Fed Turns Dovish. PPI Today. More Baltic Pipeline Damage.

Baltic Dry Index. 1983 -08            Brent Crude  87.95

Spot Gold 1860                  US 2 Year Yield 4.96 -0.12

The propensity to swindle grows parallel with the propensity to speculate during a boom the implosion of an asset price bubble always leads to the discovery of frauds and swindles.

Charles P. Kindleberger.

In the stock casinos, it’s almost back to business as usual. The new terrorist started war, other than triggering a flight to the safety of government bonds and the safety of gold, stocks are nervously steady as is the price of crude oil.

With nervous flight into the safety of bonds, US Treasury yields fell, taking the dollar down with them and the yield curve flattened, although at the long end   it’s been flattening for the last few weeks.

Ahead of this week’s US inflation figures, the Fed set about hinting at no need for any more rate hikes.

Well, maybe. Let’s wait for today’s PPI figure and tomorrow’s CPI figure.

Asia stocks hit 2-week high as Fed talk turns dovish

By Tom Westbrook  October 11, 20233:16 AM GMT+1

SINGAPORE, Oct 11 (Reuters) - Asia's stockmarkets rose on Wednesday and the dollar beat a retreat as a dovish shift in tone from Federal Reserve officials had traders paring U.S. interest rate expectations, though with a wary eye on U.S. inflation data due on Thursday.

The S&P 500 (.SPX) gained overnight and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.3% to a two-week high in morning trade. Japan's Nikkei (.N225) rose 0.5%

 

"I actually don't think we need to increase rates anymore," Atlanta Fed President Raphael Bostic told the American Bankers Association, to applause, in Nashville on Tuesday.

 

The remark follows several Fed officials noting that recent rises in longer-term yields may help do the work of tightening financial conditions and crimping inflation, leaving the central bank with less to do in terms of short-term rate levels.

 

Wagers on whether the Fed might hike again this year have pulled back a bit this week and Treasury yields have come sharply down from 16-year highs, yanking the dollar with them.

The 10-year yield fell 12.7 basis points on Tuesday and was steady in Asia on Wednesday at 4.64%, after touching 4.884% in the wake of strong U.S. jobs data on Friday.

On Wednesday the Australian and New Zealand dollars hit their highest levels on the dollar since the end of September, while sterling hit a three-week peak. The euro held at $1.0607, near Tuesday's two-week high.

Moves were small, however, while traders waited on the U.S. CPI figures.

"Signs underlying U.S. inflation is moderating could reinforce the more watchful tone from U.S. Fed members about future policy, exerting more pressure on the dollar," said Peter Dragicevich, strategist at cross-border payments firm Corpay.

A Bloomberg News report on China preparing stimulus to help its economy also supported the mood, though nerves remained as giant developer Country Garden (2007.HK) warned it wasn't going to be able to meet its offshore payment obligations on time.

 

In commodity markets oil prices have crept lower since bouncing on Monday on concern that Palestinian militants' surprise attack on Israel could spark a wider conflict.

 

Brent crude futures steadied at $87.80 a barrel on Wednesday, after hitting $89 on Monday. European gas prices, which had jumped on news of the Middle East violence, surged further on Tuesday on concern a gas pipe in Finland was sabotaged.

The subsea link connecting Finland with Estonia, which may take months to repair, was shut on Sunday and on Tuesday Finland's president said the damage was likely the result of "outside activity". Benchmark Dutch gas touched a seven-month high on Tuesday and settled 14% higher.

 

"Europe has higher than usual gas stockpiles for this time of year, as well as lower than normal gas demand, but these buffers still leave Europe exposed to a colder than usual winter and LNG imports in coming months," said CBA analyst Vivek Dhar.

More

Asia stocks hit 2-week high as Fed talk turns dovish | Reuters

South Korea stocks lead Asia market higher as Samsung rallies

UPDATED TUE, OCT 10 2023 9:47 PM EDT

Asia-Pacific markets mostly climbed, with South Korean stocks leading gains.

South Korea’s Kospi popped 2%, hitting a two-week high as chip giant Samsung Electronics jumped 3.77%.

Samsung’s third-quarter profit forecast was slightly higher than analyst expectations. The Kosdaq was up 1.68%.

In Australia, the S&P/ASX 200 climbed 0.5%, extending four straight days of gains.

Japan’s Nikkei 225 rose 0.5% as investors assessed the Reuters Tankan survey, which saw business morale at large Japanese firms stay largely unchanged. The Topix however, dipped marginally.

Hong Kong’s Hang Seng index rose 1.57%, on pace to climb for a fifth straight session.

Mainland Chinese markets were also in positive territory, with the benchmark CSI 300 index was up 0.38%. 

Overnight in the U.S., all three major indexes climbed as investors awaited key inflation data out of the world’s largest economy, with the producer price index and consumer price index readings for September out Wednesday and Thursday,. respectively.

The benchmark 10-year U.S. Treasury yield fell nearly 13 basis points to about 4.65%, as investors sought safe assets amid the Hamas-Israel conflict. Yields and prices move in opposite directions.

The Dow Jones Industrial Average gained 0.40%, while the S&P 500 rose 0.52%. The tech-heavy Nasdaq Composite added 0.58%.

Asia stock markets today: Live updates (cnbc.com)

Stock futures are flat in overnight trading Tuesday ahead of key inflation reports: Live updates

UPDATED TUE, OCT 10 2023 7:36 PM EDT

Stock futures were little changed in overnight trading as Wall Street looked ahead to Wednesday’s producer price index.

Futures tied to the Dow Jones Industrial Average were flat, along with those tied to the S&P 500. Nasdaq-100 futures inched up 0.1%.

Stocks are coming off a winning session as Treasury yields eased from their recent highs and Wall Street weighed the ripple effects from the Israel-Hamas war. The 30-stock Dow added 0.40%, while the S&P 500 gained 0.52% and the tech-heavy Nasdaq Composite jumped 0.58%.

Meanwhile, the yield on the benchmark 10-year Treasury yield fell nearly 13 basis points to about 4.65%.

“If rates continue to move lower, I think that will be the primary driver of a reasonable rebound in the equity market,” Lauren Goodwin, director of portfolio strategy at New York Life Investments said on CNBC’s “Closing Bell” on Tuesday.

“It’s also about supply and demand dynamics,” she added. “These past couple of days, we’ve had a little bit of relief from Fed narratives and also a little bit of risk mitigating type of buying. But Treasury supply is still overwhelming, we expect it to remain that way.”

Investors continue to assess the ongoing war unfolding in the Middle East after the militant group Hamas launched an attack on Israeli civilians in what marked the deadliest offensive the country’s experienced in 50 years. President Joe Biden condemned the Hamas attacks as terrorism in remarks Tuesday and said that the United States stands with Israel.

Wall Street will get another clue into the state of inflation Wednesday with September’s producer price index report. Economists expect that the PPI gained 0.3% last month, according to Dow Jones. In addition, minutes from the Federal Reserve’s latest meeting due in the afternoon will offer further insight into the central bank’s hiking cycle after it chose to skip an interest rate increase last month.

Traders are also looking ahead to Thursday’s consumer price index report for September.

Stock futures today: Live updates (cnbc.com)

Stock market likely to see 12% retreat ahead of recession, says trader who called ’87 crash

Published: Oct. 10, 2023 at 11:37 a.m. ET

That’s famed hedge-fund manager Paul Tudor Jones in an interview with CNBC Tuesday morning, explaining why he’s not enthusiastic about U.S. stocks and other risky assets as he awaits a recession induced by the Federal Reserve’s aggressive monetary tightening.

 Jones said it’s difficult to be positive on equities amid what he described as “the most threatening and challenging geopolitical environment that I’ve ever seen,” which is occurring “at the same time the United States is at its weakest fiscal position since World War II. It’s a really difficult time.”

A 2023 rally in U.S. stocks has stalled, with the S&P 500 index SPX pulling back 5.5% from a 2023 high set on July 31, leaving the large-cap benchmark up 12.9% for the year to date through Monday’s close. The Dow Jones Industrial Average DJIA is up just 1.4% so far this year.

 

Jones is widely credited with predicting, and profiting, from the stock-market crash on Oct. 19, 1987, which saw the Dow lose nearly 23% of its value, marking the largest one-day percentage decline for the blue-chip benchmark in its history.

So what does Jones like?

“I think [bitcoin and gold] probably take on a larger percentage of your portfolio than historically they would because we’re going to go through a challenging political time here in the United States and…we’ve obviously got a geopolitical situation” in Israel and Ukraine, Jones said.

More

Stocks may see 12% retreat ahead of recession, says trader who called '87 crash - MarketWatch

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.   

1970s-style stagflation may be at risk of repeating itself, Deutsche Bank warns

Last Updated: Oct. 9, 2023 at 9:41 p.m. ET First Published: Oct. 9, 2023 at 12:49 p.m. ET

A major Wall Street bank is warning about the risk that inflation expectations could become unanchored in a fashion similar to the 1970s stagflation era.

Weekend attacks on Israel by Hamas illustrate how geopolitical risks can suddenly return — adding to the surprise shocks of the current decade, such as the COVID-19 pandemic and Russia’s invasion of Ukraine, said macro strategist Henry Allen and research analyst Cassidy Ainsworth-Grace of Frankfurt-based Deutsche Bank DB, -1.40%.

Oil prices settled more than 4% higher on Monday as traders weighed the impact of the war in the Middle East on crude supplies. The spike in energy prices is adding to the growing list of similarities to the 1970s era — which also includes consistently above-target inflation across major economies and repeated optimism about how quickly it would fall; strikes by workers; and even increasing chances that this winter will be dominated by the El Niño weather pattern, similar to what took place in 1971 and which is historically tied to higher commodity prices, according to Deutsche Bank.

Inflation remains above central banks’ targets in every G-7 country — the U.S., Canada, France, Germany, Italy, Japan, and the United Kingdom. How long it will remain high is one of the most important questions facing financial markets, and a destabilization of expectations would make it even harder for policy makers to restore price stability.

“So given inflation is still above its pre-pandemic levels, it is important not to get complacent about its path,” Allen and Ainsworth-Grace wrote in a note released on Monday. “After all, if there is another shock and inflation remains above target into a third or even a fourth year, it is increasingly difficult to imagine that long-term expectations will repeatedly stay lower than actual inflation.”

History indicates that the last mile of inflation is often the hardest. One of the key lessons of the 1970s was that inflation failed to return to previous levels after the first oil shock of 1973 and U.S. recession of 1973-1975, and went even higher following a second oil shock in 1979. Now that inflation has been above target for the last two years, “a fresh inflationary spike could well lead expectations to become unanchored,” according to the Deutsche Bank note.

More

1970s-style stagflation may be at risk of repeating itself, Deutsche Bank warns - MarketWatch

Covid-19 Corner

This section will continue until it becomes unneeded.

Who knew, Trump was right all along, the CDC and others were wrong. Why?

Hydroxychloroquine Reduces COVID-19 Mortality, Study Finds

Researchers examined records from 352 adults hospitalized in AZ Groeninge Hospital in Kortrijk, Belgium.

10/9/2023  Updated: 10/9/2023

People who took hydroxychloroquine in combination with another drug while hospitalized with COVID-19 were less likely to die than those who didn't, according to a new study.

Hydroxychloroquine, which is widely used against malaria and arthritis, was given to hundreds of patients hospitalized with COVID-19 in Belgium. Thousands of others didn't receive the drug.

Researchers examined records from 352 adults hospitalized in AZ Groeninge Hospital in Kortrijk, Belgium. All patients tested positive for COVID-19 or had results from CT scans that suggested COVID-19 was present. Patients received hydroxychloroquine alone or with azithromycin, an antibiotic. They were scanned before and after treatment.

Researchers compared the results of the record analysis with a control group of 3,533 people hospitalized across Belgium with COVID-19 from March 14, 2020, to May 24, 2020. The people didn't receive hydroxychloroquine but did receive standard of care.

Twenty-eight days following the diagnosis of COVID-19, 59 people treated with hydroxychloroquine had died. The mortality percentage, or 16.7 percent, was lower than the 25.9 percentage in the control group.

Researchers found patients who received hydroxychloroquine were more likely to survive even after adjusting for age and other factors.

"Our study suggests that, despite the controversy surrounding its use, treatment with hydroxychloroquine and azithromycin remains a viable option," Dr. Gert Meeus, a nephrologist with AZ Groeninge Hospital, and other researchers wrote.

The study was published by the journal New Microbes and New Infections. Limitations include the retrospective nature of the study and differences between the treatment and control groups, including the former being younger on average. Authors declared no conflicts of interest or funding.

More

Hydroxychloroquine Reduces COVID-19 Mortality, Study Finds | The Epoch Times

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.

More on so you really, really, really, want an electric vehicle. In the UK, at least, we have a great shortage of electrical engineers/electricians able to support electric vehicles, install and fix charging stations, and provide general road service through the likes of the AA, RAC and others.

Urgent recall for hundreds of popular electric cars because the battery could EXPLODE into flames

October 10, 2023

• More than 230 Porsche Taycan electric vehicles recalled
• The recall comes after two battery fires occured in Australia

Hundreds of high-end electric sports cars have been recalled in Australia due a problem with battery protection that could lead to a high-voltage fire.

More than 230 Porsche Taycan electric vehicles are subject to the warning, issued on Tuesday, that affects all variants of the model.

The recall comes weeks after two significant electric vehicle battery fires in Australia, and following a recall issued for an Alfa Romeo hybrid SUV that also raised battery safety questions.

The latest recall affects Porsche Taycan vehicles from 2022 and 2023, with the federal transport department warning a fault could see water enter its battery.

'Due to a manufacturing issue, there is a possibility of insufficient sealing between the high-voltage battery casing and battery cover,' the recall said.

'If a sufficient amount of moisture enters the high voltage battery, arcing can occur which increases the risk of fire causing injury or death to vehicle occupants, other road users or bystanders.'

Vehicle owners are urged to contact Porsche to organise an inspection and potential repair of their car.

The Porsche Taycan is the manufacturer's first electric vehicle and one of the most expensive on the Australian market, with the price of affected models starting at $132,550 and reaching $363,800.

The fire warning follows a significant fire in Sydney in September, in which a damaged lithium-ion battery removed from an electric car caught fire in an airport holding yard and destroyed four nearby vehicles.

Firefighters were also called to extinguish a blaze in the NSW Southern Highlights in September after the battery in a Tesla Model 3 electric car was damaged by debris that fell from a truck.

More

Urgent recall for hundreds of popular electric cars because the battery could EXPLODE into flames (msn.com)

The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revival, but finally giving up in the final collapse.

 

Charles P. Kindleberger.