Tuesday, 23 May 2023

Another Day Lost. More Food Price Inflation Ahead.

Baltic Dry Index. 1365 -19        Brent Crude 76.17

Spot Gold 1962           US 2 Year Yield 4.29  +0.01

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

Deaths 53,103

Coronavirus Cases 23/05/23 World 689,046,272

Deaths 6,880,725

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

Another day dawns and another day lost to financial sanity returning to Washington, where team Biden still don’t seem to realise that their hand of four twos doesn’t beat the Republican’s hand of four Kings.

Unless team Biden can somehow rig four Aces and fast, a global financial earthquake is about to hit at some time in June 2023.

For now, the global stock casino punters remain in disbelief that this could happen. Team Biden couldn’t be that stupid, they think. I wouldn’t bet on it though. Deep in the Biden White House bunker it’s already late April 1945 with May 1945 fast approaching.


European markets set for positive open but there’s still no deal on U.S. debt ceiling

UPDATED TUE, MAY 23 2023 12:24 AM EDT

European markets are heading for a higher open Tuesday as U.S. debt ceiling negotiations continue.

On Monday, House Speaker Kevin McCarthy said he had a “productive” and “professional” meeting with President Joe Biden on how to raise the debt ceiling, but that the two did not reach a deal. June 1 is seen as the earliest date that the U.S. could default, lending urgency to the discussions.

Asia-Pacific markets were mixed overnight, while U.S. stock futures were modestly higher.

---- Yellen’s latest guidance: ‘Highly likely’ Treasury will be unable to cover debts in early June

Treasury Secretary Janet Yellen has just released a new letter to congressional leaders with updated guidance on the earliest date that the U.S. could be at serious risk of a debt default.

The date remains June 1 in the new letter, the same date it’s been since the start of May. But the new message contains two key differences from a very similar letter Yellen penned on May 15.

“With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by earlyJune, and potentially as early as June 1,” writes Yellen.

The phrase “highly likely” is new. Last week Yellen wrote that it was merely “likely.”

Yellen also removed an entire sentence from last week’s letter that said emergency measures Treasury is currently taking could help to push that June deadline out.

“The actual date Treasury exhausts extraordinary measures could be a number of days or weeks later than these estimates,” read Yellen’s May 15 letter to congressional leaders.

The new letter comes as President Joe Biden is about to meet face to face with House Speaker Kevin McCarthy, part of an increasingly urgent effort to reach a bipartisan compromise deal.

European markets live updates: stocks, news, U.S. debt ceiling (cnbc.com)

Stock futures are up slightly as Wall Street watches for debt ceiling progress: Live updates

UPDATED MON, MAY 22 2023 8:19 PM EDT

Stock futures are modestly higher Monday night after a key debt ceiling meeting between President Joe Biden and House Speaker Kevin McCarthy, even though the two did not strike a deal.

Futures tied to the Dow Jones Industrial Average added 88 points, or 0.2%. S&P 500 and Nasdaq-100 futures each also gained about 0.3%.

McCarthy and Biden met at the White House Monday evening, in a discussion that the House speaker described as “productive” and “professional.” These latest talks – taking place with just 10 days until June 1, the earliest date that the U.S. could default – seemed to have a more positive tone following the hourlong discussion.

“The president and I know the deadline, so I think we’re going to talk every day… until we get this done,” McCarthy said, noting that both teams would “come back together and work through the night” on a compromise.

Investors have been closely eyeing debt-limit negotiations in Washington, hoping for more certainty as the so-called X-date of June 1 draws closer.

“Certainly, the debt ceiling’s been weighing on investors,” said Phillip Colmar, partner and global strategist at MRB Partners. “It’s probably an 11th-hour deal, but if it is earlier than that, I think that would be encouraging.”

The meeting follows a mixed session for Wall Street as investors followed the latest updates out of resumed debt ceiling negotiations. The Dow lost about 0.4%, while the S&P 500 finished little changed. The Nasdaq Composite advanced 0.5%. The tech-heavy index touched its highest intraday level and highest close since August.

Investors will watch Tuesday for a batch of corporate quarterly earnings from retail stocks including Lowe’sBJ’s Wholesale and Dick’s Sporting Goods. On the economic front, they will follow morning data on the manufacturing and services sectors as well as new home sales.

Stock market today: Live updates (cnbc.com)

Treasury confirms U.S. default as early as June 1 without debt ceiling hike

WASHINGTON, May 22 (Reuters) - The U.S. Treasury Department reiterated Monday it expects to be able to pay the U.S. government's bills only through June 1 without a debt limit increase, leaving just 10 days for White House negotiators and congressional Republicans to reach a deal.

In her third letter to Congress in three weeks, Treasury Secretary Janet Yellen said it was "highly likely" that the agency will be unlikely to meet all U.S. government payment obligations by early June, and as early as June 1, without congressional action to raise the $31.4 trillion debt ceiling, which would trigger the first-ever U.S. default.

"With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1," she said.

Yellen said the estimates, in line with her last letter to Congress on May 15, were based on currently available data, but federal receipts, outlays and debt could still vary. She said she would update Congress as more information became available.


Treasury confirms U.S. default as early as June 1 without debt ceiling hike | Reuters

What it would mean for the global economy if the US defaults on its debt

May 22, 2023

WASHINGTON (AP) — If the debt crisis roiling Washington were eventually to send the United States crashing into recession, America’s economy would hardly sink alone.
The repercussions of a first-ever default on the federal debt would quickly reverberate around the world. Orders for Chinese factories that sell electronics to the United States could dry up. Swiss investors who own U.S. Treasurys would suffer losses. Sri Lankan companies could no longer deploy dollars as an alternative to their own dodgy currency.
“No corner of the global economy will be spared” if the U.S. government defaulted and the crisis weren’t resolved quickly, said Mark Zandi, chief economist at Moody’s Analytics.
Zandi and two colleagues at Moody’s have concluded that even if the debt limit were breached for no more than week, the U.S. economy would weaken so much, so fast, as to wipe out roughly1.5 million jobs.
And if a government default were to last much longer — well into the summer — the consequences would be far more dire, Zandi and his colleagues found in their analysis: U.S. economic growth would sink, 7.8 million American jobs would vanish, borrowing rates would jump, the unemployment rate would soar from the current 3.4% to 8% and a stock-market plunge would erase $10 trillion in household wealth.


What it would mean for the global economy if the US defaults on its debt | AP News

Up next, more US bank trouble to come says JP Morgan’s CEO. Even if sanity returns to the Biden White House bunker and President Biden capitulates and makes a deal, a great summer of US commercial real estate trouble lies directly ahead. Look away from that rapidly distorting inverted US yield curve now.

Jamie Dimon warns souring commercial real estate loans could threaten some banks

Deposit runs have led to the collapse of three U.S. banks this year, but another concern is building on the horizon.

Commercial real estate is the area most likely to cause problems for lenders, JPMorgan Chase CEO Jamie Dimon told analysts Monday.

“There’s always an off-sides,” Dimon said in a question-and-answer session during his bank’s investor conference. “The off-sides in this case will probably be real estate. It’ll be certain locations, certain office properties, certain construction loans. It could be very isolated; it won’t be every bank.”

U.S. banks have experienced historically low loan defaults over the last few years due to low interest rates and the flood of stimulus money unleashed during the Covid-19 pandemic. But the Federal Reserve has hiked rates to fight inflation, which has changed the landscape. Commercial buildings in some markets, including tech-centric San Francisco, may take a hit as remote workers are reluctant to return to offices.

“There will be a credit cycle. My view is it will be very normal” with the exception of real estate, Dimon said.

For example, if unemployment rises sharply, credit card losses might surge to 6% or 7%, Dimon said. But that will still be lower than the 10% experienced during the 2008 crisis, he added.

Separately, Dimon said banks — especially the smaller ones most affected by the industry’s recent turmoil — need to plan for interest rates to rise far higher than most expect.

“I think everyone should be prepared for rates going higher from here,” up to 6% or 7%, Dimon said.


Commercial real estate: Jamie Dimon says souring loans threaten banks (cnbc.com)

Finally, yet more bad news for global food price inflation.  HMG needs to hold off for awhile on seeking a trade deal with the USA 

MRNA animal vaccines are newly routine in America, I believe, and can enter into humans via edible animal products.  Best to wait a couple of years to see how this turns out.

Mad Cow Disease Case Detected in the US

May 20, 2023 Updated: May 21, 2023

An atypical case of bovine spongiform encephalopathy (BSE), also commonly known as mad cow disease, has been detected in South Carolina, the U.S. Department of Agriculture (USDA) said Friday.

The disease was found in an approximately 5-year-old or older beef cow at a slaughter plant in the Palmetto State.

“This animal never entered slaughter channels and at no time presented a risk to the food supply or to human health in the United States. Given the United States’ negligible risk status for BSE, we do not expect any trade impacts as a result of this finding,” the federal agency said in a statement.

The cow was from Tennessee and tested positive for atypical BSE, Clemson University stated.

“The animal showed symptoms of the disease upon arrival at the plant and was euthanized. Samples were sent to a National Animal Health Laboratory Network (NAHLN) lab for testing and returned suspect for BSE. The samples were then sent to USDA Animal and Plant Health Inspection Service’s (APHIS) National Veterinary Services Laboratories (NVSL) where they were confirmed positive for atypical L-type BSE,” the statement reads.

Michael Neault, director of Clemson Unversity Livestock Poultry Health and South Carolina state veterinarian, said that this is an “isolated case.”

----This was the seventh detection of BSE in the United States since 2003, and all but one have been atypical.

The first case was reported in December 2003 when a presumptive diagnosis of BSE was announced in an adult Holstein cow from Washington state. The diagnosis was later confirmed by an international reference laboratory in Weybridge, England.

BSE Variant Could Be Deadly for Humans

According to the U.S. Food and Drug Administration (FDA), humans could get a version of BSE called variant Creutzfeldt-Jakob disease (vCJD) if they eat food from cows sick with BSE.

As of 2019, 232 people are known to have been infected with vCJD and all of them have died. Most of the victims lived in the United Kingdom at some point in their lives. Four of them lived in the United States.

The four Americans who died after vCJD most likely were infected when they were living or traveling overseas, the agency said.

BSE and vCJD are not contagious and people will not be infected with BSE from drinking milk or eating dairy products from sick cows.

Researchers reported that one in 2,000 people in the United Kingdom were carriers of vCJD, the BBC reported.

The House of Commons Science and Technology Committee, which was renamed as the Science, Innovation, and Technology Committee this year, said in a 2014 report that thousands of people could be asymptomatic carriers of the prions that cause vCJD and blood transfusions were a key channel of transmission.


Mad Cow Disease Case Detected in the US (theepochtimes.com)

Kansas farmers abandon wheat fields after extreme drought

WICHITA, Kansas, May 22 (Reuters) - Farmers in Kansas, the biggest U.S. producer of wheat used to make bread, are abandoning their crops after a severe drought and damaging cold ravaged farms.

They are intentionally spraying wheat fields with crop-killing chemicals and claiming insurance payouts more than normal, betting the grain is not worth harvesting, Reuters found on a three-day tour of the state. Other growers are turning over dismal-looking fields to cattle for grazing.

Abandoning fields will lead to a smaller U.S. wheat supply in the world's No. 5 wheat exporter, with stocks seen falling to a 16-year low. High rates of abandonment deal an economic blow to farm towns and force wheat buyers to adjust procurement plans by buying the staple grain elsewhere.

Nationally, winter-wheat farmers plan to abandon 33% of the acres they planted, the highest percentage since World War I, the U.S. Department of Agriculture said in a May 12 report.

Kansas farmers are expected to abandon about 19% of the acres planted last autumn, up from 10% last year and 4% in 2021, according to the report. But farmers, grain traders and representatives of major food companies who traversed the state on an annual crop tour last week warn of an even greater percentage of unharvested acres.




Pasta prices have surged, prompting crisis meetings in Italy and calls for a strike

Whether it’s a plate of spaghetti aglio e olio or penne arrabbiata, the price of Italy’s beloved staple is soaring — enough to warrant a crisis meeting at the heart of the Italian government.

Pasta prices rose 17.5% in March and 16.5% in April, according to Italy’s ministry of business which cited Istat data. The jump is double that of Italy’s consumer price index figures, which climbed 8.1% year-on-year for April and 8.7% for March, according to Refinitiv data.

Pasta dishes in restaurants have risen 6.1% across the board year-on-year, Italy’s consumer rights group Assoutenti told CNBC. According to a 2022 survey by the International Pasta Organization, an average Italian consumes almost 23 kg worth of pasta per year. 

The elevated retail prices are owed to the fact that producers are now selling their pasta stocks which were made when the raw material costs were higher.

“This is due to the disposal of stocks produced with higher costs of raw materials,” Assoutenti’s President Furio Truzzi said, citing higher wheat and energy prices.

In March 2022, the price of wheat peaked to its highest levels in more than a decade as Russia’s invasion of Ukraine advanced. Both nations are huge suppliers of agricultural products to the global market.

However, Truzzi noted that the input costs have since dropped since that time, and higher pasta prices are now driven by other factors.

“High prices are maintained in order to have greater profits. Prices will fall only in the face of a significant drop in consumption,” said Assoutent, proposing plans to reduce pasta consumption with a “pasta strike” of at least 15 days. In 2007, Italians staged a one-day strike against buying pasta when prices rose by almost 20%.

International wheat prices in April lost 2.3% to drop to their lowest since July 2021, according to the Food and Agricultural Organization

“Wheat prices have been declining from their historic peak following the invasion of Ukraine, but remain high,” the World Bank’s External Affairs Officer Nandita Roy told CNBC via e-mail. She noted that the World Bank forecasts a 17.4% drop in wheat prices in 2023 relative to 2022. 

The prices of durum wheat, a variety of wheat that’s typically used in pasta, have also been on a decline in recent months. “However, there are many country-specific factors that would explain the rise in pasta prices in Italy,” Roy added.


Pasta prices have surged, prompting crisis meetings in Italy and calls for a strike (cnbc.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.

UK inflation poised to slip out of the double digits to lowest level in over a year

May 22, 2023

UK inflation is poised to tumble to its lowest level in over a year in what is expected to begin a steady descent from its multi-decade highs, new figures out this week are likely to reveal.

The rate of price increases in April is tipped to have dropped markedly to 8.2 per cent last month, down from 10.1 per cent and to the lowest level since March 2022 when it rose to seven per cent, according to City analysts.

That would take inflation out of the double digits for the first time since last summer.

Living costs have been rising rapidly for more than a year, initially driven upward by supply chains buckling under the weight of a sudden surge in demand after Covid-19 lockdowns were ditched.

Russia’s full-scale invasion of Ukraine lit a rocket under international energy prices, pushing up UK household energy bills to what could have been more than £4,000 without the government stepping in and capping bills at £2,500 last year.

While that intervention has averted the biggest hit to average living standards on record, it has knocked Britain’s finances, forcing the government to borrow £22.4bn last month, markets expect.

----A combination of poor weather and the Russia-Ukraine war jolting raw material production has also squeezed food supplies, putting upward pressure on supermarket prices, which have climbed nearly a fifth over the last year – the fastest acceleration since the 1970s.

However, the cost of living crisis that has knocked the poorest households’ finances is poised to slowly ease as the year progresses, but food price inflation may take longer than headline consumer prices to decelerate. 

Comparisons with last year’s jump in energy prices will force the headline consumer price index lower, although “further downward pressure will come from fuel prices,” Andrew Goodwin, chief UK economist at consultancy Oxford Economics, said.

Any signs that core inflation – which is running over six per cent – is failing to fall substantially in response to the Bank of England’s twelve successive interest rate rises could seal another increase at the monetary policy committee’s (MPC) next meeting on 22 June.

Bank Governor Andrew Bailey and other rate setters will break down the reasons why they lifted borrowing costs earlier this month by 25 basis points at a grilling MPs on the treasury committee on Tuesday. 


UK inflation poised to slip out of the double digits to lowest level in over a year (msn.com)

The Stagflation That Defined the 1970s Could Be Making a Comeback

May 20, 2023

Stagflation is a situation where there is simultaneous slow growth, high unemployment, and significant inflation. The term, which essentially means a stagnant economy, is a combination of the words ‘stagnation’ and ‘inflation.’ During a period of stagflation, wages are down and inflation is up, so purchasing power goes down, resulting in a stagnant economy.

The last time the U.S. experienced stagflation was in the 1970’s when oil price spikes combined with slow growth produced the toxic combination. While a lot has changed in the last 50 years, some economists believe stagflation could soon make a comeback.

J.D. DURKIN: The highest inflation in four decades has led some to compare today’s conditions to those of the 1970s. But back then – “stagflation,” or a combination of the words “stagnation” and “inflation,” was a major problem for the U.S. economy. Stagflation is a term used to describe an economy where there is slow growth, high unemployment, and significant inflation, meaning stagflation is this perfect storm where prices go up, currency is becoming devalued, and there’s no real economic growth. 

The term is synonymous with the 1970s, when people lined up for hours, when job losses were high and people waited hours for gas. During a period of stagflation, workers are getting paid less money, and things are more expensive, so purchasing power goes down – resulting in a stagnant economy.


The Stagflation That Defined the 1970s Could Be Making a Comeback (msn.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

Today, the next mRNA vaccine scandal in the making? Flu mRNA vaccines.  Approx. 7 minutes.

mRNA pathophysiology

mRNA pathophysiology - YouTube

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.

More sanity and reality from Jack Lifton and the leading Canadian website Investorintel.com

Jack Lifton is the Editor in Chief, Critical Minerals for InvestorIntel.com, a capital market source celebrating its 21st year in business. He is also a Director of InvestorIntel…

Can we get back to the way we were?

Jack Lifton  May 21, 2023

The lack of understanding of the total supply chains for the complex, unseen components, that underlie and enable the operations of the technologies we now take for granted in our daily lives, is the main reason that we have given away our competitive advantage in so many of the technologies we invented. In fact it’s a prime example of the old excuse, “I didn’t know the gun was loaded.” Most of us only see, and are only interested in, the outer face of of a device

The financialization of American industry over the last 50 years has completed eroded the engineering and experiential skills that used to be de rigeur in the management suites of America’s manufacturing giants. The decline of understanding of the sourcing and sources of the components necessary to assemble an automobile is glaringly apparent.

The limits of American chemical manufacturing engineering, critical for the downstream processing of non-fuel minerals into end user products, versus the unrestrained limits of the imagination of policy makers and their academic and bureaucratic advisors have now reached a crisis point. Policy makers think that a skilled workforce and legacy engineering competence can simply be brought into immediate existence by funding amorphous programs with the appropriate names and with the correct distribution of money to bureaucratically approved recipients who do not need to demonstrate any prior competence in the production, on-time delivery, at the agreed price, of products meeting the customer’s specification. These recipients of the other-people’s money (a/k/a taxes), rather, need to demonstrate the proper cronyism and have the necessary lobbying in Washington.  

American manufacturers driven solely by quarterly reports have given up on supporting internal corporate R&D, which in the form of GE Schenectady, Bell Labs, Park Xerox, Ford Scientific, GM Engineering, and many, many more gave us not just the twentieth century’s rapid expansion of technologically based consumer and military goods, but Nobel Prize winners, medical advances, and most of all, our contemporary lifestyle and standard of living. President Nixon’s decision to shut down the Space Shuttle Program in 1972 began the rapid decline of the major funding of corporate R&D by government agencies that fueled all technological development up to that time. That foolish, short-sighted, decision was made to try to save money due to the enormous expense of the (successful) moon program and the war in Vietnam. The long-term benefits of the moon and space shuttle programs for the general economy were ignored in favor of the short term financial needs.

Fast forward to 2023. The greatest generation of manufacturing engineers and research scientists are long gone from the management suites of American industry. The font of technology that was the private corporate R&D labs in the United States is not even a memory.


Can we get back to the way we were? - InvestorIntel

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”

Chuck Prince, dancing CEO of Citigroup, July 2007, who danced himself right out of his job in 2008.



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