The Least Worse Outcome. ECB Next.

Baltic Dry Index. 1074 +18            Brent Crude 74.49

Spot Gold 1949                  US 2 Year Yield 4.67 +0.12

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

Deaths 53,103

Coronavirus Cases 14/06/23 World 690,312,270

Deaths 6,890,861

With most countries now only reporting weekly or monthly or not updating at all, the LIR will drop the daily Covid update at the end of this week.

Public opinion always wants easy money, that is, low interest rates. 

Ludwig von Mises.

With mainstream media leading with mass coverage of events in a Miami courthouse, the LIR will cover what’s likely to be more important to the US and global economy and ultimately, most people’s lives.

Later today, the US central bank will either keep its key interest rate unchanged or raise by probably another quarter of one percent.

If unexpectedly they raise it, thousands of bull stock exchange bets will blow up, generating a new stock bubble bursting panic. So they better not do that goes the prevailing euphoria.

In the long run, either decision probably doesn’t matter much.

The global economy seems headed into another recession led by Germany and a China rebound that already seems to have crashed off the rails.

A US commercial real estate bubble has burst with devastation just about to roll through America’s regional and smaller banks.

A commercial mortgage backed securities bust is just starting to get underway.

Probably most serious of all, little if any food price inflation relief is coming in 2023 from our northern hemisphere crop production. With a new Pacific Ocean El Nino weather event just starting, it’s unlikely that next year’s southern hemisphere crops will provide any food price inflation relief either.

Given that outlook, not raising US interest rates today is probably the least worse outcome.

Asian shares up, dollar wobbly as US inflation data reinforces Fed pause bets

June 14, 20233:14 AM GMT+1

SYDNEY, June 14 (Reuters) - Asian shares rose and the dollar was under pressure on Wednesday after slowing U.S. inflation solidified bets that the Federal Reserve would skip a hike later in the day, but uncertainty remained about further rate increases beyond this week.

The much-watched U.S. CPI report overnight showed prices barely rose in May, with just a 0.1% increase from the prior month. On an annual basis, consumer prices rose 4%, the smallest in more than two years, slowing from April's 4.9%.

hat led traders to firm up expectations of a rate pause by the Fed to 91.9% when it concludes a two-day policy meeting on Wednesday, but the still-strong underlying price pressures suggest an over 60% probability the central bank could resume hikes in July, according to CME Group's FedWatch Tool.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.2% in early regional trade, after surging 1.1% in the prior session to the highest in two months.

Tokyo's Nikkei (.N225) rose 1% to a fresh 33-year high, helped by expectations of extended ultra loose policy from the Bank of Japan.

Regionally, the accommodative policy stance from China also lifted sentiment with signs of more easing to come. China's bluechips (.CSI300) rose 0.5% while the Hong Kong's Hang Seng Index (.HSI) was up 0.4%.

Both S&P 500 futures and Nasdaq futures were flat, after a strong rally overnight to their highest closing levels in 14 months thanks to the softer U.S. inflation data.

"While the soft headline inflation print gives the Fed the go-ahead to pause its rate hiking cycle on Thursday, sticky core inflation will keep the Fed's hawkish trigger finger hovering over the rate hike button in the months ahead," said Tony Sycamore, a market analyst at IG.

---- Markets would also be focusing on the post-policy press conference from Fed Chair Jerome Powell and whether the dot plot would signal any hikes ahead.

Persisting inflation pressures elsewhere are keeping markets jittery. Data showing a rapid pickup in UK wage growth in the three months to April could complicate matters for the Bank of England, which is set to debate its monetary policy decision next week.

Short-dated German yields jumped to a 3-month high overnight as investors looked to the rate decision from the European Central Bank on Thursday. It is expected to raise rates by another quarter-point and again in July before pausing for the rest of the year.

More

Asian shares up, dollar wobbly as US inflation data reinforces Fed pause bets | Reuters

 

European markets head for lower open ahead of latest Fed decision

UPDATED WED, JUN 14 2023 12:23 AM EDT

European markets are heading for a negative open Wednesday as investors look ahead to the latest monetary policy decision from the U.S. Federal Reserve.

Global markets have also been digesting the latest U.S. inflation data, which showed price pressures slowed again in May, adding to investor optimism that the Federal Reserve could skip a rate hike when it decides on policy today.

The consumer price index in May increased 4.0% year over year, marking the slowest annual rate since March 2021.

Following the report, traders increased their bets that the Fed will keep rates unchanged on Wednesday after hiking at 10 consecutive meetings. There’s an over 95% chance the central bank would keep rates at the current target rate of 5% to 5.25%, according to CME Group’s FedWatch tool.

Asia-Pacific markets were mixed overnight and S&P 500 futures traded near flat.

European markets live updates: U.S. inflation reaction, Fed decision (cnbc.com)

US stocks end higher as inflation data cements bets on rate hike pause

June 14, 202312:15 AM GMT+1

June 13 (Reuters) - The S&P 500 and Nasdaq reached their highest closes in 14 months on Tuesday after data showed consumer prices rose modestly in May, boosting bets that the Federal Reserve will not raise interest rates on Wednesday.

Nvidia (NVDA.O) jumped 3.9%, becoming the first chipmaker to end a trading session with a market capitalization above $1 trillion after smaller rival Advanced Micro Devices (AMD.O) gave an update on its artificial intelligence strategy that failed to impress investors. AMD dropped 3.6%.

Stocks advanced after a U.S. Labor Department report showed the consumer price index (CPI) rose 0.1% last month following a 0.4% jump in April, with core inflation unchanged at 0.4%.

On a year-on-year basis, headline inflation increased by a less-than-estimated 4.0%, reflecting declines in the cost of energy products and services, including gasoline and electricity.

"If the Fed was looking for data to point to say, 'We're going to pause in June,' I think they got it today," said Liz Young, head of investment strategy at SoFi in New York.

---- Traders have priced in a 93% chance that the U.S. central bank will hold interest rates at the 5%-5.25% range on Wednesday, and 62% odds of 25-basis-point hike in July, according to the CME Fedwatch tool.

More

US stocks end higher as inflation data cements bets on rate hike pause | Reuters

 

US consumer prices slow in May; core inflation sticky

June 13, 2023 2:06 PM GMT+1

WASHINGTON, June 13 (Reuters) - U.S. consumer prices rose moderately in May, leading to the smallest annual increase in inflation in more than two years, though underlying price pressures remained strong, supporting views that the Federal Reserve would keep interest rates unchanged on Wednesday while adopting a hawkish posture.

The Consumer Price Index (CPI) increased 0.1% last month as gasoline prices fell, the Labor Department said on Tuesday. The CPI gained 0.4% in April. In the 12 months through April, the CPI climbed 4.0%. That was the smallest year-on-year increase since March 2021 and followed a 4.9% rise in April.

The annual CPI peaked at 9.1% in June 2022, which was the biggest increase since November 1981, and is subsiding as last year's large rises drop out of the calculation.

Economists polled by Reuters had forecast the CPI gaining 0.2% last month and increasing 4.1% year-on-year.

The report was published as Fed officials prepared to gather for a two-day policy meeting. Data this month offered a mixed picture of the labor market, with nonfarm payrolls increasing solidly in May, but the unemployment rate rising to a seven-month high of 3.7% from a 53-year low of 3.4% in April.

Economists believe that the gradual inflation and labor market slowdown gives the U.S. central bank enough room to skip raising interest rates on Wednesday for the first time since March 2022 when the Fed embarked on its fastest monetary policy tightening campaign in more than 40 years.

The Fed, which has hiked its policy rate by 500 basis points, is expected to leave the door open to further rate increases.

With the economy showing signs of slowing, economists argue that the Fed should pause further rate increases while assessing the impact of the steps its has taken so far to cool demand.

More

US consumer prices slow in May; core inflation sticky | Reuters

Up next, commodities. The B of the ABCD “grain mafia” (ADM, Bunge, Cargill, Dreyfus,)  absorbs another  tempting morsel.

But in North America, crops are already struggling.

Bunge, Viterra will merge to form $34 billion agri-trading powerhouse

By Karl Plume and Anirban Sen  June 13, 20232:10 PM GMT+1

CHICAGO, June 13 (Reuters) - U.S. grains merchant Bunge (BG.N) and Glencore (GLEN.L)-backed Viterra are merging to create an agricultural trading giant worth about $34 billion including debt, the companies said on Tuesday, in a deal that will likely draw close regulatory scrutiny.

The deal brings the combined company closer in global scale to leading rivals Archer-Daniels-Midland (ADM.N) and Cargill (CARG.UL), valuing Bunge and Viterra at about $17 billion each. Bunge shareholders, however, will own about 70% of the combined company, because Bunge will pay for a significant chunk of the deal with cash.

----Under the deal, Viterra shareholders will get about 65.6 million shares of Bunge stock, carrying a value of about $6.2 billion, and about $2 billion in cash.

Bunge will also assume $9.8 billion of Viterra's debt, according to a joint statement.

Bunge is already the world's largest oilseed processor and analysts said it and Viterra's crushing businesses could face regulatory scrutiny in Canada and Argentina.

Last year, Bunge was the largest corn and soybean exporter from Brazil, the world's top source of the staple crops for making animal feed and biofuels, according to data from shipping agent Cargonave. Viterra was the third-largest corn exporter and No. 7 soybean shipper.

Combined, the companies accounted for about 23.7% of Brazil corn exports in 2022 and 20.9% of Brazil soybean exports, Cargonave data showed.

More

Bunge, Viterra will merge to form $34 billion agri-trading powerhouse | Reuters

CATTLE, WHEAT, AND FARMERS ARE SUFFERING IN KANSAS

By Charmayne Hefley  6/9/2023

Drought has caused hay supplies to fall to an all time low causing some Kansas cow/calf operators to have to cull their herd while others wonder if they’ll have to follow suit. 

Jude Gottschalk, owner of Gottschalk Equipment Sales, Inc. in Hays, Kansas, says some farmers have told him about selling off their cattle herds because of the significant drought. “You’re hearing these old guys breaking down and crying to see their herd go,” Gottschalk says. “It’s not only their livelihood, but these cows are their family.”

The dry conditions that have impacted Kansas have been persistent all winter long, which Gottschalk says has really damaged the pastures. 

According to the June 5 Crop Progress Condition report for Kansas, pasture and range conditions are 37% fair, 24% poor, and 21% very poor. Only 1% of the pasture and range conditions are rated as excellent, with the remaining conditions rating 17% good.

----While the drought has farmers concerned about their futures, Gottschalk says, “Rain is at the end of every drought, and you have to have the bad years so you appreciate the good ones.”

According to the latest drought monitor map, some areas of Kansas have seen some relief from precipitation with D4 exceptional drought reducing from nearly 32% of the state last week to almost 17% of the state this week. This week, D3 extreme drought conditions cover nearly 30% of the state, while just over 21% of Kansas is in D2 severe drought. Almost 13% of the state is in D1 moderate drought, just over 10% is abnormally dry, and just 9% of the state’s acres are drought-free. 

Kelley McGuire, a farmer in Mitchell County, Kansas, has also felt the effects of the drought on his farm. McGuire says that the cost per acre to keep things running has increased significantly. “I’ve had to borrow more money because the income was down,” he notes.

While McGuire is hoping for the rain to bring some relief to his farm, he says he hasn’t changed the way he manages his crops just in case rain does fall. “I try not to cut corners on growing crops,” McGuire says, “but I do change the way I feed cattle. I really shopped around for what was the cheapest source of feed for my cows.”

McGuire says that, so far, he’s had enough hay from the previous season to be able to keep his cattle. “I’ll have enough grass to sustain the cows for a little while,” McGuire says. “If it doesn’t rain, I’m looking at taking the cows off of grass. I might just sell them to not go through all the feed.”

Beyond the potential of having to sell his cattle, McGuire says he had planted one field of wheat this winter, but, due to the dry conditions, “I did have to kill it.”

McGuire, who’s 42 years old, says, “This is probably the driest I’ve ever seen it.” He says that the drought is hindering some farmers in their 70s' ability to cut their wheat for the first time in their farming careers.

“The wheat harvest that [Kansas is] going to have is going to be pretty poor,” McGuire says. 

The June 5 Crop Progress Condition report for Kansas confirmed the poor winter wheat conditions, which rated 34% very poor, 31% poor, 23% fair, 11% good, and just 1% excellent.

Cattle, wheat, and farmers are suffering in Kansas | Successful Farming (agriculture.com)

Texas Is Expected to Break The Power-Demand Record as Heat Intensifies This Week

Tue, June 13, 2023 at 7:53 PM GMT+1

(Bloomberg) -- Texas’s fragile power grid will be pushed to the brink in coming days as unusually hot weather grips the second-largest US state.

Electricity usage is forecast to break the all-time high by the end of the week, the Electric Reliability Council of Texas, or Ercot, warned. With temperatures expected to top 100F (38C) in Houston, Dallas and other Lone Star State cities, air-conditioning use is expected to soar to 80.3 gigawatts on Thursday and even higher on Friday. The record set last summer was 80.1 gigawatts.

The state capital Austin issued its first heat advisory of the season on Tuesday and opened cooling centers for residents without air conditioners. In Houston, passengers awaiting flights at George Bush Intercontinental Airport sweltered for a second straight day because the air-conditioning system wasn’t fully functioning.

Statewide, power supplies will be especially stretched on Friday when demand is projected to hover at a record level for four consecutive hours, according to Ercot data. The reserve margin — or buffer of extra electricity supplies — may shrink to as little as 5.3% during that stretch.

Even before the worst of the heat has descended, National Weather Service forecasters were warning that in some parts of the state Tuesday it will feel like it’s 114F. The Texas grid normally doesn’t see demand spike this early in the cooling season.

Texas Is Expected to Break The Power-Demand Record as Heat Intensifies This Week (yahoo.com)

Finally, more bad news from cryptoland. As the old joke goes, if it wasn’t for bad news from cryptoland, there’d be no news from cryptoland at all.

 

Cryptoverse: Security alert! Altcoins worth $100 billion dropped in hot water

By Lisa Pauline Mattackal and Medha Singh  June 13, 20236:16 AM GMT+1

June 13 (Reuters) - It's a rough time to be an altcoin. Insecurity reigns.

A slew of altcoins - a catch-all for most cryptocurrencies except bitcoin and ether - have been harpooned in lawsuits filed by U.S. regulators against exchanges Binance and Coinbase (COIN.O) last week, hammering the prices of the tokens.

It's big. Over 50 cryptocurrencies worth over $100 billion in total and making up about 10% of the overall market, are now viewed by the SEC watchdog as securities, according to CCData.

Among major players, for example, solana , polygon and cardano have sunk between 23% and 32%.

"Security classifications would affect all U.S. crypto exchanges, leading to a forced closing of various altcoin pairs," said Vetle Lunde, senior analyst at K33 Research.

Whether U.S. courts accept the SEC's classification remains to be seen, but the impacts are already being felt - Robinhood Markets (HOOD.O) has already said it will remove solana, cardano and polygon from its platform. Market participants say other exchanges may follow suit.

That would make it more expensive both for individual tokens to operate and for crypto exchanges to list them.

"Securities can only be traded by brokers, and only on regulated exchanges, and only with clearing houses and transfer agents and physical certificates," Ryan Rasmussen, analyst at Bitwise Asset Management told the Reuters Global Markets Forum. "It would certainly be a hurdle for exchanges to implement."

The SEC's classification is likely to hit investment interest for the blockchains underlying tokens like solana and cardano, both notable chains for developing decentralized finance and other applications, market players say.

"It could fundamentally hinder their ability to gain funding from the U.S," said Lucas Kiely, chief investment officer of digital investment platform Yield App, adding this would likely impact the onboarding of developers and users.

More

Cryptoverse: Security alert! Altcoins worth $100 billion dropped in hot water | Reuters

A lower interest rate doesn't make a debt go away.

Dave Ramsey.

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.

Surprise UK wage jump raises likelihood of higher interest rates

June 13, 2023 9:59 AM GMT+1

LONDON, June 13 (Reuters) - British wage growth soared and employment also jumped in the three months to April, raising expectations that the Bank of England will raise interest rates again, perhaps several times, to contain unrelenting inflationary pressures.

Data from the Office for National Statistics (ONS) on Tuesday indicated the labour market was running hotter than all economists polled by Reuters had predicted, sending sterling higher and setting off another drop in British government bond prices.

The figures added to signs that the economy is not cooling as the central bank had hoped as Britain contends with one of the highest inflation rates among major advanced economies.

Annual growth in wages excluding bonuses rose to 7.2% during the three months to April, the ONS said, up from 6.8% in the three months to March.

Outside of the COVID-19 pandemic, when wage statistics were skewed by furlough schemes, it was the highest reading on record. Economists polled by Reuters had forecast a 6.9% rise on average.

"For the Bank of England, wage growth is a big problem – it is simply at too high a level to allow inflation to hit the 2% target," said Hussain Mehdi, macro and investment strategist at HSBC Asset Management.

Including bonuses, wage growth jumped to 6.5% from 6.1% previously, but it still lagged consumer price inflation at 8.7% in April, meaning that Britons are suffering declining pay in real terms.

Employment rose by 250,000 in the three months to April, against the Reuters poll forecast for a 162,000 increase.

"With the possibility of higher-for-longer rates, a UK recession looks unavoidable as tight monetary policy filters into the real economy - including the housing market," Medhi said.

Financial markets on Tuesday put the chance of a 0.5 percentage point increase to interest rates at 33%, up from a 17% chance on Monday, and now put at 65% he likelihood that rates will reach 5.75% by the end of the year.

More

Surprise UK wage jump raises likelihood of higher interest rates | Reuters

China cuts short-term borrowing costs as economy slows

June 13, 20234:30 AM GMT+1

SHANGHAI/SINGAPORE, June 13 (Reuters) - China's central bank lowered a short-term lending rate for the first time in 10 months on Tuesday, in a bid to restore market confidence and prop up a stalling post-pandemic recovery in the world's second-largest economy.

The cut to the lending rate signals possible easing for longer-term rates over the next week and beyond as demand and investor sentiment weaken, adding to the case for urgent policy stimulus to sustain growth.

The People's Bank of China (PBOC) cut its seven-day reverse repo rate by 10 basis points to 1.90% from 2.00% on Tuesday, when it injected 2 billion yuan ($279.97 million) through the short-term bond instrument.

"The central bank's rate cut decision was not a complete surprise to the market," said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

"Commercial banks have already lowered deposit rates, and PBOC governor Yi Gang also mentioned strengthening counter-cyclical adjustment recently."

---- Cheung said the PBOC may have wanted to mitigate the impact of any future policy easing on the Chinese yuan ahead of the Federal Reserve's policy meeting this week, which is keenly watched by financial markets.

China remains an outlier among global central banks as it loosens monetary policy to shore up growth while its major peers raise interest rates to counter surging consumer prices.

Further interest rate cuts in China would only widen the yield gap with the United States, even if the Fed pauses this week, sending the yuan lower and accelerating capital outflows.

China is due to release May credit lending data and activity indicators, including retail sales and industrial production, this week.

Tuesday's rate cut suggests policymakers are increasingly worried about the health of China's recovery, traders and analysts said.

---- The next adjustment to rates could come as soon as Thursday, when the central bank is due to roll over 200 billion yuan ($27.93 billion) in medium-term lending facility (MLF) loans.

"The 10bp cut in the open market operations (OMO) reverse repo rate can be seen as a precursor to a MLF rate cut this Thursday," said Frances Cheung, rates strategist at OCBC Bank.

More

China cuts short-term borrowing costs as economy slows | Reuters

Covid-19 Corner

This section will continue until it becomes unneeded.

What else went wrong with the rushed out vaccines.

Green Monkey DNA Found in COVID-19 Shots

Jun 11 2023

The COVID-19 shots are turning out to be more of a time bomb than ever imagined. This new discovery of the presence of green monkey DNA, including tumor-linked viral promoters, in the jabs has this microbiologist and immunologist calling for an immediate halt in the use of mRNA “vaccines.”

STORY AT-A-GLANCE

 

·         Microbiologist Kevin McKernan—a former researcher and team leader for the MIT Human Genome Project—has discovered massive DNA contamination in the mRNA COVID-19 shots, including simian virus 40 (SV40) promoters.

·         SV40 has been linked to cancer in humans, including mesotheliomas, lymphomas, and cancers of the brain and bone. In 2002, the Lancet published evidence linking polio vaccines contaminated with SV40 to Non-Hodgkin’s lymphoma. According to the authors, the vaccine may be responsible for up to 50 percent of the 55,000 Non-Hodgkin’s lymphoma cases diagnosed each year.

·         The level of contamination varies depending on the platform used to measure it, but no matter which method is used, the level of DNA contamination is significantly higher than the regulatory limits in both Europe and the United States. The highest level of DNA contamination found was 30 percent.

·         The finding of DNA means the mRNA COVID-19 shots may have the ability to alter the human genome.

·         Even if genetic modification does not occur, the fact that you’re getting foreign DNA into your cells poses a risk in and of itself. Partial expression could occur, or it might interfere with other transcription translations that are already in the cell. Cytoplasmic transfection can also allow for genetic manipulation, as the nucleus disassembles and exchanges cellular components with the cytosol during cell division.

 

In the video1 above, Dr. Steven E. Greer interviews microbiologist Kevin McKernan—a former researcher and team leader for the MIT Human Genome project2—and Dr. Sucharit Bhakdi about the DNA contamination McKernan’s team has found in the Pfizer and Moderna mRNA shots.

 

As it turns out, spike protein and the mRNA are not the only hazards of these injections.

McKernan’s team has also discovered simian virus 40 (SV40) promoters that, for decades, have been suspected of causing cancer in humans, including mesotheliomas, lymphomas, and cancers of the brain and bone.3 The findings4^,5^,6^,7 were posted on OSF Preprints in early April 2023. As explained in the abstract:8

 

“Several methods were deployed to assess the nucleic acid composition of four expired vials of the Moderna and Pfizer bivalent mRNA vaccines. Two vials from each vendor were evaluated … Multiple assays support DNA contamination that exceeds the European Medicines Agency (EMA) 330ng/mg requirement and the FDA’s [U.S. Food and Drug Administration]s 10ng/dose requirements …”

More

Green Monkey DNA Found in COVID-19 Shots (theepochtimes.com)

Johns Hopkins Coronavirus resource centre

https://coronavirus.jhu.edu/map.html

Centers for Disease Control Coronavirus

https://www.cdc.gov/coronavirus/2019-ncov/index.html

The Spectator Covid-19 data tracker (UK)

https://data.spectator.co.uk/city/national

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.

Simple tweak creates safer, more efficient solid-state batteries

By David Szondy  June 12, 2023

Oak Ridge National Laboratory (ORNL) has come up with a small tweak that could have big consequences. By making a small change to how a type of solid-state battery is made, the scientists managed to eliminate defects in the electrolyte film, opening the way to safer and more efficient batteries.

Solid-state batteries have a lot of promise. Unlike current lithium-ion batteries, solid-state ones don't contain flammable liquids, which are a major drawback as illustrated by stories of laptops and electric cars bursting into flames. Solid-state batteries are also less toxic, have higher energy densities, charge faster, and survive more recharge cycles without degenerating.

The problem is that manufacturing such batteries is difficult and expensive compared to liquid batteries, with one major challenge being the defects in the electrolyte films that are key to the batteries. Tiny bubbles formed in the film prevent ions from moving between the electrodes, slowing down charging and general operations.

One electrolyte film is made from antiperovskite (Li2OHCl), where pellets of the material are pressed together into sheets. These often produce undesirable defects that reduce efficiency.

The problem is that manufacturing such batteries is difficult and expensive compared to liquid batteries, with one major challenge being the defects in the electrolyte films that are key to the batteries. Tiny bubbles formed in the film prevent ions from moving between the electrodes, slowing down charging and general operations.

One electrolyte film is made from antiperovskite (Li2OHCl), where pellets of the material are pressed together into sheets. These often produce undesirable defects that reduce efficiency.

"It’s the same material – you’re just changing how you make it, while improving the battery performance on a number of fronts," said lead researcher Marm Dixit.

The research was published in the ACS Energy Letters.

Simple tweak creates safer, more efficient solid-state batteries (newatlas.com)

Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.

Warren Buffett.