Baltic Dry Index. 1929 +102 Brent Crude 87.48
Spot Gold 1851 US 2 Year Yield 5.08 +0.05
Interest rates are to asset prices what gravity is to the apple. When there are low interest rates, there is a very low gravitational pull on asset prices.
Warren Buffett.
The big news this Columbus Day holiday in the USA, is of course the new terrible war in Israel and Gaza.
Although Hamas attack on Israel was completely missed by Israeli and western intelligence and so came as a complete surprise to stock and commodity markets, outside of the oil market, this new and hopefully short lived war, ought to have little direct effect on the markets.
In the stock casinos, its likely effect will be on sentiment, increasing caution in the often difficult month of October.
In the oil market, unless Iran is proved to be involved in helping start this already terrible war, resulting in sanctions on Iranian crude oil exports or worse, any price reaction is likely to be “transitory,” to use the central bankster’s now redundant phraseology.
Sadly, it is hard to see any good outcome to
this new terrorist war.
Dow futures
fall more than 200 points after Hamas attack against Israel
UPDATED MON, OCT 9 2023 12:02 AM
EDT
Stock futures were lower early Monday as the
attack on Israel by Palestinian militants adds geopolitical risk to an already
fragile market dealing with inflation and surging interest rates.
Futures tied to the Dow Jones
Industrial Average fell
235 points, or 0.7%. S&P 500
futures fell
0.82%, while Nasdaq 100 futures slipped
0.83%.
The Israeli-Palestinian conflict
escalated to full-blown war on Saturday after the militant group Hamas staged
an invasion, to which Israel was seemingly caught off guard. Israeli Prime
Minister Benjamin
Netanyahu asserted that Hamas “will pay a price it has never
known before.”
WTI crude oil futures were up by
2% in early trading Sunday.
The rising geopolitical tensions
could have ramifications for the energy market, with some experts forecasting a “knee
jerk surge” in oil. The rising tension could also serve to
stoke further volatility in market that has kept traders worried with
persistent inflation and higher interest rates.
Oil prices meaningfully pulled
back below $90 per barrel last week, with Brent crude slipping
roughly 11% and U.S. West Texas
Intermediate notching
an 8% drop. While neither Israel nor Palestine are major players in the global
energy picture, both nations are located in a key region for oil that could
have broader implications. OPEC+, the oil cartel that includes non-OPEC member
Russia, will
remain cautious on any moves to expand oil output further and
change plans for cuts, the Saudi Arabia’s energy minister Prince Abdulaziz bin
Salman told CNBC on Sunday.
With the bond market closed on
Monday for Columbus Day, Wall Street will have to wait until Tuesday for an
update on interest rates.
More
Dow
futures fall more than 200 points after Hamas attack against Israel (cnbc.com)
Oil prices jump
4% in the wake of Hamas attack on Israel
Oil prices jumped 4% as the Israel-Hamas conflict
extended into its third day following a surprise attack on Israel by
Palestinian militants Hamas.
Global benchmark Brent traded
4.53% higher at $88.41 a barrel Monday, while the U.S. West Texas Intermediate futures
rose 4.69% to $88.67 per barrel.
At dawn on Saturday during a major
Jewish holiday, Palestinian militant group Hamas launched a multi-pronged infiltration
into Israel — by land, sea and air using paragliders. The
attack came hours after thousands of rockets were sent from Gaza into Israel.
----While there is a surge in crude prices,
analysts believe it will be a knee-jerk
reaction, and likely temporary.
“For this conflict to have a
lasting and meaningful impact on oil markets, there must be a sustained
reduction in oil supply or transport,” said Vivek Dhar, Commonwealth Bank’s
director of mining and energy commodities research.
“Otherwise, and as history has
shown, the positive oil price reaction tends to be temporary and easily trumped
by other market forces,” he wrote in a daily note. The conflict does not
directly put any major source of oil supplies in danger, he added.
Neither side is a major oil player.
Israel boasts two oil refineries with a combined capacity of almost 300,000
barrels per day. According to the U.S.
Energy Information Administration, the country boasts “virtually no
crude oil and condensate production.” By a similar strand, the Palestinian
territories produce no oil, data from EIA
shows.
However, the conflict sits at the
doorstep of a key oil producing and export region for global consumers.
And oil-rich Iran
looms large as the market’s immediate concern.
“If western countries
officially link Iranian intelligence to the Hamas attack, then Iran’s oil
supply and exports face imminent downside risks,” Dhar said.
Oil exports coming
out of Iran have been limited since former U.S. President Donald Trump in 2018
exited a nuclear accord and re-imposed sanctions aimed at curtailing revenue to
Tehran.
“Under encouragement
from the U.S. and secret nuclear talks, Iran saw its oil exports and production
grow by some 600-k b/d to 3.2-m of output between end 2022 and mid-2023,” Citi
said in a note.
More
Brent,
WTI prices jump after Hamas attack on Israel (cnbc.com)
Blinken says
U.S. has ‘not yet seen’ evidence of Iran involvement in Hamas attack on Israel
U.S. Secretary of State Antony Blinken said Sunday
that it is not clear there was any involvement by Iran in the weekend
attack by Hamas on Israel.
Iran has long been a supporter of
Hamas, the group designated by the U.S. as a terrorist organization, whose
attack on Saturday left at least 250 in Israel dead.
“We have not yet seen evidence that
Iran directed or was behind this particular attack, but there is certainly a
long relationship,” Blinken said on CNN’s “State of the Union.”
Some Republican leaders have pointed to Iran as a
cause of the attack. Rep Michael McCaul (R-TX) said later on CNN that “we do
know that Iran was behind this” but did not specify whether he was talking
about specific information on this weekend’s attack or just the country’s
historic support of Hamas in general.
One area of criticism of Blinken
and the Biden administration has been the $6
billion the U.S. agreed in September to unfreeze for Iran to
use only for humanitarian purposes as part of a swap of detainees. However,
Blinken said Sunday that none of the $6 billion released to Iran has been
spent.
More
Saudi Arabia, other
Arab states reaffirm commitment to voluntary oil production adjustments
October 8,
20237:55 PM GMT+1
Oct 8 (Reuters) -
Bahrain, Iraq, Kuwait, Oman, Saudi Arabia and the United Arab Emirates
reaffirmed their commitment to "collective and individual voluntary
adjustments" to oil production, the Saudi state news agency said on
Sunday.
The oil
ministers of the six countries met on the sidelines of the U.N. MENA climate
week event in Riyadh on Sunday.
"Furthermore,
the ministers reiterated the willingness of the Declaration of Cooperation
(DoC) countries to take additional measures at any time in their continued
efforts to support market stability, building on the strong cohesion of the
OPEC plus," Saudi state news agency SPA said.
OPEC+ agreed in
June to extend voluntary oil cuts first introduced in April until the end of
2024. Additional voluntary cuts by Saudi Arabia and Russia extend to the end of
2023 and are subject to monthly review.
Ministers
from the Organization of the Petroleum Exporting Countries and allies led by
Russia, known as OPEC+, on Wednesday made no changes to the group's oil output policy,
after Saudi Arabia and Russia said they would keep voluntary supply cuts in place
to support the market.
Attack on Israel
could boost appeal of gold and safe haven assets
October 8, 2023 6:01 AM GMT+1
NEW YORK, Oct 8
(Reuters) - Investors are closely watching events in Israel as a geopolitical
risk to markets, with some expectation the violence could prompt a move into
safe haven assets.
Gunmen
from the Palestinian group Hamas entered Israel in an unprecedented
attack on Saturday. Western countries, led by
the United States, denounced the attack and pledged support for Israel.
Rising
geopolitical risk could see buying in assets like gold and the dollar and
potentially boost demand for U.S. Treasuries, which have been sold off
aggressively, analysts said.
"This is a
good example of why people need gold in their portfolios. It is a perfect hedge
against international turmoil," said Peter Cardillo, chief market
economist at Spartan Capital Securities, who predicted the dollar would also
benefit.
"Anytime
there is international turmoil, the dollar strengthens," said Cardillo.
Markets
have been reacting in recent weeks to an expectation that U.S. interest rates
will stay higher for longer. Bond yields have soared while the U.S. dollar has
been on
a streak of gains. Stocks meanwhile had sharp
losses for the third quarter but
stabilized in the last week.
"Whether
this is a massive market moment or not depends on how long it lasts and whether
others are sucked into the conflict," said Brian Jacobsen, chief economist
at Annex Wealth Management, of the situation in Israel. Jacobsen questioned how
much impact it would have on the oil price despite Iran having been boosting
output.
The
Hamas attack was
openly praised by Iran and by Hezbollah, Iran's
Lebanese allies.
"Iranian oil
production has been increasing, but any progress they’ve been making behind the
scenes with the U.S. will be dramatically undermined by Iran’s celebrating
Hamas’s actions," said Jacobsen, adding that "the possible output
loss matters, but it won’t be earth shattering."
"It’s
most critical to see how Saudi Arabia reacts," said Jacobsen. Washington
has been trying to strike a deal that would normalise
ties between Israel and Saudi Arabia.
David
Kotok, chair and chief investment officer at Cumberland Advisors in Sarasota,
Florida, said that the situation was concerning as the U.S. is weakened by
dysfunction in Washington. Republicans are looking for a successor to ousted
Speaker Kevin McCarthy of the House of Representatives, and
a budget showdown looms.
Attack on Israel could boost appeal of gold and safe
haven assets | Reuters
How did Israel
and the U.S. miss what Hamas was planning?
The surprise attack by Hamas on Israel suggests a massive
intelligence failure as the Israeli government appeared blindsided by the
infiltration of Hamas fighters across the southern border and the launch of
thousands of rockets.
The Hamas assault by air, land and
sea also raised questions as to why U.S. intelligence agencies apparently did
not see it coming, experts and former intelligence officials said.
U.S. officials said that if the Israelis knew an attack was imminent, they
did not share it with Washington.
“We were not tracking this,” one
senior U.S. military official told NBC News.
U.S. officials are discussing
enhancing intelligence sharing with the Israelis to support the Israeli
government in response to the Hamas attack, according to a U.S. official and a
source familiar with the discussions.
The additional intelligence to
Israel could include information gathered from drones, eavesdropping and
satellites, but the officials did not elaborate.
The onslaught took place a day
after the 50th anniversary of the 1973 Arab-Israeli war and carried echoes of
that conflict, when Israel was caught flat-footed by a coordinated offensive by
its Arab neighbors, led by Egypt and Syria.
“This is Israel’s 9/11. Not since 1973 has there been such a catastrophic
intelligence failure in Israel,” said Marc Polymeropoulous, who worked for 26
years for the CIA, where he specialized in counterterrorism, the Middle East
and South Asia.
Israel’s intelligence services have long been seen
as some of the most capable in the world, with an array of human intelligence,
eavesdropping and other technical means blanketing the West Bank and Gaza.
“It is almost inconceivable how
they missed this,” said Polymeropoulous.
It was also unclear why U.S.
intelligence agencies apparently did not see the attack coming, as well as
friendly Arab states such as Egypt, Jordan, Qatar and Saudi Arabia, he said. “I
am stunned.”
But Colin Clarke, senior
research fellow at The Soufan Center, a nonprofit that focuses on global
security issues, said Israel had to bear the main responsibility for
failing to anticipate Saturday’s attack.
“Israel has exquisite, world-class
intelligence collection and analysis capabilities and would have a far better
picture of what’s going on in its own backyard. This one falls squarely on the
Israelis,” he said.
Clarke added it was an open
question whether recent domestic political turmoil in Israel had possibly
played a role in the apparent intelligence failure.
---- U.S. officials said early assessments are
that the timing of the Hamas attack was related to signs that a deal
normalizing relations between Saudi Arabia and Israel was close to being
clinched. They also said that the 50-year anniversary of the 1973 Arab-Israeli
war also may have been a factor.
In the wake of the
attack, both Hamas and Hezbollah said the attack represented a warning to any
Muslim country seeking to strike peace with Israel.
More
How
did Israel and the U.S. miss what Hamas was planning? (cnbc.com)
Finally, in other news, China’s de-dollarisation continues, but is it deliberate or inadvertent?
China forex reserves
fall to $3.115 trillion in September
October 7, 2023 9:23 AM GMT+1
SHANGHAI,
Oct 7 (Reuters) - China's foreign exchange reserves fell more than expected in
September, official data showed on Saturday, as the U.S. dollar rose against
other major currencies.
China's
reserves - the world's largest - fell $45 billion to $3.115 trillion last
month, compared with $3.13 trillion tipped by analysts in a Reuters poll, from
$3.16 trillion in August.
The
yuan fell 0.5% against the dollar in September, while the dollar rose 0.2%
against a basket of other major currencies over the month .
China
held 70.46 million fine troy ounces of gold at the end of September, up from
69.62 million ounces at the end of August.
The
value of China's gold reserves fell to $131.79 billion at the end of September
from $135.22 billion at the end of August.
China forex reserves fall to $3.115 trillion in September | Reuters
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.
Today
a quick look at food commodities. Food price inflation hasn’t gone away.
Sugar prices hit
13-year high due to El Nino fallout: FAO
AFP Last Updated: Oct
07, 2023, 09:28 AM IST
PARIS: Global sugar prices soared to their highest level in
almost 13 years in September as the El Nino weather phenomenon hit production
in India and Thailand, the Food and Agriculture Organisation said Friday.
While world
food prices steadied as a whole last month, the FAO's Sugar Price Index jumped
by 9.8 percent compared to August, the highest point since November 2010, the
UN agency said.
El Nino, a
climate pattern that occurs on average every two to seven years, is typically
associated with warming ocean surface temperatures in the central and eastern
tropical Pacific Ocean.
The phenomenon, which can last between nine to 12 months,
started in July, according to the UN's World Meteorological Organisation.
The FAO's
Sugar Price Index has now risen for two consecutive months due to increasing
concerns over a tighter global supply outlook in the 2023-2024 season.
"This mainly reflects early forecasts pointing to
production declines in key sugar producers, Thailand and India, due to
drier-than-normal weather conditions associated with the prevailing El Nino
event," the FAO said.
"Higher international crude oil prices also contributed
to the increase in world sugar prices," it added.
Sugar prices hit 13-year high due to El Nino fallout:
FAO (indiatimes.com)
West Africa: Cocoa Prices Are Surging - West African Countries Should Seize the Moment to Negotiate a Better Deal for Farmers
4 OCTOBER 2023
The
global price of cocoa is spiking, a direct response to dwindling cocoa output in
West Africa. In September, cocoa futures reached a 44-year price peak due
to mounting concerns over reduced supplies from the region.
The price surge could prove
to be a critical moment for cocoa farming and policy in west Africa.
The
cocoa-producing belt of west Africa is responsible for generating over 80% of
the total global output. Between them, Ghana and Côte d'Ivoire contribute more
than 60% to the global output. Ghana is the second-biggest producer in the world and cocoa is a vital component of the country's
economy.
The
global price spike has led west African governments to increase the guaranteed
producer prices to farmers. Ghana recently raised the
state-guaranteed cocoa price paid to farmers by two thirds. The announcement
means that Ghana's cocoa farmers will be paid 20,943 cedis (US$1,837) per tonne
for the upcoming 2023-2024 season, up from 12,800 cedis.
Cameroon,
the world's fourth-largest cocoa producer, raised the price cocoa farmers get
to 1,500 CFA francs (US$2.50) per kilogram, a 25% jump from the previous rate
of 1,200 CFA francs. This increase is even more significant than Ghana's when
factoring in Cameroon's single-digit inflation. Additionally, the Cote d'Ivoire
government has announced a rise in the
producer price.
As an
economics researcher who has extensively studied and written about
cocoa production in west Africa, I contend that the recent shortages can be
harnessed to strengthen the position of cocoa producers. This will enable them
to address the structural challenges ingrained in the cocoa production value
chain. Rising production costs have not been recognised in the value of cocoa
beans. Farmers therefore haven't been able to earn enough income and this has
led to unsustainable farming practices.
----What's driving the change?
Ghana's
cocoa regulator recently indicated that
its farmers might not be able to meet some cocoa contract obligations for
another season. Ghana's projected cocoa yield for
the 2022/23 planting season was the lowest in 13 years, falling 24% short of
the initial estimates of 850,000 metric tonnes.
This trend has been repeated
across the region, with production falling in Côte d'Ivoire and Cameroon.
Reduced output means demand
can't be met and global prices rise.
The reduction in cocoa
output is attributed to short-term and long-term factors.
Commentators typically
emphasise the short-term factors:
·
poor weather conditions
·
black pod disease, which causes cocoa pods to rot
·
the decline in the number of cocoa farmers, some of them selling
their land to illegal
miners
·
a shortage
of fertilisers and pesticides, especially since the
conflict in Ukraine has curtailed Russia's export of potash and other
fertilisers.
More
Supermarkets
put security tags on coffee, butter and loo roll as shoplifting soars amid cost
of living crisis
Four
security-tagged Andrex toilet rolls, costing £3.75, were spotted at a Tesco
Express in south London
October
5, 2023 5:07 pm (Updated 6:12 pm)
Supermarkets have
been putting security tags on food and essential household products as
shoplifting for everyday items has soared during the cost
of living crisis.
The
Office for National Statistics (ONS) reported a 24 per cent rise in shoplifting
offences in England and Wales over the past year.
Users
on X, formerly known as Twitter, have shared pictures of loo rolls, coffee, and
sweets secured with labels to deter shoplifters.
Security
tags were seen on toilet rolls in a Tesco Express in Bromley and Beckenham,
south London, where the shoplifting rate is one of the highest in the country.
Four
security-tagged Andrex rolls, costing £3.75, were spotted at the south London
store.
Some
supermarkets have been using empty “dummy” products, with items such as
toiletries and chocolates boxed in plastic.
Shoppers
have noticed more and more security tags on essential daily items over the past
year, with images of security-tagged cheese, meat, and butter circulating on
social media. One user shared a photograph of yellow tape wrapped around
a £6
pack of Lurpak.
More
Covid-19 Corner
This
section will continue until it becomes unneeded.
'Voice of CDC' Journal Made Unsubstantiated Claims About Masking Against COVID-19: Pre-Proofed Study
A
go-to source for health policymakers published studies supporting masking
despite their questionable designs and lack of statistical evidence.
10/6/2023 Updated: 10/6/2023
One of the most influential
federal health journals in the United States has published unsupported claims
about the benefits of masks in preventing transmission of COVID-19, according
to authors of a manuscript recently accepted for publication in The American
Journal of Medicine.
The claims come from the U.S. Centers for Disease Control
and Prevention’s (CDC) Morbidity and Mortality Weekly Report (MMWR), which has
a powerfully persuasive effect on public health decision-making. How the
studies published in the MMWR advance scientific understanding "remain
largely opaque to the general public," the authors wrote in the pre-proofed paper. For this reason, the
authors expressed, it is essential to dig into how agency conclusions—and
subsequent recommendations that affect citizens across the globe—are made.
Researchers at the
University of California–San Francisco and the University of Southern Denmark
analyzed 77 studies published after 2019. Conclusions favoring masks were seen
in over 75 percent of the studies.
However, after further
scrutiny, researchers discovered questionable qualities in most of the
studies—qualities that could easily misrepresent results and confuse readers
such as health care professionals, researchers, and the public. These qualities
included poor study design, scarcity of statistical significance, dubious
methods for assessing mask effectiveness, failure to cite conflicting data, and
lack of randomization.
Moreover, over 50 percent of
the studies failed to use appropriate language when synthesizing findings,
labeling results as causal instead of correlative or associative. Scientific
principles dictate that causation cannot be inferred based on retrospective,
cross-sectional, or observational designs—the only three designs used across
all 77 studies.
The findings raise concern
about the scientific journal's reliability for informing health policy—a
journal that does not require external peer review before publication,
according to the authors.
"Over 60% of the
included studies concluded masks were effective without statistically
significant evidence to support this," the authors wrote, noting that less
than 15 percent of the 77 studies did provide such evidence. "For
clinicians, simply reading the report conclusions pertaining to masks in MMWR
may be misleading for advising patients and making health policy
recommendations."
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.
I do not like debt and do not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable.
Warren Buffett.
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