Window Tax Abolished! Fed & ECB Week.

Baltic Dry Index. 978 +01              Brent Crude 80.90

Spot Gold 1961                  US 2 Year Yield 4.82 +0.02   

It was on July 24th, 1851, that the hated Window Tax was finally abolished. Introduced under King William III, it was not intended to hit poor people, and exempted cottages, but was designed to be in proportion to the wealth of the taxpayer. An income tax was thought too intrusive, because the government had no business knowing how much people earned.

The Window Tax — Adam Smith Institute

In the stock casinos, nervousness.  The Fed and the ECB each meet this week to decide on their key interest rates. A quarter point interest rate increase is expected from both.

While another quarter percent increase shouldn’t be a casino killer, it will likely be a killer for debt indebted zombie corporations, some US regional banks, and add to the slowdown in real estate sales on both sides of the Atlantic.

Brits have to wait until August 3^rd, to learn what the BOE will do with their key interest rate.

 

Asia markets mixed as investors digest private surveys on economic activity

UPDATED MON, JUL 24 2023 12:32 AM EDT

Asia-Pacific markets were mixed on Monday as investors digested key economic data from across the region.

In Japan, the Nikkei 225 gained 1.29% to start the week, while the Topix was also 0.83% up. Japan’s business activity expanded for a seventh straight month, with the purchasing managers index from the au Jibun bank unchanged from June’s figure of 52.1.

In Australia, the S&P/ASX 200 rose marginally, after the country saw flash estimates for its composite PMI in July fall into contraction territory for the first time since March.

South Korea’s Kospi was up 0.6%, while the Kosdaq saw a 0.4% loss after reaching its highest level since April 2022 last week.

Hong Kong’s Hang Seng index tumbled 1.4% to start the week, while mainland Chinese markets were more mixed. The Shanghai Composite was up marginally while the Shenzhen Component was 0.33% lower.

U.S. markets were mixed last Friday, but the Dow Jones Industrial Average climbed 0.01% to notch its tenth straight day of gains, a feat not seen for the index since August 2017. The S&P 500 added 0.03%,while the Nasdaq Composite fell 0.22%.

Asia markets mixed as investors digest private surveys on economic activity (cnbc.com)

S&P 500 futures are flat ahead of a busy week of earnings, Fed meeting: Live updates

UPDATED SUN, JUL 23 2023 7:35 PM EDT

S&P 500 futures were little changed Sunday evening as investors awaited a batch of key earnings reports and a major policy decision from the Federal Reserve.

Futures tied to the broad market index ticked lower by 0.07%. Dow Jones Industrial Average futures were lower by 37 points. Nasdaq 100 futures rose 0.03%.

On Friday the blue-chip Dow eked out a 2.51-point gain, finishing higher for the 10th day in a row and marking its longest rally since 2017. The S&P 500 finished the week up by 0.7% at 4,536.34, while the Nasdaq Composite fell 0.6% in the same period to 14,032.81.

“Investor sentiment appears to be turning slightly bearish, so it will not be surprising for us to see the market, trending flat or lower as investors consider selling some of their investments and pocketing some of the nice gains they have achieved this year,” said Noah Hamman, CEO of AdvisorShares.

Fundstrat’s Tom Lee agreed that profit-taking will be “part of the investor mindset,” particularly for those who enjoying “stupendous” year-to-date returns from tech and FAANG stocks.

“That doesn’t mean that when they take profits, they have to necessarily exit the market,” he told CNBC’s Closing Bell: Overtime on Friday. “If the Fed surprises us in a way because it’s more of a dovish pause, I think investors are going to look for ways to find stocks that rise on easing financial conditions,” he said. “They may not come back to the FAANG. They might stick with tech, but they might broaden out to industrials and financials. So yes, profit-taking, but it doesn’t mean the market has to go down.”

Investors anticipate the Fed will increase rates by a quarter percentage point at the conclusion of its meeting on Wednesday and will be listening to comments by Chair Jerome Powell to get a sense of the central bank’s position on what happens next as it tries to navigate a soft landing for the economy.

They’re also watching for the personal consumption expenditures index, the Fed’s preferred inflation gauge, which is due at the end of the week.

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S&P 500 futures are flat ahead of a busy week of earnings, Fed meeting: Live updates (cnbc.com)

China developer Country Garden shares extend losses on debt worries; others fall

July 24, 2023 3:42 AM GMT+1

SHANGHAI/SINGAPORE, July 24 (Reuters) - Shares and bonds in Chinese property developer Country Garden (2007.HK) and its property service arm Country Garden Services Holdings (6098.HK) tumbled on Monday, extending losses from the previous week on debt concerns.

 

More liquidity troubles surfaced in China's property sector last week, sending down shares and bonds of the country's biggest developers.

Country Garden Services Holdings shares slumped more than 10% on Monday, while Country Garden fell more than 5%, with both down to their lowest level since last November.

Two onshore-traded bonds of Country Garden , plunged roughly 20% each, and some of its offshore-listed bonds also declined.

The property firm's move last week to refinance part of a 2019 loan facility failed to assure investors of its ability to repay debt due in coming months.

 

The Hang Seng Mainland Properties Index (.HSMPI) declined more than 3%, while the CSI 300 Real Estate Index (.CSI000952) dropped roughly 1.5%, even after China's cabinet approved guidelines on transforming underdeveloped areas in mega-cities that analysts said would bolster developers.

 

The property sector, which accounts for about 25% of China's gross domestic product, is on a downward trend. Home sales are slumping, and the government is moving to rein in unsustainable borrowing built up during a decade-long building boom.

Shares in other developers, including Longfor Group (0960.HK), China Overseas Land & Investment (0688.HK) and Sunac China Holdings (1918.HK), also slumped on Monday.

China developer Country Garden shares extend losses on debt worries; others fall | Reuters

In other news, Spain gets a hung Parliament, if only the UK could hang its Parliament.

Russia offers replacement grain to Africa.

An oil price rebound ahead?  If it happens, what happens to global inflation, or will it trigger the long expected global recession?

 

Spain faces political uncertainty after right fails to win predicted majority

By Charlie Devereux and Belén Carreño  July 24, 20235:01 AM GMT+1

MADRID, July 24 (Reuters) - Spaniards were greeted by political gridlock on Monday after the right failed to clinch a predicted decisive victory and no clear winner emerged in the country's general election.

The results from Sunday's vote left neither the left nor right bloc with an easy path to form a government. A Catalan leader on the run from Spanish justice became an unlikely potential kingmaker, said Ignacio Jurado, a professor in political science at the Carlos III University in Madrid.

 

The centre-right People's Party (PP) and the far-right Vox won a combined 169 seats in parliament, while the ruling Socialists (PSOE) and far-left Sumar won 153, well short of the 176 seats needed for a majority.

After winning the most seats, the People's Party (PP) will be given the first stab at trying to cobble together enough votes in parliament to win a prime-ministerial investiture vote. But its alliance with the far-right Vox will make it difficult to gain support from any other faction.

Prime Minister Pedro Sanchez' Socialists have more options but face potentially unpalatable demands from Catalan separatist parties. Those could include insistence on an independence referendum, triggering the kind of political chaos seen in 2017 when Catalonia last tried to break from Spain.

Sanchez could win over left-wing separatist party Esquerra Republicana de Catalunya (ERC), as he did to form a minority government in 2019. But he will likely also need the backing of the more hardline Junts, which has not supported Sanchez in the past four years.

Junts has not conveyed a clear position. Its candidate for Congress, Miriam Nogueras, said any backing would be in return for a fresh independence referendum for Catalonia. The Socialists, which oppose independence and any vote on the issue, may have a hard time accepting such a demand.

Carles Puigdemont, one of the party's top leaders, said Junts would back neither Sanchez nor Feijoo. Puigdemont is living in self-imposed exile in Belgium and is wanted by Spanish authorities for leading a failed independence bid in 2017.

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Spain faces political uncertainty after right fails to win predicted majority | Reuters

Russia's Putin: Black Sea grain deal became meaningless

July 24, 202312:13 AM GMT+1

July 24 (Reuters) - Russia withdrew from the Black Sea grain deal that ensured the safe export of Ukrainian grains because the agreement lost its meaning, President Vladimir Putin wrote in an article published early on Monday.

"The continuation of the 'grain deal' - which did not justify its humanitarian purpose - has lost its meaning," Putin said, according to the article on the Kremlin's website.

Saying that Russia's conditions for the extension had been ignored, Moscow last week quit the deal which had allowed Ukraine a year ago to export grain from its Black Sea ports, despite the war, to alleviate a global food crisis.

 

The key demands Putin presented last week for Moscow to return to the deal, however, did not directly refer to humanitarian purposes.

 

After quitting the deal, Russia has been pounding Ukrainian food-exporting ports nearly on a daily basis. An attack on Sunday on the southern port of Odesa killed one person and injured scores more.

 

Writing ahead of the second Russia-Africa summit that will take place in St. Petersburg on Thursday and Friday, Putin said that Russia expects a record harvest this year.

"I want to assure that our country is able to replace Ukrainian grain both commercially and free of charge, especially since we again expect a record harvest this year," Putin said.

Russia and the West have been increasingly vying for influence in Africa. Although Moscow has so far invested very little there, according to data from the United Nations, Russia has been on a diplomatic push to win the continent's support.

During a U.N. vote in March 2022 to condemn Russia's invasion of Ukraine, 28 African nations voted in favour of the resolution, but 25 either voted to abstain or did not vote at all.

"Russia will continue to vigorously work on organising the supply of grain, food, fertilizers and more to Africa: we highly value and continue to dynamically develop the entire range of economic ties with Africa," Putin wrote.

Russia's Putin: Black Sea grain deal became meaningless | Reuters

Oil markets will face ‘serious problems’ as demand from China and India ramps up, IEF secretary general says

PUBLISHED SAT, JUL 22 2023 4:04 AM EDT UPDATED SAT, JUL 22 2023 5:24 AM EDT

Oil prices are set to rise in the second half of the year as supply struggles to meet demand, according to the Secretary General of the International Energy Forum. 

Oil demand bounced back to pre-Covid levels quickly, “but supply is having a tougher time in catching up,” said Joseph McMonigle, secretary general of the International Energy Forum, adding that the only factor moderating prices right now is the fear of a looming recession. 

“So, for the second half of this year, we’re going to have serious problems with supply keeping up, and as a result, you’re going to see prices respond to that,” McMonigle told CNBC on the sidelines of a meeting of energy ministers from the group of the 20 leading industrial economies (G20) in Goa, India, on Saturday. 

McMonigle attributes the push in oil prices to increasing demand from China — the world’s largest importer of crude oil — and India. 

“India and China combined will make up 2 million barrels a day of demand pick-up in the second half of this year,” the Secretary General said. 

Asked if oil prices could once again spike to $100 a barrel, he noted that prices are already at $80 per barrel and could potentially go higher from here. 

“We’re going to see much more steep decreases in inventory, which will be a signal to the market that demand is definitely picking up. So you’re going to see prices respond to that,” McMonigle said. 

However, McMonigle is confident that the Organization of the Petroleum Exporting Countries and its allies — collectively known as OPEC+ — will take action and increase supply, if the world eventually succumbs to a “big supply-demand imbalance.”

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Oil markets to face ‘serious problems’ as demand rises: IEF (cnbc.com)

Finally, a subject we’ve touched on before and hope to never actually happen. But ZIRP and in some parts of Europe, NIRP happened, so it’s best to treat this as all too likely to happen in the USA the next time another banking crisis hits.

Hugh Hendry Warns of Rising Probability of US Banks Restricting Cash Withdrawals.

23/07/2023

Hugh Hendry, a macro guru and hedge fund manager, recently shared his views on the U.S. banking system on Stansberry Research's ""The Daniela Cambone Show."" Hendry believes that the Federal Reserve's monetary policy has increased the probability that banking customers could one day face restrictions on the amount of cash they can withdraw. He also believes that the country's banking industry will likely witness a further deposit flight since customers can now easily pull out their funds with the press of a button. Hendry attributes this to the Fed's interest rate hikes, which have made it attractive for depositors to take their money out of banks and invest it in money market funds.

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High Risk List Details - MSN Money

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.

UPS Contract Talks Go Down to the Wire as a Possible Strike Looms

July 22, 2023

Barely a week before the contract for more than 325,000 United Parcel Service workers expires, union and company negotiators have yet to reach an agreement to avert a strike that could knock the American economy off stride.

UPS and the union, the International Brotherhood of Teamsters, have resolved a variety of thorny issues, including heat safety and forced overtime. But they remain stalemated on pay for part-time workers, who account for more than half the union’s workers at UPS.

A strike, which could come as soon as Aug. 1, could have significant consequences for the company, the e-commerce industry and the supply chain.

UPS handles about one-quarter of the tens of millions of packages that are shipped daily in the United States, according to the Pitney Bowes Parcel Shipping Index. Experts have said competitors lack the scale to seamlessly replace that lost capacity.

 

The Teamsters have cited the risks its members took to help generate the company’s strong pandemic-era performance as a reason that they deserve large raises. UPS’s adjusted net income rose more than 70 percent between 2019 and last year, to over $11 billion.

The contract talks broke down on July 5 in vituperation. The two sides are to resume negotiations in the coming days, but the window for an agreement before the current five-year contract expires is tight.

In a Facebook post this month, the union said the company’s latest offer would have “left behind” many part-timers, whose jobs include sorting packages and loading trucks. The post said part-timers earned “near-minimum wage in many parts of the country.”

UPS, which says it relies heavily on part-timers to navigate bursts of activity over the course of a day and to ramp up its work force during busier months, said it had proposed significant wage increases before the talks broke down. According to the company, part-timers currently earn about $20 an hour on average after 30 days as well as paid time off, health care and pension benefits. The company noted that many part-timers graduated to jobs as full-time drivers, which pay $42 an hour on average after four years.

The union has gone out of its way to highlight the challenges facing part-time workers. In television interviews and at rallies, the Teamsters president, Sean O’Brien, has emphasized what the union calls “part-time poverty” jobs. 

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UPS Contract Talks Go Down to the Wire as a Possible Strike Looms – DNyuz

Exclusive: India's rice-export curbs put contracts for 2 million tons at risk, dealers say

By Rajendra Jadhav and Mayank Bhardwaj  July 21, 20232:21 PM GMT+1

MUMBAI, July 21 (Reuters) - India's decision to ban non-basmati white rice exports will spur traders to cancel contracts to sell around 2 million metric tons of the grain, worth $1 billion, on the world market, dealers said on Friday.

India, which accounts for 40% of world rice exports, on Thursday ordered a halt to its largest rice export category to calm domestic prices, which climbed to multi-year highs in recent weeks as erratic weather threatens production.

Anticipating that the government would impose restrictions on rice exports, traders have obtained letters of credit (LCs), or payment guarantees, over the past few days, said a Mumbai-based dealer with a global trade house.

"But the trade wasn't expecting the government to impose restrictions so soon. It was expecting them to come into effect in August or September. As a result, these traders have no choice but to use the force majeure clause to cancel the contract," he said.

Force majeure refers to unexpected external circumstances that prevent a party to a contract from meeting their obligations.

Four dealers confirmed that export contracts of around 2 million metric tons of rice, worth $1 billion, are at the risk of being cancelled.

On Thursday, the government said the ban would be effective from July 20, and only vessels currently loading would be allowed to export, not future shipments backed by LCs.

"Traders typically sign contracts in advance, so the contracts signed for the next few months cannot be executed now," Nitin Gupta, senior vice president of Olam Agri India Ltd told Reuters.

Before the export ban, India used to sell around 500,000 tons of non-basmati white rice every month, Gupta said.

Around 200,000 tons of rice is being loaded at various Indian ports, and this quantity would be allowed to move out, said B.V. Krishna Rao, president of the Rice Exporters Association.

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Exclusive: India's rice-export curbs put contracts for 2 million tons at risk, dealers say | Reuters

Covid-19 Corner

This section will continue until it becomes unneeded.

US Military Confirms Myocarditis Spike After COVID Vaccine Introduction

July 20, 2023  Updated: July 22, 2023

 

Cases of myocarditis soared among U.S. service members in 2021 after the COVID-19 vaccines were rolled out, a top Pentagon official has confirmed.

There were 275 cases of myocarditis in 2021—a 151 percent spike from the annual average from 2016 to 2020, according to Gilbert Cisneros Jr., undersecretary of defense for personnel and readiness, who confirmed data revealed by a whistleblower earlier this year.

The COVID-19 vaccines can cause myocarditis, a form of heart inflammation that can lead to mortality, including sudden death. COVID-19 also can cause myocarditis.

The diagnosis data comes from the Defense Medical Epidemiology Database.

Mr. Cisneros provided the rate of cases per 100,000 person-years, a way to measure risk across a certain period of time. In 2021, the rate was 69.8 among those with prior infection, compared to 21.7 among members who had been vaccinated.

“This suggests that it was more likely to be [COVID-19] infection and not COVID-19 vaccination that was the cause,” Mr. Cisneros said.

No figures were given for members who had been vaccinated but were also infected. The total rate, 20.6, also indicates that some members weren’t included in the subgroup analysis.

Sen. Ron Johnson (R-Wis.), who has been investigating problems with the database, questioned how the military came up with the figures.

“It is unclear whether or how it accounted for service members who had a prior COVID-19 infection and received a COVID-19 vaccination,” Mr. Johnson wrote to Mr. Cisneros.

Department of Defense (DOD) officials didn’t respond to a request for comment.

Mr. Johnson asked for the information no later than Aug. 2.

Dr. Peter McCullough, a cardiologist and president of the McCullough Foundation, looked at the newly disclosed data.

“The large increase in myocarditis cases in our military in 2021 was most likely due to ill-advised COVID-19 vaccination,” he told The Epoch Times via email, pointing to a study from Israel that found no increase of myocarditis in COVID-19 patients.

Some other papers have found COVID-19 vaccines increase the risk of myocarditis. COVID-19 has been linked elsewhere to myocarditis, although the vaccines have never prevented infection and have become increasingly ineffective against it.

The military encouraged COVID-19 vaccination after U.S. regulators cleared the vaccines for use in late 2020. Military officials were among the first in the world to raise concerns about myocarditis after vaccination and published an early case series of 22 previously healthy members who suffered myocarditis within four days of receiving a COVID-19 vaccine. U.S. officials have since said the vaccines definitely cause myocarditis.

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US Military Confirms Myocarditis Spike After COVID Vaccine Introduction (theepochtimes.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.

What does the scrapping of a wind farm plan mean for UK renewable energy?

21 July 2023  Updated 22 July 2023

 

Work has stopped on one of the UK's largest offshore wind farms after its developer said it no longer made financial sense to continue.

 

The government has a target of doubling wind capacity by 2030 and a policy of hitting net zero by 2050 - so what does the decision mean for the UK's renewable energy industry?

 

What has happened and why?

Swedish energy giant Vattenfall has announced it is to shut down development of the Norfolk Boreas site, off the Norfolk coast.

 

It was awarded one of the government's Contracts for Difference (CfDs) for the first phase one of the biggest offshore wind zones in the world last year.

 

CfDs effectively guarantee a fixed price for the electricity produced for 15 years. It meant that if prices were low, the companies would get a subsidy. If prices rise, the gains must be paid back.

 

But Vattenfall said it had seen its costs, driven by inflation, supply issues and rising wages, soar by 40%.

 

The money the government had agreed to pay them, the firm said, would not cover these increased costs.

 

Chief executive Anna Borg said: "Conditions are extremely challenging across the whole industry right now, with a supply chain squeeze, increasing prices and cost of capital, and fiscal frameworks not reflecting current market realities."

The company said two other Norfolk sites - known as Vanguard East and Vanguard West - will be reviewed.

 

Vattenfall said it remained committed to the region and was "evaluating the best way forward for all three projects in the Norfolk Zone".

 

"We have attractive wind power projects in the pipeline, and investment decisions will always be based on profitability," the company said.

More

What does the scrapping of a wind farm plan mean for UK renewable energy? - BBC News

World’s Biggest Wind Power Projects Are in Crisis Just When World Needs Them Most

Sat, 22 July 2023 at 3:00 pm BST

(Bloomberg) -- Offshore wind projects are facing an economic crisis that erased billions of US dollars in planned spending this week — just as the world needs clean energy more than ever.

A unit of Spain’s Iberdrola SA agreed to cancel a contract to sell power from a planned wind farm off the coast of Massachusetts. Danish developer Orsted A/S lost a bid to provide offshore wind power to Rhode Island, whose main utility said rising costs made the proposal too expensive. Swedish state-owned utility Vattenfall AB scuttled plans for a wind farm off the coast of Britain, citing inflation.

Soaring costs are derailing offshore wind projects even as demand for renewable energy soars. Extreme heat driven by climate change is straining electric grids all over the world, underscoring the need for more power generation — and adding urgency to calls for a faster transition away from fossil fuels. In Europe, the move to reduce reliance on Russian oil and gas has also given clean-energy projects momentum.

“Energy coming from these projects is desperately needed,” Helene Bistrom, the head of Vattenfall’s wind business, said on an earnings call this week. “With new market conditions, it doesn’t make sense to continue.”

Together, the three affected projects would have provided 3.5 gigawatts of power — more than 11% of the total offshore wind fleet currently deployed in the waters of the US and Europe. And the numbers could soon expand. At least 9.7 gigawatts of US projects are at risk because their developers want to renegotiate or exit contracts to sell power at prices that they say are now too low to make the investments worth it, according to BloombergNEF.

The jettisoned projects are the latest signs of stress for offshore wind farms that use turbines larger than skyscrapers to harvest power from the sea air, where winds are most powerful and consistent. Soaring materials costs, particularly for steel, forced turbine makers to raise prices. Costs of other key services, like specialized vessels to install the turbines, have jumped sharply as well. And rising interest rates mean that it’s more expensive to take on debt.

That doesn’t mean investment has ground to a complete halt. Some projects in the US and the UK are still going ahead, despite cost increases. And earlier this month, oil majors BP Plc and TotalEnergies SE bid €12.6 billion ($14 million) to develop offshore wind farms in Germany’s North Sea. But canceled and delayed projects show that if governments are committed to offshore wind, they’ll have to pay more to get it.

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World’s Biggest Wind Power Projects Are in Crisis Just When World Needs Them Most (yahoo.com)

Finally, a treat for all Port lovers, the Symington family story. I have no connection, nor financial interest in the Port industry. I merely like the occasional glass and thought their story too good not to pass on.

Our Story

Symington Today

Symington Family Estates is one of the world's leading producers of premium port, the leading vineyard owner in the Douro Valley and one of the top Portuguese wine producers.

We are a family of British and Portuguese origin that has lived and worked in Portugal since the 19th century. Our family business - run by the 4th and 5th generation - is founded on a deep commitment to Portugal's people, its lands and its wines. Today there are 10 family members working across the business, committed to producing the finest ports and wines and building on the achievements of the previous generations.

We own and run four of the leading port houses, Graham's, Dow's, Warre's, and Cockburn's, as well as a portfolio of Douro wines consisting of Quinta do Vesuvio, Quinta do Ataíde, Altano, and Prats & Symington (a widely acclaimed joint venture that produces Chryseia and Post Scriptum). We have recently launched a new project, Quinta da Fonte Souto, in the Alto Alentejo sub-region of Portalegre.

We are the leading vineyard owners in the Douro Valley with 26 Quintas covering a total of 2,255 ha of which 1,024 ha are under vine. The remainder is mostly natural mediterranean scrub with some olive and citrus groves. Our largest vineyard is Quinta do Vesuvio in the Douro Superior with 133 ha, and our smallest is the 7 ha Quinta da Madalena in the Rio Torto valley. All our vineyards are managed under a strict minimum intervention policy and 112 ha are organic, which make them the largest area of certified organic vineyard in northern Portugal.

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Symington Family Estates

The Window Tax was initially levied in two parts. People had to pay 2 shillings annually (a tenth of a pound) per house if they had fewer than 10 windows, 6 shillings if they had between 10 and 20, and 10 shillings for those with more than 20 windows. In current values, 2 shillings then would be worth about £13.50 now.

Of course, taxes change behaviour, and dynamic models must take this into account. The tax did not raise the hoped-for sums because many people responded to it by bricking up some of their windows in order to avoid it. Visitors to Britain stare in fascination at some of our old houses, noting that where there was clearly once a window, there are now bricks or plaster. Sometimes this can be seen in whole rows of terraced houses. New houses were built with fewer windows to avoid the tax.

The Window Tax — Adam Smith Institute