Baltic Dry Index. 1076
-18 Brent Crude 76.61
Spot Gold 1958 U S 2 Year Yield 4.70 +0.08
Wall St Week Ahead Investor
skepticism turns to optimism as U.S. stock rally rolls on
The 15% year-to-date
rally in the S&P 500 (.SPX) is pulling once doubtful
investors back into the market. Many who had whittled down stock holdings
during 2022's painful decline are shifting gears.
The National
Association of Active Investment Managers' exposure index last week hit its
highest level since late 2021, while cash levels among global fund managers
surveyed this month by Bank of America fell to their lowest point since January
2022.
Positioning among
discretionary investors, a cohort that includes fund managers to individual
investors, moved above neutral earlier this month
for the first time since February, Deutsche Bank data showed.
Meanwhile, options
investors are buying calls - bets on upside in
stocks - at levels not seen in years. A record 1.8 million S&P 500 calls
traded on Thursday, helping lift the one-month moving average of calls-to-puts
to the highest in at least four years, Trade Alert data showed.
"If you've been
fighting this market, you're very likely exhausted," said Emily Roland,
co-chief investment strategist at John Hancock Asset Management, who has been
increasing overall equity allocations.
The latest gains are fueled by factors ranging from a U.S. economy that
has so far avoided recession despite the Federal Reserve's aggressive monetary
policy tightening to growing buzz over advances in artificial intelligence.
Some Wall Street banks are revising forecasts for how high stocks can
go. Among the latest is Goldman Sachs, whose strategists raised their year-end
S&P 500 target to 4,500 from 4,000, citing expectations the economy is
likely to avoid a downturn in the next 12 months. The index ended on Friday at
4,409.59, up 23% from its October lows.
Willie Delwiche, investment strategist at Hi Mount Research, said
improving sentiment is poised to support stocks, provided it does not become
too extreme.
"Shifting from pessimism to optimism is actually what gives
lifeblood to bull markets," he said. "You run into trouble when you
get to excessive levels, but ... we're not there."
One measure of sentiment that Delwiche studies, the American Association
of Individual Investors survey, showed bullish sentiment outpacing bearish
sentiment in the latest week by the widest margin since November 2021.
Continued strength in stocks would be consistent with previous periods
when pessimism began unwinding while optimism accelerated, Delwiche said.
History also shows stocks tend to keep rallying after rising 20% above
their lows. The S&P 500 has posted a median gain of 18% in the 12 months
after clearing the 20% threshold, LPL Financial data showed.
Still, some worry stocks are already getting overheated.
Cryptocurrencies climb to end the week as investors
digest BlackRock’s bitcoin ETF plans
T
Crypto prices climbed to end the week Friday, a
day after the largest asset manager in the world jumped into the race to launch
the first spot bitcoin exchange-traded fund in the U.S.
Bitcoin ended
the day higher by 3.75% at $26,355.04, according to CoinMetrics, while ether advanced
3% to $1,718.32.
Even altcoins rose, with the tokens tied to Solana and Cardano gaining
4.5% and 2%, respectively. Binance Coin was
2.75% higher, litecoin gained
3% and the Uniswap token advanced 4%.
Bitcoin still closed the week slightly negative, for the second
week in a row, by 0.21%. Ether also posted a second consecutive weekly decline.
It fell 10.84%. Coin Metrics measures a week in crypto, which trades 24 hours a
day, from the 4:00 p.m. ET stock market close one Friday to the next.
Investors were weighing the latest development in
the crypto industry’s battle with the U.S. Securities and Exchange Commission for
regulatory recognition and guidance. After the bell Thursday, BlackRock — the
largest asset manager in the world — filed
for spot bitcoin ETF, with Coinbase as its crypto custodian.
“One of the big purposes bitcoin
serves as an asset class is really diversification. It just has a different
risk profile than traditional financial markets,” Gustavo Schwenkler, associate
professor at the Leavey School of Business at Santa Clara University said. “If
this were to get approved, then I could anticipate a lot more institutional
investors adding bitcoin to their investment to their portfolios … it would
institutionalize the market in a way that is not possible right now.”
If allowed to move forward, the
iShares Bitcoin Trust would become the first approved ETF in the U.S. to track
the price of bitcoin, versus the futures contracts tied to the cryptocurrency.
It’s been about 10 years since the first filing for a potential spot bitcoin
ETF. Since then, every application that has gone through the SEC has been
rejected.
The filing comes about a week after
the SEC sued its crypto custody partner, Coinbase, for violating securities
laws, leaving many questioning the timing of BlackRock’s application.
“That apparent commitment to Coinbase is almost as
important near term as their commitment to bitcoin is in the long term,” said
Mark Connors, head of research at 3iQ. “It’s a big deal.”
Cryptocurrencies
climb, investors digest BlackRock bitcoin ETF plans (cnbc.com)
Binance France chief brushed off concerns days before
police visit
PARIS — Days before French police visited Binance’s Paris
office, the crypto exchange’s top French executive dismissed concerns about
U.S. regulatory charges affecting Binance’s other operations, comparing them
with the flapping of a butterfly’s wings.
French prosecutors have opened a
probe into “aggravated money-laundering” by the crypto exchange, Le Monde reported Friday, adding in a statement
that the company was also being probed over operating an unauthorized exchange.
Just days before the raid, CNBC
asked Binance France President David Prinçay if he was concerned about charges
from the top two U.S. financial regulators against the exchange.
“I don’t care what happened in the U.S.,” Prinçay
retorted, speaking at the Proof of Talk summit in Paris. “We are in Europe,
with a French regulator, a European regulator.”
Prinçay insisted Binance.US assets
were separated from the international exchange, an assertion also made by the
exchange’s legal team. The U.S. Securities
and Exchange Commission, which charged Binance last week with 13
securities charges, disagrees,
arguing that Binance user funds are at “significant risk” of flight due to
founder Changpeng Zhao’s alleged ownership of an interlocking set of Binance-related
companies.
Binance France’s chief called the U.S. allegations
of commingling a
“car crash.”
“The only concerns I have right now
is that we look too much at the car crash and not drive,” Prinçay said.
Binance’s founder, Zhao, dismissed
the police statement and reporting as “FUD,” claiming it was a “surprise
on-site” inspection that was “the norm.”
More
Binance
France chief brushed off concerns days before police visit (cnbc.com)
Binance to exit the Netherlands after failing to obtain
regulatory approval
Cryptocurrency exchange Binance said it will leave
the Netherlands after the company’s application to register under the Dutch
crypto authorization regime was rejected.
Referring to a virtual asset service provider,
Binance on Friday said that it could no longer serve Dutch clients “as we have
been unable to register as a VASP with the Dutch regulator.”
The company didn’t give a reason for why it was
unable to receive a license from regulators.
Starting Friday, no new Binance users will be
accepted onto the platform. From July 17, Binance said it will cease allowing
users to buy tokens, trade, or make deposits, although its withdrawal function
remains active.
Binance recommended that users withdraw their
assets from their accounts.
The Dutch central bank, which is responsible for
authorizing new virtual asset services providers, was not immediately available
for comment.
More
Binance
to exit the Netherlands as it fails to get regulatory approval (cnbc.com)
Revolution, ruin … and vanishing anchovies: El Niño is coming
and it’s making experts nervous
June 16,
2023
What
links poor European crop yields in the late 1700s (the spark that helped light
the French Revolution), a deadly famine in 1876 which killed 13 million people
in north China, and the sudden disappearance of thousands of anchovies from
Peruvian waters in 1972?
No,
the answer is not Marty McFly or Doctor Who, but rather a global weather
pattern that, for millennia, has subtly shaped and defined the long arc of
human history.
Occuring
every three to seven years, an El Niño describes the unusual warming of the eastern Pacific Ocean, just off the
coast from Peru. The phenomenon is declared when sea temperatures in the region
rise 0.5 °C above the long-term average.
This
subsequently drives surface air temperatures and pressure changes throughout
the equator, which then go on to affect seasonal weather over both hemispheres.
The
event is driven by slow, natural fluctuations in ocean currents and wind
patterns, but the climatic impacts are felt over many months – and even years –
across the planet.
The fallout
includes: increased global temperatures; heightened rainfall; intense
flooding and droughts; surges in infectious diseases, including malaria and
even plague; forest fires; mass fish die-offs. The list goes on.
On the upside, an El Niño normally results in fewer
hurricanes in the Atlantic and can help ease drought in dry parts of the world.
This “shock to the system,” as described by Dr Madeleine
Thomson, Head of Climate Impacts and Adaptation at Wellcome, is once
again looming on the horizon, with an El Niño expected to come into effect over
the coming months.
Climate scientists have predicted there is a 90 per
cent chance that the phenomenon will take hold in the latter half of the year.
Its impacts are unlikely to be felt until the end of the year, but there is
concern it could be a strong one.
“The distinct El Niño warming pattern, caused by
slow, natural fluctuations in ocean currents and heat, is beginning to emerge
in 2023,” says Professor Richard Allan, from the National Centre for Earth
Observation at the University of Reading.
“It’s too early to say how the current El Niño
storyline will unfold, but if it does unleash its full power in 2024 then it’s
very likely that yet another record global temperature will be breached.”
More
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.
Regional
Banks Scramble to Unload Commercial Real Estate Loans, Fearing New Crisis
Analysts
fear that CRE exposure could spark another round of bank failures
June 14, 2023 Updated: June 15, 2023
The work-from-home trend
has been taking its toll on office landlords and is now making its way through
to banks’ commercial loan portfolios, leading some analysts to predict that
more trauma could be on the way for regional banks this year.
And in the current climate
of bank failures, short sellers, and nervous depositors, banks with large
exposures to commercial real estate (CRE) loans are racing to clean up and sell
down their loan portfolios in hopes that they will not fall victim to another
round of bank runs.
“There is an estimated $1.5 trillion of commercial
property debt that will be due for repayment in about 18 months,” Peter Earle,
an economist at the American Institute for Economic Research, told The Epoch
Times. “It’s not improbable that even if interest rates have fallen by that
time, some of that real estate debt will nevertheless be impaired and have an
adverse impact on regional banks.”
In step with a recent trend in the CRE market, tech
giant Google announced in May that it was attempting to sublease 1.4 million
square feet of vacant office space in its Silicon Valley home base in order to
“match the needs of our hybrid workforce.” Despite more employees returning to
their offices this year, average office occupancy rates across the United
States are still below 50 percent.
According to a report by Bank of America, 68 percent of CRE loans are
held by regional banks. Approximately $450 billion in CRE loans will mature in
2023. JPMorgan Chase estimated that CRE loans comprise, on average 28.7
percent of the assets of small and regional banks, and projected that 21
percent of CRE loans will ultimately default, costing banks about $38 billion
in losses.
Double Hit
Commercial mortgages are getting hit on two fronts:
first, by the lack of demand for office space, leading to credit concerns
regarding landlords, and second, by interest rate hikes that make it significantly
more expensive for borrowers to refinance.
According to a June 12 report by Trepp, a CRE analytics firm, CRE
loans that were originated a decade ago, when average mortgage rates were 4.58
percent, are now coming due, and in today’s market, fixed-rate CRE loan rates
are averaging around 6.5 percent.
Banks that make CRE loans consider factors like debt
service coverage ratios (DSCRs), which measure a property’s income relative to
cash payments due on loans. Simulating mortgage interest rates from 5.5 percent
to 7.5 percent, Trepp projected that between 28 percent and 44 percent,
respectively, of currently outstanding CRE loans would fail to meet the 1.25
DSCR ratio today, and thus be ineligible for refinancing.
These calculations were done assuming current cash
flows from properties stay the same and that loans are interest-only, but with
vacancies rising, many landlords may have substantially less cash flow
available. In addition, whereas interest-only CRE loans were 88 percent of the market in 2021, lenders are now
switching to amortizing mortgages to reduce risk, which significantly increases
debt service payments.
More
Sweden braces for fallout from
property slump
June 16, 20238:26 AM GMT+1
STOCKHOLM/FRANKFURT, June 16 (Reuters) - Sweden's government is ready to
step in to stem the fallout from a property rout if tumbling prices cause a
wider crisis - a potential harbinger of trouble across Europe.
High debts, rising interest rates and a wilting economy has produced a
toxic cocktail for Sweden's commercial property companies, with several cut to
junk by rating agencies.
House prices are also down by around one-fifth since their March 2022
peak, according to the Organisation for Economic Cooperation and Development
(OECD), reflecting soaring mortgage costs.
Swedish Financial Markets Minister Niklas Wykman told Reuters the state
has the financial clout to prevent a property market plunge from engulfing the
country, one of Europe's wealthiest, and its banks.
"There is a preparedness to act," he said.
"If ... more accidents happen ... or ... new risks are revealed ...
or threats to the financial system arise, then the most important thing from a
stability perspective is to have a broad tool box ... which the state can
use."
Concerns about the property sector are already weighing on the currency,
while investors are wondering if Sweden is only the first domino to fall in
Europe.
Sweden and Germany are among the worst affected by a widening property
slump on the continent, according to Eurostat.
Earlier this week, the OECD warned of 'financial stability risks' in
Sweden, pointing to banks' heavy lending to property companies and homeowners,
most of whom have floating-rate mortgages that move in lock-step with rising
interest rates.
---- Property is the lynchpin of the Swedish economy, making up 80% of
household debt. Weighed down by home loans, Swedes are twice as heavily
indebted as Germans or Italians.
Commercial real estate makes up 18% of
bank loans, according to the OECD, more than three times the level in Spain or
Ireland.
Swedish
officials are worried that banks could compound property companies'
troubled by cutting credit, triggering firesales that would further drag down
the market.
One of Sweden's
biggest landlords, SBB (SBBb.ST), is at the centre of the spiral. It is scrambling
to salvage its finances after recently seeing its credit rating downgraded
to junk.
More
Sweden braces for
fallout from property slump | Reuters
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.
Covid-19 rapid testing company Ellume from Brisbane Australia
collapses owing $140million
June
16, 2023
An Australian biotech firm that made headlines after signing a
massive deal to sell Covid-19 rapid
testing kits to the US government has collapsed after a rescue package could
not be reached.
The Australian operations of Brisbane-based Ellume went into
voluntary administration in August, 2022.
It was hoped by administrators that a $58million offer by rival
self-testing kit maker Hough would rescue the company but the deal fell
over.
The company, which helped pioneer DIY Covid-19 testing kits before
they became widely accessible, will now be wound up by June 13, with an
estimated 40 employees to lose their jobs.
It was understood Ellume owed creditors around
$140million when it entered administration last year.
It also lost $87.9 million in the most recent
reporting period, reported news.com.au.
The company was dealt a fatal blow in November,
2022 when it was forced to recall 2.2million of its products and halt
manufacturing after some tests showed 'false positives'.
The recall 'had significant impact on the
operations and liquidity of the group', Ellume later reported.
In February, 2021, the Australian company seemed
set for a bright future when it announced a $231.8million agreement with the
U.S. Department of Defense and the Department of Health and Human Services
(HHS), to speed up domestic US production of its Covid-19 home tests.
'Our focus is enabling the U.S. to minimize
community transmission and reopen as quickly as possible,' the company's
founder Dr Sean Parsons said at the time of the announcement.
'The Ellume COVID-19 Home Test is the only
authorized test of its kind and is an essential tool for the broader pandemic
response in the US.'
Ellume had been founded in Brisbane in 2009 by Dr
Parsons, a former emergency clinician who saw 'the urgent need for smarter
diagnostics while working on the front lines of Australia's 2008 H1N1
pandemic'.
The biotech company's US operations are unaffected
by the collapse of the Australian business.
Covid-19 rapid
testing company Ellume from Brisbane Australia collapses owing $140million
(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.
This weekend, EVs, a warning from
China. Warning contains ads.
Hidden
- China's Flagship EVs are Exploding in Huge Numbers
Hidden - China's
Flagship EVs are Exploding in Huge Numbers - YouTube
This weekend’s music diversion. Approx.
8 minutes.
Johann
David Heinichen Concerto for Flute in D major S 225
Johann David
Heinichen Concerto for Flute in D major S 225 - YouTube
This weekend’s chess update. Approx. 9
minutes.
This is What Happens When You Don't Play it!
This is What Happens When You Don't Play
it! - YouTube
This weekend’s maths update. Approx. 2 minutes.
Unraveling
String Theory: The Ultimate Brief Explanation
Unraveling String
Theory: The Ultimate Brief Explanation - YouTube
“I've heard that hard work never killed anyone,
but I say why take the chance?”
Ronald Reagan.
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