Baltic Dry Index. 1548 -12 Brent Crude 79.87
Spot Gold 1789 US 2 Year Yield 4.25 +0.08
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 20/12/22 World 658,298,906
Deaths 6,673,906
I did exactly the wrong thing.
The cotton showed me a loss and I kept it. The wheat showed me a profit and I
sold it out. Of all the speculative blunders there are few greater than trying
to average a losing game. Always sell what shows you a loss and keep what shows
you a profit.
Jesse Livermore
Not much need for me to comment on the news articles today, they speak pretty loudly for themselves.
Reality has returned to the stock casinos, the central banks, interest rates, recession expectations and of course unicorn ranching, aka crypto fraud.
A very challenging H1 2023 lies directly
ahead. Return of money is far safer now than return on money.
Nikkei 225 falls
more than 2% after Bank of Japan widens yield target range, yen strengthens
UPDATED TUE, DEC 20 2022
12:22 AM EST
Markets in
the Asia-Pacific fell as the Bank of Japan modified its yield
curve control tolerance range while holding its ultra-low
benchmark interest rates steady.
The Nikkei 225 fell
2.82%, leading losses in the region and the Topix fell 1.86%. The Japanese yen strengthened
by more than 2% against the U.S. dollar, hovering around its strongest levels
since August.
In South Korea, the Kospi fell
0.85% and the S&P/ASX 200 in
Australia also traded 1.54% lower.
Hong Kong’s Hang Seng index fell
1.9%, with technology and property stocks dragging down the wider index. In
mainland China, the Shenzhen
Component fell 1.48% and the Shanghai Composite fell
0.85% as the People’s Bank of China kept its key
lending rates steady.
Overnight in the U.S., stocks on
Wall Street fell, marking the fourth
consecutive day of losses for all three averages as concerns
over an upcoming recession trumped optimism for a year-end rally.
Stock futures
slide after major averages extend losses to start the week
UPDATED MON, DEC 19 2022 11:16 PM
EST
Stock
futures fell Tuesday morning, reversing directions after the Bank of Japan announced
to widen its yield target range.
Futures tied to the Dow Jones
Industrial Average lost 236 points, or 0.72%. S&P 500 futures and Nasdaq
100 futures fell 0.86% and 1.05%, respectively.
During regular trading on Monday,
the Dow shed more than 162 points, or about 0.5%. The S&P 500 fell 0.9%,
and the Nasdaq Composite lost nearly 1.5%. Stocks are on track to end the month
and the year in the red, and investors’ hopes for a Santa Claus rally are
fading fast.
“There’s still no Santa sighting.
Buckle up,” said Louis Navellier, founder of growth investing firm Navellier
& Associates. “One would like to think all the bad news is in. There are no
more Fed moves until February at the earliest. We’re not gapping down
but certainly not clawing back last week’s losses.”
Fears that the Federal Reserve
could tip the economy into a recession plagued investors. Last week, the
central bank raised its benchmark interest rate by 50 basis points and
policymakers indicated the terminal rate could rise as high as 5.1%.
Other central banks in hawkish
mode put further pressure on traders, with the European Central Bank raising
rates and its outlook for further hikes last week.
“Over 90% of central banks have
hiked interest rates this year, making the (mostly) global coordinated effort
unprecedented” said Lawrence Gillum, fixed income strategist at LPL Financial.
“The good news? We think we’re close to the end of these rate hiking cycles,
which could lessen the headwind we’ve seen on global financial markets this
year.”
A handful of big companies will
report their quarterly results this week ahead of the Christmas holiday.
General Mills will report before the bell Tuesday. Nike and FedEx are set to
report after the bell.
In economic data, housing starts
data for November are due Tuesday morning. This week promises lots of insight
into the housing industry. Sales data for existing homes and new homes will be
released Wednesday and Friday, respectively.
November’s personal consumption
expenditures report, a preferred measure of inflation for the Fed, is due on
Friday.
Stock
futures slide after major averages extend losses to start the week (cnbc.com)
Turnover
surges as funds rush to exit private equity stakes
December 19, 2022
4:25 AM GMT
SINGAPORE, Dec 19
(Reuters) - Private equity holdings are being sold at a record clip in an
opaque secondary market, investors say, as asset managers cash out to cover
losses elsewhere and rebalance portfolios.
The wave of
selling is the latest of several signs of stress in private markets and is
another signal of investors starting to fall out of love with "alternative
assets" that only recently were drawing in cash.
Conceived as an
illiquid but lucrative method of accessing unlisted companies, private
investments are typically structured into funds run by buyout firms. As they
have become popular, they have expanded to encompass property and infrastructure
projects.
Yet since such
funds are difficult to exit before maturity - usually at least three years -
money managers needing to cash out use a secondary market that has lit up in
the last few months.
The discounts on
offer suggest there is a hurry to get out, and, while total turnover is hard to
gauge, because deals are negotiated privately, it is at or near record levels.
Investment firm
Hamilton Lane says an unprecedented $224 billion in private equity stakes have
been offered in the secondary market this year to mid-November.
Not all have been
sold, but analysis firm Preqin estimates the value of secondary transactions up
until the third quarter was about $65 billion. This is not far off 2021's total
of just over $70 billion and is far higher than previous years.
Market
participants say several factors are driving selling.
Some investors
need cash. Market participants pointed to the example of the meltdown in
Britain's debt markets in September, when investors needed to cover losses and
turned to their private equity holdings to do it.
Others want to
deploy their capital elsewhere - a sign that private equity funds are no longer
so highly regarded.
Then there are
pension funds that are forced out by the need to comply with their caps on
allocations to such investments. They are among the biggest sellers.
More
Turnover surges as
funds rush to exit private equity stakes | Reuters
Millionaire
investors haven’t been this bearish since 2008
Millionaire investors
are betting on double-digit declines in stocks next year, reflecting their most
bearish outlook since 2008, according to the CNBC Millionaire Survey.
Fifty-six percent of
millionaire investors surveyed expect the S&P 500 to decline by 10% in
2023. Nearly a third expect declines of more than 15%. The survey was conducted
among investors with $1 million or more in investible assets.
They also expect
falling equities to reduce their wealth. When asked about the biggest risk to
their personal wealth over the next year, the largest number (28%) said the
stock market.
The last time millionaire investors were this
gloomy was during the financial crisis and Great Recession more than a decade
ago.
“This is the most pessimistic we’ve
seen this group since the financial crisis in 2008 and 2009,” said George
Walper, president of Spectrem Group, which conducts the survey with CNBC.
Inflation, rising rates and the
potential for recession are all weighing on the minds of wealthy investors,
Walper said. And while markets have already fallen this year, with the S&P 500 down
about 18%, wealthy investors are forecasting even more pain ahead next year.
The bleak outlook could also put
additional pressure on markets, since millionaire investors own more than 85%
of individually held stocks. More than a third of millionaires expect their
overall investment returns (which include bonds and other asset classes, along
with stocks) to be negative next year. Most are expecting returns of less than
4%, which is low given that short-term Treasurys are now yielding over 4%.
More
Millionaire investors haven't been this bearish since 2008 (cnbc.com)
Australian
stock exchange's blockchain failure burns market trust
December 20, 2022 12:07
AM GMT
SYDNEY, Dec 20
(Reuters) - In a Sydney hotel conference room in May, Tim Hogben, the head of
securities and payments for ASX Ltd , which runs the Australian stock exchange,
told traders, share registry operators and clearing house representatives what
they were hoping to hear.
A
rebuild of the exchange's aging software using blockchain-based technology was
largely ready after seven years of development, putting ASX on the verge of a
world-first transformation that would enable it to boost trading volumes and
compete more aggressively with global rivals.
"Ninety-six
percent of the software is currently in an operating-and-test environment. That
96% of that software is working," Hogben told a Stockbrokers and
Investment Advisers Association conference, in footage seen by Reuters.
"If it wasn't working, you'd be hearing about it, let me tell you."
In
November, ASX abandoned the project, citing dysfunctional management, concerns
about the product's complexity and scalability, and difficulty finding experts
to support it. The axing came after new CEO Helen Lofthouse commissioned an
Accenture review that found the rebuild was just 63% delivered and almost half
the code needed to be rewritten.
More than a dozen brokers, other market
participants and people directly involved in the blockchain project told
Reuters the failure had shaken trust in the Australian exchange operator. Some
expressed dismay over the time and costs they contributed to the doomed
endeavour and ASX's repeat assurances that all was well with the upgrade, which
had faced five delays since an initially scheduled 2020 launch.
The experience also raised questions of a
mismatch between the promises and reality of the technology that underpins
cryptocurrencies. Use of a distributed ledger in Australia's critical financial
infrastructure would have been one of the most significant applications of
blockchain-based systems in a mainstream corporate setting.
More
Australian
stock exchange's blockchain failure burns market trust | 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.
Why The Federal Reserve Can’t Solve Food Price
Inflation
December 19 2022
The Federal Reserve
has raised interest rates another 50 basis points, in an attempt to tamp down
inflation. Yet interest rate hikes have not yet had any meaningful impact on high food prices. The Fed can’t address a major cause of inflation: the corporate profiteering and price gouging that is
slowing down grocery sales, changing consumer buying patterns and exacerbating
food insecurity.
Fed Chair Jerome
Powell recently rationalized the rate hike, "Our job is to restore price
stability so that we can have a strong labor market that benefits all, over
time." Federal Reserve Bank President of St. Louis, James Bullard likewise
thinks rates need to go up “aggressively” in 2023, potentially echoing the
Volcker shocks of the 1980s. Esther George, Federal Reserve Bank of Kansas City
President, was surprisingly blunt, linking inflation to higher household savings, “We see
today that there is a bit of a savings buffer still sitting for households,
that may allow them to continue to spend in a way that keeps demand strong,”
she said. “That suggests we may have to keep at this for a while”. Personal income and job market outlooks are holding steady in the meantime, while
real wage growth has declined in most industries.
But food at home
(i.e., grocery) prices continue to be elevated over last year. November food at home CPI (consumer price index) was up
12%, while overall inflation was up 7.1%. The CPI peaked in June at 9.9% while
grocery price increases peaked in August at 13.5%. Thanksgiving was
the most expensive it has been in 4 decades and December holiday menus look
likewise.
More
Why The Federal Reserve Can’t Solve Food Price
Inflation (forbes.com)
UK
on course for slow burning recession, KPMG predicts
MONDAY 19 DECEMBER 2022 6:00 AM
The UK economy is on track to enter a long
recession sparked by households and businesses being squeezed by sky high price
rises, new forecasts out today unveil.
Gross domestic product (GDP) will shrink 1.3 per cent next year, according to consultancy KPMG, who have become the latest organisation to warn of a protracted slump hitting Britain.
The output hit will be mainly driven
by households cutting spending in response to raging inflation eroding their
pay.
KPMG reckons the rate of price increases will
average seven per cent next year, an upward revision from 5.6 per cent in their
previous forecasts.
The looming recession is much smaller than previous ones. KPMG thinks the economy will lose nearly two per cent of GDP, peak to trough, compared to the more than six per cent fall in the aftermath of the 2008 financial crisis.
This year’s inflation surge, initially driven by
supply chain breakdowns and then turbocharged by Russia’s invasion of Ukraine
roiling international energy markets, has seen prices jump 10.7 per cent.
Economists now however think inflation peaked in
October when the rate hit 11.1 per cent. But KPMG thinks the surge in prices
will extend into next year, wiping out pay growth.
The bet reinforces predictions by the spending
watchdog, the Office for Budget Responsibility, who last month predicted living
standards will drop 7.1 per cent over the next two years, the biggest fall
since records began in the 1950s.
Yael Selfin, chief economist at KPMG UK, said: “The
increase in energy and food prices during 2022, as well as higher overall
inflation, have significantly reduced households’ purchasing power.”
“Rising interest rates have added another headwind
to growth,” she added. Last week, the Bank of England knocked rates 50 points
higher for the ninth time in a row to 3.5 per cent, the steepest rate since the
financial crisis.
The likes of the OBR, Bank, IMF and now KPMG all
think the economy is hurtling toward a slow burning recession, although bets on
how much it will wipe off GDP vary.
The Bank thinks the hit to the UK economy could be
near three per cent, while others reckon it will be around 1.5 per cent in
size.
More
UK on course for slow burning recession, KPMG predicts (cityam.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.
China's
COVID surge hits Beijing trading floors, Shanghai finance hub
December 19, 2022 6:16 AM GMT
SHANGHAI, Dec 19 (Reuters) - COVID-19
is sweeping through trading floors in Beijing and spreading fast in the
financial hub of Shanghai, with illness and absence thinning already light
trade and forcing regulators to cancel a weekly meeting vetting public share
sales.
Many banks and asset managers have
dusted off plans devised to cope with previous COVID crises, injecting another
layer of unpredictability into currency and stock markets, where the outlook
is clouded by
a rocky exit from strict health curbs.
With mass testing halted after abruptly
dropped its zero-COVID policy earlier this month, official data no longer
reliably capture new case numbers. Internal surveys by several big asset
managers and banks suggest more than half of their employees in Beijing, the
epicentre of the virus surge, have tested positive.
"I would say more than half of
colleagues in Beijing are sick, compared with 5%-10% in Shanghai," said a
fund manager at PICC Asset Management, declining to be named as he's not
authorised to speak to the media.
In China's interbank market, average
daily yuan/dollar trading volume fell to about $20 billion last week, the
lowest level since April 2022, when Shanghai was put under a painful two-month
lockdown to prevent the spread of the virus.
Stock trading volume also eased last
week. The weekly total of 139 billion shares traded for the Shanghai
Composite (.SSEC) was
a bit lower than the average for the past three years of about 143 billion.
---- The pandemic also has an impact on initial public offerings (IPOs),
with the China Securities Regulatory Commission calling off a weekly meeting
vetting them last week. It is not clear if the meeting will be revived this
week.
The National Bureau of Statistics also
cancelled a news conference scheduled for November's economic data.
To be sure, years of strict COVID rules
have left a lot of businesses well placed to handle disruption.
"We travel a lot, and we have
several people on one IPO project, so we take turns do the job if one banker is
on sick leave," said one banker at Shanghai-based Haitong Securities,
speaking on condition of anonymity.
More
China's COVID surge hits Beijing trading floors, Shanghai finance hub | Reuters
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.
Hyperbat’s EV battery
expertise wins £multi-million Lotus Evija contract
19
DEC 2022
One of the UK’s leading manufacturers of high-performance electric
vehicle battery packs has sealed a £multi-million-pound contract to supply
batteries to Lotus for its new all-electric Evija, the world’s most powerful
production car.
Hyperbat was formed to bring together Williams Advanced Engineering’s
(WAE) EV battery expertise with Unipart’s capability in manufacturing
safety-critical products for premium OEMs.
This combination of engineering excellence and Tier 1 manufacturing
capability was established to support the scale-up of EV production in the UK
and will manufacture the 90kWh lithium-ion battery packs destined for use in
the first British-made all-electric hypercar.
Full production will take place at the firm’s brand-new production line
at Unipart Manufacturing Group’s site in Coventry.
The mid-mounted battery pack will support a target output of 2000 PS and
performance targets of 0-62mph in under three seconds and a top speed of over
200mph.
Andy Davis, Director at Hyperbat, said: “To win a contract with Lotus to
supply battery packs for the world’s most powerful production car demonstrates
the exceptional technology and manufacturing expertise we have at Hyperbat.
“This comes from decades of experience as a first-tier automotive
industry manufacturer and is an example of how Hyperbat can continue Britain’s
heritage at the frontier of technological innovation in the automotive
industry, coupled with Unipart’s expertise in execution.
“Required performance levels will be facilitated by our proprietary
welding and joining technologies, which, alongside the deployment of the latest
digital technologies, are critical to achieving the highest levels of
performance and product quality.
More
Hyperbat’s EV
battery expertise wins £multi-million Lotus Evija contract | Bdaily
LG Energy Solution to
invest $3.1 billion in S.Korea battery facility
December 19 2022
SEOUL (Reuters) -South
Korean battery maker LG Energy Solution said on Monday it plans to invest 4
trillion won ($3.1 billion) from this year to 2026 in a facility making
batteries for electric vehicles and other goods.
he project in
Ochang, South Korea, will include R&D and production facilities and related
infrastructure, and is expected to add 1,800 employees, the company said in a
statement.
"We plan to
set up a diversified product portfolio including pouch-type and cylindrical
batteries to respond to customer needs in a timely manner, and differentiate
production capabilities based on a 'smart' factory," an LG Energy Solution
spokesperson said.
LG Energy Solution
to invest $3.1 billion in S.Korea battery facility (msn.com)
[Prices]
are never too high to begin buying or too low to begin selling.
Jesse Livermore.
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