Baltic Dry Index. 1086 -08 Brent Crude 87.03
Spot
Gold 1939 US
2 Year Yield 4.85 -0.05
At
the heart of capitalism is creative destruction.
Joseph A. Schumpeter.
In the stock casinos, August’s dress up stocks is over, now what as the USA heads off for a Labor Day holiday?
Are stocks about to get a reality check from creative destruction in the final quarter of 2023?
Moodys’s sees a global slowdown ahead. I see much worse. China’s stumbling economy exporting deflation into the global economy, starting in Asia but quickly spreading into the rest of the world.
Stocks
over-priced to perfection are in for a harsh reality check.
Asia markets
higher as China cuts reserve requirement; Hong Kong halts trading as typhoon
approaches
UPDATED FRI, SEP 1 2023 12:32 AM
EDT
Asia-Pacific markets rise as China’s factory
activity for August expanded and the central bank announced a cut in reserve
requirements to boost the economy.
Mainland China’s Shanghai Composite traded
higher by 0.64% and the Shenzhen
Component was up 0.82% after China’s factory activity expanded
in August, surprising on the upside, according to a private-sector survey.
The Caixin/S&P global
manufacturing purchasing managers’ index rose to 51.0 in August, better than
the 49.3 that analysts polled by Reuters expected.
Also on Friday, the People Bank
of China said it would reduce
the foreign exchange reserve requirement ratio for financial
institutions by 200 basis points — starting from Sept. 15.
In Australia, the S&P/ASX 200 lost
nearly 0.39%. South Korea’s Kospi traded
slightly below the flatline while the Kosdaq declined by 0.56%. In Japan, the Nikkei 225 was up
0.66%.
Hong Kong is bracing for Super Typhoon Saola and
the Hang Seng index paused
trading as the bad weather approaches. According to the Hong Kong stock exchange guidelines, trading
will be halted if a No. 8 signal or above is issued before pre-opening and will
remain in place until 12 p.m.
As of 10.45 a.m. Singapore/Hong
Kong time, the Hong Kong Observatory noted that the
Storm Signal No. 8 will “remain in force for most of today.”
Singapore’s financial markets
will be closed today as the country heads to the polls to vote
for its ninth president.
Overnight in the U.S., the Dow Jones Industrial Average fell
by about 168 points, or 0.5%, to close at 34,721.91. The S&P 500 ticked
down nearly 0.2% to 4,507.66. The
Nasdaq Composite ticked higher at the closing bell, but still
suffers worst month in 2023.
Asia
stock market today: live updates—China Caixin PMI, HK halts trading (cnbc.com)
Europe stocks
close lower to end negative month; euro zone inflation holds steady; UBS up 6%
August 31, 2023
European stock markets closed slightly lower
Thursday after the release of preliminary euro
zone inflation data, and as UBS posted
its first set of results since the bank completed its takeover
of Credit Suisse.
The pan-European Stoxx 600 slipped
to a 0.1% loss at the end of a largely positive session, taking declines for
the month to 2.64%, according to Eikon data.
UBS posted a
second-quarter profit of $28.88 billion, well exceeding projections of $12.8
billion made by analysts polled by Reuters. Shares were up 6% by the end of the
session, though the European banking sector closed 1% lower.
Euro zone inflation
came in higher than expected for August, according to preliminary data,
remaining unchanged from July at 5.3%.
On Wednesday, Spain
reported flash inflation up 2.6% year on year for August, in line with analyst
expectations, while Germany reported a 13.2% drop in imports for the year to
July, the sharpest drop since January 1987.
Asia-Pacific markets were mixed as China’s factory activity contracted for a
fifth straight month in August.
European
markets close lower following inflation data and UBS earnings (cnbc.com)
Global growth is
set to slow — but there are ‘pockets of resilience,’ Moody’s says
The global economy is
set to slow down as inflation remains stickier than expected — but there may be
some “pockets of resilience,” according to Moody’s Investors Service.
“We’re expecting
globally a slowdown in growth, and that will have an impact on [emerging
markets] Asia through trade conditions as well as access to financing in the
region,” Marie Diron, managing director for global sovereign and sub-sovereign
risk at Moody’s Investors Service, told CNBC Thursday.
Diron said the
slowdown can be attributed to three factors: higher interest rates that
persist, China’s slowing growth, as well as financial system stresses.
While central banks
have managed to steer the global economy and “create a disinflationary trend”
by raising interest rates, inflation risks are still a sticking point, she
said.
“There are still
risks out there that inflation could prove stickier ... than currently
expected, and that would lead to higher risks for longer and slower growth,”
explained the managing director.
The Federal Reserve started its steady stream of rate hikes in March 2022, as inflation
climbed to its highest in 40 years.
In the last year and a half, the
U.S. central bank has raised the benchmark fed funds rate to between 5.25% to
5.5%. Fed Chair Jerome
Powell last Friday warned that additional interest rate
increases could
be on the table.
A second risk is financial system
stress, Diron said.
“We’ve seen banks absorbing that
period of higher rates, which has had some positive impacts on margins for
some, but also needed an adjustment in businesses, an adjustment to continue to
attract deposits,” she explained.
“It could be that there are pockets
of stress that currently have not quite emerged that materialize maybe later
this year on to next year.”
Finally, China is a
third source of vulnerability.
Moody’s is not
expecting a quick turnaround in the world’s second largest economy and sees
“relatively slow growth in China with implications across the region,” Diron
said.
“It is an outlook
really clouded by downside risks. And that may have an implication for default
rates.”
More
Global growth to slow, but India, Indonesia may be bright spots: Moody's (cnbc.com)
In
commodity news, yet another metal scandal. Crude oil soars.
Copper Giant Aurubis Says It Is Victim of a Huge
Metal Theft
Aurubis
may face losses in hundreds of millions of euros
Company
reviewing inventories, doesn’t know extent of damages
August 31,
2023 at 6:21 PM GMT+1
Updated on August
31, 2023 at 7:30 PM GMT+1
Europe’s top copper producer Aurubis AG warned it may face losses in the
hundreds of millions of euros after being hit by a massive metal theft, and no
longer expects to meet its profit forecast for the year.
The company doesn’t
yet know the extent of the damages but has discovered significant discrepancies
in inventories and shipments of metal associated with its recycling business,
Aurubis said in a statement.
It’s conducting a special inventory of metal reserves that should be completed
by the end of September.
Subscription
required
Aurubis
Says It Is Victim of Huge Metal Theft - Bloomberg
Finally,
more of the woes of China’s growing property crisis.
Chinese developer Country Garden reports $6.7bn loss amid fears of another Evergrande
August 31, 2023
Embattled Chinese developer Country
Garden reported a 48.9bn yuan ($6.7bn) loss for the first half of the year in a
stock exchange filing on Wednesday, adding to worries of a potentially
catastrophic default.
Its tenuous state has sparked fears
of a collapse that could have far-reaching consequences for the Chinese
financial system two years after the fall of Evergrande.
Country Garden, which was
China’s largest real estate firm last year, has four times as many building
projects underway as Evergrande. When the latter halted construction projects
in recent times it infuriated home buyers, who held demonstrations and stopped making mortgage
payments in protest.
Evergrande, the world’s most indebted property firm with liabilities of $328bn, has lost more than 99%
of its share market value over the past three years. The company resumed
trading on the Hong Kong stock exchange on Monday after a 17-month suspension
that Evergrande used to try to restructure its offshore debt.
Related: Evergrande shares plunge further
amid China economy fears
One of China’s biggest
builders, Country Garden has racked up debts of more than $150bn and said this
month it had failed to make interest payments on two loans.
It
is one of the few major homebuilders to have avoided default since Beijing
introduced a “three red lines” policy in 2020 that aimed to reduce debt levels
in the highly leveraged sector. The red lines set limits on
liabilities-to-asset ratios and ensure companies hold cash reserves equivalent
to at least 100% of short-term debt.
The group warned on Wednesday that if its financial performance
“continues to deteriorate” it faces possible default.
If
Country Garden does not meet a deadline for a bond payment at the beginning of
September, it could become the biggest Chinese real estate firm to crash since
Evergrande in 2021.
The
company’s cashflow problems have fuelled fears that it could spread turbulence
through China’s economy and financial system.
The
rise of the world’s second-largest economy has been largely founded on property
and construction, which account for about a quarter of China’s GDP.
Country
Garden’s losses from January to June were on par with estimates it made in
early August of 45-55bn yuan. Over the same period a year ago, the group posted
a small profit of 612m yuan.
More
Chinese developer Country Garden reports $6.7bn loss amid fears of another Evergrande (msn.com)
China says drop in trade with the U.S. is ‘a direct
consequence of U.S. moves’
BEIJING — China’s ambassador to the U.S., Xie
Feng, has blamed U.S. tariffs and export controls for a drop in trade between
the two countries.
That’s according to a speech he
gave via video on Tuesday at Forbes’ U.S.-China Business Forum in New York,
published online by the Chinese Embassy in the U.S.
China-U.S. trade fell by 14.5% in
the first half of the year from a year ago, Xie pointed out.
“This is a direct consequence of U.S. moves to
levy Section 301 tariffs on Chinese imports, abuse unilateral sanctions and
further tighten up export controls,” he said.
“Livelihoods of
many families have been affected, and businesses from both countries have born
the brunt.”
China’s trade partners
The U.S. is China’s
largest trading partner on a single country basis.
Year to date,
U.S.-China trade fell further in July with a 15.4% decline from the same period
in 2022, China customs data showed.
---- Exports
remain a major contributor to China’s economy, although their share has fallen
in recent years.
The U.S. government on Wednesday revised
down second-quarter domestic product to a 2.1% annualized pace,
contrary to expectations there would be no revision, Reuters said. The report
said lower business spending on equipment contributed to the revision.
---- Xie on Tuesday pointed out China’s global dominance in
trade and in industries such as electric vehicles. He noted that France, the
U.K. and Japan had significantly increased their foreign investment in China in
the first half of the year.
“More efforts will be
made to protect foreign investment and ensure national treatment for
foreign-invested enterprises,” he said.
More
China says drop in trade with U.S. is direct consequence of U.S. moves (cnbc.com)
The capitalist engine is first and last an engine of mass production which unavoidably also means production for the masses. . . . It is the cheap cloth, the cheap cotton and rayon fabric, boots, motorcars and so on that are the typical achievements of capitalist production, and not as a rule improvements that would mean much to the rich man.
Joseph A. Schumpeter.
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.
Situations emerge in the process of creative destruction in which many firms may have to perish that nevertheless would be able to live on vigorously and usefully if they could weather a particular storm.
Joseph A. Schumpeter.
Recession fears
after the UK's money supply stops growing for first time in 13 years
The UK’s money
supply has stopped growing for the first time in 13 years in a warning sign
that a recession could be looming.
Bank of England
data showed money supply was no larger in July than in June.
This is in stark
contrast to a flood of money printed during the pandemic, which monetarists
argue was behind the surge in inflation once lockdown restrictions eased and
the economy restarted.
But the stalling
supply raises fears of recession and deflation, or falling prices, which could
encourage the Bank to be more cautious in continuing to raise interest rates to
avoid shifting the economy into reverse.
The supply of
money is important as increases tend to push down interest rates and put more
in the hands of consumers, which increases spending and fuels inflation.
A shrinking supply
has the opposite effect and usually slows down economic activity.
Former governor
Mervyn King has said Bank rate-setters were ignoring warning signs in money
data.
He said: ‘If they
carry on for the next six months or so, tightening monetary policy, it could be
that they generate a recession as well as a sharp fall in inflation.’
The Bank of
England has raised interest rates to 5.25 per cent to tame inflation and is
expected to raise rates next month to 5.5 per cent.
A shrinking supply
has the opposite effect and usually slows down economic activity.
Former governor
Mervyn King has said Bank rate-setters were ignoring warning signs in money
data.
He said: ‘If they
carry on for the next six months or so, tightening monetary policy, it could be
that they generate a recession as well as a sharp fall in inflation.’
The Bank of
England has raised interest rates to 5.25 per cent to tame inflation and is
expected to raise rates next month to 5.5 per cent.
Full list of Homebase, House of Fraser and
Iceland stores to close in September
Major
high street retailers including Homebase and Iceland will bid farewell to
stores next month as widespread closures continue. Express.co.uk reveals the
exact dates and locations affected.
10:35,
Wed, Aug 30, 2023 | UPDATED: 07:13, Thu, Aug 31, 2023
A number
of supermarkets, homeware stores and fashion retailers have closed down brick-and-mortar sites across the UK
this year.
While many retailers started
to pull the shutters on stores early in 2023, there's no end in sight for some
brands which will lose more stores in September.
Iceland, Homebase,
and House of Fraser are
among those that will bid farewell to shops in a matter of weeks, with some
going as early as next Friday.
High energy costs and a shift
to shopping online after the pandemic have taken their toll on many shops, but
others are closing stores as part of long-term strategies to optimise their
portfolio.
Iceland, Homebase,
and House of Fraser are
among those that will bid farewell to shops in a matter of weeks, with some
going as early as next Friday.
Here's a full list of the UK branches closing
this September.
Homebase
Home and garden
giant Homebase will close its Newport store for good on Friday,
September 8, 2023.
It will mark the sixth branch
to close in Wales since 2018, during which three stores closed within the
capital, Cardiff.
Closures aren't new to the
DIY and garden specialist, which has closed a staggering 93 stores since it was
taken over by Hilco Capital five years ago.
Iceland
Renowned as the go-to budget
supermarket for frozen and long-life goods, Iceland has a loyal customer base
across its 900 stores.
However, Britons may see
their local branch disappear after the supermarket announced that it
would be shutting a handful of stores in 2023.
Three sites will go in
September, with the first being the Park Street site in Llanelli, Wales on
Saturday, September 2.
The second Iceland branch to
close next month will be the Birkenhead site in Merseyside, Wirral on Saturday,
September 16, closely followed by the Crewe store in Cheshire, which will go on
the same day.
House of Fraser
It's not just supermarkets
and grocers that will lose stores in September. Major department store House of
Fraser will bid farewell to one of its largest branches next month.
The British retailer
confirmed that its Guildford site will pull the shutters down on Saturday,
September 30, just weeks after the Solihull site closed on Monday, August 28.
Earlier in January, the
department store closed its site in High Wycombe, which came shortly after
London's Westfield Shepherd's Bush site was removed from the shopping centre.
Full list of
Homebase, House of Fraser and Iceland stores to close in just weeks |
Express.co.uk
Covid-19 Corner
This
section will continue until it becomes unneeded.
Are mask mandates
coming back with new COVID-19 variant? Here’s what experts are saying
Thu, August 31, 2023 at 3:30 AM GMT+1
Some businesses and schools
have reportedly reimplemented the “pandemic-era rule” regarding
masks, despite the Centers for Disease Control and Prevention not announcing
any new mask mandates with the latest COVID-19 variant on the rise.
The CDC reported that, “based on what CDC knows now,
existing tests used to detect and medications used to treat COVID-19 appear to
be effective” with the coronavirus variant labeled BA.2.86 and that “scientists
are evaluating the effectiveness of the forthcoming, updated COVID-19 vaccine.”
All the recommended “prevention
actions” against the new COVID-19 variant reported by the CDC include the
following:
·
“Get your COVID-19
vaccines, as recommended.”
·
“Stay home if you
are sick.”
·
“Get tested for
COVID-19 if needed.”
·
“Seek treatment if
you have COVID-19 and are at high risk of getting very sick.”
·
“If you choose to
wear a mask, wear a high-quality one that fits well over your nose and mouth.”
·
“Improve
ventilation.”
·
“Wash your hands.”
The Deseret News reported
that “the latest COVID-19 strain is being described as reminiscent of the early
days of omicron.”
The Arizona Republic reported in an opinion piece that the handling of
COVID-19 by public officials decreased some of the public’s trust in both
government and health-care experts.
Convincing Americans to don their
masks for a second time around will reportedly be difficult, despite “more and more public-health
officials” that are “dusting off their old face masks and encouraging Americans
to do the same for the new BA.2.86 variant of COVID-19.”
---- The Deseret News reported
that Kelly Oakeson, chief scientist for next generation sequencing and
bioinformatics for the Utah Department of Health and Human Services, said
regarding the new COVID-19 variant BA.2.86, “This just seems to be like another
one of those variants cropping up that we expect from time to time. There’s no
more severe illness with this.”
Oakeson continued,
“Am I changing any of my behaviors? No.”
More
Are mask mandates coming back with new COVID-19 variant? Here’s what experts are saying (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.
Graphene
Week: Showcasing the Influence of Graphene on Society
August 30, 2023
Chalmers
University of Technology in Sweden has overseen the EU’s largest
research initiative to date, the Graphene Flagship, which has a budget of one
billion euros. It is time to emphasize the path of graphene, a single sheet of
carbon, from the lab to society. In addition to a high number of new products,
patents, and companies, the research initiative is expected to generate
approximately 38,000 employment opportunities in Europe by 2030.
The media are encouraged to
participate in the findings, examine graphene-based products, and meet
academics and entrepreneurs at the Svenska Mässan/Gothia Towers in Gothenburg,
Sweden, during the Graphene Week conference, which runs from September 4th to
September 8th, 2023.
The event announces the findings of
the WifOR Institute’s widely anticipated economic impact report. Figures
include a 14.5-fold return on investment and the creation of 81,000 employment
worldwide by 2030. The primary findings include considerable contributions to
Europe’s GDP and €5.9 billion in gross value added (GVA).
Some of the Graphene
Flagship’s most successful initiatives will also be showcased during the event.
Showcasing Graphene Products and Prototypes
Graphene Week, the annual
scientific meeting of the Graphene Flagship, will include an open pavilion
showing graphene goods and prototypes, a press conference, the Graphene
Innovation Forum, which will provide an industrial perspective on graphene
technology, and more.
These platforms will make it
easier to have discussions about the past, present, and future of graphene
research and commercialization in Europe, emphasizing the project’s key
accomplishments in addition to its transition to the new Horizon Europe phase,
the EU’s main funding program for research and innovation, where it will
continue its research.
The 18th iteration
of the week-long conference will feature more than 200 lectures and sessions on
the fundamentals, uses, and production methods of graphene. This year's
conference will mark a decade of innovation and commercialization in the field
of 2D materials along with advancements made in using graphene to help achieve
some of the UN's 17 Sustainable Development Goals.
More
Graphene Week: Showcasing the Influence of Graphene on
Society (azonano.com)
Another weekend and how long can the
west’s stock casino bubbles hold out in the face of the 40 year Chinese boom
economy rapidly turning into a bust economy?
More in the weekend LIR edition.
Have a great weekend everyone.
I set out to become the greatest lover in Vienna, the greatest horseman in Austria, and the greatest economist in the world. Alas, for the illusions of youth: as a horseman, I was never really first-rate.
Joseph A. Schumpeter.
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