Baltic Dry Index. 1129 -08 Brent Crude 86.02
Spot Gold 1912 US 2 Year Yield 4.89 +0.07
“I
think we agree, the past is over.”
President George W. Bush.
Not much need for me to add my two cents worth this morning, today’s gloom and doom articles speak very loudly for themselves.
China’s property bubble has finally burst.
US consumers are bingeing on credit card debt and buy now pay later schemes.
At best stagflation lies directly ahead. At
worst, flight out of US stocks and a devastating round of US consumer and
commercial real estate defaults.
Asia suffers China
blues; dollar hits 2023 top on yen
By Wayne
Cole August 14,
20232:54 AM GMT+1
SYDNEY, Aug 14
(Reuters) - Asian shares struggled on Monday ahead of China data that is likely
to amplify the case for serious stimulus even as Beijing seems deaf to the
calls, while rising Treasury yields lifted the dollar to a 2023 peak on the
embattled yen.
Geopolitics
was an added worry after a Russian
warship on Sunday fired warning shots at a cargo ship in the
southwestern Black Sea, heralding a new stage of the war that could impact on
oil and food prices.
MSCI's
broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) eased
another 1.1%, after shedding 2% last week. Japan's Nikkei (.N225) was
off 0.5%, even as exporters drew support from the weak yen.
Chinese
blue chips (.CSi300) lost 1.1%, on top of a 3.4% decline
last week, amid a string of disappointing economic news culminating in a dire
report on new bank
loans in July.
Figures on
retail sales and industrial output are due Tuesday and analysts assume they
will underwhelm, keeping downward pressure on the yuan.
Adding to
concerns about the deteriorating health of the country's debt-laden property
developers was news two Chinese listed companies had not received payment on
maturing investment products from Zhongrong International Trust Co.
China's
Country Garden (2007.HK), the country's top private property
developer, is also set to suspend trading of its 11 onshore bonds from Monday.
The sour mood
saw S&P 500 futures and Nasdaq futures shed early gains to each ease 0.1%.
That
followed losses on Friday when surprisingly high readings on U.S. producer
prices tested market optimism that inflation would cool enough to
avoid further rate hikes.
CONSUMERS KEEP
CONSUMING
Figures on U.S.
retail sales this week are forecast to show a 0.4% pick up in spending, with
risks on the high side thanks in part to Amazon's Prime Day.
Analysts at
BofA say data on credit and debit card spending suggests sales could rise 0.7%
with activity around the July 4th holiday stronger than last year.
Such an outcome
would challenge the market's benign outlook for rates, with futures implying a
70% chance the Federal Reserve is done hiking. The market also has more than
120 basis points of cuts priced in for next year starting from around March.
Minutes
of the Fed's last meeting are due on Wednesday and could show members wanted to
keep their options open on further hikes.
Analysts at
Goldman Sachs argue the market has gone too far in pricing in aggressive
easing.
"The
motivation for cutting outside of a recession would be to normalise the funds
rate from a restrictive level back toward neutral once inflation is closer to
the target," they wrote in a note.
"Normalisation
is not a particularly urgent motivation for cutting, and for that reason we
also see a significant risk that the Fed will instead hold steady."
More
Asia
suffers China blues; dollar hits 2023 top on yen | Reuters
Hong Kong,
China stocks extend losses; Country Garden drops nearly 15% to new record low
UPDATED MON, AUG 14 2023 12:17 AM
EDT
Asia-Pacific markets largely fell on Monday, led
by Hong Kong’s Hang Seng index.
The index tumbled more than 2%,
dragged by basic materials and consumer cyclical stocks. However, the real
estate sector also saw a sell-off, with real estate firm Country Garden
Holdings leading
losses on the HSI.
Mainland Chinese stocks also were
all in negative territory, losing 1.25% on Monday.
Japan’s Nikkei 225 fell
0.44% to start the week and the Topix lost 0.28%. Japan will see its second
quarter gross domestic product figures out on Tuesday, while July’s inflation
print will come in on Friday.
South Korea’s Kospi was
down 0.63%, and the Kosdaq saw a larger loss of 1.22%, while Australia’s S&P/ASX 200 was
0.48% lower.
On Friday in the U.S., markets ended the week
mixed, with the Nasdaq
Composite ending Friday 0.6% lower and notched its second
consecutive losing week in 2023, pulled down by a selloff in semiconductor
stocks such as Advanced
Micro Devices, Nvidia and Micron.
The S&P 500 inched
lower by 0.1%, and the Dow
Jones Industrial Average added 0.3%, helped by advances of 2.1%
and 1.8% in Chevron and Merck & Co.,
respectively.
Shares of Country
Garden continue to slide after it suspends trading of onshore bonds
Shares of Chinese
real estate company Country
Garden Holdings continued
to tumble after it announced that it will suspend
the trading of 11 onshore bonds. The stock reached a new all time
low after it slid 10% on its open.
In a filing over the weekend, Country Garden
said the suspension will take effect today, and the resumption of trading “will
be determined separately.”
“During the
suspension, the company will perform information disclosure obligations in
strict accordance with the requirements of relevant laws and regulations, and
will apply for resumption of corporate bonds in a timely manner after relevant
matters are determined,” it said.
Hong Kong, China
stocks fall led by property; Country Garden down 15% (cnbc.com)
Exploring the Red Flags Raised
by Financial Markets on China's Economy: Analysts Say Wall Street is Missing
the Big Picture.
Watchlist Idea from Microsoft Start • 14/08/2023
In summary, financial markets have been raising red flags recently about China's economy due to slowing growth in retail sales, home sales, industrial production and fixed-asset investment.
Wall Street has trimmed its growth estimates for the full
year, leading to a decline in the yuan and copper prices, as well as luxury brands
reliant on Chinese consumers. Analysts believe the pessimism is due to
unrealistically high expectations and Wall Street's focus on immediate metrics,
but China has a number of tools to ensure growth keeps ticking upwards. Private
investment has been weak due to stringent regulation of Chinese business, which
is a major concern for analysts. This list contains stocks related to this
topic.
More
Red
Flags on China's Economy List Details - MSN Money
In EV news, yet another US failure. At least it didn’t catch fire, although it did burn through a big pile of government subsidies.
Why Proterra went
bankrupt
Fri, August 11, 2023 at 3:42 PM GMT+1
The largest maker of electric
buses in the U.S. filed for bankruptcy this week, a move blamed on new product
lines failing to overcome the high costs of e-bus manufacturing. But Proterra’s
demise points to another issue: Even with unprecedented levels of government
support and customer interest, some sectors cannot compete against top
manufacturers in China.
The company will continue
operations as normal for now while it uses the bankruptcy proceedings to either
sell off or recapitalize the different sections of its business.
Tim’s view
Proterra’s struggles reveal how
difficult it is to run a profitable electric vehicle business in the U.S., even
in a post-Inflation Reduction Act world.
Buses make a good candidate for
electrification because they run on predictable schedules, in fleets. The high
fuel consumption of traditional buses makes the lifetime ownership cost of an
e-bus competitive or, depending on state and local subsidies, even cheaper than
an internal combustion engine bus, according to BloombergNEF.
But they have drawbacks as a
business. Unlike passenger vehicles, buses are typically customized for each
customer, limiting automation and factory efficiency. They get ordered in
batches (when a city gets a new budget, for example), leading to inconsistent
production schedules and orders with suppliers. They take a long time to build
— 12 to 18 months from when a contract is signed to when a bus is delivered and
paid for, in Proterra’s case — which makes them vulnerable to having their
margins eaten away by inflation.
Proterra’s
nickel-based battery chemistry was also more expensive than the lithium
batteries used by most of its competitors, said Nikolaos Soulopoulos, head of
commercial transport research at BloombergNEF. Its earnings report indicates
the company spent $6.5 million more on materials for its products in the first
quarter than the revenue those products generated. And ultimately, the domestic
market is small: 750 e-buses were sold in the U.S. and Canada in 2022.
More
Why Proterra went bankrupt (yahoo.com)
Next China, not all it seems apparently.
Exposing the Charade: China's
Economic Rebound Narrative is Not What it Seems.
13/08/2023
Ruchir
Sharma, chair of Rockefeller International, argues in the Financial Times that
the narrative of China's economic rebound is not supported by economic
realities. He points to several indicators of underlying weakness, such as
corporate revenue growth of only 1.5% in the first quarter, imports dropping 8%
in April, and credit growth last month being half of forecasts. Sharma explains
that since 2008, China's economic model has been driven by government stimulus
and rising debt, which has now run out of steam. He warns that Western
observers are too optimistic about China's rebound narrative, which could lead
to investors losing hundreds of billions of dollars. He concludes that it is
time to expose this charade before the fallout gets worse. This list explores
companies that are likely to be impacted by economic weakness in China.
This
list has performed 11.63% over the past year. By comparison, FTSE 100 Index is
0.31% over the same period. The beta of this list, which is a measure of
volatility, is Moderately High at 1.05. List Beta is calculated using an
equally weighted average beta of the securities within this list. This list
includes 40.00% of Consumer Cyclicals stocks, 40.00% of Technology stocks,
10.00% of Energy stocks, 10.00% of Financials stocks.
List
performance is calculated using an equal-weight methodology. This list is
generated by scanning the web and using our algorithms to surface potentially
relevant securities to the topic.The list is intended to be educational and
includes securities that may be suitable for a watchlist.It is not intended for
investment or trading purposes. Microsoft does not recommend using the data and
information provided as the basis for making any investment decision.
Examining China's Economic Rebound List Details - MSN
Money
Global rice
prices could surge higher as flood risks loom over China
Global rice markets could come under further
strain as the world’s leading rice producer China grapples with heavy rain and
flood risks.
“Heavy rain in China’s
grain-producing north-eastern region that will reduce yields is likely to put
upward pressure on already high global rice prices,” Fitch Ratings said in a recent report.
China
is the world’s largest producer of rice, and flood
alert levels were raised for three provinces that account for
23% of the country’s rice output: Inner Mongolia, Jilin and Heilongjiang, the
report pointed out.
The world’s second largest economy
has been inundated by devastating floods in recent weeks.
Typhoon Doksuri was one of the worst storms to hit northern China in years,
with capital Beijing battered by the heaviest
rainfall in 140 years.
Fitch pointed out that many key
grain production areas in those three provinces were affected by heavy rains
and remnants of Typhoon Doksuri, and they’re set to face “another deluge as
Typhoon Khanun moves north.”
The resulting soaked grain fields will reduce crop
yields for the year, the Fitch report stated, although the full extent of the
damage is not yet clear.
“This will lift China’s domestic
grain prices and likely drive higher imports in 2H23 to partially offset the
potential yield loss,” the credit ratings firm said, adding the country may
need to look to import more rice if its own harvests fall short, and that could
drive global rice prices even higher.
Global
rice prices have surged to their highest in close to 12 years,
according to the Food and Agriculture Organization All Rice Price Index.
Other market watchers are
estimating higher
rice prices ahead after India banned non-basmati white rice
exports last month, and Thailand
urged farmers to plant less rice in a bid to save water as a
result of low rainfall.
India, which accounts for more than
40% of global rice trade, banned
exports of non-basmati white rice on July 20, as the government
looked to tackle soaring domestic food prices.
Rice
prices are hovering at decade highs, with rough rice futures last
trading at $15.98 per hundredweight (cwt).
In addition to rice, the Fitch
report also cited corn and soybean among major crops grown in Inner Mongolia,
Jilin and Heilongjiang, which will be impacted by flood risks. China is
expected to import more of both grains this year compared to the last.
Global
rice prices could rise more as China flood risks loom: Fitch Ratings (cnbc.com)
Finally, why China’s bursting property bubble is likely unfixable. People simply stop paying off mortgages and loans even if the purchased property gets built, although in many recent instances the developer ran out of money before construction began.
From
two years ago, but if anything worse now as the property bubble bursts. Approx.
9 minutes.
Fragile
steel bars/Tofu-dreg project in China/Shaky building/Collapsing buildings/Poor
quality
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.
ANALYSIS: Is
Another Wave of Inflation Happening?
8/11/2023 Updated: 8/11/2023
Following the latest
inflation data, U.S. financial markets are asking two questions. First, is this
the beginning of an inflation revival? Second, how will the recent numbers
impact the Federal Reserve's monetary policy decision-making?
In July, the annual
inflation rate edged up to 3.2 percent, marking the first increase in the
growth rate in a year. The core consumer price index (CPI), which strips the
volatile food and energy components, remains stubbornly high at 4.7 percent.
Producer prices also experienced a notable jump, rising to
0.8 percent year-over-year last month. The core producer price index (PPI) was
stuck at a higher-than-expected 2.4 percent.
Despite the substantial
surge in crude oil and gasoline prices, the gains did not fully materialize in
the Bureau of Labor Statistics' (BLS) CPI report.
"The July CPI report
obviously missed this energy price spike, and we now expect it to show up in
the August CPI report, putting further upward pressure on inflation
year-on-year," said Scott Anderson, the chief economist at Bank of the
West Economics, in a note.
Over the last three months,
West Texas Intermediate (WTI) crude prices have climbed nearly 20 percent to
above $83 per barrel. Gasoline prices have also soared about 20 percent
year-to-date, topping $3.84 a gallon, according to the American Automobile Association (AAA).
The Federal Reserve Bank of
Philadelphia revised its Inflation Nowcasting model estimate for
August lower. The regional central bank now expects the annual inflation rate
to be 3.8 percent, down from the previous forecast of 4.1 percent. The core CPI
is anticipated to edge lower to 4.5 percent.
Peter Schiff, the chief
global strategist at Euro Pacific Asse Management, thinks the upward trend in
the July inflation is only the start of renewed price pressures.
"Core is bottoming, and
the headline number is about to rise sharply, led higher by surging #oil
prices," he said on X, formerly known as Twitter.
"Today's hotter than
expected .3 [percent] rise in July PPI is only the beginning. Future, even
larger upside surprises are coming," Mr. Schiff explained in another X
post.
Appearing on CNBC following
the wholesale prices data on Aug. 11, Heritage Foundation economist EJ Antoni
also anticipates inflation to continue rising, arguing that many of the categories within the
PPI—foods and feeds, energy goods, and transportation and warehousing—will
likely be revised upward over the next six months.
Some market experts say that
the PPI is a reliable indicator of where inflation might be heading since it
measures the price producers can sell their goods. The CPI gauges the price
shoppers pay for goods and services.
Ali Dhanji, a financial
advisor at Raymond James, warned that the
PPI "is not great news for Federal Reserve as PPI tends to be a leading
indicator for consumer inflation and signals potential inflation ahead."
More
ANALYSIS: Is Another Wave of Inflation Happening? |
The Epoch Times
Yield Curve Continues To Warn Of Coming Recession
Aug 10, 2023,03:17pm EDT
The New York Federal Reserve model gives a two in three chance of a recession by July
2024. That’s the highest estimate since the early 1980s, when a recession hit,
and recessions have followed far lower levels of yield curve inversion.
The model has a
robust track record in calling recessions The Federal Reserve too suspects that
economic growth may need to cool, in order to bring down annual inflation to
their 2% goal, though recent CPI data has seen inflation cooling. The Fed’s own economists suspect that a recession could
be near. However there is hope that a so-called “soft landing” is possible.
That said, the S&P 500 has rallied so far in 2023, shrugging off recession
fears.
Other Recession Indicators
Aside from the yield
curve and the stock market itself, there are plenty of other recession
indicators available. Despite this host of metrics, calling recessions
accurately is challenging.
The U.S. Conference Board’s Economic Leading Indicators is declining, potentially giving another recession
signal. That said, the leading indicators do include the yield curve and stock
market as inputs.
Economist, Claudia Sahm, looks for a near-term increase in the unemployment rate as a clearer signal that a recession is imminent. We haven’t seen that. Unemployment has remained at low levels in 2023 despite some monthly volatility. Still, in a just a few months it’s possible that the picture changes. For example, jobless claims appear to be moving up, although it’s a volatile series.
Often the Fed raising rates can prompt a recession. Though the Fed have increased interest rates relatively dramatically since 2022, rates may stay higher for longer on the Fed and markets’ current assessment. Short-term interest rates are over 5% currently and could remain around 4% even at the end of 2024 according to the latest implied forecast of the bond market. High short-term interest rates could mean that the yield curve remains inverted for some time. If that happens, then the recession debate too, may go on for many more months.
Yield Curve
Continues To Warn Of Coming Recession (forbes.com)
Even Celebrity Realtors Feel the Pinch as LA Mansion Sales
Fall
August 12, 2023
(Bloomberg) -- Higher interest rates
and a new tax on luxury home sales in Los Angeles are weighing on even the
celebrity real estate agents who show off their million-dollar listings on TV.
Mauricio Umansky, chief executive
officer of the Agency and star of the Netflix series Buying Beverly
Hills, said his company’s transaction volume, though better than average,
is down about 25%. The housing market, he said, “is in a recession.”
Jason Oppenheim, president of
the Oppenheim Group and star of two other Netflix programs, Selling
Sunset and Selling the OC, also expects to sell
fewer homes this year.
“This is when agents get
defined — in difficult times,” he said.
The nation’s second-largest
city, a perennial hot spot for real estate, is wrestling with higher interest
rates that make homes less affordable and a new tax that went into effect in
April. The city imposes a 4% levy on properties selling for over $5 million and 5.5% on those over $10 million, with the money
going to fund affordable housing. Meanwhile, strikes by Hollywood writers and
actors have shut down TV and film production, putting further pressure on the
market.
In the
first half of the year, sales of homes priced over $10 million in
the greater Los Angeles area fell 44%, according to the brokerage firm Compass.
Total volume declined 40% to $3.2 billion. The LA market still led the US in
sales of homes above $10 million, with 160 properties trading in the first half
of 2023.
More
Even Celebrity Realtors Feel the Pinch as LA Mansion Sales Fall (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
The May 2023 Society of Actuaries Report Reveals
Disturbing Data On The Lethality Of the Covid Vaccines
Our USA Today Op-Ed "silently
suggesting" vaccines cause excess mortality was inspired by damning data
from the Society of Actuaries. Unsurprisingly, the report conclusions suggest
self-censorship.
PIERRE KORY, MD, MPA
13 AUG 2023
Although the insurance
industry, like any other, has profits for its shareholders as its primary goal,
it is also an industry whose insights have led to a few centuries of
life-saving public policies and laws which protect us from a large number of
dangers to our health and survival. For instance, insurers have led efforts to
advance safety in many fields:
----Recall that shocking life insurance data burst onto the
Covid vax/anti-Covid vax battlefield when Scott Davidson, the CEO of One
America “made the mistake” of saying the following disturbing (and truly
historic) comments
at a news conference organized by
the Indiana Chamber of Commerce in the last week of 2021 (below are some
headlines in the wake of the event):
His quotes in that
article:
“We are seeing,
right now, the highest death rates we have seen in the history of this business
– not just at OneAmerica,” the company’s CEO Scott Davison said during an
online news conference this week. “The data is consistent across every player
in that business.”
“the increase in
deaths represents “huge, huge numbers,” and that’s it’s not elderly people who
are dying, but “primarily working-age people 18 to 64” ( meaning employees of companies that have group life
insurance plans through OneAmerica).
“And what we saw
just in third quarter, we’re seeing it continue into fourth quarter, is that
death rates are up 40% over what they were pre-pandemic,” he said.
“Just to give you
an idea of how bad that is, a three-sigma or a one-in-200-year catastrophe
would be 10% increase over pre-pandemic,” he said. “So 40% is just unheard of.”
“What the data is
showing to us is that the deaths that are being reported as COVID deaths
greatly understate the actual death losses among working-age people from the
pandemic. It may not all be COVID on their death certificate, but deaths
are up just huge, huge numbers.”
He also mentioned an
“uptick” in disability claims, saying at first it was short-term disability
claims, and later the increase was within the long-term disability
claims. Ed
Dowd and his team at phinancetechnologies.com have analyzed the official U.S government disability data. They
found sudden, unprecedented, temporally associated increases in disability with
the vaccine roll-out.
More
Doctors Can Prescribe Ivermectin for COVID-19: FDA Lawyer
8/10/2023 Updated 8/11/2023
Doctors are free
to prescribe ivermectin to treat COVID-19, a lawyer representing the U.S. Food
and Drug Administration (FDA) said this week.
"FDA
explicitly recognizes that doctors do have the authority to prescribe
ivermectin to treat COVID," Ashley Cheung Honold, a Department of
Justice lawyer representing the FDA, said during oral arguments on Aug. 8 in
the U.S. Court of Appeals for the 5th Circuit.
The government is
defending the FDA's repeated exhortations to people to not take ivermectin for
COVID-19, including a post that said "Stop it."
The case was brought by three doctors who allege the
FDA unlawfully interfered with their practice of medicine with the statements.
A federal judge dismissed the case in 2022, prompting an appeal.
"The
fundamental issue in this case is straightforward. After the FDA approves the
human drug for sale, does it then have the authority to interfere with how that
drug is used within the doctor-patient relationship? The answer is
no," Jared Kelson, representing the doctors, told the appeals court.
More
Doctors Can Prescribe Ivermectin for COVID-19: FDA Lawyer | The Epoch Times
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 to expect from graphene in the
future
August 11, 2023
The extremely
strong, thin and versatile material could shake up various sectors, with
research into self-charging wearables and various applications in space.
The graphene market
looks set to surge in the coming years, as researchers discover various new
applications for the powerful ‘wonder material’.
Graphene is considered
to be one of the world’s thinnest and strongest materials, being a
one-atom-thick layer of carbon that is 200 times stronger than steel. The
material is also extremely flexible and conductive, giving it a wide range of
potential applications.
The EU committed €1bn
in funding to support research into this powerful material. This initiative –
called Graphene Flagship – will celebrate its 10-year anniversary at a
conference later this year, which will give an industry perspective and share
some of the latest graphene prototypes.
A report from IDTechEx
suggests that after a decade of research, graphene is beginning to move out of
the lab and “into the market”, with evidence that the material is being adopted
more rapidly for applications such as anti-corrosion coatings, smartphone
components and composites for vehicles.
While the potential
uses of graphene are vast, let’s take a look at some of the most exciting ways
graphene could be used in the future.
Graphene in space
Given the strength and
versatility of graphene, it is probably unsurprising that it is being
considered for a variety of uses in the space sector.
Research has been
ongoing in this sector for years. In 2017 and 2018, the Graphene Flagship
tested the potential for graphene to improve the performance of loop heat pipes
and thermal management systems in spacecraft and satellites.
The experiments also
looked at how graphene could be used in space propulsion due to its lightweight
nature and strong interaction with light. Both of these experiments showed
“extremely promising results”, according to a report by the US National
Reconnaissance Office.
A
recent paper published
in the open access journal Nanomaterials suggests graphene’s unique properties
makes it the potential “material of choice” in dealing with space environments,
with applications in satellite manufacturing, radiation shielding, fuel
propellants, life support systems and more.
However, the report
also highlights that more work is needed in terms of research and in scaling up
the production of different types of graphene.
“Graphene is expected
to help in reaching very soon the technological levels needed to increase the
exploration of the solar system and beyond, and to establish and maintain sites
on the Moon, Mars, and other planetary bodies,” the report said.
“In order to make such
ambitious endeavours feasible, not only is the rapid development of
graphene-based technologies needed, but so is the additional support of the
related space economy.”
Last year,
scientists in Ireland claimed to develop a low-cost method to produce graphene, which could accelerate the production of electronic
components that contain the wonder material.
Self-charging wearables
The wearables sector is
one that continues to grow rapidly, according to recent reports. The
International Data Corporation claims India’s wearables market grew by more
than 53pc so far this year, shipping 57.8m units in the first half of 2023.
As many wearable
products require a degree of flexibility, researchers have looked to graphene
as a way to enhance future devices in this sector.
Last year,
researchers in Sweden claimed to achieve high conductivity for a type of
graphene that is manufactured in a simpler and cheaper method. They said this
research could lead to a “new era” of flexible electronics such as portable energy-harvesting devices,
electronic skin and new wearable devices.
More
What to expect from graphene in the future
(siliconrepublic.com)
"It's strange that men should take up crime when there are
so many legal ways to be dishonest. “
Al Capone.
No comments:
Post a Comment