Baltic Dry Index. 1107 +27 Brent Crude 85.74
Spot Gold 1931 US 2 Year Yield 4.87 -0.11
“If socialists
understood economics they wouldn't be socialists.”
With just two trading days left in August, the stock casinos are busy this week in dressing up the month-end close, aided and abetted by a new AI bubble centred on Nvidia.
Nvidia, the new Apple, Tesla and Meta of the summer of 2023.
Asia markets
mirror Wall Street’s rally; Australia inflation softens in July
UPDATED TUE, AUG 29 2023 11:22 PM
EDT
Asia-Pacific markets are set to mostly rise,
largely mirroring moves on Wall Street as U.S. stocks saw a Nvidia-fueled tech
rally on Tuesday.
Investors will assess Australia’s
inflation numbers for July, which will inform the Reserve Bank of Australia’s
next monetary policy decision slated for Sep. 5. July’s headline inflation
print came in at 4.9%, softer than the 5.4% seen in June.
The Australian S&P/ASX 200 climbed
1.11% after the announcement, leading gains in the region.
Japan’s Nikkei 225 is
on pace for its third straight day of gains, gaining 0.59%, while the Topix
also extended gains and rose 0.65%.
South Korea’s Kospi advanced
0.71%, while the Kosdaq was up 0.6%.
Hong Kong’s Hang Seng index was
0.75% higher, while mainland Chinese markets were also in positive territory,
with the benchmark CSI 300 index up 0.43%.
Overnight in the U.S., all three major indexes
advanced, with the Nasdaq
Composite climbing more than 1% as investors flocked back to
tech stocks.
The tech-heavy index gained
1.74%, the S&P 500 climbed
1.45% — its best day since June 2, and the Dow Jones Industrial Average added
0.85%.
Asia markets mirror
Wall Street's rally; Australia inflation softens in July (cnbc.com)
Nasdaq pops
more than 1% for third straight winning day as tech rebounds from August slump:
Live updates
UPDATED TUE, AUG 29 2023 4:29 PM EDT
The Nasdaq
Composite climbed
more than 1% Tuesday, as investors flocked back to tech stocks in the final
days of what’s been a difficult August for the market.
The tech-heavy index gained 1.74%
to close at 13,943.76. The S&P 500 climbed
1.45% to close at 4,497.63 — its best day since June 2. The Dow Jones Industrial Average added
292.69 points or 0.85% to finish the session at 34,852.67.
Chipmaker Nvidia led
the charge of rising tech stocks with a gain of more than 4%. Shares of Meta Platforms, Tesla, Apple and Microsoft all
ended the day higher. The sector seemingly received a boost from falling bond
yields following the release of new U.S. economic data.
AT&T rose
3.9% after Citi
upgraded the stock and said the telecom giant would be able to
afford its hefty dividend. Elsewhere, shares of Best Buy added
3.8% after
the retailer reported an earnings beat.
The
2-year Treasury yield tumbled as much as 16 basis points as
consumer sentiment data came in softer-than-expected at 106.1. Economists
polled by Dow Jones forecast a 116 reading. Elsewhere, the latest job openings
and labor turnover survey showed a decline in open listings in July — another
sign of a cooling economy.
“We think this presents a pretty
good tactical entry point into risk assets, above all into US equities,” wrote
HSBC chief multi-asset strategist Max Kettner in a note Tuesday. Kettner said
the August selloff had reduced investor euphoria back to more reasonable
sentiment levels.
More
Stock
market today: Live updates (cnbc.com)
Nvidia’s stock
closes at record after Google AI partnership
Nvidia shares
rose 4.2% Tuesday to close at a record, after the chipmaker announced a
partnership with Google that
could expand distribution of its artificial intelligence technology.
The stock’s torrid run continued,
as it’s now up 234% in 2023, making it by far the best performer in the S&P
500. Facebook parent Meta is
second in the index, up 148%.
The record close comes less than a
week after the company said quarterly
revenue doubled from a year earlier and gave a forecast indicating that sales
this period could rise 170% on an annual basis. The day after the better-than-expected
earnings report, the stock climbed to a record intraday high of
$502.66 before retreating in the afternoon.
More
Nvidia's stock closes at record after Google AI partnership (cnbc.com)
Back in the real world, things don’t look so good,
in fact they don’t look good at all. By this time tomorrow we will also know
the outcome of Hurricane Idalia’s landfall in Florida.
Regional
banks face another hit as regulators force them to raise debt levels
U.S. regulators on Tuesday unveiled plans to force regional banks to issue
debt and bolster their so-called living wills, steps meant to protect the
public in the event of more failures.
American banks with at least $100
billion in assets would be subject to the new requirements, which makes them
hold a layer of long-term debt to absorb losses in the event of a government
seizure, according to a joint notice from the Treasury Department,
Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit
Insurance Corp.
The steps are part of regulators’
response to the regional banking crisis that flared up in March, ultimately
claiming three institutions and damaging the earnings power of many others. In
July, the agencies released the first salvo of expected changes, a sweeping
set of proposals meant to heighten capital requirements and
standardize risk models for the industry.
In their latest proposal, impacted lenders will
have to maintain long-term debt levels equal to 3.5% of average total assets or
6% of risk-weighted assets, whichever is higher, according to a fact sheet
released Tuesday by the FDIC. Banks will be discouraged from holding the debt
of other lenders to reduce contagion risk, the regulator said.
Higher funding costs
The requirements
will create “moderately higher funding costs” for regional banks, the agencies
acknowledged. That could add to the industry’s earnings pressure after all
three major
ratings agencies have downgraded the credit ratings of some
lenders this year.
More
Regional
banks face hit from new debt level requirements (cnbc.com)
Oil rises on large US
stockpile draw, hurricane jitters
By Trixie Sher Li Yap and Yuka Obayashi August 30, 20235:23 AM GMT+1
SINGAPORE, Aug 30
(Reuters) - Oil prices extended gains on Wednesday after industry data showed a
large draw in crude inventories in the U.S., the world's biggest fuel consumer,
and as concerns about a hurricane in the Gulf of Mexico kept investors on edge.
Brent crude
futures for October climbed 31 cents, or 0.36%, to $85.80 a barrel by 0415 GMT.
The October contract expires on Thursday and the more active November contract
was at $85.23 a barrel, up by 32 cents.
U.S. West Texas
Intermediate crude futures gained 38 cents, or 0.47%, to $81.54, logging its
fifth session of gains.
Both
benchmarks rallied more than a dollar a barrel on Tuesday as the U.S. dollar
slid after the prospects of further interest rate hikes eased following softer
U.S. job data.
U.S. crude
stocks declined by about 11.5 million barrels in the week ended Aug. 25,
according to market sources citing American Petroleum Institute figures on
Tuesday. Analysts polled by Reuters prior to the data had estimated on average
a draw of 3.3 million barrels.
More
Oil
rises on large US stockpile draw, hurricane jitters | Reuters
Post-pandemic, world facing gloomy stew of debt, trade
wars and poor productivity
Mon, August 28, 2023 at 11:17 AM GMT+1
JACKSON HOLE,
Wyoming (Reuters) - Record levels of government debt, geopolitical tensions
that threaten to split the global trading system, and the likely persistence of
weak productivity gains may saddle the world with a slow-growth future that
stunts development in some countries even before it starts.
That sobering
view of a post-pandemic global economy emerged from research organized by the
Kansas City Federal Reserve and debated here this past weekend. It explored
issues like the outlook for technological innovation, public debt, and the
state of international trade at a time when the Russian invasion of Ukraine and
conflict between the U.S. and China have eroded a once-broad global agreement,
at least in theory, to boost the free flow of goods and services.
"Countries
are now in a more fragile environment. They've used a lot of their fiscal
resources to deal with a pandemic...Then you have policy-driven forces,
geoeconomic fragmentation, trade tensions, the decoupling between the West and
China," International Monetary Fund chief economist Pierre-Olivier
Gourinchas said in an interview on the sidelines of an annual Fed conference
here. "If we get to a point where part of the world is stuck without
catching up and has large amounts of population, that creates tremendous
demographic pressures and migration pressures."
Gourinchas
said it is possible that global growth settles into a trend of around 3%
annually, a figure far below rates above 4% seen when rapid advances in China's
economy drove global output higher and which some economists consider
borderline recessionary in a world where quick gains should still be achievable
in large, less-developed countries.
But in the
emerging pandemic economy, "the global growth environment has become very
challenging," said Maurice Obstfeld, a former IMF chief economist and now
a fellow at the Peterson Institute for International Economics in Washington.
China is now
suffering what may be chronic economic problems along with a shrinking
population. Emerging industrial policies in the U.S. and elsewhere are
reordering global production chains in ways that may be more durable or serve
national security ends, but also be less efficient.
The symposium
is among the first major attempts to take stock of longer-term economic
developments after the pandemic and amid renewed geopolitical tensions after
years in which officials were at first preoccupied with fighting COVID-19
itself, then had to focus on a global breakout of inflation.
Economists and
policymakers here appeared in rough consensus that two trends from before the
pandemic, both with global-growth implications, had been intensified by the
health crisis and other recent events.
More
Post-pandemic,
world facing gloomy stew of debt, trade wars and poor productivity (yahoo.com)
In cryptoland, an unlikely victory for
Grayscale over the SEC. Come back SBF all is forgiven?
Bitcoin
rallies more than 7% as court sides with Grayscale over the SEC in crypto ETF
case
The price of bitcoin surged
Tuesday after the U.S. Court of Appeals for the DC
Circuit ruled that the Securities and Exchange Commission was
wrong to deny crypto investment giant Grayscale permission to convert its
popular bitcoin trust into an ETF.
Bitcoin jumped 7.15% following the
ruling to $27,851.82, according to Coin Metrics. The move lifted
cryptocurrencies broadly as well as crypto equities higher.
Grayscale’s lawsuit against the SEC has been closely watched by
investors and other industry participants as a key catalyst that would shake up a market marred by low
volatility and liquidity. Earlier this month, bitcoin trading volatility fell to its lowest level in more
than four years as investors had been waiting on the
sidelines for more regulatory clarity on crypto activity – whether through new
legislation out of Congress or through the ability to launch a spot bitcoin ETF.
Several bitcoin futures ETFs have already been
approved in the U.S.
“The denial of Grayscale’s proposal
was arbitrary and capricious ... The Commission failed to adequately explain
why it approved the listing of two bitcoin futures ETPs but not Grayscale’s
proposed bitcoin ETP,” the court said in the ruling. “In the absence of a
coherent explanation, this unlike regulatory treatment of like products is
unlawful. We therefore grant Grayscale’s petition for review and vacate the
Commission’s order.”
Tuesday’s ruling may increase the
chances that the SEC will approve other bitcoin ETF applications – including
that of BlackRock,
whose filing in late June drove one of bitcoin’s big rallies this year, as well
as Fidelity,
WisdomTree, VanEck and Invesco and
others. A U.S. bitcoin ETF would provide a way to get exposure to bitcoin
without having to hold it, which would invite retail and institutional
investors as well as wealth managers into the market.
A spokesperson for the SEC said
it’s “reviewing the court’s decision to determine next steps.”
More
Finally, China. The property market in crisis and suddenly a spate of fires? Hmm. Approx. 14 minutes.
What's
going on? Fires broke out in Tianjin, Beijing, and Shanghai, as well as
earthquakes...
“The more the
state "plans" the more difficult planning becomes for the
individual.”
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.
Today, does history repeat? The UK Gilt crisis of September 2022. (More
correctly, the Europe wide top collateral liquidity crisis of September 2022.) The one year anniversary is about one month
away.
Though the trigger might have been Prime Minister
Truss and Chancellor Kwarteng foolishly mistaking 2022 for a repeat of Maggie
Thatcher’s 1982 and the start of the ”big bang” privatisations and expanding
government debt in an era of falling interest rates, it quickly morphed into a
lack of availability of top European collateral, namely German government
bonds.
Ultimately, I would argue that it led to the events
of US bank failures in 2023 and the collapse of Credit Swiss, but what do I
know?
Gilt market
meltdown – A first post mortem and key takeaways
Allianz SE | Munich | Oct
04, 2022
·
The gilt crash in the UK was not a repeat of the Eurozone
sovereign debt crisis, but rather a liquidity-induced market accident that put
financial stability at risk. As credit-default swaps (CDS) for the UK did
not follow the surge in sovereign yields, liquidity risk caused the movement in
gilts, rather than credit risk. It was also not a financial dominance conflict
between central banks and markets as the Bank of England acted as a backstop
for and not against markets. In our view, the high risk to financial stability
will make more central banks likely to exert upward pressure on short-term
rates while keeping long-term rates under control.
·
Trading on the gilt market will continue to be bumpy for
a while. But the UK is not an exception when it comes to liquidity
risk. It was affected first because of the unfortunate interaction of monetary
(tightening) and fiscal policy (easing) signals. Similar liquidity squeezes may
develop, mainly in the Eurozone but also in the US since bond-market volatility
has reached levels unseen since 2008-09 and safe collateral is still scarce.
----
Markets immediately challenged the UK’s massive fiscal easing package, which
was to be entirely financed by additional bills and bond issuance, even as the
BoE was starting to sell gilts. Scrapping the tax cut for top earners is a step
in the right direction, but more will be needed to get to a credible
medium-term path. On 23 September,
Chancellor Kwasi Kwarteng announced an ambitious spending
package of around 7% of GDP (or
more than GBP200bn) over the next two years to fight the energy crisis. The
package included GBP45bn of tax cuts, expected to be funded by additional
borrowing, and represents the biggest fiscal easing since 1972, GBP15bn larger
than expected. It is equivalent to more than 50% of the total Covid-19 package
and should push public debt to 103% of GDP in 2023, from 96% in 2022, creating
a budget deficit of -7% of GDP.
The announcement of the
fiscal stimulus when the UK already has a sizeable current account
deficit, and when the Bank of England was set to start quantitative tightening,
triggered a crisis of confidence in the markets. The pound plunged against the
US dollar on 23 September (-3.5%), reaching its lowest level since 1985
More
Gilt market meltdown – a first post mortem and key
takeaways (allianz.com)
Warren Buffett may be bracing for a recession – and
Michael Burry's latest big short is a 'good move,' says top economist Steve
Hanke
August 28, 2023
Warren
Buffett and Michael Burry have rattled
financial markets with bearish disclosures this month. Steve Hanke
says the Berkshire
Hathaway CEO and the investor of "The Big Short" fame are
most likely preparing for trouble.
Berkshire
sold a net $8 billion of stocks and slowed its pace of buybacks last
quarter, sparking a 13% rise in its money pile to a near-record $147
billion.
The
sprawling conglomerate has now disposed of a net $33 billion of stocks over the
past three quarters, fueling a $38 billion increase in its stash of cash, cash
equivalents, and Treasury bills during that time.
"It's
also consistent with his long track record of piling up cash in anticipation of
storm clouds ahead with the capacity to pounce on bargains once the storm
hits," Hanke, who is a professor of applied economics at Johns Hopkins
University, added.
Hanke
is also known for serving as the president of Toronto Trust Argentina when it
was the world's best-performing emerging market mutual fund in 1995.
Buffett
prides himself on conserving plenty of cash to ride out tough periods and
capitalize on stock-market downturns and economic malaise. For example, he
struck deals with Goldman
Sachs, General
Electric, Harley-Davidson, Mars,
and other cash-hungry companies in the depths of the 2008 financial crisis.
As
for Burry's Scion Asset Management, it disclosed put
options against S&P 500 and Nasdaq-100 index funds with a notional value of
$1.6 billion at the end of June. Placing the bearish wagers would have only
cost Burry a fraction of that figure, but they still
represent a big bet given the rest of his portfolio was only worth
about $111 million at the time.
More
Buffett Expects Recession, Burry's Big Short a 'Good Move': Steve Hanke (businessinsider.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
COVID-19 evolves faster in deer
than in humans and spreads between them, study shows
Mon, 28 August 2023 at
8:00 pm BST
COVID-19
variants are evolving three times faster in white-tailed deer than in humans,
according to a new study.
Deer serve
as virus reservoirs, places where a virus thrives and multiplies, making them
the perfect host for ongoing mutation.
The virus
also appears to be passing between humans and deer, where genomic analysis
showed at least 30 infections in deer were introduced by humans. How this jump
is happening remains a mystery to experts.
"We
generally talk about interspecies transmission as a rare event, but this wasn't
a huge sampling, and we're able to document 30 spillovers. It seems to be
moving between people and animals quite easily," said co-senior
author Andrew
Bowman. He is an associate professor of veterinary preventive medicine at
The Ohio State University in Columbus.
Scientists
studied this by collecting more than 1,500 nasal swabs from free-ranging deer
in 83 of Ohio's 88 counties between November 2021 and March 2022.
More than
10% of the samples were positive for the COVID-19 virus. Scientists found at
least one positive case in 59% of the counties in which testing took place.
"And
the evidence is growing that humans can get it from deer -- which isn't
radically surprising. It's probably not a one-way pipeline," Bowman said
in a university news release.
The virus'
circulation in deer could lead to its spread to other wildlife and livestock.
Bowman and
colleagues have been studying this and previously reported finding infections
in white-tailed deer in nine Ohio locations at the end of 2021.
"We
expanded across Ohio to see if this was a localized problem -- and we find it
in lots of places, so it's not just a localized event," Bowman said.
"Some of the thought back then was that maybe it's just in urban deer
because they're in closer contact with people. But in rural parts of the state,
we're finding plenty of positive deer."
The study
also detected COVID-19 antibodies in blood samples from previous infections.
The researchers estimated that about 23.5% of deer in Ohio had been infected at
one time or another.
Scientists
collected 80 whole-genome sequences in the samples that represented groups of
viral variants. They also found the well-known Delta and Alpha variants.
The genetic
composition of Delta variants in deer matched dominant lineages found in humans
at the time. The authors said this pointed to spillover events, and that
deer-to-deer transmission followed in clusters, some spanning multiple
counties.
"There's
probably a timing component to what we found - we were near the end of a Delta
peak in humans, and then we see a lot of Delta in deer," Bowman said.
"But we were well past the last Alpha detection in humans. So the idea
that deer are holding onto lineages that have since gone extinct in humans is
something we were worried about."
More
COVID-19 evolves faster in deer than in humans and
spreads between them, study shows (yahoo.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.
New
zinc-air battery shows high power density, ultra-long stability
August 28, 2023 | 6:06 am
Researchers at Australia’s Edith Cowan University
have redesigned zinc-air batteries by using a combination of new
materials, such as carbon, cheaper iron and cobalt-based minerals.
In a
paper published in the journal EcoMat, the scientists
say that the new design has been so efficient it suppressed the internal
resistance of batteries.
The device’s voltage was also close to the theoretical voltage
which resulted in a high-peak power density and ultra-long stability.
“In addition to revolutionizing the energy storage industry, this breakthrough
contributes significantly to building a sustainable society, reducing our
reliance on fossil fuels, and mitigating environmental impacts,” lead
researcher Muhammad Rizwan Azhar said in a media statement. “Using natural
resources, such as zinc from Australia and air, further enhances the cost-effectiveness
and viability of these innovative zinc-air batteries for the future.”
Azhar explained that a zinc–air battery consists of a zinc-negative electrode
and an air-positive electrode.
Prior to this recent development, the main drawbacks of these devices were
their limited power output due to the poor performance of air electrodes and
their short lifespan.
With these issues being addressed, Azhar believes rechargeable
zinc-air batteries can become more appealing for the storage of clean energy, particularly taking into account
their low cost, environmental friendliness, high theoretical energy density,
and inherent safety.
New zinc-air battery shows high power density,
ultra-long stability - MINING.COM
It is easy to be conspicuously 'compassionate' if others are being forced to pay the cost.
Murray Rothbard.
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