Baltic Dry Index. 1097 +30 Brent Crude 83.73
Spot Gold 1952 US 2 Year Yield 4.91 +0.09
“Men, it has
been well said, think in herds; it will be seen that they go mad in herds,
while they only recover their senses slowly, one by one.”
Extraordinary Popular Delusions and the Madness of Crowds
In the stock casinos, did the Bank of Japan just thrust a giant pin into the latest stock casinos bubble?
I suspect we are about to find out in Europe and America later today.
Better rush out more US stock buyback programs,
I suppose, but borrowing at much higher interest rates now for iffy stock
buybacks doesn’t look so good compared to borrowing at ZIRP and NIRP.
Nikkei leads
losses in Asia and falls over 2% as Bank of Japan holds rates, but adjusts YCC
stance
UPDATED FRI, JUL 28 2023 12:30 AM EDT
Japan’s Nikkei 225 tumbled
over 2%, leading losses in Asia as the Bank of Japan adjusted its stance on its
yield curve control policy Friday. The Topix saw a smaller loss of 1.53%.
The BOJ also held its benchmark
policy rate at -0.1%, in line with expectations from economists.
Japan’s
central bank said that it will continue to allow 10-year
government bond yields to fluctuate in the range of around plus and minus 0.5%.
However, it will “conduct yield
curve control with greater flexibility, regarding the upper and lower bounds
the range as references, not as rigid limits, in its market operations.”
The Nikkei 225 tumbled
1.33%, while the Topix saw a smaller loss of 1.03%.
In Australia, the S&P/ASX 200 fell
1.03% as the country’s retail sales fell 0.8% year on year in June, lower than
expectations in a Reuters poll that the retail sales figure will remain
unchanged from a year ago.
South Korea’s markets were more
mixed, with the Kospi down
marginally and the Kosdaq up 2.06%.
Hong Kong’s Hang Seng index bucked
the trend and climbed 0.55%, while the Shanghai Composite was
down 0.54% and the Shenzhen
Component inched down 0.87%.
Overnight in the U.S., all three major indexes
slid, with the Dow
Jones Industrial Average losing 0.67% and snapping its 13-day
winning streak.
Should the Dow have recorded a
14th straight day of gains, the index would have tied its record winning
streak going way back to 1897.
Separately, the Nasdaq Composite shed
0.55%, while the S&P
500 dropped 0.64%.
Yields for 10-year
Japanese government bonds at highest levels in almost 9 years
Yields for 10-year
Japanese government bonds stood
at 0.539% after the Bank of Japan announced an adjustment in its stance for its yield
curve control policy.
This is the first
time 10-year JGB yields have hit this level since September 2014.
The BOJ said it
will still allow yields to fluctuate in the range of around plus and minus
0.5%, but it will “conduct yield curve control with greater flexibility,
regarding the upper and lower bounds the range as references, not as rigid
limits, in its market operations.”
Separately, Japan’s
central bank held its benchmark policy rate at -0.1%.
Dow’s historic winning streak is over. Here are
the stocks that helped make it happen.
The Dow Jones
Industrial Average’s historic summertime winning streak came to an end on
Thursday, with a late-day selloff that followed reports of the Bank of Japan
potentially embracing a major policy shift.
It will be
remembered as the Dow’s longest stretch of consecutive daily gains since Jan.
20, 1987, according to Dow Jones Market Data. Had stocks finished higher on
Thursday, the streak would have tied the Dow’s 14-day winning streak from June
14, 1897, the longest winning streak on record for the blue-chip average.
Now that it’s over,
it’s worth a look back at the stocks that helped make it happen.
---- Unlike the
S&P 500 and Nasdaq 100, which are weighted by market capitalization, the
more old-fashioned Dow is weighted by share price. UnitedHealth’s shares closed
at $508 on Wednesday, according to FactSet data.
Goldman Sachs Group GS,
It’s notable that Apple Inc. AAPL,
After trading higher for
most of Thursday’s session, the Dow DJIA,
Dow's
historic winning streak is over. Here are the stocks that helped make it
happen. - MarketWatch
European
Central Bank raises rates by a quarter percentage point, says inflation set to
remain ‘too high for too long’
PUBLISHED THU, JUL 27 2023 8:18
AM EDT
The European Central
Bank on Thursday announced a new rate increase of a quarter percentage point,
bringing its main rate to 3.75%.
The latest move
completes a full year of consecutive rate hikes in the euro zone, after the ECB
embarked on its journey to tackle high inflation last July.
“Inflation continues to decline but is still expected to remain
too high for too long,” the ECB said Thursday in a statement.
A headline inflation reading showed the rate
coming down to 5.5% in June from 6.1% in May — still far above the ECB’s target
of 2%. Fresh inflation data out of the euro zone is due out next week.
What next?
While market players had expected the 25 basis
point hike, a lot of anticipation remains about the ECB’s post-summer approach.
Inflation has eased, but questions linger about whether monetary policy is
pushing the region into an economic recession.
The central bank did not share any forward
guidance about upcoming moves.
“The Governing Council will continue to follow a
data-dependent approach to determining the appropriate level and duration of
restriction,” it said.
Carsten Brzeski, global head of macro at ING
Germany, said: “What is more interesting, the accompanying policy statement
kept the door for further rate hikes wide open and did not strike a more
cautious note.”
More
ECB rate decision July 2023: raises rates by 25 basis points (cnbc.com)
In other news, is the age of the giant
department store over? The giant shopping mall with anchor department stores?
House of Fraser owner
could close more big shops as department store model ‘broken’
July 27, 2023
The owner of House of Fraser
has said it could close more stores, after shutting eight in the past year and
declaring “the department store globally is broken”.
Michael Murray, the chief
executive of Mike Ashley’s retail empire Frasers, which also owns Sports
Direct, the designer street fashion chain Flannels and a plethora of brands
from Jack Wills to Evans Cycles, said its department store portfolio was
“continually under review” and some outlets were “still too big and we have to
find solutions for the excess space”.
House of Fraser has already
almost halved in size from 59 stores to 31 since it was bought out of
administration by Ashley’s retail empire in August 2018. Murray said that
historically stores would have been 150,000 sq ft or larger which was now “too
big” and meant that that in the past they “didn’t have the investment” they
needed. The group now wants stores of about 50,000 sq ft or smaller.
Murray’s comments came as
Frasers reported that pretax profits for the group almost doubled to £660m
after sales rose 16% to £5.6bn in the year to 30 April.
Sales at
the group’s premium division, which includes Flannels and House of Fraser, rose
5.7%, before acquisitions, but the division sank to a loss of £100,000, after a
£10.5m profit a year before after losing business rates relief and taking a
£19.8m hit from store closures.
More
House of Fraser owner could close more big shops as department store model ‘broken’ (msn.com)
Finally, more on you really, really, really want to drive an EV.
A
REUTERS SPECIAL REPORT
Tesla created secret team to
suppress thousands of driving range complaints
Filed July 27, 2023, 10
a.m. GMT
In March, Alexandre Ponsin set out on a family road trip
from Colorado to California in his newly purchased Tesla, a used 2021 Model 3.
He expected to get something close to the electric sport sedan’s advertised
driving range: 353 miles on a fully charged battery.
He soon realized he was sometimes getting less than
half that much range, particularly in cold weather – such severe
underperformance that he was convinced the car had a serious defect.
“We’re looking at the range, and you literally see the
number decrease in front of your eyes,” he said of his dashboard range meter.
Ponsin contacted Tesla and booked a service appointment
in California. He later received two text messages, telling him that “remote
diagnostics” had determined his battery was fine, and then: “We would like to
cancel your visit.”
What Ponsin didn’t know was that Tesla employees had been
instructed to thwart any customers complaining about poor driving range from
bringing their vehicles in for service. Last summer, the company quietly
created a “Diversion Team” in Las Vegas to cancel as many range-related
appointments as possible.
The Austin, Texas-based electric carmaker deployed
the team because its service centers were inundated with appointments from
owners who had expected better performance based on the company’s advertised
estimates and the projections displayed by the in-dash range meters of the cars
themselves, according to several people familiar with the matter.
Inside the Nevada team’s office, some employees
celebrated canceling service appointments by putting their phones on mute and
striking a metal xylophone, triggering applause from coworkers who sometimes
stood on desks. The team often closed hundreds of cases a week and staffers
were tracked on their average number of diverted appointments per day.
Managers told the employees that they were saving Tesla
about $1,000 for every canceled appointment, the people said. Another goal was
to ease the pressure on service centers, some of which had long waits for
appointments.
More
Tesla’s secret team to suppress thousands of driving
range complaints (reuters.com)
When I was young I thought that money was the most important thing in life; now that I am old I know that it is.
Oscar Wilde.
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.
‘Things are going
to break’: Kevin O’Leary predicts Fed hikes will lead to more U.S. regional
bank failures
PUBLISHED THU, JUL 27 2023 6:13
AM EDT
Shark
Tank investor Kevin O’Leary predicts
the ongoing cycle of U.S. Federal Reserve rate hikes could lead to more
regional U.S. bank failures.
Fed Chair Jerome Powell said the Fed is not yet fully confident that inflation is
defeated even though recent headline
reads show that price increases have cooled significantly.
The consumer price index rose 3% from a year ago in June — the lowest level since
March 2021. But Powell said the Fed would need to “hold policy at a restrictive
level for some time” and be prepared to raise rates further, given that core
inflation is still above 3% — higher than its 2% annual target.
“You keep squeezing the toothpaste tube, you keep
rolling it up, you keep raising rates, and you know things are going to break,
you just don’t know when and where,” O’Leary, who runs his own early-stage
venture capital firm, O’Leary Ventures, told CNBC’s
“Street Signs Asia” early Thursday after
the Fed’s latest rate hike announcement.
“I am just predicting — and I am very cautious on
this — it will break down in the regional banks, which supports 60% of the
economy,” he said, adding that the rapid rise in the cost of capital is
“killing them on their real estate loans.”
Regional banks such as First Republic, Silicon Valley Bank and Signature Bank have
folded since March.
Those banks were destabilized by a monetary tightening cycle that has seen 11 rate hikes since March 2022, and the latest hike takes benchmark borrowing costs to their highest level in more than 22 years.
“I am telling investors that I work with and I
advise ... let’s wait 90 days to see what happens in the small banking arena in
the United States,” O’Leary said.
He also warned that the Fed could hike rates to
beyond its current projections.
More
Kevin O'Leary: Fed hikes may lead to more U.S.
regional bank failures (cnbc.com)
Britain’s biggest
mortgage lender warns more customers are struggling
July
26, 2023
Lloyds Banking Group has
warned an increasing number of homeowners are struggling to repay their debts as rising interest rates bite.
The lender said it set aside
£662m for bad loan provisions during the first half of the year, compared to
£381m during the same period last year.
Charlie Nunn, Lloyds group
chief executive, said: “We know that rising interest rates, cost-of-living
pressures and an uncertain economic outlook are proving challenging for many
people and businesses.
“We remain fully focused on
proactively supporting our customers and helping them navigate the current
environment.”
Despite the impairment
charge, Lloyds posted a 23pc surge in half-year profits to £3.9bn.
The profit boost was driven
by a rise in the bank’s net interest margin – the difference between what
lenders charge borrowers and pay savers – to 3.1pc, up from 2.77pc a year
earlier.
Banks have come under fire from ministers and
regulators over accusations
they are profiteering from rising rates at a time when borrowers are
struggling.
Lenders have been accused of
being too slow to pass on the benefits of rising interest rates to customers
through higher savings rates.
loyds, which
also owns Halifax and Bank of Scotland, said business had slowed in recent
months.
---- Meanwhile, Santander UK
warned of a looming slump in the housing market. Santander predicted an
11pc drop in house prices over this year
and next.
The
lender said that if inflation proves exceptionally stubborn and forces the Bank
of England to raise interest rates to 7pc, from their current level of 5pc, it
would force the economy into recession and send house prices tumbling by almost
20pc.
It
warned that £60bn of mortgage loans will roll off fixed-term deals or
introductory offers in the next 18 months.
More
Britain’s biggest mortgage lender warns more customers are struggling (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Elon Musk’s Increasing Skepticism Of Covid-19 And Vaccines: A Timeline
July 26, 2023
Billionaire
Elon Musk questioned why Bronny James—college basketball player and son of
Lebron James—went into cardiac arrest, linking the medical emergency, without
evidence, to the Covid-19 vaccine in a tweet Tuesday, the latest in a series of
questionable and sometimes false comments from Musk.
TIMELINE
Musk responded to
the news of James’ cardiac arrest, saying, “We cannot ascribe everything to the
vaccine, but, by the same token, we cannot ascribe nothing,”
adding,“Myocarditis is a known side-effect” of the Covid-19 vaccine,
referencing inflammation of the heart, which has been reported as a side
effect affecting about
0.0004% of shot recipients.
Musk
shared an article on Twitter citing Israeli data that claimed that “zero young
healthy individuals died of COVID-19”–a claim that was later discredited by
Israel’s health minister.
Musk suggested Anthony
Fauci funded the creation of Covid-19 saying, “he did it via a pass-through
organization (EcoHealth),” referencing the government funding of the
gain-of-function research performed by EcoHealth at a Wuhan lab (there is no
scientific agreement that the lab created Covid-19 but some agencies say it’s
possible).
In response to Rasmussen Poll on Covid-19 side effects, Musk tweeted he
had “major side effects” from his second booster and said he hoped there was no
permanent damage “but I dunno.”
While saying he supported vaccines generally, Musk suggested the
“cure/vaccine is potentially worse” than the disease if vaccines are
administered to the whole population—an opinion shared by many who believe in
natural immunity which medical experts say is
less safe than getting the Covid-19 vaccine.
The Twitter chief called for
the prosecution of Fauci, tweeting “My pronouns are Prosecute/Fauci.”
In an interview with Time magazine, which named him
Person of the Year in 2021, Musk said he and his children had received the
vaccine, saying “the science is unequivocal,” but that he opposed vaccine
mandates, citing the “erosion of freedom in America.”
More
Elon Musk’s Increasing Skepticism Of Covid-19 And
Vaccines: A Timeline (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.
Cheap proton batteries compete with lithium on energy
density
Loz Blain July 27, 2023
RMIT
engineers say they've tripled the energy density of cheap, rechargeable,
recyclable proton flow batteries, which can now challenge commercially
available lithium-ion batteries for capacity with a specific energy density of
245 Wh/kg.
That's as compared to the ~260-odd Wh/kg
delivered by the lithium-ion batteries in a current Tesla Model 3 battery pack,
but without using any lithium, thus avoiding a forecasted
lithium squeeze, as well as geopolitically sensitive
dependence on China in the battery supply chain, and all kinds of end-of-life issues.
We've covered this particular
team's work before, way back in 2014, when the first
proof of concept of a hydrogen-based proton flow battery was announced.
Essentially, it's a different
way of using hydrogen for energy storage. The proton battery works something
like a reversible fuel cell, accepting water while charging, splitting out
positively-charged hydrogen ions and releasing oxygen.
At this point, most
hydrogen systems allow these ions to combine into H2 gas, and then expend
energy either compressing it, super-cooling it to liquefy it, or further
processing it into ammonia. The proton battery instead stores the hydrogen
protons directly and immediately, in holes in a solid, porous activated carbon
electrode soaked in a dilute acid. Discharging the battery is a matter of
adding oxygen, and energy is released as water is produced.
In their latest
paper, the RMIT researchers looked into the fundamentals of how the proton
battery worked – mainly on the oxygen-side reactions – in order to formulate
and test some ideas around how it might be improved. These ideas, according to
the paper, included vacuum drying of the activated carbon powder prior to
electrode preparation, in order to remove water in the material, mild heating
of the overall cell to 70 °C during operation, and replacement of the
oxygen-side gas diffusion layer (GDL) with a much thinner GDL fiber sheet.
The benefits, they say, were
enormous, resulting in a proton battery capable of storing almost three times
as much energy per weight as their last one – and "more than double the
highest electrochemical hydrogen storage using an acidic electrolyte previously
reported in the literature." At a density of 882 joules per gram, it
roughly equates to 245 Wh/kg, right up there with good commercial lithium
batteries currently on the market.
More
Cheap proton batteries compete with lithium on energy
density (newatlas.com)
Another weekend and an interesting
weekend for wobbly stock casino bulls. Did the Fed, the ECB and the Bank of Japan
just kill the goose that laid the latest stock casinos golden eggs? More US
banking crisis to come?
I suspect we will rapidly find out as
the northern hemisphere summer turns into autumn and winter. Have a great
weekend everyone.
“We find that whole communities suddenly fix
their minds upon one object, and go mad in its pursuit; that millions of people
become simultaneously impressed with one delusion, and run after it, till their
attention is caught by some new folly more captivating than the first.”
Extraordinary Popular Delusions & the
Madness of Crowds
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