Baltic Dry Index. 1300 -25 Brent Crude 93.36
Spot Gold 1773 US 2 Year Yield 4.37 +0.03
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,100
Coronavirus Cases 16/11/22 World 641,049,738
Deaths 6,618,226
The UK National Health Service has an unenviable statistic. On a long enough timeline, it loses 100 percent of its patients!
In the stock casinos, worry that NATO’s proxy war against Russia in Ukraine is about to widen out.
While no one wants a wider war, let alone a nuclear war with Russia, wars usually take on an uncontrollable existence of their own.
After “Russian” missiles hit Poland, NATO
scrambles to walk back on war.
European markets
set to open lower as geopolitical tensions rise after Poland missile incident
UPDATED WED, NOV 16 2022 12:28 AM
EST
European
markets are set to open lower on Wednesday as political instability gripped the
region after a missile hit Polish territory, raising tensions between Russia
and NATO.
Ukraine experienced a wave of
missile strikes across the country on Wednesday and in the evening Poland said
a Russian-made missile had struck Polish territory, killing two people. Moscow
denied responsibility for the strike. President Andrzej
Duda described it as “an isolated incident,” adding an
investigation is underway.
Shares in the Asia-Pacific were mostly lower on Wednesday as world leaders gathered in
Bali, Indonesia, for a second day of the Group of 20 summit. U.S. stock futures fell in
overnight trading as investors weighed another
lighter-than-expected inflation report and looked ahead to U.S. retail sales
data due out Wednesday.
Biden says it’s
‘unlikely’ the missile that killed two people in Poland was fired from Russia
U.S. President Joe
Biden said it’s “unlikely”
a missile that killed two people in Poland was fired from Russia,
citing the trajectory of the rocket.
Asked by a reporter
if the missile was fired from Russia, Biden said: “There is preliminary
information that contests that, I don’t want to say that until we completely
investigate.”
He went on to
say: “It’s unlikely... in the minds of the trajectory, that it was fired
from Russia. But, we’ll see.”
Biden reiterated
that the leaders of the Group of 7 agreed to support an ongoing investigation
into the explosion.
“We agreed to
support Poland’s investigation into the explosion in rural Poland near the
Ukrainian border. And I’m going to make sure we figure out exactly what
happened,” he told reporters on the sidelines of the G-20 summit in Bali,
Indonesia.
European
markets: geopolitical tensions rise after Poland missile hit (cnbc.com)
In global recession news, the end of ZIRP and
NIRP free money is only just starting to have serious consequences for many
firms who seem to have thought the Magic Money Tree forests went on forever.
‘We will see
spectacular failures’: CEOs and investors on what the end of cheap money means
for tech
PUBLISHED TUE, NOV 15 2022 4:07 AM EST
LISBON, Portugal —
Once high-flying tech unicorns are now having their wings clipped as the era of
easy money comes to an end.
That was the message
from the Web Summit tech conference in Lisbon, Portugal, earlier this month.
Startup founders and investors took to the stage to warn fellow entrepreneurs
that it was time to rein in costs and focus on fundamentals.
“What’s for sure is
that the landscape of fundraising has changed,” Guillaume Pousaz, CEO of
London-based payments software company Checkout.com, said in a panel moderated
by CNBC.
Last year, a small
team could share a PDF deck with investors and receive $6 million in seed
funding “instantly, ” according to Pousaz — a clear sign of excess in venture
dealmaking.
Checkout.com itself
saw its valuation zoom nearly threefold to $40 billion in January after a new
equity round. The firm generated revenue of $252.7 million and a pre-tax loss
of $38.3 million in 2020, according to a company filing.
Asked what his company’s valuation would be today,
Pousaz said: “Valuation is something for investors who care about entry point
and exit point.”
“The multiples last year are not the same
multiples than this year,” he added. “We can look at the public markets, the
valuations are mostly half what they were last year.”
“But I would almost tell you that I don’t care at
all because I care about where my revenue is going and that’s what matters,” he
added.
Private tech company valuations are under immense
pressure amid rising interest rates, high inflation and the prospect of a
global economic downturn. The Fed and other central banks are raising rates and
reversing pandemic-era monetary easing to stave off soaring inflation.
That’s led to a sharp pullback in high-growth tech
stocks which has, in turn, impacted privately-held startups, which are raising
money at reduced valuations in so-called “down rounds.” The likes of Stripe and
Klarna have seen their valuations drop 28% and 85%, respectively, this year.
“What we’ve seen in the last few years was a cost
of money that was 0,” Pousaz said. “That’s through history very rare. Now we
have a cost of money that is high and going to keep going higher.”
Higher rates spell
challenges for much of the market, but they represent a notable setback for
tech firms that are losing money. Investors value companies based on the
present value of future cash flow, and higher rates reduce the amount of that
expected cash flow.
Pousaz said investors
are yet to find a “floor” for determining how much the cost of capital will
rise.
More
Tech leaders
reckon with higher interest rates, down rounds and layoffs (cnbc.com)
The cracks in the US Treasury bond market
The
meltdown in UK gilts exposed the vulnerability of large bond markets. Could the
biggest of them survive a wave of selling?
15 November, 2022
Buying and selling in the world’s biggest bond market is supposed to be easy.
However, for most of this year, says Gregory Whiteley, a bond portfolio manager
at DoubleLine Capital, it has been anything but straightforward. Whiteley says
a trader used to be able to get hold of $400mn of US Treasury bonds — not an
outsize quantity in this $24tn market — as a routine matter.
But now that
typically involves breaking up the order into smaller chunks; perhaps doing
$100mn of the trade electronically, he explains, and then picking up the phone
to see if they can prise the rest of the debt from the hands of Wall Street’s
trading desks over the course of a day. The US Treasury bond market suffered a
huge scare at the start of the coronavirus pandemic when fears about a collapse
in the global economy led to a sudden slump in prices and liquidity. Now as the
Federal Reserve battles to rein in inflation, a recession looms and most asset
prices have faced a dramatic sell-off, the world’s most important bond market
is creaking once again.
Liquidity in the
market — one crucial measure of how well it is functioning — is at its worst
levels since March 2020 after a dramatic decline in the past year. Market
depth, a measure of liquidity which refers to the ability of a trader to buy or
sell Treasuries without moving prices, is also at its worst level since March
2020, according to Jay Barry at JPMorgan. “Markets are in a much more fragile
place, with terrible liquidity,” says Greg Peters, co-chief investment officer
at PGIM Fixed Income. “The way I think about fragile market function is that
the odds of a financial accident are just higher.”
All this was happening even before the recent meltdown in UK government debt,
which has added to the anxiety about the vulnerability of the world’s large
bond markets.
While investors
are not concerned about an exact replay of the UK crisis, in which pension
funds placed leveraged bets on the direction of bonds at a large scale, many
fear that an unforeseen wave of selling could quickly overwhelm the US bond
market’s shaky infrastructure.
More
The
cracks in the US Treasury bond market | Financial Times (ft.com)
Chemicals
industry warns that rail strike will shut plants and cost economy billions
The U.S. chemical manufacturing industry is one of
the largest users of freight rail, shipping more than 33,000 carloads per week,
and it is forecasting billions of dollars in economic damage if a labor deal
isn’t reached between rail companies and unions before a potential strike in
December.
A new economic analysis released by the
American Chemistry Council estimates that a rail strike would impact approximately
$2.8 billion in chemical cargo that is moved weekly, with a month-long strike
resulting in an overall hit to the economy of $160 billion, or one percentage
point of GDP.
The ACC represents companies across industrial, energy and pharmaceutical sectors,
among other manufacturing niches, including 3M, Dow, Dupont, Exxon Mobil,
Chevron, BP and Eli Lilly.
Chemicals are among
the most sensitive cargo moved by freight rail companies, and the first to be
dealt with when there is risk of a strike. Strike preparation plans released by
the railroads back in September when a looming work stoppage was averted
indicated that the freight companies would start securing critical chemicals
like chlorine for drinking water over regular cargo seven days prior to the
strike date. Ninety-six hours before a strike deadline, all chemical shipments
are no longer moved.
“AAR data show that
there was a drop of 1,975 carloads of chemical shipments during the week of
September 10 when the railroads stopped accepting shipments due to the threat
of a strike,” said Jeff Sloan, ACC’s senior director of transportation policy.
“We would expect a similar dramatic reduction in chemical shipments if an
embargo were to take place this month.”
The start of rail
strike preparation will depend on the voting results from some of the largest
rail unions yet to ratify the labor deal recommended by President Biden’s
Presidential Emergency Board.
The two largest
unions, the Transportation Division of the International Association of Sheet
Metal, Air, Rail, and Transportation Workers (SMART-TD) and the Brotherhood of
Locomotive Engineers and Trainmen (BLET), a Division of the Rail Conference of
the International Brotherhood of Teamsters, will announce their vote results on
Monday, November 21.
If both unions ratify the tentative agreement, the strike date the
rails would start prepping for is December 5. That’s the day the Brotherhood of
Maintenance of Way Employees Division (BMWED), and the Brotherhood of Railroad
Signalmen (BRS), can strike. Their cooling-off period ends December 4. The
International Brotherhood of Boilermakers rejected the labor deal Monday, but said it will continue to negotiate during
the cooling-off period.
More
Chemical
industry warns rail strike will hit GDP, stoke inflation (cnbc.com)
March 2021 UK census population of England 56.49 million.
NHS England says 62 million are registered with a G.P. in England alone. How?
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.
UK
unemployment rises to 3.6 per cent as recession looms
15
November 2022
The
rate of UK unemployment rose to 3.6 per cent in the three months to September,
up from 3.5 per cent in the previous three months, the Office for National
Statistics said.
Darren
Morgan, director of labour and economic statistics at the Office for National
Statistics (ONS), said half a million working days in August and September were
lost to strikes in addition to older people leaving the workforce.
The Office for National Statistics
also published data on wages showing between July and September wages fell in
real terms by 2.6 per cent for total pay when adjusted for inflation, and by
2.7 per cent on the year for regular pay.
“The proportion of people neither
working nor looking for work has risen again,” Mr Morgan said.
“Since the onset of the pandemic,
this shift has largely been caused by older workers leaving the labour market
altogether, but in the most recent quarter, the main contribution has actually
come from younger groups.
“August and September saw well over
half a million working days lost to strikes, the highest two-month total in
more than a decade, with the vast majority coming from the transport and
communications sectors.”
Mr Morgan added that as real earnings
begin to fall, most strikes are on disputes over pay.
He added: “Job vacancies continue to fall back from their recent peak,
with increasing numbers of employers now telling us that economic pressures are
a factor in their decision to hold back on recruitment.
“The biggest driver behind the fall came from hospitality, followed by
retailing and wholesaling.”
It
comes as the Bank of England warned the UK was falling into a deep recession
amid rising inflation, food costs and energy bills.
More
UK unemployment
rises to 3.6 per cent as recession looms (msn.com)
AIER Leading Indicators Index Remains Well
Below Neutral
Robert Hughes – November 14, 2022
AIER’s Leading
Indicators Index held at 25 in October. The latest result is the fifth
consecutive month below the neutral 50 threshold. The low readings are
consistent with weakness in the economy and significantly elevated risks for
the outlook.
The first estimate of
third-quarter real gross domestic product (GDP) came in at a 2.6 percent
annualized growth rate, following rates of -1.6 percent in the first quarter
and -0.6 percent for the second quarter. Real final sales to private domestic
purchasers, about 88 percent of real GDP and arguably a better measure of
private domestic demand, has shown greater resilience, with growth having
stayed positive despite declines in real GDP. However, domestic demand growth
has slowed significantly, from a 2.6 percent pace in the fourth quarter of 2021
to 2.1 percent in the first quarter, 0.5 percent in the second quarter, and
just 0.1 percent in the third quarter.
Consumers remain the
cornerstone of the U.S. economy with real consumer spending accounting for
about 70 percent of real GDP and about 80 percent of real domestic demand. For
consumers, the labor market remains tight with payrolls continuing to expand
(though the pace appears to be slowing), job openings at a high level, and
layoffs hovering near lows. The solid labor market supports positive consumer
attitudes but that is offset but high inflation and rapid interest rate
increases that threaten future economic growth.
The longer elevated
rates of price increases continue and the higher the Fed raises interest rates,
the higher the probability that a vicious cycle of declining economic activity
and contracting labor demand will begin to dominate the economy. Overall, the
outlook remains highly uncertain. Caution is warranted.
AIER Leading Indicators Index Remains Well Below Neutral | AIER
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.
Better
late then never, or shutting the stable door long after the horses have bolted?
Myocarditis
after Covid vaccination: Research on possible long-term risks underway
Both
Pfizer and Moderna are launching clinical trials to track health issues — if
any — in the years following a diagnosis of vaccine-associated heart problems
in teens and young adults.
Nov. 12, 2022, 12:00 PM
GMT
----
Miller is one of a very small group
of people in the United States who have experienced myocarditis
following vaccination with the Pfizer-BioNTech or the Moderna Covid
vaccines based on mRNA technology.
Myocarditis is a condition that has long been linked to a number
of viral infections, including influenza, coxsackieviruses, as well as Covid.
It has also been observed as an infrequent but worrisome side effect of the
mRNA Covid vaccines.
Are there long-term risks of myocarditis?
Of the hundreds of millions of Covid vaccine doses given in the
U.S. since late 2020, there have been around 1,000 reports of vaccine-related
myocarditis or pericarditis in children under age
18, primarily young males, according to the Centers for Disease Control and
Prevention. Most of those who developed the condition
have fully recovered, although research so far has only looked at how well
they're doing after several months. Some doctors wonder
if it can cause permanent damage to the heart.
Now, the first research in the U.S. is underway, tracking
adverse health effects — if any — that may appear in the years following a
diagnosis of vaccine-associated heart problems. Moderna has already
launched two trials, the most recent in September. Pfizer confirmed that at
least one of its trials, which will include up to 500 teens and young adults
under age 21, is slated to begin in the next couple of months.
The Food and Drug Administration has required that the drugmakers conduct
several studies assessing the potential long-term
impacts of myocarditis, as part of its approval of the mRNA Covid vaccines in
the U.S. Early findings from the research could be published as early as next
year, sources told NBC News.
Some of the trials will follow those who developed the condition
for as long as five years, according to the
FDA’s approval letters. The trials will be
monitoring for myocarditis and subclinical myocarditis, which doesn't cause
symptoms.
The FDA declined to comment on Pfizer's and Moderna's studies
because they are ongoing, but an agency official said the chance of having
myocarditis occur following vaccination is "very low."
The condition does not lead to cardiac-related death, the
official said, as claimed by Florida's surgeon general last month who cited an
unpublished analysis of state data.
"There is no evidence of increased risk of deaths following
mRNA vaccines compared to individuals who did not get vaccinated," the
official said. "In fact, evidence from well-conducted, peer-reviewed,
published studies suggests that the
risk of death is higher for unvaccinated individuals for
nearly every age group."
What is known about myocarditis and vaccines?
The vast majority of cases occur in young men, ages 16 to 24,
according to the CDC. The agency did not have data available on the total
number of cases in young adults 24 and younger, but it estimates there have
been 52.4 cases and 56.3 cases per million doses of Pfizer's and Moderna's
vaccines, respectively.
---- A study by Canadian researchers published Monday in the
Journal of the American College of Cardiology found that men younger than 40 who got the Moderna vaccine had
the highest risk of heart issues, usually within 21 days after the second dose.
The study was observational, meaning it doesn’t prove cause and effect but it
is one of only a few studies to compare the risk of myocarditis between the
Pfizer and the Moderna vaccines.
More
Myocarditis after
Covid vaccine: Research on long-term effects underway (nbcnews.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.
Today, something different. When the
mirage ends. How to lose $32 billion in less than a week. Approx. 11 minutes.
How the Crypto King Lost It All in One Week | FTX Collapse
Explained
How the Crypto
King Lost It All in One Week | FTX Collapse Explained - YouTube
Column: Crypto tycoon
Sam Bankman-Fried didn't lose a $16-billion fortune. His 'fortune' was never
real
November
14, 2022
The Greek tragedy unfolding in the financial
press over the past week is the story of Sam Bankman-Fried, the would-be
cryptocurrency tycoon and political kingmaker whose multibillion-dollar empire
has sunk like the Titanic after its encounter with the iceberg.
Bloomberg put it this way: "Bankman-Fried’s Assets Plummet From $16 Billion
to Zero in Days."
The story under that headline
reported that Bankman-Fried's entire fortune had been "wiped out" in
"one of history’s greatest-ever destructions of wealth."
----Bankman-Fried either had $16 billion in assets at the
start of last week and still has a sizable share of it today, or zero now and
close to zero then. Both things can't be true.
Based on reports that Bankman-Fried
and his cryptocurrency exchange firm, FTX, are now under investigation by
federal prosecutors and securities regulators, I'm voting that $16 billion was
mythical and that zero is the right number.
----What's known thus far,
according to an FTX balance sheet published by
the Financial Times, is that the firm recently had about $900 million in liquid
assets against nearly $9 billion in liabilities. That means that FTX, the core
of Bankman-Fried's purported fortune, was as much as $8 billion in the hole.
Not
all those liquid assets are worth as much as the balance sheet states. It
mentions about $472 million in stock of the brokerage Robinhood. But Robinhood
shares have fallen in price by about 20% over the last 11 days, so that figure
may be, um, optimistic by nearly $100 million.
When
initial reports of FTX's upside-down capital structure leaked out recently,
customers staged a run on the exchange, ordering withdrawals of billions of
dollars in deposits that FTX couldn't provide. FTX has now filed for
bankruptcy, and Bankman-Fried has stepped down as CEO.
Reports
have also emerged that FTX lent customers' assets to its related trading arm,
Alameda Research, which used them to fund risky investments of its own. If FTX
were regulated by the same rules that conventional stock and bond brokerages
must follow, client assets must be kept separate from brokerage assets.
----Among the assets the balance sheet
describes as "illiquid" or "less liquid" — that is,
possibly unavailable to cover liabilities — are cryptocurrencies purportedly
worth billions of dollars, including $554 million in FTT, a crypto token
originated by FTX itself.
Another cryptocurrency, Serum, was
listed with a value of $2.2 billion as of last Thursday. The previous week, the
extremely volatile crypto was valued at $5.4 billion, according to the balance
sheet. Serum, by the way, is another crypto token originated by FTX, so even
its $2.2-billion value on the balance sheet is extremely questionable.
More
How
FTX got an EU licence just two months before it crashed
15
November, 2022
Sam Bankman-Fried enjoyed preaching about how
he maintained high regulatory standards at his crypto exchange FTX.
In mid-September it secured a licence to
operate in the EU, from Cyprus, and its 30-year-old founder declared: “Securing
this license in the European Union is an important step in achieving our goal of
becoming one of the most regulated exchanges in the world.
“We are continuing to work
with [Cypriot regulators] and regulators across the globe to be the leader in
the digital asset industry when it comes to meeting the financial standards
that are expected of traditional financial institutions.”
Less than two months later,
those claims look increasingly farcical with FTX in collapse and Bankman-Fried
having resigned in disgrace. FTX’s
main international exchange held just $900m (£763m) in easily sellable assets
against $9bn in liabilities the day before it collapsed into bankruptcy.
The fiasco has shone a
spotlight on how regulators have tied themselves in knots in attempting to
supervise a “wild west” industry that has spent heavily to market itself to the
mainstream – FTX’s name has been emblazoned on Lewis Hamilton’s Mercedes in
Formula One.
In trying
to expand FTX’s global footprint, Bankman-Fried turned to Cyprus as a window into the EU – a country that it is claimed has become notorious
as a magnet for those seeking a “few questions asked” financial regime.
Now,
the Mediterranean nation is backpedalling fast and questions are being asked in
Brussels about how FTX could be granted an EU licence less than two months
before it imploded. After occasional claims that post-Brexit Britain could pose
a threat to the bloc’s financial stability, the EU is now being forced to do
some soul searching of its own following the FTX debacle.
More
How FTX got an EU
licence just two months before it crashed (msn.com)
“There are three kinds of lies: Lies, Damned
Lies, and Statistics”
Attributed to Mark Twain, who himself
attributed it to Prime Minister Benjamin Disraeli.
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