Baltic Dry Index. 1123 -49 Brent Crude 73.35
Spot Gold 1959 US 2 Year Yield 4.46 -0.08
Coronavirus
Cases 01/04/20 World 1,000,000
Deaths 53,103
Coronavirus Cases 31/05/23 World 689,549,946
Deaths 6,884,636
"We finished the year, and
we reported that we had $17 billion of cash sitting at the bank's parent
company as a liquidity cushion. As the year has gone on, that liquidity cushion
has been virtually unchanged."
Bear Stearns CEO Alan Schwartz.
March 12, 2008. Bust March 17, 2008.
To this old dinosaur commodities trader and markets follower since 1968, there is nothing in the global economic situation that I like.
The global recovery from the 2008 crash was mostly based on a China driven economic boom and from where I watch the Chinese economy, that economic boom is fast turning into bust.
Elsewhere, the EU’s powerhouse economy of Germany has already dropped into recession, put there by the USA blowing up the Nord Stream pipelines that delivered cheap natural gas from Russia that “fuelled” the German business model.
In America, a sick business model is about to get sicker, assuming the House and Senate pass the debt ceiling deal which will push Uncle Sam into another 4 trillion of debt in just a short two years.
Everywhere else, wars, civil wars, fiat money collapse, food price inflation, societal disorder.
Welcome to the Decline and Fall of the Roman
US Empire?
In 410 AD the Roman legions left Britain and the Dark Ages swiftly followed over the next 200 hundred years.
In the 21st century, things happen a little faster. We no longer travel at the speed of a horse or sailing ship.
Oil, Dr. Copper and the inverted US Treasury yield curve are signalling bad times directly ahead. Who am I to disagree.
To this old dinosaur, debt defaults, bank failures, revolutions and (probably) more wars come next.
"How did you go bankrupt? Two ways. Gradually and then suddenly."
Ernest
Hemmingway. "The Sun Also Rises.
Hong Kong slides
2% to new 2023 low; Asia markets mixed as China manufacturing contracts
UPDATED TUE, MAY 30 2023 11:14 PM EDT
Hong Kong’s Hang Seng index tumbled
2% to a new low for 2023 as Asia-Pacific markets mostly fell on Wednesday.
Mainland Chinese markets were
also all lower, with the Shanghai
Composite down 0.55% and the Shenzhen Component down
0.75%.
Asia sees a slew of economic data
out on Wednesday, including China’s May manufacturing activity figures. The
country’s manufacturing purchasing managers index slid for a second-straight
month to 48.8, a steeper contraction than March’s 49.2.
In Japan, the Nikkei 225 retreated
from its 33-year high and fell 1.12%, while the Topix declined 0.99%.
Australia’s S&P/ASX 200 dropped
1.28% as the country’s weighted inflation rate rose more than expected to 6.8%,
higher than the 6.4% expected by economists polled by Reuters.
South Korea’s Kospi reversed
earlier gains and lost 0.11%, but the Kosdaq advanced 0.66%.
Overnight in the U.S., all three major indexes
ended mixed as Wall
Street considered the likelihood of Congress passing a
tentative deal on raising the U.S. debt ceiling amid growing
opposition within the GOP.
The Dow Jones Industrial Average lost
0.15% and the Nasdaq
Composite gained 0.32%. Meanwhile, the S&P 500 eked
out a marginal gain, after trading both above and below the flatline during the
session.
Hong Kong slides 2% to
new 2023 low; Asia markets mixed as China manufacturing contracts (cnbc.com)
Stock futures are
little changed as traders await debt ceiling progress in Washington: Live
updates
UPDATED TUE, MAY 30 2023 6:42 PM
EDT
Stock futures were flat on Tuesday evening as
investors kept an eye on the federal debt ceiling debate in Washington ahead of
the final trading day of May.
Futures tied to the Dow Jones
Industrial Average dipped 31 points, or about 0.1%. S&P 500 futures and
Nasdaq 100 futures were each little changed.
The move in futures comes after a
muted day of trading on Tuesday that saw the Dow shed about 50 points while the
Nasdaq Composite rose 0.3%.
Heading into the final trading
day of May, the Nasdaq Composite is
up nearly 6.5% for the month. The S&P 500,
however, is up only about 0.9%, while the Dow has
fallen 3.1%.
The outperformance of the
tech-heavy Nasdaq is due in large part to the excitement around artificial
intelligence, which briefly pushed Nvidia’s
market cap above
$1 trillion on Thursday.
However, many investors and Wall
Street strategists are worried that the market’s strength has been too narrow.
“We’re not seeing any signs of
broad participation. We’re not seeing signs of early cyclicals on top of A.I.,”
said Andrew Smith, chief investment strategist at Delos Capital Advisors in
Dallas.
One factor that has weighed
on the market in recent weeks is the fight over the debt
ceiling. President Joe Biden and House Speaker Kevin McCarthy announced a
deal over the weekend to cap federal baseline spending for two
years and raise the debt ceiling, but the agreement has not yet been ratified.
The Fiscal Responsibility Act
appeared poised
to pass a key committee hurdle on Tuesday, with a full House
floor vote expected on Wednesday night, according to a tentative House voting
schedule.
Stock
market today: Live updates (cnbc.com)
In
other news, nothing good. Bunker time. Is China about to sink the global
economy? What happens to US and EU banks if it does?
New warning
signs emerge for China’s property market
BEIJING — New data
show China’s massive property sector is still struggling to turn around,
despite signs of recovery earlier this year.
“In a reversal from
April, prices accelerated in the housing market but sales slowed,” the
U.S.-based China Beige Book said in its report for May, released Tuesday.
That’s based on the research firm’s survey of 1,085 businesses conducted from
May 18 to 25.
“In commercial
property, both pricing and transactions weakened sharply,” the report said.
“Poor results in construction and reduced fiscal activity sent copper
producers’ May earnings and production into contraction.”
Beijing has eased its
pressure on real estate developers in the last year, following a crackdown on
their debt levels in August 2020. The property sector and related industries
have accounted for more than a quarter of China’s economy, according to Moody’s
estimates.
New home sales for
the week ended May 28 grew by 11.8% from a year ago, a sharp slowdown from
24.8% growth a week earlier, pointed out Nomura’s chief China economist Ting Lu
in a report Monday. That’s based on seven-day moving average data from Wind
Information.
Both weeks’ sales
volume was lower than during the same period in 2019, prior to the pandemic,
the report said.
Most of the sales decline stemmed from China’s
largest cities, the report said. Those so-called tier-1 cities have been a
bright spot since people tend to move to urban centers for jobs.
Investors pull back
Investors in
Chinese property developers are also getting more skeptical about the market.
The Markit iBoxx
index for China high-yield real estate bonds is back down to near where it was
trading in November, when Beijing announced support for the sector through a
“16-point plan.”
While that plan “has
been instrumental to setting a floor to this crisis,” the initiatives are only
aimed at supporting developers’ debts at a project level, S&P Global
Ratings analysts said in a May 22 report.
That means there’s
still uncertainty about whether developers can repay investors for bonds at a
holding company level, the ratings agency said. They’re looking at whether the
developers can generate enough cash from property sales.
In April, the
analysts pointed out that national property sales fell to 900 billion yuan
($126.87 billion), below last year’s monthly average of 1.1 trillion yuan.
For all of 2023,
S&P expects China developer sales to fall by about 3% to 5% — slightly
better than the previously forecast 5% to 8% drop.
---- In
the secondary-home market, business activity “has been cooling since April,
with a fall in the number of listed-for-sale homes, lower asking prices and
fewer transactions,” Fitch Ratings said in a release Monday.
---- “Secondary-home market sentiment can be
viewed generally as a barometer of the property sector, as pricing and supply
are not subject to regulators’ intervention – unlike the new-home market,” the
Fitch analysts said.
Secondary home sales
also greatly influence prices for new homes, the analysts said, estimating more
than half of homes sold in China’s largest cities fall into the secondary-home
market.
More
New
warning signs emerge for China's property market (cnbc.com)
ECB
warns of hit to top European banks if funds run into trouble
May 30, 2023 10:48
AM GMT+1
FRANKFURT, May 30 (Reuters) - The euro
zone's top banks may take a hit if their financial clients, such as funds,
insurers and clearing houses, withdrew their deposits or otherwise ran into
trouble, the European Central Bank warned on Tuesday.
The ECB study looked into the risk of
spillovers from so-called shadow banks -- such as funds and other financial
companies that provide funding in one form or another -- to traditional
lenders, and vice versa.
It found the exposure both in terms of
bank assets, such as loans, and liabilities, such as deposits, was concentrated
in the euro zone's top 13 lenders, including its eight globally important
banks.
The biggest risk it identified was that
shadow banks withdrew their funds from banks, such as deposits and repurchase
agreements. These account for 13% of all traditional banks' liabilities -- or
more for larger banks.
This could happen if the shadow banks
-- or non-bank financial intermediaries (NBFI) in the regulators' jargon --
were themselves hit by outflows or lost confidence in a bank.
"This funding may be highly
sensitive to the credit quality of the recipient banks and can amplify the
funding pressures faced by banks if the soundness of their fundamentals has
been called into question," the ECB said.
Other spillover channels included
forced sales of assets by shadow banks, which would cause losses at traditional
banks because their portfolios often overlap or are correlated, the ECB said.
It added that distress at
systemically important lenders would also spell trouble for shadow banks.
"If one or a group of such
(banks) were to become distressed, there would probably be substantial ramifications
in terms of the ability of significant parts of the NBFI sector to manage
liquidity and market risks," the ECB said.
The ECB, which used confidential
data it obtained in its role as the euro zone's top banking watchdog, did not
name any firm in the report.
The euro zone's global systemically
important banks are BNP Paribas (BNPP.PA), Deutsche
Bank (DBKGn.DE), BPCE, Credit
Agricole (CAGR.PA), ING (INGA.AS), Santander (SAN.MC), Societe
Generale (SOGN.PA) and
UniCredit (CRDI.MI).
ECB warns of hit to top European banks if funds run into trouble | Reuters
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.
Inflation out of control 'until end of 2025' amid 'concerning'
wage rises - latest updates
May
30, 2023
The Bank of England will not get
inflation back under control until the end of 2025 because of soaring food
prices and a "concerning" rise in wages, according to Goldman Sachs.
The Wall Street giant predicted
it will take at least two-and-a-half more years for policymakers to bring the
headline rate back to its 2pc target from the current 8.7pc level.
It blamed a "more gradual
decline in food inflation" and the UK's tight jobs market for the slower
decline.
While Goldman said a sharp fall
in gas prices will help bring down household energy bills significantly this
year, it added: "food inflation, on the other hand, remains at record
levels and has shown limited signs of slowing so far."
Ibrahim Quadri, UK economist at
Goldman, added: "Given the tightness in the labour market, we remain
concerned about the risk of wage growth not cooling sufficiently and
sustainably over the medium term."
Goldman analysis shows there is
roughly a six-month lag between any significant rise or fall in producer prices
and its impact on the cost of the weekly shop. While this relationship suggests
supermarket prices "should moderate going forward", it added that the
decline was likely to be more "gradual" than usual.
It expects food prices to keep
rising at an annual pace of at least 2.5pc until 2026.
Food inflation slows
to 15.4% in May after April record, survey suggests
May
30, 2023
There
were signs that the rapidly rising increase in the price of food may have
reached its peak as a survey of prices in shops suggested they fell between
April and May.
Food inflation fell
to 15.4 per cent in the year to May, according to a survey by the British Retail Consortium (BRC) and Nielsen.
It was
down from 15.7 per cent in April.
It is
still an incredibly high figure, meaning that a person who spent around £20 in
a food shop a year ago would now be paying a little over £23 for the same
items.
This
is an average so the exact number would depend on what they bought.
Although
May’s figure is a little lower than the food inflation seen in April, it is
still the second fastest annual increase the BRC has ever measured, it said.
It
added that the price of fresh food increased by 17.2 per cent in the year to
May, down from 17.8 per cent in April.
----Overall
inflation in shops rose from 8.8 per cent to 9 per cent between April and May,
the BRC said, an all-time high.
“While overall
shop price inflation rose slightly in May, households will welcome food
inflation beginning to fall,” said BRC chief executive Helen Dickinson.
“The slow in
inflation was largely driven by lower energy and commodity costs starting to
filter through to lower prices of some staples including butter, milk, fruit
and fish.
More
Food inflation
slows to 15.4% in May after April record, survey suggests (msn.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
Don't rule out that
Covid leaked from lab, says top Chinese scientist
May 30, 2023
A former Chinese government scientist
said ‘you can always suspect anything’ in relation to the theory Covid-19
leaked from a laboratory.
Virologist and immunologist Professor George Gao
was previously the head of China’s Centre for Disease Control (CDC) and is now
vice president of the National Natural Science Foundation of China.
He told the BBC Radio 4 podcast Fever: The Hunt for Covid’s Origin: ‘You can
always suspect anything. That’s science. Don’t rule out anything.’
Professor Gao played a key role in China’s
response to the pandemic and in its efforts to trace how it started.
But China has always strongly refuted the suggestion
that the virus may have originated in a Wuhan laboratory.
The Chinese Embassy in the UK said: ‘The so-called “lab leak” is a lie
created by anti-China forces. It is politically motivated and has no scientific
basis.’
Wuhan was the location of the first lockdown of the 2020 pandemic and
where the novel coronavirus Covid-19 was discovered.
The capital of
the Hubei province is home to the Wuhan Institute of Virology (WIV), which is
one of China’s top national laboratories and spent years studying
coronaviruses.
Professor Gao said
some kind of formal investigation was carried out and ‘that lab was
double-checked by the experts in the field’.
He said he has
not seen the result, but has ‘heard’ the lab was given the all-clear.
----But the lab leak theory resurfaced in
February when a United States government department report concluded
the virus most likely emerged from such a leak.
But a previous investigation into the emergence of
Covid-19 by the World Health Organisation found it was ‘extremely unlikely’ the
virus leaked from a lab.
But the podcast reported the Chinese government
refused a second phase of investigation, which would involve audits of
laboratories in the Wuhan area.
Don't rule out that Covid leaked from lab, says top
Chinese scientist (msn.com)
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.
Graphene’s germanium cousin holds promise for energy-efficient
electronics
May 30, 2023
Researchers from the University of Twente have proven
that germanene, the germanium equivalent of graphene, behaves
as a topological insulator. It’s the first 2D topological insulator that
consists of a single element. It also has the unique ability to switch
conduction ‘on’ and ‘off.’ This could lead to more energy-efficient
electronics.
Topological insulators are materials with the unique
property of insulating electricity in their interior while conducting
electricity along their edges. The conductive edges allow electrical current to
flow without energy loss. “At the moment, electronic devices lose a lot of
energy in the form of heat because defects in the material increase the
resistance. As a result, your mobile phone can get uncomfortably hot,” explains
UT researcher Pantelis Bampoulis.
Due to the unique nature of topological insulators,
scattering of electrons doesn’t occur and therefore electrical current in 2D
topological insulators flows without dissipating energy. This makes them more
energy-efficient than current electronic materials.
Previously known topological insulators consist of
complex mixtures from different types of elements. “Germanene is unique in that
it’s made from just a single element,” says Bampoulis. To create this exciting
material, the researchers melted germanium together with platinum. When the
mixture cooled down, a tiny layer of germanium atoms formed a honeycomb lattice
on top of the germanium-platinum alloy.
The researchers also discovered that the conducting
properties of the material can be switched ‘off’ by applying an electric field.
This property is unique for a topological insulator. “The possibility to switch
between ‘on’ and ‘off’ states adds an exciting application case for germanene,”
notes Bampoulis. It paves the way for designing topological field-effect
transistors. Chips based on these electronic switches wouldn’t heat up.
Electrons also zip easily through graphene’s
lattice, but lacking an intrinsic bandgap, it has to be engineered.
"The world urgently needs to create a
diversified currency and financial system and fair and just financial order
that is not dependent on the United States."
