Baltic Dry Index. 2348 -63 Brent Crude 76.99
Spot Gold 2023 US 2 Year Yield 4.44 +0.07
I am therefore afraid that we must abandon the plan of improving
the government of the Bank of England by the appointment of a permanent
Governor, because we should not be sure of choosing a good governor, and should
indeed run a great risk, for the most part, of choosing a bad one.
Walter Bagehot. Lombard Street, 1873.
In
the stock casinos, it is the final full trading week of 2023. Time to continue
Fed Chairman Powell’s interest rate cutting, Fear Of Missing Out (F0M0) rally,
or time to take profits ahead of year-end and the 2024 recession?
The
shipping disruption in the Red Sea wants careful watching too. If drone risks
lead to increased shipping and insurance rates, inflation may be about to start
rising once again. If drone attack risk
leads to any disruption to Europe’s oil and LNG supply, that inflation risk
from higher energy pricing could be considerable. Whose idea was it to blow up
the Nord Stream pipelines?
Asia shares subdued
for BOJ meeting, US inflation test
By Wayne Cole December 18, 2023 5:52 AM GMT
SYDNEY, Dec 18 (Reuters) - Asia stocks
slipped on Monday in a subdued start to a week where Japan's central bank might
edge further away from its uber-easy policies, while a key reading on U.S.
inflation is expected to underpin market pricing of interest rate cuts there.
The Bank of Japan
(BOJ) meets Tuesday amid much chatter that it is considering how and when to
move away from negative interest rates. None of the analysts polled by
Reuters expected a definitive move at this meeting, but policy makers might
start laying the groundwork for an eventual shift.
April was favoured
by 17 of 28 economists as
the kick-off for negative rates to be scrapped, making the BOJ one of the few
central banks in the world actually tightening.
"Since the last meeting in
October, 10-year JGB yields have fallen and the yen has appreciated, giving the
BOJ little incentive to revise policy at this stage," said Barclays
economist Christian Keller.
"We think the BOJ will wait to
confirm the result of the 'shunto' wage negotiations next spring, before moving
in April."
---- Over in the United States, a
reading on core personal consumption expenditure (PCE) index is forecast by
analysts to rise 0.2% in November with the annual inflation rate slowing to its
lowest since mid-2021 at 3.4%.
Analysts suspect the balance of risk
is on the downside and a rise of 0.1% for the month would see the six-month
annualised pace of inflation slow to just 2.1% and almost at the Federal
Reserve's target of 2%.
Markets reckon the slowdown in
inflation means the Fed will have to ease policy just to stop real rates from
rising, and are wagering on early and aggressive action.
New York Fed President John Williams
did try to rain on the parade on Friday by saying there was no talk of easing
by policy makers, but markets were disinclined to listen.
MARCH MADNESS
Two-year Treasury yields ticked up
only slightly in response, and still ended the week down a steep 28 basis
points at the lowest close since mid-May.
Yields on 10-year notes stood at
3.91%, having dived 33 basis points last week in the biggest weekly fall since
early 2020.
Fed fund futures imply a 74% chance
of a rate cut as early as March, while May has 39 basis points (bp) of easing
priced in. The market also implies at least 140 basis points of cuts for all of
2024.
More
Asia
shares subdued for BOJ meeting, US inflation test | Reuters
Asia markets take a breather, Bank of Japan
policy meet and China LPR in focus this week
UPDATED SUN, DEC 17 2023 9:35 PM
EST
Asia-Pacific markets dipped Monday at the start
of the penultimate week of 2023, after most markets in the region rallied last
week following the U.S. Federal Reserve’s decision to hold rates and its
roadmap for rate cuts in 2024 and 2025.
The Bank of Japan
will meet for the last time this year. A note from Dutch bank ING said it
expects the BOJ to maintain all its major policy settings, “though the overall
tone about future policy at the press conference and statement could start to
soften.“
A Reuters poll of economists also expects the BOJ to maintain its benchmark
interest rate at -0.1%.
Separately, China
will release its loan prime rates on Wednesday, while inflation data from Japan
is due Friday.
In Australia, the S&P/ASX 200 was
0.26% lower, on pace to snap a six-day winning streak.
Japan’s Nikkei 225 dropped
1.22%, while the Topix saw a larger loss of 1.56%.
South Korea’s Kospi struggled
to make headway, falling 0.11%; the small-cap Kosdaq was the outlier, rising
1.35%.
Hong Kong’s Hang Seng index dropped
0.85%, while the mainland Chinese CSI 300 inched down 0.30%.
On Friday in the U.S., markets ended mixed, and
with the Dow Jones Industrial Average up
0.2% and setting a new intraday record and the Nasdaq Composite 0.4%
higher. The Nasdaq-100 ended Friday at 16,623.45, topping a record close
dating back to November 2021.
In contrast, the S&P500 slipped
marginally, but still logged gains for a seventh straight week to mark its
longest winning streak since 2017.
Asia stock markets
today: Live updates (cnbc.com)
Stock futures are little changed after
major averages rally for seven consecutive weeks: Live updates
UPDATED SUN, DEC 17 2023 7:00 PM
EST
U.S. stock futures traded near the flatline Sunday night after the three
major averages notched their seventh straight week of gains. The Dow Jones
Industrial Average recorded a new intraday record, and the Nasdaq 100 had a new
closing high.
Futures tied to the Dow industrials added
34 points, or 0.1%. The S&P 500 futures
also inched up 0.1%, while Nasdaq 100 futures
rose by just 0.02%.
The winning streak for the S&P 500 marked its longest
string of weekly gains since 2017. The broad market index is up by 3.3% for the
month, while the Dow and Nasdaq are 3.8% and 4.1% higher, respectively.
Investor sentiment took a positive turn last week after the
Federal Reserve indicated three short-term interest rate cuts are expected in
2024 amid cooling inflation.
“Slowing inflation, low growth expectations, and intact
growth momentum is a great combination from a market perspective. We’ve argued
time and again that this is a backdrop that is as Goldilocks as it gets,” HSBC
chief multi-asset strategist Max Kettner wrote in a Friday note.
Kettner noted, however, that near-term growth and earnings
expectations in the U.S. remain weak. The current winning streak seems similar
to the 2017-2018 market rally, he added, where broadly bullish sentiment gave
way to disappointment in January “by the blow-up in implied equity market
volatility.”
“So, for the first time in H2, we
are starting to be wary of the positive momentum. It may be prudent to start
2024 on a more cautious note,” Kettner said.
On the economic front, investors
will be looking toward December’s business leaders survey and housing market
index results. Monday marks the start of the final full trading week of
2023.
Wall Street Breakfast: The Week Ahead
Dec. 17, 2023 7:55 AM ET
The economic calendar is heavy next week as
releases covering housing, manufacturing, and consumer sentiment pour in just
ahead of the three-day weekend for the Christmas holiday. The key release will
be the monthly update on core PCE. The Federal Reserve's favored inflation
gauge is forecast to show a soft 0.2% month-over-month rise in November to take
the year-over-year rate down to +3.4%. Crucially, that mark would also imply a
six-month annualized inflation rate of just above 2.0%, which is the Fed's stated
inflation target. If the core PCE number comes in close to expectations, the
buzz over lower interest rates may continue.
At the time of publication, federal funds futures
trading implied a 95% probability that the Fed's target rate would be lower
than the current level after the May FOMC meeting. Globally, the Bank of Japan
meeting next week also has the potential for some dramatic news on the end of
the negative interest rate era for the nation.
Wall
Street Breakfast: The Week Ahead | Seeking Alpha
Finally,
if this lasts very long, it will have a big impact across Europe.
More shipping giants suspend passage via Red Sea
after attacks
December
16, 2023
Two more major
shipping firms, Mediterranean Shipping Company and CMA CGM, said on Saturday
they were suspending passage through a Red Sea strait vital for global trade,
after Yemeni rebel attacks in the area.
The
announcement by Italian-Swiss giant MSC and France's CMA CGM follows a similar
decision on Friday by two of the world's largest shipping companies, Maersk and
Hapag-Lloyd, in response to a warning by the Iran-backed Huthi rebels.
The Huthis,
who control much of Yemen but are not recognised internationally, said they
were targeting vessels near the strategic Bab al-Mandab strait to pressure
Israel over its devastating war with Palestinian Hamas militants in the Gaza
Strip.
Forty percent
of the world's international trade transits through the strait, which runs
between Yemen, on the southwestern tip of the Arabian Peninsula, and the
African continent.
The tensions
have added to fears that the Gaza conflict could spread.
An American
destroyer on Saturday shot down more than a dozen drones in the Red Sea
launched from Huthi-controlled areas of Yemen, the US Central Command (CENTCOM)
said.
And the UK
government said one of its destroyers had also brought down a suspected attack
drone in the area.
MSC, one of
the world's largest freight shipping lines, said one of its container vessels
had been targeted in the Red Sea on Friday and it was halting traffic through
the strait until it was safe.
No one on the
MSC Palatium III was wounded but the ship suffered fire damage, the company
said.
CMA CGM said
it had ordered all its vessels to leave the area and stay there until further
notice.
"The
situation continues to deteriorate and there are increasing concerns about
security," it said.
More shipping giants suspend passage via Red Sea after
attacks (msn.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.
Bank of Canada
diverges from Fed, says rates not coming down soon
By David Ljunggren and Dale Smith December 15, 2023 8:38 PM GMT
OTTAWA, Dec 15
(Reuters) - The Bank of Canada on Friday made clear that interest rates were
not coming down any time soon, putting it on a divergent path from the U.S.
Federal Reserve, which said this week that easing could be on the timetable.
The Canadian
central bank raised rates by a quarter point in both June and July to a 22-year
high and has left them on hold in the three policy-setting meetings since.
Inflation slowed to 3.1% in October, down from a 2022 peak of more than 8%, but
has remained above the bank's 2% target since March 2021.
"The Fed is
going to do what they need to do. We're going to focus on what needs to be done
here in Canada," Governor Tiff Macklem told a business audience in Toronto
after a speech.
"We have not
started having that discussion (about cutting rates), because it's too early to
have that discussion. We're still discussing whether we raised interest rates
enough and how long they need to stay where they are."
Money markets
expect the bank to begin easing as soon as April and for rates to fall 125
basis points in 2024.0#BOCWATCH
U.S.
central bank chief Jerome Powell on Wednesday said the historic tightening of
monetary policy is
likely over, with a discussion of cuts in
borrowing costs coming into view.
The Bank of
Canada had previously forecast inflation should hit 2% by end-2025 but Macklem
- making his last public appearance of 2023 - told reporters it should be
closer to target by the end of next year.
"Inflation
is still too high. If we don't do enough ... ultimately, we're probably going
to have to raise rates even further to get it down," he said. Earlier, in
his speech, he had said future inflation declines were likely to be gradual.
Macklem also
expressed increasing optimism it could bring inflation back down to target but
said the next few quarters would be difficult as high interest rates restrict
the economy.
"The 2%
inflation target is now in sight. And while we're not there yet, the conditions
increasingly appear to be in place to get us there," he said.
The
European Central Bank this week said policy easing was not
even brought up in a two-day meeting, and
the Bank of England said rates would remain high for "an extended
period".
"I expect
2024 to be a year of transition ... with the cost of living still increasing
too quickly, and with growth subdued, the next two to three quarters will be
difficult for many," said Macklem, adding the jobless rate was likely to
rise further.
The central bank
held its key overnight rate at 5% on Dec 6 and left the door open to another
hike, saying it was still concerned about inflation while acknowledging an
economic slowdown and a general easing of prices.
"Today's
speech reinforces the building sense that the Bank is comfortable that policy
rates are now tight enough to quell inflation," said Andrew Kelvin, chief
Canada strategist at TD Securities.
Bank
of Canada diverges from Fed, says rates not coming down soon | Reuters
America’s Sugar Shortfall Leaves Candy-Makers
Scrounging
Sat, December 16, 2023 at 3:00 PM
GMT
(Bloomberg)
-- Bonbons and candy canes may dominate the American holiday aesthetic, but US
confectionery companies are feeling anything but jolly as they head into one of
the sugar market’s tightest years in recent memory.
Prolonged
droughts in major cane-producers Mexico and Louisiana have helped push US sugar
futures to the highest ever for this time of year and forced users to turn to
high-cost imports instead. Sweets-makers paying up to snag supplies are
choosing to protect their margins by raising prices for consumers — and hoping
shoppers don’t balk at the mark-up.
“We just found
that it was better to just pay more for sugar and pass it along to the consumer
than to be completely out of sugar,” said Kirk Vashaw, chief executive officer
of Dum Dums lollipop maker Spangler Candy Co. “And there’s a lot of other
companies that I think thought the same thing.”
Candy is big
business in the US: Confectionery retail sales are forecast to be $48.8 billion
this year, according to consumer research group Euromonitor International. With
about 1,600 manufacturing sites across all 50 states, the US sector employs
more than 200,000 people, the National Confectioners Association estimates —
with more than double the number of indirect roles, like suppliers.
Rising food
costs have been a problem ever since pandemic-era supply chain snags and labor
shortages blindsided businesses in 2020. Even now, food prices for many
everyday items remain at their highest levels ever — and sweets have been
particularly hard hit. Consumer prices for confectionery items rose 13.4% in
the 12-month period ending Nov. 25, according to data from consumer researcher
NIQ, outpacing overall grocery gains.
Although
inflation is a problem the world over, the US sugar market has been uniquely
impacted due to its protectionist regulations. US rules cap both domestic sales
and the volume of foreign supplies that can be brought in under low duties; all
other sugar imports past those so-called tariff-rate quotas are subject to
higher taxes. The regulations are intended to protect grower profits,
especially given higher US production costs, and prevent other countries from
flooding the US with sugar.
More
America’s Sugar Shortfall Leaves Candy-Makers Scrounging (yahoo.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
Pfizer mRNA
Vaccine Makes ‘Aberrant Proteins,’ Experts Concerned About Autoimmunity Events
A
study shows that Pfizer vaccines were significantly more likely to produce
proteins that some experts believe may increase cancer and autoimmune risk.
12/13/2023 Updated: 12/15/2023
There may be
around a 1 in 10 chance that Pfizer mRNA COVID-19 vaccines will not generate
spike proteins but something else, a new Cambridge study finds, raising
concerns about autoimmune response among experts.
The study
authors found that 8 percent of the time, Pfizer mRNA COVID-19 vaccines are
mistranslated, leading to the formation of unintended proteins.
This mistranslation is primarily driven by Pfizer's modification to
their mRNA bases.
“Our work
presents both a concern and a solution for this new type of medicine,” said
leading author Anne Willis in the study’s press release.
One can think of
mRNA vaccines as a set of instructions used to make spike proteins. Once the
vaccine enters the cell, ribosomes interpret the mRNA instructions to make
proteins, like spike proteins.
If the
instructions are misinterpreted, errors in the final protein may be produced.
Some errors are minor, like misspelling one word in a text, while others are
more detrimental.
This
misinterpretation is called a frameshift, which occurs when one or two mRNA
bases are skipped. Since mRNA bases are translated in sets of threes, skipping
a base would affect all the sequences downstream, leading to new proteins being
formed.
“Frameshifting
results in the production multiple, unique and potentially aberrant proteins,”
immunologist Jessica Rose wrote in her Substack article
discussing the study.
While most
naturally occurring mRNA contains uridine, the Pfizer mRNA vaccines use
N1-methylpseudouridine. This makes the mRNA sequence hardier and less prone to
breakdown by the immune system. Pfizer’s opting for less commonly occurring
mRNA bases is also why some scientists call the mRNA vaccines modified RNA, or
modRNA.
By
implementing additional edits to the mRNA sequences, the authors were able to
reduce further frameshifted proteins.
Although "there is no evidence: that
the aberrant proteins generated by Pfizer vaccination are associated with
adverse outcomes, for future use of mRNA technology, it is important that
"mRNA sequence design is modified" to reduce these shifts, the
authors concluded.
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.
White-hot
thermal grid battery aims to decimate lithium on price
Loz Blain December 14, 2023
Fourth
Power says its ultra-high temperature "sun in a box" energy storage
tech is more than 10X cheaper than lithium-ion batteries, and vastly more
powerful and efficient than any other thermal battery. It's hoping to prove it
with a 1-MWh prototype.
As a
grid-level energy storage solution, Fourth aims to compete with big lithium
battery arrays in the short-duration 5-10 hour range – basically storing excess
solar energy during the heat of the day for use in the evening and at night
when generation drops off. But the company says it's also relevant up to the
100-hour stage, which would cover the "several days of bad weather and
poor renewable generation" case.
This is one
of a number of thermal energy storage companies coming up out of Massachusetts
and backed by Bill Gates's Breakthrough Energy Ventures fund. You might
remember Antora
Energy from a few months ago, with its ultra-hot carbon block batteries and high-efficiency thermophotovoltaic energy
converters, for example.
The idea is
simple enough: you take excess renewable energy and use it to heat something up
inside a heavily insulated storage system. Both Antora and Fourth use big,
super cheap and abundant blocks of graphite for bulk energy storage – in
Fourth's case, heating them up as high as a white-hot 2,500 °C (4,530 °F).
Energy is moved around
Fourth's system using liquid tin metal, which melts at a relatively low 232 °C
(450 °F). This is Fourth's secret sauce, and relies on a Guinness World Record-holding pump designed by founder Dr. Asegun Henry. At high
temperatures over about 1,000 °C (1,800 °F), liquid metals can destroy metallic
pumps, but Henry claims his engineered ceramic design will happily operate up
to "almost half the sun's temperature" – we assume this refers to the
5,600-odd °C (10,000 °F) on the Sun's surface rather than the 15 million °C (27
million °F) at the core.
These pumps move the
superheated liquid tin around a graphite plumbing system, transferring heat
from the heating elements to the graphite blocks, and then taking it from the blocks to the energy recovery
system when it's time to send it back to the grid.
To recover
the energy, the liquid tin is pumped through lots of narrow graphite pipes
inside an array of power-harvesting cells. These pipes become white-hot and
emit intense light, which is harvested through thermophotovoltaic (TPV) cells –
much like solar cells, but tuned to work optimally with this storage system. At
these temperatures, nearly all the heat transfer happens as light rather than
conductive or convective heat, and these TPV systems are able to harvest energy
using photovoltaic principles. Indeed, that's the major reason behind the
company name; the light emitted by an object scales with the "fourth
power" of its absolute temperature.
---- As the energy is harvested, the liquid tin drops from
around 2,400 °C to 1,900 °C, (4,350 °F to 3,450 °F) and it's sent back to the
heating elements to be "recharged" when energy is available.
The combination of
that liquid tin pumping system and these high-efficiency TPV cells, says the
company, combine to give you a thermal battery that's incredibly responsive,
delivering energy back to the grid within seconds of a demand spike, and with
an unprecedented power density, since the system can "transfer 10 to 100
times more heat than any other company with the same size equipment."
Fourth says it's
aiming for a round-trip energy efficiency of around 50% from these thermal
batteries – which is not great compared with the significantly higher
efficiency of a big lithium battery array. It also appears to assume some
pretty considerable development on the TPV side, since the record set back in
2022 was closer to 41%. And efficiency will be lower over longer-term storage
use cases, in which it'll lose an estimated 1% of its stored energy per day.
But the power game
is all about cold, hard cash, and here, Fourth says there's absolutely no
contest. It's nearly all made of super-cheap graphite and tin instead of pricey
refined lithium, so where a lithium battery setup might cost around US$330 per
kilowatt-hour of stored and returned energy, Fourth claims it'll get the same
job done for less than $25. So even if it'll throw away more electricity, the
bottom line will still make it a financial no-brainer.
More
White-hot thermal grid battery aims to decimate
lithium on price (newatlas.com)
A large Bank is exactly the place where a vain and shallow
person in authority, if he be a man of gravity and method, as such men often
are, may do infinite evil in no long time, and before he is detected. If he is
lucky enough to begin at a time of expansion in trade, he is nearly sure not to
be found out till the time of contraction has arrived, and then very large
figures will be required to reckon the evil he has done.
Walter Bagehot. Lombard Street, 1873.
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