Monday, 1 May 2023

May Day. Golden Week. Fed Week. FRC Day.

 Baltic Dry Index. 1576  -05          Brent Crude 79.74

Spot Gold 1984                US 2 Year Yield 4.04 -0.03

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

Deaths 53,103

Coronavirus Cases 01/05/23 World 687,108,868

Deaths 6,863,787

“If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.”

John Maynard Keynes

Many, if not most of the world’s gambling stock casinos are closed today, mostly celebrating Labour Day though a few celebrating Our Lady’s Start of May.

The US stock casinos have no truck with Labour Day and so will largely have to gamble on alone, second guessing the up coming Fed meeting and coming interest rate decision, while awaiting the still undisclosed fate of failed US bank First Republic.

That US authorities failed to complete a closure, takeover, or bailout over the weekend compares very unfavourably with the Swiss authorities handling of the Credit Swiss collapse.

Later this week the ECB also meets and is expected to raise their key interest rate, though probably by only 25 points rather than 50.


Australia and Japan trade higher while most Asian markets close for Labor Day

UPDATED SUN, APR 30 2023 11:59 PM EDT

Australian and Japanese markets are both trading higher even as most Asian markets are closed for the Labor Day holiday Monday.

In Australia, the S&P/ASX 200 rose 0.62%, as the country saw its factory activity in April contracted at its fastest pace in 35 months, with private surveys from Juno Bank showing its purchasing managers index standing at 48.

In Japan, the Nikkei 225 was last 0.69% higher, while the Topix was up 0.63%. Japan’s purchasing managers index for April came in at 49.5, its softest contraction in six months, according to the au Jibun bank.

Over the weekend, China’s factory activity unexpectedly slipped into contraction territory with its official manufacturing purchasing managers index at 49.2, in contrast to economists expectations of 51.4.

On Friday, the three major indexes in the U.S. all closed higher, with the Dow Jones Industrial Average gaining 0.8% to notch its best month since January. The S&P 500 added 0.83%, while the Nasdaq Composite advanced 0.69%.

Australia expected to hold inflation rate steady at 3.6%

Australia’s central bank is expected to hold its benchmark policy rate at 3.6% when it announces its decision Tuesday.

A Reuters poll of 34 economists revealed that 26 of them expect the Reserve Bank of Australia to keep rates at current levels, while the remaining eight forecast a 25-basis-point hike.

If the RBA hikes rates to 3.85%, that would be the highest level since April 2012.

Australia’s inflation — a key data point for the RBA — eased to 7% in the first quarter, lower than the 7.8% recorded at the end of 2022.

Australia, Japan higher while most Asian markets close for Labor Day (


Stock futures are flat after Dow notches best month since January

UPDATED SUN, APR 30 2023 7:02 PM EDT

U.S. stock futures were flat in overnight trading Sunday after the major averages logged gains for April, and the Dow Jones Industrial Average notched its best month since January.

Futures tied to the Dow dipped 30 points, while S&P 500 and Nasdaq-100 futures each inched 0.1% lower.

Stocks are coming off a winning week and month. On Friday, the blue-chip index added 272 points, or 0.8%, while the S&P 500 rose 0.83%. The Nasdaq Composite advanced 0.69% as Big Tech earnings took center stage.

For the month, the Dow gained 2.5% to notch its best monthly stretch since January, while the benchmark index gained 1.5%. The tech-heavy index posted marginal gains.

Earnings reports from major tech companies dominated much of last week’s market debate, fueling the narrative that earnings are faring better-than-feared, despite many widespread macroeconomic concerns.

So far, a little over half of S&P 500 companies have reported earnings, with more than 79% and about 72% surpassing earnings and sales expectations, respectively. First-quarter earnings are currently on track to fall 3.7% for the period, a smaller drop than the 6.7% decline projected on March 31, according to FactSet.

---- Elsewhere, CNBC reported over the weekend that regulators have called on banks to submit a final offer for embattled lender First Republic, under pressure from deposit flight in the wake of Silicon Valley Bank’s collapse. JPMorgan Chase and PNC are among the likely bidders.

The latest update comes after the bank reported last week that deposits tumbled more than 40% in the first quarter, triggering further declines in the already struggling stock. Shares have cratered 97% since the start of the year.

In other news, investors anxiously await the latest rate hike decision from the Federal Reserve, due out Wednesday at the conclusion of the central bank’s policy meeting. As of Sunday evening, about 79% of traders anticipate a 25 basis point rate hike, according to CME Group’s FedWatch tool. Wall Street will closely monitor remarks from Fed Chair Jerome Powell, offering clues into the central bank’s forward policy path.

Monday kicks off another busy week for earnings, with results from Norwegian Cruise Line and MGM Resorts. Reports from PfizerStarbucksAdvanced Micro Devices and CVS Health are due out later in the week.

On the economic front, Wall Street awaits ISM manufacturing data, construction spending and S&P Global manufacturing PMI on Monday. April’s nonfarm payrolls report is on deck Friday.

Stock futures are flat after Dow notches best month since January (

PNC, JPMorgan putting in final bids for First Republic Bank in FDIC auction

NEW YORK, April 30 (Reuters) - PNC Financial Services Group (PNC.N), JPMorgan Chase & Co (JPM.N) and Citizens Financial Group Inc (CFG.N) were among banks that submitted final bids for First Republic Bank (FRC.N) on Sunday in an auction by U.S. regulators, sources familiar with the matter said.

The Federal Deposit Insurance Corp had been expected to announce a deal on Sunday night, with the regulator likely to say at the same time that it had seized the lender, three sources previously told Reuters.

As the process dragged on late into the evening, one source familiar with the situation said the regulators had come back multiple times with requests for bids to be revised and specific criteria to be refined on assets that were being bid.

That source said there was a sense a decision was nearing.

U.S. regulators have been trying to clinch a sale of First Republic over the weekend, with roughly half a dozen banks bidding, sources said on Saturday, in what is likely to be the third major U.S. bank to fail in two months. Guggenheim Securities is advising the FDIC, two sources familiar with the matter said on Saturday.


PNC, JPMorgan putting in final bids for First Republic Bank in FDIC auction | Reuters

Charlie Munger: US banks are ‘full of’ bad commercial property loans

April 30, 2023

Charlie Munger has warned of a brewing storm in the US commercial property market, with American banks “full of” what he said were “bad loans” as property prices fall.

The comments from the 99-year-old investor and sidekick to billionaire Warren Buffett come as turmoil ripples through the country’s financial system, which is reckoning with a potential commercial property crash following a handful of bank failures.

“It’s not nearly as bad as it was in 2008,” the Berkshire Hathaway vice-chair told the Financial Times in an interview. “But trouble happens to banking just like trouble happens everywhere else. In the good times you get into bad habits . . . When bad times come they lose too much.”

Munger was speaking on the veranda of his home in Greater Wilshire, a leafy neighbourhood of Los Angeles where he has lived for 60 years since he designed the property himself.

Dressed in a plaid shirt, Munger held court from his wheelchair as the travails of ailing California-based bank First Republic were playing out in real time on a television screen airing CNBC in the background.


Berkshire has a long history of supporting US banks through periods of financial instability. The sprawling industrials-to-insurance behemoth invested $5bn in Goldman Sachs during the 2007-08 financial crisis and a similar sum in Bank of America in 2011.


But the company has so far stayed on the sidelines of the current bout of turmoil, during which Silicon Valley Bank and Signature Bank collapsed. “Berkshire has made some bank investments that worked out very well for us,” said Munger. “We’ve had some disappointment in banks, too. It’s not that damned easy to run a bank intelligently, there are a lot of temptations to do the wrong thing.”

Their reticence stems in part from lurking risks in banks’ vast portfolios of commercial property loans. “A lot of real estate isn’t so good any more,” Munger said. “We have a lot of troubled office buildings, a lot of troubled shopping centres, a lot of troubled other properties. There’s a lot of agony out there.”

He noted that banks were already pulling back from lending to commercial developers. “Every bank in the country is way tighter on real estate loans today than they were six months ago,” he said. “They all seem [to be] too much trouble.”


Charlie Munger: US Banks Are ‘full Of’ Bad Commercial Property Loans - WorldNewsEra

Finally, more bad news for ending soaring food price inflation in 2023.


Spain, Portugal swelter as April temperature records broken

CORDOBA, Spain, April 28 (Reuters) - Mainland Spain and Portugal have broken temperature records for April, as the Iberian neighbours swelter in an early-season heatwave that has exacerbated a long drought in some regions.

Spain's southern city of Cordoba registered 38.8 Celsius (101.8 Fahrenheit) at its airport on Thursday, beating the previous record of 38.6 C in the eastern city of Elche in 2011, weather agency AEMET said on Friday.

Spain's absolute April record remains the 40.2 C reached in 2013 on Gran Canaria in the Canary Islands.

In neighbouring Portugal, the temperature in the central town of Mora reached 36.9 C, breaking the record of 36.0 C set in April 1945, its weather agency said.

Temperatures started dropping on Friday in Portugal but the heatwave persisted in parts of Spain.

On Friday, Madrid opened its urban "beach" - a series of splash fountains along the Manzanares river - a month earlier than usual.

---- The Iberian Peninsula is suffering a long-running drought, with an almost 25% drop in rainfall since October on top of the previous year being one of Spain's driest on record.

That has contributed to earlier-than-usual wildfires, stoking fears of a repeat of last summer's extreme wave of fires, which was widely attributed to climate change.

Authorities in Portugal have meanwhile put two municipalities, Proenca-A-Nova in the centre and Tavira in the south on extreme alert for wildfires.

Spain, Portugal swelter as April temperature records broken | Reuters

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 factory activity unexpectedly cools in April


China’s manufacturing activity unexpectedly shrank in April, official data showed on Sunday, raising pressure on policymakers seeking to boost an economy struggling for a post-Covid lift-off amid subdued global demand and persistent property weakness.

The official manufacturing purchasing managers’ index (PMI) declined to 49.2 from 51.9 in March, according to data from the National Bureau of Statistics, below the 50-point mark that separates expansion and contraction in activity on a monthly basis.

That missed expectations of 51.4 tipped by economists in a Reuters poll and marked the first contraction since December, when the official manufacturing PMI was at 47.0.

The world’s second-biggest economy grew faster than expected in the first quarter thanks to robust services consumption, but factory output has lagged amid weak global growth. Slowing prices and surging bank savings are raising doubts about demand.

The Politburo, a top decision-making body of the ruling Communist Party, on Friday stressed that restoring and expanding demand is the key to a durable recovery and cautioned the current improvement is mainly restorative “with weak momentum and insufficient demand.”

“A lack of market demand and the high-base effect from the quick manufacturing recovery in the first quarter” were among factors that led to the contraction in April, said senior NBS statistician Zhao Qinghe.

New export orders edged down to 47.6 from 50.4 in March, the PMI showed.

The manufacturing sector, which employs about 18% of China’s workforce, remains under pressure due to slack global demand. Some exporters told Reuters at the country’s biggest trade fair they have frozen investments and some have cut labor costs in response.

To boost trade and employment, the cabinet last week unveiled plans, including supporting auto exports, facilitating visas for overseas businesspeople and providing subsidies to firms that hire college graduates.

Confidence in the property sector, for years a pillar of China’s growth, remains fragile. Multiple crises since mid-2020 have included developers’ debt defaults and stalled construction of pre-sold housing projects.


China's factory activity unexpectedly cools in April (

Surveillance: It’s Getting Harder to Pretend Stagflation Can’t Happen

The combination of sticky inflation and slowing growth is giving rise to a nightmare scenario of stagflation

28 April 2023 at 15:39 BST

Worst of All Worlds

Four months into 2023 and we've already cycled through no-landing, hard-landing and soft-landing scenarios. But something potentially even more insidious keeps creeping up: What happens if inflation remains higher than in the past and growth keeps slowing? Or, to put it another way, we just get a period of stagflation.

"Stagflation is the worst case scenario," said Seema Shah of Principal Asset Management. It's not an impossible outcome by any means, especially with the employment cost index coming in higher than expected. While higher wages will support consumer spending and growth more broadly, it's clear that growth is slowing down, in some cases materially.

As Jon noted, there's a growing belief that the economy will lose momentum in the second quarter, and Tom kept going back to the classic "sell in May and go away" mantra which has some historic basis.

"We're expecting negative GDP prints in the third and fourth quarter of this year," said Phil Orlando of Federated Hermes.

This is opening up the door to a softening in the stance of central bankers who until now have been dead-set on killing inflation. Tides are shifting heading into next week's Fed and ECB meetings. And Kamakshya Trivedi of Goldman Sachs doesn't see a different playbook among the global central banks. "Central banks want to pause or want to step down the pace of tightening they have been delivering," said Trivedi.

60-40 At Risk

If inflation stays high, it'll create a challenging environment, especially for those relying on the classic 60/40 portfolio model of investing.

“I’ve looked at this going back 150 years and when the inflation rate trends is sustained above the historical average, which is 3%, then the 60/40 doesn’t work,” says Jurrien Timmer of Fidelity Investments.

Timmer explains that on a 10-year rate-of-change basis, inflation was at about 2%, now it’s about 2.5%. “It really comes down to whether the inflation situation remains structural or transitory.”


Stagflation Risks Rise As Growth Ebbs and Inflation Sticks Around - Bloomberg

Covid-19 Corner

This section will continue until it becomes unneeded.

CDC Will Stop Tracking Covid-19 Community Levels, Here Are The Problems

Apr 29, 2023,10:02pm EDT

It’s about to get a whole lot harder to anticipate and prevent another Covid-19 surge or outbreak in U.S. With the U.S. declaration of Covid-19 as a public health emergency scheduled to expire on May 11, the U.S. Centers for Disease Control and Prevention (CDC) is planning to cease reporting Covid-19 Community Levels as it has been doing, according to Brenda Goodman reporting for CNN. The CDC won’t abandon all Covid-19 surveillance and will reportedly continue to display what’s happening with Covid-19 hospitalizations and deaths. But hospitalizations and deaths tend to increase only after the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) has already increased in an area. So unless you have a time machine or can somehow enter the quantum realm like the Avengers did, such measures won’t really going to help anyone prevent another Covid-19 uptick. Yep, the U.S.’s reactive rather than proactive approach to the Covid-19 pandemic is about to get even less proactive.

Relying on hospitalizations and deaths to determine what to do can be sort of like saying that you are going to wait until you’re fired or the company is bankrupt before determining whether you need to improve your job performance. Or waiting until the divorce papers arrived before saying, “Hmm, maybe I should start doing the dishes and not do all that that cheating stuff?” Hospitalizations tend to occur about one to two weeks after people have gotten infected. That’s because people don’t typically say, “Oh, someone with Covid-19 coughed in my face. Time to rush to the hospital.” Deaths come even further out after the virus has spread and after hospitalizations happen because that’s how time works. So once hospitalizations and deaths have risen, it’s kind of too late to reinstitute Covid-19 precautions such as face mask requirements. The horse is already out of the barn. The cat is already out of the bag. The Senator has already left for Cancun.

There will still be wastewater testing in communities. But it’s not yet clear what portions of the U.S. will have this available and how this will be reported. Goodman’s article did mention that the CDC will still track Covid-19 sort of like how it tracks the flu. There’s one itty, bitty, long problem with that. Covid-19 is not the flu. Experts have been trying to tell everyone for over three years now that the SARS-CoV-2 is not like the influenza. You don’t see too many people saying that they have long flu. While the Covid-19 hospitalization and death rates have come down, they are still higher than that of the flu. The SARS-CoV-2 can go airborne in ways that influenza virus cannot. Plus, the SARS-CoV-2 hasn’t become seasonal like the flu yet. It may be moving that direction but, and here’s a big but you cannot lie, there are still plenty of Covid-19 in the Spring and Summer unlike the flu.

CDC Will Stop Tracking Covid-19 Community Levels, Here Are The Problems (

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.

Graphene Market: Increasing Demand For High-Performance Materials To Drive Industry Growth Analysis By 2030

Graphene market size is projected to reach $876.8 million by 2027, growing at a CAGR% of 40.2% from 2020 to 2027

OREGON, PORTLAND, UNITED STATES, April 28, 2023 / / -- According to the report published by Allied Market Research, the graphene market by Type (Mono-layer and Bi-layer Graphene, Few Layer Graphene, Graphene Oxide, Graphene Nano Platelets), by Application (RFID, Composites, Sensors, Research and Development, Energy storage, Functional Ink, Polymer Additives, Tire, Coatings, Others), and Region: Global Opportunity Analysis and Industry Forecast, 2020-2030. The global graphene market generated $87.5 million in 2019, and is expected to reach $876.8 million by 2027, witnessing a CAGR of 40.2% from 2020 to 2027. The report provides a detailed analysis of changing market dynamics, top investment pockets, key segments, competitive landscape, value chain, and regional scenario.

The surge in manufacturers of graphene, rise in demand for electronics applications, and utilization of composites & coatings drive the growth of the global graphene market. However, fatal effects on the environment restrain the market growth. On the other hand, increase in R&D activities across the globe and large-scale production using renewable sources offer opportunities in the next few years.

Get inside Scoop of the report, request for sample PDF:

Leading players of the global graphene market analyzed in the research include ACS Material LLC, CVD Equipment Corporation, Bluestone Global Tech, Graphenea S.A., Graphene Nanochem PLC, Haydale Limited, G6 Materials, Vorbrck Materials, Nanotek Instruments Inc., and XG Sciences.

Covid-19 Scenario:

Production activities of graphene have been stopped due to lockdown across many countries. Moreover, supply chain in the chemical sector has been disrupted up to a major extent.

The demand has been decreased considerably from the automotive industry as utilization of composites, batteries, and others have been hindered. However, the demand would surge steadily as manufacturing plants start day-to-day activities.

The report offers detailed segmentation of the global graphene industry based on type, application, and region.

By type, the graphene nano platelets segment accounted for more than three-fifths of the total market share in 2019, and is projected to maintain its lead position during the forecast period. However, the mono-layer & bi-layer graphene segment is expected to grow at the fastest CAGR of 42.0% from 2020 to 2027.


Graphene Market: Increasing Demand For High-Performance Materials To Drive Industry Growth Analysis By 2030 | MENAFN.COM

“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done”

John Maynard Keynes.

No comments:

Post a Comment