Trust Me, I’m A Central Bankster!

 Baltic Dry Index. 1489  +05          Brent Crude 75.02

Spot Gold 1972                 US 2 Year Yield 3.76  unch

Coronavirus Cases 01/04/20 World 1,000,000

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Deaths 6,826,925

A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873

Will the US and European banking sectors start to stabilise, beginning today? This week? Next month?

No one knows, of course, but that is the big hope behind of the soothing, oily words coming out of banking regulators, politicians and the banksters themselves.

My guess, stability returns this week, but not for long.

The drip, drip, drip of deposit flight from small banks to large will not reverse.

If a strategically important bank like Credit Suisse can blow up and Deutsche Bank trade itself into sky high Credit Default Swaps, how likely is it that they were the only majors covering up problems? Minors?

How many more SVBs to come over the summer in the USA?

How many banks are likely to fail in the next recession?

So a fragile stability of sorts will likely emerge, but with almost no one trusting anyone, despite all the oily words of reassurance, resilience and “trust me, I’m a central bankster.”

 

Asia-Pacific markets trade mixed as banking sector stress lingers

UPDATED SUN, MAR 26 2023 11:25 PM EDT

Asia-Pacific markets were mixed on Monday as investors continue to assess the impact of the banking troubles in the U.S and Europe. Deutsche Bank ended the week seeing a selloff of its U.S.-listed shares, after the German lender’s credit default swaps jumped, adding onto lingering fears of contagion from turmoil seen in banking sector.

Hong Kong’s Hang Seng index led losses in the region, dipping 1.73% and the Hang Seng Tech index falling 2.85%. In mainland China, the Shanghai Composite fell 0.6%, and the Shenzhen Component lost 0.15%.

In Australia, the S&P/ASX 200 rose 0.15%, while Japan’s Nikkei 225 also gained 0.31% and the Topix climbed 0.41%. South Korea’s Kospi and Kosdaq fell 0.36% and 0.08% respectively.

Wall Street ended its session on Friday with all three major indices higher to record a winning week, with Dow Jones Industrial Average gaining 1.2% week-to-date, while the S&P 500 and Nasdaq Composite climbed 1.4% and 1.7%, respectively.

Asia-Pacific markets trade mixed as banking sector stress lingers (cnbc.com)

 

Stock futures are up as Wall Street looks to build on winning week: Live updates

UPDATED SUN, MAR 26 2023 8:20 PM EDT

Stock futures edged higher Sunday evening as Wall Street came off a winning week and investors continued to follow the troubling bank sector.

Futures tied to the Dow Jones Industrial Average added 132 points, or 0.4%. S&P 500 futures gained 0.5%, while Nasdaq-100 futures advanced 0.4%.

The moves come after Wall Street capped off a winning week despite volatility related to the Federal Reserve’s latest interest rate hike and the ongoing bank crisis. The Nasdaq Composite led the major indexes upward with a 1.7% advance. The S&P 500 finished the week up 1.4%, while the Dow added 1.2%.

The central bank announced a quarter percentage point interest rate hike — which was largely in line with Wall Street expectations — while hinting that an end to interest rate increases could be on the horizon.

The health of the U.S. banking system also weighed on investors over the course of the week, with a particular focus on First Republic, PacWest and other regional financial institutions. CNBC reported over the weekend that the deposit outflow from small banks to industry giants like JPMorgan Chase and Wells Fargo has slowed in recent days.

Meanwhile, Bloomberg reported that U.S. authorities were considering expanding an emergency lending program for banks, which could give First Republic more time to shore up its liquidity. First Republic ended last week down 46.3% as investors contemplated if the plan from a group of banks to deposit $30 billion would be enough to bolster its balance sheet.

Fed Chair Jerome Powell and Treasury Secretary Janet Yellen aimed to assure investors that the U.S. banking system remained stable and supported in commentary delivered over the course of the week. That helped ease investors’ fears, in turn allowing the SPDR S&P Regional Banking ETF (KRE) and broader SPDR S&P Bank ETF to finish the week 0.2% and 0.4% higher, respectively, after selloffs in the preceding weeks. But both ETFs are still down more than 25% since March began.

In addition to First Republic, investors sold off U.S.-listed shares of Deutsche Bank after the German lender’s credit default swaps shot up, leaving the stock down 5.5% for the week. The news reignited concerns over the health of the European banking system that started with UBS’ acquisition of Credit Suisse earlier this month.

More

Stock market today: Live updates (cnbc.com)

ANZ CEO: Banking turmoil has potential to trigger financial crisis

March 27, 2023 5:25 AM GMT+1

SYDNEY, March 27 (Reuters) - Australia and New Zealand Banking Group's (ANZ.AX) CEO said on Monday the latest turmoil in the global banking system had the potential to trigger a financial crisis though it was early to predict it could bring one similar to that in 2008.

Authorities around the world are on high alert for the fallout from the recent turmoil at banks following the collapse of Silicon Valley Bank (SVB) and Signature Bank (SBNY.O) in the U.S. and the emergency takeover of Credit Suisse.

"It's a crisis for some obviously, but is it a financial crisis, who knows? Does it have the potential to be one? Yes, it does have the potential to be one," CEO Shayne Elliott said in an interview on the bank's website.

But he said it was premature to assume the current condition could result in "another GFC", referring to the global financial crisis around 15 years ago that plunged the world's major advanced economies into their worst recession since the Great Depression in the 1930s.

Australian banks did not suffer as much as those in the U.S. and Britain during the 2008 crisis, thanks in part to tighter lending standards and a more resilient home economy.

"This is a different issue. This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties," Elliott, the top executive at the country's no.4 lender, said.

Australia's banking regulator, soon after the collapse of startup-focused lender SVB, flagged it had intensified supervision of local banks.

Global regulators have acted much quicker to support banks this time, having learned lessons from the prior crises, Elliott said.

"Having said all that, it's clearly not over. I don't think you can sit here and say, 'Well, that's all done, Silicon Valley Bank and Credit Suisse and, you know, life will go back to normal'. These things tend to roll through over a long period of time."

More

ANZ CEO: Banking turmoil has potential to trigger financial crisis | Reuters

IMF says risks to financial stability have increased, calls for vigilance

March 26, 2023 6:18 AM GMT+1

BEIJING, March 26 (Reuters) - International Monetary Fund chief Kristalina Georgieva said on Sunday that risks to financial stability have increased and called for continued vigilance although actions by advanced economies have calmed market stress.

The IMF managing director reiterated her view that 2023 would be another challenging year, with global growth slowing to below 3% due to scarring from the pandemic, the war in Ukraine and monetary tightening.

Even with a better outlook for 2024, global growth will remain well below its historic average of 3.8% and the overall outlook remained weak, she said at the China Development Forum.

The IMF, which has predicted global growth of 2.9% this year, is slated to release new forecasts next month.

Georgieva said policymakers in advanced economies had responded decisively to financial stability risks in the wake of bank collapses but even so vigilance was needed.

"So, we continue to monitor developments closely and are assessing potential implications for the global economic outlook and global financial stability," she said, adding that the IMF was paying close attention to the most vulnerable countries, particularly low-income countries with high levels of debt.

She also warned that geo-economic fragmentation could split the world into rival economic blocs, resulting in "a dangerous division that would leave everyone poorer and less secure."

Georgieva said China's strong economic rebound, with projected GDP growth of 5.2% in 2023, offered some hope for the world economy, with China expected to account for around one third of global growth in 2023.

The IMF estimates that every 1 percentage point increase in GDP growth in China results in a 0.3 percentage point rise in growth in other Asian economies, she said.

More

IMF says risks to financial stability have increased, calls for vigilance | Reuters

 

US mulls more support for banks while giving First Republic time - Bloomberg News

March 26, 2023 12:42 AM GMT

March 25 (Reuters) - U.S. authorities are considering the expansion of an emergency lending facility that would offer banks more support, in an effort that could give First Republic Bank (FRC.N) more time to shore up its balance sheet, Bloomberg News reported on Saturday.

All deliberations are at an early stage and an expansion of the Federal Reserve's emergency lending program is one of the many considerations by officials to support the failing lender, the report said, citing people with knowledge of the situation.

While any changes to the Fed's liquidity offerings would apply to all eligible users, the adjustments could be designed to ensure that First Republic benefits from the changes, Bloomberg said.

Representatives for the U.S. Treasury, Federal Deposit Insurance Corporation (FDIC) and First Republic Bank declined to comment. The Federal Reserve did not immediately respond to a Reuters request for a comment.

U.S. banks have sought record amounts of emergency liquidity from the Federal Reserve in the past month after the failures of Silicon Valley Bank and Signature Bank.

Earlier this month, U.S. President Joe Biden's economic team worked with regulators to set up measures to support the banking system, including setting up a new facility to give banks access to emergency funds and making it easier for banks to borrow from the Fed in emergencies.

US mulls more support for banks while giving First Republic time - Bloomberg News | Reuters

How badly the banking crisis could hit Britain

26 March 2023

----While international markets appeared to cool at one point last week, a surge in investors betting that Deutsche Bank could default on its debts on Friday sparked fears that the crisis will rumble on.

Central bankers also compounded issues for the sector by prioritising the fight against inflation over concerns for the banking sector by raising rates yet again.

Despite the turbulence, Andrew Bailey appeared sanguine. 

The Governor of the Bank of England derided Janet Yellen’s interventionism, saying the US’ blanket guarantee of all SVB deposits increased the risk of “moral hazard” in the industry, as he took a victory lap for orchestrating a quick-fire sale of SVB UK’s arm to HSBC.

So far, UK lenders appear to have been largely immune to the wider crisis engulfing the global banking industry. But could there be trouble ahead and, if so, where?

Regulations introduced in the wake of the financial crisis mean that Britain’s biggest banks are much better capitalised than they were pre-2008, and Bailey has been at pains to reassure the market that the system remains “safe and sound”.

However, Gary Greenwood, a banking analyst at Shore Capital, does not think the UK is out of the woods just yet.

“It would be foolish to suggest that the UK banks should be totally unaffected by recent events,” he says. 

“Nervousness in the market has clearly increased.”

Greenwood believes that some smaller lenders, both in the UK and abroad, could be more susceptible to market turbulence than their larger peers.

One notable phenomenon in Britain’s banking industry in recent years has been the rapid growth of upstart digital banks, as London attempted to position itself as a global fintech hub.

Companies such as Starling, Monzo, Revolut, Atom Bank and Zopa have all grown from nothing to service millions of customers in the space of a few years. 

There is no suggestion that any of these companies have faced any issues in recent weeks.

Greenwood says: “It is possible that depositors may look to find a safer home if they fear broader contagion risk.

“This could put some pressure on smaller banks, particularly those funded by instant access deposits or with a high proportion of uninsured deposits, which may be perceived as being at risk in the current climate.”

However, he adds that this is likely to be more of a risk in the US after Donald Trump rolled back parts of the crisis-era Dodd-Frank Act during his time in the White House, loosening regulation on lenders with assets below $250bn.

More

How badly the banking crisis could hit Britain (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.

Fed’s Preferred Inflation Gauge Seen Staying Elevated

Sun, 26 March 2023 at 7:23 am BST

(Bloomberg) -- The Federal Reserve’s preferred measure of underlying price pressures probably remained elevated in February, keeping officials in a precarious spot as they seek to balance inflation-fighting resolve and stress on the banking system.

The US personal consumption expenditures price index, excluding food and fuel, is forecast to rise 0.4% from a month earlier, according to the Bloomberg survey median. That would follow the largest advance since June.

Compared with February 2022, the core inflation gauge is seen up 4.7%, while the overall measure is projected to post a 5.1% advance — both more than double the Fed’s goal.

Policy makers on Wednesday raised their benchmark interest rate for the ninth straight meeting, to the highest since 2007, while stressing that their bid to tamp down inflation isn’t expected to deepen a nascent banking crisis. Still, rising borrowing costs risk adding to pressures on the financial system that could tip the economy into a recession.

The government’s data on Friday are also expected to show inflation-adjusted personal spending declined in February after surging a month earlier.

----The income and spending report takes top billing in a subdued week for US economic releases that includes readings on consumer confidence, home prices, and contract signings for purchases of previously-owned houses.

Investors will likely pay closer attention to Fed officials this coming week in hopes of gauging the appetite for further rate hikes. Fed Governor Philip Jefferson will discuss monetary policy at event on Monday, followed later in the week by speeches from Boston Fed President Susan Collins, Richmond Fed President Tom Barkin, and governors Christopher Waller and Lisa Cook.

Fed Vice Chair for Supervision Michael Barr is scheduled to testify at separate hearings of the Senate Banking Committee and the House Financial Services Committee on recent bank failures.

More

Fed’s Preferred Inflation Gauge Seen Staying Elevated (yahoo.com)

Cargo theft, led by food and beverage, is surging across the U.S.

PUBLISHED SAT, MAR 25 2023 9:51 AM EDT UPDATED SAT, MAR 25 2023 3:35 PM EDT

Food and beverage coming into port or in a warehouse is No. 1 on the list of products being targeted by freight thieves who are increasing their criminal activity across the national supply chain. It’s a sign of the economic times, and adding further pressure to the high prices faced by consumers during an elevated inflation environment.

“During the financial downturn in 2008, we saw a theft shift towards food and beverage where it stayed in that spot until the end of 2019,” says Scott Cornell, transportation lead and crime and theft specialist at insurance provider Travelers. “In 2020, we saw the target move to household goods, because we were all at home. In 2021, electronic theft was high due to some shortages as a result of all the working and schooling from home.”

Food inflation has moderated, but remains up almost 10% year over year, according to the latest CPI data from February, released earlier this month. Meat, poultry, fish and egg prices fell for the first time since December 2021 in February, but egg prices, a prime example of what is historically volatile food inflation, remain up 55.4% from a year ago.

While household goods and electronics are still high on the list of cargo thieves, “Now, we’re starting to see food and beverage commodities pull up front,” Cornell said.

According to CargoNet’s latest theft report through February, there was an almost 50% increase year over year in beverage and food cargo theft. January had also posted a 50% increase in this theft category. The average value of the theft is $214,0000 per load.

According to the FBI, cargo theft is estimated to cost trucking companies and retailers at least $15 billion to $30 billion a year. It is adding to the supply chain disruptions that have fueled inflation.

More

Cargo theft, led by food and beverage, is surging across the U.S. (cnbc.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

Many CDC Blunders Exaggerated Severity of COVID-19: Study

By Zachary Stieber  March 24, 2023 Updated: March 24, 2023

The U.S. Centers for Disease Control and Prevention (CDC) made at least 25 statistical or numerical errors during the COVID-19 pandemic, and the overwhelming majority exaggerated the severity of the pandemic, according to a new study.

Researchers who have been tracking CDC errors compiled 25 instances where the agency offered demonstrably false information. For each instance, they analyzed whether the error exaggerated or downplayed the severity of COVID-19.

Of the 25 instances, 20 exaggerated the severity, the researchers reported in the study, which was published ahead of peer review on March 23.

“The CDC has expressed significant concern about COVID-19 misinformation. In order for the CDC to be a credible source of information, they must improve the accuracy of the data they provide,” the authors wrote.

The CDC did not respond to a request for comment.

Most Errors Involved Children

Most of the errors were about COVID-19’s impact on children.

In mid-2021, for instance, the CDC claimed that 4 percent of the deaths attributed to COVID-19 were kids. The actual percentage was 0.04 percent. The CDC eventually corrected the misinformation, months after being alerted to the issue.

CDC Director Dr. Rochelle Walensky falsely told a White House press briefing in October 2021 that there had been 745 COVID-19 deaths in children, but the actual number, based on CDC death certificate analysis, was 558.

Walensky and other CDC officials also falsely said in 2022 that COVID-19 was a top five cause of death for children, citing a study that gathered CDC data instead of looking at the data directly. The officials have not corrected the false claims.

Other errors include the CDC claiming in 2022 that pediatric COVID-19 hospitalizations were “increasing again” when they’d actually peaked two weeks earlier; CDC officials in 2023 including deaths among infants younger than 6 months old when reporting COVID-19 deaths among children; and Walensky on Feb. 9, 2023, exaggerating the pediatric death toll before Congress.

“These errors suggest the CDC consistently exaggerates the impact of COVID-19 on children,” the authors of the study said.

‘Horrific’

Dr. Vinay Prasad, an epidemiologist at the University of California, San Francisco and the paper’s corresponding author, said that the errors identified “are not errors of interpretation or preference but demonstrably false numbers.”

“Horrific that the CDC has made these errors and in some cases still not issued correction, and even repeated the errors,” he wrote on Twitter.

Limitations of the paper include it not being an exhaustive review of CDC studies and statements.

More

Many CDC Blunders Exaggerated Severity of COVID-19: Study (theepochtimes.com)

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.

Europe’s big battery hope Northvolt in talks to secure over $5bn in funding

Swedish start-up has become the main European challenger to the big Asian companies that dominate the industry

26 March 2023

Swedish start-up Northvolt is in talks to secure more than $5bn of financing to pursue its goal of becoming Europe’s biggest battery manufacturer.

The company is negotiating with a number of banks to raise the debt financing and an agreement could be reached later this year, according to people with knowledge of the details. Northvolt declined to comment.

Northvolt was founded in 2017 and has become the main European challenger to the big Asian producers that dominate the industry such as CATL of China and South Korea’s LG.

The Swedish company produced the first battery from its European factory just south of the Arctic Circle in Sweden at the end of 2021. The plant is planned to eventually cover space equivalent to 70 football pitches.

Northvolt is also about to begin construction of a second “gigafactory” jointly with Volvo Cars in Gothenburg and will decide next month whether to build a third plant in Germany or in the US. A large-scale recycling facility next to its first plant in Skellefteå in northern Sweden will begin

The group, which is talking to banks about a stock market listing as soon as next year at a valuation of about $20bn, has raised more equity financing than any other unlisted start-up in Europe.

But its current fundraising would be a significant step up. It raised a $1.1bn convertible note in July, taking the total amount of debt and equity financing it has raised since its founding to $8bn. Executives say it is constantly talking to investors about raising more for its future projects.

The Swedish group, whose biggest shareholders include Volkswagen, Goldman Sachs, BMW and Baillie Gifford, is one of the companies on the front lines of an transatlantic subsidy battle.

It had previously announced it would build its next gigafactory in Germany but in recent months has said it is considering whether to postpone that and build in the US instead, attracted by subsidies provided by the country’s Inflation Reduction Act. Northvolt told policymakers in Brussels that US subsidies were worth at least €8bn per factory. VW earlier this month accelerated plans for a plant in North America ahead of one in eastern Europe

Northvolt’s chief executive Peter Carlsson has previously told the FT that the IRA was “moving momentum a lot from Europe to the US”, with not just Northvolt but also Asian battery companies and suppliers considering moving investments.

The success of Northvolt contrasts with the UK’s battery manufacturing hopeful Britishvolt, which collapsed into administration this year after running out of funding.

Europe’s big battery hope Northvolt in talks to secure over $5bn in funding | Financial Times (ft.com)

Again, it may be said that we need not be alarmed at the magnitude of our credit system or at its refinement, for that we have learned by experience the way of controlling it, and always manage it with discretion.

But we do not always manage it with discretion. There is the astounding instance of Overend, Gurney, and Co. to the contrary. Ten years ago that house stood next to the Bank of England in the City of London; it was better known abroad than any similar firm known, perhaps, better than any purely English firm. The partners had great estates, which had mostly been made in the business. They still derived an immense income from it.

Yet in six years they lost all their own wealth, sold the business to the company, and then lost a large part of the company's capital. And these losses were made in a manner so reckless and so foolish, that one would think a child who had lent money in the City of London would have lent it better. After this example, we must not confide too surely in long-established credit, or in firmly-rooted traditions of business. We must examine the system on which these great masses of money are manipulated, and assure ourselves that it is safe and right.

Walter Bagehot. Lombard Street, 1873.