Wednesday, 3 May 2023

Fed D Day. The Great Disruption Arrives.

 Baltic Dry Index. 1552 -24          Brent Crude 75.33

Spot Gold 2016              US 2 Year Yield 3.97  -0.17

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

Deaths 53,103

Coronavirus Cases 03/05/23 World 687,343,663

Deaths 6,867,685

 Just because you have a good hand today doesn't mean it's good tomorrow. And some of the things we're doing may become very disadvantageous at some point.

Jamie Dimon, CEO JP Morgan Chase.

It is Fed interest rate decision day. Will they chicken out and opt for Burnsian  great cost push wage inflation or will they continue to pursue anti-inflation Volkerism?

By this time tomorrow we will know.

Look away from that massively inverting US Treasury yield curve, soaring gold price and collapsing oil price, now!

Does it matter in the long run anyway, as the banksters continue failing in the end run of the Great Nixonian Error of Fiat Money, communist money, as the Great Disruption of Artificial Intelligence arrives to replace human intelligence?

Who needs a money manager when pretty soon we will all have an AI money manager on our laptop and smart phone?

Asian markets fall ahead of Fed policy decision, tracking losses on Wall Street

UPDATED WED, MAY 3 2023 12:34 AM EDT

Asia-Pacific markets largely fell Wednesday as investors look ahead to the U.S Federal Reserve’s policy decision overnight.

Most economists surveyed by Reuters said said they expect the Fed to hike rates by 25 basis points, with the remainder forecasting a pause.

Hong Kong’s Hang Seng index led losses in the region and tumbled 1.75%, led by energy, industrials and healthcare stocks, while the Hang Seng Tech index slid 2.38%.

In Australia, the S&P/ASX 200 fell 1.46%, while South Korea’s Kospi dropped 1% and the Kosdaq saw a smaller loss, falling 0.92%. Markets in Japan and mainland China are closed for a holiday Wednesday.

Overnight in the U.S., all three major indexes fell for a second-straight session as banking fears returned to Wall Street ahead of the Fed rate decision.

The Dow Jones Industrial Average and Nasdaq Composite fell 1.08% each, while the S&P 500 saw a slightly larger loss and slid 1.16%.

Asian markets fall ahead of Fed policy decision, tracking losses on Wall Street (

Bank of Korea governor says it’s ‘premature’ to talk about rate cuts

Bank of Korea Governor Rhee Chang-yong says it’s too early to start talking about rate cuts.

The South Korean central bank was one of the first to pause its tightening cycle, spurring market speculation that it could soon begin cutting rates. But Rhee told CNBC’s Chery Kang at the Asian Development Bank’s annual meeting Incheon that those expectations are “premature.”

“We made it clear, given that our core inflation is still well above our target, and our inflation is going below 4% ... so it’s going down,” Rhee said Wednesday. “But still, I think that given that it’s above the target, we have to wait and see and then you know, it would be a little bit premature to talk about pivot at this moment.”

Rhee’s comments come a day after the economy reported inflation reached a 14-month low of 3.7% while hovering above the central bank’s target of 2%.

“We paused our interest rate [hikes] in the last two meetings because we have increased our interest rate by 300 basis points in 1½ years, very fast in pace. And we think it’s the right time for us to kind of assess what is the accumulated impact from this rapid increase,” Rhee said.


Bank of Korea governor says it's 'premature' to talk about rate cuts (

PacWest falls more than 20% as regional bank stocks slide to new lows

Regional bank stocks fell sharply Tuesday as the fallout from the third major bank failure this year continued to put pressure on the sector.

Shares of PacWest fell nearly 28% on Tuesday and was on track for its fourth-straight negative session. The stock was halted for volatility multiple times. steep declines deepened losses in the sector from Monday. Over the weekend, regulators seized troubled regional bank First Republic and sold it to JPMorgan Chase.

First Republic is the third failure of a large regional bank this year, following Silicon Valley Bank and Signature Bank in March.

The reasons for Tuesday’s declines were not immediately clear. JPMorgan Chase CEO Jamie Dimon said Monday that the initial phase of the regional bank crisis was “over,” and there was cautious optimism among Wall Street analysts that the deposit flight issues had been contained.

First Republic reported a decline in deposits of about 40% during the first quarter, raising questions about how the bank could survive on its own.

Most other regional banks reported smaller deposits declines, however, and some, such as PacWest, reported that deposits began rebounding in late March.

The recent bank failures and expected regulatory changes in response to them have also raised questions about the long-term profit outlooks for mid-sized regional banks.

“We believe that banks with assets >$500B and <$60B are the clearest winners in the new world order, while there is likely to be a no-man’s land between $80-120B, as banks in this range may need to shrink to avoid new regulations or more actively engage in M&A to increase scale and absorb regulatory costs,” KBW analyst David Konrad said in a note to clients Sunday.

Another issue for the regional banks is the possibility of more Fed rate hikes. Higher rates will make it more costly for the banks to hold on to their deposits while also lowering the market value of the long-dated bonds and loans on their books.

Concern about the market value of those assets was one of the sparks for the initial run on Silicon Valley Bank in March.

The central bank is expected to raise its benchmark rate by 0.25 percentage points Wednesday.

PacWest falls more than 20% as regional bank stocks slide to new lows (

Take your seat for the Bank of England, Federal Reserve and central banks’ final act

TUESDAY 02 MAY 2023 7:00 AM

This is the final act in central banks’ aggressive interest rate hike cycle. Well, so say most analysts.

“There’s a growing sense that the recent banking stresses will leave their mark on the global economy, even if the acute phase of the crisis seems to be over,” Dutch bank ING’s experts said in a note recently, referring to the collapse of Silicon Valley Bank, Credit Suisse and, just yesterday, First Republic Bank.

“Cracks are starting to form in the most interest-sensitive parts of the economy after what, in many cases, has been the most aggressive central bank tightening cycle in decades,” they added.

Markets have a slightly different take than the wonks in the research arms of investment banks and consultancies.

Britain’s yield curve – which incorporates every bet on the country’s official interest rate – suggests we’re headed for a five per cent rate peak. Analysts meanwhile think they’ll end up a bit lower than that, somewhere between 4.5 and 4.75 per cent, depending on who you ask.

There’s unity though on suspecting the Bank of England will send rates 25 basis points higher at its next meeting on 11 May. 

That same day, we’ll get fresh economic forecasts from Threadneedle Street’s best and brightest. 

---- Governor Andrew Bailey and his team are grappling with the toughest inflation crunch of any rich nation – it’s still in the double digits at 10.1 per cent, aided and abetted by falling wholesale energy prices taking a while to filter through to consumer bills thanks to the regulator-managed price cap.

There’s been calls to pause hikes now to avoid piling too much pressure on households and businesses. To do so risks denting the Bank’s inflation fighting credibility even more though.

---- Federal Reserve chair Jerome Powell’s in a better position than Bailey. Inflation in the US has been falling since last summer, mainly because the world’s largest economy has been less exposed to the massive energy shock in Europe.

One more rate rise on 3 May of 25 basis points to a range of five and 5.25 per cent and that’s it for the Fed, markets and analysts reckon. Then Powell and co will keep them there probably until the autumn, allowing the increases’ effects to spread through the US. Cuts will follow.

Powell is trying to avoid fashioning too sharp a slowdown while bringing inflation sustainably back to two per cent – the infamous “soft landing”. Bailey still needs to make a meaningful impact on price rises in Britain.

Ongoing concerns about the health of the regional American banking sector will probably stop the Fed from carrying on tamping down on spending. First Republic Bank’s shares tanked last week after it said in its results over $100bn was pulled from its vaults in the first months of this year. It was handed over to JP Morgan yesterday.

European Central Bank (ECB) officials clearly don’t want to be the lender of last resort for the eurozone anymore. 

They are intent on firmly putting the era of cheap money in the common currency bloc to the sword with a “higher for longer” approach, keeping borrowing costs at their expected peak of anywhere between 3.5 and four per cent well into 2024.

The size of the ECB’s move on Thursday is contested among market participants. Japanese investment bank Nomura ditched its call for a 50 basis point increase at the end of last week. ING reckons it’ll be a 25 point jump.

Weaker spending in the eurozone, softer core inflation and a rolling back of hawkish sentiment among officials are being seen as signals the ECB could slow its tightening pace.


Take your seats for central banks’ final act (

Finally, get ready and prepare for the Great Disruption.  Who needs doctors when nurses working for a company with great computer technicians with access to AI computers will replace most of them. Economists, central banksters, teachers?

Tomorrow will not be like today, which was like yesterday. Tomorrow will be like when the world discovered, oil, the steam turbine and electricity. Or when stone age man invented the wheel and farming.

Cue the 21st century Luddites. Will we all become anarchic Luddite France?

Chegg shares drop more than 40% after company says ChatGPT is killing its business

Chegg shares tumbled after the online education company said ChatGPT is hurting its growth.

“In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups,” CEO Dan Rosensweig said during the earnings call Monday evening. “However, since March we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate.”

The company, which provides homework assistance and online tutoring, said revenue would be between $175 million and $178 million this quarter, far below FactSet’s analyst consensus estimate of $193.6 million.

Chegg shares closed down 48.41% to $9.08 on Tuesday.

Otherwise, Chegg beat first-quarter expectations on the top and bottom lines, with earnings per share ex-items of 27 cents above analysts’ 26 cent estimate, and revenue of $188 million topping a $185 million consensus.

Following the results, Morgan Stanley analyst Josh Baer slashed his price target to $12 from $18. The analyst said that AI “completely overshadowed” the results.

Meanwhile, Jefferies downgraded the stock to hold from buy, citing the threat artificial intelligence poses to Chegg. The Wall Street firm slashed its price target to $11 from $25. 


Chegg shares drop 40% after company says ChatGPT is killing its business (

My daughter asked me when she came home from school, "What's the financial crisis?" and I said, it's something that happens every five to seven years.

Jamie Dimon, CEO JP Morgan Chase.

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 in countries using euro currency inches higher to seven per cent 

Inflation in European countries using the euro currency inches higher to 7% in April as the squeeze on households extends.

 Updated: 02/05/2023 - 12:46

Europe's painful inflation inched higher last month, extending the squeeze on households and keeping pressure on the European Central Bank to unleash another large interest rate increase.

Consumer prices in the 20 countries using the euro currency jumped 7% in April from a year earlier, just down from the annual rate of 6.9 per cent in March, the European Union statistics agency Eurostat said Tuesday.

Food prices eased a little, falling to an annual 13.6 per cent from March’s 15.5 per cent, while energy prices rose a more modest 2.5per cent.

Core inflation, which excludes volatile food and fuel, slowed slightly but was still high at 5.6 per cent, underlining the expectation that the ECB will press ahead with its campaign to beat inflation into submission with rate hikes. The question is: How quickly will the bank go?

Analysts say the ECB's meeting Thursday in Frankfurt could end in an increase of a quarter- or a half-percentage point. 

A quarter-point hike would be a moderation in the bank's series of rapid increases, while a half-point would underline concern that inflation is still not heading back toward the bank's goal of two per cent considered best for the economy.

Inflation in countries using euro currency inches higher to seven per cent | Euronews

Slowing demand for fuel adds to fears of looming US recession

Sales of diesel are down and American motorists are starting to hold back spending

May 2, 2023

As growth slows in the US economy, warning signs in the energy markets are adding to investor fears that a recession is looming over the world’s biggest fuel guzzler.

Demand for diesel, the lifeblood of the industrial economy, has fallen sharply in recent months as freight markets cool. And there are indications that petrol demand may be beginning to wane as motorists look to dial back spending.

Taken together, analysts said, these suggest a deceleration in the world’s leading economy could soon give way to contraction.

“If you were looking at it in the closet, and not knowing what the wider economy was doing, you would say we’re seeing some sort of an industrial recession,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service.

US economic growth slowed considerably in the first quarter of the year, according to official figures released last week, adding 1.1 per cent on an annualised basis. That was down from 2.6 per cent in the last three months of 2022 and marked a greater drop-off than economists had anticipated.

While US consumers continue to spend despite the broader economic cooldown, there are signs that they may be beginning to tighten their belts.

Demand for distillates including diesel, which is used to power the trucks and trains that transport goods around the country, was about 6 per cent lower in the first quarter of 2023 compared with the same period last year as a trade slowdown bites, according to government data crunched by S&P Global Commodity Insights.

“Simply stated, we’re in a freight recession,” said Shelley Simpson, chief executive of trucking group JB Hunt on a recent earnings call. UPS boss Carol Tome suggested the trend would continue, pointing to a retail slowdown and saying she expected “volume to remain under pressure”.

Meanwhile, petrol demand, which is more closely linked to consumer travel, has held up so far, with consumption in the first quarter off by 2 per cent versus last year. But there are indications that it is beginning to slip.

“What we’re seeing is this ongoing narrative of persistently . . . resilient consumers, and this flagging industrial and business investment sector — which is where you see diesel demand falling off, you see gasoline demand remaining firm,” said Rory Johnston, who runs Commodity Context, a market research service.

“[But] if the business sector continues to retrench, that will inevitably, eventually feed into the consumer side.”

Data at the pump suggests that may be beginning to happen, as America’s motorists become more conscious of their spending.

 According to Opis, which tracks activity across 40,000 stations nationwide, petrol volumes sold in the week to April 22 were down about 3 per cent versus the same week last year, 6 per cent versus the same week two years ago and 20 per cent versus the same week in 2019, before the pandemic hit.


Slowing demand for fuel adds to fears of looming US recession | Financial Times (

Morgan Stanley to cut another 3,000 jobs as banking layoffs continue

TUESDAY 02 MAY 2023 10:56 AM

Morgan Stanley is reportedly set to cut thousands of  jobs before the midway point of the year, as the largest round of banking layoffs since the financial crisis looks set to continue.

The bank is looking to lay off 3,000 staff, Bloomberg reported, representing about five per cent of the bank’s staff. They are expected to be concentrated in the banking and trading group.

Morgan Stanley declined to comment on the report.

While many banks have recently reported bumper profits thanks to rising interest rates, banks that concentrate more on investment banking, such as Morgan Stanley, have suffered. 

In its first quarter results profit slipped 19 per cent year-on-year to $3bn. Investment banking revenue in particular fell 24 per cent while fixed income – which was a bright spot for many banks this quarter – slipped 12 per cent.

Although Morgan Stanley’s chief executive James Gorman said there was a “growing M&A pipeline”, he admitted “it largely remains a back half 2023 and full year 2024 story.”

As the slump in dealmaking has continued into 2023, many banks have tried to cut costs.

Already a range of different banks have made large scale redundancies, including Goldman Sachs, Barclays and Citi. Just last week investment bank Lazard said it would reduce its workforce by 10 per cent this year as a result of the freeze in IPOs and mergers. 

Across the industry, job cuts in 2023 have been the steepest since the financial crisis.

Morgan Stanley to cut another 3,000 jobs as banking layoffs continue (

Covid-19 Corner

This section will continue until it becomes unneeded.

Due to its importance I will leave this up through the week.  Of course, much more research is needed, plus some research in combination with Ivermectin and other drugs too. Approx. 21 minutes.

Cannabidiol and covid

Cannabidiol and covid - YouTube

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.

Electric vehicle battery state of health monitoring could be made mandatory


New EU vehicle regulations could make battery state of health (SOH) monitoring standard for all new electric vehicles (EVs), according to the Office for Zero Emission Vehicles (OZEV).

Abdul Chowdhury, head of vehicle policy at OZEV spoke at a recent Vehicle Remarketing Association (VRA) meeting.

Chowdhury explained that because the battery forms a large part of a used EV’s value and performance, providing information on its health would support consumers in making informed comparisons between vehicles and help alleviate concerns over battery degradation.

He said: “The UK government has been working with the United Nations Economic Commission for Europe (UNECE) and other international partners to develop technical regulations on SOH monitors and minimum battery performance standards, and is currently analysing options for adopting these regulations into UK law.

“The EU is also considering options, and its Euro 7 proposals look set to bring SOH monitors in from July 2025.”

Minimum performance levels for EV batteries

Battery SOH is an estimate of a battery’s remaining total capacity, compared to the total capacity at the EV’s production.

The Global Technical Regulations on EV batteries developed at UNECE, where many international automotive standards and regulations are set, cover two key aspects.

The first is to mandate installation of SOH monitors on EVs which must be accessible to the consumer, meet accuracy requirements and be validated through in-service testing.

The second is to set a minimum performance standard of 80% SOH from 0-5 years old or 100,000 km, whichever comes first, and 70% SOH for vehicles between 5-8 years old or 100,000 to 160,000 km, whichever comes first.

Other areas where OZEV is looking to provide support to the used EV sector include providing standardised EV information to customers at the point of sale and helping to ensure that sufficient numbers of technicians were trained to repair EVs.

He said: “The used market is critical to the UK’s transition to zero emission vehicles and meeting our net zero ambitions.

“It is where 80% of all cars are bought and sold, and as we move from early EV adopters to a mass transition, its health is critical to ensuring a fair and equitable transition for all.


Electric vehicle battery state of health monitoring could be made mandatory | Used Cars (

Don't do anything stupid. And don't waste money. Let everybody else waste money and do stupid things; then we'll buy them.

Jamie Dimon, CEO JP Morgan Chase.


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