Baltic Dry Index. 1044 -24 Brent Crude 75.85
Spot Gold 1925 US 2 Year Yield 4.94 +0.07 Mon.
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.
In the stock casinos, more wobble. Who knew starting a high-tech semiconductor trade war on China might backfire?
But then who knew starting a NATO proxy war on Russia in the Ukraine would jeopardise much of the world’s vital exports of wheat, barley and sunflower oil, among other commodities.
Not to worry though, we have team Biden,
Trudeau, Sunak, Macron, Scholtz and Von der Leyen on the case.
Asia markets fall
as investors digest private surveys for services activity in Japan, China
UPDATED TUE, JUL 4 2023 10:30 PM
EDT
Asia-Pacific
markets largely fell as investors digest the release of private surveys on
services activity from the region.
Services activity in Japan and
China remained in expansion territory for the month while the pace of growth
softened.
In Japan, the Nikkei 225 fell
0.16% and the Topix was fractionally higher. South Korea’s Kospi meanwhile lost
0.32% and the Kosdaq rose 0.44%.
Greater China markets were lower,
with the Shanghai Composite and
the Shenzhen Component fractionally
lower. Hong Kong’s Hang
Seng index fell 0.24% while the Hang Seng Tech index gained
0.22%.
Australia’s S&P/ASX 200 fell
0.15% after the Reserve Bank of Australia held
rates at 4.1% on Tuesday.
U.S. markets were closed for the
Independence Day holiday, but U.S. futures were all
lower ahead of Wednesday’s session. Traders will be watching
closely for minutes from the Federal Reserve’s June meeting, after Chairman
Jerome Powell said last month to expect more
rate hikes ahead.
Futures for the Dow Jones Industrial Average were
down 0.11, while S&P
500 and Nasdaq
Composite futures declined 0.9% and 0.17% respectively.
Stock
futures are little changed Tuesday night in a holiday-shortened week: Live
updates
UPDATED TUE, JUL 4 2023 7:02 PM
EDT
U.S. stock futures were little changed on
Tuesday night as Wall Street looks to resume a holiday-shortened week.
Dow Jones Industrial Average
futures fell by 33 points, or 0.1%. S&P 500 and Nasdaq 100 futures dipped
0.07% and 0.14%, respectively.
Markets were closed Tuesday for
the Fourth of July holiday. They closed early Monday.
Investors are coming off a
positive session Monday, which kicked off the start of a new month, quarter and
half-year for traders. Stocks rose slightly during the shortened trading day,
with the Dow Jones Industrial Average adding
10.87 points, or 0.03%. The S&P
500 rose 0.12%, while the Nasdaq Composite closed
0.21% higher.
Those gains build on a strong
start to the year. Last week, the Nasdaq Composite closed out its best first
half of the year since 1983, while the S&P 500 notched its best first-half
advance since 2019, as a surge in interest in artificial intelligence buoyed
investor optimism in stocks. The Dow Jones Industrial Average was the laggard,
rising just 3.8%. Some market participants expect that could mean continued
upside in the second half.
“We’ve been bullish. We still
think there’s a rally,” Carson Group’s Ryan Detrick told CNBC’s “Closing Bell”
on Monday, adding, “Maybe we’re due for a pullback sometime August, September,
October — perfectly normal — but we’d be a buyer of any weakness.”
On the economic front, traders
are watching for May factory orders data out Wednesday after the market open.
Economists polled by Dow Jones are anticipating a rise of 0.6%, which would be
greater than the 0.4% increase the previous month.
Investors are also expecting
June’s Federal Reserve meeting minutes at 2 p.m. ET, which could shed some
light on the path for interest rate hikes going forward.
Elsewhere, New York Fed President
John Williams is expected to speak at 4 p.m. ET at the 2023 Annual Meeting of
the Central Bank Research Association (CEBRA) in New York City.
Stock
market today: Live updates (cnbc.com)
In real world news, the USA and Europe were stunned by China’s retaliation in the widening high tech semiconductor trade war on China. Who knew that China is the dominant producer and exporter of germanium and gallium. Well no one in Washington or Brussels.
China move to curb
chipmaking material exports escalates supply worries
July 4, 20236:33 AM GMT+1
BEIJING/SHANGHAI,
July 4 (Reuters) - A move by China to restrict exports of some metals widely
used in semiconductors, electric vehicles and high-tech industries has ramped
up a trade war with the United States and could potentially cause more
disruption to global supply chains.
Companies are
rushing to react to the abrupt news announced on Monday, with one U.S.
semiconductor wafer manufacturer quickly saying it was applying for export permits
to assure investors. A China-based germanium producer told Reuters enquiries
from abroad and prices had surged overnight.
China's commerce
ministry said it would from Aug. 1 control exports of
eight gallium products and six germanium products to protect its national
security and interests, a move analysts saw as a retaliatory action in response
to escalating efforts by Washington to curb China's technological advances.
"China has
hit the American trade restrictions where it hurts," said Peter Arkell,
chairman of the Global Mining Association of China.
"Gallium and
germanium are just a couple of the minor metals that are so important for the
range of tech products and China is the dominant producer of most of these
metals. It is a fantasy to suggest that another country can replace China in
the short or even medium term," Arkell said.
Gallium,
germanium and other minor metals are widely used in wide-bandgap semiconductors
in communication equipment, solar panels and electric vehicles.
China is the
dominant producer of gallium and germanium.
In 2022, top importers of China's gallium products were Japan, Germany and the
Netherlands, news website Caixin said, citing customs data. Top importers of
germanium products were Japan, France, Germany and the United States, it said.
EXPORT PERMITS, DISRUPTION WORRIES
U.S.
semiconductor wafer maker AXT Inc (AXTI.O), which
has manufacturing facilities in China, said on Monday its Chinese subsidiary
Tongmei would immediately apply for permits to keep exporting gallium and
germanium substrate products from China.
"We are
actively pursuing the necessary permits and are working to minimize any
potential disruption to our customers," said AXT Chief Executive Officer
Morris Young.
A manager at a
China-based germanium producer said his company had received several queries
from buyers in Europe, Japan and the United States hoping to stockpile the
product ahead of the export controls taking effect. The buyers were
anticipating it could take as long as two months to obtain license permits for
exports.
"Offer
prices in the domestic market and the export market have increased to 10,000
yuan ($1,380) per kg and over $1,500 per kg, respectively," he said.
While the
industry had expected to see some export controls for these metals, the timing
had caught it by surprise, he said.
"Some
downstream users have locked in long-terms sales contracts for the coming two
to three years and they are vexed about a possible jump in raw material prices,
as it raises their production costs and may cause them losses," he said,
declining to be named citing the sensitivity of the matter.
Shares in some
metal producers rose on Tuesday, with Yunnan Lincang Xinyuan Germanium Industry
Co (002428.SZ) jumping
10% by the daily upper limit, and Yunnan Chihong Zinc & Germanium Co (600497.SS) climbing
7%.
----Beijing last
made a retaliatory move against U.S. pressure on chips in May, when it banned some
domestic sectors from purchasing products from U.S. memory chipmaker
Micron (MU.O).
Jefferies
analysts said they saw the export controls as China's second and much bigger
countermeasure in the U.S.-China tech war after the Micron ban, and also as a
likely response to a potential U.S. tightening of an AI chip ban.
"The risk of
a rapid escalation of U.S.-China tension is not small," they said.
"If this
action doesn't change the U.S.-China dynamics, more rare earth export controls
should be expected."
China move to curb chipmaking material exports
escalates supply worries | Reuters
What are
Gallium and Germanium? China curbs exports of metals critical to chips and
other tech
---- Germanium and gallium are the two metals in the spotlight.
But what and how
crucial are they?
---- What are germanium and gallium?
Germanium and
gallium are metals that are not found naturally. They are instead formed,
usually as a by-product of the refineries of other metals.
Germanium, a
silvery-white metal, is formed as by-product of zinc production. Fellow soft,
silvery metal Gallium, meanwhile, is a by-product of processing bauxite and
zinc ores.
What are germanium and gallium used for?
Germanium has
several uses, including in solar products and fiber optics. The metal is
transparent to infrared radiation and can be employed in military applications,
such as night-vision goggles.
The solar panels
that contain germanium have applications in space.
Gallium is used for
manufacturing the gallium arsenide chemical compound, which can make radio
frequency chips for mobile phones and satellite communication, for example.
That compound is also a key material in semiconductors.
Which country produces the metals?
China produces 60%
of the world’s germanium and 80% of gallium, according to the Critical Raw
Materials Alliance, an industry body.
Gallium arsenide is
complex to produce, and only a few companies in the world can do so. One is
located in Europe, while the others are in Japan and China, the CRM Alliance
says.
How big of a deal are
China’s curbs?
“A warning shot,
not a death blow,” Eurasia Group said in a note on Monday.
“But these latest
measures are more limited in scope, and while the new rules require Chinese
exporters to first obtain a license, no language automatically bars export
to specific countries or end-users.”
The U.S. and Europe
don’t import huge amounts of these materials. The U.S. received $5 million of
gallium metal and $220 million of gallium arsenide in 2022, according to
government figures.
Germanium intake
was higher, with the country taking $60 million of the metal, while the EU
imported $130 million of Germanium in 2022, according to data from S&P
Global Market Intelligence.
Other countries are
also able to produce these metals. Belgium, Canada, Germany, Japan, and Ukraine
can manufacture germanium. Japan, South Korea, Ukraine, Russia and Germany
meanwhile produce gallium.
There are also
potential substitutes for these metals.
China’s scale allowed
it to produce them at a lower cost than elsewhere, but Eurasia Group notes that
Beijing’s moves will have a “limited impact on global supply given the targeted
scope.”
“It is a shot across
the bow intended to remind countries including the United States, Japan, and
the Netherlands that China has retaliatory options and to thereby deter them
from imposing further restrictions on Chinese access to high-end chips and
tools,” Eurasia Group said.
What are Gallium and Germanium? China curbs exports of metals for tech (cnbc.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.
Run for your lives - Fed
economists warn of biggest economic crash in 50 years
July 4, 2023
Investing.com
- The low interest rate phase in the 2010s and countless monetary stimulus
programmes led to the formation of all kinds of bubbles - that is well known.
However, no one wants to know that these bubbles will burst.
Why should
they? After all, the central banks are propagating a soft landing and
suggesting that they can cope with any situation, no matter how difficult.
There is no talk of a banking or even a financial crisis; instead, the economy
is reported to be robust and there is no reason to worry.
Of course,
there are also voices that claim the opposite and warn of an impending
collapse. But you don't like to listen to these doomsayers, especially not if
you are betting on the next all-time high. For one's own salvation, it is advantageous
to follow the official, politically correct accounts.
But when two
Fed economists like Ander Perez-Orive and Yannick Timmer write a paper in which
they talk about the biggest wave of bankruptcies since the tightening cycles of
the 1970s, then at the latest one should listen very carefully to what is being
said.
The study
prepared by the two economists says that current monetary policy is expected to
lead to a "significant slowdown in investment and employment". The
data analysed show that "when the share of troubled firms in an economy is
higher, tightening shocks have a greater impact on investment and
employment".
At 37 per
cent, the number of US companies on the verge of insolvency is the highest it
has been in 50 years.
So this Fed
analysis concludes that the current monetary policy measures alone are enough
to cause the biggest recession since the 1970s.
This already
dicey situation is exacerbated by the fact that the economy must prepare for
new supply bottlenecks in the international trade in goods. This will, of
course, be accompanied by price rises that will exacerbate inflation and force
central banks to raise interest rates even further.
The reason is
that the US government and its allies are convinced that they can very
effectively slow down China's growth by imposing export bans on its latest chip
technology. However, the fact that China is in the driver's seat, because these
chips would not exist without the raw materials from China, does not seem to
have been thought through thoroughly enough.
China's
reaction was not long in coming and hits not only the Achilles heel of the USA,
but of the entire Western world.
From 1 August,
China will restrict the export of rare earths such as gallium and germanium.
Licences are required to export these raw materials, which are issued by the
Ministry of Commerce. Those who do not have a licence are not allowed to take
these basic materials (NYSE:XLB), which are urgently needed in the world, out
of the country.
More
Run for your lives - Fed economists warn of biggest
economic crash in 50 years (msn.com)
US manufacturing
slump deepens, factory gate price pressures subdued
July 4, 2023 2:22 AM GMT+1
WASHINGTON, July 3 (Reuters) - U.S.
manufacturing slumped further in June, reaching levels last seen when the
nation was reeling from the initial wave of the COVID-19 pandemic, but price
pressures at the factory gate continued to deflate, a silver lining for the
economy.
Shrinking activity left factories
resorting to layoffs, the survey from the Institute for Supply Management (ISM)
showed on Monday. ISM Manufacturing Business Survey Committee Chair Timothy
Fiore described the practise as happening "to a greater extent than in
prior months."
At face value, the ISM survey is
consistent with an economy that is in recession. But the so-called hard data
such as nonfarm
payrolls, first-time applications for unemployment
benefits and housing
starts, suggest the economy continues to grind along.
Risks of a downturn have, however,
increased as businesses and consumers deal with the 500 basis points worth of
interest rate increases from the Federal Reserve since March 2022, when the
U.S. central bank embarked on its fastest monetary policy tightening campaign
in more than 40 years.
"This provides further reason to
suspect that a recession is on the horizon," said Andrew Hunter, deputy
chief U.S. economist at Capital Economics. "The ISM survey adds to the
evidence that core goods prices will start falling again soon."
The ISM's manufacturing PMI dropped to
46.0 last month, the lowest reading since May 2020, from 46.9 in May. That
marked the eighth straight month that the PMI stayed below the 50 threshold,
which indicates contraction in manufacturing, the longest such stretch since
the Great Recession.
Economists polled by Reuters had
forecast the index edging up to 47. Manufacturing, which accounts for 11.1% of
the economy, contracted at a 5.3% annualized rate in the first quarter,
government data showed last week.
Some pockets of strength remain,
however, amid solid demand for goods like transportation equipment.
The ISM survey showed that transportation
equipment was the only one of the six biggest industries reporting growth last
month. But even so, makers of transportation equipment expressed worries that
second-quarter sales could decrease and boost inventory levels. They projected
total end-of-year sales "to be about where we were last year."
More
US manufacturing slump deepens, factory gate price
pressures subdued | Reuters
China's services
activity softens as recovery falters - Caixin PMI
July 5, 2023 3:19 AM GMT+1
BEIJING, July 5 (Reuters) - China's
services activity expanded at the slowest pace in five months in June, a
private-sector survey showed on Wednesday, as weakening demand weighed on
post-pandemic recovery momentum.
The Caixin/S&P
Global services purchasing managers' index (PMI) eased to 53.9 in June from
57.1 in May, the lowest reading since January when COVID-19 swept through the
country after authorities ditched anti-virus curbs. The 50-point mark separates
expansion from contraction in activity.
The data broadly tracked the
government's official PMI released last week and
showed a slowdown in service sector activity as demand for in-person services
weakened.
After growing at a
faster-than-expected pace in the first quarter, the world's second-biggest
economy lost steam in April-June amid steepening deflation, high youth unemployment
and sluggish foreign demand.
More
China's
services activity softens as recovery falters - Caixin PMI | Reuters
Covid-19 Corner
This
section will continue until it becomes unneeded.
Long Covid not caused
by COVID-19 immune inflammatory response, new research finds
4 July 2023
Long Covid, which affects nearly two-million
people in the UK (1), is not caused by an immune inflammatory reaction to
COVID-19, University of Bristol-led research finds. Emerging data demonstrates
that immune activation may persist for months after COVID-19.
In this
new study, published in eLife today [4 July], researchers
wanted to find out whether persistent immune activation and ongoing
inflammation response could be the underlying cause of long Covid.
To
investigate this, the Bristol team collected and analysed immune responses in
blood samples from 63 patients hospitalised with mild, moderate or severe
COVID-19 at the start of the pandemic and before vaccines were available. The
team then tested patients’ immune responses at three months and again at eight
and 12 months post hospital admission. Of these patients, 79% (82%, 75%, and
86% of mild, moderate, and severe patients, respectively) reported at least one
ongoing symptom with breathlessness and excessive fatigue being the most
common.
Dr Laura Rivino,
Senior Lecturer in Bristol's School
of Cellular and Molecular Medicine and
the study’s lead author, explained: "Long Covid occurs in
one out of ten COVID-19 cases, but we still
don’t understand what causes it. Several theories proposed include
whether it might be triggered by an inflammatory immune response towards
the virus that is still persisting in our body, sending our immune system into
overdrive or the reactivation of latent viruses such as human cytomegalovirus
(CMV) and Epstein Barr virus (EBV)."
The team
found patients' immune responses at three months with severe symptoms displayed
significant dysfunction in their T-cell profiles indicating that inflammation
may persist for months even after they have recovered from the virus.
Reassuringly, results showed that even in severe cases inflammation in these
patients resolved in time. At 12 months, both the immune profiles and
inflammatory levels of patients with severe disease were similar to those
of mild and moderate patients.
Patients
with severe COVID-19 were found to display a higher number of long Covid
symptoms compared to mild and moderate patients. However, further analysis
by the team revealed no direct association between long Covid symptoms and
immune inflammatory responses, for the markers that were measured, in any of
the patients after adjusting for age, sex and disease severity.
More
July: Immune response to COVID-19 | News and features
| University of Bristol
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.
Explainer: How Japan
plans to release Fukushima water into the ocean
July 4, 20233:21 AM GMT+1
TOKYO, July 4
(Reuters) - Japan is set to begin pumping out more than a million tonnes of
treated water from the destroyed Fukushima Daiichi nuclear power plant this
summer, a process that will take decades to complete.
The water was
distilled after being contaminated from contact with fuel rods at the reactor,
destroyed in a 2011 earthquake. Tanks on the site now hold about 1.3 million
tonnes of radioactive water - enough to fill 500 Olympic-sized swimming pools.
Here is how Tokyo Electric Power Company (9501.T) (Tepco)
plans to deal with the water:
WATER RELEASE
Tepco has been
filtering the contaminated water to remove isotopes, leaving only tritium, a
radioactive isotope of hydrogen that is hard to separate from water. Tepco will
dilute the water until tritium levels fall below regulatory limits before
pumping it into the ocean from the coastal site.
Water containing
tritium is routinely released from nuclear plants around the world, and regulatory
authorities support dealing with the Fukushima water in this way.
Tritium is
considered to be relatively harmless because it does not emit enough energy to
penetrate human skin. But when ingested it can raise cancer risks, a Scientific
American article said in 2014.
The water
disposal will take decades to complete, with a rolling filtering and dilution
process, alongside the planned decommissioning of the plant.
REACTION TO OCEAN RELEASE
Tepco has been
engaging with fishing communities and other stakeholders and is promoting
agriculture, fishery and forest products in stores and restaurants to reduce
any reputational harm to produce from the area.
Fishing unions in
Fukushima have urged the government for years not to release the water, arguing
it would undo work to restore the damaged reputation of their fisheries.
Neighbouring
countries have also expressed concern. China has been the most vocal, calling
Japan's plan irresponsible, unpopular and unilateral.
Explainer:
How Japan plans to release Fukushima water into the ocean | Reuters
In any
great organization it is far, far safer to be wrong with the majority than to
be right alone.
John Kenneth
Galbraith.
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