Baltic
Dry Index. 1643 +48 Brent Crude 80.68
Spot Gold 1938 US 2 Year Yield 5.04 +0.01
“Because the
lenders sold many—though not all—of the loans they made to other investors, in
the form of mortgage bombs bonds, the industry was also fraught with
moral hazard. “It was a fast-buck business,” says Jacobs. “Any business where
you can sell a product and make money without having to worry how the product
performs is going to attract sleazy people.”
The Big Short: Inside the Doomsday Machine
In the stock casinos, more pause ahead of tomorrow’s US consumer inflation numbers and a meeting later this week between Presidents Biden and Xi.
No surprises are expected from either events, so by the end of the week the focus will likely be on whether the US Federal Government faces a shutdown on Friday.
Though two important commodities are
signalling that the global economy is slowing fast, if not entering a new
recession, the stock punters for now, are not paying any attention to commodity
signals.
Most Asia markets
edge lower by midday; Biden-Xi talks awaited
UPDATED SUN, NOV 12 2023 11:17 PM EST
Most Asia-Pacific markets reversed gains on
Monday to trade lower by the afternoon, as investors look to more economic data
ahead of high-stakes talks between the U.S. and China.
U.S.
President Joe Biden and China’s President Xi Jinping are set
this week for their first in-person meeting in about a year.
Separately, ratings agency
Moody’s Investors Service on Friday downgraded
its ratings outlook on the U.S. government to negative from
stable, pointing to rising risks to the nation’s fiscal strength.
Japan’s Nikkei 225 was
flat, while the Topix dipped 0.14%. South Korea’s Kospi edged
0.18% lower and the Kosdaq dropped 1.78%.
In Australia, the S&P/ASX 200 fell
0.29%.
Hong Kong’s Hang Seng index fell
0.14%, while China’s CSI 300 index eased 0.52%.
U.S. stocks rallied
Friday, recovering the ground lost in the previous session, as Treasury yields
stabilized.
The Dow Jones
Industrial Average closed 1.15% higher, while the S&P 500 ended
1.56% higher. The Nasdaq Composite added 2.05% to notch its best day
since May.
Live
updates: Most Asia markets ease; Biden-Xi talks awaited (cnbc.com)
Stock futures dip after Moody’s downgrades U.S.
outlook: Live updates
UPDATED MON, NOV 13 2023 12:40 AM EST
U.S. stock futures dipped on Monday after
Moody’s Investors Service lowered
its U.S. credit rating outlook to negative from stable.
Dow
Jones Industrial Average futures fell
120 points, or 0.36%. Futures tied to the S&P 500 and Nasdaq-100 both
shed 0.5%.
Moody’s on Friday underscored the
U.S.′ “very large” fiscal deficits and partisan gridlock in Washington as
contributing factors for the downgrade. The ratings agency reaffirmed America’s
credit rating at AAA, the highest level. This comes three months after Fitch
lowered the U.S. long-term foreign currency issuer default
rating to AA+ from AAA, also citing expected fiscal deterioration, an
increasing debt burden and political standoffs on fiscal and debt issues.
“In the context of higher
interest rates, without effective fiscal policy measures to reduce government
spending or increase revenues,” the agency said. “Moody’s expects that the US’
fiscal deficits will remain very large, significantly weakening debt affordability.”
While there is “zero default risk
of U.S. debt,” the lower credit rating outlook remains relevant for its impact
on the attractiveness of the debt for foreign investors, said Jay Hatfield, CEO
at Infrastructure Capital Management.
“The U.S. has been downgraded
because our budget process is completely broken. That’s really the crux of the
issue — that there’s no real organized process to pass a budget. That
does impact the psyche of global fund ambassadors,” said Hatfield.
On the economic data front,
investors will be keeping an eye on October’s monthly federal budget, as well
as the Federal Reserve Bank of New York’s October consumer expectations survey.
Fed Governor Lisa Cook is also scheduled to give remarks Monday morning. This
all comes ahead of the monthly consumer price index data on Tuesday.
The major averages are coming off
their second consecutive week of gains. The S&P 500 rose 1.3% the previous
week, while the Dow and Nasdaq gained about 0.7% and 2.4%, respectively.
Stock
market today: Live updates (cnbc.com)
As Biden and Xi
gear up for a high-stakes meeting, experts have low expectations
U.S.-China relations, marred in the past year by a
series of inflection points, have reached one of the most tense periods perhaps
since 1972, when the two nations established diplomatic ties.
A Chinese spy balloon. Close encounters in both the air and the Taiwan Strait. Diplomatic spats over the theft
of technology, hacking and trade. A drought of military-to-military talks.
Even the lapse of a panda agreement.
All point to worsening relations
that will hang over next week’s meeting between President Joe Biden and China’s
President Xi Jinping, their first in-person meeting in about a year, and the first time since 2017 that Xi has stepped foot on American
soil.
But experts and U.S. officials
caution not to expect markedly improved relations post-meeting.
“We should probably keep a pretty
low bar in terms of tangible outcomes and deliverables,” said Colleen Cottle,
deputy director of the Global China Hub at the Atlantic Council. “This is a
meeting that’s probably much more about symbolism and showing a commitment
among both leaders to maintain high-level communications and keep
communications flowing over the course of the next year.”
Senior U.S. administration
officials detailed a handful of agenda items during a briefing with reporters.
The leaders are expected to discuss hot-button issues including military
communications, human rights and the South China Sea, an official said.
“We’re not talking about a long
list of outcomes or deliverables,” a senior administration official told
reporters. “The goals here really are about managing the competition,
preventing the downside risk of conflict and ensuring channels of communication
are open.”
Neither the U.S. nor China appears
to be gearing up for a significantly positive swing in relations, experts said.
More
As Biden and Xi gear up for a high-stakes meeting, experts have low expectations (cnbc.com)
In commodities news, Dr. Copper is signalling
bad economic news to come. Crude oil is signalling the same or worse,
recession.
Copper Market Slump Threatens Shift to Wind Power,
Electric Cars
November 11, 2023
A prolonged
slide in copper prices is challenging the world’s shift to renewable energy
sources.
Mining firms
will need to dig up gigantic amounts of new copper over the next several years
to supply the transition to renewables. But demand is slumping right now from
manufacturers and builders who use the metal in everything from electrical wire
to roofing.
The result of
that timing mismatch is what Wall Street analysts say is a temporary surplus
that is keeping copper prices low and discouraging the investments necessary to
meet the needs of the world’s expanding population of wind farms, solar arrays
and electric vehicles.
The dynamic
leaves the market poised for a crunch that could lead to price spikes and
shortfalls, said Goldman Sachs metals strategist Nicholas Snowdon.
“It’s a matter
of when, not if, the market goes into an extreme state of scarcity and the
copper price spike plays out,” he said.
Copper futures
have slid more than 15% in the past 10 months, to about $3.60 a pound. One
source of pressure has been a weaker than expected pandemic recovery in
China—the world’s largest copper consumer.
Other factors
include a strengthening dollar, a slowing global manufacturing sector and the
resolution of supply disruptions in Chile and Peru, two of the largest
producers.
More
Copper Market Slump Threatens Shift to Wind Power,
Electric Cars (msn.com)
Oil prices fall on
worries of waning demand in US and China
By Yuka Obayashi and Colleen Howe
November 13, 2023 4:41 AM GMT
BEIJING, Nov 13 - Oil prices backed off on Monday,
reversing their Friday rally, as renewed concerns over waning demand in the
United States and China dented market sentiment.
Brent crude futures for January were down 71 cents,
or 0.87%, at $80.72 a barrel at 0400 GMT, while the U.S. West Texas
Intermediate (WTI) crude futures for December were at $76.49, down 68 cents, or
0.88%.
Both benchmarks were well below the 100-day moving
average of $86.61 a barrel for WTI and $82.31 a barrel for Brent.
Prices gained
nearly 2% last Friday as Iraq voiced support for oil cuts by OPEC+, but lost
about 4% for the week, notching their third weekly losses for the first time
since May.
"Investors
are more focused on slow demand in the United States and China while worries
over the potential supply disruptions from the Israel-Hamas conflict have
somewhat receded," said Hiroyuki Kikukawa, president of NS Trading, a unit
of Nissan Securities.
The
U.S. Energy Information Administration (EIA) said last week crude oil
production in the United States this year will rise by slightly less than
previously expected while demand will fall.
Next year, per
capita U.S. gasoline consumption could fall to the lowest level in two decades,
it said.
Weak economic
data last week from China, the world's biggest crude oil importer, also
increased fears of faltering demand.
More
Oil prices fall on worries of waning demand in US and China | Reuters
Finally, is anyone on team Biden aware or care?
This is not good news for a country looking to sell trillions of more debt
later this year and in Q1 24.
U.S. is warned about its global standing as Gaza suffering persists
November 11, 2023
NEW DELHI — A month into the Gaza war, President Biden’s steadfast support for Israeli leaders, even as the Palestinian civilian death toll mounts, risks lasting damage to Washington’s standing in the region and beyond, Arab leaders and analysts say, warning that the perceived U.S. acceptance of attacks on refugee camps, hospitals and apartment buildings could shatter American influence for years to come.
Anger over the campaign’s enormous civilian collateral is increasingly directed at the United States, not just at Israel, and has been a constant source of friction throughout Secretary of State Antony Blinken’s travels in the Middle East and Asia over the past week. Prime ministers and diplomats have admonished him over Israeli actions, with many charging that the attacks are facilitated by U.S. weaponry and that efforts to push for “humanitarian pauses” rather than an enduring cease-fire is a formula for continued violence against noncombatants.
“The whole region is sinking in a sea of hatred that will define generations to come,” said Jordanian Foreign Minister Ayman Safadi, speaking alongside Blinken in Amman. He called for Washington to put a halt to Israeli attacks on civilians. “The U.S. has a leading role to play in these efforts. And on it and on all of us fall the very heavy responsibility of ending this catastrophe.”
Blinken’s conversations with Israeli leaders also were tense, as Prime Minister Benjamin Netanyahu and his top lieutenants ceded little ground to U.S. concerns about civilian safety, maintaining that Hamas operatives are hiding among innocent bystanders in Gaza. Even in Tokyo, at a gathering of nations typically supportive of the United States, foreign ministers had contentious conversations about the U.S. handling of the Gaza crisis, although the European Union’s chief diplomat, Josep Borrell, directed most of his ire at his German counterpart for taking the U.S. side rather than backing Borrell’s effort to deliver a sharper call to Israel to halt its offensive. French President Emmanuel Macron later broke with the U.S. position, calling for a cease-fire.
As massive pro-Palestinian demonstrations were held throughout the world, hundreds of thousands of people in Indonesia, Pakistan and elsewhere criticized Israel and its American backers for the death toll, which has surpassed 11,000 Palestinians, many of them children, according to the Hamas-controlled Gaza Health Ministry.
----American concerns about waning influence in the Middle
East long predate the Oct. 7 Hamas attack on Israel that left 1,200 dead, but the
current situation will probably accelerate and deepen the fallout, analysts
said. And the close ties between the United States and Israel over the approach
in Gaza has left Arab leaders unwilling to be seen doing any favors for
Washington.
“What the Americans are doing
now, this policy, is damaging them. At least 1.3 billion people in the world
are going to hate them,” said Gen. Abbas Ibrahim, a former top Lebanese
official who has been involved in negotiations to secure the exit of foreign
nationals trapped in Gaza. “And it’s not just about Muslims anymore. There are
people demonstrating all over the world.”
----The anger toward
Washington has given Russia and China an opening to portray themselves as
defenders of Palestinians, boosting their image in the developing world and
using their propaganda outlets to amplify the connection between the United
States and Israeli actions in Gaza. Moscow hosted senior Hamas leaders last
month, earning praise from the organization and condemnation from Israel.
For a world already split over
Russia’s invasion of Ukraine, the Gaza crisis is offering fodder, for those who
want to seize it, that Western nations care more about the deaths of White
Christian Ukrainians than non-White Muslims in the Middle East.
More
U.S. is warned about its global standing as Gaza suffering persists (msn.com)
If there is
one common theme to the vast range of the world’s financial crises, it is that
excessive debt accumulation, whether by the government, banks, corporations, or
consumers, often poses greater systemic risks than it seems during a boom.
Carmen Reinhart.
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.
Recession: The Stars Continue To Align
Nov
11, 2023,11:18pm EST
The oft forecasted
Recession hasn’t yet appeared. Has it been avoided (i.e., “soft-landing”)? A
look at the growing evidence leads us to conclude that the Recession is coming;
we suspect that when the NBER gets around to dating it, this quarter (Q4) will
mark its beginning.
The
first evidence of this showed up in the recent employment data. And consumers
(2/3rds of GDP) are just starting to adjust after a spending spree with the
“free money” doled out by Uncle Sam in 2021 and 2022. Credit card balances are
now at record levels (and at interest rates in the mid-20% range).
Delinquencies are now rising. Earnings expectations for the Retail industry are
being cut as major retailers reduce guidance. And stock analysts have been
cutting their earnings forecasts (see chart). Banks have cut back on staff and
have restricted lending both to consumers and businesses while upping their
loan loss reserves. Housing affordability is at a 35-year low because of high
prices, but equally to blame are mortgage rates, now at 8%. As for inflation,
that’s about the only good news; it looks like it is melting.
Employment
October
was the first month in a while to show employment weakness. As noted in our
last blog, when the revisions (-101K) and Birth/Death model add-on (+127K) are
accounted for, the payrolls were actually negative in the Establishment Survey.
The Household Survey, which wasn’t mentioned anywhere in the media, registered
-348K net jobs. And if it weren’t for the fall in the Labor Force Participation
Rate (discouraged applicants), the U3 Unemployment Rate would have risen more
than the +0.1 percentage point that brought it to 3.9% (the low was 3.4% last
December). Be that as it may, in the post-WWII era, a rise of 0.5 percentage
points in U3 has signaled a Recession 100% of the time. So, those that believe
in the “soft-landing” scenario must also believe that “this time is different.”
(As Warren Buffet famously said: “What we learn from history is that people
don’t learn from history.”)
According to Rosenberg Research, over the past three
months, the Household Survey has shown a -40K decline in job holders and +665K
more unemployed people. To show the stress on household budgets, over those
three months, the number of multiple job holders has risen by +243K to a near
record 8.4 million.
More
Recession: The Stars Continue To Align (forbes.com)
US consumer sentiment drops again in November,
inflation expectations rise
November
10, 2023
(Reuters) -U.S. consumer
sentiment fell for a fourth straight month in November and households'
expectations for inflation rose again, with their medium-term outlook for price
pressures shooting to the highest level in more than a dozen years, a survey showed
on Friday.
The University
of Michigan's preliminary reading of its Consumer Sentiment Index dropped to
60.4, the lowest level since May, from October's final reading of 63.8.
The median
expectation among economists in a Reuters poll had been for the index to be
little changed at 63.7.
The survey's
preliminary gauge of current conditions fell to 65.7 from last month's final
level of 70.6, while the expectations index slid to 56.9 from 59.3 in October.
Like the headline index, both sub-indexes were the lowest since May.
"While
current and expected personal finances both improved modestly this month, the
long-run economic outlook slid 12%, in part due to growing concerns about the
negative effects of high interest rates," Joanne Hsu, the director of the
University of Michigan's Surveys of Consumers, said in a statement.
"Ongoing wars in Gaza and Ukraine weighed on many consumers as well."
Consumers'
outlook for inflation in the year ahead rose for a second month to a
seven-month high of 4.4%, "indicating that the large increase between
September's 3.2% reading and October's 4.2% reading was no fluke," Hsu
said.
Meanwhile,
over a five-year horizon, consumers expect inflation to average 3.2%, up from
3.0% in October and the highest since March 2011.
More
US consumer sentiment drops again in November, inflation expectations rise (msn.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
Top FDA Officials Accepted Jobs with Moderna After Playing Key Roles in the Licensure of COVID-19 Vaccines
A new BMJ investigation reveals a "revolving
door" between FDA officials tasked with regulating COVID-19 vaccines and
the companies who manufacture them.
11/10/2023 Updated: 11/10/2023
Two high-level
regulatory officials with the U.S. Food and Drug Administration (FDA) involved
in vaccine oversight accepted jobs at Moderna just months after signing off on
the licensure of the company’s COVID-19 vaccine, according to a British Medical
Journal (BMJ) investigation.
The report by Peter Doshi, associate
professor at the University of Maryland School of Pharmacy and senior editor at
The BMJ, reveals a long-standing revolving door between the FDA and
pharmaceutical companies whose products it regulates and raises questions about
the impartiality and independence of top FDA regulators.
2 Top FDA Vaccine
Regulators Went to Work for Moderna
Dr. Doran Fink is a “physician/scientist experienced in regulation and clinical development/licensure of vaccines and related biological products” and was deeply involved with vaccine regulation at the FDA for more than 12 years, according to his LinkedIn profile.
According to the BMJ report, Dr. Fink started his FDA career as a
clinical reviewer in 2010 and “worked his way up” to Deputy Director of the Division of Vaccines and Related Product
Applications within the FDA’s Office of Vaccines
Research and Review, where he led a team of medical officers focused on
infectious diseases and related biological projects.
During the
COVID-19 pandemic, Dr. Fink was a prominent voice on COVID-19 vaccines and
which population groups should receive them. He spoke on behalf of the FDA at
numerous meetings held by the agency’s vaccine advisors who met to discuss
whether to approve COVID-19 vaccines, change their composition, or authorize
boosters.
Dr. Fink also presented at meetings held
by the Centers for Disease Control and Prevention’s Advisory Committee on
Immunization Practices—a group of health experts that develop recommendations
on how to use vaccines—as the FDA’s “principal FDA ex officio representative.”
According to
the BMJ report and Dr. Fink’s LinkedIn profile, Fink also served on the senior
leadership team for COVID-19 vaccine review and policy activities in response
to the COVID-19 public health emergency.
As part of his
role, he advised vaccine manufacturers on vaccine development throughout the
pandemic and coordinated “expedited review of regulatory submissions,” advised
U.S. government stakeholders outside the FDA on COVID-19 vaccine science and
development, and contributed to FDA guidance on the development, licensure, and
emergency use authorization of COVID-19 vaccines.
Most notably, Dr.
Fink engaged in a “senior level review” of the FDA’s decision memoranda for
emergency use authorization and licensure of COVID-19 vaccines, including
Moderna’s.
According to
Fink’s LinkedIn profile, he left the FDA in December 2022 and started a job at
Moderna as the head of “Translational Medicine and Early Clinical Development,
Infectious Diseases” in February 2023.
Dr. Jaya Goswami
has a similar history. Dr. Goswami began working as a medical officer at the
FDA’s Center for Biologics Evaluation and Research in March 2020 and had “broad
oversight over vaccines and biologics clinical development,” according to the
BMJ report.
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.
Batteries of the future: How
cotton and seawater might power our devices
9th
November 2023
Zip.
The power's out. But on a street in India, there's a cash machine still happily
dispensing banknotes. Thanks, in part, to burnt cotton. For this cash machine
has a backup battery inside it – a battery that contains carbon from carefully
combusted cotton.
"The
exact process is secret, to be honest with you," says Inketsu Okina, chief
intelligence officer at PJP Eye, the Japanese firm that made the battery. He's
not joking, either. "The temperature is secret and atmosphere is secret.
Pressure is secret," he continues, cagily.
Okina
does say that a high temperature is required, above 3,000C (5,432F). And that
1kg (2.2lbs) of cotton yields 200g (7oz) of carbon – with just 2g (0.07oz)
needed for each battery cell. The firm bought a shipment of cotton in 2017 and
still hasn't used all of it, says Okina.
In the
batteries developed by the company, together with researchers at Kyushu
University in Fukuoka, Japan, carbon is used for the anode – one of the two
electrodes between which flow ions, the charged particles in batteries. Ions
move in one direction when the battery is charging and in the other direction
when it releases energy to a device. The majority of batteries use graphite as
an anode but PJP Eye argues their approach is more sustainable, since they can
make anodes using waste cotton from the textile industry.
With huge demand for batteries expected
in the coming years, propelled by the rise of electric vehicles and
large energy storage systems, some researchers and businesses are frantically
developing possible alternatives to the lithium ion and graphite batteries that
are commonplace today. Like PJP Eye, they argue we could be using much more
sustainable and widely available materials for battery production.
----From
seawater to biowaste and natural pigments, there is a long list of potential
alternatives in nature that would be much more widely available – the hard part
is proving that any of them can realistically compete with the kinds of
batteries already on the market, which are seemingly so indispensable in our
gadget-strewn world.
PJP
Eye also touts the possibility of improving battery performance as well as
making batteries greener. "Our carbon has a bigger surface area than
graphite," says Okina, describing how the chemistry of the anode in
their Cambrian
single carbon battery allows for a battery that charges very
quickly, up to 10 times faster than existing lithium ion batteries, he claims.
The
battery's cathode is made from a "base metal" oxide. Although Okina
won't disclose exactly which one, these metals include copper, lead, nickel and
zinc, which are more readily and less reactive than alkaline metals such as
lithium. The company claims to be working on a dual carbon
electrode battery, where both electrodes are made from plant-based
carbon. The technology is based on research conducted by researchers at Kyushu
University, although the battery is not expected to be available until 2025.
Being able to charge a battery quickly doesn't matter too much for
a cash machine, but it does for an electric vehicle when you just want to juice
it up and go. He mentions that the Chinese firm Goccia, in partnership with
Hitachi, has developed an e-bike that uses PJP Eye's battery and will put it on
sale in Japan early in 2023. The bike's maximum speed is 50km/h (31mph) and you
can travel a distance of 70km (44 miles) on one charge, he says.
It's
far from the only battery that uses carbon from waste biomaterials. Stora Enso
in Finland has developed a battery
anode that uses carbon from lignin, a binding polymer found in trees.
Cotton could also be used in place of the electrolyte that
facilitates the flow of ions between the cathode and anode, potentially
creating more
stable, solid-state batteries than those currently available,
according to some researchers.
But
some see even bigger, potentially inexhaustible, sources of energy out there in
nature. The world's vast oceans represent a "practically unlimited"
store of material for batteries, argues Stefano Passerini, deputy director of
the Helmholtz Institute Ulm in Germany.
He and
colleagues described their
design for a battery that transfers sodium ions out of seawater, in
order to build up a store of the metal sodium, in a paper published in May
2022. To do this, the team designed a special polymer electrolyte through which
sodium ions may pass.
More
Batteries of the future: How cotton and seawater might
power our devices - BBC Future
It
is estimated that 40 million people died in the First World War between 1914
and 1918. In that final year of the war the great influenza pandemic took hold
and was to cause possibly 50 million fatalities, some estimates claiming a
global death toll as high as 100 million.
No pandemic before or since has resulted in deaths on such a scale. Tragically,
many soldiers who survived the horrors of trench warfare then fell victim to
the influenza scourge.
It is commonly referred to as “the Spanish flu” epidemic but Spain is highly
unlikely to have been the source. Wartime censors in the UK, Germany, the United
States and France, anxious not to lower morale, played down the numbers of
victims. But there were no restrictions on reporting the figures for Spain,
which had taken no part in the war. So the belief grew that seemingly badly hit
Spain was the epicentre of the disease.
More
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