Baltic Dry Index. 601 -07 Brent Crude 84.78
Spot Gold 1878 US 2 Year Yield 4.47 +0.03
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 08/02/23 World 676,593,069
Deaths 6,774,634
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.
In the stock casinos, it is 2019 again, all news is good news [for now.]
But I suspect, not for very long.
Someone has to pay for higher global interest rates. Global food price inflation isn’t ending for months, at best. A wage price inflation spiral is just getting underway.
A NATO proxy war on Russia is about to enter year two, likely to expand, with no end in sight.
A fading US president seems determined to generate
a Thucydides Trap clash with China.
Fed
Rate Hikes Aren’t Going Away Soon
February 7 2023
Fed Bank of Minneapolis President Neel Kashkari said
Tuesday that January’s strong labor-market report shows the US central bank
would need to keep
raising rates to as much as 5.4%. Last week, the Fed raised its
benchmark to a range of 4.5% to 4.75%. So by his reading, there’s still a ways
to go. But JPMorgan’s Michael Feroli said markets “shouldn’t expect the same
degree of hand-holding” from the central bank as it gets closer to
its terminal rate. Earlier on Tuesday, the euro fell for a fourth straight
session, its fastest slide since October, with investors likely building in
expectations for a more hawkish Fed. The common currency dropped as much as
0.5% to 1.0669 against the dollar, the lowest since early January. It weakened
even more against other
G-10 peers, including funding currencies like the Japanese yen and
the Swiss franc.
Here are today’s top stories
Federal
Reserve Chair Jerome Powell
stuck to the message that interest rates need to keep rising. Indeed, Powell
floated the idea Tuesday that borrowing costs may reach a higher peak than
traders and policymakers anticipate. “We think we are going to need to do further
rate increases,” Powell told David Rubenstein during a
question-and-answer session at the Economic Club of Washington. “The labor
market is extraordinarily strong.”
More
Bloomberg
Evening Briefing: Fed Rate Hikes Aren’t Going Away Soon - Bloomberg
European stocks
head for higher open after Fed Chair Powell’s comments
UPDATED WED, FEB 8 2023 12:20 AM EST
European markets
are heading for a higher open Wednesday as investors digested the latest
comments from U.S. Federal Reserve Chair Jerome Powell.
Speaking at an
event at The Economic Club of Washington, D.C., Powell said Tuesday that
inflation is beginning to ease but that he expects the “disinflationary
process” to be a long one, and cautioned that interest rates could rise more
than markets anticipate if the economic data doesn’t cooperate.
The major U.S. averages
initially jumped during the remarks, before briefly falling into negative
territory, and then closing higher. Overnight, Asia-Pacific markets traded
mixed following the comments.
Europe
markets live updates: stocks, earnings, data and news (cnbc.com)
CNBC Daily Open: Jerome Powell’s speech was
hawkish. Investors’ mood was bullish
The bottom line
Despite whatever
hawkishness there is in Federal Reserve Chair Jerome Powell’s words, it seems
that markets — either in a fit of optimism or misled by confirmation bias —
will always seize on the most dovish of his statements and run with them.
That’s what happened last week after Powell’s press conference, when markets
focused on his acknowledgement that a “disinflationary process has started.” It
appears the same thing occurred Tuesday after Powell’s speech in Washington
D.C.
Analysts awaited Powell’s speech with anxiety.
Markets dropped the previous day on January’s jobs report; they expected Powell
to reassert the importance of interest rate hikes on the back of such a strong
labor market. And he unambiguously did so. “If we continue to get, for example,
strong labor market reports or higher inflation reports, it may well be the
case that we have do more and raise rates more than is priced in,” Powell said.
“My guess is it will take certainly [higher interest rates] into not just this
year, but next year to get down close to 2%.”
Yet markets reacted buoyantly. The Nasdaq
Composite was the biggest winner, gaining 1.9%. The S&P 500 rose 1.29%, and
the Dow Jones Industrial Average increased 0.78%. Markets, especially the
tech-heavy Nasdaq, may have been reacting positively to the flood of new AI
chatbot products announced by Google and Microsoft (and Baidu), hoping they may
usher in a new tech boom. But it’s just as likely that markets were relieved
that Powell was not as hawkish as they had feared. And so the game of chicken
between the Fed and markets continues.
Stock
Markets: U.S. stocks rallied despite Fed Chair Powell’s speech (cnbc.com)
China says will
'safeguard interests' over balloon shootdown
February
7 2023
BEIJING (AP) — China said Tuesday it will “resolutely safeguard its
legitimate rights and interests” over the shooting down of a suspected Chinese
spy balloon by the United States, as relations between the two countries
deteriorate further.
The balloon prompted U.S. Secretary of State Antony Blinken
to cancel a highly-anticipated visit to Beijing this week that had offered slight hopes for
an improvement in relations.
China claims it was a
civilian balloon used for meteorological research but has refused to say to
which government department or company it belongs.
Foreign
Ministry spokesperson Mao Ning on Tuesday reiterated that the “unmanned
airship” posed no threat and entered U.S. airspace accidentally.
Mao
again criticized the U.S. for overreacting rather than adopting a “calm,
professional" manner, and for using force in bringing the
balloon down Saturday in the Atlantic Ocean just off the U.S.
coast.
Asked
if China wanted the debris returned, she only reasserted that the balloon “belongs
to China."
“The
balloon does not belong to the U.S. The Chinese government will continue to
resolutely safeguard its legitimate rights and interests," Mao said at a
daily briefing without giving further details.
Beijing's attitude has hardened considerably following a
surprisingly mild initial response on Friday, in which it described the balloon's presence
as an accident and expressed “regret" for the balloon
having entered the U.S.
More
China
says will 'safeguard interests' over balloon shootdown (msn.com)
Thucydides Trap
Thucydides Trap, or Thucydides' Trap, is a term popularized
by American political scientist Graham T. Allison to describe an apparent
tendency towards war when an emerging power threatens to displace an
existing great power as
a regional or international hegemon.[1] It was coined and is primarily
used to describe a potential conflict between the United States and the People's
Republic of China.[2]
The term is based on a quotation
of ancient Athenian historian
and military general Thucydides, in which he
posited that the Peloponnesian War between Athens and Sparta had been inevitable because of
Spartan fears of the growth of Athenian power.[3][4]
Supporting the thesis, Graham Allison led a study at Harvard University's Belfer Center for Science and International Affairs which found that among 16 historical instances of an emerging power rivaling a ruling power, 12 ended in war. That study, however, has come under considerable criticism, and scholarly opinion on the veracity of the Thucydides Trap—particularly as it relates to a potential U.S.–China military conflict—is divided.
The term was coined by
American political scientist Graham T. Allison in a 2012 article for
the Financial Times.[2] Based on a quote by ancient
Athenian historian and military general Thucydides in his text History of
the Peloponnesian War positing that "it was the rise
of Athens and the fear that this instilled in Sparta that made war
inevitable",[5][6] Allison used the term to
describe a tendency towards war when a rising power (exemplified by Athens)
challenges the status of a dominant power (exemplified by Sparta). Allison
expanded upon the term significantly in his 2017 book Destined for War,
in which he argued that "China and the US are currently on a collision
course for war".[7][2
More
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.
Post-QE bond losses
rising reality for central banks - BIS
February 7 2023
LONDON
(Reuters) - Central banks face mounting losses on the trillions of dollars of
bonds they bought in the past 15 years of rolling crises, a paper from the Bank
for International Settlements (BIS) said, warning that the deficits could leave
them open to political attack.
Having rapidly
raised interest rates to fight inflation, the Federal Reserve and its European
peers are now making huge interest payments to commercial banks on deposits
they themselves created with their massive support efforts, which were known as
quantitative easing (QE).
The Fed's
cumulative loss from its quantitative easing now stands at almost $26 billion.
The Swiss National Bank made a loss of 132 billion Swiss francs ($143 billion)
last year, while the European Central Bank (ECB) now pays 2.5% interest on 4
trillion euros that commercial banks got for free during the crisis years.
The U.S. Treasury will not need to worry about bailing out
the Fed, which can simply defer any loss. But the Treasury will still be
missing the $50 billion to $100 billion the Fed's bond profits used to provide
each year.
The ECB and a number of national central banks in Europe have
issued warnings, though. Britain's government, which has received more than 120
billion pounds in profits from the Bank of England since 2009, has already set
aside 11 billion pounds for the central bank.
The BIS's
paper said that when bailouts were required they risked raising the ire of taxpayers
and politicians who then took aim at central banks' independence.
"If there
is macroeconomic mismanagement and the state lacks credibility, losses may
erode the central bank's standing, which may jeopardise its independence and
could even lead to the currency's collapse," the paper said, referring to
the worst-case scenario.
There were
dozens of past examples from developing economies, including Mexico, Chile, the
Czech Republic and Israel, where central banks can operate without major
difficulties in negative equity, it said.
To head off
any political barbs, however, the banks should communicate that the measures
that led to the losses were undertaken to ensure price and economic stability
which has a long-term benefit.
"To maintain the public's trust and to preserve central
bank legitimacy now and in the long run, stakeholders should appreciate that
central banks' policy mandates come before profits," the paper said.
Post-QE bond losses rising reality for central banks - BIS (msn.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.
How the brain can be affected by COVID-19
Tue, February 7, 2023 at
2:00 AM GMT
A new study published in
the New England Journal of Medicine and Nature reveals that a severe COVID-19 infection can age the brain in a big way. MRIs and tissue
samples from the brains of 30-year-olds killed by the virus were more
consistent in structure and chemical function with those of 70-year-olds.
After a
severe case of COVID-19, the virus may continue to reproduce in some
organs for several months, but very little evidence of viral products may be
seen in the blood stream. This may suggest that the virus can become
disseminated by more direct pathways. For example, an infection of the
brain might result from direct migration of the virus from the mucus membranes
of the nose.
Animal
studies with an experimental COVID-19 nasal vaccine show it to be unusually
effective, especially when given two weeks following the traditional
intramuscular vaccine. A broader immunity is achieved in the nasal mucosa than
with the traditional vaccine, significantly reducing viral load and
transmissibility. We may eventually take our annual boosters by this route.
Much of
the lethality of COVID-19 has to do with the speed of infection. Even though
the newer variants have mutated to become more transmissible, and accordingly
faster to infect, they have not resulted in worsening disease. This is likely
because more than 98% of the U.S. population now has some form of passive or
active immunity. But for isolated populations, a new infection has the
potential to be more dangerous. Similarly, stopping the virus early where it
first infects our bodies may save a lot of lives and a lot of brains.
When you get the virus
At the
first sign of illness, avoid cold temperatures that can shunt blood away from
the nasal mucosa allowing a virus to become more deeply seated in the tissue.
Limit the initial overreaction of the immune response by taking an
anti-inflammatory drug like Advil if not contraindicated by other medical
conditions. Stay hydrated with warm fluids. Some nasal saline could only help.
How the brain can
be affected by COVID-19 (yahoo.com)
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, more official scare story about
that Chinese balloon threat and it’s not even the silly season yet. At least unlike the 1960 U-2, it didn’t have a
pilot.
Balloon With 3 Hypersonic
Missiles Tested by China in 2018
February 6,
2023Updated:
February 6, 2023
Chinese state-owned television
aired footage of a high-altitude balloon dropping hypersonic weapons in 2018.
The stunning footage displays a
high-altitude balloon, not dissimilar from the one that traversed over the United States last week, carrying
three hypersonic glide vehicles (HGVs) into high altitude and dropping them for
testing.
Chinese state broadcaster CCTV
reported on the weapons test in September 2018. The footage has since been
deleted from Chinese media, but photographs and short clips can still be found
online.
In one post from 2018, a Twitter
user shared footage from Douyin, China’s version of TikTok, which shows the balloon
lifting the three HGVs from the ground.
HGVs are generally launched by
rockets in a similar manner to traditional missiles. Upon reaching orbit,
however, HGVs detach from the rocket and fly through the atmosphere using their
own momentum.
Such weapons are much faster than
other missiles while they are in low orbit, but become much slower upon hitting
the dense air of the atmosphere as they have no jets to power them. The three
HGVs dropped by the balloon in the footage appear to have been designed to test
this phenomenon.
The balloon-dropped HGVs were
part of an effort to develop precision warheads for hypersonic weapons, which
would give the Chinese military an “unstoppable nuclear-capable weapon,” according to the South China Morning Post.
Balloons One Part of China’s War Preparations
Paul Crespo, president of the
Center for American Defense Studies, said that the balloon which traversed U.S.
airspace this week could “absolutely” be a dry run for an attack using a
balloon-mounted weapon, but that hypersonic missiles would likely not be a
first choice for China’s communist regime.
“While China has tested
hypersonic missiles launched from balloons in the past, that isn’t a likely use
for these airships,” Crespo told The Epoch Times in an email. “The biggest
threat is sending one or more of these high altitude balloons over the U.S.
with a small nuclear EMP (Electro Magnetic Pulse) device.”
“Detonated
at extremely high altitude, they could knock out power and communications
across the US, wreaking widespread havoc for a year or more without firing a
shot on the ground.”
---- Communist
China is not alone in developing novel ways to use high-altitude balloons as
weapons of war.
The United States has researched
and tested the use of such balloons for deploying swarms
of explosive-laden suicide drones since at least 2018.
The Pentagon is also investing tens of millions of dollars into
high-altitude balloons that it intends to use for surveillance and, notably,
hopes to use to track the CCP’s
hypersonic arsenal.
The Epoch Times has requested
comment from the White House and Pentagon.
Balloon With 3
Hypersonic Missiles Tested by China in 2018 (theepochtimes.com)
Nothing is so admirable in
politics as a short memory.
John Kenneth Galbraith.
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