Monday 31 July 2023

Dress Up Monday. China Slows. Passing The Peak.

Baltic Dry Index. 1110 +13 Brent Crude 84.40

Spot Gold 1955 US 2 Year Yield 4.87 -0.04

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

John Kenneth Galbraith.

It is the last trading day of July, time to dress up stocks one more time before what I suspect will be a stocks rout in the rest of H2 23. But this time it’s different, right?

In the USA, bank credit and deposits are falling as is the velocity of money. The yield curve has remained inverted for over a year. Some 40 million holders of student debt are about to start making payments again starting no later than October.

In the EU, paymaster Germany is leading the rest into recession led by manufacturing.

In the UK, a weak economy is about to get hit with another interest rate hike this week.

China’s manufacturing economy is already in recession, with the wider economy faltering.

All in all a good time to sit out the next few months safely in money market funds finally delivering savers a real interest rate in the USA, if not in the UK.

Asia markets rise as China’s factory activity contracts for fourth straight month

UPDATED SUN, JUL 30 2023 10:52 PM EDT

Asia-Pacific markets rose on Monday as China’s factory activity for July remained in contraction territory for the fourth straight month.

The official manufacturing purchasing managers index came in at 49.3, higher than June’s figure of 49.0, according to the national bureau of statistics.

The PMI for non-manufacturing activity came in at 51.5, a slower rate of expansion compared to the 53.2 in June.

Hong Kong’s Hang Seng index surged over 1.71%, while the Hang Seng Tech index saw a larger climb of 4.84%. At current levels, this would be the first time that the HSI breached the 20,000 mark in over a month.

Mainland Chinese markets were all higher as well, with the Shanghai Composite up 1.27% and the Shenzhen Component 1.16% higher.

Japan’s Nikkei 225 popped 1.83%, while the Topix saw a larger gain of 1.52%. The country’s industrial output for June came in lower than expected, registering a 2% growth month on month compared to the 2.4% expected by economists.

South Korea’s Kospi advanced 0.88%, and the Kosdaq climbed 1.86%.

Australia’s S&P/ASX 200 also rose 0.1%, as investors prepare for the Reserve Bank of Australia’s rate decision on Tuesday, with economists polled by Reuters expecting a 25 basis points hike in its benchmark policy rate to 4.35%.

On Friday in the U.S., all three major indexes gained as June data for the personal consumption expenditures price index continued to show easing inflation. Core PCE gained 0.2% month-over-month, and core PCE rose 4.1% from the year-ago period, lower than the anticipated 4.2%

The Dow rose 0.5%, while the S&P 500 added and the Nasdaq Composite advanced 1.90%.

Asia markets rise as China's factory activity contracts for fourth straight month (cnbc.com)

Stock futures rise slightly as the market is set to end July with solid gains: Live updates

UPDATED SUN, JUL 30 2023 6:51 PM EDT

Stock futures rose slightly in overnight trading Sunday as the market is poised to wrap up the month of July with strong gains.

Futures on the Dow Jones Industrial Average inched up 34 points. S&P 500 futures rose 0.2% and Nasdaq 100 futures were 0.4% higher.

The S&P is up 3% in July, on pace for its fifth positive month in a row for the first time since its seven-month streak ending August 2021. The tech-heavy Nasdaq Composite has gained 3.8% month to date, also on track for its fifth straight winning month.

The blue-chip Dow is up 3.1% in July. Last week, the 30-stock average posted a 13-day advance that matched the index’s longest streak of gains going back to 1987.

“This bull market is no longer just a mega-cap story. A new chapter of broadening participation has developed,” said Adam Turnquist, chief technical strategist at LPL Financial. ”Relatively resilient economic data in the U.S., receding inflation pressures and expectations for the end of the Federal Reserve’s rate-hiking campaign have underpinned a notable expansion in market breadth since early June.”

The Fed hiked rates to their highest level in more than 22 years after passing a much-anticipated quarter-point hike. Fed Chair Jerome Powell said the central bank will make data-driven decisions on a “meeting-by-meeting” basis.

Investors will shift their focus on the big jobs report this week. Economists polled by Dow Jones expect the U.S. economy to have added 200,000 jobs in July. Nonfarm payrolls increased 209,000 in June.

Stock market today: Live updates (cnbc.com)

Contraction in China factory activity extends into a fourth month

PUBLISHED SUN, JUL 30 2023 9:31 PM EDT

China’s factory activity contracted for a fourth consecutive month in July, while non-manufacturing activity slowed to its weakest this year as the world’s second-largest economy struggles to revive growth momentum in the wake of soft global demand.

The official manufacturing purchasing managers’ index came in at 49.3 in July — compared with 49.0 in June, 48.8 in May and 49.2 in April — according to data from the National Bureau of Statistics released on Monday. July’s reading was slightly better than the 49.2 median forecast in a Reuters poll.

Monday’s figures also showed China posting its weakest official non-manufacturing PMI reading this year, coming in at 51.5 in July — compared with 53.2 in June, 54.5 in May and 56.4 in April. A PMI reading above 50 points to an expansion in activity, while a reading below that level suggests a contraction.

“Although China’s manufacturing PMI rebounded to 49.3% this month, some enterprises in the survey reported that the current external environment is complicated and severe, overseas orders have decreased, and insufficient demand is still the main difficulty facing enterprises,” Zhao Qinghe, a senior NBS official, wrote in an accompanying statement Monday.

These readings for July point to the “tortuous” economic recovery that China’s top leaders described last Monday, which the Politburo attributed to insufficient domestic demand, difficulties in the operation of some enterprises, many risks and hidden dangers in key areas and a grim and complex external environment.

----More worryingly, business expectation among the non-manufacturing sectors declined from the previous month.

A similar production and business activity expectation index for manufacturing sectors, though, saw an increase of 1.7 percentage points from the previous month, which the NBS attributed to policy support to grow private enterprises and expand domestic demand.

Contraction in China factory activity extends into a fourth month (cnbc.com)

Next expect more food price inflation to come, despite the northern hemisphere grain harvests now underway.

Russian missile attacks leave few options for Ukrainian farmers looking to export grain

July 30, 2023

AVLIVKA, Ukraine (AP) — The summer winds carried the smell of burned grain across the southern Ukrainian steppe and away from the shards of three Russian cruise missiles that struck the unassuming metal hangars.

The agricultural company Ivushka applied for accreditation to export grain this year, but the strike in mid-July destroyed a large portion of the stock, days after Russia abandoned the grain deal that would have allowed the shipments across the Black Sea without fear of attack.

Men shirtless and barefoot, with blackened soles from ash, swept unburnt grain into piles and awaited the loader, whose driver deftly steered around twisted metal shrapnel, bits of missile and craters despite his shattered windshield.

They hoped to beat the next rain to rescue what was left of the crop. According to the Odesa Regional Prosecutor’s Office, Russia struck the facility July 21 with three Kalibr- and Onyx-class cruise missiles.

“We don’t have a clue why they did it,” explained Olha Romanova, the head of Ivushka. Romanova, who worked in the debris alongside the others, wore a red headscarf and an exhausted expression and was too frazzled to even estimate her losses.

----But Ivushka wasn't the only target in Odesa. The main port also was struck, leaving Black Sea shipping companies that relied upon the grain deal to keep them safe and food supplies flowing to the world at a standstill.

The Black Sea handled about 95% of Ukrainian grain exports before Russia’s invasion and the U.N.-brokered initiative allowed Ukraine to ship much of what farmers harvested in 2021 and 2022, said Joseph Glauber, senior research fellow at the International Food Policy Research Institute.

Ukraine, a major supplier of corn, wheat, barley and vegetable oil, shipped 32.9 million metric tons (36.2 million U.S. tons) of grain under the nearly yearlong deal designed to ease a global food crisis. It has been able to export an additional 2 million to 2.5 million metric tons (2.2 to 2.7 million U.S. tons) monthly by the Danube River, road and rail through Europe.

Those are now the only routes to ship grain, but have stirred divisions among nearby European countries and generated higher costs to be absorbed by Ukrainian farmers, said Glauber, former chief economist at the U.S. Department of Agriculture.

Russian missiles strikes against the Danube port last Monday also raised questions about how much longer that route will remain viable.

That’s a disincentive to keep planting fields already threatened by missiles and strewn with explosive mines. Corn and wheat production in agriculture-dependent Ukraine is down nearly 40% this year from prewar levels, analysts say.

From the first of July last year until June 30 this year, Ukraine exported 68 million tons of grain, according to data from Mykola Horbachov, the president of the Ukrainian Grain Association. Ukrainian farmers shipped 11.2 million tons via railways, 5.5 million tons by road transport and around 18 million tons through Danube ports. Additionally, nearly half of the total exported grain, 33 million tons, was delivered through seaports under the Black Sea Grain Initiative.

Russian missile attacks leave few options for Ukrainian farmers looking to export grain (msn.com)

Finally, EVs using Lithium-ion batteries may not be the answer to anything after all.

Focus: Ocean shippers playing catch up to electric vehicle fire risk

By Lisa Baertlein and Anthony Deutsch July 28, 20235:29 PM GMT+1

LOS ANGELES/AMSTERDAM, July 27 (Reuters) - Electric vehicles are crisscrossing the globe to reach their eager buyers, but the battery technology involved in the zero- emission automobiles is exposing under-prepared maritime shippers to the risk of hard-to-control fires, industry, insurance and emergency response officials said.

That risk has been put under the spotlight by the burning car carrier drifting off the Dutch coast. The Dutch coastguard said the fire's cause was unknown, but Dutch broadcaster RTL released a recording in which an emergency responder is heard saying "the fire started in the battery of an electric car."

While all logistics companies deal with the risk of EV lithium-ion batteries burning with twice the energy of a normal fire, the maritime industry hasn't kept up with the developing technology and how it creates greater risk, maritime officials and insurers said.

There were 209 ship fires reported during 2022, the highest number in a decade and 17% more than in 2021, according to a report from insurer Allianz Global Corporate & Specialty (AGCS) (ALVG.DE). Of that total, 13 occurred on car carriers, but how many involved EVs was not available.

The European Maritime Safety Agency said in a March report the main cargo types identified as responsible for "a large share of cargo fire accidents included ... lithium-ion batteries."

There were 3,783 new cars on board, including 498 electric battery vehicles, a spokesperson of ship chartering company "K" Line said on Friday. Initial reports had put the number of electric vehicles at just 25.

Japan's Shoei Kisen, which owns the ship, said it was working with authorities to get control of the fire.

----One hazard in lithium-ion batteries is "thermal runaway," a rapid and unstoppable increase in temperature that leads to fires in EVs that are hard to extinguish and can spontaneously reignite.

Fire extinguishing systems on the massive ships that haul cars weren't designed for those hotter fires, and shipping companies and regulators are scrambling to catch up, said Douglas Dillon, executive director of the Tri-state Maritime Safety Association that covers Delaware, Pennsylvania and New Jersey.

Recent fire-related losses are resulting in increased insurance costs for automakers shipping cargo and costs are likely to increase for vessel owners as well, said John Frazee, a managing director at insurance broker Marsh. As ship owners seek to limit losses by legally pursuing automakers whose vehicles are determined to have caused a fire, automakers are buying additional liability protection, he said.

Exacerbating the risks is the business model used by the companies that includes tightly packed ships. Auto carriers like the burning ship are known as RoRos, which stands for roll-on/roll-off - the way cars are loaded and unloaded.

RoRos are like floating parking garages and can have a dozen or more decks carrying thousands of vehicles, industry officials said. Unlike parking lots, however, cars are parked bumper-to-bumper with as little as a foot or two of space overhead.

----The International Maritime Organization, which sets regulations for safety at sea, plans to evaluate new measures next year for ships transporting EVs in light of the growing number of fires on cargo ships, a spokesperson told Reuters.

That could include specifications on types of water extinguishers available on boats and limitations on the amount a battery can be charged, which impacts flammability.

Focus: Ocean shippers playing catch up to electric vehicle fire risk | Reuters

Industry groups, New York firefighters call for stronger rules on lithium ion battery safety

Consumer watchdog agency acknowledges current standards 'aren't enough' to prevent deadly fires.

July 28, 2023 11:39 AM

Subscription required.

Automakers, FDNY want more safety regs on lithium ion batteries | Automotive News (autonews.com)

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.

Property Pain From Canary Wharf to Mainhattan Has Only Just Begun

From London’s Canary Wharf to Paris’s La Defense, high-rise financial districts have been hit hard and it’s about to get worse

By Jack Sidders 27 July 2023 at 05:00 BST Updated on27 July 2023 at 09:49 BST

In London’s Canary Wharf, HSBC is exiting and Credit Suisse could soon follow. DekaBank has decided to leave its aging skyscraper in Frankfurt’s ensemble known as Mainhattan, while Paris’s La Defense is losing one tenant after another.

Europe’s high-rise financial districts have been hit hardest by the turmoil sweeping office markets around the world, and with vacancy rates soaring and valuations plunging, the pain is set to intensify.

Banks and other prime tenants are looking to make going to the office more desirable as part of a post-pandemic reset, and instead of giant glass and steel towers styled after Wall Street, they’re opting for smaller sites in locations closer to shops and restaurants. It also reflects the changing needs of banks as the shift away from wholesale trading means there’s less need for the vast floors that proliferated before the financial crisis.

The trend means neighborhoods like London’s Mayfair and Paris’s 7th arrondissement — home to the Eiffel Tower — are booming. By contrast, oversized financial centers like Canary Wharf, La Defense and Frankfurt’s US-style downtown are facing massive, high-risk investment to avoid becoming ghost towns.

Moody’s Corp. may be the next prime tenant to vacate Canary Wharf. The ratings agency has appointed broker Cushman & Wakefield Plc to advise on options for a new premises that would likely be almost a third smaller than its current base, people with knowledge of the process said.

“For these mono-cultural districts, we are going to have to see them change over time,” Kathleen McCarthy, global co-head of real estate at Blackstone Inc., said in an interview. They’ll need to appeal to a broader array of tenants and evolve into more of a mix of work, life and play, “that can take a long time and it can be a little bumpy for people that own those assets,” she said.

Revivals are becoming increasingly urgent for the high-rise districts that had their heydays around the turn of the millennium. Vacancy rates in La Defense — Europe’s largest purpose-built business district, located five kilometers (three miles) from the Arc de Triomphe — hit 20% at the end of the first quarter, compared to 3% in central Paris, according to CoStar Group. About 15% of the office space in Canary Wharf is empty, well over double the 6% rate in London’s West End, figures from the real estate data provider show.

It’s a similar situation in Frankfurt, where the vacancy rate is twice that of Berlin and Munich. Over 1 million square meters of space lies vacant in Germany’s financial center. That’s equivalent to more than eight times the space in the Commerzbank tower, Frankfurt’s largest office building. And the new Four complex, where Dekabank will move, adds to the competition.

London, Paris, NYC's Empty Office Problem Is Only Getting Worse - Bloomberg

Exodus from Canary Wharf leaves it at its emptiest for 18 years

July 29, 2023

Canary Wharf is at its emptiest since 2005, according to new analysis, compounding fears over the future of the financial district as big names continue to abandon their offices.

Vacancy rates at Canary Wharf hit 14.8pc in the second quarter of this year, a level last seen 18 years ago, according to data from the property information provider CoStar.

This comes as an increasing number of financial services companies shrink their offices to reflect more working from home.

A CoStar spokesman said: “With many large corporates cutting their office footprints in the Docklands, this part of London has seen particularly high vacancy rates, which we expect to continue to increase in the near-to-medium term.

“These changes in office space requirements currently affecting the Docklands have been prompted by the pandemic, which resulted in a high number of companies adopting flexible working policies whereby organisations require less office space.”

Exodus from Canary Wharf leaves it at its emptiest for 18 years (msn.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

Pediatrician Fired After Raising Alarm on COVID-19 Vaccines During US Senate Event

7/29/2023 Updated: 7/29/2023

A medical expert was terminated by one of her employers after raising concerns about the safety of COVID-19 vaccines during an event held by a U.S. senator, according to newly disclosed documents.

After Dr. Renata Moon (who will appear on "American Thought Leaders" premiering Mon. Aug. 30, 7:30pm ET) testified during the December 2022 event on Capitol Hill, Washington State University officials told her that they were alerting a state medical commission because she allegedly promoted misinformation, one of the documents shows.

The Washington Medical Commission (WMC) has said that doctors who offer misinformation about COVID-19 vaccines, treatments, and preventative measures "erode the public trust in the medical profession and endanger patients," that people should lodge complaints against doctors who allegedly provide misinformation, and that it may revoke the licenses of doctors who are found to have spread misinformation.

Drs. Jeff Haney and James Record, Washington State University officials, referenced the commission in a letter to Dr. Moon dated March 3, 2023.

"The WMC has asked the public and practitioners to report possible spread of misinformation. There are components of your presentation that could be interpreted as a possible spread," they wrote. "As such, we are ethically obligated to make a report to the WMC to investigate possible breach of this expectation."

The university informed Dr. Moon in June 2023 that it was effectively firing her by not renewing her appointment as a clinical associate professor of medicine, according to other documents reviewed by The Epoch Times.

"At this time, the needs of the college are moving in a different direction and your participation is no longer required," Drs. Haney and Record wrote.

More detailed reasoning was not provided.

"This is not about my personal situation with the school. This is about freedom of speech for all Americans," Dr. Moon told The Epoch Times in an email. "We must create an ethical healthcare system that is concerned only with the well being of individual patients and not the financial interests of massive corporations. We are dealing with conflicts of interest that are larger than any of us ever imagined."

Pediatrician Fired After Raising Alarm on COVID-19 Vaccines During US Senate Event | The Epoch Times

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.

Researchers find a way to easily bypass guardrails on OpenAI’s ChatGPT and all other A.I. chatbots

July 28, 2023

Hello and welcome to July’s special edition of Eye on A.I.

Houston, we have a problem. That is what a lot of people were thinking yesterday when researchers from Carnegie Mellon University and the Center for A.I. Safety announced that they had found a way to successfully overcome the guardrails—the limits that A.I. developers put on their language models to prevent them from providing bomb-making recipes or anti-Semitic jokes, for instance—of pretty much every large language model out there.

The discovery could spell big trouble for anyone hoping to deploy a LLM in a public-facing application. It means that attackers could get the model to engage in racist or sexist dialogue, write malware, and do pretty much anything that the models’ creators have tried to train the model not to do. It also has frightening implications for those hoping to turn LLMs into powerful digital assistants that can perform actions and complete tasks across the internet. It turns out that there may be no way to prevent such agents from being easily hijacked for malicious purposes.

The attack method the researchers found worked, to some extent, on every chatbot, including OpenAI’s ChatGPT (both the GPT-3.5 and GPT-4 versions), Google’s Bard, Microsoft’s Bing Chat, and Anthropic’s Claude 2. But the news was particularly troubling for those hoping to build public-facing applications based on open-source LLMs, such as Meta’s LLaMA models.

That’s because the attack the researchers developed works best when an attacker has access to the entire A.I. model, including its weights. (Weights are the mathematical coefficients that determine how much influence each node in a neural network has on the other nodes to which it’s connected.) Knowing this information, the researchers were able to use a computer program to automatically search for suffixes that could be appended to a prompt that would be guaranteed to override the system’s guardrails.

These suffixes look to human eyes, for the most part, like a long string of random characters and nonsense words. But the researchers determined, thanks to the alien way in which LLMs build statistical connections, that this string will fool the LLM into providing the response the attacker desires. Some of the strings seem to incorporate language people already discovered can sometimes jailbreak guardrails. For instance, asking a chatbot to begin its response with the phrase “Sure, here’s…” can sometimes force the chatbot into a mode where it tries to give the user a helpful response to whatever query they’ve asked, rather than following the guardrail and saying it isn’t allowed to provide an answer. But the automated strings go well beyond this and work more effectively.

Against Vicuna, an open-source chatbot built on top of Meta’s original LlaMA, the Carnegie Mellon team found their attacks had a near 100% success rate. Against Meta’s newest LlaMA 2 models, which the company has said were designed to have stronger guardrails, the attack method achieved a 56% success rate for any individual bad behavior. But if an ensemble of attacks was used to try to induce one of any number of multiple bad behaviors, the researchers found that at least one of those attacks jailbroke the model 84% of the time. They found similar success rates across a host of other open-source A.I. chatbots, such as EleutherAI’s Pythia model and the UAE Technology Innovation Institute’s Falcon model.

Somewhat to the researchers’ own surprise, the same weird attack suffixes worked relatively well against proprietary models, where the companies only provide access to a public-facing prompt interface. In these cases, the researchers can’t access the model weights so they cannot use their computer program to tune an attack suffix specifically to that model.

links.newsletter.fortune.com/e/evib?_t=5c2d888702774d17aa3d0350287b6d73&_m=d58444115a134bf796d8730d67c1d6e4&_e=7t1BB5K7Q3Szc4HkybcWEgt36u9BopSJa8pEZZCJKjU%3D

Wikipedia:Large language models

Large language models (LLMs) are natural language processing computer programs that use artificial neural networks to generate text. Some notable ones are GPT-3, GPT-4, LaMDA (Bard), BLOOM, and LLaMA. LLMs power many applications, such as AI chatbots and AI search engines. They are used for a growing number of features in common applications, such as word processors, spreadsheets, etc. In this policy, the terms "LLM" and "LLM output" refer to all such programs and applications and their outputs.

LLM-generated content is often an outright fabrication, complete with fictitious references, which are emblematic of hoaxes.

Wikipedia:Large language models - Wikipedia

In any great organization it is far, far safer to be wrong with the majority than to be right alone.

John Kenneth Galbraith.

Saturday 29 July 2023

Special Update 29/07/2023 Are Stocks And CBs Parting Ways?

Baltic Dry Index. 1110 +13 Brent Crude 84.99

Spot Gold 1959 U S 2 Year Yield 4.87 -0.04

“Among the things he passed on to me were the belief that all men and women, regardless of their color or religion, are created equal and that individuals determine their own destiny; that is, it’s largely their own ambition and hard work that determine their fate in life.”

Ronald Reagan.

In the stock casinos, nervous optimism that the worst of the interest rate hikes are over. But are the punters now completely misreading the US Fed, the ECB and the Bank of Japan?

Have stocks and the central banks suddenly set off in different directions? If they have, who wins?

With much more food price inflation to come, from rice, wheat, barley, coffee and cocoa, to name just a few, wage price inflation is probably just starting.

Our central banksters now find themselves in a corner of their own making.

In the USA, Chairman Powell is exceptionally challenged. If he lets up on interest rates now and wage price inflation rips through the US economy, he risks having to raise interest rates in election year 2024, risking pushing the US economy into recession in a Presidential election year.

Alternatively, the Fed could do nothing and let US inflation head back towards double digit inflation. What to do, what to do?

Chasing overpriced stocks in a hyped up AI bubble, to this old dinosaur market trader doesn’t seem wise, to say the least.

S&P 500 closes nearly 1% higher on softening inflation data, nabs 3rd week of gains: Live updates

UPDATED FRI, JUL 28 2023 4:39 PM EDT

Stocks rose Friday with the Dow Jones Industrial Average and S&P 500 closing out their third winning weeks in a row as a measure of inflation closely watched by the Federal Reserve came in at its lowest in nearly two years.

The Dow jumped 176.57 points, or 0.50%, to 35,459.29. The S&P 500 added 0.99% to 4,582.23. The Nasdaq Composite gained 1.90% to 14,316.66.

All three major averages notched weekly gains with the 30-stock average up by about 0.66%. On Thursday, the Dow ended a 13-day win streak, a length not seen since 1987. The S&P advanced 1.01%, and the tech-heavy index is up 2.02%.

This week, investors cheered data showing cooling inflation and stronger-than-expected earnings reports that supported the case the U.S. could avoid a recession.

On Friday, June data for the personal consumption expenditures price index continued to show easing inflation. The gauge showed core PCE gained 0.2% month-over-month, in line with the 0.2% increase expected by economists polled by Dow Jones. Core PCE rose 4.1% from the year-ago period, lower than the anticipated 4.2%.

The data is of particular interest after the central bank raised interest rates earlier this week in a widely expected move. The Fed targets inflation at 2% annually.

“In the wake of stronger than expected GDP, and a better-than-expected earnings season, this could be the catalyst to send the market to new highs,” wrote Gina Bolvin, president of Bolvin Wealth Management Group.

Earnings season continued with Dow member Procter & Gamble shares gaining nearly 3%. The consumer goods company behind Tide and other brands beat analysts’ earnings and revenue expectations in its most recent quarter.

Intel jumped 6.6% as investors applauded a return to profitability, while Roku climbed 31% a day after beating Wall Street expectations on both the top and bottom lines.

On the other hand, Ford Motor shares fell 3.4% even though the automaker beat estimates and raised guidance. The company said its electric vehicle adoption was taking longer than expected due to higher costs.

Stock market today: Live updates (cnbc.com)

The Bank of Japan just shocked markets with a policy tweak — here’s why it matters

PUBLISHED FRI, JUL 28 2023 5:49 AM EDT

The Bank of Japan announced Friday “greater flexibility” in its monetary policy — surprising global financial markets.

The central bank loosened its yield curve control — or YCC — in an unexpected move with wide-ranging ramifications. It sent the yen whipsawing against the dollar, while Japanese stocks and government bond prices slid.

Elsewhere, the Stoxx 600 in Europe opened lower and government bond yields in the region jumped.

---- “We didn’t expect this kind of tweak this time,” Shigeto Nagai, head of Japan economics at Oxford Economics, told CNBC’s “Capital Connection.”

Why it matters

The Bank of Japan has been dovish for years, but its move to introduce flexibility into its until-now strict yield curve control has left economists wondering whether a more substantial change is on the horizon.

The yield curve control is a long-term policy that sees the central bank target an interest rate, and then buy and sell bonds as necessary to achieve that target. It currently targets a 0% yield on the 10-year government bond with the aim of stimulating the Japanese economy, which has struggled for many years with disinflation.

In its policy statement, the BOJ said it will continue to allow 10-year Japanese government bond yields to fluctuate within the range of 0.5 percentage point either side of its 0% target — but it will offer to purchase 10-year JGBs at 1% through fixed-rate operations. This effectively expands its tolerance by a further 50 basis points.

---- From a market perspective, investors — many of whom were not expecting this move — were left wondering whether this is a mere technical adjustment, or the start of a more significant tightening cycle. Central banks tighten monetary policy when inflation is high, as demonstrated by the U.S. Federal Reserve’s and European Central Bank’s rate hikes over the past year.

“Fighting inflation was not the official reason for the policy tweak, as that would surely imply stronger tightening moves, but the Bank recognised obstinately elevated inflationary pressure by revising up its forecast,” Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, said in a note.

The BOJ said core consumer inflation, excluding fresh food, will reach 2.5% in the fiscal year to March, up from a previous estimate of 1.8%. It added that there are upside risks to the forecast, meaning inflation could increase more than expected.

---- MUFG said that Friday’s “flexibility” tweak shows the central bank is not yet ready to end this policy measure.

“Governor Ueda described today’s move as enhancing the sustainability of monetary easing rather than tightening. It sends a signal that the BoJ is not yet ready to tighten monetary policy through raising interest rates,” the bank’s analysts said in a note.

Capital Economics’ economists highlighted the importance of inflation figures looking ahead. “The longer inflation stays above target, the larger the chances that the Bank of Japan will have to follow up today’s tweak to Yield Curve Control with a genuine tightening of monetary policy,” they wrote.

Bank of Japan loosen's YCC, cites 'greater flexibility' and jolts markets (cnbc.com)

Endgame for Fed's tightening cycle challenged by easing financial conditions

By Michael S. Derby July 28, 20237:05 PM GMT+1

July 28 (Reuters) - Less tight financial conditions as exhibited by the red-hot stock market may increase the chances that the Federal Reserve hikes rates again before the end of the year, some economists reckon, even as financial markets put little odds on that happening.

Several measures of financial conditions, including those mceproduced by the central bank, have shifted in way that signals reduced restraint on the economy, at a time when central bank officials believe more work may be needed to lower inflation.

Taking in to account everything from stock prices to measures of borrowing costs for the government, businesses and households, financial conditions matter to monetary policy. That is because the Fed relies on markets to transmit changes in its short-term interest rate target to the broader economy.

The current slackening in these gauges means markets and the Fed are starting to go on separate paths.

“Easy financial conditions obviously boost near-term growth,” and can encourage more risk-taking of the sort that can lean against the restraint the Fed is trying to impose on the economy, said Benson Durham, head of global policy at Piper Sandler.

On Friday, the Federal Reserve reported that its Financial Conditions Impulse on Growth for June moved to 0.458, from May’s 0.603 reading. The index, now the lowest since August 2022, seeks to describe whether financial conditions are aiding or restraining growth, so the latest reading points to them providing less drag on the economy.

Meanwhile, Goldman Sachs’ closely watched Financial Conditions Index has been easing fairly steadily since May. As of the end of July, that measure was also at levels last seen in late August of last year, while the Chicago Fed’s latest index has also pointed to easier conditions.

Since March of last year, the Fed has been engaged in a historically aggressive campaign of short-term interest rate increases, taking its target rate from near zero levels to between 5.25% and 5.5% after a quarter percentage-point increase on Wednesday.

An explicit goal has been to tighten financial conditions. Mortgage rates have soared to around 7%, while other borrowing costs are up. Rate hikes also slammed the stock market, at least for a time, while pushing up the dollar relative to other currencies.

Tighter financial conditions have helped accomplish the Fed’s desire to slow down the economy in a bid to lower inflation pressures from multi-decade highs. But now things are shifting the other way, which could create issues for the Fed as it approaches the endgame for its tightening cycle.

The various gauges on balance show financial conditions reached their most restrictive levels late last year, and have receded since. That dovetails with a stock market rally that has pushed up the benchmark S&P 500 Index (.SPX) by nearly 20% so far this year. Meanwhile, yields on the riskiest corporate debt securities - so-called junk bonds - have fallen by about 1.2 percentage points since last autumn even as the Fed kept raising interest rates.

---- Powell noted in the press conference that it is a tossup as to whether the Fed raises rates or holds steady in September. He offered no views on whether the central bank will be able to boost by another quarter percentage point by year’s end, as June FOMC forecasts predicted.

Piper Sandler's Durham said the easier financial conditions make the odds of another rate rise higher by year’s end, in contrast with the current market outlook. This easing gives officials “the space and the breathing room” to bump rates up again, especially in an economy that is otherwise doing very well despite aggressive increases.

Bank of America economists said in a note on Thursday that they believe market pricings show an underestimation of what the central bank needs to do on rates. They said easing inflation in the face of still-strong jobs data and better-than-expected growth “are likely to keep the Fed worried that its policy stance is insufficiently restrictive.”

Endgame for Fed's tightening cycle challenged by easing financial conditions | Reuters

Finally, a journey of a thousand miles starts with a single step. Whose great idea was it to weaponise the dollar?

Bolivia is the latest South American nation to use China’s yuan for trade in challenge to the dollar

Updated 3:24 AM GMT+1, July 28, 2023

LA PAZ, Bolivia (AP) — Bolivia is now using the yuan to pay for imports and exports, becoming the latest country in South America to regularly use the Chinese currency in a small but growing challenge to the hegemony of the U.S. dollar for international financial transactions in the region.

Between May and July of this year, Bolivia conducted financial operations amounting to 278 million Chinese yuan ($38.7 million), which accounts for 10% of its foreign trade during that period, Economy Minister Marcelo Montenegro said on Thursday.

“We’re already using the yuan. It’s a reality and a good start,” Montenegro said during a news conference. “Banana, zinc, and wood manufacturing exporters are conducting transactions in yuan, as well as importers of vehicles and capital goods.” These electronic transactions are carried out through the state-owned Banco Unión.

“The amount being used in yuan is still relatively small, but it will increase over time,” Montenegro said.

With these transactions, Bolivia joins other countries in South America, most notably Brazil and Argentina, which are using the yuan. The three countries are ruled by leftist or left-leaning governments.

In Latin America and the Caribbean, the use of the yuan is growing especially “in those countries that are looking to establish stronger ties with China, that view themselves as in some way politically aligned on this particular objective on decreasing their overall reliance on the dollar and on the U.S. in general,” said Margaret Myers, director of the Asia & Latin America Program at the Washington-based Inter-American Dialogue.

The use of the yuan comes at a time when China’s footprint in the region is increasing with rising trade and investment.

Bolivia is the latest South American nation to use China's yuan for trade in challenge to the dollar | AP News

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.

Key Fed inflation rate falls to lowest annual rate in nearly 2 years

PUBLISHED FRI, JUL 28 2023 8:39 AM EDT

Inflation showed further signs of cooling in June, according to a gauge released Friday that the Federal Reserve follows closely.

The personal consumption expenditures price index excluding food and energy increased just 0.2% from the previous month, in line with the Dow Jones estimate, the Commerce Department said.

So-called core PCE rose 4.1% from a year ago, compared to the estimate for 4.2%. The annual rate was the lowest since September 2021.

PCE inflation June 2023: (cnbc.com)

US economy unexpectedly accelerated to a 2.4% growth rate in April-June quarter despite Fed hikes

Updated 9:47 PM GMT+1, July 27, 2023

WASHINGTON (AP) — The U.S. economy surprisingly accelerated to a 2.4% annual growth rate from April through June, showing continued resilience in the face of steadily higher interest rates resulting from the Federal Reserve’s 16-month-long fight to bring down inflation.

Thursday’s estimate from the Commerce Department indicated that the gross domestic product — the economy’s total output of goods and services — picked up from the 2% growth rate in the January-March quarter. Last quarter’s expansion was well above the 1.5% annual rate that economists had forecast.

Driving last quarter’s growth was a burst of business investment. Excluding housing, business spending surged at a 7.7% annual rate, the fastest such pace since early 2022. Companies plowed more money into factories and equipment. Increased spending by state and local governments also helped fuel the economy’s expansion in the April-June quarter.

Consumer spending, the heart of the nation’s economy, was also solid last quarter, though it slowed to a 1.6% annual rate from a robust 4.2% pace in the first quarter of the year.

Investment in housing, though, fell, weakened by the weight of higher mortgage rates.

“This is a strong report, confirming that this economy continues to largely shrug off the Fed’s aggressive rate increases and tightening credit conditions,’’ said Olu Sonola, head of U.S. economics at Fitch Ratings. “The bottom line is that the U.S. economy is still growing above trend, and the Fed will be wondering if they need to do more to slow this economy.”

In fighting inflation, which last year hit a four-decade high, the Fed has raised its benchmark rate 11 times since March 2022, most recently on Wednesday. The resulting higher costs for a broad range of loans — from mortgages and credit cards to auto loans and business borrowing — have taken a toll on growth.

Still, they have yet to tip the United States into a widely forecast recession. Optimism has been growing that a recession isn’t coming after all, that the Fed can engineer a so-called “soft-landing” — slowing the economy enough to bring inflation down to its 2% annual target without wrecking an expansion of surprising durability.

This week, the International Monetary Fund upgraded its forecast for U.S. economic growth for all of 2023 to 1.8%. Though that would be down from 2.1% growth for 2022, it marked an increase from the 1.6% growth that the IMF had predicted for 2023 back in April.

US economy unexpectedly accelerated to a 2.4% growth rate in April-June quarter despite Fed hikes | AP News

German economy stagnates in Q2

July 28, 2023

BERLIN (Reuters) - The German economy stagnated in the second quarter of 2023, with no quarter-on-quarter change in gross domestic product in seasonally adjusted terms, the federal statistics office reported on Friday.

A Reuters poll of analysts had forecast a slight increase of 0.1%, after the economy fell into a mild recession in winter.

Household consumption stabilised in the second quarter after the weak winter half-year, according to the statistics office.

Year-on-year, the economy contracted by a price and calendar adjusted 0.2%.

German economy stagnates in Q2 (msn.com)

BASF cuts investment budget amid downturn

July 28, 2023

FRANKFURT (Reuters) - German chemicals giant BASF on Friday cut its budget for investment in plants and equipment this year to preserve cash amid a global downturn in the business cycle.

"We have to exercise strict discipline," when it comes to investments and reducing inventory levels of raw materials, Chief Financial Officer (CFO) Dirk Elvermann said in a media call after the release of detailed second-quarter results.

Investments this year would be cut to 5.7 billion euros ($6.24 billion), down from 6.3 billion projected earlier this year.

Among other measures, some spending on one of the company's main projects, the construction of a chemical complex in Zhanjiang, southern China, would be postponed and better financial terms were also renegotiated with local contractors, the CFO added.

The company, however, confirmed the larger plans for the site and the 10 billion euros earmarked for it overall.

BASF on Friday also said that the decline in second-quarter earnings was a result of lower prices and lower volume across its businesses but added that its agriculture division was able to increase prices.

Earlier this month, it reported a drop in quarterly earnings in an unscheduled release and cut its full-year profit guidance, the latest in a string of chemical companies caught out by weak demand from industrial clients and higher interest rates.

A slew of chemical industry peers including Croda, Lanxess, Victrex, Clariant and Evonik have recently cut their earnings predictions.

BASF cuts investment budget amid downturn (msn.com)

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

https://www.zerohedge.com/markets/environmental-disaster-ev-battery-metals-crunch-horizon-industry-races-recycle

Covid-19 Corner

This section will continue until it becomes unneeded.

COVID-19 hospitalizations and cases rise in possible summer wave

Thu, July 27, 2023 at 3:00 PM GMT+1

New numbers from the Centers for Disease Control and Prevention (CDC) shows that weekly COVID-19 hospitalizations have jumped by over 10 percent across the United States. At least 7,109 admissions were reported for the week of July 15, up from 6,444 during the previous week. This is the largest increase of a key indicator of the virus since December 2022.

A second hospital metric is also trending upwards with summer’s temperatures. An average of 0.73 percent of emergency room visits in the past week were related to COVID-19 as of July 21, a jump from 0.49 percent through the same period in June.

"US COVID-19 rates are still near historic lows after 7 months of steady declines. Early indicators of COVID-19 activity (emergency department visits, test positivity and wastewater levels) preceded an increase in hospitalizations seen this past week," CDC spokesperson Kathleen Conley said in a statement according to CBS News. "The U.S. has experienced increases in COVID-19 during the past three summers, so it's not surprising to see an uptick.”

Hospitalizations do remain below the levels recorded at this time last year as of now. July 2022 peaked at over 44,000 weekly hospitalizations and five percent of emergency room visits in last year’s summer surge.

While this current uptick is small, it is a notable reversal after months of declining coronavirus numbers across the country.

In the Los Angeles area, cases increased by about 32 percent this week. Health officials suspect that this jump may be linked to celebrations from the Fourth of July, travel, and the region’s record breaking heat causing people to stay inside more frequently. Upticks in COVID-19 in wastewater samples from New York also showed a possible increase in cases in June.

The Midwestern region of the country is the only part of the US that did not record more hospitalizations last week than the one before.

This rise in cases is not unique to the United States. Japan may have entered a ninth COVID-19 wave that continues to surge this month. Hospitalizations and emergency room visits in the Asian country have risen for nine straight weeks.

COVID-19 hospitalizations and cases rise in possible summer wave (yahoo.com)

Technology Update.

With events happening fast in the development of solar power and graphene, I’ve added this section.

NASA's Solid-State Battery Breakthrough Could Transform Air Travel

By Haley Zaremba - Jul 23, 2023, 2:00 PM CDT

NASA may have just found a way to change the future of the aeronautics industry.

Researchers at NASA’s Solid-state Architecture Batteries for Enhanced Rechargeability and Safety (SABERS) have successfully created a solid-state battery technically advanced enough to efficiently power an aircraft. Finding a way to make air travel greener has been a critical point of interest for the global path to decarbonization, as well as for the economic wellbeing of the industry in a future where fuel prices will likely continue to increase while policy instruments such as carbon taxes become more commonplace.

The transportation sector is one of the world’s biggest contributors to climate change, producing almost a quarter of total energy-related carbon emissions worldwide – and air travel is one of the biggest offenders. On average, airplanes emit approximately 100 times more carbon dioxide per hour than a shared bus or train ride. Altogether, aviation’s annual emissions are higher than most entire countries, at 1 billion tons of carbon dioxide per year. And the combustion of jet fuel doesn’t just emit carbon, it also produces “nitrogen oxides, soot, water vapor and sulfate aerosols, all of which interact with the atmosphere and have an effect on the climate in different ways and at different time scales.”

Not only will the new batteries be able to electrify aircraft, thereby eliminating carbon and non-carbon emissions associated with burning jet fuel, these breakthrough solid-state batteries manage to avoid one of the most major trade-offs plaguing electrification processes writ large: lithium. Lithium is a finite resource associated with its own slew of negative environmental externalities, as well as major geopolitical implications. China currently controls nearly one-third of the world’s lithium supply chains, and diversifying that market will not be easy. Furthermore, lithium’s essential role in a huge number of clean energy infrastructural components has led to rising prices and a scarcity mindset. Avoiding this sticky situation altogether is a major win for SABERS.

NASA may have just found a way to change the future of the aeronautics industry. Researchers at NASA’s Solid-state Architecture Batteries for Enhanced Rechargeability and Safety (SABERS) have successfully created a solid-state battery technically advanced enough to efficiently power an aircraft. Finding a way to make air travel greener has been a critical point of interest for the global path to decarbonization, as well as for the economic wellbeing of the industry in a future where fuel prices will likely continue to increase while policy instruments such as carbon taxes become more commonplace.

NASA's Solid-State Battery Breakthrough Could Transform Air Travel | OilPrice.com

This weekend’s music diversion. A long forgotten Bohemian composer whose work was occasionally misattributed to Vivaldi. Approx. 12 minutes.

František Jiránek (1698-1778) - Concerto a 5

František Jiránek (1698-1778) - Concerto a 5 - YouTube

This weekend’s chess update. Approx. 6 minutes.

WARNING! People Have gone Mad Trying to Solve This || White to mate in 2!

WARNING! People Have gone Mad Trying to Solve This || White to mate in 2! - YouTube

This weekend’s interesting maths update. Approx. 9 minutes.

A weird method for factoring quadratics (and why it works)

A weird method for factoring quadratics (and why it works) - YouTube

“As government expands, liberty contracts.”