Baltic
Dry Index. 1290 +55 Brent Crude 92.33
Spot
Gold 1910 US
2 Year Yield 4.96 -0.02
The difference between stupidity and genius is that genius has its limits.
Albert Einstein.
In the stock casinos, a continued disconnect from an increasingly harsh global economic reality.
Day two of US inflation figures as a US inflationary auto strike looms.
The ECB’s dithering ends later today. Ignore inflation and leave interest rates unchanged or hike their key interest rate and push Euroland into recession?
Australia’s LNG strikes set to intensify.
All in all, a good time to be out of stock
casinos still priced to perfection.
European markets
head for mixed open ahead of ECB rate decision
UPDATED THU, SEP 14 2023 12:24 AM
EDT
European
markets are heading for a mixed open Thursday as investors in the region look
ahead to the European Central Bank’s next rate decision.
The central bank is expected to
keep rates steady as economic activity in the euro area decelerates at a faster
pace than previously expected.
European stock markets closed
slightly lower Wednesday as investors reacted to stronger than expected U.S.
inflation data.
The consumer price index, which
measures costs across a broad variety of goods and services, rose 3.7% from a
year ago, the U.S. Department of Labor reported Wednesday. Economists surveyed
by Dow Jones had forecast an increase of 3.6%. On a monthly basis, prices
increased 0.6%, in line with expectations.
The core consumer price index,
which excludes food and energy and is closely monitored by the Federal Reserve,
rose by 0.3% on the month and 4.3% on the year. Economists polled by Dow Jones
signaled rises of 0.2% and 4.3%, respectively.
European
markets live updates: ECB rate decision, stocks and data (cnbc.com)
Dow slips a second day after August’s slightly
hotter core inflation reading: Live updates
UPDATED WED, SEP 13 2023 4:37 PM
EDT
The Dow Jones
Industrial Average fell Wednesday
as traders absorbed a hotter-than-expected August core inflation print.
The Dow lost 70.46 points, or 0.20%, to
34,575.53 for its second straight decline. Meanwhile, the S&P
500 was up 0.12% to 4,467.44.
The Nasdaq Composite added
0.29% to end at 13,813.59.
3M was the biggest laggard in the 30-stock Dow,
dropping more than 5.7%. Caterpillar shares
were lower by 2%. Meanwhile, Apple shares declined more than 1%, falling for a
second day.
On the other hand, tech gains helped to lift the
S&P 500 and Nasdaq. Tesla shares
gained 1.4% after billionaire investor Ron Baron stood by his bullish
thesis on the electric vehicle
maker. Amazon shares
hit their highest level since August 2022; they advanced more than 2.5%.
August’s core inflation print in
the consumer price index increased 0.3% and 4.3% respectively, against
estimates for 0.2% and 4.3%. Federal Reserve officials focus more on the core
number as it provides a better indication of where inflation is heading over
the long term.
Meanwhile, the headline numbers rose 0.6% last
month, and was up 3.7% from a year ago. Economists surveyed by Dow Jones were looking
for respective increases of 0.6% and 3.6%.
“This report interrupts the run of good news
[and] makes it more difficult to talk a happy game about inflation,” said
Vincent Reinhart, chief economist at Dreyfus and Mellon. “It doesn’t matter for
the upcoming FOMC meeting’s results. They’re not going to act. They have not
signaled action. Market participants do not expect action. And that’s because
they’ve shifted down the pace of tightening.”
“If they act, it will be in November,” Reinhart
added.
Wall Street has mostly priced in a pause in rate
hikes at the Fed’s meeting next week. Fed funds futures pricing data as of
Wednesday afternoon indicate a 97% probability of rates remaining the same,
according to the CME FedWatch Tool.
Stock market today: Live updates (cnbc.com)
In other news, a US auto strike is less than 24 hours away, unless of course, the big three car makers capitulate.
As Europe slides closer to recession, what’s the ECB going to do with their key interest rate later today?
Argentina goes for broke and takes a
trip down memory lane back to 1991.
Ford CEO rebuffs
UAW leader’s criticisms as strike deadline on Thursday approaches
DETROIT – Ford Motor CEO
Jim Farley rebuffed comments by United Auto Workers President Shawn Fain that
the company is not taking
bargaining seriously ahead of a Thursday night strike deadline,
placing blame on the union leader for not showing up to the bargaining table –
both figuratively and literally.
Farley said the company has
received “no genuine counteroffer” on its four economic proposals, including
the latest offer that Ford is calling the most generous offer ever between the
UAW and company. He also said Fain, who is simultaneously negotiating with General Motors and Stellantis,
was absent during a Tuesday meeting that he and Ford Chair Bill Ford expected
Fain to attend.
“We’re here, we’re ready to negotiate, but it’s sure hard to negotiate a
contract when there’s no one to negotiate with,” Farley told reporters
Wednesday night on the sidelines of the Detroit
Auto Show. “We have time left, but it’s hard to negotiate when you
don’t get any feedback back.”
Farley’s comments came roughly 24
hours after he told reporters Tuesday that he was optimistic the company could
reach a deal with the union.
Public criticism between the union
and an automaker aren’t unprecedented but the amount of detail being released, announced
strike plans and simultaneous bargaining certainly are.
Farley said he didn’t know Fain had
received the offer until he was discussing it during a 5
p.m. Facebook Live with union members. He also questioned
whether Fain is too busy already “planning strikes or PR events that we can’t
get the feedback to make the best offer.”
A UAW spokesman did not immediately respond for
comment regarding Farley’s comments or a letter released on his behalf by the
company countering many of Fain’s criticisms.
The union has argued the companies know their demands. They include:
ambitious targets of 40% hourly pay increases, a reduced 32-hour workweek, a
shift back to traditional pensions, the elimination of compensation tiers and a
restoration of cost-of-living adjustments, among other items.
Farley declined to directly answer
a question about whether he believes the union is bargaining in good faith,
which could justify a complaint with the National Labor Relations Board.
The UAW late last month filed
unfair labor practice charges against GM and Stellantis to the
NLRB for not bargaining with the union in good faith or a timely manner. It did
not file a complaint against Ford.
More
Ford
CEO fires back at UAW leader as Thursday strike deadline looms (cnbc.com)
ECB considers lifting
rates to record high even as economy slows
By Francesco
Canepa and Balazs
Koranyi September 13, 202311:13 PM GMT+1
FRANKFURT, Sept
14 (Reuters) - The European Central Bank is set to decide on Thursday whether
to raise its key interest rate to a record peak in what should be its final
step in the fight against inflation, or take a break as the economy
deteriorates.
The central bank
for the 20 countries that share the euro faces a dilemma. Even after nine
consecutive rate hikes, prices are rising at more than twice its 2% target and
are not expected to slow to that level for another two years.
But higher
borrowing costs across much of the world and China's economic malaise are
taking a toll on economic growth, with a recession in the euro zone now a
distinct possibility.
Analysts and investors had been leaning towards a pause in the ECB's rate increases until Reuters reported on Tuesday that the central bank was set to raise its forecast for inflation next year to more than 3%, bolstering the argument for a hike.
Policymakers
saw the 2024 projection as crucial to determine whether inflation, currently still
above 5%, was heading back to target or risked getting stuck at a higher
level for too long.
"The
inflation momentum is simply too strong for the ECB to pause," Danske Bank
economist Piet Haines Christiansen said.
A
majority of economists in a Sept 5-7 Reuters poll had expected the
ECB to hold rates steady this week, but with the mood shifting money markets
now assign a 65% chance of a hike, expected to be the last in a cycle that
began in July 2022.
An increase of 25
basis points on Thursday would take the rate the ECB pays on bank deposits to
4.0%, the highest level since the euro was launched in 1999.
Just 14 months
ago, that rate was languishing at a record low of minus 0.5%, meaning banks had
to pay to park their cash securely at the central bank.
More
ECB
considers lifting rates to record high even as economy slows | Reuters
Europe's high gas
prices hit industrial output
By John Kemp September 13, 2023 2:00 AM GMT+1
LONDON, Sept 12 (Reuters) - Europe's
gas consumption is down by between 10% and 15% compared with the decade before
Russia's invasion of Ukraine, as high prices enforce a sharp reduction in fuel
use especially by energy-intensive manufacturers.
Use by the largest consuming countries
shows no sign of recovering in 2023, despite the improved supply outlook and
retreat in prices since the middle of 2022, indicating some consumption losses
may be permanent.
According to Eurostat estimates,
consumption in the European Union's seven-largest gas consuming countries
amounted to 6.1 million terajoules (TJ) in the first seven months of the year.
Consumption had fallen from 6.8 million
TJ in the same period of 2022 and an average of 7.0 million TJ in the 10 years
from 2012 to 2021 ("Supply, consumption and transformation of gas",
Eurostat, Sept. 8, 2023).
Use was down in every one of the first
seven months of the year compared with the pre-invasion decade showing
consumption was down irrespective of temperatures.
Germany, Italy and the Netherlands all
reported sharp reductions in gas consumption in June and July compared with the
pre-invasion average.
Space heating demand was essentially
zero in this period so cuts reflected reduced use by electricity generators and
industrial customers.
Chartbook: Europe gas consumption
By July 2023, front-month gas futures
prices had fallen by 88% from the peak in August 2022, after adjusting for
inflation, as panic-buying for storage ended and a mild winter left the region
with record stocks.
---- Real front-month prices were in
the 60th percentile for all months since 2010 in July and have risen to the
83rd percentile so far in September.
Most energy-intensive industrial users
require uninterrupted supplies, buy gas on contracts linked to longer-term
averages, and hedge their costs forward to lock in profit margins.
Prices for gas to be delivered
throughout 2024 are still double the inflation-adjusted average for the five
years between 2017 and 2021.
Many users in steelmaking, smelting,
cement, ceramics, glass-making, fertilizers, petrochemicals and horticulture
are struggling to pass on the rise in energy costs to their own customers.
In Germany, production by
energy-intensive manufacturers was down by more than 17% in July compared with
before the invasion.
Production in energy-intensive
manufacturing has taken a bigger hit than during the first wave of the pandemic
in 2020.
More
Europe's high gas prices hit industrial output |
Reuters
Argentina inflation hits 124% as cost-of-living crisis
sharpens
By Miguel
Lo Bianco and Jorge
Otaola September 14, 2023 12:06
AM GMT+1
BUENOS
AIRES, Sept 13 (Reuters) - Argentina's annual inflation rate shot up to 124.4%
in August and hit its highest level since 1991, stoking a painful
cost-of-living crisis in the South American country.
The soaring prices, which rose more than expected, are
forcing hard-hit shoppers to run a daily gauntlet to find deals and cheaper
options as price hikes leave big differences from one shop to the next, with
scattered discounts to lure shoppers.
The
August monthly inflation reading of 12.4% - a figure that would be eye-watering
even as an annual figure in most countries worldwide - is pushing poverty
levels past 40% and stoking anger at the traditional political elite ahead of
October elections.
"It's
so hard. Each day things costs a little more, it's like always racing against
the clock, searching and searching," said Laura Celiz as she shopped for
groceries in Tapiales on the outskirts of Buenos Aires. "You buy whatever
is cheaper in one place and go to the next place and buy something else."
Her
husband, Fernando Cabrera, 59, was doing sums on a calculator to compare fruit
and vegetable prices.
"In
this way we try to beat inflation or at least compete with it a little,"
he added.
A
central bank analyst poll, released after the data, forecast inflation would
end the year above 169%, a sharp hike from its estimate a month earlier of
141%. It predicted monthly inflation of 12% in September and 9.1% in October.
Argentina
is caught in a cycle of economic crises, with a major loss of confidence in the
peso driving steady depreciation, triple-digit inflation, negative central bank
reserves and a flagging economy due to drought hitting farming.
The
country is also battling to salvage a $44 billion deal with the International
Monetary Fund (IMF) and facing the prospect of a $16 billion legal bill after a
U.S. court ruling related to the state takeover of energy firm YPF a decade
ago.
More
Argentina
inflation hits 124% as cost-of-living crisis sharpens | Reuters
UPDATE 1-Chevron Australia LNG workers escalate strikes, 24-hour stoppages possible
SYDNEY, Sept
14 (Reuters) - Workers at Chevron's two liquefied natural gas (LNG) projects in
Australia plan to escalate industrial action from Thursday to anything from a
total strike to hours-long work stoppages, their union said, increasing the
risk of disrupted output from facilities accounting for over 5% of global
supply.
Workers at the
Gorgon and Wheatstone facilities have been stopping work briefly for the past
six days, after talks with Chevron over wages and working conditions broke
down.
The unions had
said they would ratchet the pressure on the company from Thursday, possibly by
completely stopping work. A union official said they were now going to review
what action to take every 12 hours.
Research group
EnergyQuest estimated revenue at risk for Chevron and partners from the strikes
at about A$76 million ($49 million) per day, though it said not all of that
revenue would be lost as some cargoes may be deferred to a later date.
"There is
a marked escalation of protected industrial action today, however, it is in
various one-hour blocks," said the union official, who declined to be
named as he was not authorised to speak with media.
"We are
strategically assessing the protected industrial action we need to take every
12 hours and will continue to escalate at times which align with our industrial
strategy."
Domestic
supplies will not be impacted, the union said.
Chevron had
said it would continue to take steps to maintain operations if any disruptions
occur, without giving details.
Australia is
the world's biggest LNG exporter and its main buyers are in Asia. Traders
anticipate any cuts to supplies would send Asian buyers competing with
Europeans for cargo, spurring spot price volatility in the European gas market.
Dutch and
British wholesale gas prices rose slightly on Wednesday, ahead of the strike
escalation.
More
UPDATE
1-Chevron Australia LNG workers escalate strikes, 24-hour stoppages possible
(yahoo.com)
Finally, sanctions,
what sanctions? Russia and China integrate their economies even closer.
China, Russia agree to build
huge grain hub at border to facilitate trade, enhance food security
Fresh
deals signed at Eastern Economic Forum in Russian city bordering China show how
the neighbours continue to grow closer amid tensions with West
Chinese imports of Russian agricultural products, such as soybeans and rapeseed oil, have rapidly increased as Beijing steps up efforts to guarantee food supplies
Published: 6:32pm, 12 Sep, 2023
The cosying up
that China and Russia have been doing since last year continued on Monday as
both sides agreed to invest heavily to improve their grain trade – a move that
comes as Beijing has made food security a priority with 1.4 billion mouths to
feed.
Against the
backdrop of the four-day Eastern Economic Forum in Vladivostok, Russia, firms
from both countries signed multiple agreements on Monday to ensure that Russian
grain makes its way to China as quickly and efficiently as possible.
More.
Subscription required.
I couldn't repair your brakes, so I made your horn louder.
Steven Wright.
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.
People who think they know everything are a great annoyance to those of us who do.
Isaac Asimov.
Mortgage demand stalls at a level not seen
since 1996
PUBLISHED WED, SEP 13 2023 7:00 AM EDT
Higher mortgage rates
continue to take their toll on mortgage demand, especially for refinancing.
Total mortgage
application volume dropped 0.8% last week compared to the previous week,
according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract
interest rate for 30-year fixed-rate mortgages with conforming loan balances —
$726,200 or less — increased to 7.27% from 7.21%, with points increasing to
0.72 from 0.69, including the origination fee, for loans with a 20% down payment.
Demand for refinances
dropped 5% for the week and was 31% lower than the same week one year ago. The
refinance share of mortgage activity decreased to 29.1% of total applications
from 30.0% the previous week. As a comparison, at this time of year in 2020,
when pandemic monetary policy had interest rates around 3%, the refinance share
of mortgage applications was 63%.
Applications for
mortgages to purchase a home rose 1% week to week but were 27% lower than the
same week one year ago. The adjustable-rate mortgage share of total
applications rose, signaling that potential buyers are using all the tools they
can to lower their monthly payments. ARMs offer lower interest rates but are
deemed riskier because their rates are fixed for a shorter term.
“Mortgage
applications decreased for the seventh time in eight weeks, reaching the lowest
level since 1996,” said Joel Kan, a Mortgage Bankers Association economist, in
a release. “Given how high rates are right now, there continues to be minimal
refinance activity and a reduced incentive for homeowners to sell and buy a new
home at a higher rate.”
More
Mortgage demand stalls at a level not seen since 1996
(cnbc.com)
Euro zone July
industrial production drops more than expected
September 14, 2023
BRUSSELS (Reuters)
- Euro zone industrial production dropped much more than expected in July, data
showed on Wednesday, underlining downward revisions of economic growth for this
year in European Commission forecasts.
The European
Union's statistics office Eurostat said industrial production in the 20
countries sharing the euro fell 1.1% month-on-month in July for a 2.2%
year-on-year decline.
Economists
polled by Reuters had expected a 0.7% monthly fall and a 0.3% year-on-year
easing.
The weaker
than expected numbers were a result of sharp declines in the output of capital
goods and durable consumer goods month-on-month and durable consumer goods,
energy and intermediate goods year on year.
The European
Commission said on Monday consumer demand continued to be affected by high
inflation while euro zone exports suffered from weaker external demand, notably
from China.
Euro zone July industrial production drops more than
expected (msn.com)
UK economy fares
worse than expected in July as strikes weigh
By Andy Bruce and David Milliken September 13, 20237:30 AM GMT+1
LONDON, Sept 13
(Reuters) - Britain's economy contracted at the fastest pace this year in an
unexpectedly poor reading for the month of July, with strikes in hospitals and
schools weighing on output, official data showed on Wednesday.
The Office for
National Statistics said gross domestic product shrank 0.5% in July from June,
worse than all forecasts in a Reuters poll of economists that had pointed to a
contraction in gross domestic product (GDP) of 0.2% from June.
All major sectors
of the economy - services, manufacturing and construction - declined in July,
the data showed.
The data
underlined signs that Britain's economy is weakening, perhaps by more than the
Bank of England had expected ahead of its September interest rate meeting.
Data
on Tuesday showed a faster
rise in the unemployment rate than the
central bank expected, although the BoE remains worried that strong wage growth
will fuel persistent inflation.
The ONS said the
health sector was the biggest driver behind the 0.5% drop in services output
and cited industrial action by senior and junior doctors as a cause of
appointment cancellations. Schools in England also saw strikes.
Unusually wet
weather in July hurt output in retail and construction companies, the ONS said.
Wednesday's
data do not include recent, substantial upward revisions to the performance of Britain's economy up to the
end of 2021.
UK economy fares worse than expected in July as
strikes weigh | Reuters
Covid-19 Corner
This section will continue until it becomes unneeded.
No update today, due to length. Normal service tomorrow, probably.
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.
Startup Carbon Rivers
Explores Graphene As A Fish-Saving Alternative To A Toxic Compound Found In
Tires
September 12, 2023
U.S. startup
Carbon Rivers Inc. offers "wonder material" graphene as a solution to
the environmental impacts of vehicle tires.
The widely
used compound found in tires — 6PPD — causes water pollution and harms various
fish species. The compound stabilizes tires and reduces cracking but comes with
environmental harm that outweighs the benefits. The compound's toxicity extends
to human health as well because it contributes to air pollution when released
into the atmosphere.
Recognizing
these dangers, there is a need to find safer alternatives to 6PPD to protect
ecosystems and promote a healthier environment.
Graphene, a
nanomaterial, can replace 6PPD while offering a range of benefits.
Carbon Rivers is working
with regulators, and testing of graphene-infused tires should begin in the
first quarter of 2024. If successful, the company anticipates it could produce
graphene nanoflakes for use in commercial tires as early as 2025. The startup
is discussing the innovative approach with tire manufacturers, aiming to
advance to commercial testing.
Graphene, often hailed
as a super material because of its exceptional properties, including strength,
flexibility and thermal conductivity, offers several advantages. In addition to
its potential as a safer alternative to 6PPD, graphene is also an inexpensive
additive to tires. Its introduction into tire manufacturing could significantly
reduce the environmental impact associated with 6PPD use, marking a step toward
sustainability.
While some tire
manufacturers already incorporate graphene for improved speed, grip, durability
and puncture resistance, concerns remain about the dependence on China, which
controls the majority of the global graphite supply required for graphene
production. Companies such as Pirelli and Michelin have shown interest in
graphene as an alternative to 6PPD but emphasize the need for further research
and testing before considering its widespread industrial application.
More
As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder.
John Glenn.
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