Baltic Dry Index. 1473 +61 Brent Crude 85.38
Spot Gold 2023 US 2 Year Yield 3.84 -0.13
Coronavirus
Cases 01/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 05/04/23 World 684,289,335
Deaths 6,833,794
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith
With mainstream media
fanatically focused on New York City’s pathetically poor attempt at staging a
Stalinist show trial, the LIR remains firmly focused on what seems to be a
rapidly changing for the worse global economy.
With a lag effect of
many months, the fast rising global interest rates might not have had much, if
any, effect on global inflation, but they’re starting to have a great impact
elsewhere and it’s only likely to get much worse.
The wheels have
started to fly off the global economy waggon.
Our greatly
over-priced gambling stock casinos seem to have heavily bet on black but red
just came up.
A difficult summer
lies directly ahead and that assumes we don’t have any more Credit Swindles, or
that the Ukraine-NATO proxy war on Russia doesn’t widen out.
Not to worry though, Team
G-7 have Biden, Trudeau, Sunak, Macron and Scholz on the case. What could
possibly go wrong?
New Zealand hikes interest rate by 50 basis
points in a surprise move; Asia markets mixed
UPDATED WED, APR 5 2023 12:30 AM EDT
Asia-Pacific markets were mixed on Wednesday as
Wall Street digested a key U.S.
labor report that showed job openings dropped to their lowest
level in nearly two years in February.
New Zealand’s central bank raised its benchmark cash rate by 50
basis points to 5.25%, with the New Zealand dollar strengthening
by nearly 0.9% following the decision.
Stocks in Wellington erased
earlier gains and the S&P/NZX 50 traded
0.4% lower.
In Australia, the S&P/ASX 200 was
up marginally. Japan’s Nikkei 225 led
losses in the region, losing 1.31%, while the Topix lost 1.54% as the economy
saw its services sector expanding for the seventh straight month.
On the other hand, South Korea’s Kospi gained 0.25%,
while the Kosdaq index also gained 1.14%.
Singapore will see its retail sales figures for
February released later today. The benchmark Straits Times Index was 0.53% up,
led by the country’s financial sector. Mainland Chinese and Hong Kong markets
are closed for a holiday.
Overnight in the U.S., all three
major indexes fell, with both the Dow Jones Industrial Average and S&P 500 snapping
a four day winning streak. The Dow dropped 0.59%, while
the S&P and Nasdaq
Composite declined by 0.58% and 0.52% respectively.
Fed’s Mester says rate target will need to exceed 5%
Federal Reserve
Bank of Cleveland President Loretta Mester said in a speech in New York that the central bank
will need to raise rates further to tame inflation.
“Precisely how much
higher the federal funds rate will need to go from here and for how long policy
will need to remain restrictive will depend on how much inflation and inflation
expectations are moving down,” said Mester, adding that it will “depend on how
much demand is slowing, supply challenges are being resolved, and price
pressures are easing.”
The central bank in
its March meeting raised the benchmark interest rate by 25
basis points, raising the federal funds rate to a target range
between 4.75%-5%.
Mester is not a
voting member on the Federal
Reserve’s 2023 committee but an alternate member.
New
Zealand hikes interest rate by 50 basis points in a surprise move; Asia markets
mixed (cnbc.com)
Up next, then one by
one the wheels flew off.
‘We are going to see
parts of the economy break’: Recession fears move back to the forefront of
markets
Pimco sees risk of
‘sooner and deeper recession’
Investors
appear to be reconsidering the risk that the U.S. economy could be about to tip
into a recession, following Tuesday’s data which revealed the red-hot labor
market is finally loosening up.
That data showed job openings fell to a 21-month low of 9.9 million in February, down from
a revised 10.6 million for the prior month. Soon after those figures came out,
alongside a report revealing factory orders declined a third time in the past four months,
investors flocked to the safety of Treasurys — everything from 6-month T-bills TMUBMUSD06M,
Tuesday’s data dented the appeal of stocks, with
Dow industrials DJIA,
The tone in financial markets has shifted since
March, when stocks managed to shake off concerns about the global banking
sector and posted their largest monthly gains since January. That occurred as
the 2-year Treasury yield experienced its biggest one-month plunge since
January 2008, and the 10-year TMUBMUSD10Y,
On Tuesday, though, stocks fell in tandem with
yields as traders priced in a scenario in which the Fed is essentially done
with interest-rate hikes after May. Fed funds futures traders have clung to
prospects of rate cuts by year-end since March, when troubles at Swiss banking
giant Credit Suisse CS,
“Because
we’ve really seen job openings remain elevated for quite some time, today’s
data was significant,” said Edward Moya, a senior market analyst for the
Americas at OANDA Corp. in New York. “It looks pretty clear that we are going
to see parts of the economy break and we are heading for a recession. We forget
that there’s also a banking crisis going on, so there’s going to be some pain
that’s really going to cripple small and medium businesses. We are going to see
some tough times and are probably going to see this play out in markets.”
More
Financial crash
warning as £1.2trn in EU loans vulnerable to Silicon Valley Bank fallout
April 4, 2023
European Union banks' £1.2 trillion
commercial real estate loans have come under the spotlight after the fall out
from Silicon Valley Bank's collapse. It comes amid warnings commercial real
estate (CRE) could be in the crosshairs of further turmoil in the global banking
sector. Analysis published today (April 4) highlights how European
banks' loans are now in investors' sights after Silicon Valley Bank's collapse.
Nordic
lenders have been identified as the most vulnerable, but UK banks are seeking
to offload their own CRE exposure.
A
Centre for Economic and Business Research report published on Monday found £210billion had been wiped off
the value of Britain's commercial real estate in the past nine
months.
According
to a report from Bloomberg Intelligence (BI) published today, a five percent
write-off could wipe out 24 percent of EU bank 2023 pretax profit, making CRE
risk key in first quarter results.
Thomas Noetzel and Philip Richards, Senior Industry Analysts
at BI, said in a statement: "In Europe, surging interest rates and
inflation and a weak economic backdrop leave loans to the sector as a key risk
on bank balance sheets as investors assess where the next threat may come from.
----Nordic, UK, German and
French banks are the most exposed, with combined exposure of 20 of the largest
lenders totalling about €550billion (£480bn), or seven percent of total loans,
equivalent to 73 percent of CET1 capital."
Commercial real estate loans total €1.4tn across the EU,
according to data from the European Banking Authority. These make up 6.4
percent of total loans in those markets.
The European Central Bank (ECB)
has announced plans to strengthen its focus on banks' exposure to CRE, noting
it as "one of the most severely affected by the COVID-19 pandemic"
while adding it "has also attracted considerable investment during the
prolonged low interest rate environment".
The ECB has said CRE accounts for as much as 30 percent of
banking non-performing loans.
Financial
crash warning as £1.2trn in EU loans vulnerable to Silicon Valley Bank fallout
(msn.com)
JPMorgan CEO Says Bank Crisis
Not Over, America Shifting Into a ‘Vicious Cycle’
April 4, 2023 Updated: April
4, 2023
JPMorgan CEO Jamie Dimon said in a letter to shareholders
that the U.S. banking crisis is not over, and that even when it does end, its
impact will linger for years, while warning that America seems to moving into a
“vicious cycle.”
“As I write
this letter, the current crisis is not yet over, and even when it is behind us,
there will be repercussions from it for years to come,” Dimon wrote in the
wide-ranging 43-page
missive that included the ominous warning that storm clouds
threaten the U.S. economy.
The collapse
of Silicon Valley Bank (SVB) triggered a crisis of confidence in the U.S.
banking sector, prompting financial authorities to rush through a rescue
package to stem a potential run on bank deposits that threatened broader
financial instability.
“Any crisis
that damages Americans’ trust in their banks damages all banks—a fact that was
known even before this crisis,” Dimon wrote.
In the two
weeks since the failure of SVB, roughly $213 billion in deposits have been
pulled from America’s domestically chartered commercial banks as skittish
savers rushed to withdraw their money, according to the latest seasonally adjusted
Federal Reserve figures on deposit outflows.
While some
argue that’s a relative drop in the bucket compared to the roughly $16 trillion
in total deposits held in U.S. domestic banks, experts have
warned that the deposit flight is a factor contributing to
tighter lending standards, with small businesses especially vulnerable to what
some believe is a looming credit crunch.
“Regarding
the current disruption in the U.S. banking system, most of the risks were
hiding in plain sight,” Dimon wrote, including exposure to rising interest
rates, which materialized when the Federal Reserve set out on an aggressive
rate-hiking cycle in a bid to tame soaring inflation.
Dimon
faulted regulators for not including interest-rate risk in stress testing,
which exacerbated the risks.
When
the crisis does eventually pass, it will lead to changes in the regulatory
framework, Dimon argued, while cautioning against “knee-jerk, whack-a-mole, or
politically motivated responses that often result in achieving the opposite of
what people intended.”
Rather
than rushing to over-regulate, Dimon urged U.S. financial authorities to
“deeply think through and coordinate complex regulations” in order to achieve
stated goals while getting rid of “costly inefficiencies and contradictory
policies.”
---- Dimon said that the banking sector turmoil from the
collapse of SVB—along with the failure of Swiss lending giant Credit
Suisse—have made a recession more likely.
“The
failures of SVB and Credit Suisse have significantly changed the market’s
expectations, bond prices have recovered dramatically, the stock market is
down, and the market’s odds of a recession have increased,” he wrote. “And
while this is nothing like 2008, it is not clear when this current crisis will
end.”
More
JPMorgan
CEO Says Bank Crisis Not Over, America Shifting Into a ‘Vicious Cycle’
(theepochtimes.com)
In
Depth: How China’s Export Surge Left the Shipping Industry With a Hangover
Apr 04, 2023 07:27 PM
Since early March, two of China’s
largest container truck yards near the major port city of Ningbo in Zhejiang
province have been filled with nearly 3,000 idle vehicles with no cargo to
haul.
Traffic at the Hengpu and Beilun
parking lots, which primarily serve the port, has dropped dramatically over the
last two years, several truck drivers told Caixin. During the shipping boom in
2021, some drivers would make 27 cargo deliveries per month on average, they
said. Now, they’re happy if they can do two a week.
More, subscription
required.
In
Depth: How China’s Export Surge Left the Shipping Industry With a Hangover
(caixinglobal.com)
Finally, if planet
Earth is going to try to go all electric, let the EV resource wars begin.
Glencore launches
$22bn copper raid as battle for battery resources explodes
April 3, 2023
Glencore has launched a $22bn (£17bn) bid for a rival copper miner amid a growing battle for control of the world’s battery metals resources.
The FTSE 100 metals giant’s unsolicited approach to Canada’s Teck Resources would
create the world’s third largest copper producer, as demand for the metal
jumps along with the shift towards electric cars.
The bid was rejected on Monday by
Teck, which is controlled by Canada’s Keevil family and is in the process of
separating its coal and copper divisions.
However, Gary Nagle, Glencore’s chief
executive, indicated he was not going away, saying: “We put a very compelling
deal forward for the Teck board to consider.
“We are proposing to merge two great
companies ... It’s certainly not a takeover.”
Asked if he would launch a hostile
takeover if the board was not persuaded, he replied: “We haven’t gone hostile,
and why would we?
“This is a compelling transaction to
a company that is held in highest regard. We want to put our two great
companies together and make two even better companies.”
The move would mark Glencore’s
biggest deal since its acrimonious $30bn takeover of Xtstrata in 2013.
Glencore is one of the world’s largest mining
and metals companies, producing
and trading oil, gas, coal, lithium, copper, cobalt and other metals around the
world.
It made
revenue of $255bn during 2022, and has a market cap of almost £57bn.
Teck
Resources is far smaller, with revenues of $17.3bnCAD (£10.4bn) in 2022 and a
market cap of about $29bnCAD.
However, it has a prized portfolio of
copper, zinc and steelmaking coal mines in areas including Chile and Canada.
Glencore is already a shareholder in
some of them.
Under Glencore’s proposal, Glencore
and Teck would merge and then split into two businesses: one focused on battery
metals needed for the shift towards greener energy and the other on coal.
Glencore’s shareholders would own
76pc of the new entities, and Teck’s shareholders would own the other 24pc.
More
Glencore launches $22bn copper raid
as battle for battery resources explodes (msn.com)
Ford invests in Indonesia nickel supplier to shore up
critical EV battery materials
Published April 4,
2023
- Ford is investing in an Indonesia-based nickel facility in a
strategy to secure more critical minerals needed to produce electric
vehicle batteries.
- The
automaker is taking a stake in the Pomalaa Block HPAL Project alongside
two other companies — PT Vale Indonesia Tbk and China-based Zhejiang
Huayou Cobalt Co., according to an announcement from Ford.
- Early site
preparations are currently underway, with plans to open the facility in
2026.
The plant is expected
to produce up to 120,000 tons per year of a lower cost nickel called mixed
hydroxide precipitate, a piece of Ford’s larger plan to ultimately bring down
the cost of its EV batteries.
“This framework
gives Ford direct control to source the nickel we need – in one of the
industry’s lowest-cost ways – and allows us to ensure the nickel is mined in
line with our company’s sustainability targets, setting the right ESG standards
as we scale,” Lisa Drake, vice president for Ford Model e EV industrialization,
said in a statement.
The automaker is
also in the midst of signing a separate supplier agreement with Zhejiang Huayou
Cobalt Co. for cathode materials needed to produce lithium-ion batteries,
according to the release.
Ford has spent
the past year working to secure continued access to the host of minerals needed
for EVs and batteries.
Last summer, the
automaker signed a spate of supplier
agreements in Asia,
South America and North America for access to graphite, cobalt and nickel.
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.
High inflation
boosts public finances, IMF says
Debt
as proportion of GDP fallen in US and Italy despite pandemic-era deficits
3
April, 2023
Higher
inflation has bolstered advanced economies’ public finances, the IMF said on
Monday, as it called on governments to use the windfall to cut deficits.
Research published by the fund showed that the surprise surge in prices over the past couple of years helped lower debt burdens substantially.
According to the IMF’s data, high inflation led the US’s net debt burden to fall from 99 per cent of gross domestic product in 2020 to 95 per cent in 2022, despite the country’s large pandemic-era budget deficits. Italy’s net debt burden fell from 142 per cent of GDP to 135 per cent.
But Paolo Mauro, deputy director of the IMF’s fiscal affairs department, warned that governments should not “count” on public debt burdens falling further because of so-called “surprise” inflation.
“You
cannot keep surprising people,” he said, adding that fiscal authorities should
lower budget deficits to help central banks bring high price rises under
control.
High inflation delivered a public finances windfall partly because the surge in
prices in 2021-2022 was more than expected by investors. Many lost out by
lending to governments at low rates of return rather than demanding higher debt
costs that usually accompany higher inflation.
The fund’s research estimated that an unexpected inflation increase of 1 percentage point would reduce the share of public debt in GDP by an average of 0.9 percentage points for countries with a debt burden of more than 50 per cent of GDP. Most advanced economies have debt burdens far in excess of this level.
But Mauro said the
benefit of inflation to taxpayers at the expense of bond holders was
unlikely to be repeated.
The shock to prices owing to supply chain problems during the pandemic — and a
surge in food and energy costs across Europe after Russia’s invasion of Ukraine
— is now being priced into bond markets.
Yields on the US benchmark 10-year government bond have risen from 1.1 per cent at the start of 2021 to 3.5 per cent today, with similar rises across advanced economies and at all maturities of debt.
The
estimates were published in an analytical chapter of the IMF’s Fiscal Monitor
ahead of the fund’s spring meetings next week.
More
High inflation boosts public finances, IMF says | Financial Times (ft.com)
Deutsche Bank no
longer sees UK GDP contracting in 2023
April 3, 2023
(Reuters) - Deutsche Bank said on Monday it no longer expects UK's gross domestic product (GDP) to contract in 2023, after revised figures last week showed the economy grew in the last quarter of 2022.
The German
bank expects UK GDP to be unchanged at 0% in 2023, a 0.2 percentage point
upgrade compared to its earlier projection.
On Friday, the
Office for National Statistics said UK GDP increased by 0.1% between October
and December after a preliminary estimate of no growth.
DB expects
more supportive fiscal policy to aid the first two quarters of the year.
"Beyond
H1 2023, we remain more cautious around the UK outlook, particularly with the
effects of (central bank interest) rate rises feeding through more fully in to
the economy, and our colleagues anticipating a U.S. recession later this
year," senior economist Sanjay Raja wrote in a note.
Raja says an
interest rate hike from the Bank of England in May is "all but
certain". The BoE has hiked for the last 11 meetings, taking the rate to
4.25% as of March.
Deutsche Bank no
longer sees UK GDP contracting in 2023 (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
A new approach to a
Covid-19 nasal vaccine shows early promise
April 3, 2023
Scientists
in Germany say they’ve been able to make a nasal vaccine that can shut down a
Covid-19 infection in the nose and throat, where the virus gets its first foothold in the body.
In
experiments in hamsters, two doses of the vaccine – which is made with a live
but weakened form of the coronavirus that causes Covid-19 – blocked the virus
from copying itself in the animals’ upper airways, achieving “sterilizing
immunity” and preventing illness, a long-sought goal of the pandemic.
Although
this vaccine has several more hurdles to clear before it gets to a doctor’s
office or drug store, other nasal vaccines are in use or are nearing the finish
line in clinical trials.
China
and India both rolled out vaccines given through the nasal tissues last fall,
though it’s not clear how well they may be working. Studies on the
effectiveness of these vaccines have yet to be published, leaving much of the
world to wonder whether this approach to protection really works in people.
The US has reached
something of a stalemate with Covid-19. Even with the darkest days of the
pandemic behind us, hundreds of Americans are still dying daily as the
infection continues to simmer in the background of our return to normal life.
As long as the
virus continues to spread among people and animals, there’s always the
potential for it mutate into a more contagious or more damaging version of
itself. And while Covid infections have become manageable for most healthy
people, they may still pose a danger to vulnerable groups such as the elderly
and immunocompromised.
Researchers
hope next-generation Covid-19 vaccines, which aim to shut down the virus before
it ever gets a chance to make us sick and ultimately prevent the spread of
infection, could make our newest resident respiratory infection less of a
threat.
One way
scientists are trying to do that is by boosting mucosal immunity, beefing up
immune defenses in the tissues that line the upper airways, right where the
virus would land and begin to infect our cells.
---- Mucosal vaccines are also better at priming a different kind of first
responder than injections do. They do a better job of summoning IgA antibodies,
which have four arms to grab onto invaders instead of the two arms that the
y-shaped IgG antibodies have. Some scientists think IgA antibodies may be less
picky about their targets than IgG antibodies, which makes them better equipped
to deal with new variants.
The new nasal
vaccine takes a new approach to a very old idea: weakening a virus so it’s no
longer a threat and then giving it to people so their immune systems can learn
to recognize and fight it off. The first vaccines using this approach date to
the 1870s, against anthrax and rabies. Back then, scientists weakened the
agents they were using with heat and chemicals.
The
researchers manipulated the genetic material in the virus to make it harder for
cells to translate. This technique, called codon pair deoptimization, hobbles
the virus so it can be shown to the immune system without making the body sick.
More
A new approach to
a Covid-19 nasal vaccine shows early promise (msn.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.
Looks like we all need to prepare for
a new way of fighting wars.
New algorithm keeps drones from colliding in midair
Researchers
create a trajectory-planning system that enables drones working together in the
same airspace to always choose a safe path forward.
Date: March 30, 2023
Source:
Massachusetts Institute of Technology
Summary: Researchers developed a multiagent trajectory
planning system that guarantees a group of drones working together in the same
airspace will avoid collisions even if their communications to one another are
delayed.
When multiple drones are working together in the same
airspace, perhaps spraying pesticide over a field of corn, there's a risk they
might crash into each other.
To help avoid
these costly crashes, MIT researchers presented a system called MADER in 2020.
This multiagent trajectory-planner enables a group of drones to formulate
optimal, collision-free trajectories. Each agent broadcasts its trajectory so
fellow drones know where it is planning to go. Agents then consider each
other's trajectories when optimizing their own to ensure they don't collide.
But when the
team tested the system on real drones, they found that if a drone doesn't have
up-to-date information on the trajectories of its partners, it might
inadvertently select a path that results in a collision. The researchers
revamped their system and are now rolling out Robust MADER, a multiagent
trajectory planner that generates collision-free trajectories even when
communications between agents are delayed.
"MADER
worked great in simulations, but it hadn't been tested in hardware. So, we
built a bunch of drones and started flying them. The drones need to talk to
each other to share trajectories, but once you start flying, you realize pretty
quickly that there are always communication delays that introduce some
failures," says Kota Kondo, an aeronautics and astronautics graduate
student.
The algorithm
incorporates a delay-check step during which a drone waits a specific amount of
time before it commits to a new, optimized trajectory. If it receives additional
trajectory information from fellow drones during the delay period, it might
abandon its new trajectory and start the optimization process over again.
When Kondo and
his collaborators tested Robust MADER, both in simulations and flight
experiments with real drones, it achieved a 100 percent success rate at
generating collision-free trajectories. While the drones' travel time was a bit
slower than it would be with some other approaches, no other baselines could
guarantee safety.
"If you
want to fly safer, you have to be careful, so it is reasonable that if you
don't want to collide with an obstacle, it will take you more time to get to
your destination. If you collide with something, no matter how fast you go, it
doesn't really matter because you won't reach your destination," Kondo
says.
More
AeroVironment
introduces latest Switchblade 300 suicide drone
David Szondy April 03, 2023
AeroVironment has rolled out its latest variant
of its Switchblade
300 loitering missile system, more commonly
known as a suicide drone. Building on the previous Block 10C, the Switchblade
300 Block 20 boasts greater endurance and ease of operation.
Introduced in 2011, the Switchblade 300 series
was designed to provide US Army foot soldiers with their own backpackable air
support weapons. Where other drones are designed for reconnaissance, the
Switchblade 300 can loiter in the air until its sensors acquire a target then
destroy it using a built-in warhead that delivers a forward-firing shotgun
blast effect to minimize collateral damage.
In 2022, the Switchblade
300 came to public prominence when the US sent 700 to Ukraine to combat the
Russian invasion. With the need to replenish US munitions while supplying
additional drones to Ukraine, AeroVironment is abandoning the Block 10C for the
more advanced Block 20.
Built especially
for small expeditionary units, the Switchblade 300 Block 20 has a gross weight
of about 8 lb (3.6 kg) and is designed to be carried and operated by a single
soldier using a tablet-based Fire Control System that also acts as a training
aid.
The combination
storage tube/launcher can put the 4-lb (2-kg) drone into the air in less than
two minutes. This tube also includes an integrated control and the system can
be launched from land, sea, and mobile platforms.
The video below introduces the Switchblade 300
Block 20.
AeroVironment
introduces latest Switchblade 300 suicide drone (newatlas.com)
In any
great organization it is far, far safer to be wrong with the majority than to
be right alone.
John Kenneth
Galbraith.
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