Monday 15 May 2023

A Week To Save The USA From Default? A Week To Remember?

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"The best minds are not in government. If any were, business would hire them away."

Ronald Reagan.

A week to save the USA from a debt default? Well not quite, though time is fast running out as the USA Labor Day holiday weekend approaches at month-end.

Almost no one believes US Treasury Secretary Yellen’s scaremongering of a US debt default on June 1, but President Bush and the US Congress are fast running out of time to negotiate some sort of compromise to raise the US debt ceiling and get it enacted and signed into law.

In any other country, not that any other G-7 countries are foolish enough to have debt ceilings, a politically contrived debt default would only be a disaster for the nation involved.

But because of the US economy’s importance in the global economy and because of the international role of the dollar reserve standard, any US debt default will act as a giant earthquake across the global economy and international banking system.

If such a US default lasted more than a few days before sanity was restored, an international banking crisis would swiftly follow, with many of the not to big to fail banks likely failing.

Again, no one yet really expects any of this to actually happen. Complacency still rules, but for how long?

Hopefully, we won’t find out if some sanity returns this week in the District of Crooks.


Asia-Pacific markets mixed; Thailand’s election results in focus, baht strengthens

UPDATED MON, MAY 15 2023 12:08 AM EDT

Asia-Pacific markets are trading mixed after two out of three major U.S. indexes recorded a second straight week of losses, fueled by concern over the U.S. debt ceiling and disappointing economic data.

Thailand’s currency strengthened against the greenback as the country’s opposition party was on course to secure a win in its general election, ending nearly a decade of conservative ruled backed by the military.

The country’s Set Composite briefly traded 0.3% higher at the open on Monday before paring gains and last traded 0.2% lower. Thailand’s gross domestic product grew 2.7% year on year, more than expected.

Australia’s S&P/ASX 200 fell 0.17% alongside South Korea’s Kospi and Kosdaq, losing 0.52% and 1.61% respectively. Japan’s Nikkei 225 was up 0.4%, with the Topix also 0.49% higher on Monday.

Hong Kong’s Hang Seng index was marginally down, while mainland Chinese markets were mixed. The Shanghai Composite fell 0.82%, but and the Shenzhen Component gained 0.11%.

In the U.S., all three major indexes ended Friday lower, with the tech heavy Nasdaq Composite down 0.35%. The S&P 500 slipped 0.16% while the Dow Jones Industrial Average inched down 0.03%.

On a weekly basis, the S&P 500 and Dow fell for a second consecutive week, down 0.29% and 1.11%, respectively. The Nasdaq gained 0.4% as U.S. President Joe Biden and congressional leaders postponed a meeting on its debt ceiling set for Friday to the following week.

Asia-Pacific markets mixed; Thailand's election results in focus, baht strengthens (

Stock futures slip on Sunday night after S&P 500 and Dow post two straight weekly losses: Live updates

UPDATED SUN, MAY 14 2023 7:02 PM EDT

U.S. stock futures fell slightly on Sunday night following back-to-back weekly losses for the Dow Jones Industrial Average and S&P 500.

Dow futures fell by 70 points, or about 0.2%. S&P 500 futures and Nasdaq 100 futures dipped 0.21% and 0.27%, respectively.

The S&P 500 and Dow lost 0.3% and 1.1%, respectively, last week. The Nasdaq Composite, meanwhile, advanced 0.4%. The broader market index fell as poor sentiment around the U.S. economy weighed on investor sentiment.

“The weak parts of the market remain weak and unable to rally, while the strong parts of the market are extended and vulnerable,” BTIG’s Jonathan Krinsky said in a Friday note.

Wall Street on Friday absorbed a preliminary reading from the University of Michigan last week that showed consumer sentiment falling to a six-month low. Also in focus were debt ceiling negotiations as the U.S. draws nearer to the so-called “X date,” or when the government may go into default without a raise in the debt limit to pay its bills. CNBC reported a meeting between President Joe Biden and congressional leaders on the topic was rescheduled to this week.

On Monday, investors are watching for the May data for the Empire State Index, which will show how New York State manufacturers feel about the economy. Economists polled by Dow Jones are expecting a reading of 1.0, which would be lower than the 10.8 level in previous data.Traders are also anticipating China industrial output and retail sales data.

Good news for markets next week. Everyone agrees the debt ceiling ‘X-date’ is not here yet

Washington can hardly agree on anything, but the consensus everywhere is that the “X date,” when the Treasury can no longer pay the government’s bills unless the debt ceiling is raised, won’t arrive any earlier than June 1 — and maybe not for weeks after.

Good news for markets next week: no default, no credit agency downgrade, no apocalypse. Just further talks between White House and Congressional staffers, leading to another meeting between President Joe Biden and Congressional leaders before Biden leaves next Wednesday for a G-7 summit in Tokyo.

The bad news is that complacency is nigh in the stock market, as shown by the CBOE Market Volatility Index (the VIX) trading below 18 on Friday, and having fallen almost 22% in 2023.

Stock market today: Live updates (

Morning bid: Major macro signals from China, Japan

May 15 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever.

Major economic data from China and Japan, and a central bank rate decision from the Philippines could be the main regional drivers for Asian markets this week, with investors growing increasingly nervous about the U.S. and global macro outlook.

World stocks ended last week on a shaky footing as worries about the U.S. debt ceiling, credit conditions and the cumulative effect of 500 basis points of Fed rate hikes overshadowed surprisingly strong U.S. earnings.

---- The MSCI World index fell 0.5% - not a big deal, perhaps, but the second weekly decline in a row and the steepest since the U.S. banking crisis blow-up two months ago.

Asian shares ex-Japan, however, inched up for a second weekly rise in a row, also something not seen since early March.

If U.S. tech stocks are flying - the Nasdaq rose for a third week and Wall Street's rally this year is entirely thanks to AI-centric stocks, according to SocGen - Asian tech is stuck in quicksand.

The Hang Seng tech index fell last week for a sixth straight week, its longest losing streak since mid-2015 when the first tremors of the Chinese stock market earthquake were felt and only weeks before Beijing devalued the yuan.

The latest Chinese economic indicators have been shocking. Inflation and imports collapsed in April, casting severe doubt over the strength of the economy's post-lockdown recovery and ramping up expectations of more policy easing.

Industrial production, retail sales and fixed asset investment data for April this week will paint a fuller picture. More sub-par numbers will likely increase the selling pressure on Chinese stocks - the Shanghai composite had its worst week since March, while the blue chip index fell for a fifth week and also had its biggest weekly fall in two months.

Japan's first-quarter GDP figures will be released on Wednesday, and perhaps more importantly, the latest inflation numbers are out on Friday.

Core inflation is far higher than the Bank of Japan would like and is expected to have re-accelerated to 3.4% in April. Although new BOJ Governor Kazuo Ueda insists he will go slow on reversing the bank's super-loose policy, some analysts expect the BOJ to abandon yield curve control this summer.


Morning bid: Major macro signals from China, Japan | Reuters

Finally, more bad news in food price inflation although some recent rain in parts of Italy and France will have helped. But by how much?

Drought recedes in Britain after a wet spring – but much of Europe is parched

Fri, 12 May 2023 at 4:17 pm BST

Be careful what you wish for. Britain’s seesaw rainfall patterns that began last winter have continued, with an on-off pattern of dry and then wet months for many areas.

In the south of England, last year’s drought was still affecting parts of the UK in early December, with stores of water in reservoirs and groundwater lower than usual. Seemingly endless rain followed over Christmas and January, before one of the driest Februaries on record led to renewed warnings of drought.

Hydrologists like me were pointing to low stocks of water in aquifers and rivers, raising our eyebrows and sucking our teeth like car mechanics faced with a blown gasket. We need rain, we said, or reservoirs will dry up, crops will fail, and restrictions on how much water people can use, like hosepipe bans, may be necessary.

Well, we got it. England and Wales had their wettest March in 40 years and April continued the wet trend, although rainfall was more patchy. The reason was that the jet stream, the fast-flowing and meandering air current high up in the atmosphere which governs a lot of weather in Britain and north-west Europe, shifted south. This pulled cold air down from the Arctic in early March.

Much of Britain shivered under this blanket of cold, with snow and ice blocking roads and closing schools. Then westerly winds returned, pulling cyclonic weather systems off the ocean in a stream of wet weather.

In April, the jet stream shifted north, leading to unsettled weather and lots of the April showers that we tend to expect of a British spring.

The result is that the hydrology of England and Wales – the state of the water supply in rocks, soils, rivers and reservoirs – has bounced back. In some areas, it has bounced back so quickly that there have been floods. The heavy thunderstorms of recent days in parts of south-west England caused flash flooding of the kind that scientists expect to see more of as a result of the warmer atmosphere created by climate change.

----The European drought continues

The drought has been broken in much of the UK. But other parts of western Europe, which the British Isles had been sharing dry conditions with, remain parched. Spain and Portugal are seriously water-stressed, as is southern France and northern Africa.

As supermarket shoppers in the UK can attest, this has hit supplies of fresh fruit and vegetables in recent months. Spain’s grain harvest, one of its key crops for many farmers, now appears threatened, with soils unable to sustain growth.

The long-running drought across Europe means that some major rivers continue to have low flows. The Po in north Italy and the Rhine, the arteries of western European industry, are both still down on where they should be.

When they are disrupted by flood or drought, big rivers that flow across international borders can heighten political and economic tensions. Low water levels in Europe have disrupted electricity supplies from normally reliable hydroelectric plants and some transport of materials and goods along the Rhine has had to shift to road and rail.

As in Britain, the risk of sudden heavy rain can easily cause dangerous flooding, even while drought continues. Two people recently died in northern Italy when floods caused by exceptional downpours saw rivers swell dangerously. Yet, after months of dry conditions beforehand, the same region may still be in drought.


Drought recedes in Britain after a wet spring – but much of Europe is parched (

Without water, we are nothing!': Spain's crippling drought reignites tensions over Tagus river

Issued on: 13/05/2023 - 07:49

 An early scorching heatwave across Spain has worsened the impact of the country's long-term drought, causing unprecedented damage to the country's crops. As farmers grow desperate for irrigation, the government's plan to limit the rerouting of water from the nation's longest river – the Tagus – for agricultural purposes lies at the centre of a heated debate. FRANCE 24 reports.

The mathematics of drought are extremely simple for Ricardo Ferri, a Spanish farmer from the Valencian community: after 100 days without rain, he has lost 100% of his crops.


The earth on his 55-hectare property is deeply desiccated. Wheat plants are only a quarter of the size they should be – they've basically stopped growing since the last rainfall in early February. It's as if time has been suspended.

"Wherever you look, the soil is completely dry, there is not a single drop of humidity! It's the first time I've lost everything because of the drought ... It's the same for all cereal farmers in this area," Ferri told FRANCE 24.

The problem is far from being limited to this single region. The Coordinator of Farmers and Ranchers Organisations (COAG) warned in mid-April that the country's long-term drought was causing "irreversible losses" to more than 5 million hectares of crops in Andalusia (south), Extremadura (east), Castilla-La Mancha (centre), and Murcia (south-east).

Cereals such as wheat and barley are the worst impacted because a drastic shortage of water in spring means that the grain will not be harvested in summer – even if rain returns. Farmers like Ferri have written the harvest off completely, hoping to get some emergency aid to cope with the financial fallout.

Even crops known for their adaptation to a dry climate, such as nuts and olives, are now


'Without water, we are nothing!': Spain's crippling drought reignites tensions over Tagus river (

Shame of food price surge: No one has explained how this 'greedflation' can be justified in an age of ESG investment, says ALEX BRUMMER

May 14, 2023

----The Government is pledged to halve inflation from 10.1 per cent by December. The rapid improvement in annual inflation the Bank of England projected in February to 3.9 per cent was revised upwards to 5.1 per cent in its latest forecast. Under Andrew Bailey, Bank forecasting is less reliable than the weather.

The reason for some optimism is the sharp drop in energy prices. Wholesale gas is now 30 per cent cheaper than at the start of the Ukraine war. As the energy price bubble comes out of the consumer prices index, the latter should dip. The delay must be exasperating at the Treasury which had been counting on faster transmission.

The real sinner in our current cost of living shock is food. It was reported in March that the price of food was 19.2 per cent higher than a year earlier – and at its highest level for 45 years. Subsequent surveys from retail monitors do not suggest a rapid improvement.

There will be an intense focus on what is going wrong in Britain's food supply chain this week. Rishi Sunak is due to host a farm summit at Downing Street tomorrow. Elsewhere, the Environment, Food and Rural Affairs Committee is to probe how profitability and risks are shared through the food supply chain. Whether these forums are capable of coming up with meaningful answers is uncertain.

----Much of the blame for food inflation rests with the big branded food and non-alcoholic beverage companies – such as Kraft Heinz, Nestle, Coca-Cola and Unilever – who have striven to maintain profit margins in the post-pandemic era.

No one has explained how this 'greedflation' can be justified in an age of environmental, social and governance (ESG) investment. The great food price bubble is a moral and ethical outrage.

Shame of food price surge: No one has explained how this 'greedflation' can be justified in an age of ESG investment, says ALEX BRUMMER (

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.

Recession Odds Rise to Highest in 40 Years: Fed

May 13, 2023 Updated: May 13, 2023

The odds that the United States will fall into a recession at some point over the next 12 months have risen to a 40-year high, according to a probability model from the New York Federal Reserve.

The probability that the country will enter a recession within the next year has risen to 68.2 percent, according to the New York Fed, which is the highest level since 1982.

The Fed’s recession risk indicator is now greater than it was in November 2007, not long before the subprime crisis, when it stood at 40 percent.

The recession model is based on the spread between the three-month and 10-year yields on U.S. Treasurys.

For months, the U.S. economy had been projected to show slowing real GDP growth and labor market softening.

Amid the banking sector turmoil sparked by the collapse of Silicon Valley Bank, economists at the Federal Reserve have projected a shallow recession.

“Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years,” stated the minutes from a March meeting of the Federal Open Market Committee (FOMC).

There has been a growing chorus of experts who believe that the odds of a recession are high.

Former Treasury Secretary Larry Summers said he thinks the chances are “probably about 70 percent.”

“The chance that a recession will have begun this year in the U.S. over the next 12 months is probably about 70 percent,” Summers said in a recent interview with Foreign Policy.

“As I put together the lags associated with monetary policy, the credit crunch risks, the need for continuing action around inflation, the risk of geopolitical or other shocks affecting commodities, 70 percent would be the range that I would be in.”

Economists at Capital Economics published their latest quarterly U.S. economic outlook report, warning that the “acute bank stress” will result in “further tightening” of credit conditions, leaving them “even more convinced that the economy will fall into recession this year.”

ING economists are also “more convinced than ever” with their prediction of a recession, citing in a research note the financial turmoil and the Fed’s monetary policy tightening.

A recent poll showed that most Americans believe that the country is headed for a recession—or has already fallen into an economic downturn.


Recession Odds Rise to Highest in 40 Years: Fed (

Recession? Corporate America’s Earnings Say It’s Already Arrived

May 13, 2023

(Bloomberg) -- As the US economy teeters on the brink of recession, Wall Street is already enduring what could turn out to be the most prolonged corporate profits downturn in seven years. 

With the first-quarter earnings season drawing to a close, the profits of S&P 500 companies are estimated to have dropped 3.7% on average, compared to a year ago. While data compiled by Bloomberg Intelligence shows that 78% of firms surpassed forecasts, that’s less impressive than it sounds, given analysts had slashed their expectations before the season kicked off.

More crucially, it was the second straight quarter of earnings declines for corporate America. Bearish earnings forecasts now center around the April to June period, for which a 7.3% profit slump is penciled in, according to data compiled by Bloomberg Intelligence. And the pinch from higher interest rates and wilting consumer demand will extend into the third quarter of 2023, analysts reckon, backtracking on earlier predictions that earnings recovery would kick in around then.

That implies a longer profit recession than during the pandemic. An earnings drop of more than three quarters was last seen in 2015 to 2016, when the Federal Reserve started its last interest rate hiking cycle.

Unsurprising then that the S&P 500 index has posted no gains since major Wall Street lenders kicked off the earnings season in mid-April.


Recession? Corporate America’s Earnings Say It’s Already Arrived (

Covid-19 Corner

This section will continue until it becomes unneeded.

Messenger RNA COVID-19 Vaccines Had No Effect on Overall Mortality: Trial Data Reanalysis

May 13 2023

The Pfizer and Moderna COVID-19 vaccines did not impact overall mortality, a reanalysis of clinical trial data found.


The two vaccines, both based on messenger RNA (mRNA) technology, protected against deaths from COVID-19 but that effect was offset by vaccinated trial participants being more likely to die from cardiovascular problems, Christine Stabell Benn, a health professor at the University of Southern Denmark, and other researchers reported in April in the Cell journal.


On the other hand, vaccines that utilized adenoviruses, such as the Johnson & Johnson vaccine, had a favorable impact on both COVID-19 mortality and overall mortality, according to the reanalysis.


The research analyzed data from randomized clinical trials (RCTs) reported by the companies that manufacture the vaccines.

“In the RCTs with the longest possible blinded follow-up, mRNA vaccines had no effect on overall mortality despite protecting against some COVID-19 deaths. On the other hand, the adenovirus-vector vaccines were associated with lower overall mortality,” researchers said.

“The differences in the effects of adenovirus-vector and mRNA vaccines on overall mortality, if true, would have a major impact on global health,” they added later.

Pfizer, Moderna, Johnson & Johnson, and AstraZeneca did not respond to requests for comment.

Benn and colleagues took data from three RCTs for the mRNA vaccines and six RCTs for the adenovirus-vector vaccines that had mortality data available. They compared the overall deaths in the vaccinated arms with the placebo arms. They also broke deaths down into different categories: attributed to COVID-19, cardiovascular problems, other non-COVID-19 causes, accidents, and non-accident, non-COVID-19 causes.

“We extracted the number of deaths from the studies that led to approval of the new mRNA and adenovirus-vector COVID-19 vaccines. We calculated the relative risk of dying, overall, and for various causes of death, for each vaccine type,” Benn told The Epoch Times in an email.

The Pfizer and Moderna vaccines, the researchers found, were associated with lower COVID-19 mortality but higher cardiovascular and non-accident, non-COVID-19 mortality. There was no difference in overall mortality between the vaccinated arms and the placebo groups.

The Johnson & Johnson vaccine was associated with lower overall mortality and with lower non-COVID-19 mortality, with no effect on COVID-19 mortality. AstraZeneca’s shot, never authorized in the United States but cleared in some other countries, performed well against overall mortality and other categories across several trials, except for one trial where slightly more vaccinated people died from non-COVID causes or non-accident, non-COVID-19 causes.


Messenger RNA COVID-19 Vaccines Had No Effect on Overall Mortality: Trial Data Reanalysis (

Some other useful Covid links.

Johns Hopkins Coronavirus resource centre

Centers for Disease Control Coronavirus

The Spectator Covid-19 data tracker (UK)

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.

The influence of AI on trust in human interaction

Date: May 8, 2023

Source:  University of Gothenburg

Summary:  As AI becomes increasingly realistic, our trust in those with whom we communicate may be compromised. Researchers at the University of Gothenburg have examined how advanced AI systems impact our trust in the individuals we interact with.

In one scenario, a would-be scammer, believing he is calling an elderly man, is instead connected to a computer system that communicates through pre-recorded loops. The scammer spends considerable time attempting the fraud, patiently listening to the "man's" somewhat confusing and repetitive stories. Oskar Lindwall, a professor of communication at the University of Gothenburg, observes that it often takes a long time for people to realize they are interacting with a technical system.

He has, in collaboration with Professor of informatics Jonas Ivarsson, written an article titled Suspicious Minds: The Problem of Trust and Conversational Agents, exploring how individuals interpret and relate to situations where one of the parties might be an AI agent. The article highlights the negative consequences of harboring suspicion toward others, such as the damage it can cause to relationships.

Ivarsson provides an example of a romantic relationship where trust issues arise, leading to jealousy and an increased tendency to search for evidence of deception. The authors argue that being unable to fully trust a conversational partner's intentions and identity may result in excessive suspicion even when there is no reason for it.

Their study discovered that during interactions between two humans, some behaviors were interpreted as signs that one of them was actually a robot.

The researchers suggest that a pervasive design perspective is driving the development of AI with increasingly human-like features. While this may be appealing in some contexts, it can also be problematic, particularly when it is unclear who you are communicating with. Ivarsson questions whether AI should have such human-like voices, as they create a sense of intimacy and lead people to form impressions based on the voice alone.

In the case of the would-be fraudster calling the "older man," the scam is only exposed after a long time, which Lindwall and Ivarsson attribute to the believability of the human voice and the assumption that the confused behavior is due to age. Once an AI has a voice, we infer attributes such as gender, age, and socio-economic background, making it harder to identify that we are interacting with a computer.

The researchers propose creating AI with well-functioning and eloquent voices that are still clearly synthetic, increasing transparency.

Communication with others involves not only deception but also relationship-building and joint meaning-making. The uncertainty of whether one is talking to a human or a computer affects this aspect of communication. While it might not matter in some situations, such as cognitive-behavioral therapy, other forms of therapy that require more human connection may be negatively impacted.

Jonas Ivarsson and Oskar Lindwall analyzed data made available on YouTube. They studied three types of conversations and audience reactions and comments. In the first type, a robot calls a person to book a hair appointment, unbeknownst to the person on the other end. In the second type, a person calls another person for the same purpose. In the third type, telemarketers are transferred to a computer system with pre-recorded speech.

The influence of AI on trust in human interaction -- ScienceDaily

Wendy's to begin replacing drive-thru staff with AI chatbots

Loz Blain  May 10, 2023

“It’s at least as good as our best customer service representative, and it’s probably on average better,” said Wendy's CIO Kevin Vasconi to the Wall Street Journal. After successful early tests, the fifth biggest fast food chain in the USA will start using AI chatbots to interact with drive-thru customers next month.

“It’s at least as good as our best customer service representative, and it’s probably on average better,” said Wendy's CIO Kevin Vasconi to the Wall Street Journal. After successful early tests, the fifth biggest fast food chain in the USA will start using AI chatbots to interact with drive-thru customers next month.

“It’s at least as good as our best customer service representative, and it’s probably on average better,” said Wendy's CIO Kevin Vasconi to the Wall Street Journal. After successful early tests, the fifth biggest fast food chain in the USA will start using AI chatbots to interact with drive-thru customers next month.

“It’s at least as good as our best customer service representative, and it’s probably on average better,” said Wendy's CIO Kevin Vasconi to the Wall Street Journal. After successful early tests, the fifth biggest fast food chain in the USA will start using AI chatbots to interact with drive-thru customers next month.


Wendy's to begin replacing drive-thru staff with AI chatbots (

"In politics stupidity is not a handicap."

Napoleon Bonaparte, French Dictator.

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