Baltic Dry Index. 616 +14 Brent Crude 86.13
Spot Gold 1860 US 2 Year Yield 4.52 +0.02
Coronavirus
Cases 02/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 14/02/23 World 677,746,166
Deaths 6,783,450
“When the music stops, in terms of liquidity, things will be
complicated. But as long as the music is playing, you’ve got to get up and
dance. We’re still dancing,” he said in an interview with the FT in Japan.
Chuck Prince, former CEO of Citigroup who danced himself out of
his job in the Great Recession.
In the stock casinos, in theory today’s US inflation numbers could have a big impact. A higher than expected number might mean higher US interest rates for longer, driving stock prices lower.
But I suspect that this is fully priced into current stock prices and that any surprise impact in the stock casinos will come to the upside if today’s inflation release comes in as expected or better than expected.
In reality, I doubt that one month’s
inflation number will change very much at the US central bank. Besides, the
Bureau of Lying Labor Statistics is doctoring the way it complies the
inflation statistics, (plus revisions.) China’s bean counters would be proud.
What happens next in food and energy price inflation, plus stopping a rising global wage price spiral, will most likely drive the stock casino action at least out through mid-year.
In a foolhardy move, the USA announced yet another crude oil release from their Strategic Petroleum Reserve. What could possibly go wrong?
Inflation report
due Tuesday has the potential to deliver some bad news
Just as Federal Reserve officials have grown
optimistic that inflation is cooling, news could come countering that
narrative.
All market eyes Tuesday will be on
the release of the Labor Department’s consumer price index, a widely followed
inflation gauge that measures the costs for dozens of goods and services
spanning the economy.
The CPI was trending lower as 2022
came to close. But it looks like 2023 will show that inflation was strong —
perhaps even stronger than Wall Street expectations.
“We’ve gotten surprises on the soft
side for the last three months. It wouldn’t be at all surprising if we get
surprise on the hot side in January,” said Mark Zandi, chief economist at
Moody’s Analytics.
Economists are expecting that CPI
will show a 0.4% increase in January, which would translate into 6.2% annual
growth, according to Dow Jones. Excluding food and energy, so-called core CPI
is projected to rise 0.3% and 5.5%, respectively.
However, there’s some indication
the number could be even higher.
The Cleveland Fed’s “Nowcast” tracker of CPI
components is pointing toward inflation growth of 0.65% on a monthly basis and
6.5% year over year. On the core, the outlook is for 0.46% and 5.6%.
The Fed model is based on what its
authors say are fewer variables than the CPI report while utilizing more
real-time data rather than the backward-looking numbers often found in
government reports. Over time, the Cleveland Fed says its methodology
outperforms other high-profile forecasters.
Impact on interest
rates
If the reading is
hotter than expected, there are potential important investing implications.
Fed policymakers
are watching the CPI and a host of other data points for clues on whether a
series of eight
interest rate increases is having the desired effect of cooling
inflation that hit a 41-year high last summer. If it turns out that monetary
tightening isn’t working, it could force the Fed into a more aggressive
posture.
Zandi said,
however, that it’s dangerous to make too much of individual reports.
“We shouldn’t get
fixated too much on any month-to-month movements,” he said. “Generally, looking
through month-to-month volatility we should see continued decline in
year-over-year growth.”
Indeed, the
CPI peaked out around 9% in June 2022 on an annual basis but
has been on the decline since, falling to 6.4% in December.
But food prices
have been stubborn, still up more than 10% from a year ago in December.
Gasoline prices also have reversed course, with prices at the pump up about 30
cents a gallon in January, according to AAA.
Even the initially
reported 0.1% decline in the headline CPI for December has been revised up, and
is now showing a gain of 0.1%, according to revisions released Friday.
----Markets currently expect the Fed to raise its
benchmark interest rate two more times from its current target range of
4.5%-4.75%. That would translate to another half a percentage point, or 50
basis points. Market pricing also indicates that Fed will stop at a “terminal
rate” of 5.18%.
Changes in the CPI report
There are other
issues that could cast a cloud over the report, as the Bureau of Labor Statistics is changing the way it’s
compiling the report.
One significant
alteration is that it is now weighting prices on a one-year comparison rather
than the two-year duration it had previously used.
That has resulted
in a change in how much influence the various components will have — the
weighting for both food and energy prices, for instance, will have an
incrementally smaller influence on the headline CPI number, while housing will
have a slightly heavier weighting.
In addition,
shelter will have a heavier influence, going from about a 33% weight to 34.4%. The
BLS also will give heavier price weighting to unattached rental properties, as
opposed to apartments.
The change in
weightings are done to reflect consumer spending patterns so the CPI provides a
more accurate cost-of-living picture.
Inflation
report due Tuesday has the potential to deliver some bad news (cnbc.com)
Oil
prices fall on U.S. crude reserve release
February 14 2023
(Reuters) -Oil prices fell on Tuesday
after the U.S. government said it would release more crude from its Strategic
Petroleum Reserve (SPR) as mandated by lawmakers, defying expectations from
some traders that the release could be cancelled or delayed.
Brent crude futures fell by 70 cents,
or 0.81%, to $85.91 per barrel by 0256 GMT, while U.S. crude futures fell by 93
cents, or 1.16%, to $79.21 per barrel.
The U.S. Department of Energy (DOE)
said after the previous session ended that it would sell 26 million barrels of
oil from the SPR, a release that would likely push the reserve to its lowest
level since 1983.
"Energy traders were expecting to hear
news about refilling the SPR and not tapping them for more supplies,"
Edward Moya, an analyst at OANDA said.
The DOE had considered cancelling the
fiscal year 2023 sale after U.S. President Joe Biden's administration last year
sold a record 180 million barrels from the reserve. But that would have
required Congress to act to change the mandate.
Traders will be looking for clues
from Tuesday's crucial U.S. consumer price index (CPI) data for January. U.S.
monthly consumer prices rose in the previous two months instead of falling as
previously estimated, raising the risk of higher inflation readings in the
months ahead.
"Any higher-than-expected data
may cause a renewed sell-off in risk assets, including oil," Tina Teng, an
analyst at CMC Markets said.
Supply concerns also eased after the
Energy Information Administration said it expected record March production from
the seven biggest U.S. shale basins. Elsewhere, crude exports resumed at a key
Turkish port after a devastating earthquake rocked the region.
More
Oil
prices fall on U.S. crude reserve release (msn.com)
Japan reportedly
nominates Ueda as next central bank chief; Asia markets mixed
UPDATED TUE, FEB 14 2023 12:32
EST
Asia-Pacific markets traded mixed on Tuesday as
Japan reportedly announced its nomination of Kazuo Ueda as the new Bank of
Japan governor, according to Reuters. He is set to succeed
incumbent head Haruhiko Kuroda, if confirmed by the country’s parliament.
Following the announcement, the Nikkei 225 rose
0.59% and the Topix climbed 0.68%, while the Japanese yen strengthened
to 132.82 against the U.S. dollar. The yield on the 10-year Japanese
government bond remained
at the upper ceiling of the central bank’s tolerance range of 0.5%.
South Korea’s Kospi traded 0.5%
higher, while the Kosdaq also gained 0.83%. In Australia, the S&P/ASX 200 rose
0.18% to close the day at 7430.9 as investors digested the results of National Australia Bank’s business confidence
survey.
The Hang Seng index erased
earlier gains and traded fractionally lower, and the Hang Seng Tech index also
fell 0.55%. In mainland China, the Shanghai Composite climbed
marginally and the Shenzhen
Component dropped 0.54%.
Singapore is set to release its
budget for 2023 later today, and India’s consumer price index rose to 6.5% on
an annualized basis.
Overnight on Wall
Street, major indexes closed higher, regaining
their footing after the S&P 500 and Nasdaq Composite suffered
their worst weekly declines in nearly two months.
Japan
reportedly nominates Ueda as next central bank chief; Asia markets mixed
(cnbc.com)
Next, slightly better news for Pakistan. But realistically, how much time, food and
energy will the IMF’s release of the frozen $1.1 billion buy?
IMF,
Pakistan to resume talks on unlocking bailout funds, official says
February 13, 2023 7:57 AM GMT
ISLAMABAD, Feb 13
(Reuters) - Talks between the International Monetary Fund and Pakistan will
resume virtually on Monday, a Pakistani official said, as the two sides look to
reach a deal to unlock funding critical to keep the cash-strapped south Asian
country afloat.
The two could not reach a deal last
week and a visiting IMF delegation departed Islamabad after 10 days of talks,
but said negotiations would continue. Pakistan is in dire need of funds as it
battles a wrenching economic crisis.
"Duration
(of the talks) cannot be confirmed but we intend to wrap these up at the
soonest," Finance Secretary Hamed Yaqoob Sheikh told Reuters in a text
message, confirming that talks were resuming on Monday.
Talks centre
around reaching an agreement on a reforms agenda under the country's $6.5
billion bailout programme, which it entered in 2019. An agreement on the ninth
review of the programme would release over $1.1 billion.
Pakistan's
foreign exchange reserves held by the central bank have fallen to $2.9 billion,
barely enough to cover three weeks of imports. A resumption of the IMF
programme would also unlock other avenues of funding for Pakistan.
An agreement, if
reached, would still need to be cleared by the IMF board.
IMF, Pakistan to resume talks on unlocking bailout funds, official says | Reuters
Finally, in cryptocurrency news, yet another
stablecoin is facing extinction.
Binance stablecoin backer
ordered to stop issuing token - Binance CEO
LONDON (Reuters) - New York's chief
financial regulator has ordered Paxos, the company behind the stablecoin of
major crypto exchange Binance, to stop issuing the token, Paxos said in a
statement on Monday.
The Binance USD (BUSD) stablecoin,
one of the world's biggest, is issued and redeemed by New York-based Paxos
Trust Company, both of which are regulated by the New York Department of
Financial Services.
The token, which is designed to keep
a steady value and is widely used by crypto traders at Binance, is backed by
reserves of ordinary cash and U.S. Treasuries, according to Paxos' website.
Paxos said it would stop issuing new
BUSD as of Feb. 21 "as directed by and working in close coordination with
the New York Department of Financial Services". Paxos will continue to
support and redeem pre-existing BUSD until "at least February 2024, the
statement said.
Binance CEO Changpeng Zhao wrote in a
series of Twitter comments: "We were informed by Paxos they have been
directed to cease minting new BUSD by the New York Department of Financial
Services (NYDFS)."
----Binance USD is the seventh-largest cryptocurrency, with
more than $16 billion in circulation, according to market tracker CoinGecko.
Zhao said Binance would "continue to support BUSD for the foreseeable future"
and that he saw users "migrating to other stablecoins over time."
The NYDFS clampdown, first reported
by the Wall Street Journal, comes amid a wider crackdown on cryptocurrencies
and Binance by U.S. regulators. The Justice Department is investigating Binance
for suspected money laundering and sanctions violations, Reuters has previously
reported.
The WSJ, citing unnamed sources,
reported on Sunday that the Securities and Exchange Commission has told Paxos
it plans to sue the company, alleging that Binance USD is an unregistered
security.
The SEC also did not immediately respond
to a request for comment.
"'IF' BUSD is ruled as a
security by the courts, it will have profound impacts on how the crypto
industry will develop (or not develop) in the jurisdictions where it is ruled
as such," Zhao wrote on Twitter. He said he had no information on the
lawsuit.
Binance stablecoin
backer ordered to stop issuing token - Binance CEO (msn.com)
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.
Pub
insolvencies jump 83 per cent as rising energy bills force them to shut up shop
MONDAY 13 FEBRUARY 2023 7:00 AM
Britain’s pubs are at “breaking point”, hospitality
chiefs have warned, after new figures reveal that the number of pub and bar
insolvencies has risen 83 per cent in the last year.
According to data published by accountancy firm UHY
Hacker Young, some 512 pub and bar companies went bust in 2022, up from 280 the
previous year – with the firm citing inflation and rising energy bills as the
key reasons for closures.
Kate Nicholls, chief executive of UKHospitality,
told City A.M. that the scale of insolvencies is unfortunately
reflective of the “enormous challenges” facing hospitality, and many pubs are
now at “breaking point”.
“Soaring energy costs, labour shortages, record
food and drink inflation, industrial action and debt from pandemic loans, to
name a few, will eventually deal a fatal blow to businesses, and we’re seeing
that in these figures,” she said.
It comes as the government revealed it is set to
reduce the amount of relief it provides businesses and public sector
organisations in relation to energy bills in April.
The current Energy Bill Relief Scheme, which was
announced in September, has provided £18bn to businesses to help with soaring
costs.
However, this support package will now be replaced
with the Energy Bills Discount Scheme which will see the amount reduced to
£5.5bn.
“The spiralling cost of energy has been our members’ number one concern for close to a year now and remains so,” Emma McClarkin, chief executive, of the British Beer and Pub Association, told City A.M.
“As this data
demonstrates, there is no doubt that energy costs are causing businesses to
fail – people simply cannot afford to make ends meet and are left with no
choice but to shut up shop meaning a community loses its pub or brewery, and
the jobs and livelihoods that go with it, for good,” McClarkin said.
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.
Booster Shots May Trigger Stroke
Incidents, According to CDC and FDA
An Overview of Risk
and Prevention
Feb 11 2023
In addition to cardiac events,
another life-threatening side effect has been associated with the Pfizer-BioNTech
vaccine. When is the risk period? Does the flu shot play any role in these
events? What actions should we take to better protect ourselves?
Summary of Key Facts
·
An
increased risk of stroke events has
been identified with the Pfizer COVID-19 bivalent vaccine, according to a
joint statement from the Centers for Disease Control and Prevention (CDC) and
the Food and Drug Administration (FDA).
·
The
onset time in people aged 65 years and older was 1–21 days after the booster,
with a significant cluster of events observed 11–21 days after the booster.
·
Sixty-four
percent had received the flu vaccine on the same day as the COVID-19 booster.
·
The
bivalent booster contains the code of the spike protein, contributing to the
increased risk of blood clots. High-risk people should avoid the boosters.
·
Solution: Remember the five
“suddens” of stroke warning signs.
·
Advice
on preventing other risk factors of stroke is also provided in this paper.
On Jan. 13, 2023, the FDA and CDC
issued a joint statement that a new “safety signal” for
ischemic stroke had been detected in one of the agency’s vaccine safety
surveillance systems.
The statement read, in part: “CDC’s Vaccine Safety Datalink (VSD),
a near real-time surveillance system, met the statistical criteria to prompt
additional investigation into whether there was a safety concern for ischemic
stroke in people ages 65 and older who received the Pfizer-BioNTech COVID-19
vaccine bivalent.”
The VSD system monitors the electronic health records of 12.5 million Americans served by nine integrated health systems.
The CDC stated that no other safety databases had detected this signal
(including the Medicare and Veterans Affairs data sets). Pfizer released a
statement that it had not detected this signal in its databases, and no other
countries have found a similar signal in their monitoring systems.
The clot risk appears to be greater on days 11–21 after
receiving the booster, especially for those who received a high-dose or adjuvant flu vaccine on the same day.
More
Booster Shots May
Trigger Stroke Incidents, According to CDC and FDA (theepochtimes.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.
Solar power: Glass bricks and
other solar inventions
11 Feb 202311
February 2023 Last updated
at 06:44
A British company has designed a new kind of glass brick
that can create electricity using solar power.
Solar power uses the energy of the Sun to generate
electricity.
The brick can be used to replace windows or other glass in
office blocks, buildings and even bus stops.
The inventors at Build Solar think they look better than
solar panels and take up less space, so could be an eco friendly alternative to
current building materials.
The company has recently been awarded money from the
government to help them develop the solar bricks.
It's comes as part of the government's attempt to cut
emissions to 'net zero' by the year 2050.
The company says buildings take up nearly half of the
energy the world uses, so the solar bricks could help to offset some of that.
We thought we'd check out some other solar technology that
could be used in the future...
Another company, called Ocean Sun, thinks one of the ways
to make space for big solar panels is to put them out on the ocean.
Until they came along people thought waves would damage
floating solar panels.
But they came up with a floating platform with flexible
panels to try and solve that problem.
More
Solar power: Glass bricks and other solar inventions -
CBBC Newsround
Interest rates are the most important prices in the economy,
according to Nobel laureate F.A. Hayek, because they reflect the collective
time preference of individuals to consume either now or later. Accordingly,
interest rates co-ordinate allocation of capital across the economy by
signalling to businesses whether they should invest. Distortions in interest
rates can cause “clusters of errors” in which large swathes of businesses
unwittingly miscalculate at the same time.
Hayek observed that interest rate stimulus interfered with
economic calculations, causing managers to invest in projects that would not
otherwise have appeared profitable. Losses can subsequently materialise as
customer demand fails to meet forecasts that were, in retrospect, optimistic.
Long-term projects are highly sensitive to interest rates and are therefore more
susceptible to such distortions. Pension obligations and long-term,
capital-intensive projects are at high risk of miscalculation based on
artificially low rates.
Caitlin Long August 11, 2010
https://www.ft.com/content/2838c142-a560-11df-a5b7-00144feabdc0
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