Baltic Dry Index. 721 -19 Brent Crude 86.52
Spot Gold 1929 US 2 Year Yield 4.12 -0.09
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 25/01/23 World 673,748,755
Deaths 6,749,727
“America has never quite forgiven Europe for
having been discovered somewhat earlier in history than itself.”
In the
stock casinos, confusion. The attempted short squeeze seems to have failed.
America
and China hurl rocks at each other’s greenhouses.
Yield curve inversion steepens.
Asia-Pacific
shares trade mixed, tracking Wall Street’s struggle for direction
UPDATED TUE, JAN 24 2023 10:18 PM
EST
Asia-Pacific shares traded mixed on Wednesday,
taking the lead from Wall Street’s struggle for direction as China and Hong
Kong markets remain closed for the Lunar New Year holidays.
In South Korea, the Kospi rose 1.26%,
while the Kosdaq climbed 1.65%. Japan’s Nikkei 225 added
0.11% and the Topix inched up 0.19%.
Australia’s S&P/ASX 200 declined
0.15% as investors await the release of the country’s inflation reading.
Markets in China and Hong Kong are closed for a
holiday.
New Zealand’s fourth quarter
inflation reading rose 1.4% quarter-on-quarter. Indonesia is slated to release
its core inflation data for December.
Overnight in the U.S., major
indexes struggled
for direction with the Dow Jones Industrial Average closed on a
third day of gains, while the S&P 500 and Nasdaq Composite took a dip.
Asia-Pacific
shares, Wall Street, CPI (cnbc.com)
European markets
head for lower open, shrugging off positive PMI data
UPDATED WED, JAN 25 2023 12:21 AM
EST
European
markets are heading for a negative open on Wednesday, continuing a negative
trend seen at the end of Tuesday’s trading session, despite data out of the
eurozone showing an uptick in business activity in the region’s services and
manufacturing sectors.
The S&P
Global eurozone composite purchasing managers’ index came in at 50.2 in
January, up from 49.3 in December and ahead of a consensus forecast of 49.8.
The 50 mark separates expansion from contraction.
On Wednesday,
investors will be looking out for the latest Ifo business climate survey data
out of Germany for January to get another gauge of economic sentiment in
Europe’s largest economy.
‘Outright
negative’ on stocks: JPMorgan’s Marko Kolanovic braces for correction, hard
landing
JPMorgan’s Marko
Kolanovic is abstaining from the early 2023 rally.
Instead, the
Institutional Investor hall-of-famer is bracing for a 10% or more correction in
the first half of this year, telling investors he’s “outright negative” on the
market.
“Fundamentals are deteriorating. And, the market
has been moving up. So, that has to clash at some point,” the firm’s chief
market strategist and global research co-head told CNBC’s “Fast Money” on Tuesday. Kolanovic slashed his firm’s
exposure to stocks last week to
underweight. In a recent note, he warned the market is not currently
pricing in a recession. His base case is a hard landing.
“Short-term interest rates moved a
lot in the last six months, and they’ll probably still go a bit higher and stay
there,” he said. “The consumer took a lot of debt. Interest rates went up. The
consumer was resilient, and that was sort of our thesis last year... But as
time progresses, they’re less and less resilient.”
Kolanovic, who is ranked as the
number one equity strategist by Institutional Investor for the twelfth time,
cites troublesome trends in recent key economic data — including ISM services, retail
sales and the Philadelphia Fed Survey as reasons to turn
bearish.
“We think things first turn south,
get much worse,” said Kolanovic.
Yet, the tech-heavy Nasdaq is
up more than 8% so far this year, and the S&P 500 is
up almost 5%. It closed on Tuesday at 4,016.95.
He lists positive developments
including China’s reopening from Covid-19 lockdowns and a weaker dollar for
market enthusiasm. Kolanovic believes they helped create a narrative the worse
is behind us and a recession “somehow magically ” happened last year.
“I just don’t think that at 5%
rates we can have this economy functioning,” said Kolanovic, who noted private
equity and venture capitalists can’t exist in this kind of environment.
“Something will have to give, and the Fed will need to flinch.”
More
Outright
Negative: JPMorgan's Kolanovic sees correction, hard landing (cnbc.com)
In other news, China and America
spar over debt and Africa. Nothing good lies down this road.
China
tells U.S. to fix its own debt problems after Yellen Africa remarks
January
24, 2023 6:38 PM GMT
WASHINGTON, Jan
24 (Reuters) - After U.S. Treasury Secretary Janet Yellen called China a "barrier" to
debt reform in Africa this week, Chinese officials in Zambia had a pointed
response - get your own house in order.
The
Chinese Embassy in Zambia said on its website Tuesday "the biggest
contribution that the U.S. can make to the debt issues outside the country is
to act on responsible monetary policies, cope with its own debt problem, and
stop sabotaging other sovereign countries' active efforts to solve their debt
issues."
Republicans in
the House of Representatives are using a risky, unusual threat to refuse to
vote in a new debt ceiling, a figure that reflects money
already spent and now owed by the government, to pressure the Biden
administration and Democrats to cut spending programs. So far, the Biden White
House is refusing to negotiate, counting on hardline
Republicans to step back under pressure from businesses, investors and moderates.
U.S.
national debt is about $31 trillion, a figure that has skyrocketed since 2000's
$5.6 trillion thanks in part to increased spending for an aging population,
outlays for Iraq and Afghanistan wars, COVID-19 programs and tax cuts that
trimmed revenues.
Yellen and
International Monetary Fund Managing Director Kristalina Georgieva arrived separately in Zambia Sunday to
highlight the need for debt reform in Africa.
Zambia
defaulted on its debt in 2020 and has made little progress to restructure it
with Chinese and private creditors to date, a situation that has helped pushed
citizens into poverty.
The
world's poorest countries faced $35 billion in debt-service payments to official
and private-sector creditors in 2022, more than 40% of which was due to China,
the World Bank said.
The U.S. Federal Reserve's
rate increases, designed to tame inflation at home, and the appreciating U.S.
dollar have added to African countries' debt service burden,
the African Development Bank said last week.
China
tells U.S. to fix its own debt problems after Yellen Africa remarks | Reuters
Finally,
a weaponised dollar, “transient” inflation that wasn’t, Magic Money Tree
creation since March 2020 and a relatively “low” gold price, and suddenly what
do you know, everyone wants some gold.
Dr.
Copper is now signalling more inflation ahead as China’s economy reopens. Time
to swap pictures of dead US presidents for something of value it seems.
Switzerland sent 524
tonnes of gold to China last year, the most since 2018
January 24 2023
LONDON
(Reuters) - Swiss exports of gold to countries including China, Turkey,
Singapore and Thailand surged to multi-year highs in 2022, Swiss customs data
showed on Tuesday, as low prices boosted demand from consumers in Asia and the
Middle East.
Rising
interest rates caused many financial investors in Europe and North America to
sell gold last year, releasing large amounts of metal from storage and pushing
down prices.
This allowed bullion to flow to Asian markets, which are more focused on
retail of jewellery and small gold bars to consumers who typically buy more
when prices drop.
Economic instability also spurred demand for gold, which many see as a
safe investment, particularly in Turkey, where inflation has rocketed.
Switzerland is the world's biggest gold refining and transit hub. It
imports bullion from mines and storage centres around the world for processing
and re-export.
Last year, it exported 524 tonnes of gold worth around $33 billion at
current prices to mainland China and Hong Kong, up from 354 tonnes in 2021 and
the most since 2018, Swiss customs data showed.
Switzerland shipped 69 tonnes of gold to Singapore, up from 33 tonnes in
2021 and the most since 2017, and 92 tonnes to Thailand, up from 56 tonnes in
2021 and the most since 2013.
It sent a whopping 188 tonnes to Turkey, up from 11 tonnes in 2021 and
by far the most in records stretching back to 2012, and 47 tonnes to Saudi
Arabia, up from 7 tonnes in 2021 and the most since 2015.
The weak spot
was India, the biggest bullion market after China. Switzerland sent 224 tonnes
of gold to India last year, down from 507 tonnes in 2021.
Shipments to
India slowed sharply in December as gold prices began to rally. From as low as
$1,615.59 an ounce in November, gold prices have risen above $1,940 as Western
investors anticipating the end of interest rate-hike cycle started to buy.
Demand
from China may remain solid as the abandonment of COVID-19 restrictions revives
economic growth, said independent analyst Ross Norman.
More
Switzerland sent 524 tonnes of gold to China last
year, the most since 2018 (msn.com)
“Those who pay their bills on time are soon
forgotten. It is only by not paying one's bills that one can hope to live in
the memory of the commercial classes.”
Oscar Wilde.
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.
With
a critical two day Federal Reserve meeting coming up next week, the war to get
the Fed to stop raising interest rates is starting to go nuclear.
What
does the writer expect if President Biden really authorises refilling the
Strategic Petroleum Reserve from next month just as China’s economy returns
from two years of massive lockdowns?
Good news on inflation
means Federal Reserve should back off on further interest rate hikes
Tue,
January 24, 2023 at 11:03 AM GMT
Many hate inflation, for reasons
both rational and not. The good news is that inflation is in retreat, having fallen every month the past half-year with trends
continuing downward. Several reasons are in play for falling prices, but let’s
quickly review two that impact many: what economists call “non-core inflation”
items, such as food and fuel.
On the rational side of the
ledger, people dislike the uncertainty inflation introduces into family
budgets. This is especially true for financially stretched working Americans when food and energy prices are
rising, as they dramatically spiked in the first half of 2022. For people on
tight budgets, essentials, such as gas and groceries prices can become
unaffordable if their cost heads north. War and transportation costs drove
energy and food prices to painful highs this summer.
Two chief factors since have
brought energy prices down.
One, the Biden Administration sensibly tapped
the US’s strategic oil reserves, thus reducing supply pressures until energy markets
stabilized. Further downward price pressure on fuel has come from Europe’s
unusually, if not somewhat unsettling, balmy winter. Petrol prices in Wisconsin
now hover around $3 a gallon (or, inflation adjusted for some perspective to
when President Obama left office and Trump assumed office, to about $2.50 in
2017 prices). And now that oil prices have stabilized, the US government will
begin anew oil purchases in February to replenish the Strategic Oil Reserve.
----Now, let’s examine the other
“fuel”: food. Groceries began their rise during Covid-19 as supply chains were
disrupted and food processors, especially meat, experienced rolling shutdowns
of facilities. Food prices continued their rise in 2022. Much of this simply
came from the concentrated market character of processed food, where a few big
players could collude to drive up prices (profits). But, underlying factors
were also in play, such as disruptions and uncertainty of global grain supply
given the war between Russia and Ukraine, where both constitute nearly a third
of global wheat exports, which then impacts bread and pasta prices.
Eggs are another staple of many
people’s diets, and a food that often dramatically rises during energy crises.
Chicken feed cost is connected to petroleum through fertilizer and diesel
needed to grow it. Avian enclosures then use more fuel yet for heat. Most
infamously, egg prices rocketed up by nearly 50% in the wake of the Yom Kippur
war of 1973 that kicked of the 300% jump in the cost of oil that year.
Similarly, the energy price spikes from the Russia/Ukraine war had the same
impact in 2022, which saw egg prices jump up roughly 25%. As always, when the
waters are chummed with energy price spikes, sharks come to feed, with some
collusion and speculation further driving up prices. Yet, egg prices (like oil
and gas) are also now falling and would be dropping faster still if not for
Avian flu. But, that too will get sorted as the market corrects with greater
supply.
In short, inflation is falling, and
not just for non-core items. Therefore, the Federal Reserve would be well
advised to back off on further hikes to the prime lending rate, which slows the
economy and hurts working people.
UK
borrowing hits December record of £27.4bn piling pressure on Hunt ahead of
March budget
TUESDAY 24 JANUARY 2023 11:45 AM
UK borrowing in December hit its highest total in
30 years driven upwards by the government’s debt interest bill soaring due to
raging inflation, official figures out today show.
The government took on £27.4bn of debt last month,
the largest amount since records began in 1993, according to the Office for National Statistics (ONS).
The amount was higher than market expectations.
The big overshot was caused by the amount of money
Britain pays investors climbing rapidly last month to £17.3bn.
A huge chunk of the government’s debt stock is
linked to an old measure of inflation, the retail price index, meaning investor
payouts rise in line with prices.
Interest payments are upgraded in line with the RPI
figures from two before, which topped 14 per cent in October, forcing the debt
bill to nearly double December 2021’s number.
The government’s energy price cap of £2,500 has
seen it spend billions of pounds on protecting households from crippling rises
in energy bills.
That has raised spending sharply, widening the gap
between what the treasury takes in tax receipts and spends on supporting the UK
economy.
Poorer households have also received one off
payments to help with eye watering living costs, stepping up spending further.
Today’s borrowing figures are the penultimate ones
before the budget on 15 March.
More
UK borrowing hits
December record of £27.4bn (cityam.com)
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.
Big Change to COVID-19 Vaccine
Strategy Might Be Coming Soon, FDA Documents Show
January 23, 2023 Updated: January 23, 2023
The Food and Drug Administration
(FDA) wants to simplify the current COVID-19 vaccination strategy to be more like an
annual flu shot, according to briefing documents released on Jan. 23 ahead
of a key advisory meeting to be held on Jan. 26.
The FDA’s proposal, as outlined in the documents, is to simplify COVID-19 vaccine composition and
annual immunization schedules.
Currently, people first get
two doses of the original COVID-19 vaccine spaced several weeks apart, followed
a few months later by a bivalent booster tailored to protect against newer
variants. The FDA’s proposal wants to change that.
Instead, the primary dose and
booster would be combined into a single product for healthy adults, developed
in spring based on prevailing strains and given once a year in the fall, much
like how flu shots are administered.
There would still be a two-dose
vaccine—and corresponding immunization schedule—for very young children, as
well as the elderly and people with compromised immunity who might not get the
same kind of immune response from a single shot.
The proposed changes would
basically mean that the bulk of COVID-19 vaccines would become bivalent, while
Pfizer and Moderna’s bivalent shots would be used for all doses, not just
boosters.
Some experts say the proposed
change could boost vaccine uptake.
Key Question
The key question that the
Vaccines and Related Biological Products Advisory Committee will be asked to
vote on at its Jan. 26 meeting, according to one of the documents (pdf),
is as follows:
“Does the committee recommend
harmonizing the vaccine strain composition of primary series and booster doses
in the U.S. to a single composition, e.g., the composition for all vaccines
administered currently would be a bivalent vaccine (Original plus Omicron
BA.4/BA.5)?”
Besides that question being put
to a vote, the panel also will discuss simplifying the process for determining
the need for periodic COVID-19 vaccine updates and the timing of such updates.
More
Big Change to
COVID-19 Vaccine Strategy Might Be Coming Soon, FDA Documents Show (theepochtimes.com)
But, shouldn’t someone be investigating
this. What if it’s even only partly related to all/some of the vaccines? Why
has GB quietly withdrawn the Oxford Astra Zeneca vaccine?
Excess
deaths are soaring as health-care systems wobble
What lessons can be learned from a miserable
winter across the rich world?
Jan
19th 2023
Excess
deaths are soaring as health-care systems wobble | The Economist
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.
Green
energy hub planned for former gas power plant
January 24 2023
A former gas fired
power plant, in North Yorkshire, is to be turned into a green energy hub under
ambitious plans by Centrica.
The energy company
has acquired the four-acre former Knapton Generating Station from Third Energy
and plans to develop a 28MW battery on the site.
In addition,
Centrica is exploring how Knapton could be used for off-grid hydrogen
production, as well as the possibility for solar energy in the surrounding
area.
The multi-million
pound deal is part of Centrica Business Solutions strategic plan to create a
900MW portfolio of solar and battery assets by 2026.
The first project
at the site near Malton will be a 56MWh battery which will utilise some of the
41.5MW export capability of the existing grid connection.
It is anticipated
the battery would be able to power around 14,000 homes for two hours.
Greg McKenna,
managing director of Centrica Business Solutions, said: “Taking an old fossil
fuel asset and revitalising it to help advance the decarbonisation of the grid
not only feels the right thing to do from a sustainability point of view, but
aligns with our strategy.
“We’re quickly
acquiring a portfolio of assets that can play an important role in facilitating
a net zero future for the UK.”
Gas production
ended at the site in 2019 and the Knapton site has been cleared of all gas
processing equipment and the gas turbine.
Together with its housing shed and associated
equipment, it has been dismantled and removed. Third Energy will retain the
ownership of the 12 well-sites and associated gas pipeline network.
Green energy hub
planned for former gas power plant | TheBusinessDesk.com
“the King gave orders that the page's salary
was to be doubled. As he received no salary at all this was not of much use to
him, but it was considered a great honour, and was duly published in the Court
Gazette.”
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