Baltic Dry Index. 962 -05 Brent Crude 83.19
Spot Gold 1963 US 2 Year Yield 4.85 +0.04
In central banking as in diplomacy, style, conservative
tailoring, and an easy association with the affluent count greatly and results
far much less.
John Kenneth Galbraith.
In the stock casinos, caution ahead of today’s
interest rate decisions. Boom times at Google and Microsoft (unless you’re an
employee.)
Asia markets
largely down ahead of Fed rate decision; Australia inflation falls in second
quarter
UPDATED TUE, JUL 25 2023 11:19 PM
EDT
Asia-Pacific markets were largely down as
investors brace for the U.S. Federal Reserve’s rate decision on Wednesday.
The Fed is expected
to approve what would be the 11th interest rate increase since
March 2022.
Markets are pricing in an
absolute certainty that the Fed will approve a quarter percentage point hike
that will take its benchmark borrowing rate to a target range of 5.25%-5.5%.
That would push the upper boundary of the federal funds rate to its highest
level since January 2001.
In Australia, the S&P/ASX 200 climbed
0.64%, as the country’s inflation on an annual basis grew 6% in the June
quarter. But it was still slower than the 7% seen in the first quarter,
official data showed.
In Japan, the Nikkei 225 was
down 0.16%, extending its losses from Tuesday, while the Topix also sunk 0.18%.
South Korea’s Kospi dropped
0.97%, and the Kosdaq saw a smaller loss of 0.24%.
Hong Kong’s Hang Seng index retreated
from Tuesday’s rally and inched down 0.56%, while mainland Chinese market also
all fell.
The Shanghai Composite was down
marginally, while the Shenzhen
Component lost 0.31%.
Overnight in the U.S., all three major indexes
finished higher, with the Dow
Jones Industrial Average continuing to extend its winning
streak to 12 days.
The 30-stock index rose
0.08% to mark its longest rally since February 2017, while the S&P 500 added
0.28% and the Nasdaq
Composite advanced 0.61%.
Google parent and
Microsoft see third-quarter profits surge
Alphabet
and Microsoft report combined net profit of more than $38bn
Tue Jul 25 2023 - 21:36
Microsoft and Google’s parent
Alphabet reported a surge in second-quarter profits, as the two tech giants
looked to push their developments in so-called artificial intelligence (AI).
Alphabet
said in a statement its net profits topped $18.4 billion (€16.6 billion) in the
quarter to the end of June. That compared with $16 billion a year earlier.
Revenue
increased 9 per cent to $74.6 billion on a constant currency basis compared
with a year ago, which strips out the impact of foreign exchange movements.
“There’s
exciting momentum across our products and the company, which drove strong
results this quarter,” Sundar Pichai, chief executive of Alphabet and Google,
said. “Our continued leadership in AI and our excellence in engineering and
innovation are driving the next evolution of Search, and improving all our
services.”
Chief financial officer
Ruth Porat will assume the newly created role of president and chief investment
officer of Alphabet and Google, the company said, putting her in prime position
as a future chief executive of the business. She will take on the role from the
start of September.
Google laid off about 240 of its
5,000 employees in Ireland earlier this year as part of firm-wide cuts.
The company
took a $2 billion charge related to its lay-offs in the first six months of the
year, as well as $633 million in charges tied to “actions to optimise our
global office space”.
The
company, which owns several offices in central Dublin, “may incur additional
charges in the future as we further evaluate our real estate needs”, it added.
Meanwhile,
Microsoft posted a net profit of $20.1 billion – up 23 per cent on a constant
currency basis versus a year ago, for its quarter.
Revenue
rose 10 per cent to $56.2 billion, the Seattle-based firm said in a statement.
Much of the growth was driven by Microsoft’s cloud business, where revenue
increased by close to a quarter.
The firm,
which employs about 3,500 people in Ireland, has laid off about 250 staff here
in recent months as part of a wider round of cuts across its global business.
More
Google
parent and Microsoft see third-quarter profits surge – The Irish Times
In other news, a mixed bag. The IMF forecasts better global growth ahead. Well maybe, maybe not.
The UPS deal suggests more wage price inflation to come, resulting in higher prices for US goods deliveries.
China slows.
Saudi oil exports fall.
IMF raises global
growth forecast despite China’s recovery ‘losing steam’
PUBLISHED TUE, JUL 25 2023 9:03
AM EDT UPDATED TUE, JUL 25 2023 11:59 AM EDT
The International Monetary
Fund on Tuesday raised its growth forecast for the global economy, turning
slightly more positive despite slowing momentum from China.
In the latest update
to its World Economic Outlook, the IMF raised its 2023 global growth prediction
by 0.2 percentage point to 3%, up from 2.8% in its April assessment. The IMF
kept its 2024 growth forecast unchanged at 3%.
In terms of
inflation, the fund also expects an improvement from last year. Headline
inflation is projected to reach 6.8% this year, falling from 8.7% in 2022.
However, core inflation, which strips out volatile items, is seen declining
more slowly to 6% this year, from 6.5% last year.
“The global economy continues to gradually recover
from the pandemic and Russia’s invasion of Ukraine. In the near term, the signs of progress are undeniable,”
Pierre-Olivier Gourinchas, chief economist of the IMF, said in an accompanying
blog post Tuesday. “Yet many challenges still cloud the horizon, and it is too
early to celebrate,” he added.
The IMF highlighted concerns with tighter credit
conditions, depleted household savings in the U.S. and a shallower-than-expected
economic recovery in China from strict Covid-19 lockdowns.
“In the United
States, excess savings from the pandemic-related transfers, which helped
households weather the cost-of-living crisis and tighter credit conditions, are
all but depleted. In China, the recovery following the reopening of its economy
shows signs of losing steam amid continued concerns about the property sector,
with implications for the global economy,” Gourinchas said.
The U.S., the world’s
largest economy, is set to grow 1.8% this year and 1% in 2024, according to the
IMF. In China, gross domestic product is seen falling from 5.2% this year to
4.5% for 2024.
----Among Europe’s major economies, Germany is the
only one where the IMF has cut its growth expectations for this year. The fund
sees the German economy contracting by 0.3% this year, that’s a reduction of
0.2 percentage point from April’s forecast. This is due to weaker manufacturing
output and lower growth performance during the first quarter of this year, the
IMF said.
Data released Monday
showed business activity shrinking at a faster pace than expected in July
across the euro zone. In Germany, the data pointed to an economic contraction
with manufacturing production levels dropping for the third month in a row and
at the fastest pace since May 2020.
More
IMF raises global
growth forecast despite China's recovery 'losing steam' (cnbc.com)
UPS, union avert
strike with planned 5-year deal, more pay
By Lisa Baertlein and Priyamvada C July 25, 202311:39 PM GMT+1
July
25 (Reuters) - UPS (UPS.N) and its Teamsters union have signed a tentative contract
deal for about 340,000 U.S. workers at the parcel delivery firm, one week ahead
of a threatened strike that could have cost the economy billions and disrupted
a quarter of the nation's package shipments.
Tuesday's
agreement, which must be ratified by union members, cinches another win for
transportation labor groups. Railroad, airline and West Coast seaport workers
have all seen their bargaining hand strengthened by labor shortages and public
support for those who risked their lives early in the pandemic to keep the U.S.
economy functioning.
The
planned Aug. 1 strike by workers at UPS, which handles about 20 million
packages a day across the United States, could have also driven customers into
the arms of rivals like FedEx (FDX.N), which is still embroiled
in talks with its pilots union.
"This
contract sets a new standard in the labor movement and raises the bar for all
workers," International Brotherhood of Teamsters General President Sean
O'Brien said.
The Teamsters
said the contract provides historic wage increases, one more paid holiday and
air conditioning in the company's ubiquitous brown delivery trucks. It also
eliminates a two-tier pay system and forced overtime for delivery drivers.
"We demanded
the best contract in the history of UPS, and we got it," O'Brien said,
adding that UPS put $30 billion in new money on the table without a single
concession from the union. "We've changed the game."
More
UPS, union avert strike with planned 5-year deal, more
pay | Reuters
What new norm of
slower Chinese growth could mean for the global economy
The Chinese economy could be facing a prolonged
period of lower growth, a prospect which may have global ramifications after 45
years of rapid expansion and globalization.
The Chinese
government is ramping up a host of measures aimed at boosting
the economy, with leaders on Monday
pledging to “adjust and optimize policies in a timely manner” for
its beleaguered property sector, while pushing stable employment towards a
strategic goal. The Politburo also announced pledges to boost domestic
consumption demand and resolve local debt risks.
---- The ruling Chinese Communist Party has set a growth target
of 5% for 2023, lower than usual and notably modest for a country that has
averaged 9% annual GDP growth since opening up its economy in 1978.
Over the past few
weeks, authorities announced a series of pledges targeted at specific sectors
or designed to reassure private and foreign investors of a more favorable
investment environment on the horizon.
However, these were largely broad measures lacking
some major details, and the latest readout of the Politburo’s quarterly meeting
on economic affairs struck a dovish tone but fell short of major new
announcements.
Julian Evans-Pritchard, head of
China economics at Capital Economics, said in a note Monday that the country’s
leadership is “clearly concerned,” with the readout
calling the economic trajectory “tortuous” and highlighting the
“numerous challenges facing the economy.”
These include domestic demand,
financial difficulties in key sectors such as property, and a bleak external
environment. Evans-Pritchard noted that the latest readout mentions “risks”
seven times, versus three times in the April readout, and that the leadership’s
priority appears to be to expand domestic demand.
“All told, the Politburo meeting
struck a dovish tone and made it clear the leadership feels more work needs to
be done to get the recovery on track. This suggests that some further policy
support will be rolled out over the coming months,” Evans-Pritchard said.
“But the absence of any major
announcements or policy specifics does suggest a lack of urgency or that
policymakers are struggling to come up with suitable measures to shore up
growth. Either way, it’s not particularly reassuring for the near-term
outlook.”
---- For the global economy, however, the most
immediate spillover of a Chinese slowdown will likely come in commodities and
the industrial cycle, as China reconfigures its economy to reduce its reliance
on a property sector that has been “absorbing and driving commodity prices.”
More
What
new norm of slower Chinese growth could mean for the global economy (cnbc.com)
Saudi oil exports
down 40% in May y/y - statistics agency
July 25, 2023 9:04 AM GMT+1
DUBAI, July 25
(Reuters) - Saudi oil exports fell almost 40% in May from the same period a
year ago, latest government data released on Tuesday showed, weighing on
overall total exports, amid an extension of voluntary production cuts and lower
oil prices.
The value of oil
exports declined to 72 billion riyals ($19.20 billion) in May from 115.5
billion riyals last year, the General Authority for Statistics said, down 37.7
%, with the share of oil exports in total exports down to 74.1% from 80.8% in
May 2022.
Overall
merchandise exports fell 32.1% in May this year to 97.1 billion riyals from 143
billion riyals in May 2022.
Amid
softer oil prices, Saudi Arabia said earlier this month it would prolong an
extra production output cut on top of a broader OPEC+ deal, and has raised
prices for most of its crude to Asian
customers in August for a second month.
Recent
data from the Joint Organizations Data Initiative (JODI) showed Saudi crude oil
exports in May fell to a 19-month
low.
Non-oil exports -
excluding re-exports - fell 19.2 in May this year from a year earlier.
China was the top
destination for Saudi exports, receiving 17.4% of the total, followed by India
and Japan. It was also the top importer of goods into Saudi Arabia, accounting
for just over 23% of total imports into the country in May.
Total value of
merchandise imports in May this year grew 21% to 67.7 billion riyals.
Saudi oil exports down 40% in May y/y - statistics agency | 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.
I am therefore afraid that we must abandon the plan of improving
the government of the Bank of England by the appointment of a permanent
Governor, because we should not be sure of choosing a good governor, and should
indeed run a great risk, for the most part, of choosing a bad one.
Walter Bagehot. Lombard Street, 1873.
UK recession risk just got a whole
lot lower after inflation undershoot
TUESDAY 25 JULY 2023 6:00 AM
Bank of England Governor Andrew Bailey would not have been the only person in the City last week breathing a sigh of relief after the better than expected inflation numbers.
It was the first time the Office for
National Statistics’ calculations have undershot analysts’ forecasts since
January’s numbers. It was also the first time the Bank has nailed its own
projections in ages.
Just six of the last 18 inflation prints have come in
lower than market expectations, according to calculations by investment bank
Nomura.
What a nice way to sign off for the summer
holidays.
Lifting the bonnet on the data extracts yet more good news. Core inflation slipped to 6.9 per cent, below an expected fall to 7.1 per cent.
Declines in global commodity prices
are finally feeding through to prices, most notably in food cost growth
slipping, although the rate is still very high at over 17 per cent.
Petrol prices also yanked headline inflation lower,
signalling supermarkets and other forecourt operators are finally handing over
savings to customers (perhaps due to intense government pressure).
Businesses are now playing a greater role in taming
inflation, which could weaken the pressure on the Bank to lean on demand with
sharp rate rises. About bloody time.
But don’t read too much into one set of data. To
conclude that the cost of living crisis has turned a corner, there needs to be
yet further good news.
Part of the reason why inflation has hugged closer
to eight and nine per cent while European and US rates have stepped lower is
due to the state energy regulator Ofgem only changing its price cap every three
months.
July’s inflation calculation will incorporate the
lower £2,074, helping to pull inflation possibly below seven per cent.
Research firm Kantar’s latest estimate of grocery
price growth fell to around 14 per cent in July, while recent purchasing
managers’ indexes show input costs are rising at the slowest pace in over two
years.
Under reported last week was the ONS estimating the
cost of components used by factories to make products falling 2.7 per cent over
the year to June.
All this points to a downsized recession risk in
the UK, a judgement that has oscillated seemingly with every new set of
economic data from the ONS.
More
Recession risk just got a whole lot lower after
inflation undershoot (cityam.com)
Bank of England
policymakers weigh up 14th rate hike to tame inflation
July 25,
2023
LONDON
(Reuters) - The Bank of England is expected to raise interest rates for the
14th consecutive meeting next week as it continues to battle the highest
inflation rate among the Group of Seven big, rich nations.
Financial
markets think it is a near-certainty that the BoE will announce a rate increase
of at least a quarter-percentage point on Aug. 3, taking Bank Rate to 5.25%
from 5% now, and around a 40% chance of a half-point rise to 5.50%.
More
Bank
of England policymakers weigh up 14th rate hike to tame inflation (msn.com)
'Big Short' investor Steve Eisman says the market
will continue to melt up as long as there's no recession - and there's still no
sign of one
Tue, 25 July 2023 at 1:46 am BST
Though Steve Eisman sees the
Federal Reserve's hiking cycle as a potential catalyst for an economic
downturn, he told CNBC that nothing points to a recession yet.
And that suggests the market will
continue to rally.
"So far, there's no evidence
of a recession. So as long as there's no evidence of recession, I think the
market will probably continue to melt up — people are chasing," the
Neuberger Berman portfolio manager said.
Best known for the 2008 housing
crash prediction portrayed in "The Big Short," Eisman said that his
firm continues to be fully invested, with no plans to withdraw as long as the
economy keeps chugging along.
However, while investor expectations point to one more Fed rate hike on Wednesday and
then a pause, he noted the possibility of more tightening, even suggesting the
chance of three more hikes.
But even if the Fed hikes rates
again, Chairman Jerome Powell could send mixed messages during his
post-announcement press briefing, Eisman said.
"The only caveat I would say
is, after the Fed raises rates, Powell will speak, and if history is any guide,
Powell will be dovish even when he wants to be hawkish. That just tends to be
his personality," he said.
In recent weeks, a number
of economic commentators have chimed in about the likelihood of a soft
landing, driven by an inflationary slowdown and continued labor market
strength.
Another reason the
much-anticipated recession hasn't emerged yet is that corporate net interest payments have actually fallen amid the central bank's
hawkishness.
Strong economic performance has
also been paired by equity market strength, as investors shrug off the
tightening cycle to rally around Big Tech firms that benefit from new
developments in artificial intelligence.
More
Covid-19 Corner
This section will continue until it becomes unneeded.
Unlocking the secrets of asymptomatic COVID-19
infections: HLA-B*15:01 connection revealed
In a recent
study published in Nature, researchers describe the findings of the COVID-19 Citizen Science
Study, a large-scale study directly examining human leukocyte antigen (HLA)
variation(s) in a prospective cohort comprising individuals with mild
coronavirus disease 2019 (COVID-19).
They invited
29,947 volunteer bone marrow donors with high-resolution HLA genotyping
data to develop this prospective cohort and two additional independent cohorts.
Background
Numerous
studies intending to understand the genetic basis of differential outcomes in
COVID-19 have examined genetic associations with severe disease course,
primarily in hospitalized cohorts, e.g., the multicentre Host Genetics
Initiative.
However,
few studies have examined genetics in non-hospitalized, prospective,
community-based cohorts. Studies directly examining HLA associations
with infection had relatively small cohorts and fetched mixed and inconclusive
results.
Hundreds
of genes govern human immune responses to diseases, of which HLA variants
have the most robust associations with viral infections. It makes them relevant
molecular targets for COVID-19 vaccine development.
Individuals
expressing HLA-B*46:01 might be more vulnerable to COVID-19. Conversely,
HLA-B*15:03 protects against COVID-19 by presenting highly conserved SARS-CoV-2
peptides to T cells.
More
in-depth insights into the impact of HLA variation(s) in
infectious diseases could inform vaccine development and potential
immunotherapies for COVID-19.
---- Results
The
main study finding was that the HLA-B*15:01 allele was
markedly associated with asymptomatic infection in participants reporting a
SARS-CoV-2-positive test result.
Nearly
10% of individuals with European ancestry carry this common allele and remain
asymptomatic post-SARS-CoV-2 infection than those who do not.
Another
important effect of HLA-B*15:01 homozygosity was that it
increased the likelihood of remaining asymptomatic during SARS-CoV-2 infection
by >eight times. Asymptomatic patients in two independent cohorts of the
study also had highly similar frequency distributions of HLA-B*15:01.
Furthermore,
the study results showed that the HLA-DRB1*04:01 allele
augmented the HLA-B*15:01 effect when paired, like in the
United States (US)-origin people who self-identified as white.
Upon
analyzing immunodominant epitopes in T cells in human peripheral blood
mononuclear cells or PBMCs from pre-pandemic healthy donors, the authors
observed that the cells from donors carrying HLA-B*15:01 allele
unexposed to SARS-CoV-2 were reactive to the SARS-CoV-2 spike (S) peptide
NQK-Q8, and most cells displayed a memory phenotype.
Thus,
this amino acid sequence identity between seasonal CoVs and SARS-CoV-2 S
peptides explains the T cell cross-reactivity.
The
presence of high-affinity, cross-reactive memory T cells in unexposed donors
further corroborated the robust association between the allele HLA-B*15:01 and
asymptomatic COVID-19.
More
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.
Electric Super Hub taps solar and battery power to
keep EVs moving
Paul Ridden July 24, 2023
UK sustainable
energy company GridServe has partnered with Cornwall Services to install an
Electric Super Hub in the heart of the popular tourist destination, which
includes a solar canopy and a huge battery to support the grid supply to a
dozen EV chargers.
The 12-bay flagship Electric Super Hub is located at a busy
rest stop on a major road running from London to Land's End, effectively
replacing and upgrading two existing 50-kW chargers.
Drivers of electric vehicles who are quickly passing through are treated
to six 350-kW fast chargers, with the remainder hosting 22-kW AC chargers for
use by those staying overnight at the onsite Holiday Inn hotel. The Super Hub
is topped by a solar canopy which provides the plugged-in EVs with shelter
while feeding energy into the system to support the 100-kW grid connection.
Naturally this won't be enough to meet all of the facility's power
needs, so there's a 1-MW SEC 1000 Li-ion battery as well that draws from the
grid during periods of low demand and pushes out its stored energy to the
chargers when needed. GridServe has also applied for permission to build a
megawatt solar farm next door.
The Electric Super Hub has actually been in a test phase for
the last few months, topping up more than 100 EVs per day at peak times, but
the company reports that it's now officially open for business – though the
fast-chargers are being throttled back for the moment while further testing and
optimization is undertaken. Once that's completed, drivers will be able to take
advantage of 350-kW fast charging.
"We are delighted to deliver a UK first innovation to
Cornwall Services and its customers," said GridServe CEO, Toddington
Harper. "We hope the innovative technology we have deployed at this
location can also become a blueprint for others, where larger grid connections
will be too slow to deliver to keep up with the demand that the rapid
transition to electric vehicles presents. We have also submitted plans to
further increase energy capacity at the site in future with an adjacent solar
farm, which will allow us to deliver up to 4 million zero carbon miles energy
directly into electric vehicles every year."
Electric Super Hub taps solar and battery power to
keep EVs moving (newatlas.com)
Few people are willing to sell their homes. Which makes sense because…
92% of Americans have a mortgage below 6% right now, explaining the lack
of incentive to sell a house only to buy a new one with a mortgage rate of
around 7%. What I will add to this data point is that 23% have a mortgage below
3%, and 61% are below 4%, meaning they really, really aren’t likely to make a
change. (Source: David Bahnsen)
John Mauldin. Saturday July 22, 2023.
No comments:
Post a Comment