Baltic Dry Index. 1948 -35 Brent Crude 85.60
Spot Gold 1879 US 2 Year Yield 4.99 +0.03
If all else fails, immortality
can always be assured by spectacular error.
John Kenneth
Galbraith.
In the stock casinos, the punters think it’s back to business as usual. To dinosaur Graeme, I think that’s a big mistake.
Globally, our world, economically and politically, is far from normal and getting further from “normal” by the day. Business as usual requires “usual” background conditions.
Right now we have two wars running, albeit with very different causes, with the latest terrorist war on Israel on the cusp of widening out into a massive regional war, which if it happens, threatens a massive crude oil price spike.
Later today, the latest figures on US
consumer price inflation. But with the US auto workers strike suddenly
escalating, the view out of the front windscreen is likely to trump the view in
the rear view mirror.
Asia-Pacific
stocks rise ahead of key U.S. inflation data
UPDATED WED, OCT 11 2023 11:59 PM
EDT
Asia-Pacific markets rose as investors looked
ahead to key
U.S. consumer inflation data, which will inform the Federal
Reserve’s rate decision in its policy meeting beginning Oct. 31.
In Australia, the S&P/ASX 200 added
0.22%.
In Japan, the Nikkei 225 gained
1.33% higher, with shares of Uniqlo-owner Fast Retailing up
0.48% ahead of its full-year earnings report due later in the day.
South Korea’s Kospi rose
nearly 1% and held near two-week highs.
Hong Kong’s Hang Seng index climbed
1.76%, while China’s benchmark CSI 300 gained 0.83%.
Overnight in the U.S., all three
major indexes closed in the green. The Dow Jones Industrial Average climbed
0.19%, or 65.57 points, to close at 33,804.87. The S&P 500 gained
0.43%, ending at 4,376.95. The Nasdaq
Composite added 0.71% to close at 13,659.68.
Economists
surveyed by Dow Jones are forecasting a 0.3% month-over-month
increase for the upcoming U.S. inflation data, and a 3.6% rise from the prior
year.
Asia-Pacific
stocks rise ahead of key U.S. inflation data (cnbc.com)
Stock futures
inch higher as Wall Street awaits key inflation data: Live updates
UPDATED WED, OCT 11 2023 7:23 PM
EDT
U.S. stock futures ticked up Wednesday night as
investors looked toward new consumer inflation data for greater insight on the
economy.
Futures tied to the Dow Jones Industrial
Average added
38 points, or 0.1%. S&P 500
futures and Nasdaq 100 futures inched
up about 0.2% each.
The major averages closed Wednesday’s
main trading with modest gains, marking a fourth consecutive
winning session. The Dow advanced
0.2%, while the S&P 500 added
0.4%. The tech-heavy Nasdaq Composite climbed
0.7%, closing above its 50-day moving average for the first time since
September.
The consumer price report for
September will be released Thursday morning. Economists surveyed by Dow Jones
are forecasting a 0.3% month-over-month increase, and 3.6% rise from the prior
year. Investors believe that the strength of inflation indicated in the report
will play a key part in whether the Federal Reserve decides to maintain or
raise interest rates at its two-day meeting beginning Oct. 31.
The data comes following a stronger-than-expected producer
price index for September.
″[August’s] CPI print was a bit
stronger than we anticipated, though the downward trend in core inflation
persisted. We would hope for that to continue, [but] will be keeping a close
eye on the pass-through of higher energy prices into broader inflation in the
months ahead should they persist,” said Vanguard senior economist Andrew
Patterson.
The ongoing Israel-Hamas war has
raised questions of a potential oil supply crunch and a resulting rise in fuel
prices if the geopolitical instability spreads to neighboring oil producers in
the region.
Traders will also be keeping an
eye out on jobless claims numbers for the week ending Oct. 7. Atlanta Fed
president Raphael Bostic and Boston Fed president Susan Collins will be giving
remarks Thursday afternoon, which could give Wall Street more insight into the
central bank’s stance.
Several companies will kick off
the latest earnings season Thursday. Delta Air Lines and Walgreens Boots Alliance will
release their results before the market open. Fastenal and Domino’s Pizza are
also scheduled to post their quarterly earnings.
Stock
market today: Live updates (cnbc.com)
Fed officials see ‘restrictive’ policy staying
in place until inflation eases, minutes show
Federal Reserve
officials at their September meeting differed on whether any additional
interest rate increases would be needed, though the balance indicated that one
more hike would be likely, minutes released Wednesday showed.
While there were
conflicting opinions on the need for more policy tightening, there was
unanimity on one point – that rates would need to stay elevated until
policymakers are convinced inflation is heading back to 2%.
“A majority of
participants judged that one more increase in the target federal funds rate at
a future meeting would likely be appropriate, while some judged it likely that
no further increases would be warranted,” the summary of the Sept. 19-20 policy
meeting stated.
The document noted
that all members of the rate-setting Federal Open Market Committee agreed they
could “proceed carefully” on future decisions, which would be based on incoming
data rather than any preset path.
Another point of
complete agreement was the belief “that policy should remain restrictive for
some time until the Committee is confident that inflation is moving down
sustainably toward its objective.”
The meeting
culminated with the FOMC deciding against a rate hike.
However, in the dot
plot of individual members’ expectations, some two-thirds of the committee
indicated that one more increase would be needed before the end of the year.
The FOMC since March 2022 has raised its key interest rate 11 times, taking it
to a targeted range of 5.25%-5.5%, the highest level in 22 years.
Since the September
meeting, the 10-year Treasury note yield has risen about a quarter percentage
point, in effect pricing in the rate increase policymakers indicated then.
More
Fed
minutes October 2023: (cnbc.com)
Wholesale inflation rose 0.5% in September,
more than expected
A measure of wholesale prices rose more than expected in September,
indicating simmering inflation pressures for the U.S. economy.
The producer price index, which measures costs for finished
goods that producers pay, increased 0.5% for the month, against the Dow Jones
estimate for a 0.3% rise, the
Labor Department reported Wednesday. That was less than the
0.7% increase in August.
Excluding food and energy, the core PPI was up 0.3%, versus
the forecast for 0.2%. Excluding food, energy and trade services, the index
rose 0.2%, in line with the estimate.
Markets showed only a mild
reaction to the PPI release, with stock futures off slightly and Treasury
yields off their lows though still negative on most longer-duration issues.
Inflation pressures came
primarily from final demand goods, which surged 0.9% on the month, while
services increased 0.3%.
Much of the goods prices increase
came from gasoline, which jumped 5.4%, while food prices posted a 0.9% gain.
Energy prices broadly rose 3.3%. Core goods, stripping out food and energy,
increased just 0.1%, a reflection of normalized supply chains.
On the services side, prices for
final demand services less trade, transportation and warehousing rose 0.3%,
while final demand trade services costs increased 0.5%. Also in the services
category, the costs for deposit services at commercial banks surged 13.9%.
On a year-over-year basis, the
headline PPI increased 2.2%, the largest move since April. The 12-month pace
had slowed to as low as 0.2% in June but has been on the rise since.
The report “suggests we haven’t
seen the end of sticky inflation — and high interest rates,” said Mike
Loewengart, head of model portfolio construction for Morgan Stanley’s Global
Investment Office. “Either way, investors will need to remain patient. Lowering
inflation significantly from last year’s highs was one challenge, getting it
down to the Fed’s 2% target level is another.”
More
PPI
September2023: Wholesale inflation rose 0.5% (cnbc.com)
Finally, in other news, the US auto strike
escalates.
UAW launches
strike against Ford’s Kentucky truck plant, signaling major escalation in labor
fight
DETROIT — United Auto Workers has unexpectedly expanded its U.S. strikes at Ford Motor to
a highly profitable SUV and truck plant for the automaker in Kentucky.
The strike was effective at 6:30 p.m. ET Wednesday at Ford’s
Kentucky Truck Plant, where the automaker produces Ford Super Duty pickups as
well as the Ford Expedition and the Lincoln Navigator SUVs. The facility
employs 8,700 UAW members.
The union’s decision to strike the plant, which is Ford’s
largest in terms of employment and revenue, is a major escalation in UAW’s
targeted, or “stand-up,”
strikes. It also marks a change in strategy, which has previously included UAW
President Shawn Fain publicly announcing the strike targets before the work
stoppages occur.
A Ford source said the union informed the company early Wednesday afternoon
that it wanted a new economic counteroffer by 5 p.m. ET, followed by a meeting
request for 5:30 p.m. ET with the UAW’s entire Ford bargaining committee,
including UAW President Shawn Fain, Vice President Chuck Browning.
The source, who agreed to speak on the condition of anonymity
because the talks were private, said the meeting lasted less than 10 minutes
before Fain said the company “lost Kentucky Truck.”
“The strike was called after Ford refused to make further
movement in bargaining,” the union said in a release. “The surprise
move marks a new phase in the UAW’s Stand Up Strike.”
A UAW source with knowledge of the talks said the company did
not add any additional cash to the deal, which provoked the strike escalation.
The source added the union was expecting Ford to enhance its prior economic
offer.
Ford
said the “decision by the UAW to call a strike at Ford’s Kentucky Truck Plant
is grossly irresponsible but unsurprising given the union leadership’s stated
strategy of keeping the Detroit 3 wounded for months through ‘reputational
damage’ and ‘industrial chaos.’”
More
UAW
launches key strike against Ford's Kentucky truck plant (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.
Yield Curve Less Inverted, But Recession Warning Remains
Oct 9, 2023,10:58am EDT
After
inverting on most measures in mid 2022, the predicted U.S. recession that an inverted
yield curve often warns of, has not occurred. Since July, the degree of
inversion has lessened, but there is still concern of economic pain ahead. That
said recent economic data such as September jobs data, with over 300,000 jobs
added, and Q3 Gross Domestic Product growth, at over 2%, has been reassuring
that a U.S. recession is not imminent.
A Recession Signal
In
the generally unreliable world of macroeconomic forecasting, the yield curve
has a better track record than many alternative metrics. Historically, an
inverted yield curve has often meant a recession is coming in about a year or
so. Historically, this metric has generally predicted U.S. recessions with few
false positives.
Yield
curve inversion occurs when longer term government bond interest rates fall
below shorter term rates. This often happens when the Federal Reserve raises
interest rates sharply, as we’ve seen recently. However, the 2022 signal
implied a potential 2023 recession.
To
date that has not happened. Of course, that picture could change, but we are
simply running out of time for a recession to start in 2023.
Other Interpretations
Exact
interpretation of the yield curve vary. The New York Fed’s research suggest
that the appropriate metric to watch is the 10 year yield relative to the 3
month rate. That spread has become less negative since July, too. Still, as of
September, the model maintained by the New York Fed predicts a 54% chance of a
recession within 12 months.
Why Hasn’t It Worked?
So
why hasn’t the potential recession that the yield curve heralded arrived?
Perhaps, we will see a recession but not yet, not everyone agrees that a
recession will occur within 12 months of the yield curve signal. Maybe it will
take longer. That might be the case this time, because many households and
corporations locked in borrowing at lower rates in past years, and aren’t
feeling the impact of higher rates just yet, though will eventually.
It’s
also notable that the first half of 2022 did see weak economic growth, though
was not classified as a recession. So maybe we’ve recently seen an event that
was very close to a recession.
Another
angle is fiscal policy. Monetary policy in the U.S. is restrictive as interest
rates have risen, and that’s, in part, what the yield curve measures. However, the
government is running large budget deficits as it spends more than it takes in
through taxes currently. For fiscal 2023, the deficit
is around $1.5 trillion. That fiscal position can boost growth, and may to
some extent, offset the impact of restrictive monetary policy.
In addition, the pandemic had various unusual impacts on
the economy. In some cases theses are still being worked through. That has
created a number of unusual economic impacts such as an increase in savings for
many households, spiking inflation and imbalances in the labor market.
Therefore, traditional economic relationships haven’t always held.
The yield curve continues to signal a U.S. recession is
coming and on some interpretations ‘should’ have occurred already. To date, the
economic data disagrees. It remains to be seen whether this is a black mark
against the typically reliable yield curve forecast. On the other hand, maybe
we will see a recession, just a little later than the yield curve implies.
Yield Curve Less Inverted, But Recession Warning
Remains (forbes.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
COVID-19 mRNA
Vaccine Contaminated by Mystery DNAs and Truncated mRNAs: Health Implications
double-stranded
DNA contamination, integration, and migration?
10/10/2023 Updated: 10/10/2023
In Part 5, we turn to the
third major issue related to DNA contamination with residual bacterial plasmids
and truncated mRNA from the manufacturing process. Are the vaccines more
contaminated than our regulatory agencies realize? Should this raise concerns
about migration to the gut or their expression by cells?
The questions posed throughout this series highlight the
inherent safety issues associated with a lax regulatory framework for approval
of the COVID-19 mRNA vaccines. In this article, we consider how lax regulation
is related to DNA and RNA contamination issues.
Summary of
Key Facts
· Concerns have been raised about DNA contamination in the mRNA COVID-19
vaccines. The specific concern is the presence of higher than expected residual
DNA plasmids used in the original mRNA production. Independent investigations
suggest that the Pfizer mRNA vaccine may have high levels of DNA contamination,
potentially exceeding regulatory limits.
· There are theoretical risks associated with plasmid DNA expression and
migration to the gut, which could affect human health and the microbiome.
Additionally, concerns have been raised about the quality control and
manufacturing oversight of mRNA vaccines.
· The European Medicines Agency (EMA), Europe's drug regulatory authority,
noted the presence of truncated and modified RNA as impurities in the mRNA
COVID-19 vaccines, raising the need for oversight.
· Related to the manufacturing process, a Danish study compared the rate of
adverse events to the batch size (number of doses in a batch) and found a
correlation.
The Advisory Committee
on Immunization Practices met last week to recommend the updated COVID-19
vaccine. (pdf) However, the manufacturers presented little data from
testing in humans. Moderna was the only manufacturer to present safety and
antibody response data from experience with 101 individuals. Pfizer presented
antibody response data from 20 mice and is currently collecting data from 400
individuals in clinical testing. No data on manufacturing oversight was
presented during the meeting.
As part of the safety
evaluation of drug approval, the CMC process (chemistry, manufacturing, and
controls) becomes critical in identifying and eliminating impurities. It sets
strict standards and product specifications to maintain the purity of each
batch. Compliance with these standards is essential for obtaining approval from
global health authorities.
More
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.
Today, AI aims at replacing the co-pilot.
How long before the auto-pilot and AI co-pilot replace the pilot?
MIT system promotes AI from backup to co-pilot
David Szondy October 10, 2023
MIT's Computer Science
and Artificial Intelligence Laboratory (CSAIL) is developing an AI co-pilot for
aircraft called Air Guardian that actively co-operates with the pilot, making
the computer part of a team instead of an emergency backup.
Flying a modern plane
may be exhilarating, but it can also be alarmingly difficult at times. Taking
off, landing, flying in crowded airspaces, or dealing with a sudden malfunction
can see the pilot facing an overwhelming influx of data from multiple displays
and only a fraction of a second to process it all and make a decision.
One example of this was on January 15, 2009 when US Airways Flight 1549
struck a flock of birds while taking off from LaGuardia Airport in New York.
Pilot Chesley "Sully" Sullenberger became a hero that day when he
made the decision to ditch the Airbus A320 in the Hudson River, saving the
lives of the 155 passengers and crew.
The irony of the incident is that, according to an AI expert who
reviewed the incident and prefers to remain anonymous, Sullenberger didn't need
to ditch the plane and could have made it to an airfield. The problem was that
he simply didn't have enough time to properly assess the situation and had to
make the best call that he could.
A study of the incident found that if the aircraft had been equipped
with an AI system, the ditching could have been avoided because of its ability
to handle the data overload.
Such AI flight systems have garnered a lot of attention in recent years
because of their safety potential as well as the possibility of replacing human
crews on routine cargo flights. However, the usual approach is to treat the AI
as something like an emergency warning system. Essentially, its job is to just
sit in its box monitoring the flight data and then kicking in if something
strays out of the designated safety parameters.
According to MIT, Air Guardian takes a different approach by monitoring
not just the aircraft, but also the pilot, so it acts more like a co-pilot than
an emergency brake. It does this by tracking the pilot's eye movements and
building up "saliency maps," which is a ten-dollar word for noting
where the pilot is looking and how much attention is being paid to what's being
looked at.
More.
MIT system promotes AI from backup to co-pilot
(newatlas.com)
Nothing is so admirable in
politics as a short memory.
John Kenneth Galbraith.
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