Baltic Dry Index. 1381 +41 Brent Crude 94.49
Spot Gold 1928 US 2 Year Yield 5.02 +0.02
There can be few fields of human endeavour in which history
counts for so little as in the world of finance. Past experience, to the extent
that it is part of memory at all, is dismissed as the primitive refuge of those
who do not have the insight to appreciate the incredible wonders of the
present.
John Kenneth Galbraith.
Not much for me to add to this morning’s articles.
This week it’s all about what the Fed and to a lesser extent, the Bank of England do with interest rates.
What happens or doesn’t happen in that US auto strike. Eventually, how inflationary will it’s ending be.
To a lesser extent, what happens next in
China’s still growing property crisis and what happens next with the price of
crude oil.
Asia markets fall
ahead of closely watched central bank decisions this week
UPDATED SUN, SEP 17 2023 9:58 PM
EDT
Asia-Pacific markets slipped Monday as investors
look ahead to a week of central bank decisions.
The U.S. Federal
Reserve’s decision is expected early Thursday in Asia, while Australia’s
central bank will release its minutes for its Sept. 5 policy meeting on
Tuesday.
On Friday, the Bank
of Japan will conclude its monetary policy meeting and traders will be looking
for clarity on when the BOJ will start to shift its ultra-easy monetary policy.
Elsewhere, the People’s Bank of China is also expected to release its loan prime
rate decisions on Friday.
In Australia, the S&P/ASX 200 started
the week down 0.74%, while South Korea’s Kospi also
fell 0.68% and the Kosdaq slumped 0.72%.
Hong Kong’s Hang Seng index slid
1.16%, leading losses in Asia, while mainland Chinese markets were more
subdued, with the CSI 300 trading close to the flatline.
On Friday in the U.S., all
three major indexes lost ground, with the the Dow Jones Industrial Average sliding 0.83%, while the S&P 500 was lower by 1.22% and the Nasdaq Composite dropped 1.56%.
Asia
stock markets today: Live updates (cnbc.com)
Stock futures are
little changed as Wall Street awaits Fed meeting: Live updates
UPDATED
SUN, SEP 17 2023 7:00 PM EDT
U.S. stock futures inched up Sunday night as
investors look toward the Federal Reserve’s next policy decision.
Futures tied to the Dow Jones
Industrial Average added 32 points, or 0.1%. The S&P 500 and Nasdaq 100
futures also ticked up 0.1%.
The broad market index and the
Nasdaq both ended the previous trading week in the red, marking their second
straight week of losses. The Dow managed to end the week 0.1% higher.
Investors are widely anticipating
that the Fed will hold interest rates steady. However, traders will be keeping
a close eye to get a better sense on the central bank’s stance on inflation
from here.
“How the Fed delivers the pause
is crucial for November and December rate expectations, but whether it’s
presented with a dovish or hawkish tilt is what matters most for financial
markets,” said Quincy Krosby, chief global strategist for LPL Financial.
Recent inflation data came
largely in-line with economists’ expectations. While the producer price index
gained more than expected, the core
PPI, which excludes food and energy, matched the estimate. The
core consumer price index also increased slightly higher than expected in
August, rising 0.3% month-over-month, against the estimate of 0.2%.
However, Krosby believes higher
prices could be ahead as the labor market remains strong. The United
Auto Workers strike in Detroit could place further upward
pressure on prices, according to the strategist.
“Given the UAW strike with the
potential for a substantial pay package, coupled with labor’s recent successful
negotiations, underpinning a broad swath of higher wages, the FOMC is faced
with a likelihood of resulting higher prices,” said Krosby.
Policymakers will be looking
toward more economic data releases Monday. September’s Housing Market Index
data is scheduled to be released. The New York Fed will also be announcing
September’s Business Leaders Survey results.
Stock
futures are little changed as Wall Street awaits Fed meeting: Live updates
(cnbc.com)
China Evergrande shares tumble 25% after wealth
management staff detained
September 18,
20233:12 AM GMT+1
HONG
KONG, Sept 18 (Reuters) - Shares of embattled developer China Evergrande Group (3333.HK) plunged
25% on Monday after police detained
some staff at its wealth management unit, suggesting a new
investigation that could add to the property company's woes.
Evergrande, the
world's most indebted property developer, is at the centre of a crisis in
China's real estate sector that has seen a string of defaults since late 2021
that have rattled global markets and sparked fears of contagion. Trading in the
company's stock was suspended for 17 months until Aug. 28.
During protests
by disgruntled investors at Evergrande's Shenzhen headquarters in 2021, Du
Liang was identified by staff as general manager and legal representative of
Evergrande's wealth management division.
"Recently,
public security organs took criminal compulsory measures against Du and other
suspected criminals at Evergrande Financial Wealth Management Co," police
in the southern city of Shenzhen said in a social media statement on Saturday
night.
Reuters could not
confirm that Du was among those detained, and the police statement did not
specify the number of people detained, the charges or the date they were taken
into custody.
Evergrande has
not responded to request for comment on the police action.
The
stock fell as much as 25% to HK$0.465 in early morning trade, the lowest in two
weeks. It pared losses by 0200 GMT, down 11%, lagging a 0.9% fall in the
broader Hang Seng Index (.HSI).
Last month, the
Chinese developer posted a January-June net loss of 33 billion yuan ($4.5
billion), versus a 66.4 billion yuan loss in the same period the previous year.
Earlier
this month, Evergrande said it had delayed
making a decision on offshore debt restructuring from September to
next month to allow holders of its debt more time to consider its restructuring
plan.
China
Evergrande shares tumble 25% after wealth management staff detained | Reuters
Cash-squeezed
developer Country Garden faces another dollar coupon deadline
By Xie Yu September 18, 20234:15 AM GMT+1
HONG
KONG, Sept 18 (Reuters) - Embattled Chinese property developer Country Garden (2007.HK) faces
yet another liquidity test with Monday's deadline to pay $15 million in
interest linked to an offshore bond after having dodged default at the last
minute twice earlier this month.
The country's
No.1 private developer, whose financial woes have worsened the property sector
outlook and prompted Beijing to unveil a raft of support measures, will have a
30-day grace period to pay the coupon before it would be considered in default.
If Country Garden
fails to pay the $15 million before the grace period ends in mid-October, the
principal will become due immediately and any failure to service will trigger
cross-default terms, said Sandra Chow, co-head of Asia-Pacific research at
CreditSights.
"It's going
to be really hard," for Country Garden to meet debt obligations due to its
tumbling cash levels at a time when property sales in the world's
second-largest economy remained very weak, Chow said.
A Country Garden
spokesperson did not immediately respond to Reuters request for comment on
Monday about its latest debt repayment obligation.
Country Garden
last month warned of default risks if its financial performance continues to
deteriorate. It has 108.7 billion yuan ($14.9 billion) of debt due within 12
months but cash of only around 101 billion yuan as of June.
It avoided
default by winning approval from its creditors to extend payments for an
onshore private bond, in a major relief for the embattled Chinese developer as
well as the crisis-hit property sector.
The
developer in August missed coupon payments worth $22.5 million tied to two
dollar bonds but managed to wire
funds before a grace period ended earlier this month, dodging a
default.
Last
week, onshore bondholders approved to
extend repayments of seven other Country Garden bonds by three years.
Shares
in Country Garden, one of the few large Chinese developers that have not
defaulted on debt obligations, were trading up nearly 1% in Hong Kong, while
the broader market (.HSI) was down 0.9%.
Many creditors
believe that Country Garden will have to restructure its offshore debt if it
doesn't get liquidity support soon.
Some
offshore creditors of Country Garden have started talks with New York-based law
firm Kobre
& Kim LLP and London-based Ashurst and
are looking at forming groups if the property developer seeks to restructure
its debt.
Cash-squeezed
developer Country Garden faces another dollar coupon deadline | Reuters
Stellantis offers raises, inflation protection
measures to UAW as strikes continue
PUBLISHED SAT, SEP 16 2023 2:09
PM EDT UPDATED SAT, SEP 16 2023 3:22 PM EDT
Stellantis said Saturday that its most recent proposal to the
United Auto Workers includes raises of nearly 21% over the course of the
contract, including an immediate 10% pay increase, and the end of wage tiers
for some workers, the latest development in a historic showdown between
the big three Detroit automakers and the union.
The Jeep maker’s proposal, which is in line with
proposals from Ford and General
Motors, would also continue to offer
profit sharing to workers, according to new details on the offer released by
the company Saturday.
“The teams have been very, very careful to listen,
very careful for us to come up with best offers that we can do that also
protect … the company,” COO Mark Stewart said on a Saturday call with
reporters.
The standoff between the UAW and major automakers
Stellantis, Ford and General Motors reached a fever pitch Friday, with the
union starting work stoppages after an agreement wasn’t met by a Thursday night deadline. The
so-called stand-up strike started with walkouts at three key plants — one for
each automaker — with the possibility that the UAW can call on more of its
members to join the strike if needed.
The union has been seeking 40% hourly pay
increases, a reduced 32-hour workweek, a move back to traditional pensions, the
elimination of compensation tiers and a restoration of cost-of-living
adjustments, among other items. The UAW didn’t immediately respond to a request
for comment about the proposal.
Meanwhile, Ford and GM resumed negotiations
Saturday after no talks occurred between the union any of the automakers the
previous day. Stellantis said it planned to pick up talks again Monday.
UAW President Shawn Fain said earlier this week
that Stellantis had previously offered a 17.5% increase.
Under the new proposal, starting pay for
supplemental employees would increase by $4.22, or nearly 27%, to $20 an hour.
The company also said it would cut the timeline
for ascending the hourly wage scale in half to four years, meaning all
full-time hourly employees would reach the top before the contract expires.
Under the offer, the wage-tier system would be eliminated entirely for its
Mopar division, which is known for service, parts and customer interfacing.
Stellantis also offered an inflation protection
measure within compensation. The company said it has committed more than $1
billion for improvements in the pension and retirement savings plans for
current employees and retirees.
Stellantis leadership also pushed back against the
union’s descriptions of the automaker’s plans to close or sell 18 facilities. The company has said it aims to run parts distribution
centers more efficiently and continue shifting resources toward electric
vehicles. Jobs in these plants would be persevered, the company said.
More
Stellantis offers raises, inflation protection to UAW as strikes continue (cnbc.com)
Finally, the EU splits over access to
Ukraine’s grain. More food price inflation ahead.
Poland,
Hungary, Slovakia to introduce own bans on Ukraine grains
PUBLISHED SAT, SEP 16 2023 6:12
AM EDT UPDATED SAT, SEP 16 2023 6:14 AM EDT
Poland, Slovakia and
Hungary announced their own restrictions on Ukrainian grain imports on Friday
after the European Commission decided not to extend its ban on imports into
Ukraine’s five EU neighbors.
Ukraine was one of
the world’s top grain exporters before Russia’s 2022 invasion reduced its
ability to ship agricultural produce to global markets. Ukrainian farmers have
relied on grain exports through neighboring countries since the conflict began
as it has been unable to use the favored routes through Black Sea ports.
But the flood of
grains and oilseeds into neighboring countries reduced prices there, impacting
the income of local farmers and resulting in governments banning agricultural
imports from Ukraine. The European Union in May stepped in to prevent
individual countries imposing unilateral bans and imposed its own ban on
imports into neighboring countries. Under the EU ban, Ukraine was allowed to
export through those countries on condition the produce was sold elsewhere.
The EU allowed that
ban to expire on Friday after Ukraine pledged to take measures to tighten
control of exports to neighboring countries. The issue is a particularly
sensitive one now as farmers harvest their crops and prepare to sell.
EU Trade Commissioner
Valdis Dombrovskis said on Friday countries should refrain from unilateral
measures against imports of Ukrainian grain, but Poland, Slovakia and Hungary
immediately responded by reimposing their own restrictions on Ukrainian grain imports.
They will continue to allow the transit of Ukrainian produce.
“As long as Ukraine
is able to certify that the grain is going to get to the country of
destination, through the trucks and trains, the domestic use ban is not really
going to put a dent in Ukraine’s ability to get exports out,” said Terry
Reilly, senior agricultural strategist for Marex. He noted that disruptions to
Black Sea exports are a bigger concern.
It is
unclear how much Ukraine has pledged to restrict exports or how the new bans
would impact the flow of produce from Ukraine. The issue has underscored
division the EU over the impact of the war in Ukraine on the economies of
member countries which themselves have powerful agriculture and farming
lobbies.
----“The ban covers four cereals, but also at my
request, at the request of farmers, the ban has been extended to include meals
from these cereals: corn, wheat, rapeseed, so that these products also do not
affect the Polish market,” Polish Agriculture Minister Robert Telus said in a
statement posted on Facebook.
“We will extend this
ban despite their disagreement, despite the European Commission’s
disagreement,” added Polish PM Mateusz Morawiecki. “We will do it because it is
in the interest of the Polish farmer.”
Hungary imposed a
national import ban on 24 Ukrainian agricultural products, including grains,
vegetables, several meat products and honey, according to a government decree
published on Friday.
Slovakia’s
agriculture minister followed suit announcing its own grain ban. All three bans
only apply to domestic imports and do not affect transit to onward markets.
More
Poland, Hungary, Slovakia to introduce own bans on
Ukraine grains (cnbc.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.
Bank of England should hike UK
interest rates further, says think tank
Mon, 18 September 2023
at 6:01 am BST
The Centre for Economics and
Business Research (Cebr) has said that the Bank of
England (BoE) should hike UK interest rates by 25 basis points
at its next meeting on Wednesday. [Edit: Thursday.]
The London-based economic
consultancy said the monetary policy committee (MPC) would then have until
November to "evaluate if the loosening in the labour market is having the
desired effect on domestic inflationary pressure".
It warned that UK inflation,
which currently stands at 6.8%, is still too high.
Currently the Bank Rate is 5.25%
and despite governor Andrew Bailey
telling MPs recently that rates are near the top of the cycle,
speculation is growing that the MPC may vote to raise it by another 0.25% to
5.50%.
Last month, the Office for
National Statistics (ONS) revealed that Consumer Prices Index inflation was
6.8% in July, down from 7.9% in June.
It was the lowest rate since
February 2022 but still represents a sharp increase in the cost of
living for Brits over the past year, and is above the Bank's 2%
target.
"Core inflation and services
inflation are not yet moving in the right direction which suggests that wage
pressures are still feeding through into higher prices," the Cebr said.
"The recent sharp uptick in
global oil prices should be a warning — any potential new exogenous shock could
quickly change the picture and reignite an inflationary spiral."
It comes as the European Central
Bank (ECB) raised rates
by 0.25% last week despite the gloomy economic outlook for the
currency bloc.
Across the Atlantic, the US
Federal Reserve is expected to hold rates steady this month, benefitting both
from weaker inflationary dynamics and a stronger economy.
Cebr warned that a recent rise in
oil prices shows that central bankers cannot rely on endlessly falling energy
prices to bring inflation back to its 2% target.
For most of the year, central
bankers had help from falling energy prices and base effects, meaning that
inflation duly ticked downwards month after month.
More
Bank
of England should hike UK interest rates further, says think tank (yahoo.com)
Kristy Dorsey:
Interest rates may already be too high to avoid recession
Sat,
16 September 2023 at 4:30 am BST
Too slow off the mark when
inflation started gathering pace towards the end of 2021, the Bank of England's
belated campaign to raise interest rates now looks dangerously close to dumping
the UK economy into an unavoidable recession.
Though legally independent of
government interference when it comes to setting monetary policy, there is
little doubt Andrew Bailey & Co have felt pressure to do whatever it
takes to help deliver on Prime Minister Rishi Sunak's promise to halve
inflation as we gear up towards next year's general election campaign. Members of the Bank's Monetary Policy Committee
(MPC) headed by Governor Bailey are clearly content to manufacture a
downturn to slow rising wages and inflation, but the escalating risk
is that this will snowball into a punishing recession.
Business lobby
groups made clear their fears of another rise in the cost of borrowing when the
MPC makes its next announcement on Thursday after this past week's news
that wage inflation remained stuck at
7.8% during the three
months to July, the highest since comparable records began in 2001.
Odds are that wage inflation
figure will retain its Svengali-like influnce over the MPC, which has fretted
incessantly about the effect of pay increases on inflation. But drill down a
little deeper and the wage numbers are more dovish than they first appear.
Stripping out the public sector,
private sector wages barely increased between June and July. And if you
disregard the bonus element of recent public sector pay deals, wage inflation
across government, the NHS and so forth falls from 12.2% to 6.6% - below the
July inflation rate of 6.8%.
With unemployment up at 4.3% and
the number of vacancies across the UK falling
below one million for the first time in two years, there are clear signs that the red-hot jobs market is
cooling. This doesn't scream the need to raise the base interest rate beyond
the current 5.25%.
In fact, with the exception of
inflation, pretty much all of the macroeconomic factors facing the UK point to
a policy rate which is restrictive.
The economy is flatlining, as
evidenced by figures on Wednesday from the Office for National Statistics (ONS)
which showed that gross domestic product (GDP) fell
by 0.5% in July versus the
0.2% decline expected by most economists.
More
Kristy Dorsey: Interest rates may already be too high
to avoid recession (yahoo.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
COVID-19 Oral
Vaccine Pill Developed
9/16/2023 Updated: 9/16/2023
Researchers
in Japan have discovered a way to administer the vaccine by mouth and in pill
form instead of injection. This allows for easier distribution, wider
accessibility, and speedier administration, according to researchers.
How
It Works
The pill is similar to the shot in that it
contains an active form of the coronavirus as a way to produce immunity.
However, researchers target mucus instead of blood.
“The best way to neutralize viruses is
before they can enter inside human cells but are only on the external surface
of [skin] cells that line and produce mucus in the lungs, nose, and mouth,”
a statement released by
the publisher reads.
According to
the authors, compared to the current vaccines that are given subcutaneously,
these oral vaccines are more effective in inducing Immunoglobulin A
(IgA). IgA is a class of antibodies operates in mucus and can disable
viruses. A coronavirus infection shielded by a vaccine that produces
mucosal immunity in the form of IgA antibodies is a better prevention
strategy than the blood serum immunity approach currently available, they add.
The authors
also mentioned that nasal vaccines tend to produce side effects, such as
headaches and fever, on the central nervous system or lungs.
The paper was published in the journal Biology Methods and Protocols.
Trial
Success
Researchers used an animal model to test
oral vaccine effectiveness. Nine monkeys were divided into three groups of
three.
The latest COVID-19 news and case numbers from around the states and territories
September 15, 2023
Here's a quick wrap
of the COVID-19 news and case numbers from each Australian jurisdiction for the
past week, as reported on September 15, 2023.
The states and
territories are now reporting their COVID-19 statistics weekly, instead of
through the daily updates that were provided from the early days of the
pandemic.
This story will be updated
throughout the day so check back later if the figures for your
state or territory are not included.
- Australia
Capital Territory
- New South
Wales
- Northern
Territory
- Queensland
- South
Australia
- Tasmania
- Victoria
- Western
Australia
More
The latest COVID-19 news and case numbers from around the states and territories - ABC News
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 By-Product Compensates “Flash” Hydrogen
Production Expenses
September 15, 2023
Hydrogen is seen as a possible replacement for
fossil fuels, but the technologies utilized to produce it either emit too much
CO2 or are too expensive. Rice University researchers
have discovered a low-emissions method for harvesting hydrogen from plastic
waste that could potentially more than pay for itself.
In this work, we converted waste plastics—including mixed waste plastics
that don’t have to be sorted by type or washed—into high-yield hydrogen gas and
high-value graphene. If the produced graphene is sold at only 5% of current
market value—a 95% off sale! —clean hydrogen could be produced for free.
Kevin Wyss, Study Lead Author and Doctoral Student, Rice University
‘Green’
hydrogen, on the other hand, costs around $5 for slightly over two pounds and
is created by splitting water into its two constituent atoms using renewable
energy sources. Although it was more affordable, the majority of the over 100
million tons of hydrogen utilized globally in 2022 came from fossil fuels, with
each ton of hydrogen produced generating around 12 tons of carbon dioxide.
The main form of hydrogen used today is ‘gray’ hydrogen, which is
produced through steam-methane reforming, a method that generates a lot of
carbon dioxide. Demand for hydrogen will likely skyrocket over the next few
decades, so we can’t keep making it the same way we have up until now if we are
serious about reaching net zero emissions by 2050.
James Tour, T. T. and W. F. Chao Professor, Chemistry, Rice University
For roughly
four seconds, the researchers subjected plastic waste samples to fast flash
Joule heating, raising their temperature to 3100 degrees Kelvin. The technique
vaporizes the hydrogen in plastics, resulting in graphene, an extraordinarily
light, durable substance composed of a single sheet of carbon atoms.
Wyss added, “When
we first discovered flash Joule heating and applied it to upcycle waste plastic
into graphene, we observed a lot of volatile gases being produced and shooting
out of the reactor. We wondered what they were, suspecting a mix of small
hydrocarbons and hydrogen, but lacked the instrumentation to study their exact
composition.”
The Tour lab
obtained the requisite technology to characterize the vaporized contents with
financing from the United States Army Corps of Engineers.
“We know
that polyethylene, for example, is made of 86% carbon and 14% hydrogen, and we
demonstrated that we are able to recover up to 68% of that atomic hydrogen as
gas with a 94% purity. Developing the methods and expertise to characterize and
quantify all the gases, including hydrogen, produced by this method was a
difficult but rewarding process for me. I am glad that techniques I learned and
used in this work—specifically life-cycle assessment and gas chromatography—can
be applied to other projects in our group,” Wyss further stated.
He concluded,
“I hope that this work will allow for the production of clean hydrogen from
waste plastics, possibly solving major environmental problems like plastic
pollution and the greenhouse gas-intensive production of hydrogen by
steam-methane reforming.”
The US Army
Engineer Research and Development Center (W912HZ-21-2-0050), the Air Force
Office of Scientific Research (FA9550-22-1-0526), the National Science
Foundation, and the Office of Naval Research (N00014-22-1-2788) funded the
study.
Graphene
By-Product Compensates “Flash” Hydrogen Production Expenses (azocleantech.com)
If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.
John Maynard Keynes.
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