Thursday 4 May 2023

Fed Hikes. US Bank Crisis Spreads. China Slows.

 Baltic Dry Index. 1558 +06         Brent Crude 72.89

Spot Gold 2044               US 2 Year Yield 3.89  -0.08

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

Deaths 53,103

Coronavirus Cases 04/05/23 World 678,455,990

Deaths 6,868,594

"We shouldn't pour cold water on everything.  We, the eight or nine players in global investment banking, have a very good future."

Deutsche Bank, CEO Josef Ackermann. Davos, January 2007.

To no one’s surprise the US central bank raised its key interest rate yesterday by a quarter of one percent.  In their following guidance they hinted that this might be their last increase, at least for a while, but they didn’t hint at any pivot to interest rate declines.

Although widely anticipated, US stocks sold off, largely because stock punters in the gambling casinos now expect the US banking crisis to grow.

Which US bank will be next to fail under pressure from rising interest rates? Which will be “rescued” and which just allowed to fail?

But with US banks under pressure from higher interest rates, US bank lending will be restricted and come at a much higher price.  The US economy is shifting from Easy Street to Skid Row.

Over the summer we will shortly find out who is insolvent and who is about to become insolvent, unable to rollover their debts at an affordable price.

Sell in May, go away looks especially attractive this year, if only from the Great Disruption to come from Artificial Intelligence rolling out with increasing speed.

Dow closes more than 250 points lower Wednesday after Fed hikes rates for a 10th time: Live updates


Stocks fell Wednesday after the Federal Reserve raised rates by 25 basis points, as was widely expected.

The Dow Jones Industrial Average closed lower by 270.29 points, or 0.80%, to end at 33,414.24. The S&P 500 dropped 0.70% to close at 4,090.75. The Nasdaq Composite slid 0.46% to close at 12,025.33. The indexes notched three-day losing streaks.

Earlier bullish sentiment was dented somewhat after Fed Chair Jerome Powell ruled out cutting interest rates because he did not expect inflation to come down quickly enough.

“In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Fed said in a statement.

However, traders noticed what the Fed didn’t say this time in its post-meeting statement. The central bank appeared to soften its language about future rate increases by dropping a line from the March statement that said, “the Committee anticipates that some additional policy firming may be appropriate.”

Powell commented to the press after the statement’s release that dropping that language was a “meaningful change” and that the central bank’s June decision would be driven by incoming data.

Ed Moya, senior market analyst at Oanda said Wednesday’s rate increase, which marks the central bank’s 10th consecutive hike, “will likely be the last one in this cycle.”

“The Fed is concerned that tighter credit conditions will weigh on economic activity and hiring, while helping maintain disinflation trend,” Moya said. “Credit tightening is about to cripple the economy and it appears that as long as we don’t get a perfect storm of hotter-than-expected labor and inflation data, the Fed will keep rates on hold for at the very least till the end of the year.”

The SPDR S&P Regional Banking ETF (KRE) declined more than 1%. The regional banking ETF fell more than 6% during Tuesday’s trading session. Shares of PacWest shed nearly 2% after losing about 28% the prior day. Western Alliance shares were down 4.4%.

Stock market today: Live updates (

S&P 500 futures slip after the Federal Reserve hikes rates, bank contagion fears return: Live updates

UPDATED WED, MAY 3 2023 11:54 PM EDT

S&P 500 futures fell after the Federal Reserve hiked rates by another 25 basis points and investors’ fears of contagion in the regional bank space returned.

Futures linked to the broad-market index slipped 0.2%. Futures linked to the Dow Jones Industrial Average dropped 88 points, or 0.2%. Nasdaq 100 futures traded near the flat line, up 0.06%.

Shares of PacWest tanked by more than 50% in after-hours trading. The decline came after news that the California bank has been assessing strategic options, including a possible sale, a person familiar told CNBC. Bloomberg first reported that the bank was weighing its choices. Regional bank shares sold off hard, with Western Alliance tumbling 23% and Zions Bancorporation dropping about 10%.

There likely won’t be a respite for the embattled regional banking sector until the Fed cuts interest rates, said Jeffrey Gundlach, CEO of DoubleLine. Since the closure of Silicon Valley Bank in March, First Republic has joined the ranks of failed institutions and was recently taken over by JPMorgan Chase.

“Leaving rates this high is going to continue this stress,” Gundlach said on CNBC’s “Closing Bell” Wednesday. “I believe with a very high degree of probability there’s going to be further regional bank failures.”

Indeed, as the Fed pushed through its 10th rate hike in this cycle and the central bank seemed to soften its language on future increases, Chair Jerome Powell said that it may be too soon to cut.

“We on the committee have a view that inflation is going to come down not so quickly,” he said in his post-meeting press conference. “It will take some time, and in that world, if that forecast is broadly right, it would not be appropriate to cut rates and we won’t cut rates.”

Stocks closed lower in Wednesday’s regular session, with the Dow shedding 270 points, or 0.8%, and the S&P 500 dropping 0.7%. The Nasdaq Composite lost roughly 0.5%.

Looming ahead are key economic reports that will inform the Fed’s next steps from here. Initial jobless claims are due Thursday. Friday’s main event will be April’s payrolls report, which economists polled by Dow Jones predict will rise by 180,000.

In terms of earnings, investors will be watching Moderna, which issues results before the opening bell Thursday. Apple is slated to post earnings after the market’s close, along with Lyft, DraftKings and Coinbase.

Stock market today: Live updates (

The market is looking for the next ‘domino’ to fall, keeping banks under pressure

After an intense few days in which the fate of ailing lender First Republic was finally determined, veteran banking analyst Christopher McGratty was looking forward to some calm.

So early Tuesday, more than 24 hours after U.S. regulators seized First Republic and picked JPMorgan Chase to take over most of its assets, McGratty headed to see a client in Manhattan. Minutes after the start of regular trading, however, the regional bank stocks he covers for KBW began plunging.

The sharp selloff in regional banks sparked by the March failure of Silicon Valley Bank resumed Tuesday, catching Wall Street analysts and investors off guard. The orderly resolution of First Republic by the nation’s biggest lender was supposed to quell concerns about the state of the American banking system, not reignite them.

The steep declines — PacWest shares tumbled 28% to a record low Tuesday, while Western Alliance lost 15% — amid a lack of new news had banking experts casting about for why this was happening.

Fears about uninsured deposits, worries about commercial real estate and coming regulation were all named possible triggers.

---- “People are searching for answers, and no one has a good one,” said McGratty, the head of U.S. bank research at KBW who has covered the industry for nearly 20 years.

March madness

PacWest and Western Alliance had recently disclosed first-quarter results and updated figures through mid-April that initially calmed investor concerns about deposit outflows. But the current moment is more about human emotions than the way banks are evaluated in normal times, he said.

“The market is looking for the next potential domino” to fall after the seizures of SVB, Signature and First Republic, McGratty said.

“We’re in this situation that feels a lot like March, where we’re trading stocks on fear and sentiment and not fundamentals,” he added.

Which doesn’t make the danger to mid-sized banks any less real. Pressure on bank stocks could cause customers to again yank deposits from their institutions, according to analysts including McGratty and Evercore ISI’s John Pancari.

“While we are confident in liquidity and capital levels at the banks post 1Q, we cannot ignore the risk that market pressures on bank stock valuations could feed a self-fulfilling prophecy,” Pancari said Tuesday in a research note.


Regional banks: Market looking for next domino to fall (

PacWest weighs its strategic options, sending bank shares in a tailspin

May 3 (Reuters) - PacWest Bancorp (PACW.O) is exploring strategic options including a sale or capital raising, a source familiar with the matter said, sending the shares of the bank and several other U.S. regional lenders tumbling in after-market trading.

Later on Wednesday, Western Alliance Bancorp (WAL.N) sought to assure markets, saying it had not experienced any unusual deposit flows and had adequate liquidity.

The Phoenix-based regional lender said it was "reaffirming its financial strength as well as its deposit growth guidance in response to recent industry events."

A PacWest spokesperson declined to comment.

The fall in shares, including a 52% plunge at PacWest and 23% decline in Western Alliance, underscores how investors remain unconvinced about the health of regional banks despite regulators' efforts to call an end to the banking crisis that started with the collapse of Silicon Valley Bank and Signature Bank in March.

The sector jitters come after a period of relative calm, and could tighten credit availability across America and hurt growth.

"Confidence in a financial institution is built over decades and destroyed in days. As each domino falls, the next weakest bank begins to wobble," billionaire investor Bill Ackman wrote in a tweet.

He called on regulators to put in a broad deposit guarantee.

PacWest stock has lost almost 90% of its value since the regional banking crisis started on March 8. Other regional lenders, whose shares have been under pressure this week, also fell, giving up gains from earlier in the day.

Zion Bancorp (ZION.O), First Horizon (FHN.N) and Comerica (CMA.N) each slumped more than 7% and the SPDR S&P Regional Banking ETF (KRE.P) dropped 5%.

Zion and First Horizon were not available for comment after business hours on Wednesday.


PacWest weighs its strategic options, sending bank shares in a tailspin | Reuters

IBM to Pause Hiring for Jobs That AI Could Do

Mon, May 1, 2023 at 10:08 PM GMT+1

(Bloomberg) -- International Business Machines Corp. Chief Executive Officer Arvind Krishna said the company expects to pause hiring for roles it thinks could be replaced with artificial intelligence in the coming years.

Hiring in back-office functions — such as human resources — will be suspended or slowed, Krishna said in an interview. These non-customer-facing roles amount to roughly 26,000 workers, Krishna said. “I could easily see 30% of that getting replaced by AI and automation over a five-year period.”

That would mean roughly 7,800 jobs lost. Part of any reduction would include not replacing roles vacated by attrition, an IBM spokesperson said.

As artificial intelligence tools have captured the public imagination for their ability to automate customer service, write text and generate code, many observers have worried about their potential to disrupt the labor market. Krishna’s plan marks one of the largest workforce strategies announced in response to the rapidly advancing technology.

More mundane tasks such as providing employment verification letters or moving employees between departments will likely be fully automated, Krishna said. Some HR functions, such as evaluating workforce composition and productivity, probably won’t be replaced over the next decade, he added.


IBM to Pause Hiring for Jobs That AI Could Do (

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.

China's skidding factory sector taps brakes on economic recovery

BEIJING, May 4 (Reuters) - China's factory activity unexpectedly contracted in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector, a private survey showed on Thursday, imperilling the broader economic outlook for the second quarter.

The Caixin/S&P Global manufacturing purchasing managers' index (PMI) fell to 49.5 in April from 50.0 in March. The 50-point index mark separates growth from contraction on a monthly basis.

The reading missed expectations of 50.3 in a Reuters poll and marked the first contraction since January when the exit from zero-COVID policies led to a wave of infections across China and briefly hit production lines.

It echoes a similarly disappointing official PMI released on Sunday and reflects the unevenness of China's economic recovery, with the services sector so far outperforming manufacturing and helping the world's second-largest economy grow a robust 4.5% year-on-year in the first quarter.

Data this week showed tourism spending during the five-day May Day holiday that ended on Wednesday rebounded to pre-COVID-19 levels. However, given a subdued property market and weak demand from overseas, analysts say the economy faces persistent headwinds as the government aims to achieve full-year growth of around 5%.


China's skidding factory sector taps brakes on economic recovery | Reuters

France's Le Maire wants to break food price inflation "spiral" by autumn

May 3, 2023

PARIS (Reuters) - Finance Minister Bruno Le Maire said on Wednesday that he would meet with retailers and suppliers next week to discuss ways to break the food price inflation "spiral" by autumn, which is a major concern for cash-strapped consumers.

Le Maire also told Franceinfo radio that economic growth remained solid in France despite recent strikes and protests against President Emmanuel Macron's legislation to raise the retirement age by two years to 64.

French food retailers and their suppliers agreed a 10% average increase in prices in annual negotiations in March, which both sides said was necessary to cover higher production costs.

Le Maire has since repeatedly called on both sides to reopen negotiations to ensure that a recent fall in global wholesale food prices is passed on to consumers. Le Maire has even threatened to take action if they do not respond to his calls.

France's headline inflation rate rose to 5.9% in April from 5.7% in March. The French inflation level stood at 6.9%, as measured by a European Union-harmonised consumer price index.

Bank of France governor and European Central Bank member Francois Villeroy de Galhau said last month he expected food price inflation to start easing in the second half of this year.

Commenting on the impact on the French economy of recent strikes against pension reform, Le Maire also said: "There is no significant impact from the social protests...French growth remains solid."

Last month, data from statistics agency INSEE showed GDP edged up 0.2% in the first quarter after a flat fourth quarter, helped by household consumption, which was steady after falling one percent in the last three months of 2022.

France's Le Maire wants to break food price inflation "spiral" by autumn (

But, as we covered last month, breaking global food price inflation is easier said than done.

Global rice shortage is worst in two decades: Report

Bad weather in Pakistan, China strains supplies, prices

Thursday, April 20, 2023

Unfriendly weather patterns in major rice-producing countries have created what a new report Thursday is calling the worst global rice shortage in 20 years.

Market analysis firm Fitch Solutions told CNBC that there’s a deficit of 8.7 million metric tons of rice produced in the 2022-23 growing season. The shortfall is causing rice prices to rise to an abnormally high average of $17.30 per cwt through the rest of the year. Cwt is a unit of measurement for commodities such as rice.


“At the global level, the most evident impact of the global rice deficit has been, and still is, decade-high rice prices,” Fitch Solutions’ commodities analyst Charles Hart told the network.

The last time rice experienced such a shortfall was in 2003-04, when there was a deficit of 18.6 million metric tons of the staple produced that year.

Poor weather in rice-producing nations such as China and Pakistan is seen as the primary driver of the deficit.

A wet second half of the year in China combined with heavy floods in Pakistan cut into production for two nations that together contribute about 12% of the world’s rice supply, according to World’s Top Exports. China was also hit by extreme droughts for a portion of last year.

Major consumers of rice, particularly countries in Asia and Africa, will be the most affected by the shortage. However, analysts expect the supply strains to moderate by 2024 and for production to move into a surplus again by 2025.

Global rice shortage is worst in two decades: Report - Washington Times

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.

Well if they say so, I suppose.

New Chemix AI-Based EV Battery Development Reduces Or Eliminates Cobalt

May 2, 2023

California tech startup Chemix is ready to mix it up in the electric vehicle battery space announcing a new artificial intelligence-based platform called MIX aimed at vastly accelerating battery development, imporoving performance and discovering new, more sustainable, battery chemistries.

“AI and batteries are, you know, the two most important technologies of this century and we basically have to find a way that you practically apply AI to advance the better development so that the pace at which the battery innovation moves finally catches up with the pace at which the batteries aren't currently scaled up,” said Kaixiang Lin, co-founder, and CEO of Chemix in an interview.

He likens MIX to an umbrella under which several AI engines Chemix developed work in concert.

One is called “material discovery” which calls on AI to predict the performance of certain materials that are then tested, Lin explained.

Another key engine is aimed at specific batteries to deal with the typically lengthy testing process.

“We actually build an AI machine learning engine that can you know, significantly speed up the iteration by predicting how the batteries will last, essentially giving us a kind of instantaneous decision making power,” said Lin.

The results, Lin asserts, are faster development and discovering of materials that could potentially reduce reliance on elements such as lithium, nickel and cobalt that must be mined and extracted.


New Chemix AI-Based EV Battery Development Reduces Or Eliminates Cobalt (

Opinion: EVs have failed many times before. Why do we think this time it will work?

The electric vehicles go back to the early 1800s

Author of the article:  Michael Nitefor,  Special to Financial Post

Published May 02, 2023   

Many people, including many politicians, clearly think electric vehicles are the way of the future. But they’re also the way of the past. Vehicle electrification goes back to 1832, years before the pioneering work of Étienne Lenoir and Nikolaus Otto on internal combustion (IC) engines. Electrification gained early traction in the horseless carriage era due to its distinct operational advantages over early steam- and gasoline-powered cars.

Without government mandates or subsidies, EVs were all the rage in the U.S. by the turn of the 20th century, accounting for around a third of all vehicles on the road. Yes, you read that correctly: one third. Early EV boosters such as Thomas Edison and Ferdinand Porsche, contributed, respectively, to battery improvements and the building of the first hybrid EV. In the years before the First World War, many women chose electric cars because they started instantly without hand cranking and had no hard-to-shift transmission. Clara Ford herself, wife of Henry Ford, drove a 1914 Detroit Electric, one of 13,000 built by the Anderson Electric Car Company between 1907 and 1939.


Opinion: EVs have failed many times before | Financial Post

Success is the ability to go from one failure to another with no loss of enthusiasm.

Winston Spencer Churchill.


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