Baltic Dry Index. 1055 +15 Brent Crude 74.79
Spot Gold 1961 U S 2 Year Yield 4.59 +0.07
In the fantasy, central
bank fiat money fuelled gambling stock casinos, a new bull market? Ignore it,
head for the exits.
In the real world economy, where real people have
to work for their living, a crash landing looms for later this year. It will
likely be far worse than the GFC of 2008-2010.
In China, deflation stalks the scripted economy. How
long before China exports deflation to the rest of the world?
Meanwhile, food price inflation is about to go
into orbit.
Not to worry though, we have Biden, Trudeau,
Sunak, Macron and Scholz on the case. What could possibly go wrong?
JPMorgan bond chief Bob Michele sees worrying
echoes of 2008 in market calm
To at least one market veteran, the stock market’s resurgence after
a string of bank failures and rapid interest rate hikes means only one thing:
Watch out.
The current period reminds Bob Michele, chief investment officer for JPMorgan Chase’s
massive asset management arm,
of a deceptive lull during the 2008 financial crisis, he said in an interview
at the bank’s New York headquarters.
“This does remind me an awful lot of that March-to-June period in
2008,” said Michele, rattling off the parallels.
Then, as now, investors were concerned about the
stability of U.S. banks. In both cases, Michele’s employer calmed frayed nerves
by swooping in to acquire a troubled competitor. Last month, JPMorgan bought failed
regional player First Republic; in March 2008, JPMorgan took over the investment bank Bear
Stearns.
“The markets viewed it as, there
was a crisis, there was a policy response and the crisis is solved,” he said.
“Then you had a steady three-month rally in equity markets.”
The end to a nearly 15-year period
of cheap
money and low interest rates around the world has vexed
investors and market observers alike. Top Wall Street executives, including
Michele’s boss Jamie
Dimon, have raised alarms about the economy for more than a year.
Higher rates, the reversal of the Federal Reserve’s bond-buying programs and
overseas strife made for a potentially dangerous combination,
Dimon and others have said.
But the American economy has
remained surprisingly resilient, as May payroll figures surged more
than expected and rising stocks caused some to call the start of a fresh bull
market. The crosscurrents have divided the investing world into roughly two
camps: Those who see a soft landing for the world’s biggest economy and those
who envision something far worse.
For Michele, who began his career four decades ago,
the signs are clear: The next few months are merely a calm before the storm.
Michele oversees more than $700 billion in assets for JPMorgan and is also
global head of fixed income for the bank’s asset management arm.
In previous rate-hiking cycles going back to 1980,
recessions start an average of 13 months after the Fed’s final rate increase,
he said. The central bank’s most recent move happened in May.
In that ambiguous period just after the Fed has
finished raising rates, “you’re not in a recession; it looks like a soft
landing” because the economy is still growing, Michele said.
“But it would be a miracle if this
ended without recession,” he added.
The economy will probably tip into
recession by the end of the year, Michele said. While the downturn’s start
could get pushed back, thanks to the lingering effects of Covid stimulus funds,
he said the destination is clear.
“I’m highly confident that we’re
going to be in recession a year from now,” he said.
More
Recession:
JPMorgan bond chief Bob Michele sees worrying echoes 2008 (cnbc.com)
China's factory deflation steepens
as demand wanes
June 9, 20235:13 AM GMT+1
BEIJING, June 9 (Reuters) - China's factory gate prices fell at the
fastest pace in seven years in May and quicker than forecasts, as faltering
demand weighed on a slowing manufacturing sector and cast a cloud over the
fragile economic recovery.
As rising interests rates and inflation squeeze demand in the United
States and Europe, China is in contrast battling a sharp decline in prices with
factories receiving less for their products from key overseas markets.
The producer price index (PPI) for May fell for an eighth consecutive
month, down 4.6%, the National Bureau of Statistics (NBS) said on Friday. That
was the fastest decline since February 2016 and bigger than the 4.3% fall in a
Reuters poll.
"The risk of deflation is still weighing on the economy," said
Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a note.
"Recent economic indicators send consistent signals that the economy is
cooling," he added.
China's economy grew faster than expected in the first quarter, but
recent indicators show demand is rapidly weakening with exports, imports and
factory activity falling in May.
The consumer price index (CPI) rose 0.2% year-on-year, speeding up from
a 0.1% rise in April but, missing a forecast for a 0.3% increase.
Food price inflation, a key driver of CPI, slowed to 1.0% year-on-year
from 2.4% in the previous month. On a month-on-month basis, food prices fell
0.7%.
More
China's factory deflation steepens as demand wanes |
Reuters
China’s exports plunge by 7.5% in May, far more than
expected
PUBLISHED TUE, JUN 6 2023 11:32 PM EDT UPDATED FRI, JUN 9 2023 12:30 AM
EDT
BEIJING — China’s exports fell in May for the first time since February,
adding to concerns that growth in the world’s second-largest economy could be
faltering.
Exports fell 7.5% year-on-year to $283.5 billion, customs data showed
Wednesday, far worse than the 0.4% decline predicted by a Reuters poll.
The decline was so sharp that export volumes came in below their levels
at the start of the year, after accounting for seasonality and changes in
export prices, Julian Evans-Pritchard, head of China Economics at Capital
Economics, said in a note.
----Customs data
released Wednesday showed the dollar value of China exports to the U.S. slumped
15.1% from the January to May period compared to a year ago, while exports to
the European Union declined 4.9% in the same period. China exports to ASEAN,
however, rose 8.1% in U.S. dollar terms from January to May, compared to a year
ago.
More
China's
exports plunge by 7.5% in May, far more than expected (cnbc.com)
China can’t rely on Southeast Asian exports to offset a
U.S. slowdown
BEIJING — China can’t easily rely on its neighbors
as export markets in a global slowdown, the latest trade data show.
Exports
to the Association of Southeast Asia Nations have been growing. The
10-member bloc surpassed the European Union during the pandemic to become
China’s largest trading partner on a regional basis.
Data showed that exports to Southeast
Asia fell by 16% in May compared to a year ago, dragging down China’s
overall exports.
Exports to the U.S. — China’s largest trading
partner on a single-country basis — fell by 18% from a year ago in U.S. dollar
terms in May. That’s according to official figures accessed through Wind
Information.
At $42.48 billion, the U.S. exports
in May were more than the $41.49 billion China exported to Southeast Asia that
month, according to customs data.
Southeast Asia can’t fully offset
the loss from the U.S. market, said Bruce Pang, chief economist and head of
research for Greater China at JLL.
ASEAN is made up of 10 countries:
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand and Vietnam.
The U.S. is one single market
versus a grouping of 10 countries, Pang pointed out, adding that companies can
also sell at higher profit margins in the U.S. market.
More
China
can't rely on Southeast Asian exports to offset a U.S. slowdown (cnbc.com)
Eurozone sinks into recession
June
8, 2023
The eurozone entered into a technical recession at
the start of the year, according to revised data, as rising inflation hit
consumer spending.
The economy shrank by 0.1pc for a second
consecutive quarter in the first three months of 2023, figures from the EU’s
statistic agency showed.
Eurostat revised down an earlier forecast that had
predicted slight growth, after the continent’s largest economy Germany said
last month it had fallen into recession.
It had previously estimated that the eurozone
economy had expanded by 0.1pc in the first quarter of the year.
Household consumption slumped by 0.3pc over the
period, following a decline of 1pc in the previous quarter, indicating domestic
demand was “hit hard by the combination of inflation and rising interest
rates,” according to economists.
It comes as the European Central Bank is expected
to continue raising interest rates at its next meeting later this month, and
again in July, in a bid to bring down persistent inflation.
Capital Economics’ chief Europe economist Andrew
Kenningham warned that the eurozone economy “is likely to contract again in the
second quarter as the effects of monetary policy tightening continue to feed
through”.
Eurozone sinks
into recession (msn.com)
UK and US
poised to fall into recession as interest rates dampen growth
Moody’s report shows weak growth across G20 as central
banks move to reduce persistent high inflation
Wed 31 May 2023 14.44
BST
Stubbornly high inflation and higher borrowing costs are
poised to drive the economies of the UK, Germany and US
into recession, the leading rating agency Moody’s has warned.
In a downbeat forecast for growth across advanced G20
economies, it said a ramping up of interest rates by central banks on both sides of the Atlantic was
expected to weigh on economic growth this year.
UK and US poised
to fall into recession as interest rates dampen growth | Recession | The
Guardian
“Under the gold standard, a free banking system stands as the
protector of an economy's stability and balanced growth... The abandonment of
the gold standard made it possible for the welfare statists to use the banking
system as a means to an unlimited expansion of credit... In the absence of the
gold standard, there is no way to protect savings from confiscation through
inflation”
Alan Greenspan.
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.
More
food price inflation is likely, and it’s not just Ukraine’s crops that are in
trouble.
Dryness
and early heat are affecting crops in Canada and parts of the USA.
China
has the opposite problem, where too much rain has impacted their wheat crop, most
likely turning China into a global importer of wheat in the second half of
2023.
Heavy 'dragon boat water' rains
hit southwest China, some cities flooded
June 9, 20238:24 AM GMT+1
BEIJING, June 9 (Reuters) - Non-stop heavy rains lashed parts of
southwest China on Friday, triggering floods in cities, engulfing roads and
partially submerging buildings.
A particularly harsh first bout of summer rains known locally as
"dragon boat water" saw the city of Beihai in Guangxi log 453
millimetres on Thursday. That was a regional daily record for June, according
to the China Meteorological Administration.
Cars were half underwater in flooded Beihai streets and at one
multi-storey building, water cascaded down a staircase as firefighters raced to
rescue its residents, videos circulating on social media showed.
The nearby city of Yulin had had 35 hours of rain as of 7 a.m. local
time on Friday (2300 GMT Thursday), broadcaster CCTV reported.
Rain is forecast to continue in southern China over the coming days
while the northeast is also expected to be hit by sudden thunderstorms, the
weather bureau reported.
China, prone to floods, is increasingly warning of more extreme weather
due to climate change. Guangxi experienced a rare extreme drought in May, with
rainfall plunging to 60-year lows.
The
central province of Henan, the granary of China, was recently struck by heavy
rainfall that
caused crops to sprout or be hit by blight, triggering concerns about food
security.
Heavy 'dragon boat
water' rains hit southwest China, some cities flooded | Reuters
Maps show how Kakhovka dam collapse threatens Ukraine’s bread
basket
Falling water levels in Kakhovka reservoir could
imperil canals that feed some vital crop regions
by Ashley Kirk and Lucy Swan Thu 8 Jun 2023 13.29 BST
The destruction of the Nova Kakhovka dam has
led to fears that a depleted reservoir will leave three critical regions in
Ukraine’s bread basket without a key water supply.
This has led to warnings about
the region and wider world’s food supply, with Ukraine accounting for 40% of
global trade in sunflower meal, 35% of sunflower oil, and 5% of wheat, barley
and corn exports.
A series of canals run from the Kakhovka reservoir, all
of which help irrigate swathes of agricultural land in southern Ukraine. If the reservoir dries up, this water supply will be
reduced.
The most significant of these canals are the North
Crimean and Kakhovsky canals, which run from just north of the broken dam.
The North Crimean canal supplies water to western Kherson
before flowing down to Crimea. Its entrance is just before the dam and
satellite imagery from 6 June already shows increased greenery within its
reservoir – a sign of the water level decreasing.
The Kakhovsky canal irrigates most of the Kherson
region’s fields before entering Zaporizhzhia.
Dnipro region is also supported by the Dnipro-Kryvyi Rih
canal which runs north of the Kakhovka reservoir, while a separate canal system
provides drinking water and irrigation to the city of Zaporizhzhia.
Satellite imagery of the area directly south of the
reservoir, around these canals, shows mile upon mile of agricultural land. The
circular formations are caused by a centre-pivot irrigation system that waters
crops with equipment that rotates around a pivot.
Ukraine’s most important crops are corn, wheat, sunflower
seed and barley. All of these yields are already down by at least a fifth in
2023-24, according to the US Department of Agriculture.
There are fears that declining levels in the Kakhovka
reservoir will mean less water feeding through to the network of canals used to
irrigate these crops.
With the exception of corn, which has its biggest yields
in northern Ukraine, the other three crops are centred in the south.
Dnipro and Zaporizhzhia are some of the most important
regions for wheat and both rely on canals that run from the reservoir. Dnipro
is similarly important for sunflower seed.
While Odesa and Mykolaiv have the biggest yields for
barley, Dnipro, Zaporizhzhia and Kherson are all still big producers of this
crop.
Already images from the village of Marianske in Dnipro,
taken on 7 June, show how reservoir levels have fallen.
The Ukrainian agrarian and food ministry has warned that
agricultural land in these regions could be so heavily affected that they could
turn into “deserts”.
“The terrorist act at the Kakhovskaya HPP [hydropower
plant] has left 94% of irrigation systems in Kherson region, 74% in Zaporizhzhia,
and 30% in Dnipropetrovsk without a source of water,” the ministry said in
a statement. “The
destruction of the Kakhovskaya HPP will mean that the fields in the south of
Ukraine may turn into deserts as early as next year.”
Maps show how Kakhovka dam collapse threatens
Ukraine’s bread basket | Ukraine | The Guardian
Below,
why a “green energy” economy may not be possible, and if it is, it won’t be
quick and it will be very inflationary, setting off a new long-term commodity
Supercycle. Probably the largest seen so far.
The
“New Energy Economy”: An Exercise in Magical Thinking
https://media4.manhattan-institute.org/sites/default/files/R-0319-MM.pdf
Mines,
Minerals, and "Green" Energy: A Reality Check
https://www.manhattan-institute.org/mines-minerals-and-green-energy-reality-check
"An
Environmental Disaster": An EV Battery Metals Crunch Is On The Horizon As
The Industry Races To Recycle
by Tyler Durden Monday, Aug 02, 2021 - 08:40 PM
Covid-19
Corner
This
section will continue until it becomes unneeded.
J&J's COVID vaccine taken by 19 MILLION Americans is pulled
by FDA
June 8, 2023
- It was mired in controversy early on over health and contamination
concerns
- A brief pause in 2021 after severe blood clots were reported eroded
public trust
The Food and Drug Administration (FDA) has revoked authorization of Johnson & Johnson’s Covid vaccine after it was paused over rare blood clot
concerns, which sent demand plummeting.
The move
was not unexpected because J&J’s parent company Jannsen had requested that
federal regulators at the FDA withdraw authorization for its vaccine after it
was revealed that the last tranche of doses – about 12.5 million – had expired.
As of year
three of the Covid pandemic, nearly 231 million Americans have received either
one J&J shot or two doses of an mRNA vaccine from Pfizer or Moderna.
Vaccination
fatigue has swept the US, with millions of Americans frustrated by the fact
that a shot does not guarantee immunity from the virus but rather protects against severe illness, and all those who had planned on getting fully
vaccinated are believed to have done so by now.
With a
renewed wave of demand for J&J’s single-dose vaccine highly unlikely,
coupled with a beleaguered history of production hiccups and health concerns
that severely eroded public trust, the pharmaceutical company has opted to step
away from the Covid vaccine field.
More
J&J's COVID
vaccine taken by 19 MILLION Americans is pulled by FDA (msn.com)
Some more useful Covid links.
Johns Hopkins Coronavirus
resource centre
https://coronavirus.jhu.edu/map.html
The Spectator
Covid-19 data tracker (UK)
https://data.spectator.co.uk/city/national
World Health Organization - Landscape of COVID-19 candidate
vaccines. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines
NY Times Coronavirus Vaccine Tracker. https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html
Regulatory Focus COVID-19 vaccine tracker. https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section.
No
technology update this weekend. At least not in the usual sense. This weekend,
shipping. Approx. 15 minutes.
Life
Inside the World's Largest Container Ships Ever Created - History of Ships
Documentary
This weekend’s music diversion. That
Red Priest, again. Shame about the Largo. Still, who am I to critique and two out of
three isn’t bad unless you’re playing Russian roulette. Approx. 6 minutes.
Vivaldi:
RV 781 / Concerto for 2 trumpets (oboes), violin, strings & bc in D major /
Modo Antiquo
This weekend’s chess update. Approx.
12 minutes.
How
Exactly Does THIS Happen?
How Exactly Does
THIS Happen? - YouTube
This weekend’s maths update. Approx. 18 minutes.
Visualising
irrationality with triangular squares
Visualising
irrationality with triangular squares - YouTube
"Deficit spending is simply a
scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this
insidious process. It stands as a protector of property rights."
Alan Greenspan.
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