Baltic Dry Index. 2348 -63 Brent
Crude 76.55
Spot Gold 2020 U S 2 Year Yield 4.44 +0.07
If all else fails, immortality can always
be assured by spectacular error.
John Kenneth
Galbraith.
After the Powell Pivot, have the US stock casinos gone off half cocked?
Did FOMO just cause a massive new stocks bubble into an arriving new global recession?
Has
Chairman Powell gone off half cocked?
Dow,
Nasdaq close higher Friday, extending rally to a seventh winning week: Live
updates
UPDATED FRI, DEC 15 2023 4:38 PM EST
The Dow Jones Industrial Average closed
higher Friday after a whipsaw session, where it marked a fresh intraday record,
and the tech-heavy Nasdaq-100 set a record close. All three major averages
scored their seventh-straight winning week.
The Dow closed
up 56 points, or 0.2%, at 37,305.16. The S&P 500 slipped
36 points, or 0.01%, to 4,719.19 while the Nasdaq Composite closed
up 52 points, or 0.4% at 14,813.92. The Nasdaq-100 ended
Friday at 16,623.45, topping a record close dating back to November 2021.
Price moves may have been
exaggerated by the simultaneous expiration of stock index futures and options,
as well as options on individual stocks, in the quarterly event known as
“triple witching.
Shares of Costco closed
up 4.5% after hitting an all-time high during the session. The retailer
surpassed Wall Street’s estimates for quarterly results and issued a dividend
of $15 per share.
As of Friday, the Dow is higher
on the month by 3.8%. The S&P 500 is up by 3.3%, while the Nasdaq Composite
has climbed 4.1% so far in December.
The S&P 500 marked its
longest weekly winning streak since 2017, and could still soon join the Dow
with its own all-time high. The broad market index is less than 2% away from
that mark, which was set in January 2022.
Wall Street rallied this week
after the Federal Reserve on Wednesday admitted that its efforts to tamp down
inflation are taking hold, and indicated three interest rate cuts are coming in
2024, buoying investor sentiment. The November retail sales data that came in
stronger than expected on Thursday, following this week’s cooler inflation
readings, added to hopes the Federal Reserve could navigate a soft landing.
That said, New York Fed President
John Williams pushed
back on the euphoria around the central bank easing rates next
year. “We aren’t really talking about rate cuts right now,” Williams told
CNBC’s Steve Liesman in an interview on Friday.
“Stocks got a major sentiment
boost from Wednesday’s Fed meeting, but that immediate effect was bound to wear
off,” said Chris Larkin, managing director of trading and investing at E-Trade.
“The market doesn’t go up every day, no matter how strong a trend is. Pullbacks
and pauses are inevitable, regardless of how big they are or how long they
last.”
Stock
market today: Live updates (cnbc.com)
Fed’s
John Williams says the central bank isn’t ‘really talking about rate cuts right
now’
New York Federal Reserve President John Williams
said Friday rate cuts are not a topic of discussion at the moment for the
central bank.
“We aren’t really talking about
rate cuts right now,” he said on CNBC’s “Squawk Box.” “We’re very
focused on the question in front of us, which as chair Powell said… is, have we
gotten monetary policy to sufficiently restrictive stance in order to ensure
the inflation comes back down to 2%? That’s the question in front of us.”
The Dow Jones Industrial average
shot to a record and the 10-year Treasury yield fell below 4.3% this week as
traders took the Fed’s Wednesday forecast for three rate cuts next year as a
sign the central bank was changing its tough stance and would start cutting
rates sooner than expected next year.
Traders are betting that the central bank would
cut rates deeper than three times, according to fed funds futures. Futures
markets also indicate that the Fed could start cutting rates as soon as March.
Williams is reining in some of that
enthusiasm a bit, it appears.
“I just think it’s just premature
to be even thinking about that,” Williams said, when asked about futures
pricing for a rate cut in March.
Williams said the Fed will remain
data dependent, and if the trend of easing inflation were to reverse, it’s
ready to tighten policy again.
“It is looking like we are at or
near that in terms of sufficiently restrictive, but things can change,”
Williams said. “One thing we’ve learned even over the past year is that the
data can move and in surprising ways, we need to be ready to move to tighten
the policy further, if the progress of inflation were to stall or reverse.”
The Fed projected that its favorite
inflation gauge — the core personal consumption expenditures price index — will
fall to 2.4% in 2024, and further decline to 2.2% by 2025 and finally reach its
2% target in 2026. The gauge rose
3.5% in October on a year-over-year basis.
“We’re definitely seeing slowing in
inflation. Monetary policy is working as intended,” Williams said. “We just got
to make sure that … inflation is coming back to 2% on a sustained basis.“
Fed’s
John Williams: Central bank not talking about rate cuts now (cnbc.com)
Wall St Week Ahead Epic Treasury rally may be running out of
fuel as Fed pivot priced in
By David Randall
December
15, 2023 10:46 PM GMT
NEW YORK, Dec 15
(Reuters) - A surge in U.S. government bonds has helped lift stocks and
heightened investors’ appetite for risk. Now some are betting that further
gains may be harder to come by unless the economy severely weakens, potentially
upsetting the narrative of resilient growth that has propelled markets.
An
unexpected dovish pivot from the Federal
Reserve earlier this week turbocharged the rally in Treasuries, sending
benchmark 10-year yields to their lowest level since July. Yields, which move
inversely to bond prices, now stand at 3.93%, some 110 basis points from a
16-year high hit in October.
The
tumble in Treasury yields has rippled far beyond the bond market as it pulled down rates on
mortgages, eased financial conditions and pushed investors into stocks
and other risky investments. The S&P 500 is up nearly 15% since its October
lows and has risen nearly 23% this year, putting it within striking distance of
a record high.
Some investors,
however, believe much of the dovish shift from the Fed may already be reflected
in Treasury prices. Deeper cuts, they say, would be more likely if a rapidly
slowing economy forced the Fed to accelerate its easing - an outcome that would
run counter to the “soft landing” outlook that has buoyed stocks in recent
months.
"The
market is pretty perfectly priced for a soft landing," said Stephen
Bartolini, said lead portfolio manager of the U.S. Core Bond Strategy at T.
Rowe Price. "The bulk of the move lower is complete and if we were to push
yields from here it would have to be due to expectations that the economy is
slipping into recession."
The Fed’s new
projections - published on Wednesday - pencil in a median 75 basis points of
cuts next year, taking the fed funds rate to between 4.50% and 4.75%. Traders,
by contrast, are betting rates will fall by 150 basis points, according to data
from LSEG.
Technical factors
may also make it more difficult for the bond rally to sustain itself. The swift
move will likely prompt some profit-taking on the part of investors due to
concerns that the trade is overcrowded, strategists at BofA Global Research
said in a note Friday.
Some
Fed officials have begun pushing back against the view
that a pivot is imminent. New York Fed President John Williams on Friday said
the U.S. central bank is still focused on whether it has monetary policy on the
right path to continue bringing inflation back to its 2% target.
“We have seen
the easy money on this Fed pivot already made," said James Koutoulas,
chief executive officer at Typhon Capital management, who believes further
gains in Treasuries may require a growth scare that sparks a scramble for safe
assets. "We expect to chop around a bit in the front of the curve until
the economy materially weakens further.”
Investors will
be watching economic data next week, including personal consumption
expenditures and initial jobless claims that may sway the Fed's outlook for
inflation.
---- Arthur
Laffer Jr., president of Laffer Tengler Investments, is less bullish on
government bonds. The swift decline in yields is already loosening financial
conditions, potentially making it more difficult for the Fed to cut rates next
year without risking a snapback in inflation, he said.
Laffer
pointed to data such as the Atlanta Fed's GDPNow estimate, which shows fourth
quarter GDP rising by 2.6%, more than one percentage point higher than in
mid-November.
The rally
"is overdone and the market has moved too fast," he said.
Wall
St Week Ahead Epic Treasury rally may be running out of fuel as Fed pivot
priced in | Reuters
In
commodities, gold tagged along with FOMO stocks.
Costco
sold more than $100 million in gold bars last quarter
Costco has
found a new hit with online shoppers — gold.
The retail warehousing giant sold
more than $100 million of the precious metal in its fiscal first quarter, which
ended Nov. 26, Costco Chief Financial Officer Richard Galanti told analysts
during the company’s earnings call Thursday.
The 1-ounce bars typically sell
out within a few hours after they are loaded to Costco’s
website, Galanti said back in September. The gold bars were listed at a price
of $2,069.99 an ounce on Friday on the website, higher than the latest spot
price of $2,020.58.
Customers are limited to two bars per Costco
membership, making it difficult to build a real position in the precious metal.
Members generally seemed satisfied
with their purchase though, with a 4.9 star rating on Costco’s website and
nearly 800 reviews. Some customers did complain about stiff state sales taxes.
Spot gold prices have jumped about
12% this year. JPMorgan is forecasting a breakout rally for the precious metal
in 2024 with a peak of $2,300 an ounce as interest rates are expected to fall,
according to the bank’s commodities outlook published earlier this month.
The investment bank said gold could
retreat to $1,900 an ounce in the coming months, but that would set up
investors to position themselves for a midyear rally in 2024.
Gold is on
pace for a weekly gain after the U.S. dollar weakened and
Treasury yields retreated in the wake of the Federal Reserve signaling
Wednesday that three rate cuts are in store for 2024.
One important note on Costco’s gold
bars: They are nonrefundable.
Costco
sold more than $100 million in gold bars last quarter (cnbc.com)
In
other news, is the Gaza tragedy now spreading? It’s terrible news for the west
if it has.
Shipping giants Hapag-Lloyd and Maersk pause Red Sea travel amid
attacks
Two shipping giants, Hapag-Lloyd and Maersk, are
pausing their travel through the Red Sea and the Bab el-Mandeb Strait in the
Middle East following a series of attacks on their vessels by
Iranian-backed Houthi militants from Yemen.
Maersk, the world’s second largest
container shipping company, moves 14.8% of the world’s trade. It said it would
divert ships away from the Red Sea. The Houthi group backs Hamas, the
Palestinian militant group, and has said it is targeting
vessels headed for Israel.
In an email to CNBC, a Maersk
spokesman said the Danish company is deeply concerned about the highly
escalated security situation in the southern Red Sea and Gulf of Aden. The
recent attacks on commercial vessels in the area are alarming and pose a significant
threat to the safety and security of seafarers, the spokesman added, saying
that employees’ safety is the company’s top priority.
“Following the near-miss incident
involving Maersk Gibraltar yesterday and yet another attack on a container
vessel today, we have instructed all Maersk vessels in the area bound to pass
through the Bab al-Mandab Strait to pause their journey until further notice,”
the representative said.
Maersk said it would release more
details about potential next steps in the coming days.
Hapag-Lloyd, which controls
about 7% of the global container ship fleet, told CNBC in an email,
that it will “pause all container ship traffic through the Red Sea until
Monday. Then we will decide for the period thereafter.”
The Bab el-Mandeb Strait is between
the Horn of Africa and the Middle East. It connects the Red Sea to the Gulf of
Aden and the Arabian Sea, which feed into the Indian Ocean. This waterway is
used by container ships and exports of petroleum and natural gas from the
Persian Gulf.
Approximately 12% of the world’s
trade, which includes 30% of all global containers, move through the Suez
Canal. That then feeds through the Red Sea and Bab el-Mandeb. The significance
of the Suez Canal was thrust into the spotlight in March 2021, when container
ship the Ever Given was stuck for six days.
Israel based ocean carrier ZIM has re-routed
vessels to avoid the Arabian and Red Seas to safeguard their vessels and crew
amid the threats by the Houthis. The vessels are traveling around the Cape of
Good Hope in South Africa. This alternative route to the Indian Ocean adds 10
to 14 days of travel time to a vessel’s journey. The long way around Africa
also incurs higher fuel costs because of the longer travel distance.
Since Houthi militants threatened Saturday to
attack any vessels that have ownership ties to Israel, or does business in the
country, there have been as many as seven incidents. Overall, 13 vessels have
been attacked since the Israel-Hamas war began in early October.
In response to Friday’s attacks, in
which three vessels were attacked, the World Shipping Council said it is deeply
alarmed and concerned about the escalating crisis, and that it’s calling for
decisive action to protect seafarers.
More
Shipping giants Hapag-Lloyd and Maersk pause Red Sea travel (cnbc.com)
Finally,
a soft commodities update from Bloomberg.
Bad Weather
Whips Breakfast Drinks Into the Hottest Commodities
December 15, 2023 at 12:00 PM GMT
A cup of orange juice, coffee or
hot chocolate? But rather than a breakfast question, it’s something that’s been
high on the minds of commodities traders.
Coffee, cocoa and orange juice
have soared like no other raw material this year, and it’s down to the weather.
Orange juice futures have surged
more than 80% — hitting a record in November — as output in key grower Florida
suffered due to disease and storms. Cocoa has seen crucial West African
supplies pummeled by rain and issues such as black-pod
disease, sending prices to the highest since the 1970s.
A cup of orange juice, coffee or
hot chocolate? But rather than a breakfast question, it’s something that’s been
high on the minds of commodities traders.
Coffee, cocoa and orange juice
have soared like no other raw material this year, and it’s down to the weather.
Orange juice futures have surged
more than 80% — hitting a record in November — as output in key grower Florida
suffered due to disease and storms. Cocoa has seen crucial West African
supplies pummeled by rain and issues such as black-pod
disease, sending prices to the highest since the 1970s.
Those gains are in contrast to a lot of
the commodities basket. Staples like wheat and animal feed ingredients like
corn and soy are down this year thanks to ample supplies. A Bloomberg index tracking spot commodity prices this week touched the
lowest since 2021.
The rally in some of the breakfast ingredients has
consequences for grocery inflation even as broader food-commodity costs have steadily fallen from last year’s
record. Food companies may be reluctant to start lowering
prices even if they’re less likely to hike them again.
One major coffee trader recently filed for bankruptcy amid the steep price moves, showing
that it’s a tough environment to hedge costs.
Some shoppers may be undeterred by expensive treats. Asia’s
growing number of chocolate lovers will indulge their sweet tooth
even as cocoa prices skyrocket, one industry veteran recently told Bloomberg News.
More Coffee
China has the most branded coffee shops
globally, overtaking the US after a 58% boom over the last year, according
to the World Coffee Portal, the Allegra Group’s research arm. Coffee giant
Nestle is bullish on the outlook for consumption growth in India and China,
its key markets.
“We have a
really strong footprint in Asia and we are really bullish about those markets
that have very low per-capita consumption,” Philipp Navratil, head of Nestle’s
coffee strategic business unit, said recently.
Coffee, Cocoa and Orange Juice Inflation Driven by Weather - Bloomberg
Global
Inflation/Stagflation/Recession Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians, inflation/recession now needs an entire
section of its own.
Euro zone likely in recession, PMI surveys show
By Jonathan Cable December 15, 2023 10:36 AM GMT
LONDON, Dec 15
(Reuters) - The downturn in euro zone business activity surprisingly deepened
in December, according to closely watched surveys which indicated the bloc's
economy is almost certainly in recession.
It was a
broad-based decline with activity deteriorating in both Germany and France and
across services and manufacturing, the surveys showed.
Last
quarter, the euro zone economy contracted 0.1%, official data has shown, and
December's Purchasing Managers' Index (PMI) - seen as a good gauge of economic
health - suggested activity has now declined in every month of this quarter.
That would mark two consecutive quarters of economic contraction, meeting the
technical definition of recession.
The European Central
Bank trimmed its growth forecasts for 2023 and 2024 on Thursday.
HCOB's
preliminary Composite PMI, compiled by S&P Global, fell to 47.0 this month
from November's 47.6, confounding expectations in a Reuters poll for an uptick
to 48.0 and marking its seventh month below the 50 level separating growth from
contraction.
"The
drop-back in the euro zone Composite PMI in December provides more evidence
that the economy is in recession," said Andrew Kenningham at Capital
Economics.
Companies
in Britain's huge services sector however saw another pick-up in
growth this month, suggesting the economy has just enough momentum to avoid a
recession for now at least.
WAITING GAME
Indicating firms
in the euro zone do not see a big improvement anytime soon they reduced
staffing for a second month. The composite employment index was at a three-year
low of 49.6, just shy of November's 49.7.
A PMI for the
bloc's dominant services industry fell to 48.1 from 48.7, far short of the
Reuters poll prediction of a rise to 49.0.
"This
confirms our expectation that the euro area economy will continue to contract
in Q4, contrary to the ECB's expectations," said Christoph Weil at
Commerzbank.
Demand for
services fell again as indebted consumers feeling the pinch from record-high
borrowing costs in the 20-country currency union spent less. The new business
index dipped to 46.6 from 46.7.
On
Thursday, the ECB left interest rates on hold and pushed back against
bets on imminent cuts by reaffirming borrowing costs would remain at record
highs. A recent Reuters
poll showed it would wait until the second
quarter before it starts cutting.
The
ECB's next move should be lowering interest rates, French central bank
chief Francois
Villeroy de Galhau said on Friday but
implied a rate cut was not imminent.
Factories in
the currency union also had another disappointing month. The manufacturing PMI
held steady at November's 44.2 - missing the Reuters poll forecast for 44.6 and
chalking up its 18th month sub-50.
An index
measuring output fell to 44.1 from 44.6.
Factory
managers were more optimistic, though, about the year ahead and the future
output index jumped to 55.6 from 53.3, its highest since May.
Euro zone likely in recession, PMI surveys show |
Reuters
Recession red-flags but Brits still look
set to splash the cash this Christmas
FRIDAY 15 DECEMBER 2023 6:51 AM
Consumer confidence
has increased amid Christmas cheer in a small but much-needed boost for
retailers, figures show.
GfK’s long-running Consumer Confidence
Index increased two points in December but
remains firmly in negative territory at minus 22.
Expectations for the
general economic situation over the next 12 months increased by one point to
minus 25 but has risen to 28 points higher than a year ago.
Notably, confidence in
personal finances – reflecting household financial optimism and
control over budgets – has recovered from the depressed minus 29 of a year ago
to minus 2.
The major purchase
index, a mark of confidence in buying big ticket items, also rose, by one point
to minus 23.
Joe Staton, client
strategy director at GfK, said: “Against the backdrop of flat-lining economic growth, interest
rates at a 15-year high, and price rises
potentially eroding disposable income for years to come, the Consumer
Confidence Index shows a modest improvement this month with gains across all
key measures.
“Although the headline
figure of minus 22 means the nation’s confidence is still firmly in negative
territory, optimism for our personal finances for the next 12 months shows a
notable recovery from the depressed minus 29 reported this time last year.
“Despite the severe cost-of-living crisis still impacting most
households, this slow but persistent movement
towards positive territory for the personal finance measure looking ahead is an
encouraging sign for the year to come.”
Recession red-flags but Brits to splash the cash this Christmas (cityam.com)
Covid-19 Corner
This
section will continue until it becomes unneeded.
70 Percent of Deaths from Pfizer Vaccine in
Japan Reported Within 10 Days of Jab: Study
Number
of deaths within the first 10 days of vaccination was 'significantly higher'
than those between 11 and 180 days among people aged 64 and under.
12/12/2023 Updated: 12/12/2023
Around 70
percent of people who died in Japan after receiving a Pfizer COVID-19 vaccine
lost their lives in the first 10 days following the jab, according to a recent
study.
The peer-reviewed Japanese study, published in the Cureus journal
on Dec. 7, looked at the association between Pfizer COVID-19 vaccination and
deaths within 10 days of vaccination.
The risk
period was defined as within 10 days of vaccination, with vaccination day being
Day 1, and the control period defined as 11 to 180 days after vaccination.
The analysis
was divided into two groups: Group 1 representing individuals aged 65 and above
and Group 2, which included people aged 64 and below.
The researcher
identified 1,311 deaths in Group 1, which included 662 males and 649 females.
In Group 2, the team identified 247 deaths—155 males and 92 females.
“The percentage of reported cases that
experienced death within 10 days after vaccination was 71 percent in Group 1
and 70 percent in Group 2,” said the study results.
Over-65s
In Group 1, more women than men died overall
from various medical conditions in the first 10 days of vaccination. Following
the 10 days, there were more deaths reported of men.
Most of the post-vaccine deaths happened on the
second day, followed by the third and fourth days.
Other than “unexplained deaths,” the biggest cause of death in this
group was ischemic heart disease (119 deaths), followed by heart failure (92),
and aspiration pneumonia/asphyxia (72). Autopsies were performed in eight of
the 239 unexplained death cases.
More
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section.
Opinion: Massive spending on clean energy
has garnered only meagre gains
Trillions
have been spent on renewables yet they still provide less than 10% of global
energy
Published Dec 13, 2023
COP28, the 28th “Conference of the Parties to the Framework Convention on
Climate Change,” which just concluded in Dubai, had as one of its central
themes the need to promote the energy transition by spending more on renewable
energy. But what have been the results of such spending up to now?
The International Energy Agency, in its reports on energy financing, breaks down global energy
investment into investment in fossil fuels, on the one hand, and in “clean
energy,” on the other. In 2023, estimated investment in “clean energy” will be
close to $2.2 trillion (in C$). That is an almost unimaginable amount of money,
made only slightly less daunting when portrayed as $6 billion per day.
The
$2.2 trillion consists of investment in: renewable power (electricity generated
by wind, solar and biomass energy sources) of about $857 billion, energy grids
($430 billion), energy efficiency ($438 billion), electric vehicles and battery
storage ($216 billion combined) and nuclear energy ($82 billion).
The
International Renewable Energy Agency (IRENA) uses a different definition of
renewable energy. It includes wind, solar, biomass, energy efficiency,
“electrified transport,” “electrified heat,” energy storage, hydrogen and
carbon capture and storage, but excludes nuclear energy. According to IRENA’s
most recent report, investment in these “transition-related
technologies” totalled $8.9 trillion over the years 2015-2022. Last year,
expenditures were $1.7 trillion — a cool $4.7 billion per day.
The
IEA and IRENA estimates differ because of their different definitions of what
constitutes both “clean energy” and “renewable energy.” But they both indicate
that global expenditures on non-traditional energy production have been growing
for decades and are very high indeed. Still other sources publish different
estimates, but they all indicate that this type of investment, largely funded
by government subsidies, has been going on since the 1980’s and grew most in
the period 2000-2011.
Both
the IEA and IRENA report that over 90 per cent of global expenditures on clean
energy have been in China, the United States, western Europe and other OECD
countries. On the other hand, those 35 countries generate less than half of
global GHG emissions. Which means the world’s other 160 countries produce more
than half of global GHG emissions but account for only 10 per cent of clean
energy investment.
What
has been the result of these gargantuan expenditures? The effects of current
investments in electrical energy infrastructure won’t be fully apparent for
some time, but we should be able to see the effects of spending that has been
rising for more than 20 years. To find out, I consulted the authoritative Statistical
Review of World Energy 2023, published by the Energy Institute, the
successor to British Petroleum as the producer of the Statistical Review. It
works closely with KPMG to produce the report.
The
share of the world’s primary energy consumption produced by renewable energy
has essentially doubled since 2015, from about 3.5 to seven per cent of the
world total. Yet, fossil fuels (oil, natural gas and coal), which accounted for
85 per cent of primary energy consumption in 2015, still accounted for 82 per
cent in 2022. At that rate of reduction — three percentage points every seven
years — we will not get to full decarbonization (i.e., zero use of fossil
fuels) until well into the next century.
More
Massive spending on clean energy has garnered only
meagre gains | Financial Post
This weekend’s music
diversion. Approx. 7 minutes.
J.
F. Fasch: Concerto for violin, strings & b.c. in A major (Ms No. 3868) /
Ensemble Sans Souci
This weekend’s chess
update. Approx. 13 minutes.
This
is Much Trickier Than it Looks! || Magnus vs Alireza (CCTF 2023)
This
is Much Trickier Than it Looks! || Magnus vs Alireza (CCTF 2023) (youtube.com)
Finally,
this weekend, the tetracycline story. Approx.
18 minutes.
Tetracycline:
The Rise of Pfizer
Tetracycline: The Rise of Pfizer - YouTube
Faced with the choice between changing one's mind and proving
that there is no need to do so, almost everyone gets busy on the proof.
John Kenneth Galbraith.
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