Baltic Dry Index. 1009 +16 Brent Crude 78.03
Spot Gold 1921 US 2 Year Yield 4.94 -0.05
If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.
John Maynard Keynes.
In the Asian stock casinos this morning, some up some down, as the punters there try to figure out what China’s latest economic figures mean for the markets. Deflation?
Try to figure out what US Treasury Secretary Yellen accomplished if anything, on her now completed trip to Beijing.
In the American and European stock casinos, it’s inflation week, with the latest numbers on the US Consumer Price Index and Producer Price Index due. How will the Fed react?
In politics, it’s NATO week in Vilnius Lithuania, not that many Americans can find Lithuania on a map of Europe.
Will Zelensky turn up in Vilnius and if he does, how many Generals and intelligence spooks will he bring along for NATO briefings?
But first President Biden is off to Downing Street later this morning for a 30 minute photo op, with Prime Minister Sunak. Then it’s off to Windsor Castle for a late lunch with KC3.
In the evening President Biden jets off for a night on the town in Vilnius. Prime Minister Sunak jets off to join him there on Tuesday.
Sadly, the disastrous NATO proxy war on Russia wrecking poor Ukraine right next door to Vilnius, shows no sign of ending. No one attending NATO wants the proxy war to end.
Asia markets
mixed as China’s June inflation data miss expectations
UPDATED MON, JUL 10 2023 12:30 AM
EDT
Asia-Pacific
markets are mixed ahead of key inflation reports this week, including the U.S.
consumer price index report due Wednesday and the producer price index on
Thursday.
In the region, China’s consumer
price index was flat in June year-on-year, its lowest level since February
2021. Meanwhile, producer prices fell 5.4% year-on-year,
the fastest rate of decline since December 2015.
U.S. Treasury Secretary Janet
Yellen concluded her
visit to Beijing, and said that the talks were “direct” and
“productive,” putting bilateral ties on “surer footing.”
In Japan, the Nikkei 225 fell
0.87%, extending losses after dipping more than 1% on Friday, with the Topix
seeing a 0.61% loss.
South Korea’s Kospi was 0.26%
higher, while the Kosdaq saw a loss of 0.33%. Australia’s S&P/ASX 200 rose
0.15%.
Hong Kong’s Hang Seng index rebounded
and climbed 1.57%, with mainland Chinese markets also all higher. The Shanghai Composite gained
0.38% and the Shenzhen
Component rose 0.56% on Monday.
On Friday, U.S.
markets closed lower on fears that the U.S. Federal Reserve
will hike rates this month, with all three major indexes falling.
The Labor Department’s June
jobs report showed payrolls increased less than expected,
cooling down from
May. Nonfarm payrolls rose by 209,000, while the unemployment rate
came in at 3.6%.
The Dow Jones Industrial Average saw
the largest loss of 0.55%, while the S&P 500 shed
0.29% and the Nasdaq
Composite shed 0.13%.
Asia markets mixed as
China's June inflation data miss expectations (cnbc.com)
Stock futures
climb ahead of a key inflation data week for Wall Street and the kickoff of
second-quarter earnings season
July 9, 2023
Stock futures ticked up on Sunday evening as
investors prepare for a slate of inflation data on Wednesday and Thursday and
brace for the start of the second-quarter earnings season.
Futures tied to the Dow Jones
Industrial Average added
38 points, or 0.1%. Nasdaq 100 futures climbed
0.01% while S&P 500 futures gained
about 0.1%.
This week’s inflation data
follows a rate hike skip at the June Federal Open Market Committee meeting. The
consumer price index report is due out Wednesday morning, followed by the
central bank’s preferred gauge of wholesale price pressures, the producer price
index, on Thursday.
Stocks
are heading into a new week after closing lower on jobs data from ADP and the
Labor Department last week. Despite non-farm payrolls growth cooling
somewhat, investors signaled that the still churning economy is enough for the
Federal Reserve to continue on with benchmark interest rate hikes.
---- Still, investors also have a slew of
quarterly earnings reports to consider. Finance behemoths BlackRock, JPMorgan
Chase, Wells Fargo and Citi will all report and kick off the second-quarter
earnings season.
“We believe S&P
500 earnings will face significant pressure during the rest of the year and
enter an earnings recession,” Morgan Stanley analyst Edward Stanley wrote in a
Sunday note to investors. “The reason is negative operating leverage — when
cost growth exceeds sales growth, earnings growth takes a steep hit.”
China’s producer
prices sink again in June in latest sign of stalled recovery
China’s annual producer prices
sank for a ninth-straight month in June, while consumer prices remain
unchanged, official data showed Monday, underscoring the depth of the
challenges that beset the world’s second-largest economy in reviving demand and
revitalizing growth.
Monday’s inflation data
underwhelmed market expectations, offering fresh evidence that China’s economy
may require more muscular policy support to sustain the country’s recovery from
its strict “zero-Covid” curbs late last year.
“I think today’s numbers [are]
actually lower than expectation, especially in the consumer part of the
inflation equation – it’s actually entering a deflationary zone,” Hong Hao,
Grow Investment Group’s chief economist, told CNBC Monday.
----Producer prices
sank 5.4% in June from a year earlier and slipped 0.8% from a month ago,
according to China’s National Bureau of Statistics. This was weaker than a
Reuters poll that had expected a 5.0% annual decline, compared with the 4.6%
annual decline in May. The annual decline in June was China’s ninth consecutive
drop and its steepest since December 2015.
Weak producer prices
“could be attributed, in part, to a higher base for comparison, as global commodity
prices were surging a year ago following Russia’s invasion of Ukraine,” Capital
Economics’ Zhichun Huang said in a note Monday.
“PPI deflation is
likely to ease somewhat in the second half of the year, partly because
infrastructure spending should put a floor under commodity prices,” he added.
Annual consumer price
inflation was flat in June — driven by a 7.2% drop in pork prices —
underwhelming expectations for a 0.2% rise in a Reuters poll and weaker than
the 0.2% rise in May. Monthly consumer price inflation in June was weaker 0.2%,
weaker than expectations for flat growth and tracking the 0.2% decline in May.
The monthly decline was China’s fifth consecutive fall.
Core inflation, which
excludes food and energy costs, was 0.4% in June, compared with 0.6% in May.
More
China's
producer prices sink again in more signs of stalled recovery (cnbc.com)
In other news, some economists want us all to
live with higher annual inflation targets. What could possibly go wrong?
French central bank head warns against raising ECB
inflation target
July 9, 2023 10:53 AM GMT+1
AIX-EN-PROVENCE,
France, July 9 (Reuters) - France's central bank head Francois Villeroy de
Galhau pushed back on Sunday against a suggestion from some French economists
to raise the European Central Bank's (ECB) 2% inflation target.
Villeroy, who sits on the ECB's governing council, also said that its interest rate hikes were close to topping out and that rates would be kept at elevated levels long enough for the impact to feed through the economy.
The aim is to bring inflation down to the 2% target by
2025, Villeroy said at an economics conference in the southern French city of
Aix-en-Province.
Former IMF chief economist, Frenchman Olivier Blanchard,
has long called for a higher inflation target than the 2% shared by most major
central banks, arguing that the increased flexibility that would provide would
outweigh the costs.
Veteran French economist Patrick Artus also called for a
higher target at the conference on Saturday and French Finance Minister Bruno
Le Maire said that if economists were opening the debate there should be
"no taboos about transgression".
In response, Villeroy said that a higher inflation target
was a "false good idea" and would lead to higher rather than lower
borrowing costs.
"If we announced our inflation target is no longer
2% but 3%, lenders would immediately demand higher interest rates, at least 1%
(more)" in anticipation of higher inflation and uncertainty Villeroy said.
More
French central bank head warns against raising ECB
inflation target | Reuters
Global Inflation/Stagflation/Recession Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Today,
something different. The communist/socialist solution to everything, tax the
rich! How well did that work in Argentina, Venezuela, or anywhere else daft
enough to try it short of existential war?
Tax the rich too much and they’ll probably move.
Economist Kate Barker: ‘To tackle inflation
we should put taxes up for the better-off’
Former
Bank of England MPC member worries high interest rates will not be enough to
solve the current crisis
July
9, 2023
Interest rates are rising, mortgage rates are
multiplying, and in Britain at least, opinions are divided. Are mortgage
holders suffering too much or not enough? Politicians worry about families
squeezed by their repayments. The Bank of England, meanwhile, worries many
homeowners are shielded by longer, fixed-term mortgages — so monetary policy
cannot bring down inflation quickly.
“The truth is that the pain is rather badly
distributed,” says Kate Barker, an economist who sat on the Bank’s Monetary
Policy Committee between 2001 and 2010. “The people who will suffer the pain
early are the ones whose mortgages happen to come to an end early. There’s also
pain in the rental market.” It would be “illogical” for any government to stop
this pain altogether — “otherwise there’d be no traction from monetary policy”.
Barker has been a vocal advocate for a more
balanced housing policy since authoring an influential 2004 report that called
for more new homes. She does not expect the rising interest rates to lead to a
sharp fall in house prices, citing the spread of fixed mortgages, banks’
embrace of forbearance, and low unemployment.
Instead “the impact on house prices will be
relatively muted”, with the number of sales remaining “rather low”. The
prospects for first-time buyers may improve over the medium term, as low growth
prevents house prices from bouncing back. “In the early 1990s, there was quite
a long period where prices didn’t move very much. We may go into another period
like that.” In such a scenario, house prices would rise a little in nominal
terms, but would fall relative to earnings. “That would be a good result.”
Yet the broader picture is dispiriting.
Britain has come to the end of more than a decade of low interest rates with
precious little to show for it. The government did not borrow cheaply to build
plentiful housing: its target of 300,000 new homes a year was never hit, and is
now merely an “ambition”. Projects, from the HS2 rail network to insulating
homes, will require decades of investment. Water companies have been told to
find £56bn to reduce sewage overflows, just as their cost of capital increases.
“In hindsight, it was a big missed
opportunity,” says Barker. “One of the difficulties was that, although now we
know it was 10 years of low interest rates, in 2012 they didn’t. People thought
that borrowing might become more expensive.”
When Barker left the MPC in 2010, she argued with the then governor Mervyn King
over whether low interest rates and quantitative easing were enough to
stimulate the economy. He thought they were; she had doubts. The assumption
behind Bank of England independence was that the economy would go through
“little cycles”, which the MPC could harness. “But when you get a really big
shock, sometimes you have to say, shouldn’t [fiscal and monetary policies] all
weigh in?
“We attributed too much power to monetary
policy. You could argue that the same thing’s happening today. We’re asking
monetary policy to do all the work.”
UK prime minister Rishi Sunak has pledged to
halve inflation this year, but his strategy has been largely to let the BoE
act. “We ought to be doing more of the work of driving out inflation by putting
taxes up on the better-off.” Which taxes? “Income tax, and you could say it
wasn’t forever.”
Tax rises might be politically unpalatable.
But Barker’s time studying housing has made her familiar with identifying the
UK’s inefficient shibboleths: the lack of capital gains tax on people’s primary
homes, the distorting bands of stamp duty, the false “totem” of the greenbelt.
“Sometimes you just have to keep on saying something that’s politically
unpopular for a very long time — much longer than you think — before anybody
picks it up.”
More
Covid-19 Corner
This
section will continue until it becomes unneeded.
Is ‘Long Vax Syndrome’ A Rare Covid-19 Vaccine Side
Effect? Here’s What’s Known
July
8, 2023
Don’t
overreact to this news. But researchers are longing to find out more about how
people’s immune systems may in rare cases overreact to the Covid-19 vaccine.
There have been reports of what’s been dubbed “Long Vax Syndrome” in some
people who’ve gotten vaccinated against Covid-19. It’s being called “Long Vax”
not because the vaccinators used a particularly long needle but because the
symptoms that have developed have resembled some of those seen with long Covid.
This has included headaches, major fatigue, blood pressure issues, and abnormal
heart rates that have lasted days, weeks, and potentially even longer. The long
and short it, though, is that the number of reported “Long Vax” cases have
still been far, far, far, far fewer than the number of reported long Covid
cases. Nevertheless, any potential real side effect of Covid-19 deserves a
long, hard look by real scientists who really understand this area.
It’s
been tough to study this syndrome in large part because the number of reported
cases has been so low to date. A pre-print posted on medRxiv back on May 17, 2022, did describe what happened to 23 patients who had
reported seemingly nerve-related symptoms that began within a month of getting
vaccinated against Covid-19. The patients ranged in age from 27 to 71 years
with the median age being 40 years. All but two were women. None of them had
any evidence of previous neurological illnesses.
However,
after getting vaccinated, all 23 experienced funny sensations—funny as in pins
and needles and not ha-ha funny—that were quite severe on their faces or limbs.
Nearly, two-thirds (61%) had experienced POTS, as well as heat intolerance and
irregular heartbeats. Now, in this case, POTS doesn’t refer to the cookware as
most people have experienced cookware at some point. Instead, POTS here stands
for postural orthostatic tachycardia syndrome. This is a medicalese way of
saying abnormal drops in blood pressure and lightheadedness (hence the word
orthostatic) and increases in your heart rate (hence the word tachycardia) when
going from you go from a lying position (meaning what you might do on a bed
rather than what some politicians do a lot) to a standing one (hence the word
postural).
----
The research team led by Farinaz Safavi, M.D., Ph.D. and Avindra Nath, M.D.,
from the National Institute of Neurological Disorders and Stroke decided to put
some skin in the game, so to speak, and take samples of skin from the lower
legs of 16 of these patients. These biopsies revealed changes in and around the
nerves of some of these patients, including 19% having abnormal swelling of
their nerve axons. There was also quite a reaction in some cases. Some of these
biopsies also showed collections of complement C4d—a chemical produced when the
immune system reacts to something—in the cells lining blood vessels. All in
all, over half (52%) of the patients had objective evidence of what’s called
small-fiber peripheral neuropathy.
So,
it looked like the immune system may have been generating a reaction against
nerve cells in the patients’ bodies, causing inflammation. When you have an
immune system reaction and inflammation, one general way is to give
corticosteroids. Corticosteroids is sort of like the song “Don’t Stop
Believing” by Journey. They can be overused but can make you feel better
regardless of the issue.
More
Is ‘Long Vax Syndrome’ A Rare Covid-19 Vaccine Side
Effect? Here’s What’s Known (forbes.com)
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.
Just add dendrimers, cellulose and
graphene: New eco-friendly, long-lasting light-emitting electrochemical cell
July 7, 2023
In research that could lead to a new age in illumination, researchers from Japan and Germany have developed an eco-friendly light-emitting electrochemical cells using new molecules called dendrimers combined with biomass derived electrolytes and graphene-based electrodes. Their findings were published in the journal Advanced Functional Materials.
Electroluminescence
is the phenomenon where a material emits light in response to a passing
electric current. Everything from the screen you're using to read this sentence
to the lasers used in cutting edge scientific research are results of the
electroluminescence of different materials. Due to its ubiquity and necessity
in the modern age, it is only natural that extensive resources go into research
and development to make this technology better.
"One
such example of an emerging technology is 'light-emitting electrochemical
cells' or LECs," explains
Associate Professor Ken Albrecht from Kyushu University's Institute for
Materials Chemistry and Engineering and one of the leads of the study.
"They have been attracting attention because of their cost advantage
over organic
light emitting diodes, or
OLEDs. Another reason for LECs popularity is their simplified structure."
OLED
devices generally require the carful layering of multiple organic films, making
it tricky and costly to manufacture. LECs on the other hand can be made with a
single layer of organic film mixed with light-emitting materials and an
electrolyte. The electrode that connects it all together can even be made from
inexpensive materials unlike the rare or heavy metals used in OLEDs. Moreover,
LECs have lower driving voltage, meaning they consume less energy.
"Our
research teams have been exploring new organic materials that can be used in
LECs. One such candidate are dendrimers," explains Prof. Rubén D. Costa of
the Technical University of Munich, who led the research team in Germany.
"These are branched symmetric polymeric molecules whose unique structure
has led to their utility in everything from medicine to sensors, and now in
optics."
Building upon their
past work on developing dendrimers, the research team began modifying their
materials for LECs.
"The dendrimer
we developed initially had hydrophobic, or water repelling, molecular groups.
By replacing this with hydrophilic, or water liking, groups we found that the
lifetime of the LEC device could be extended to over 1000 hours, more than
10-fold from the original," explains Albrecht. "What makes it even
better is that thanks to our collaboration with Dr. Costa's team the device is
very eco-friendly."
More
Economics is extremely useful as a form of employment for economists.
John Kenneth Galbraith.
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