Baltic Dry Index. 1032 +08 Brent Crude 79.49
Spot Gold 1939 US 2 Year Yield 4.88 +0.03
The natural tendency of the state is inflation.
Murray Rothbard.
Yesterday I headlined “US Inflation Day.” That was of course my error in thinking it was already Wednesday, as I wrote in the early hours of Tuesday morning. Inflation Day is today for the US CPI and tomorrow for the US PPI figures.
Unlike, the Pope, Chairman Powell at the Fed and Governor Bailey at the BOE, Graeme makes the occasional error. My apologies. I hope no one is paying Graeme for such errors.
In the stock casinos, more cautious optimism that inflation is over. But is it? Certainly not in food price inflation.
Asia markets
mixed ahead of India and U.S. inflation data
UPDATED TUE, JUL 11 2023 10:46 PM EDT
Asia-Pacific
markets were mixed ahead of key inflation data out of India and the U.S on
Wednesday.
Economists expect the U.S.
inflation rate for June to fall slightly to 5%, down from 5.3% in May, based on
a Reuters poll. The inflation print, along with producer prices data on
Thursday, will give clues to the Federal Reserve’s path for rate hikes.
In Japan, the Nikkei 225 slid
1.16%, while the Topix was down 0.87%. The country saw wholesale inflation slow
to its lowest pace in six months, with the corporate goods price index rising
just 4.1% year on year, official data showed.
South Korea’s Kospi fell 0.15%
lower, while the Kosdaq saw a smaller loss of 0.07% as the country saw its
unemployment rate climb slightly to 2.6% in June.
Hong Kong’s Hang Seng index opened
1% up, while mainland Chinese indexes were all in negative territory. The Shanghai Composite fell
0.2%, while the Shenzhen
Component was down marginally.
Australia’s S&P/ASX 200 gained
0.47%, leading benchmark indexes in the region.
Overnight in the U.S., all
three major indexes advanced higher, with the Dow Jones Industrial Average gaining the most at 0.93%. The tech-focused Nasdaq Composite climbed 0.55% and the S&P 500 gained 0.67%.
Asia markets mixed
ahead of India and U.S. inflation data (cnbc.com)
Nasdaq 100 index
to undergo special rejiggering because a few tech stocks have gotten too big
The rapid rise of a few already-massive tech
stocks this year is causing Nasdaq to make unusual adjustments to its popular growth
index.
The company announced July 7 that
it will do a special rebalance of the Nasdaq 100 Index,
which will take effect before the market opens July 24.
The Nasdaq 100 index comprises 100 of the largest nonfinancial companies that trade on the exchange and is often seen as a proxy for growth stocks. The index has surged about 37% year to date, well above the S&P 500 and the Dow Jones Industrial Average
Nasdaq said a special rebalance can be used to
“address overconcentration in the index by redistributing the weights.”
While the index is already
rebalanced on a quarterly basis, Nasdaq tries to keep the five biggest stocks
below a 40% combined weighting in one rebalance per year designated as the
annual adjustment, according to the firm’s methodology.
The five biggest stocks appear to be over that threshold currently, according
to the holdings of the Invesco QQQ ETF,
which tracks the index.
The QQQ’s holdings show how concentrated the index
has become. The three largest positions — Microsoft, Apple and Nvidia —
account for more than 30% of the fund combined, as Nvidia’s stock price has
nearly tripled this year. The top 10 holdings account for a combined weighting
of nearly 59%.
This is the third special rebalance
on record for the Nasdaq 100. The company said it will announce new weightings
July 14.
More
Nasdaq 100 to undergo rejiggering because few tech stocks now too big (cnbc.com)
On the interest rate front, today it’s Bank of Canada show me day. An increase is widely expected, all the more so with a dock strike in British Columbia likely to be pushing up Canada’s inflation rate.
In China news, another sign of a slowing economy.
China's car sales
shrink 2.9% in June as big-ticket spending falters
July
10, 2023
BEIJING/SHANGHAI
(Reuters) - China's passenger vehicle sales fell in June, data from the China
Passenger Car Association (CPCA) showed on Monday, as a stumbling economic
recovery led to more consumer caution on big-ticket spending.
Car sales in June
totalled 1.91 million units, down 2.9% from last year, CPCA data showed. It was
the first monthly contraction since January. However, sales advanced 2.5% to
9.65 million units in the first half of the year.
Meanwhile,
sales of new energy vehicles (NEVs), including pure battery electric cars and
plug-in hybrids, jumped more than 25% in June, accounting for roughly 35% of
the total car sales. NEV sales surged more than 37% to 3.09 million units in
the first six months.
Both Tesla and
rival BYD made record deliveries of their China-made vehicles in the second
quarter, despite an uncertain recovery for the sector.
Chinese automakers counted more on overseas markets to
sustain their sales growth, with car exports soaring 56% in June.
However,
Tesla's share in China's market of pure electric and plug-in hybrid cars fell
to 8.8% in the second quarter from 10.5% in the first three months, according
to a Reuters calculation based on CPCA numbers.
With domestic
consumer demand weak, the world's largest auto market has been grappling with a
price war triggered by Tesla in January that has since spread to more than 40
brands offering discounts on their vehicles.
While the
price cuts initially boosted sales, the market's recovery has been losing
steam, prompting authorities to roll out more buyer incentives, including
purchase tax breaks for EVs.
Two days after
organising an industry-wide pledge to avoid "abnormal pricing", the
China Association of Automobile Manufacturers (CAAM) retracted on Saturday,
citing antitrust law.
China's car sales shrink 2.9% in June as big-ticket spending
falters (msn.com)
Finally, in commodities news, a gallium panic
is now underway ahead of China’s trade war counter attack.
World's biggest
gallium buyer says clients stockpiling
July
11, 202312:07 PM GMT+1
FRANKFURT, July 11 (Reuters) - China's
planned export controls on gallium have caused frantic stockpiling of
speciality semiconductor wafers made from the metal, according to the world's
largest gallium buyer.
Freiberger Compound
Materials relies almost entirely on Chinese suppliers for its gallium needs to
make wafers that go into mobile phone radio signal amplifiers and optical
electronics.
Consuming an
estimated 10% of global gallium output, the company has found itself at the
centre of turmoil following
China's surprise announcement to control exports of gallium and germanium products
from Aug. 1.
"My clients are
not relaxed about this at all. There's now a burst of orders being placed to
increase inventory levels. The industry is very much on edge," chief
executive Michael Harz told Reuters.
Chinese gallium
companies have driven most rivals elsewhere out of the market by undercutting
them on price over the last decade.
Freiberger, with
annual sales of 70-80 million euros ($77-$88 million) and a 65% market share in
gallium arsenide wafers for smartphone power amplifiers, competes with Japan's
Sumitomo Electric (5802.T) and
a number of smaller Chinese manufacturers.
Red LEDs and red
light sensors are another major use for gallium arsenide.
The group, which
traces its roots to a state-owned electronics factory in the former East
Germany, has several months' worth of gallium in stock because it had long
anticipated some form of trade crisis and has little else it can do to react,
Harz said.
Automakers are also in a dilemma over whether they can continue to rely on a metal which had been seen as a game changer for electric vehicles.
Harz said his
Chinese suppliers were providing authorities with data needed to obtain export
licences.
They have estimated
that deliveries will stop when the export controls take effect on Aug. 1 and
resume about a month later when licence requests have been processed, though no
reliable information is available.
Harz does not
believe that China will disrupt gallium trade flows over the next few years
because that would quickly damage its own electronics industry.
The CEO added he
viewed China's move for now as "sabre rattling", because the world's
leading makers of power amplifiers, which boost radio signals so that
smartphones can communicate with cell towers, are based in the United States.
Freiberger consumes several dozens of tons
of gallium per year, making the raw material its largest single cost.
World's biggest gallium buyer says clients stockpiling | 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.
German inflation
bucks downward trend in June
July 11, 20237:27 AM GMT+1
BERLIN, July 11 (Reuters) - German
inflation rose in June, interrupting a steady decline since the start of the
year.
German consumer
prices, harmonised to compare with other European Union countries, increased by
6.8% on the year in June, the federal statistics office said on Tuesday,
confirming preliminary data.
The year-on-year
rebound in German inflation midway through the second quarter is almost
exclusively due to base effects from last year's fuel discount and a
temporarily reduced rail fare.
In June 2022, in a
bid to counter rising energy prices, the German government cut taxes on fuel
and introduced a public transport ticket allowing travel across the country for
9 euros a month, causing inflation to dip.
Germany's core
inflation rate, which excludes volatile items such as food and energy, stood at
5.8% in June, up from 5.4% in May.
The statistics
office offers a breakdown of the data for June on its
website.
German inflation bucks downward trend in June |
Reuters
Shock
record wage growth amplifies risk of 14th straight Bank of England interest
rate rise
TUESDAY 11 JULY 2023 7:12 AM
Workers’ pay is rising faster than
expected and at among the fastest paces on record in a sign that the Bank of
England will deliver a 14th straight interest rate rise next month, official
figures out this morning reveal.
Pay excluding bonuses rose 7.3 per
cent over the three months to May on an annual basis, the same rate of increase
as the last quarter after an earlier estimate was revised up, according to the
Office for National Statistics (ONS).
The number was above the City’s expectations of
a 7.1 per cent increase and over the Bank of England’s estimate. It also
matched the highest rise the ONS has tracked since it started reporting data in
2001.
Including one-off
bonuses, wages jumped 6.9 per cent over the same period. The City thought the
figure would slow to 6.8 per cent.
Governor Andrew Bailey
and the rest of the nine-strong monetary policy committee (MPC) is concerned
elevated wage settlements will raise businesses’ fixed costs, incentivising
them to keep lifting prices. That could mean inflation – stuck at 8.7 per cent
in May – falls much slower than expected.
“Today’s data confirm
that the labour market is still too hot, as pay growth remains uncomfortably
high,” Yael Selfin, chief economist at KPMG UK, said.
Sky high inflation has
compelled staff to ask their employers’ for pay rises that help shield their
living standards. Workers’ pay increases have been cancelled out for more than
a year and a half now, according to ONS data.
Britain’s labour
market has held up extremely well despite predictions that the country is
headed for its first recession outside of the pandemic since the 2008 financial
crisis. But cracks are emerging.
Unemployment jumped to
four per cent from 3.8 per cent in the three months to May, the ONS said today.
Vacancies, though down
85,000, are still running at more than 1m.
More
Shock record wage growth amplifies risk of 14th
straight rate rise (cityam.com)
Bank of England may need
to keep rates higher for longer, IMF says
July
11, 2023
LONDON
(Reuters) - The Bank of England may need to keep interest rates high for an
extended period if inflation pressures persist, the International Monetary
Fund's directors said on Tuesday.
"A
continuous review of the pace and magnitude of monetary tightening is
warranted," IMF directors said after a review of Britain's economy.
"Should inflationary pressures show signs of further
persistence, the policy rate may have to be raised further and would need to
remain higher for longer to durably lower inflation and keep inflation
expectations anchored."
Bank of England may need to keep rates higher for
longer, IMF says (msn.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
Second
Covid vaccine leads to low response in immunocompromised patients, study shows
July 10, 2023
New data has
indicated that patients with a suppressed or compromised immune system show a
low or imperceivable response after two doses of the same Covid-19 vaccine.
The news comes from one of the largest studies in the world exploring
clinically at-risk patients’ response to infection and vaccination – the OCTAVE
trial.
As part of the trial, nearly 2,700 patients across 20 hospital sites
were infected with either the alpha, delta or omicron strain of the disease and
were subsequently studied up to one year after their first vaccination.
The study’s results showed that 474 patients became ill with Covid-19 a
year after their initial vaccination, with the researching finding just one
case of the alpha strain and 110 and 336 of delta and omicron strains
respectively. The study saw 48 hospital admissions with 15 people also dying
from the disease.
The majority (76%) of infections occurred more than six months after the
second vaccination with most of these also being the first infection.
The lion’s share (90%) of infections were mild; severe cases totalled
9.8% of infections. Patients with renal disease were the cohort most likely to
suffer from a severe reaction – the delta variant was more likely to induce a
more severe reaction than the omicron wave.
The OCTAVE trial was setup during the pandemic and is a
collaboration between the universities of Birmingham, Oxford and Glasgow, with
funding coming from the Medical Research Council. The National Institute for Health
and Care Research (NIHR) Clinical Research Network also supported the
project.
NIHR’s clinical lead for Covid-19 vaccination programme, Professor
Andrew Ustianowski, said: “COVID-19 is no longer the major problem that it was,
largely as a result of the UK's world-leading vaccination research programme
and roll-out. Vaccines however do not always provide equal protection in all
our individuals, especially those with poor immune systems.
“The OCTAVE study has been pivotal in informing us on how best we
should protect subgroups of our populations most at risk, so that we do not
leave anyone behind in our fight to better protect all from the ongoing threat
of coronavirus.”
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.
Australia fuels Japan’s big bet on ammonia
July 10, 2023
Tokyo | Akihiko Numazawa and his colleagues at industrial conglomerate IHI
overseeing one of Japan’s most ambitious clean energy projects have a tough
sell for investors.
They have successfully trialled green ammonia shipped from Australia as
a fuel to power prototype gas turbines and say the company is on track to
commercialise the carbon-neutral gas by 2026.
If they can pull it off, the fuel offers a viable alternative to
hydrogen and other forms of green energy, which are badly needed by Japanese
companies to reduce their carbon footprints.
“Ammonia is easy to handle. We have the infrastructure to handle ammonia
now. We just modify it, scale it up and make it safe. That is the quickest way
to get to carbon neutral. It is the best way to do that compared to hydrogen
and other sources,” says Mr Numazawa, general manager at IHI’s business
development headquarters.
Australia is playing a key role in the company’s cutting-edge energy push taking place at a factory in Yokohama, a port city south of Tokyo.
IHI signed a
deal with Woodside Energy and Japan’s Marubeni Corp in 2021 to produce and
export green ammonia made from hydropower in Tasmania. IHI says it takes about
200,000 tonnes of ammonia a year from Tasmania’s Bell Bay where it is produced.
But that will increase significantly if the project becomes commercially viable
by 2026 as planned.
However, the push to use ammonia to co-fire coal power plants is a hard
sell in Japan, and investors and environmentalists have concerns. IHI and the
Japanese government reject suggestions that ammonia releases fine particles
that could be a health hazard.
Environmental groups also say that combining the use of ammonia with
traditional fossil fuels in power stations encourages the ongoing use of carbon
emitting energy sources.
IHI dismisses these concerns, saying the goal is to have both new and
modified plants fully powered by green ammonia. It concedes there will be a
transition phase though, particularly if its technology is shared with
developing countries where coal will still be used.
IHI is a 170-year-old conglomerate best known for manufacturing aircraft
engines. Like many companies in Japan, which wants to be carbon neutral by
2050, it is in a race against time to lower emissions in a country which has
few natural resources of its own.
It wants clean energy to be a main pillar of its future business where
it will produce gas turbines that run on ammonia combustion technology, and for
storage.
Almost 10 years ago, it made a bold bet on ammonia and is investing
billions of dollars to establish the world’s first turbines fired entirely from
green ammonia – a compound combining hydrogen and nitrogen.
More
Australia-Japan trade: Tasmanian ammonia fuels a big
bet on green energy (afr.com)
By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
John Maynard Keynes.
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