Wednesday 28 December 2022

The Biden Bust Accelerates. More Crypto Fraud.

 Baltic Dry Index. 1515 Fri.       Brent Crude 83.86

Spot Gold 1810            US 2 Year Yield 4.32 +0.01

Coronavirus Cases 02/04/20 World 1,000,000

Deaths 53,103

Coronavirus Cases 28/12/22 World 662,734,465

Deaths 6,688,778

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith.

Not much need for input from me this morning, the  news speaks loudly of a bursting bubble for itself.

Asia markets mixed as investors look ahead to 2023 headwinds, Hong Kong stocks rise on China reopening

UPDATED WED, DEC 28 2022 12:08 AM EST

Asia-Pacific markets mostly fell after Wall Street’s losses overnight as investors weighed headwinds for the economy in 2023.

Hong Kong’s Hang Seng index added 1.93% as trade resumed after the holiday weekend – investors further digested China’s announcement to scrap quarantine requirements for travelers, reopening faster than expected.

In mainland China, the Shanghai Composite rose fractionally and the Shenzhen Component fell 0.73%. The offshore yuan was little changed and last stood at 6.707 against the U.S. dollar.

n South Korea, the Kospi fell 2.12% as stocks of heavyweight chipmakers and battery manufacturers priced in the effects of ex-dividend, which shareholders would not be entitled to annual payouts for next year. Australia’s S&P/ASX 200 fell 0.45% after giving up earlier gains.

In Japan, the Nikkei 225 was down 0.55% and the Topix shed 0.18%. The Bank of Japan reiterated its stance that the latest widening of its yield curve control tolerance range should not be interpreted as a chance in monetary policy direction.

Asia-Pacific shares, China, yuan, Bank of Japan, Hang Seng index (cnbc.com)

S&P 500 closes lower, Nasdaq sheds 1% as bond yields pop

UPDATED TUE, DEC 27 2022 5:43 PM EST

The S&P 500 fell Tuesday, at the start of the holiday-shortened week, as bond yields climbed and investors weighed the economic outlook for 2023.

The Dow Jones Industrial Average rose 37.63 points, or 0.11%, to finish at 33,241.56. The S&P 500 fell 0.4% to settle at 3,829.25, while the Nasdaq Composite shed 1.38% to end at 10,353.23.

China-linked stocks advanced as the country loosened Covid restrictions. Tesla dropped more than 11% on news of an extended production pause, with the stock on pace for its worst year ever. Southwest shed nearly 6% as the airline canceled thousands of flights.

Bond yields also pushed higher, putting pressure on growth stocks like technology. The yield on the 10-year Treasury note was last up nearly 11 basis points to trade at 3.85%. Apple’s stock was among the worst performers in the Dow, falling to levels not seen since June 2021 and closing 1.4% lower.

“It’s basically the continuation of high yields depressing growth, with redistribution into other sectors that are smaller, but not big enough to change the headline index,” said Keith Lerner, Truist’s co-chief investment officer.

The combination of tax-loss selling, portfolio rebalancing and investors deciding where to position for 2023 may also be weighing on the indices, said Sameer Samana, senior global market strategist for Wells Fargo Investment Institute.

Stocks are headed for their worst yearly performance since 2008, with the Dow and S&P off by 8.5% and 19.7%, respectively, in 2022. The Nasdaq’s fallen 33.8%.

More

S&P 500 closes lower, Nasdaq sheds 1% as bond yields pop (cnbc.com)

Tesla’s stock is headed for its worst month, quarter and year on record

Tesla’s sell-off intensified on Tuesday, with the stock closing down 11%. Elon Musk’s electric car company is days away from closing out its worst month, quarter and year on record and has moved past Meta to become the worst-performing stock in 2022 among the most valuable tech companies.

The latest drop comes after The Wall Street Journal reported that Tesla will continue a weeklong production halt at its Shanghai facility, facing a fresh onslaught of Covid cases within its Chinese workforce.

Reuters reported that when Tesla’s Shanghai plant reopens in January, it will do so for just 17 days, in a break from Tesla’s established practices. Shanghai has been battered by a fresh wave of Covid infections this month.

Tesla shares have fallen 73% from their record high in November 2021. The stock is down 69% in 2022, more than double the decline in the Nasdaq. Among major carmakers, Ford is down 46% and General Motors has fallen 43%. Since its IPO in 2010, Tesla has only fallen in one other year, an 11% drop in 2016.

Twitter is bleeding cash, and Musk is selling Tesla stock in big chunks. According to filings in mid-December, Musk sold about 22 million more shares of Tesla, which were worth around $3.6 billion, Earlier this year, Musk told his millions of followers on social media that he had “no further TSLA sales planned” after April 28.

---- For the month of December, Tesla has plunged 44%, by far its worst month ever, as it had never fallen more than 25% in a single month. And in the fourth quarter, the stock is down 59%, worse than its 38% drop in the second quarter of this year, which had been its worst period on record.

Last week, Tesla expanded discounts in North America for buyers of Model 3 and Model Y electric vehicles. Those discounts came after the automaker offered incentives in mainland China for December auto sales earlier this month.

Pressure is also mounting in the used-car market, with the average price for a used Tesla dropping 17% from July highs, and with used Teslas lingering longer than other makes before being resold.

More

Tesla's stock is headed for its worst month, quarter, year on record (cnbc.com)

In crypto news, FTX keeps going from bad to worse. Pouring good money after bad it seems to me. Other than some Bahamian real estate, what real assests are left?

Mango goes bad.

FTX customers file class action to lay claim to dwindling assets

Dec 27 (Reuters) - FTX customers filed a class action lawsuit against the failed crypto exchange and its former top executives including Sam Bankman-Fried on Tuesday, seeking a declaration that the company's holdings of digital assets belong to customers.

The lawsuit is the latest legal effort to lay claim to the dwindling assets of FTX, which is already feuding with liquidators in the Bahamas and Antigua as well as the bankruptcy estate of Blockfi, another failed crypto company.

FTX pledged to segregate customer accounts and instead allowed them to be misappropriated and therefore customers should be repaid first, according to the lawsuit filed in U.S. Bankruptcy Court in Delaware.

"Customer class members should not have to stand in line along with secured or general unsecured creditors in these bankruptcy proceedings just to share in the diminished estate assets of the FTX Group and Alameda," said the complaint.

FTX did not immediately respond to a request for comment.

Bahamas-based FTX halted withdrawals last month and filed for bankruptcy after customers rushed to pull their holdings from the what was once the second-largest cryptocurrency exchange after questions surfaced about its finances.

More

FTX customers file class action to lay claim to dwindling assets | Reuters

U.S. charges fraud in Mango crypto manipulation case

NEW YORK, Dec 27 (Reuters) - U.S. prosecutors have filed criminal charges of commodities fraud and manipulation against a man accused of trying to steal about $110 million in October by rigging the Mango Markets cryptocurrency exchange.

According to a complaint made public on Tuesday in Manhattan federal court, Avraham Eisenberg's trades in futures related to Mango's crypto token MNGO enabled him to withdraw $110 million in cryptocurrencies from other investors' deposits, with no apparent intention to repay the funds.

Eisenberg was arrested on Monday night in Puerto Rico, U.S. Attorney Damian Williams in Manhattan said in a court filing. It was unclear whether Eisenberg has a lawyer.

Mango is a decentralized cryptocurrency exchange run by Mango DAO that lets investors lend, borrow, swap, and use leverage to trade cryptocurrency assets.

The Dec. 23 complaint signed by FBI Special Agent Brandon Racz said Eisenberg on Oct. 11 used two accounts to concurrently buy and sell futures based on the relative values of MNGO and the stablecoin USD Coin (USDC).

By being on both sides of the transaction, Eisenberg artificially inflated the price of MNGO relative to USDC, allowing him to borrow and then withdraw $110 million of different cryptocurrencies, the complaint said.

Mango soon began negotiations with Eisenberg and reached a settlement to recoup $67 million.

"All mango depositors will be made whole," with token holders who vote for the settlement agreeing not to "pursue any criminal investigations or freezing of funds once the tokens are sent back," a community post said at the time.

More

U.S. charges fraud in Mango crypto manipulation case | Reuters

Finally, Russia retaliates on oil. What will happen to the price of crude oil from February?

Putin bans Russian oil exports to countries that implement price cap

MOSCOW, Dec 27 (Reuters) - President Vladimir Putin on Tuesday delivered Russia's long-awaited response to a Western price cap, signing a decree that bans the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by the cap.

The Group of Seven major powers, the European Union and Australia agreed this month to a $60-per-barrel price cap on Russian seaborne crude oil effective from Dec. 5 over Moscow's "special military operation" in Ukraine.

The cap is close to the current price for Russian oil, but well beneath the windfall price Russia was able to sell for this year and that helped offset the impact of financial sanctions on Moscow.

Russia is the world's second largest oil exporter after Saudi Arabia, and a major disruption to its sales would have far reaching consequences for global energy supplies.

The decree, published on a government portal and the Kremlin website, was presented as a direct response to "actions that are unfriendly and contradictory to international law by the United States and foreign states and international organisations joining them".

“Deliveries of Russian oil and oil products to foreign entities and individuals are banned, on the condition that in the contracts for these supplies, the use of a maximum price fixing mechanism is directly or indirectly envisaged," the decree stated, referring specifically to the United States and other foreign states that have imposed the price cap.

"The established ban applies to all stages of supply up to the end buyer."

---- Russia has been promising to respond officially for weeks, and the eventual decree largely established what officials had already said publicly.

The G7 price cap allows non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is being sold for less than the price cap.

More

Putin bans Russian oil exports to countries that implement price cap | 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.

South Korea December exports to fall for third month as China demand still weak: Reuters poll

SEOUL, Dec 28 (Reuters) - South Korea's exports likely extended their falling streak to a third straight month in December, a Reuters poll showed on Wednesday, with demand from China yet to recover from loosening COVID-19 restrictions.

The country's outbound shipments were projected to have fallen 10.1% in December from the same month a year ago, according to the median forecast of 12 economists.

That would be the third straight month of year-on-year declines, after a 14.0% loss in November, which was the biggest in 2-1/2 years, and 5.8% in October.

"South Korea's exports are under pressure from declining exports to China, where the economy still remains sluggish even after easing of its COVID-19 restrictions, and weak sales of IT products, mainly semiconductors," said Park Sang-hyun, chief economist at HI Investment and Securities.

"Moreover, global economic slowdown is materialising, so exports are likely to continue the falling trend for the time being."

China has eased some of its most stringent restrictions to fight COVID-19 since last month.

During the first 20 days of December, South Korea's exports shrank 8.8% from the same period a year ago. Those to China dropped 25.5%, outweighing gains in U.S. and EU-bound shipments, in likely the seventh consecutive falling month.

Meanwhile, imports were expected to have fallen at a much milder pace of 0.6% in December, after a 24-month gaining streak through November.

Altogether, the trade balance is set to remain in deficit for a ninth consecutive month. It is also on track for the first annual shortfall in 14 years and the largest-ever.

Full monthly trade data is scheduled for release on Sunday, Jan. 1, at 9 a.m. (0000 GMT).

More

South Korea December exports to fall for third month as China demand still weak: Reuters poll | Reuters

Nearly three in five German industry associations foresee gloomy 2023

BERLIN, Dec 27 (Reuters) - Nearly three out of five German industry associations are pessimistic about next year and expect their companies to produce less as high energy prices due to the war in Ukraine show no signs of abating, found a survey published Tuesday.

Of the 49 associations surveyed by the IW economic institute, 30 said they expect their members to produce less, while 13 said they expect their sectors to produce more.

Nearly 40 associations said the current situation for their companies is worse than a year ago, when many assumed that the worst of the coronavirus pandemic had been mostly overcome.

With inflation at record highs, however, the mood in the German economy has not recovered, according to the survey, which was conducted from mid-November through early December.

"Businesses do not expect the high energy prices to fall back to pre-crisis levels in the foreseeable future. That clouds the outlook for the coming year enormously," said IW economic expert Michael Groemling.

He warned that the situation for energy-intensive firms was particularly precarious and their success is tied to affordable energy.

Nearly three in five German industry associations foresee gloomy 2023 | 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

https://www.zerohedge.com/markets/environmental-disaster-ev-battery-metals-crunch-horizon-industry-races-recycle

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.

U.K. Stops Publishing Key Covid-19 Statistics

December 26, 2022

 The U.K. has stopped publishing certain covid-19 modelling data, as officials say it is not necessary as the country “lives with the disease.”

The country’s Health Security Agency announced this week it would no longer report the growth and reproductive rates of infections as part of its standard publication schedule.

The growth rate and “R” rate give an idea of how fast infection rates are increasing or decreasing around the country. In recent months, the U.K.H.S.A. has shared this information every two weeks. But according to the agency’s website, the most recent update — published December 23 — will be the last.

In addition, medium-term projections, which modelled potential hospitalisations and deaths on a fortnightly basis, will no longer be published from January 6.

What does the latest covid data show?

Friday’s R rate update gave England a result between 1 and 1.2. This means every ten infected people are likely to pass the virus on to between ten and 12 others.

England’s overall growth rate was between 0 and 4%, with covid infections increasing the most in the east and south west of the country.

At the height of the pandemic, these figures were much higher as the virus spread more quickly among the population.

But the changing nature of testing and reporting results also makes it hard to properly compare results from different time periods

More

U.K. Stops Publishing Key Covid-19 Statistics (forbes.com)

China will publish COVID-19 data once a month, under Category B disease management

December 27, 2022.

China will eventually publish data on COVID-19 cases once a month when the disease comes under Category B management, an official at the Chinese Center for Disease Control and Prevention said on Tuesday.

China’s management of COVID-19 was downgraded to the less strict Category B from the current top-level Category A, as the disease has become less virulent and will gradually evolve into a common respiratory infection.

Official statistics, however, showed only one COVID-19 death in the seven days to Monday, fuelling doubts among health experts and residents about the government's data. The numbers are inconsistent with the experience of much less populous countries after they re-opened.

Doctors say hospitals are overwhelmed with five- to six-times more patients than usual, most of them elderly. International health experts estimate millions of daily infections and predict at least one million COVID-19 deaths in China next year.

Nevertheless, authorities are determined to dismantle the last vestiges of their zero COVID-19 policies.

China will publish COVID-19 data once a month, under Category B disease management | Al Arabiya English

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.

Wind energy and solar power set to power China’s next 40 years

December 26, 2022

The recently concluded COP27 international climate change summit in Sharm El Sheik offered world leaders, experts, and activists an opportunity to stop and take stock one year after a landmark agreement to “phase down” coal emissions. Already, there is reason for concern: A November 2022 report from the International Energy Agency found that, if nothing is done, emissions from already existing coal assets are enough to tip the world across the 1.5 degrees Celsius increase scientists and world leaders agreed was the threshold for a safe climate under the 2015 Paris Agreement and the 2021 Glasgow Compact.

 

Because China is the world’s largest burner of coal, any discussion of a coal phasedown hinges on whether it can cut its reliance on fossil fuels. Although China has set ambitious targets for cutting emissions over the coming decades, political leaders remain wary that cutting coal power too much, too fast could affect the country’s energy security and economic growth. This summer, an unprecedented heat wave and severe drought put serious strain on China’s power system, as high temperatures drove power demand much higher than planners anticipated, while droughtlike conditions in traditionally water-rich regions like the southwestern province of Sichuan hampered the output of hydroelectric dams, causing significant power outages.

 

China is not alone in experiencing grid resilience issues due to extreme weather. In Texas, a 2021 winter storm wreaked havoc on gas infrastructure and transmission lines, knocking out power to millions and leading to hundreds of deaths. This summer, several French nuclear power plants had to reduce output as rising temperatures warmed the water used to cool reactors.

 

The good news is that China can simultaneously enhance its energy security, address recent grid reliability issues, and cut its reliance on coal power. The solution lies in its world-class renewable resources — and a willingness to invest in a modern and more resilient grid. A new study, conducted by myself and my colleagues at the Berkeley Lab, Energy Innovation, and the University of California, Berkeley, found China could more than double the share of carbon-free electricity production to 80% by 2035, while cutting power generation costs without sacrificing reliability. This transition would generate more economic growth, reduce air pollution, dampen the volatility of energy prices, and have significant benefits for the health of the Chinese people.

 

China is already the world leader in wind and solar development, adding more wind, solar, and offshore wind capacity than any other country in 2021. 

More

Wind energy and solar power set to power China’s next 40 years | REVE News of the wind sector in Spain and in the world (evwind.es)

"In economics, hope and faith coexist with great scientific pretension."

John Kenneth Galbraith.

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