Baltic Dry Index. 621 -19 Brent Crude 79.94
Spot Gold 1865 U S 2 Year Yield 4.21 +0.21
However, if the
real money supply continues to shrink as sharply as it is currently, the signs
point to at least an economic slowdown and, more likely, a recession. When the
real money supply in the economy shrinks, those holding cash become poorer.
They can now no longer purchase the quantities of goods they previously bought
and need to adjust their spending: stop buying more expensive goods, or
continue buying more expensive goods while forgoing other things. The result is
a drop in aggregate demand.
More in the Inflation… section.
The latest US employment report was a major
boost to the US economy but something of a setback for the US central bank and
the stock casinos.
But to this old dinosaur market follower,
some caution is needed when dealing with the numbers from the Bureau of Lying
Labor Statistics.
Are the numbers real or the product of
year-end noise, a warmer winter, baby-boom retirements making employers chase
scarce workers or something else?
If real, this becomes a major headache for
the central banksters who just trial ballooned that inflation has turned the corner.
Well not if a wage price spiral is now
getting underway.
Despite that, US yields soared, gold sank, and
the stock casinos cashed in some bullish bets.
Jobs report shows increase of 517,000 in January,
crushing estimates, as unemployment rate hit 53-year low
The employment picture started off 2023 on a
stunningly strong note, with nonfarm payrolls posting their biggest gain since
July 2022.
Nonfarm payrolls increased by 517,000 for January, above the Dow Jones estimate of 187,000 and December’s gain of 260,000, according to a Labor Department report Friday.
“It was a phenomenal report,” said Michelle Meyer, chief U.S.
economist at the Mastercard Economics Institute. “This brings into question how
we’re able to see that level of job growth despite some of the other rumblings
in the economy. The reality is it shows there’s still a lot of pent-up demand
for workers were companies have really struggled to staff appropriately.”
The unemployment rate fell to 3.4% versus the
estimate for 3.6%. That is the lowest jobless level since May 1969. The labor
force participation rate edged higher to 62.4%.
A broader measure of unemployment that includes
discouraged workers and those holding part-time jobs for economic reasons also
edged higher to 6.6%. The household survey, which the Labor Department uses to
compute the unemployment rate, showed an even bigger increase of 894,000.
“Today’s jobs report is almost too good to be
true,” wrote Julia Pollak, chief economist at ZipRecruiter. “Like $20 bills on
the sidewalk and free lunches, falling inflation paired with falling unemployment
is the stuff of economics fiction.”
Growth across a multitude of sectors helped propel
the massive beat against the estimate.
Leisure and hospitality added 128,000 jobs to lead
all sectors. Other significant gainers were professional and business services
(82,000), government (74,000) and health care (58,000). Retail was up 30,000
and construction added 25,000.
Wages also posted solid gains for the month.
Average hourly earnings increased 0.3%, in line with the estimate, and 4.4%
from a year ago, 0.1 percentage point higher than expectations though a bit
below the December gain of 4.6%.
The unemployment rate for Blacks fell to 5.4%,
while the rate for women was 3.1%.
“When you look at this, it’s pretty hard to shoot any holes in
this report,” said Dan North, senior economist at Allianz Trade North America.
More
Jobs report January 2023: Payrolls increased by 517,000, unemployment rate at 53-year low (cnbc.com)
Stocks fall on Friday, but S&P 500 notches winning week as
strong 2023 continues
UPDATED FRI, FEB 3 2023 5:34 PM EST
Stocks fell
Friday as a strong jobs report worried some investors that the Federal Reserve
would keep hiking rates. Still, the S&P 500 notched its fourth weekly gain
in five weeks as investors bet falling inflation is ahead.
The S&P 500 declined 1.04% to
4,136.48. The Nasdaq Composite shed 1.59% to 12,006.95. Meanwhile, the Dow
Jones Industrial Average slipped 127.93 points, or 0.38%, to 33,926.01 — even
as Apple shares gained.
Regardless, the broader market
index and Nasdaq Composite notched a positive week. The S&P 500 closed the
week higher by 1.62%. The Nasdaq Composite gained 3.31%, posting its fifth-straight
winning week as it rode a tech-fueled rally to outperform the
other major indexes. Meanwhile, the Dow was the outlier, down 0.15%.
Investors absorbed a stronger-than-expected January
jobs report that spurred bond yields higher. The U.S. economy added
517,000 jobs in January, blowing past Dow Jones’ estimates of a jobs
gain of 187,000 last month. The 10-year Treasury yield topped
3.5% after jumping more than 12 basis points following the
report.
Wall Street also digested
earnings results from major tech companies. Apple shares jumped
2.4%, reversing earlier losses after the company missed
estimates on the top and bottom lines in its most recent
quarterly report. Meanwhile, Google-parent
Alphabet fell 2.8% following disappointing results. Amazon’s
stock also declined 8.4% in its worst day since April after the e-commerce
giant’s report, though it still notched a 1.1% gain on the week.
Even so, investors took hope from
recent signs of falling inflation, as well as some well-received comments this
week from Federal Reserve Chair Jerome Powell saying the disinflationary
process has begun.
“I think the market’s coming
closer to our view that inflation is declining rapidly,” said Jay Hatfield, CEO
at Infrastructure Capital Management. ”[The Fed’s] models have proven to be
terrible. They missed this inflation on the upside, and now they’re missing the
deflation.”
Stocks
fall on Friday, but S&P 500 notches winning week as strong 2023 continues
(cnbc.com)
Jobs blowout: What the employment report
means for Biden and Powell
President Joe Biden and the White
House can celebrate the report as evidence the economy is continuing to hum
along.
The
U.S. economy generated 517,000 jobs in January, a surprisingly strong number
that underscores the remarkable resilience of the labor market but could stiffen
the Federal Reserve’s determination to squeeze the economy to fight
40-year-high inflation.
----
President Joe Biden celebrated the report as evidence the economy is continuing
to hum along, and the number is likely to blunt attacks from Republicans over the
administration’s spending policies. But senior officials in the West Wing were
privately hoping for a less-robust number. So was Fed Chair Jerome Powell.
Here’s how the
number is likely to play with four key political and economic figures.
Biden — The White House can view the report as evidence
that economists’ predictions of an imminent recession are off-base. But
inflation is Biden’s biggest enemy on the economy, and the report will cause
some unease within the administration, given that it could mean the Fed will
crack down harder on growth to curb prices.
---- Powell — The report is likely to come as a jolt to the Fed
chair. Powell said in a recent speech that the economy only needs to gain about
100,000 net jobs a month to keep up with the number of new people entering the
workforce.
He’s strongly
committed to bringing inflation to the central bank’s target range of 2
percent. Since the Consumer Price Index peaked last June at 9.1 percent,
inflation has steadily fallen, hitting a still-high 6.5 percent in December.
Powell
and the Fed on Wednesday again raised rates by a quarter of a percent, the
eighth straight increase. But it was the smallest bump since March. He
cautioned at his press conference that more hikes lay ahead, saying “the job is
not fully done.”
Any single report
can be an outlier and is unlikely to sway the Fed. But Powell is worried about
the hot jobs market driving up wages, fueling inflation. So any news showing
the market heating rather than cooling could be unwelcome.
In
one positive sign for Powell, wages rose 0.3 percent in January, down from 0.4
percent in December. What the Fed chair fears most is a “wage-price spiral” in
which higher wages drive prices and create a dangerous inflation cycle. That is
not evident in this report.
There is also a
chance that seasonal factors, which often make January jobs figures hard to
read, helped trigger the surprising number.
“The blowout
517,000 increase in total employment was almost certainly a function of
seasonal noise and traditional churn in early year job and wage environment and
exaggerates what is already a robust trend in hiring,“ Joe Brusuelas, chief
economist at consulting firm RSM US, said in a client note.
More
Jobs
blowout: What the employment report means for Biden and Powell - POLITICO
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.
The
Old Lady of Threadneedle Street thinks the worst of inflation may be over. If
so, why didn’t they follow the Fed’s lead this week and just increase their
interest rate by a quarter of one percent?
But
be careful what you wish for says The Mises Institute.
‘Important we enguard against doing too
much’ with rate rises, Bank of England’s top economist Pill warns
FRIDAY 03 FEBRUARY 2023 9:47 AM
The
chief economist of the Bank of England has cautioned that it is important the
Bank does not raise borrowing costs too high.
Huw Pill’s
warning came a day after the central bank hiked interest rates by 0.5
percentage points to 4% but indicated it could slow down recent rate-hiking
activity.
He told Times Radio that it is important the Bank does not do “too much”, despite recognising that UK inflation was “much too high”.
The economist said: “We have to recognise we have done a lot with monetary policy already.
“Interest
rates have risen by almost 400 basis points (four percentage points).
“It’s
also important that we enguard against the possibility of doing too much.”
Mr Pill
said the full effects of recent interest rate increases had yet to be fully
felt across the UK economy.
Thursday’s
rate increase to the highest interest rate level since 2008 was the tenth
consecutive rise by the Bank as it sought to grapple with soaring inflation.
After
the decision, the Governor of the Bank, Andrew Bailey, said that while
inflation remained above 10%, it appeared to have turned a corner.
More
Inflation
has probably peaked, says upbeat bank.
Thursday February 02 2023,
10.30pm, The Times
Inflation has
probably peaked and should fall to 4 per cent by the end of the year, the Bank
of England has said.
Britain is still expected to enter
a recession but it will be shorter and shallower than previously thought, it
added, as interest rates were raised for a tenth consecutive time, to 4 per
cent.
In an upbeat
announcement, Andrew Bailey, the governor of the Bank of England, said there
were signs that inflation had “turned a corner” but he warned against
complacency as it was “very early days”.
Inflation appears to have peaked
at 11.1 per cent in October, the Bank said. It fell to 10.5 per cent by the end
of last year. The Bank thinks it will “fall sharply” in 2023 to as low at
4 per cent by the end of the year after a drop of more than 50 per cent in
natural gas prices since December.
Last month Rishi Sunak pledged that the government
would halve inflation by the end of 2023.
The jobs market will remain
strong, with unemployment peaking at just over 5 per cent rather than the 6.5
per cent the Bank forecast last November. The red-hot labour market is helping
to push up private sector wages, a factor that could keep inflation stubbornly
high in the coming months.
The Bank believes that there will
be a recession, defined by two consecutive quarters of falling growth, but the
economy will contract by less than 1 per cent, better than a 3 per cent
projection made after September’s mini-budget.
Interest rates
were raised to a 15-year high. Britain is still expected to suffer seven years
of lost growth since 2019, only returning to its pre-pandemic size by 2026.
The cost of borrowing was at a
historic low of 0.1 per cent in December 2021, but it has been repeatedly
raised in an attempt to tackle double-digit inflation. The latest decision
increased the rate of interest by 0.5 percentage points, in line with
expectations, from 3.5 per cent. The move will add nearly £50 a month to the average
borrower’s mortgage payment.
The consumer prices index, which
is the main measure of inflation, remains at more than five times the Bank of
England’s 2 per cent target.
More
Inflation has probably peaked, says upbeat Bank |
Business | The Times
You Think the
Global Economy Is Brightening? Beware: The Big Hit Is Yet to Come
02/02/2023Thorsten Polleit
Relief
is spreading among economic analysts and stock market experts. Energy prices
are decreasing noticeably. The energy supply this winter seems secure; in
Europe, government support for consumers and producers is available if needed.
China is turning away from its zero-covid policy, and production is ramping up
again. High goods price inflation is still a major concern for consumers and
producers, but central banks are delivering at least some interest rate hikes
to hopefully reduce currency devaluation. So should we bid farewell to crisis
and recession worries? Unfortunately, no.
Because
there is an overall economic development that is tantamount to a storm but
remains unnamed by many experts and investors. And that is the global
contraction of the real money supply. What does that mean? The real money
supply represents the actual purchasing power of money. For example: You have
ten dollars, and one apple costs one dollar. So with your ten dollars, you can
buy ten apples. If the apple price increases to, say, two dollars per piece,
the purchasing power of the ten dollars falls to five apples. It becomes
obvious that the real money supply is determined by the interplay between the
nominal money supply and the prices of goods.
The
real money supply in an economy can decrease when the nominal money supply goes
down or goods prices rise. This is exactly what is currently happening around
the world. The chart below shows the annual growth rate of the real money
supply in the Organization for Economic Cooperation and Development (OECD) from
1981 to October 2022. The real money supply recently contracted by 7.3 percent
year on year. There has never been anything like this before. What is the
reason?
More
You Think the Global Economy Is Brightening? Beware:
The Big Hit Is Yet to Come | Mises Wire
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.
Long-COVID Mental Health Issues: 2 Main Causes, Low-Cost Treatment, and
Natural Ways to Heal
Feb 2 2023
“If I could take one symptom away from all of [my long-COVID patients], I think that would be depression,” said critical care specialist Dr. Joseph Varon, chief of critical care and the COVID-19 department at the United Memorial Medical Center in Houston, Texas.
Beyond the physical tribulations
and social instability that this condition can bring, long-COVID patients feel
that the one thing not getting adequately addressed is the mental health toll
the disease inflicts.
Long-COVID Mental Problems: 2 Main Causes
1. Physical Symptoms
One thing Varon has observed in
his long-COVID patients is that, though everyone is affected differently, they
are all depressed and anxious as a result of the disease.
The long-COVID symptoms and
physical deterioration are major contributors. Cognitive impairments—colloquially
known as brain fog, fatigue, malaise, and debilitation—can impact a
person’s employment and social well-being, further leading to mental health
problems.
“They get so concerned that their cognitive functions are not [at their] best, and that they have sleep difficulties,” Varon said.
For
people who have been suffering for a long time, the hopeless thoughts that they
may never recover and return to normal life are the most crippling.
More
World
Health Organization - Landscape of COVID-19 candidate vaccines. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines
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 more useful Covid links.
Johns Hopkins Coronavirus
resource centre
https://coronavirus.jhu.edu/map.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, I’ve added this section.
Acid
coating converts regular electrolyzers to split seawater
Loz Blain
February 02, 2023
Green
hydrogen is going to demand a lot of water for electrolysis – nine liters of
pure water for every kilogram of hydrogen. Researchers say they've found a
simple way to use seawater in standard electrolyzers, and that's big news for
clean energy.
An
international team from the University of Adelaide, Australia, Tianjin and
Nankai Universities in China and Kent State University in the US has published
new research claiming that a simple, cheap acid layer over the catalyst in an
electrolyzer allows it to split seawater with "nearly 100 per cent
efficiency," without any pre-treatment other than filtering.
A typical electrolyzer catalyst, says the team, might be made
from cobalt oxide, with chromium oxide on its surface. Seawater would generally
ruin these catalysts via severe erosion due to chlorine ions, or gunk them up
with insoluble precipitations of magnesium and calcium, which build up and
block the electrodes.
But the addition of a
Lewis acid layer on the catalyst, it seems, was able to capture enough
negatively charged hydroxyl anions from the seawater to generate a powerfully
alkaline environment with a pH of 14 around the catalyst, stopping both
chloride attacks on the catalyst and the formation of precipitates on the
electrodes.
“We have split natural
seawater into oxygen and hydrogen with nearly 100 per cent efficiency, to
produce green hydrogen by electrolysis, using a non-precious and cheap catalyst
in a commercial electrolyzer,” said Professor Shizhang Qiao.
---- The team says it's working to scale up its system for
commercial-scale electrolyzers, and looking for industrial partners to take it
into production.
The paper is available in the
journal Nature
Energy.
Sources: University of Adelaide, South China Morning Post
Acid coating
converts regular electrolyzers to split seawater (newatlas.com)
This weekend’s organ music diversion.
Approx. 14 minutes.
F.X.Brixi
Organ Concerto in C major, Vera Hermanova
F.X.Brixi Organ Concerto in C major, Vera Hermanova - YouTube
This
weekend’s chess update. Approx. 12 minutes.
She
Finished Ahead of 6 GMs!
She Finished Ahead of 6 GMs! - YouTube
This
weekend’s science update. Approx. 11 minutes.
James
Webb Space Telescope and the Traveling Salesman Problem
James Webb Space Telescope and the Traveling Salesman Problem - YouTube
A recession will likely put
highly indebted economies under severe stress. Many debtors will no longer be
able to service their debts. Loan defaults increase. As a result, banks become
reluctant to grant new loans and demand repayment of expiring loans. Investor
confidence in debt-ridden economies and financial markets is dwindling. The
result would be a fulminant credit crisis, at least at the scale of the one in
2008/9. Investors fear that their interest and principal payments will not be
made. Credit markets freeze and the unbacked monetary system is headed for
collapse.
The economic pain would be
enormous, and the political pressure on central banks to lower interest rates
again and keep the economy afloat with new credit and more money would be
foreseeable. In the hour of need, governments and the public at large will
likely see the policy of the least evil in increasing the money supply. Even a
sky-high inflation policy becomes acceptable from their point of view to escape
a perceived even greater evil. There are quite a few examples of this tragic
handling of the unbacked paper money system.
You Think the
Global Economy Is Brightening? Beware: The Big Hit Is Yet to Come | Mises Wire
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