Baltic Dry Index. 1223 -14 Brent Crude 84.31
Spot Gold 1896 US 2 Year Yield 4.97 +0.05
August
22, 1642 the English Civil War begins when King Charles 1 raises an army
without permission from Parliament.
In the stock casinos, the greatest disconnect ever? Well since 1929 perhaps.
Let’s all pretend China’s deflation isn’t happening. US interest rates aren’t at a 16 year high. US banks aren’t getting downgraded almost daily. Global food price inflation shows no sign of abating. Germany and Holland are leading the EU into an EU wide recession.
Too much fiat money is still circulating, chasing stocks.
What could possibly go wrong, as KC1 never said, as he kicked
off the English civil war?
Asia markets rise
as 10-year U.S. Treasury yield hits 16-year high
UPDATED MON, AUG 21 2023 11:01 PM
EDT
Asia-Pacific markets rose across the board even
as yields of U.S. 10-year Treasury bonds hit levels not seen in over a decade.
The benchmark 10-year Treasury note yield hit a high of
4.34%, reaching its highest level since November 2007. This is notable as
higher bond yields generally mean lower stock prices.
Japan’s Nikkei 225 climbed
0.67%, while the Topix rose 0.73%. Overnight, SoftBank Group’s chip
unit Arm filed for a Nasdaq listing that is expected to be the largest of
the year.
South Korea’s Kospi also
gained 0.53%, and the Kosdaq was 0.42% up. The Australian S&P/ASX 200 hovered
just above the flatline.
Hong Kong’s Hang Seng index rebounded
from a seven-day losing streak and gained 0.54%, while on mainland China, the
CSI 300 was up 0.1%.
On Monday in the U.S., all three major indexes ended mixed, with
the tech-heavy Nasdaq
Composite snapping a four day losing streak and gaining 1.6%,
while the S&P 500 gained 0.69% and the Dow
Jones Industrial Average fell 0.11%.
Asia markets rise as
10-year U.S. Treasury yield hits 16-year high (cnbc.com)
S&P downgrades multiple US banks citing
'tough' operating conditions
August 22,
20233:21 AM GMT+1
Aug 21 (Reuters)
- S&P Global on Monday cut credit ratings and revised its outlook for
multiple U.S. banks, following a similar move by Moody's, warning that funding
risks and weaker profitability will likely test the sector's credit strength.
S&P
downgraded the ratings of Associated Banc-Corp (ASB.N) and
Valley National Bancorp (VLY.O) on
funding risks and a higher reliance on brokered deposits.
It
also downgraded UMB Financial Corp (UMBF.O),
Comerica Bank (CMA.N) and Keycorp (KEY.N),
citing large deposit outflows and prevailing higher interest rates.
A sharp rise in
interest rates is weighing on many U.S. banks' funding and liquidity, S&P
said in a summarized note, adding that deposits held by Federal Deposit
Insurance Corp (FDIC)-insured banks will continue to decline as long as the
Federal Reserve is "quantitatively tightening."
The rating
agency also downgraded the outlook of S&T Bank and River City Bank to
negative from stable on high commercial real estate (CRE) exposure among other
factors.
Moody's
had earlier this month cut the ratings of
10 banks by one notch and placed six banking giants, including Bank of New York
Mellon BK.N, US Bancorp (USB.N),
State Street (STT.N) and Truist Financial (TFC.N) on
review for potential downgrades.
The collapse of
Silicon Valley Bank and Signature Bank earlier this year sparked a crisis of
confidence in the U.S. banking sector, leading to a run on deposits at a host
of regional banks, despite authorities launching emergency measures to shore up
confidence.
S&P
downgrades multiple US banks citing 'tough' operating conditions | Reuters
Soaring yields leave
stocks struggling for headway
By Tom Westbrook August 22, 20233:32 AM GMT+
SINGAPORE, Aug 22 (Reuters) - Treasury yields hit new decade
highs in Asia on Tuesday as traders grew wary of how long interest rates might
need to stay elevated, with the higher risk-free rate putting a dampener on
stocks even as beaten-down Chinese markets attempted a rebound.
Benchmark 10-year U.S. Treasury yields rose about 2.5 basis
points (bps) in early Tokyo trade to 4.366%, extending an overnight rise to hit
their highest since 2007.
Yields go up when bond prices go
down. U.S. Ten-year yields are up almost 40 bps for the month so far. MSCI's
broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.4%,
led by volatile gains in China.
Japan's Nikkei (.N225) rose 0.5%, helped
by an overnight drop in the yen, which can be a boon for exporters' profits,
and a positive lead from Wall Street where the S&P 500 rose 0.7%.
S&P 500 futures fell about 0.2% in early trade.
The selloff in bond markets is catching investors' eyes since it
has no obvious trigger and has not come with major shifts in inflation
expectations, meaning that "real" yields, which discount inflation
expectations, have surged.
"That being the case, it is not outlandish to expect
significant impact on credit and capital flows," said Vishnu Varathan,
head of economics at Mizuho Bank in Singapore, since it ought to prompt
investors to revaluate taking risks.
More
Soaring yields leave stocks struggling for headway | Reuters
Next up China. How bad will deflation get?
As China Falls Into Deflation, the Mood Turns Dark
When their government abruptly ended its
harsh Covid measures in December, many Chinese expected a robust rebound from
pent-up demand. Eight months later, China is instead facing an accumulation of
bad news: record youth
unemployment, a deep housing
slump, stagnant spending,
even deflation.
That’s a shock to many Chinese who are used to
an economy that kept on expanding and living standards that rose with it. Now
they’re contending with slowing businesses and shrinking personal fortunes.
I talked to over a dozen business
owners and consumers, as I have been doing for years, and I can report: Their confidence in
the future of the economy and the country is at a nadir. If they had hoped for
a rebound, that hope has been extinguished. They worry that it’s the beginning
of something they don’t dare to imagine and fear that the government doesn’t
have solutions. The bad news just keeps coming.
“The most terrifying thing is that everyone
around me is at a loss of what to do next,” said Richard Li, the owner of an
auto parts wholesale business. “I used to believe that our country would become
better and better.”
In the first half of 2023, the revenue of Mr.
Li’s business fell 15 percent from a year ago, when the city he lives in — with
more than 10 million other people — was locked down for weeks.
He discovered that other companies like his
were struggling, too. Some of his clients, auto repair shops, even shut their
doors because car owners were reducing spending.
Mr. Li had four stores and closed two of them.
He let go two-thirds of his employees and stopped investing in new products. He
also cut back on dining out and hanging out with his buddies. Strapped for
cash, he tried to sell an apartment he bought in 2020 as an investment. But
there have been few queries, even after he cut the price to $400,000 from
$500,000.
It’s getting harder for people
like Mr. Li to rely on the Chinese government to know what’s going on in the
economy. Data it has released for years has been held back. Last week, it
stopped sharing the unemployment
rate for young people after the data hit a high at 21.3 percent
in June.
----China slipped into deflation after the government’s
draconian “zero Covid” policy drastically suppressed consumption and business
activity last year. Chenggang Xu, an economist
at Stanford University, explained why deflation can be pernicious.
“The best scenario
is that everyone expects prices will keep decreasing, so they will keep waiting
for the prices to fall further,” he said. “The worst scenario is that people
are very scared and very anxious.” Fear about their jobs or the survival of their
businesses, he said, will cause them to save more and spend less, pushing the
economy further into the trap of deflation.
With anxiety
running high, people are already saving more and spending less.
More
As
China Falls Into Deflation, the Mood Turns Dark – DNyuz
China’s 40-Year Boom Is Over. What Comes Next?
The
economic model that took the country from poverty to great-power status seems
broken, and everywhere are signs of distress
August 20, 2023
For decades, China powered its economy by investing
in factories, skyscrapers and roads. The model sparked an extraordinary period
of growth that lifted China out of poverty and turned it into a global giant
whose export prowess washed across the globe.
Now the model is broken.
What worked when China was playing catch-up makes
less sense now that the country is drowning
in debt and running out of things to build. Parts of China are saddled
with under-used bridges and airports. Millions of apartments
are unoccupied. Returns on investment have sharply declined.
Signs of trouble extend beyond China’s dismal
economic data to distant provinces, including Yunnan in the southwest, which
recently said it would spend millions of dollars to build a new Covid-19
quarantine facility, nearly the size of three football fields, despite China
having ended its “zero-Covid” policy months ago, and long after the world moved
on from the pandemic.
Other localities are doing the same. With private
investment weak and exports flagging, officials say they have little choice but
to keep borrowing and building to stimulate their economies.
Economists now believe China is entering an era of
much slower growth, made worse by unfavorable
demographics and a widening
divide with the U.S. and its allies, which is jeopardizing foreign
investment and trade. Rather than just a period of economic weakness, this
could be the dimming of a long era.
“We’re witnessing a gearshift in what has been the
most dramatic trajectory in economic history,” said Adam Tooze, a Columbia
University history professor who specializes in economic crises.
What will the future look like? The International Monetary
Fund puts China’s GDP growth at below 4% in the coming years, less than half of
its tally for most of the past four decades. Capital Economics, a London-based
research firm, figures China’s trend growth has slowed to 3% from 5% in 2019,
and will fall to around 2% in 2030.
More
China’s 40-Year Boom Is Over. What Comes Next? - WSJ
Finally,
will this week’s BRICs meeting come up with a dollar alternative? Unlikely.
Emerging economies are pushing
to end the dollar’s dominance. But what’s the alternative?
Updated 6:08 AM GMT+1,
August 19, 2023
----Across the
developing world, many countries are fed up with America’s dominance of the global financial system — especially the power of the dollar. They will air
their grievances next week as the BRICS bloc of Brazil, Russia, India, China and South
Africa meet with other emerging market countries in Johannesburg, South Africa.
But griping about King Dollar
is easier than actually deposing the de facto world
currency.
The dollar is by far the
most-used currency in global business and has shrugged off past challenges to
its preeminence.
Despite repeated talk of the BRICS
countries rolling out their own currency, no concrete proposals have emerged in
the run-up to the summit starting Tuesday. Emerging economies have, however,
discussed expanding trade in their own currencies to reduce their
reliance on the buck.
At a meeting of BRICS foreign
ministers in June, South Africa’s Naledi Pandor said the bloc’s New Development
Bank will seek alternatives “to the current internationally traded currencies”
— a euphemism for the dollar. Pandor was sitting alongside Russia’s Sergey
Lavrov and China’s Ma Zhaoxu — representatives of two countries that are
especially eager to weaken America’s
international financial clout.
The BRICS grouping dates to 2009.
Originally, it was just BRIC, a term coined by Goldman Sachs economist Jim
O’Neill to refer to the rising economies of Brazil, Russia, India and China.
South Africa joined in 2010, adding the “S” to the name. More than 20 countries
— including Saudi Arabia, Iran and Venezuela — have expressed interest in joining
BRICS.
In 2015, the BRICS countries
launched the New Development Bank — an alternative to the U.S. and
European-dominated International Monetary Fund and World Bank.
“Developing nations are itching to
loosen the grip of Western dominance and open the door to a new world order
where the East commands equal, if not greater, influence,” said Martin Ssempa,
a Ugandan political activist who has defended a law Uganda passed this year
prescribing the death penalty for
some homosexual acts.
The legislation prompted the World Bank to announce this month that
it was halting new lending to the East African country.
Critics in the developing world
are especially uneasy about America’s willingness to use the dollar’s global
influence to impose financial
sanctions against adversaries — as it did to Russia
after the invasion of Ukraine last
year.
They also complain that
fluctuations in the dollar can destabilize their economies. A rising dollar,
for instance, can cause chaos abroad by drawing investment out of other
countries. It also increases the cost of repaying loans denominated in dollars
and buying imported
products, which are often priced in dollars.
More
Emerging
economies are pushing to end the dollar's dominance. But what's the
alternative? | AP News
August 22, 1944 Adolf Hitler orders Paris to be destroyed. Is
Paris burning?
Dietrich von Choltitz – The German
General Who Refused To Destroy Paris
Dietrich von Choltitz - The German General Who Refused
To Destroy Paris (warhistoryonline.com)
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
Rice prices soar,
fanning fears of food inflation spike in Asia
A perfect storm may be brewing in Asia.
Rice prices surged to their highest
in almost 12 years, after India’s
rice export ban and adverse weather conditions dented
production and supplies of Asia’s primary staple food, according to the UN’s
food agency.
“The price of global rice prices is
particularly worrying,” Qingfeng Zhang, a senior director from the Asian
Development Bank, told CNBC. “What seems to be clear is that food price
volatility will continue in coming months.”
Other than India,
food inflation has been relatively tame in Asia so far this year.
But a confluence of
factors is stoking fears that shortage of rice supplies could mark a
return to a broad increase in the prices of other food commodities in
Asia.
Among them: extreme climate from global warming,
along with the onset of El Niño for the first time in seven years, Russia’s
withdrawal from the Black
Sea grain initiative and protectionist food policies in the
form of trade restrictions.
El Niño is a weather phenomenon
triggered by warming of water temperatures in the eastern and central
equatorial Pacific Ocean, which brings wild weather conditions that have
wreaked havoc globally.
At the height of the 2010-2012 food
price crisis, the Asian Development Bank estimated that a 30% hike in international food prices in
2011 translated to a 10% rise in food prices for developing
Asia, and stripped 0.6 percentage points off gross domestic product
growth for some food-importing countries in the region.
Underscoring how higher food prices
erode purchasing power, ADB suggested at that time that a 10% rise in
domestic food prices in developing Asia would push 64.4 million into poverty,
based on the $1.25-a-day poverty line. It would have meant increasing the
poverty rate from 27% to 29% during that time.
More
Asia
food inflation fears rise as rice prices surge (cnbc.com)
Thai Q2 GDP growth
slows sharply amid weak global demand, govt cuts outlook
By Orathai Sriring and Kitiphong
Thaichareon August 21,
20236:08 AM GMT+1
BANGKOK,
Aug 21 (Reuters) - Thailand's economy grew at a much slower-than-expected pace
in the second quarter, data showed on Monday, as
weak exports and slower investment undercut strength in tourism and prompted
the government to downgrade its 2023 growth forecast.
Southeast Asia's
second-largest economy has been hobbled by slackening global growth, led by its
main trading partner China and falling investor confidence due to a protracted
period without a government following elections in May.
Thailand's
gross domestic product grew 1.8% in the April-June period from a year earlier,
the National Economic and Social Development Council (NESDC) said, well below
the 3.1% expansion expected by economists in a Reuters
poll.
GDP had risen
2.6% year-on-year in the first quarter, revised down from 2.7% stated earlier.
The
second quarter was hurt by export
volumes falling 5.7% year-on-year and
dragging manufacturing output down by 3.3%, while government spending also
declined 4.3%. All of this put a further dampener on fixed asset investment,
which was down 2.8% on-quarter.
The global demand
weakness prompted the government to cut its 2023 GDP growth forecast to between
2.5% and 3.0% from a range of 2.7% to 3.7%, meaning the central bank may not
rush to raise rates again.
"With
inflation below target and the economic recovery showing signs of faltering
already, we believe the Bank of Thailand is unlikely to deliver further rate
hikes this year," said Shivaan Tandon, emerging Asia economist at Capital
Economics.
More
Thai Q2 GDP growth slows sharply amid weak global
demand, govt cuts outlook | Reuters
Asking prices for UK
homes drop sharply - Rightmove
August 21, 202312:08 AM GMT+1
LONDON, Aug 21
(Reuters) - Asking prices for homes in Britain fell sharply this month as
rising mortgage costs caused sellers to lower their expectations of what they
can get for their properties, an industry survey showed on Monday.
Website Rightmove
said average asking prices for homes dropped by 1.9%, the biggest monthly fall
for August since 2018 and twice as steep as the usual summertime fall.
Britain's housing
market, which boomed during the COVID-19 pandemic, has weakened as the Bank of
England fights high inflation with a run of interest rate hikes, although
two-year mortgage rates recently dipped from July's 15-year highs.
Mortgage lenders
Nationwide and Halifax both previously reported falls in selling prices in
July.
Rightmove's
survey also showed the number of home sales was down 15% compared with 2019,
before the pandemic.
Sales of homes
typically sought by first-time buyers fell by a less severe 10%, reflecting a
12% jump in rents for properties in that category over the past year, Rightmove
said.
Homes on the
market as a whole were down by 10% compared with August 2019.
Average asking prices for homes were 2% below their peak in May
but, reflecting the surge in demand during the pandemic, remained 19% higher
than in August 2019, Rightmove said.
Asking prices for UK homes drop sharply - Rightmove |
Reuters
Legendary investor
Jeremy Grantham warns a recession is coming and the Fed’s rosy forecast is
‘almost guaranteed to be wrong’
August
19, 2023
Despite nearly two years of recession predictions by
Wall Street’s top minds, billionaire investors, and former Federal Reserve
officials, the U.S. has yet to suffer an economic downturn. And with a strong
labor market and inflation fading in the face of aggressive interest rate
hikes, some experts have turned bullish, arguing that Fed Chairman Jerome Powell can engineer
a soft landing for
the economy. Even the Fed’s staff economists revealed in July that they are no
longer forecasting the
“mild recession” they had first predicted in
March.
But Jeremy Grantham,
co-founder of the investment firm Grantham Mayo Van Otterloo (GMO), believes
investors should ignore his more optimistic peers and the central bank’s staff.
“[T]he Fed’s record on these
things is wonderful,” Grantham said sarcastically in a Bloomberg interview Thursday.
“It's almost guaranteed to be wrong. They have never called a recession,
particularly not the ones following the great bubbles.”
The
veteran investor made his name predicting the dotcom crash of 2001 and the
Global Financial Crisis of 2008, but is also known for making some off-base, or at least premature, market bubble forecasts in recent years. This week he
argued that the Fed’s interest rate hikes are still working their way through
the economy, increasing the cost of borrowing for households and businesses,
depressing real estate prices, and weighing on growth-focused stocks.
Ultimately,
that means “we will have a recession running perhaps deep into next year and an
accompanying decline in stock prices,” he warned.
A
long-time Fed critic, Grantham believes that central bank officials “prided
themselves in stimulating the bubbles” with near-zero interest rates and
aggressive purchases of mortgage-backed securities and government bonds since
the Global Financial Crisis, and particularly through COVID. But now, he
argues, the economy is paying the price for their unsustainable policies.
“They
took credit for the beneficial effect of higher asset prices on the economy,”
he said. “But they have never claimed credit for the deflationary effect of
asset prices breaking—and they always do.”
For
Grantham, years of unsustainable growth in asset prices due largely to Fed
policy and a lack of investment in
the production of key raw materials globally will ultimately lead to a new era
for the economy.
More
Covid-19 Corner
This
section will continue until it becomes unneeded.
Analysis
finds COVID-19 may trigger new-onset high blood pressure
AUGUST 21, 202
An analysis of electronic medical
records for more than 45,000 people found that COVID-19 infection was
significantly associated with the development of high blood pressure, according
to new research published in Hypertension.
"While
COVID-19 is typically more severe in patients with preexisting high blood
pressure, including higher rates of hospitalization and mortality compared to
people with normal blood pressure, it is unknown whether the SARS-CoV-2 virus may trigger
the development of high blood pressure or worsen preexisting
hypertension," said senior study author Tim Q. Duong, Ph.D., professor of
radiology and vice chair for radiology research and associate director of
Integrative Imaging and Data Science at the Center for Health and Data
Innovation at Albert Einstein College of Medicine and Montefiore Health System
in New York City.
This
retrospective observational study is the first to investigate the development
and risk
factors associated with
persistent high blood pressure in people with COVID-19 infection compared to
influenza, a similar respiratory virus. According to the 2017 ACC/AHA Guideline for the Prevention, Detection,
Evaluation, and Management of High Blood Pressure in Adults, hypertension is classified as having top and bottom
numbers greater than or equal to 130/80 mm Hg.
Health
data were analyzed from electronic medical records at the Montefiore Health System in Bronx, New York,
which serves a large, racially and ethnically diverse population. The study
included 45,398 people with COVID-19—hospitalized between March 1, 2020 and
February 20, 2022—and 13,864 people with influenza without
COVID-19—hospitalized between January 2018 and February 20, 2022—who returned
to the hospital system for any medical reasons within an average follow-up
period of six months.
The
analysis found:
- 21% of people
hospitalized with COVID-19 and 11% of those who were not hospitalized for
COVID-19 developed high blood pressure, compared to 16% of people
hospitalized with influenza and 4% of those not hospitalized for
influenza.
- People
hospitalized for COVID-19 were more than twice as likely and those not
hospitalized are 1.5 times more likely to develop persistent hypertension
compared to people hospitalized and non-hospitalized with influenza,
respectively.
- People
infected with SARS-CoV-2 who were over 40 years old, Black adults or those
with preexisting conditions, such as chronic
obstructive pulmonary disease, coronary
artery disease or chronic
kidney disease, had an elevated risk of developing high blood
pressure.
- Persistent
high blood pressure was more common among people infected with SARS-CoV-2
who were treated with vasopressor and corticosteroid medications during
the pandemic.
More
Analysis finds COVID-19 may trigger new-onset high
blood pressure (medicalxpress.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.
Solar-powered fog net captures water and cleans out
pollution
Michael Irving August 20, 2023
Fog
nets are a literal lifesaver in arid regions
with regular fog – but unfortunately they can also capture airborne pollution.
Scientists at ETH Zurich have now developed fog nets that can use sunlight to
break down hazardous molecules.
Rain is
rare in many regions, but for some, such as the mountains
of northern Chile, water-dense fogs roll
in regularly in a frustrating show of irony. The droplets in these fogs are
usually too small to fall as rain, but can condense on certain surfaces. Locals
have long taken advantage of this and used fog nets to collect water in useful
quantities and funnel it into pipes and tanks.
In many places
though, atmospheric pollution can contaminate that collected water, making it
potentially unsafe to drink or even cook with. So for the new study,
researchers at ETH Zurich developed a new type of fog net that purifies the
water it captures.
The net is made up
of metal wire coated with certain polymers as well as titanium dioxide. The
polymer mix is designed to maximize the efficiency of droplet formation, and
ensure they run down the mesh as quickly as possible. Meanwhile, the titanium
oxide works as a chemical catalyst, breaking down organic compounds when
exposed to UV in sunlight.
The team tested the
fog net in the lab and a pilot plant, using artificial fog that had pollutants
such as diesel and BPA added to it. Sure enough, the nets were able to collect
about 8% of the water from the fog while removing some 94% of those pollutants.
Just 30 minutes of sunlight exposure was enough to activate the titanium oxide
for 24 hours, allowing it to work even in areas that receive very little
sunlight.
“Our system not
only harvests fog but also treats the harvested water, meaning it can be used
in areas with atmospheric pollution, such as densely populated urban centers,”
said Ritwick Ghosh, lead author of the study.
The team says the
technology could not only be used to provide cleaner drinking water to regions
that need it, but could also help recover higher quality water from steam lost
to power plant cooling towers.
The research was published in
the journal Nature
Sustainability.
Source: ETH Zurich
Solar-powered fog net captures water and cleans out
pollution (newatlas.com)
First Geneva Convention
The First Geneva Convention for
the Amelioration of the Condition of the Wounded in Armies in the Field, held
on 22 August 1864, is the first of four treaties of the Geneva Conventions.[1][2] It
defines "the basis on which rest the rules of international law for the
protection of the victims of armed conflicts."[3]
After the first treaty was adopted in
1864, it was significantly revised and replaced in 1906, 1929, and finally
1949. It is inextricably linked to the International
Committee of the Red Cross,
which is both the instigator for the inception and enforcer of the articles in
these conventions.
More
First Geneva Convention - Wikipedia
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