Thursday, 18 May 2023

Did Team Biden Just Fold? Japan Slows.

 Baltic Dry Index. 1425 -51        Brent Crude 76.71

Spot Gold 1979           US 2 Year Yield 4.12  +0.06

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

Deaths 53,103

Coronavirus Cases 18/05/23 World 688,579,069

Deaths 6,876,409

“Once the principle is admitted that it is the duty of the government to protect the individual against his own foolishness, no serious objections can be advanced against further encroachments.”

Ludwig von Mises.

We open today with rare good news on the food price inflation front. The Ukraine grain export deal has been extended by another two months.

Ukraine war live updates: Turkey says grain deal has been extended for Ukrainian shipping corridor


Russia appears to be doubling down on its efforts to capture Bakhmut in eastern Ukraine. Ukraine’s armed forces said Wednesday that Russian forces continue to concentrate their efforts on capturing the besieged town and nearby areas around Lyman, Avdiivka and Marinka.

In an operational update, the general staff of Ukraine’s armed forces sectors said there had been 55 combat engagements recorded in those areas in the past 24 hours. “Bakhmut and Marinka remain at the epicenter of hostilities,” Ukraine’s military staff reported.

The Black Sea Grain Initiative was extended by two months Wednesday, according to Turkish President Recep Tayyip Erdogan. The deal, which kept Ukrainian agricultural shipping lanes open from several major ports, was set to expire May 18.

Ukraine war live updates: Latest news on Russia and the war in Ukraine (

Back in the stock casinos, no one believes that President Biden will be so dangerously reckless as to force the USA into a June debt default.

Did team Biden just cave in? From far away London that’s how it looks.

Expect a short lived relief rally when an all round face saving debt ceiling compromise is announced.


Biden, McCarthy say U.S. won’t default as debt talks inch forward

WASHINGTON — Top leaders from both sides of the aisle reassured Americans on Wednesday that the U.S. won’t default on its debt as tense negotiations over the debt ceiling continued.

“I think at the end of the day we do not have a debt default,” House Speaker Kevin McCarthy told CNBC in a “Squawk Box” interview Wednesday morning.

President Joe Biden echoed that sentiment later in remarks from the White House, “We’re going to come together because these is no alternative,” he said. “Every leader in the room understands the consequences of failure.”

Biden spoke minutes before he departed Washington for a truncated visit to Asia, where he plans to attend the Group of Seven summit. He also said he would hold a news conference Sunday upon his return to share the latest on the negotiations.

The House speaker’s and the president’s remarks were the latest signs that negotiations, which had been stalled for months, were now moving into a more serious and concrete phase, and potentially closer to a deal.

Leaders are running out of time to raise the debt ceiling before a June 1 deadline when the government is set to run out of money. McCarthy met Tuesday with Biden at the White House alongside Vice President Kamala Harris and other top congressional leaders in an attempt to hammer out a deal before the president left for Japan.

McCarthy refrained from saying Wednesday that he was optimistic about the state of the talks, but said he was encouraged by Biden’s willingness to negotiate.

“The only thing I’m confident about is now we have a structure to find a way to come to a conclusion,” McCarthy said. “The timeline is very tight. But we’re going to make sure we’re in the room and get this done.”

Lifting the debt ceiling is necessary for the government to cover spending commitments already approved by Congress and the president — and prevent default. Doing so does not authorize new spending. But House Republicans have said they will not raise the limit if Biden and lawmakers do not agree to future spending cuts.

McCarthy and House Minority Leader Hakeem Jeffries in separate interviews Wednesday morning on “Squawk Box” agreed that negotiations were moving forward, but the two remained entrenched in their positions.

Jeffries called a Republican request to attach work requirements to federal food benefits a “nonstarter” but said he remains optimistic about negotiations.


Biden, McCarthy say U.S. won't default as debt talks inch forward (


Asia markets rise as Wall Street lifted by hopes of debt ceiling deal

UPDATED THU, MAY 18 2023 12:33 AM EDT

Asia-Pacific markets rose on hopes of U.S President Joe Biden and congressional leaders inching closer to a deal to raise the U.S. debt ceiling and avoid a default.

House Speaker Kevin McCarthy said that a “better process” is now in place for further talks, saying it’s “possible to get a deal by the end of the week.” Biden shortened his trip to Asia to focus on the negotiations, the White House said.

In Japan, the Nikkei 225 rose 1.46% and the Topix was up 1.03% as investors further digested Japan’s trade data for April – imports fell further than expected while exports also missed forecasts by Reuters. South Korea’s Kospi gained 0.62% and the Kosdaq gained 0.11% in Asia’s morning trade.

Stocks in Australia also rose, with the S&P/ASX 200 up 0.55% as the country’s unemployment rate came in at 3.7% in April, higher than the 3.5% expected by economists.

“A second consecutive day of softer domestic data will likely be enough to keep a hawkish Reserve Bank of Australia from raising rates again when it meets in June,” IG analyst Tony Sycamore said in an email.

Hong Kong’s Hang Seng index rebounded after Wednesday’s late sell off, climbing 1.3% on Wednesday. Mainland Chinese markets are also higher, with the Shenzhen Component gaining 0.18% and the Shanghai Composite up 0.44%.

Stocks on Wall Street closed higher on Wednesday, with all three major indexes gained over 1%, with the Nasdaq Composite gaining the most at 1.28%. The Dow Jones Industrial Average climbed 1.24% and the S&P 500 gained 1.19%.

Asia markets rise as Wall Street lifted by hopes of debt ceiling deal (


European markets head for higher open as U.S. debt ceiling talks make progress

UPDATED THU, MAY 18 2023 12:29 AM EDT

European markets are heading for a higher open Thursday as U.S. debt ceiling talks make progress.

Wall Street sentiment improved Wednesday and Asia-Pacific markets rose overnight on hopes that U.S President Joe Biden and congressional leaders were inching closer to a deal to raise the U.S. debt ceiling and avoid a default.

House Speaker Kevin McCarthy said that a “better process” is now in place for further talks, saying it’s “possible to get a deal by the end of the week.” Biden shortened his trip to Asia to focus on the negotiations, the White House said.

European markets live updates: stocks, news, earnings, debt ceiling (

Back in the real world, in western Europe, a summer of severe drought lies ahead, say the experts. Stock up on Christmas food now?


Southern Europe braces for climate change-fuelled summer of drought

BRUSSELS, May 17 (Reuters) - Southern Europe is bracing for a summer of ferocious drought, with some regions already suffering water shortages and farmers expecting their worst yields in decades.

As climate change makes the region hotter and drier, years of consecutive drought have depleted groundwater reserves. Soils have become bone dry in Spain and southern France. Low river and reservoir levels are threatening this summer's hydropower production.

With temperatures climbing into summertime, scientists warn Europe is on track for another brutal summer, after suffering its hottest on record last year – which fuelled a drought European Union researchers said was the worst in at least 500 years.

So far this year, the situation is most severe in Spain.

"The situation of drought is going to worsen this summer," said Jorge Olcina, professor of geographic analysis at the University of Alicante, Spain.

There's little chance at this point of rainfall resolving the underlying drought, either. "At this time of the year, the only thing we can have are punctual and local storms, which are not going to solve the rainfall deficit," Olcina said.

Seeking emergency EU assistance, Spain’s Agriculture Minister Luis Planas warned that "the situation resulting from this drought is of such magnitude that its consequences cannot be tackled with national funds alone," according to an April 24 letter sent to the European Commission (EC) and seen by Reuters.

---- France is emerging from its driest winter since 1959, with drought "crisis" alerts already activated in four departmental prefects, restricting non-priority water withdrawals - including for agriculture, according to government website Propluvia.

Portugal, too, is experiencing an early arrival of drought. Some 90% of the mainland is suffering from drought, with severe drought affecting one-fifth of the country - nearly five times the area reported a year earlier.

In Spain, which saw less than half its average rainfall through April this year, thousands of people are relying on truck deliveries for drinking water, while regions including Catalonia have imposed water restrictions.

Some farmers have already reported crop losses as high as 80%, with cereals and oilseeds among those affected, farming groups have said.

"This is the worst loss of harvest for decades,” Pekka Pesonen, who heads the European farming group Copa-Cogeca, said of Spain. "It's worse than last year's situation."

Spain is responsible for half of the EU's production of olives and one third of its fruit, according to the Commission.

---- "Severe drought in Southern Europe is particularly worrying, not only for the farmers there but also because this can push up already very high consumer prices if the EU production is significantly lower," Commission spokesperson Miriam Garcia Ferrer said.

Similar struggles could emerge in Italy, where up to 80% of the country’s water supply goes toward agriculture. With this year’s thin mountain snow cover and low soil moisture, Italian farmers are planning to cut back – sowing summer crops across an area 6% smaller than last year’s planting area, according to national data on sowing intentions.

After two years of water scarcity, parts of northern Italy entered May with a 70% deficit in snow water reserves and a 40% deficit of soil moisture, said Luca Brocca, a Director of Research at Italy's National Research Council.

With the ground so parched, rain when it does arrive fails to soak in, with devastating consequences. 

Southern Europe braces for climate change-fuelled summer of drought | Reuters

But, did northern Italy’s severe drought just end in the worst possible way?


Northern Italy hit by deadly floods as heavy rains burst riverbanks

May 17, 2023

Floods caused by heavy rains in Italy's northern Emilia Romagna region have killed two people, authorities said on Wednesday, as local mayors warned residents they were still in danger.

"At the moment there are two dead... the emergency is still underway," the region said in a statement, after desperate efforts overnight to save children and the elderly from rising waters.

The victims were a man in Forli, near Bologna, and one in Cesena, whose wife was also missing, the region said.

A third victim was found Wednesday on a beach in Cesenatico, according to media reports.

The civil protection agency said 14 rivers had broken their banks across the region between Tuesday and Wednesday, and 23 towns were flooded.

It urged "maximum caution" on Twitter, as mayors warned people to stay on high ground.

"About 5,000 people have been evacuated, but that number might rise," Civil Protection Minister Nello Musumeci told Radio 24.

Photographs showed streets transformed into rivers, and firemen moving people to safety in rubber dinghies.

"We absolutely must not lower our guards," Cesena mayor Enzo Lattuca said on Facebook.

Residents "must not under any account go into basements or cellars, and stay out of ground floors if possible", he said.

Italian Prime Minister Giorgia Meloni on Tuesday tweeted her support for those affected and said the government was "ready to intervene with the necessary aid".

Northern Italy hit by deadly floods as heavy rains burst riverbanks (

Imola GP cancelled as F1 bosses release statement after severe flooding causes mayhem

May 17, 2023

F1 have confirmed that the Emilia Romagna Grand Prix has been postponed until further notice due to flooding in northern Italy which has severely impacted the area surrounding the circuit. There had been calls to cancel the event as talks were held at high-level on Wednesday, the second day that F1 personnel were banished from the circuit.

Staff working at Imola prior to the GP had been told to leave on Tuesday afternoon as a precautionary measure due to flooding in the nearby Santerno River, they were then told to keep away on Wednesday amid heavy rain that had continued into the next day.

----"Following discussions between Formula 1, the President of the FIA, the competent authorities including the relevant Ministers, the President of the Automobile Club of Italy, the President of Emilia Romagna Region, the Mayor of the City and the promoter the decision has been taken not to proceed with the Grand Prix this weekend in Imola.

"The decision has been taken because it is not possible to safely hold the event for our fans, the teams and our personnel and it is the right and responsible thing to do given the situation faced by the towns and cities in the region. It would not be right to put further pressure on the local authorities and emergency services at this difficult time."

The race was due to be the sixth of the season but while authorities will attempt to find a date, the BBC have claimed that it is unlikely that Imola will make a return this season due to the crowded schedule.


Imola GP cancelled as F1 bosses release statement after severe flooding causes mayhem (

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.

Japan's export growth hits two-year low on weak China demand

TOKYO, May 18 (Reuters) - Japan's export growth hit its weakest pace in more than two years in April as China-bound shipments slumped amid lingering worries about faltering global economic demand.

Exports rose 2.6% in April from a year earlier, Ministry of Finance data showed on Thursday, slower than a 3.0% increase expected by economists in a Reuters poll and a 4.3% rise in March. It also marked the weakest gain since February 2021 when exports declined 4.5%.

The world's No. 3 economy emerged from recession in the first quarter, helped by a boost in consumer spending and tourism following the end of COVID-19 pandemic restrictions, but weak exports are weighing on factory activity and hampering a broader recovery.

Exports have expanded every month since the February 2021 decline, helped in part by a weaker yen that makes Japanese products competitive.

However, gross domestic product data for January-March on Wednesday showed exports slumped 4.2% in the period, the first quarterly decline in 18 months.

"Weakening exports will put a drag on capital spending, which may sap domestic demand as consumption lacks strength," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"The global economy will slow further in the latter half of this year, so you cannot count on either domestic or external demand, leaving Japan's economy in a soft patch."


Japan's export growth hits two-year low on weak China demand | Reuters

Euro zone inflation ticks up in April

FRANKFURT, May 17 (Reuters) - Euro zone inflation accelerated last month, Eurostat said on Wednesday, confirming preliminary data pointing to increasingly stubborn price growth among the 20 nations sharing the euro.

Overall price growth accelerated to 7.0% in April from 6.9% a month earlier, as rising services and energy costs offset a slowdown in food price growth.

Although underlying price growth, the key focus of European Central Bank policymakers in recent months, slowed a touch, the crucial services component continued to accelerate, pointing to mounting wage pressures that could get inflation stuck above the ECB's 2% target.

Excluding volatile food and fuel prices, core inflation slowed to 7.3% from 7.5%, while an even narrower measure, which excludes alcohol and tobacco, slowed to 5.6% from 5.7% in its first decline since last June.

Inflation has been above the ECB's 2% target for nearly two years and the bank has lifted interest rates by a combined 375 basis points since last July to arrest runaway price growth.

But more hikes are likely as it could be 2025 before inflation is back at target and the "last mile" of disinflation, getting from 3% to 2%, could be especially difficult, taking nearly 2 years.

Services inflation, which is primarily driven by labour costs, accelerated to 5.2% from 5.1%, confirming policymaker fears that nominal wage growth could become dangerously fast.

---- Unexpectedly generous wage deals in Germany, the bloc's biggest economy, also raise the risk that labour costs could continue to rise especially quickly next year, prolonging inflation.


Euro zone inflation ticks up in April | Reuters

Bank of England governor Andrew Bailey warns of uncertainty over inflation drop

WEDNESDAY 17 MAY 2023 11:49 AM

The risk of inflation staying higher for longer than the Bank of England’s two per cent target than it expects is mounting due to the slow reduction of wage pressures and price rises, the Governor of the central bank warned today.

Speaking at the British Chambers of Commerce’s (BCC) annual conference, Andrew Bailey warned the Bank thinks the likelihood of inflation topping its projections are “skewed significantly to the upside”.

Economists on Threadneedle Street have arrived at that judgement because “the unwinding of second-round effects may take longer than it did for them to emerge”.

Our commitment to the two per cent inflation target is unwavering,” Bailey said, however.

Inflation has consistently breached the central bank’s projections, including in March when it hit 10.1 per cent, 0.8 percentage points over its prediction.

Bailey said if further inflation shocks emerge, “then further tightening in monetary policy would be required”.

The Bank’s base case scenario assumes interest rates will need to rise to the market’s expected peak of 4.75 per cent for inflation to eventually dip below the two per cent.

The Governor, alongside six other members of the nine-strong monetary policy committee (MPC), last week backed a twelfth straight interest rise, voting for a 25 basis points increase to 4.5 per cent, taking them to their highest level since October 2008.


Core inflation, a more accurate measure of underlying inflation pressures, also firmed in March, suggesting UK inflation is beginning to be driven by home-grown factors such as pay growth instead of international energy prices soaring after Russia’s invasion of Ukraine.

Those upside inflation shocks reflect “the possibility of more persistence in domestic wage and price setting,” Bailey said.

Last week, the Bank hiked its medium term inflation forecasts from its February projection. 

It now thinks the rate of price increases will still be around five per cent by the end of the year, up from 3.9 per cent, and that it won’t return to its two per cent target until 2025.


BoE Gov Andrew Bailey warns of uncertainty over inflation drop (

Covid-19 Corner

This section will continue until it becomes unneeded.

Johnson & Johnson COVID-19 Vaccine Becomes Unavailable in US

May 15, 2023 Updated: May 16, 2023

One of the four COVID-19 vaccines authorized in the United States is no longer available, the nation’s public health agency says.

The Johnson & Johnson COVID-19 vaccine “is no longer available in the U.S.,” the U.S. Centers for Disease Control and Prevention (CDC) stated in a recent update.

That’s due to the vaccine expiring on May 7. Health care workers were advised to dispose of any remaining doses in accordance with regulations.

The CDC and Johnson & Johnson didn’t respond to requests for comment.

U.S. regulators first cleared the jab in February 2021, giving Americans an alternative to the messenger RNA-based Moderna and Pfizer COVID-19 vaccines. Johnson & Johnson’s vaccine became popular in part because it’s only a single dose. The messenger RNA vaccines each have a primary series of two doses.

But uptake slowed after U.S. authorities paused recommending the vaccine because of concerns about a reported link to a combination of blood clotting and low platelet levels, a condition called thrombosis with thrombocytopenia syndrome (TTS) that can cause death. About 15 percent of the post-vaccination TTS cases have been fatal.

Regulators limited the availability of the vaccine in 2022 because experts determined it caused TTS.

Since March, recipients have also been warned that they face an increased risk of myocarditis, or heart inflammation, and a related condition called pericarditis. All four COVID-19 vaccines authorized in the United States present an increased risk of myocarditis, primarily for young males.


Johnson & Johnson COVID-19 Vaccine Becomes Unavailable in US (


COVID-19's total cost to the economy in US will reach $14 trillion by end of 2023 – new research

May 16, 2023

The economic toll of the COVID-19 pandemic in the U.S. will reach US$14 trillion by the end of 2023, our team of economistspublic policy researchers and other experts have estimated.

Putting a price tag on all the pain, suffering and upheaval Americans and people around the world have experienced because of COVID-19 is, of course, hard to do. More than 1.1 million people have died as a result of COVID-19 in the U.S., and many more have been hospitalized or lost loved ones. Based on data from the first 30 months of the pandemic, we forecast the scale of total economic losses over a four-year period, from January 2020 to December 2023.

To come up with our estimates, our team used economic modeling to approximate the revenue lost due to mandatory business closures at the beginning of the pandemic. We also used modeling to assess the economic blows from the many changes in personal behavior that continued long after the lockdown orders were lifted – such as avoiding restaurants, theaters and other crowded places.

Workplace absences, and sales lost due to the cessation of brick-and-mortar retail shopping, air travel and public gatherings, contributed the most. At the height of the pandemic, in the second quarter of 2020, our survey indicates that international and domestic airline travel fell by nearly 60%, indoor dining by 65% and in-store shopping by 43%.

We found that the three sectors that lost the most ground during the first 30 months of the pandemic were air travel, dining, and health and social services, which contracted by 57.5%, 26.5% and 29.16%, respectively.

These losses were offset to a degree by surges in online purchases, a series of large fiscal stimulus and economic relief packages and an unprecedented expansion of the number of Americans working from home – and thus were able to keep doing jobs that might otherwise have been cut.

From 2020 to 2023, the cumulative net economic output of the United States will amount to about $103 trillion. Without the pandemic, the total of GDP over those four years would have been $117 trillion – nearly 14% higher in inflation-adjusted 2020 dollars, according to our analysis.


COVID-19's total cost to the economy in US will reach $14 trillion by end of 2023 – new research (

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.

Something different today. Today out with the old and in with the new.

East Ayrshire farm gets okay to install 1,000 solar panel modules on historic ironworks site

Auldhouseburn Farm will install the 200kW system adjacent to Furnace Road after East Ayrshire Council planning officers gave the go ahead

May 17, 2023

An East Ayrshire farm has been given the go ahead to install 1,000 solar panel modules on land which was home to the area’s first ironworks in the 1700s.

Alan Blackwood, of Auldhouseburn Farm, applied to install the 200kW of ground mounted panels which will be laid out in rows alongside Furnace Road right at the edge of the Muirkirk boundary.

While there were no objections, the West of Scotland Archaeology Service pointed out the historic value of the site and stressed the need to monitor it for finds during development.

They stated: “The application lies on top of Muirkirk ironworks. This is recorded as the location of the first ironworks in the area being established in 1787 and is a significant industrial archaeological site.

“Any ground disturbance involved in the application could reveal buried remains of significance associated with the ironworks.

“A simple watching brief during the main pieces of proposed ground disturbance is advised.

---- Muirkirk Iron Works were built in 1787, opening the following year. A canal ran east from the iron works and served a number of coal mines.

The ironworks were located just beyond the end of the Muirkirk 1st rail line which opened in 1848, connecting it with Ayr Harbour.

The works finally closed in 1923 following a strike where the blast furnaces had been left to cool with iron inside them. However, the works were only demolished in the 1960s, leaving little in the way of remains.

The report concluded: “The proposed ground mounted solar array is not considered to have a negative of significant impact on adjacent uses of residential properties. The proposed location will mitigate the visual impact with minimal visibility from the public domain.

“In conclusion and noting the above assessment, the proposed installing of ground mounted solar panels is considered to be acceptable under the terms of the relevant policies.

East Ayrshire farm gets okay to install 1,000 solar panel modules on historic ironworks site - Daily Record

“The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau.”

Ludwig von Mises.


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