain !! Pull up, Pull up!! Terrain, terrain!!! Pull up, Pull up!!!
Terrain, Terrain-Pull up, Pull Up!! (sound effect)
Terrain, Terrain-Pull up, Pull Up!! (sound effect) - Bing video
Hong Kong stocks
lead losses in Asia-Pacific session after Fed signals more hikes ahead
UPDATED THU, NOV 3 2022 1:18 AM
EDT
Shares in
the Asia-Pacific dropped on Thursday after the U.S. Federal Reserve Chairman
Jerome Powell signaled
further hikes ahead after raising rates by 75
basis points as expected and called discussions on pausing the
tightening cycle “premature.”
Hong Kong’s Hang Seng index fell
2.65%, leading losses in the wider Asia-Pacific trading session. Hang Seng Tech
fell 3.4%. Mainland China’s Shanghai Composite lost
0.64% and the Shenzhen Component was
down 0.7%.
In Australia, the S&P/ASX 200 was
down 1.84%. The Kospi was
flat and the Japanese market was closed for a holiday Thursday. The MSCI’s
broadest index of Asia-Pacific shares outside Japan slipped 1.58%.
Overnight on Wall
Street, the Dow Jones Industrial Average dropped 505.44 points, or 1.55% to
32,147.76, and the S&P 500 shed 2.5% to 3,759.69. The Nasdaq Composite
tumbled 3.36% to 10,524.80.
The indexes rose
earlier in the session on a line in the Fed statement that said “the Committee
will take into account the cumulative tightening of monetary policy, the lags
with which monetary policy affects economic activity and inflation, and
economic and financial developments.”
Asia
markets: Stocks drop after the Fed signals more hikes ahead (cnbc.com)
Fed approves
0.75-point hike to take rates to highest since 2008 and hints at change in
policy ahead
The Federal Reserve on Wednesday approved a fourth
consecutive three-quarter point interest rate increase and signaled a potential
change in how it will approach monetary policy to bring down inflation.
In a well-telegraphed
move that markets had been expecting for weeks, the central
bank raised its short-term borrowing rate by 0.75 percentage point to a target
range of 3.75%-4%, the highest level since January 2008.
The move continued the most aggressive pace of monetary policy tightening since
the early 1980s, the last time inflation ran this high.
Along with anticipating the rate hike, markets also had been looking for
language indicating that this could be the last 0.75-point, or 75 basis point,
move.
The new
statement hinted at that policy change, saying when determining
future hikes, the Fed “will take into account the cumulative tightening of
monetary policy, the lags with which monetary policy affects economic activity
and inflation, and economic and financial developments.”
Economists are hoping this is the much talked about “step-down” in policy
that could see a rate increase of half a point at the December meeting and then
a few smaller hikes in 2023.
This week’s statement also expanded on previous
language simply declaring that “ongoing increases in the target range will be
appropriate.“
The new language read, “The Committee anticipates that ongoing increases in the
target range will be appropriate in order to attain a stance of monetary policy
that is sufficiently restrictive to return inflation to 2 percent over time.”
Stocks
initially rose following the announcement, but turned negative
during Chairman Jerome Powell’s news
conference as the market tried to gauge whether the Fed thinks
it can implement a less restrictive policy that would include a slower pace of
rate hikes to achieve its inflation goals.
On balance, Powell
dismissed the idea that the Fed may be pausing soon though he said he expects a
discussion at the next meeting or two about slowing the pace of tightening.
He also reiterated
that it may take resolve and patience to get inflation down.
“We still have some
ways to go and incoming data since our last meeting suggests that the ultimate
level of interest rates will be higher than previously expected,” he said.
---- The chairman also expressed some pessimism
about the future. He noted that he now expects the “terminal rate,” or the
point when the Fed stops raising rates, to be higher than it was at the
September meeting. With the higher rates also comes the prospect that the Fed
will not be able to achieve the “soft landing” that Powell has spoken of in the
past.
“Has it narrowed?
Yes,” he said in response to a question about whether the path has narrowed to
a place where the economy doesn’t enter a pronounced contraction. “Is it still
possible? Yes.”
However, he said the
need for still-higher rates makes the job more difficult.
“Policy needs to be
more restrictive, and that narrows the path to a soft landing,” Powell said.
More
Interest rates UK -
latest: Bank of England expected to confirm biggest rise in 33 years
3 November, 2022
Economists are expecting the Bank of England today
to announce a 0.75 percentage-point rise in the base rate – to 3 per cent – in
what would be the biggest hike for 33 years.
The
move could push up by hundreds of pounds the amount that mortgage holders have
to pay every month.
It would be the biggest
single increase since 1989, and would also be the eighth time in a row that the
Bank has hiked interest rates. Less
than a year ago the rate was 0.1 per cent.
The
Bank is trying to curb inflation by
raising rates. However, the decision-makers could be divided over the size of
the hike, with some possibly opting for a 0.5 percentage-point increase.
The
Bank’s monetary policy committee meets eight times a year to decide interest
rate policy. The announcement, which will be at noon, will be welcomed by
savers if any increase in base rates is passed on.
The
Bank of England began selling its massive gilt holdings on Tuesday, following a
tumultuous two months for financial markets after former prime minister Liz
Truss and ex-chancellor Kwasi Kwarteng sparked a rout in gilts and sent the
pound tumbling to an all-time low against the US dollar.
Interest
rates UK - latest: Bank of England expected to confirm biggest rise in 33 years
(msn.com)
In other news, Russia re-joins the Ukraine grain
deal. Sky high energy prices have Europe closing down. Maersk warns.
Russia says it resumes participation in Ukraine grain deal
November 2, 2022 10:43 AM GMT
ANKARA/MYKOLAIV,
Ukraine, Nov 2 (Reuters) - Russia said on Wednesday it would resume its
participation in a deal to free up vital grain exports from war-torn Ukraine
after suspending it over the weekend in a move that had threatened to
exacerbate hunger across the world.
The Russian
defence ministry said it had received written guarantees from Kyiv not to use
the Black Sea grain corridor for military operations against Russia.
"The Russian
Federation considers that the guarantees received at the moment appear
sufficient, and resumes the implementation of the agreement," the ministry
statement said.
Turkish President
Tayyip Erdogan said earlier that Russian Defence Minister Sergei Shoigu had told
his Turkish counterpart that the July 22 grain deal brokered by Turkey and the
United Nations would continue to operate as of midday on Wednesday.
"The grain
transports will continue as agreed before as of 12 (pm) today," Erdogan
said.
Russia suspended its involvement in the deal over the weekend, saying it could not
guarantee safety for civilian ships crossing the Black Sea because of an attack
on its fleet there. Ukraine said that was a false pretext.
Ships have
continued to carry Ukrainian grain on the route despite the suspension, but
that had been unlikely to continue for long because insurance companies were
not issuing new contracts due to Russia's move, industry sources told Reuters.
Ukrainian
President Volodymyr Zelenskiy said earlier that the world should respond firmly
to any Russian attempts to disrupt Ukraine's export corridor across the Black
Sea, which was blocked after Moscow invaded Ukraine on February 24.
More
Russia says it
resumes participation in Ukraine grain deal | Reuters
Energy
crisis chips away at Europe's industrial might
November 2, 2022 9:55 AM GMT
LONDON, Nov 2
(Reuters) - Europe needs its industrial companies to save energy amid soaring
costs and shrinking supplies, and they are delivering - demand for natural gas
and electricity both fell in the past quarter.
It is far too
early to rejoice, though. The drop is not just because industrial companies are
turning down thermostats, they are also shutting down plants that may never
reopen.
And while lower
energy use helps Europe weather the crisis sparked by Russia's war in Ukraine
and Moscow's supply cuts, executives, economists and industry groups warn its
industrial base may end up severely weakened if high energy costs persist.
Energy-intensive
industries, such as aluminium, fertilisers, and chemicals are at risk of
companies permanently shifting production to locations where cheap energy
abounds, such as the United States.
Even as an
unusually warm October and projections of a mild winter helped drive prices lower,
natural gas in the United States still costs about a fifth what companies pay
in Europe.
"A lot of
companies are just quitting production," Patrick Lammers, management board
member at utility E.ON (EONGn.DE) told
a conference in London last month. "They actually demand destruct."
Euro-zone manufacturing activity this
month hit its weakest level since May 2020, signaling Europe was heading for a
recession.
The International
Energy Agency estimates European industrial gas demand fell by 25% in the third
quarter from a year earlier. Analysts say widespread shutdowns had to be behind
the drop because efficiency gains alone would not produce such savings.
"We are
doing all we can to prevent a reduction in industrial activity," an
European Commission spokesperson said in an email.
But a survey released
on Wednesday showed companies in Europe's industrial powerhouse Germany were
already scaling back because of energy costs.
More than one
business in four in the chemicals sector and 16% in the auto sector said they
were being forced to cut production, a survey of 24,000 businesses by the
German chambers of commerce and industry (DIHK) showed. Moreover 17% of auto
sector companies said they were planning to move some production abroad.
"The effects
are clearly visible: energy-intensive producers of intermediate goods in
particular are cutting back on production," said DIHK Managing Director
Martin Wansleben, referring to critical semi-finished products, such as
chemicals and metals.
More
Energy crisis chips away at Europe's industrial might
| Reuters
World’s largest
container shipping firm Maersk, a barometer for global trade, warns of ‘dark
clouds on the horizon’
PUBLISHED WED, NOV 2 2022 3:30 AM
EDT
Maersk, the world’s largest container shipping firm, on Wednesday
posted record profit for the third quarter on the back of high ocean freight
rates, but noted a slowdown in demand.
The Danish giant, widely seen as a barometer for
global trade, reported earnings before interest, taxes, depreciation and
amortization (EBITDA) of $10.9 billion for the quarter, above consensus analyst
projections of $9.8 billion and up around 60% from the same period a year ago.
The company confirmed its full-year guidance for
underlying EBITDA of $37 billion and free cash flow above $24 billion.
CEO Soren Skou said
the “exceptional results” this year were driven by a continued rise in ocean
freight rates, but said it was clear that these have peaked and will begin to
normalize in the fourth quarter amid falling demand and an easing of supply
chain congestion. Skou flagged that earnings in Maersk’s ocean operations will
come down in the coming months.
“With the war in Ukraine, an
energy crisis in Europe, high inflation, and a looming global recession there
are plenty of dark clouds on the horizon,” Skou said in a statement Wednesday.
“This weighs on consumer purchasing power which in
turn impacts global transportation and logistics demand. While we expect a
slow-down of the global economy to lead to a softer market in Ocean, we will
continue to pursue the growth opportunities within our Logistics business.”
In its second-quarter report, Maersk flagged an impending slowdown in global shipping container demand amid weakening
consumer confidence and supply chain congestion.
More
Shipping firm Maersk, a barometer for trade, warns of
'dark clouds on the horizon' (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.
Expensive
bites for millions of Brits as food inflation soars to record 11.6 per cent
WEDNESDAY 02 NOVEMBER 2022 7:46 AM
With even basics such as tea bags, milk and sugar
seeing significant price rises, food inflation has soared to a record 11.6 per
cent in October.
Overall shop prices are now 6.6 per cent higher
than they were this time last year – also a record – but food inflation jumped
well above September’s 10.6 per cent and the three-month average rate of 9.7
per cent, according to the British Retail Consortium (BRC)-Nielsen Shop Price
Index.
Fresh food prices are now 13.3 per cent more than
last October, up from 12.1 per cent in September.
Non-food inflation accelerated to
4.1 per cent, up from 3.3 per cent in September.
BRC chief executive Helen Dickinson said: “It has
been a difficult month for consumers who not only faced an increase in their
energy bills, but also a more expensive shopping basket.
“Prices were pushed up because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market.
Mike Watkins, head of retailer and business insight
at NielsenIQ, said: “External factors are keeping shop price inflation at
record highs and the challenging economic conditions are significantly
impacting consumer confidence and retail spend.
“With pressure growing on discretionary spend
across both non-food and food retail, delivering good value is the table stake
in the battle for shopper loyalty over the next eight weeks.”
Which? head of food policy Sue Davies said:
“Soaring food prices are a real concern, and our research shows millions of
consumers are already skipping meals or struggling to put healthy meals on the
table due to the cost-of-living crisis. It is vital that households get the
support they need from the government and businesses.
“Supermarkets have a crucial role to play in
helping their customers navigate the tough months ahead. Budget lines for
healthy and affordable essential items need to be widely available across their
stores and they should ensure shoppers can easily compare the price of products
to get the best value. Promotions should be targeted at supporting those most
in need.”
Expensive bites for millions of Brits as food inflation soars to record 11.6 per cent (cityam.com)
This
may be the year to dine out for Thanksgiving, Wells Fargo says
NOV. 1, 2022 / 4:35 PM
Nov. 1 (UPI) -- A report compiled by Wells Fargo has
analyzed the cost of eating at home versus the cost of eating out this
Thanksgiving.
By comparing data from last year's Consumer Price
Index Wells Fargo calculated
that food prices for a home cooked meal have increased by 9.81% since last year
while food prices for a meal away from home have increased by 5.79%.
The
disparity in price increases means that a meal away from home is comparatively
more affordable than in years past.
The
increased cost of basic commodities like eggs (+32.5%), butter (+25.8%), and
flour (+17.1%), have driven up the cost of an average Thanksgiving basket.
Meanwhile, Turkey prices are expected to increase 23% since last year,
partially due to the effects of highly pathogenic avian influenza.
Environmental
and agricultural factors played a significant role in dictating food costs in
American homes this year.
Dry
conditions on the East Coast forced cranberry farmers to increase irrigation,
which will likely lead to increased prices for fresh cranberries.
Extreme
heat in the Northwest also has affected potato crops, with farmers experiencing
a lower than average yield for the second year in a row. Meanwhile, a surplus
is expected to make sweet potatoes more affordable than many other traditional
options.
Meal prices at limited-service
restaurants, establishments where you pay before eating, have increased at a
much slower rate than grocery prices and the price of a meal at a full-service
restaurant, making them the most attractive option for many Americans this
Thanksgiving.
This may be the year to dine out for Thanksgiving, Wells Fargo says - UPI.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.
Covid-19 and life expectancy: France fares well as vaccination
rate proves key
The international comparisons published in the
journal 'Nature Human Behaviour' put into perspective the virulent criticisms
made during the pandemic against France's public health organization.
By drawing up a comparative assessment of two years
of Covid-19 in 27 European countries as well as in the United States,
demographers highlight profound inequalities. While the years 2020 and 2021 were
marked by a decline in life expectancy in a large majority of European
countries, this loss over two years was very limited in France (1.2 months) and
its neighbors (5.7 months in Germany, 7.4 months in Spain and Italy), while in
the countries of the former Soviet bloc the drops were dizzying: 3.5 years in
Bulgaria and 2.8 years in Poland.
In the United States, the results were dismal. Not
only was the rate of death from Covid-19 faster, but the victims were also
younger than in other comparable countries. In two years, the country recorded
an estimated excess of more than 1 million deaths, and life expectancy fell by
2.7 years, the largest decline in this indicator since 1920. This figure, half
of which is related to the scale that the pandemic took there, and the other
half to the overconsumption of opiates, is explained in particular by record
obesity rates, a deficient social protection system and a very low vaccination
recall rate, 30%, which was half that of France.
A major lesson from the Nature Human Behaviour
study is that the correlation between vaccination and a lower loss of life
expectancy is clearly established by demographers. The countries with the least
vaccinated populations are also those with the highest life expectancy
deficits.
The inequalities also concern the ability to return to a
positive trajectory after the 2020 decline. Some countries, such as Belgium,
France, Switzerland and Spain, have regained several months of life expectancy.
Others, such as Bulgaria, Greece and the United States, have continued to lose
life expectancy in 2021.
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.
Synthesizing
Many “White Graphene” Nanotubes Simultaneously
Nov 1 2022
A
team of engineers from the Massachusetts
Institute of Technology (MIT) and the University of Tokyo
has created centimeter-scale structures that are composed of hexagonal boron
nitride (hBN) and loaded with hundreds of billions of hollow aligned fibers
(nanotubes). These centimeter-scale structures are large enough for the naked
eye to see.
hBN is
a single-atom-thin material, which has been called “white graphene” due to its
transparent look and resemblance to carbon-based graphene in molecular
structure and strength. It can endure higher temperatures than graphene
and is electrically insulating instead of conductive. When hBN is rolled
into nanoscale tubes (or nanotubes), its remarkable properties are considerably
improved.
The
team’s findings, published recently in ACS
Nano, offer a path toward making aligned boron nitride
nanotubes (A-BNNTs) in bulk. The scientists aim to utilize the method to
produce large volumes of these nanotubes, which can then be integrated with
other materials to create sturdier, more heat-resilient composites, for
instance, to protect hypersonic aircraft and space structures.
As hBN
is electrically insulating and transparent, the researchers also intend to
integrate the BNNTs into transparent windows and employ them to insulate
sensors inside electronic gadgets electrically.
The
researchers are also examining methods to knit the nanofibers into membranes
for water filtration and “blue energy,” a novel idea for renewable energy
wherein electricity is generated from the ionic sifting of salt water into
fresh water.
Brian Wardle, professor
of aeronautics and astronautics at MIT, compares the team’s outcomes to
researchers’ decades-long, ongoing quest of manufacturing mass carbon
nanotubes.
Wardle is the
study’s senior author. The study also comprises lead author and MIT research
scientist Luiz Acauan, former MIT postdoctoral researcher Haozhe Wang, and
co-workers at the University of Tokyo.
Similar to
graphene, hBN has a molecular structure akin to chicken wire. In graphene, this
chicken wire formation is composed of carbon atoms organized in a repeating
pattern of hexagons.
For hBN, the
hexagons are made up of alternating atoms of nitrogen and boron. In the last
few years, scientists have learned that two-dimensional (2D) sheets of hBN
display excellent stiffness, strength, and resilience properties at elevated
temperatures.
When sheets of
hBN are rolled into nanotube structures, these properties are additionally
improved, mainly when the nanotubes are aligned, like miniature trees in a
tightly packed forest.
More
Synthesizing Many
“White Graphene” Nanotubes Simultaneously (azonano.com)
"From a strictly economic
point of view, buying gold in a major inflation and holding it probably
presents the least risk of capital loss of any investment or speculation."
Henry Hazlitt.
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