Baltic Dry Index. 668 -13 Brent Crude 83.40
Spot Gold 1953 US 2 Year Yield 4.09 -0.12
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 02/02/23 World 675,491,566
Deaths 6,764,989
Interest rates are to asset prices what gravity is
to the apple. When there are low interest rates, there is a very low
gravitational pull on asset prices.
Warren Buffett.
As expected, the US central bank raised their key interest rate yesterday by a quarter of one percent.
In “guidance” afterwards, Fed Chairman Powell said the bank would continue raising its interest rate in 2023, wouldn’t cut its key interest rate in 2023, but if circumstances change in 2023 it might.
The US bond market and the gold market immediately took that as a sign that the Fed had just blinked and was ready to be turned.
And
so the Great Global Interest Rate Jamboree rolls on today to London and
Frankfurt, where the BOE and ECB will both likely follow the Fed’s lead. (Some
at the ECB have called for a half of one percent rate rise, but with Germany
near or entering recession, I think that unlikely.) But both are further behind their respective inflation rates than the Fed, so just might surprise.
The Federal
Reserve raised rates. Chair Powell says it’s ‘premature’ to declare victory
against inflation
UPDATED WED, FEB 1 2023 7:36 PM EST
The Federal Reserve raised rates by 25
basis points, or 0.25 percentage point, as was widely expected. Federal Reserve
Chair Jerome Powell then held a news conference, in which he said that the
economy’s disinflationary process had started. To be sure, Powell added that
it’s premature to declare victors against inflation.
Powell’s focus is the labor market, says Gary
Cohn
Federal Reserve
Chair Jerome Powell made it clear during his press conference that the data the
Fed is closely watching more than anything else is jobs data, said former
Goldman Sachs chief operating officer Gary Cohn.
“He did go back and
forth giving you both sides of the argument,” said Cohn, a former economic
advisor in the Trump administration. “The only thing he kept hanging his hat on
was the labor market. At this point it feels like we are just labor dependent.”
Don’t expect a rate
cut in 2023, Powell says
Jerome Powell said
he doesn’t expect the Fed to cut rates this year, as some major strategists
project.
“Given our outlook,
I don’t see us cutting rates this year, if our outlook comes true,” the Fed
chair said.
Powell also said he
was “not concerned” about the bond market implying one more cut before a pause,
because some market participants are expecting inflation to fall faster than
the Fed does.
“If we do see
inflation coming down much more quickly, that will play into our policy
setting, of course,” Powell said.
Fed meeting leaned
‘slightly dovish,’ investment strategist says
The central bank is
nearing the end of its rate hike campaign and was more dovish this meeting,
according to Charlie Ripley, senior investment strategist for Allianz
Investment Management.
A lack of clarity
on future interest rate moves signals the Fed is nearing the end of is rate
tightening cycle, Ripley said. After hikes end, he said the central bank will
likely “sit tight while the economic data catches up to the policy.”
“The Fed is
essentially speaking out of both sides of the mouth as they signaled
further increases are appropriate, but also acknowledged they will consider the
cumulative amount of tightening in future policy decisions,” he said.
Ripley added that
the slowing pace of current rate hikes to 25 basis points is a “clear sign”
that the central bank is more confident that current economic policy is having
its intended impacts of tightening.
Taken all together,
Ripley said the meeting “tilted slightly dovish.”
Live
Updates: Fed rate hike in February 2023 (cnbc.com)
Asia-Pacific
markets mostly rise as investors digest Fed’s smaller quarter-point hike
UPDATED WED, FEB 1 2023 10:19 PM
EST
Stocks in
the Asia-Pacific traded mostly higher on Thursday as investors digested the U.S.
Federal Reserve’s smaller rate hike of 25 basis points and Fed
Chairman Jerome Powell acknowledged inflation is falling.
Hong Kong’s Hang Seng index rose
0.54% with the Hang Seng tech index rising 1.9%, leading gains in the region.
In mainland China, the Shanghai
Composite also rose 0.14% and the Shenzhen Component rose
0.36%.
South Korea’s Kospi rose
0.5% and the Kosdaq gained 1.48%, as the nation’s consumer price index rose
5.2% in the first month of 2023 on an annualized basis, ticking upward for the
first time in three months, government data showed.
The Korean won stood
at 1,221.18 against the U.S. dollar while the dollar index fell
by a percent to stand at 101.08.
In Japan, the Nikkei 225 traded
0.16% higher while the Topix lost 0.32%. In Australia, the S&P/ASX 200 rose
0.19% and the S&P/NZX 50 in
New Zealand also gained 0.37%.
Investors will also be watching
closely shares of Adani Group companies at India’s market open after Adani
Enterprises called
off its fully subscribed follow-on offering overnight.
On Wall
Street, traders shrugged off the Fed’s
little indication that it may be nearing the end of its hiking
cycle. The S&P 500 gained 1.05% higher, the Nasdaq Composite added 2%, and
the Dow Jones Industrial Average rose 0.02%.
Asia-Pacific markets mostly rise as investors digest Fed's smaller quarter-point hike (cnbc.com)
In
other news, the IMF’s dubious record at
calling the future
Why the IMF could be forced to eat ‘humble pie’ again
1
February 2023.
They call it the "dismal science" for good reason. The supposed oracles of economic forecasting have been forced to eat humble pie on more than one occasion.
Christine Lagarde famously asked if she had to apologise “on my knees” to George Osborne after accusing the former chancellor of “playing with fire” on austerity. “We got it wrong. We acknowledged it,” the then International Monetary Fund managing director said in 2014.
That didn't stop Ms Lagarde from making the same mistake again. In fact, there are many examples of forecasters at the Washington-based International Monetary Fund missing the mark.
Its growth forecasts for the
UK have differed significantly from the actual results in recent years.
Back in July, the Fund
predicted the UK economy would grow by 3.2pc in 2022, an estimate it revised
slightly higher to 3.6pc in October.
Yet on Tuesday, it judged the
economy to have grown by 4.1pc, revealing it had been far too gloomy.
The disparities have been
particularly stark in recent years, with the pandemic prompting huge sways in
GDP.
Two and a half months or so
before the UK’s first lockdown was announced, the forecasters tipped the
economy to grow 1.4pc in 2020. A year later, they estimated it had in fact
faced a 10pc contraction.
Some get
it wrong so often that they actually publish annual post-mortems of their
mistakes.
The Office for Budget Responsibility (OBR), the government's tax
and spending watchdog, is one of them.
It
published its latest mea culpa on Tuesday, admitting that its March 2021
forecast failed to spot stronger inflation and
a more robust post-pandemic recovery that meant more people were in work and
tax receipts and wage growth were higher than expected, dragging even more
people into higher tax bands.
The
forecast, which the watchdog helpfully unpicked in its latest Forecast
Evaluation Report, highlights how small misjudgements can end up leading to big
errors.
It
said higher inflation, which boosted the cash size of the economy and as a
result tax receipts, resulted in a "£108.6bn overestimate of borrowing in
2021-22". These are big numbers.
The
OBR acknowledged that one big mistake it made was underestimating the strength of Britain's jobs market.
Many, including the Bank of England believed that ending the furlough scheme
that subsidised people's wages in 2021 would lead to hundreds of thousands more
people losing their jobs.
That led to
predictions of slower growth, higher unemployment and ultimately the Bank of
England to delay raising interest rates, which many economists recognise today
was a mistake.
More
Why the IMF could be forced to eat ‘humble pie’ again (msn.com)
“The only function of economic forecasting is to make astrology look respectable.”
Ezra Solomon, professor in the Stanford University Graduate School of Business.
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.
Something
a little different today. Today why London thrives on innovation as the EUSSR
lags.
As the EU rehashes old myths of no win-no
fee litigation, London stands to benefit
WEDNESDAY 01 FEBRUARY 2023 5:15 AM
In the EU, there are still many misconceptions
about litigation funding. Here in London we must see it as a way for companies
to manage risks and costs, writes Glenn Newberry
At the end of last year, German MEP Axel Voss
weighed in against the litigation funding industry – and third party disputes
funding – reigniting old debates and myths, many of which had, we thought, been
debunked years ago.
The market for third-party funding for legal cases is huge, and has doubled in the last four years. In economically volatile times, it is a useful lever for businesses looking to take costs and risks off their balance sheets.
The practice is nearly as old as the
legal profession itself. Allowing a third party to bear the costs of a dispute
between others who could otherwise not afford to – in exchange for a commission
– was common in ancient Rome, and lasted in England until the Middle Ages.
However, it was criminalised in 1275 to prevent vexatious claims – a ban that
lasted until the late 1960s. But the ancient laws of “champerty and
maintenance” were also stifling access to justice, and from the 1990s onwards,
it was recognised that provided suitable safeguards were in place, there was no
reason disinterested parties should not pay for legal actions.
This aspect is perhaps at the root of many
misconceptions about litigation funding – for example that it is only for
people who can’t afford to go to court, or for class-action-type cases. It is
also why politicians frequently fear the sector as open to abuse. They envisage
a spectre of wealthy investors and lawyers plotting to control cases, ignore
the client and receive a bonanza payday either way.
In truth, litigation funding has mostly become a
sophisticated way for companies to manage risk and costs by aligning their risk
profile with that of their lawyers. Leveraging third party capital to fund a dispute,
in return for a share of the rewards, means companies can pursue litigation
without downside risk or any upfront outlay. But the options available are
becoming ever-more sophisticated, allowing companies to share risk and reward,
and manage fees – and it is now open, in part, to defendants as well as
claimants.
Formerly investors would look to bear the whole cost, in return for around 3-4 times that as a return – still beneficial to the claimant, but only really applicable to certain matters. Now there are a whole host of options which enable clients, lawyers, investors and insurers, to share risk and reward in a truly collaborative way.
There are Conditional Fee
Arrangements, which allow for the payment of fees, in part or in whole,
depending on the outcome of the dispute – effectively no win, no fee, but with
a higher adjusted payout when successful. Damages Based Agreements mean firms
negotiate for a portion of the damages received if the case is won, no fee in
the event of a loss. These agreements are usually combined with insurance for
the client against being liable for costs if they lose as well. As such,
as a legal solution, these are truly “off book” and derisked.
All of these approaches involve investors, insurers
and lawyers taking on most – or often all – of the downside risk of a
loss in return for increased remuneration in the event of a win. Clearly they
will only do this having undertaken a full risk analysis, and done due
diligence, on the probability of success, which is in the client’s favour.
Stifling a growing market sector, which enables
many companies to better manage their finances, is a poor use of European
parliamentarians’ time. But in the event it does happen, it is all the more
reason to make sure London has a thriving market.
As the EU rehashes
old myths of no win-no fee litigation, London stands to benefit (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.
Merck
Covid Drug Linked to New Virus Mutations, Study Says
February 1 2023
Some researchers worry the drug may create more contagious or health-threatening variations of Covid, which has killed more than 6.8 million people globally over the past three years.
Mutations
linked to the use of Merck’s pill, Lagevrio, have been identified in viral
samples taken from dozens of patients, according to a preprint study from
researchers in the US and at the Francis Crick Institute, Imperial College
London and other UK institutions.
The
drug-linked mutations of the virus haven’t been shown to be more immune-evasive
or lethal yet, according to the study published Friday without peer review on
the medRxiv website. But their very existence highlights what some scientists
say are potential risks in wider use of the drug, which was recently cleared in
China.
Lagevrio works by creating mutations in the Covid genome
that prevent the virus from replicating in the body, reducing the chances it
will cause severe illness. Some scientists had warned before it was authorized
in late 2021 that by virtue of how it works, the drug could give rise to
mutations that could turn out to be problematic. The preprint paper has
reawakened those worries about the Merck drug.
More
Merck Covid Drug Linked to New Virus Mutations, Study Says (msn.com)
How will life change once the COVID-19
emergency ends?
The
declaration of a COVID-19 public health emergency three years ago changed the
lives of millions of Americans by offering increased health care coverage,
beefed-up food assistance and universal access to coronavirus vaccines and
tests
January
31 2023
The
declaration of a COVID-19 public health emergency three years ago changed the
lives of millions of Americans by
offering increased health care coverage, beefed-up food assistance and
universal access to coronavirus vaccines and tests.
Much
of that is now coming to an end, with President Joe Biden's
administration saying it plans to end the emergency declarations on May 11.
Here's
a look at what will stay and what will go once the emergency order is lifted:
COVID-19
TESTS, TREATMENTS AND VACCINES
The
at-home nasal swabs, COVID-19 vaccines as well as their accompanying boosters,
treatments and other products that scientists have developed over the last
three years will still be authorized for emergency use by the Food and Drug
Administration once the public health emergency is over.
But
how much people pay for certain COVID-related products may change.
Insurers
will no longer be required to cover the cost of free at-home COVID-19 tests.
Free
vaccines, however, won't come to an end with the public health emergency.
"There’s
no one right now who cannot get a free vaccine or booster," said Cynthia
Cox, vice president at Kaiser Family Foundation. "Right now all the
vaccines that are being administered are still the ones purchased by the
federal government."
But
the Biden administration has said it is running out of money to buy up vaccines
and Congress has
not budged on the president's requests for more funding.
Many
states expect they can make it through the spring and summer, but there are
questions around what their vaccine supply will look like going into the fall —
when respiratory illness typically start to spike, said Anne Zink, the
president of the The Association of State and Territorial Health Officials.
“We’re
all anxious to find out more about that,” Zink said.
More
How will life
change once the COVID-19 emergency ends? | The Independent
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.
Boeing
to build braced-wing airliner, shooting for 30% efficiency gain
Loz Blain January 30, 2023
With
a US$425-million cash injection from NASA, Boeing will build and test a
full-sized airliner based on its transonic truss-braced wing (TTBW) concept,
using long, thin, strut-braced wings to add lift, reduce drag, and burn an
impressive 30% less fuel.
When you burn as much fuel as an airline does,
a single-digit fuel efficiency tweak adds up to massive savings. Take the drag-reducing
Aeroshark film Swiss Airlines has stuck all over its 12
Boeing 777s – it delivers a 1% efficiency gain, and as a result, over just 12
aircraft, Swiss expects to use 4,800 tonnes less jet fuel every year, saving
nearly half a million dollars per year, per plane at today's prices. That'd be
closer to half a billion a year for an operator like American Airlines, closing
in on 1,000 planes in its fleet, from a 1% efficiency gain.
So you can see how an airliner 30% more
efficient than today's best single-aisle machines could be a bit of a big deal.
We first ran across Boeing's "truss-braced wing" design concept back
in 2010, as a part of the "Subsonic
Ultra Green Aircraft Research" (SUGAR) Volt concept it designed as part of a NASA research program.
The idea takes advantage of the
higher lift and lower drag you get with longer, slimmer, high aspect ratio
wings – the sort you might find on an unpowered glider. A
concept Boeing was testing in 2016, for
example, had wings some 50% wider than comparable standard aircraft.
Structurally, that kind of
thing simply doesn't work without reinforcement. So Boeing's design hangs the
wings from the top of the fuselage, and braces them with long trusses coming up
from the belly of the plane. These too are carefully shaped airfoils, adding
extra lift as well as strength and stability.
As a subsonic concept cruising at around Mach
0.70 to 0.75 (519 to 556 mph, 835 to 895 km/h), Boeing estimated these
braced-wing airliners could burn 50% less fuel than a regular plane. In 2019,
the concept was redesigned
to cruise at the edge of transonic speed, around
Mach 0.8 (593 mph, 955 km/h), and whether because of the added speed or simply
from a better understanding of the aerodynamics, Boeing has walked the efficiency
claims back.
More
Boeing to build
braced-wing airliner, shooting for 30% efficiency gain (newatlas.com)
No comments:
Post a Comment