Stocks, Bubble Nears Its 2024 Pin.

Baltic Dry Index. 2094  22/12/23 Brent Crude  77.56

Spot Gold 2075                  US 2 Year Yield 4.26 +0.06

There was a party of economists out mountain climbing in the Himalayas and they got lost. One of them took a look at the map and studied very carefully, compared it to distant landmarks and checked his compass. Finally, he said to the other economists, “Do you see that big mountain over there? According to the map, we’re standing on top of it.”

In the stock casinos, what bubbles up, must come down? China leads the rest? Wall Street delusional?

Wall Street bets big on the Chairman Powell US central bank. But will Chairman Powell deliver Wall Street's bet on 150 basis points of cuts?

 

Asia markets mixed on last trading day of 2023, investors assess China EV prospects after Xiaomi’s entry

UPDATED THU, DEC 28 2023 9:18 PM EST

Asia-Pacific markets were mixed on the last trading day of 2023, with investors assessing prospects of electric-vehicle companies after China’s Xiaomi unveiled its first EV.

Chinese consumer electronics company Xiaomi on Thursday detailed plans to enter China’s oversaturated electric-vehicle market. Hong Kong shares of the company fell more than 3% after open.

The company seeks to compete with automaker giants Tesla and Porsche with a car model it says it spent more than 10 billion yuan ($1.4 billion) to develop.

Hong Kong’s Hang Seng index was flat at open, while China’s CSI 300 index rose 0.16%.

China and Hong Kong indexes rallied more than 2% each in the previous session, but were still set to be the biggest percentage losers for the year among major Asia-Pacific markets.

China’s CSI 300 index is down 11.8% for the year, while the Hang Seng has plunged 13.8% in 2023.

Japan’s Nikkei 225 fell 0.19%, but the index has gained 28.5% so far this year, making it Asia’s top-performing market.

The broader Topix was 0.24% higher, after having surged over 25% in 2023.

South Korea markets were shut on Friday, with the Kospi up 18.7% for the year and the Kosdaq jumping 27.5%.

Australia’s S&P/ASX 200 index dipped 0.22%, cooling off from two straight sessions of gains, but was still up 7.76% for the year.

Overnight, the S&P 500 finished marginally higher Thursday, closing in on a new all-time high in the penultimate trading day of what’s been a strong year for stocks.

The broad market index added 0.04% to finish at 4,783.35, putting it within striking distance of its highest closing level of at 4,796.56 set in January 2022.

The Dow Jones Industrial Average rose 0.14% to notch a fresh record closing high. The Nasdaq Composite inched down 0.03%.

Live updates: Asia markets mostly higher, Aussie stocks open lower (cnbc.com)

Stock futures are flat ahead of final trading day of 2023 with S&P 500 on cusp of record: Live updates

UPDATED THU, DEC 28 2023 8:18 PM EST

Stock futures were little changed on Thursday evening as Wall Street looks to end a winning year on a high note and possibly a new milestone.

S&P 500 futures rose less than 0.1%. Dow Jones Industrial Average futures ticked up 17 points, or less than 0.1%, while Nasdaq-100 futures were also marginally higher.

The S&P 500 enters the final trading day of 2023 less than 0.5% from a new record high, which could serve as an exclamation point on a rally that has gained strength in the final months of the year.

The S&P 500 is up 24.6% in 2023, with Dow rising 13.8%. The Nasdaq Composite has led the way with a gain of 44.2% on the year — on pace for its biggest annual increase since 2003.

The story for much of 2023 was the excitement around artificial intelligence fueling big gains for the “Magnificent 7” stocks like Nvidia and Microsoft, which bolstered the indexes even as the average stock struggled amid rising interest rates and fueled the outperformance of the tech-heavy Nasdaq.

But with the Federal Reserve signaling it is likely done with rate hikes and could even cut rates multiple times next year, the 10-year Treasury yield dove from above 5% in late October to less than 3.9% on Thursday. Investors have also grown more confident in a possible “soft landing” where the U.S. economy avoids a recession.

As a result, the market rally has broadened out in the fourth quarter, with the industrial-heavy Dow already making a string of record highs this month. The small-cap Russell 2000 is up almost 14% in December, on track for its best month since November 2020.

Ryan Detrick, Carson Group chief market strategist, pointed out on Thursday’s “Closing Bell” that gains of 10% or more in final two months of a year is historically a signal that there is more room to run for stocks.

“A big end of year rally like this is not consistent with the end of a bull market. It usually means that upward momentum, that slingshot, is going to continue,” Detrick said.

Stock market today: Live updates (cnbc.com)

Foreign investors unwind $33bn bet on China growth rebound

Almost 90% of money that flowed into Chinese stocks in 2023 has left amid concern about economy

December 28, 2023

Nearly nine-tenths of the foreign money that flowed into China’s stock market in 2023 has already left, spurred by mounting doubts about Beijing’s willingness to take serious action to boost flagging growth.

Since peaking at Rmb235bn ($33bn) in August, net foreign investment in China-listed shares this year has dropped 87 per cent to just Rmb30.7bn, according to Financial Times calculations based on data from Hong Kong’s Stock Connect trading scheme.

Traders and analysts said the reversal reflected pessimism over the outlook for the world’s second-largest economy among global fund managers. International investors have been persistent net sellers since August, when missed bond payments by developer Country Garden revealed the severity of a liquidity crisis in the country’s property sector.

“The confidence issue goes beyond real estate, although real estate is key,” said Wang Qi, chief investment officer for wealth management at UOB Kay Hian in Hong Kong. “I’m referring to consumer confidence, business confidence and investor confidence — both from domestic and foreign investors.”

Chinese shares have continued to underperform global peers in recent weeks despite a run of positive economic data, signs of a thaw in US-China relations and moves to give the financial system a stronger buffer against slowing growth by cutting the rates most lenders pay on deposits.

Yet in contrast to a 4.7 per cent rise by the S&P 500 index this month, China’s benchmark CSI 300 index of stocks listed in Shanghai and Shenzhen has fallen more than 3 per cent. Net foreign sales of China-listed shares have reached about Rmb26bn in December.

“It’s so counterintuitive — the data is getting better and the general environment should be quite positive for Chinese stocks,” said Alicia García-Herrero, chief Asia-Pacific economist at Natixis. “Frankly there’s no reason for this other than investors basically giving up and saying: ‘We don’t see the upside’.”

The exit by offshore investors has been facilitated by widespread share buybacks from listed companies in China and by large-scale purchases from domestic investment funds and state-run financial institutions — all of which are under pressure from Beijing to prop up sagging valuations.

The protracted foreign sell-off threatens to end the year on a sour note for Chinese markets. When markets close on Friday, they are set to record the smallest annual foreign inflow since 2015, the first full year of the Stock Connect programme. The cross-border trading scheme, run out of Hong Kong, is the dominant channel through which offshore investors trade mainland-listed equities.

 Traders said a nascent recovery in market sentiment had been stymied on Friday by a sharp sell-off of gaming stocks, including Tencent and NetEase, after Beijing announced tough new regulations for the sector.

More

Foreign investors unwind $33bn bet on China growth rebound (ft.com)

 

US bond bulls look to 2024 Fed pivot to sustain searing rally

By Davide Barbuscia  December 28, 2023 9:22 AM GMT

NEW YORK, Dec 27 (Reuters) - As bonds emerge from a historic selloff, some investors expect better times in the U.S. fixed income market next year - as long as the Federal Reserve’s rate cuts play out as anticipated.

A fourth-quarter rally saved bonds from an unprecedented third straight annual loss in 2023, following the worst-ever decline a year earlier. The late year surge came after Treasuries hit their lowest level since 2007 in October.

Fueling those gains were expectations that the Fed is likely finished with rate increases and will cut borrowing costs next year - a view that gained traction when policymakers unexpectedly penciled in 75 basis points of easing in their December economic projections amid signs that inflation continued to cool.

Falling rates are expected to guide Treasury yields lower and push up bond prices - an outcome that a broad swathe of investors are anticipating. The latest fund manager survey from BofA Global Research showed investors are holding their biggest overweight position in bonds since 2009.

Still, few believe the path to lower yields will be a smooth one. Some worry the over 100 basis point drop in Treasury yields since October already reflects expectations for rate cuts, leaving markets vulnerable to snap backs if the Fed doesn’t cut soon enough or fast enough.

The market has priced some 150 basis points in cuts next year, twice what policymakers have penciled in, futures tied to the Fed’s main policy rate show. Benchmark 10-year Treasury yields stood at 3.88% last week, their lowest level since July.

Many are also watchful for the return of the fiscal worries that helped drive yields to their 2023 peaks but ebbed in the later part of the year.

“As long as the Fed doesn't totally have this wrong, we should expect to see some rate cuts next year,” said Brandon Swensen, a senior portfolio manager on the BlueBay Fixed Income team at RBC Global Asset Management. However, “it could be a bumpy path."

More

US bond bulls look to 2024 Fed pivot to sustain searing rally | Reuters

Finally, more de-dollarisation for a weaponised fiat global reserve dollar. Not to worry though, Argentina has just dropped the Peso for the fiat dollar, well so they say. But with massive dollar debts and no actual dollars, they will need to borrow the dollars from Uncle Scam Sam.

Russia, Iran Officially Ditch U.S. Dollar for Trade

By Tom Kool - Dec 27, 2023, 4:30 PM CST

Russia and Iran have finalized an agreement to trade in their local currencies instead of the U.S dollar, Iran's state media has reported.  Both countries are subject to U.S. sanctions.

 

"Banks and economic actors can now use infrastructures including non-SWIFT interbank systems to deal in local currencies," Iran’s state media has declared. 

Moscow has lately been cozying up to Tehran, with Iran revealing in November it will provide Russia [Iran?] with Su-35 fighter jets, Mi-28 attack helicopters and Yak-130 pilot training aircraft.

The global de-dollarization drive has been going on for years with BRIC countries and the so-called pariah states trying to ditch the American dollar in favor of other currencies. 

Back in 2019, Putin declared that time was ripe to review the dollar’s role in trade. At that time, Russia and China considered switching to the euro, the world’s second most dominant currency, as an acceptable stalemate, with the ultimate goal being to use their own currencies. 

 

Earlier in the current year, Russia paid dividends from the Sakhalin 1 and 2 oil projects in Chinese yuan instead of the dollar. Last year, Russia was cut off from the US dollar-dominated global payments systems following sweeping sanctions off the Ukraine war. 

Russia has declared it will no longer accept the American currency as payment for its energy commodities but will instead switch to Chinese and Emirati currencies. 

More

Russia, Iran Officially Ditch U.S. Dollar for Trade | OilPrice.com

 

Finally, bring on 2024.

 

‘Sitting on a powder keg’: US braces for a year, and an election, like no other

Wed 27 Dec 2023 16.00 GMT

The 60th US presidential election, which will unfold in 2024, will be quite unlike any that has gone before as the US, and the rest of the world, braces for a contest amid fears of eroding democracy and the looming threat of authoritarianism.

It will be a fight marked by numerous unwanted firsts as the oldest president in the country’s history is likely to face the first former US president to stand trial on criminal charges. A once aspirational nation will continue its plunge into anxiety and divisions about crime, immigration, race, foreign wars and the cost of living.

 

Democrat Joe Biden, 81, is preparing for the kind of gruelling campaign he was able to avoid during coronavirus lockdowns in 2020. Republican Donald Trump will spend some of his campaign in a courtroom and has vowed authoritarian-style retribution if he wins. For voters it is a time of stark choices, unique spectacles and simmering danger.

“It feels to me as if America is sitting on a powder keg and the fuse has been lit,” said Larry Jacobs, the director of the Center for the Study of Politics and Governance at the University of Minnesota. “The protective shield that all democracies and social orders rely on – legitimacy of the governing body, some level of elite responsibility, the willingness of citizens to view their neighbors in a civic way – is in an advanced stage of decline or collapse.

“It’s quite possible that the powder keg that America’s sitting on will explode over the course of 2024.”

US politics entered a new, turbulent era with Trump’s shocking victory over Hillary Clinton in 2016. The businessman and reality TV star, tapping into populist rage against the establishment, was the first president with no prior political or military experience. His chaotic four-year presidency was scarred by the Covid-19 pandemic and ended with a bitter defeat by Biden in a 2020 election that was itself billed as an unprecedented stress test of democracy.

More

‘Sitting on a powder keg’: US braces for a year, and an election, like no other | US politics | The Guardian

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.

Well, an economist’s guess is as good as anyone else’s.

The forecast for the UK's economy is 'far rosier' than for France or Germany with inflation set to fall rapidly next year, report suggests

December 28, 2023

Britain's economic prospects are looking 'far rosier', with inflation set to fall rapidly in 2024 and growth to outpace a number of G7 rivals, a forecast suggests.

The report from accountancy giant PwC proposes that 2024 'will be the year the UK turns a page'.

The wide-ranging look-ahead even sees sporting success to add to Britain's lustre in the coming 12 months, predicting a third-place finish for Team GB in the medals table at the Paris Olympics.

The report is the second this week to argue that the UK's near-term future looks brighter than doom-mongers suggest.

It says that while gross domestic product (GDP) growth will remain weak, it will sit firmly in the middle of G7 nations when measuring how well countries have done compared to pre-Covid levels.

PwC predicts that UK growth between 2019 and 2024 of 2.7 per cent will put it ahead of France (2.4 per cent), Japan (1.5 per cent) and Germany (1.2 per cent). But it is expected to trail behind the US, which is forecast to enjoy a 9.6 per cent expansion, Canada 5.2 per cent and Italy 3.7 per cent.

PwC predicts that the UK economy will be 2.7 per cent bigger in 2024 than it was in 2019, outperforming France, Japan and Germany. And it also forecasts that inflation will hit the Bank of England's 2 per cent target by early 2025. That is a more optimistic outlook than that of the Bank itself which does not expect the target to be reached until late 2026.

Falling inflation should help many of those worst hit by the cost of living squeeze feel better off in real terms as their money goes further, especially with the increase in the national living wage to £11.44 an hour. 

The report also sees house prices falling by only 2 per cent, a milder decline than some others were predicting. PwC chief economist Barret Kupelian said: 'Following the post-pandemic challenges, 2024 will be the year the UK turns a page.

More

The forecast for the UK's economy is 'far rosier' than for France or Germany with inflation set to fall rapidly next year, report suggests (msn.com)

Turkey’s 49% Minimum Wage Hike Balances Between Unions, Markets

December 28, 2023

Bloomberg) -- Turkey will raise the minimum wage by 49% in the new year, close to a level that several Wall Street lenders have warned would complicate the central bank’s efforts to curb inflation. 

The monthly net minimum salary will be set at 17,002 liras ($577) as part of a single adjustment, Labor Minister Vedat Isikhan said in a televised news conference in Ankara on Wednesday. Goldman Sachs Group Inc. and Morgan Stanley have suggested the central bank could further tighten policy should the hike be higher than 40%-50%.

“We fulfilled our promise not to allow our workers to be crushed by inflation,” the minister said. 

The government is looking to take some of the pressure off living costs before local elections in a country where consumer price increases are on track to surpass 70% in the months ahead. For President Recep Tayyip Erdogan, the choice was a compromise between the competing demands of labor unions and investors wary of rampant inflation.

Turkey’s Labor Unions Confederation, which represented the workers during talks with the government, was asking for an increase to 18,000 liras and a two-time hike next year, according to its president, Ergun Atalay.

The challenge is how to placate a population enduring a cost-of-living crisis but without getting in the way of an effort to cut inflation almost in half by the end of next year. 

Chronic inflation that last year reached the fastest in almost a quarter century is eroding the purchasing power of Turks, prompting the government to raise the lowest salaries to retain popular support. This year, two adjustments resulted in an increase of more than 100%. 

More

Turkey’s 49% Minimum Wage Hike Balances Between Unions, Markets (msn.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

Study Finds COVID Vaccination Independently Associated With Long COVID Syndrome

Developing long COVID appears to be more likely after two doses of a COVID-19 vaccine, suggesting that the spike protein may contribute to the phenomenon. 

12/27/2023 Updated: 12/27/2023

 

People who receive two doses of a COVID-19 vaccine may be more likely to develop long-COVID, a new study finds.

In the study published in PLOS One, researchers examined data from 487 and 371 individuals at four weeks and six months post-SARS-CoV-2 infection, respectively, to estimate the incidence, characteristics, and predictors of long COVID among patients. Long COVID symptoms were reported by 29.2 percent of participants four weeks following infection. This number dropped to 9.4 percent at six months, indicating symptoms may diminish over time.

Researchers found that the greater the severity of infection a patient had, the more likely they were to experience long COVID. The incidence of long COVID at four weeks of follow-up in those who experienced mild/moderate disease was 23.4 percent compared with 62.5 percent in those with severe cases.

At six months, the incidence of long COVID was considerably lower. For those with mild/moderate infection, only 7.2 percent reported symptoms compared with 23.1 percent in those with severe/critical cases. The most commonly reported symptom was fatigue. Other symptoms included cough, cognitive dysfunction or brain fog, and loss of taste and smell.

During the four-week follow-up, patients were more likely to experience long COVID if they had preexisting medical conditions, a higher number of symptoms during the acute phase of COVID-19 illness, if their infection was more severe or resulted in hospitalization, or if they had received two COVID-19 vaccine doses.

Although previous vaccination was associated with long COVID, the authors could not find “any interaction effect of COVID-19 vaccination and acute COVID-19 severity on causing Long COVID.”

This implies that prior vaccination "was independently associated with the occurrence of long-COVID," cardiologist Dr. Peter McCullough explained in a recent Substack post.

 

---- One theory is that vaccination may cause some people to generate a second round of antibodies that target the first. These antibodies could function like spike protein, which targets the angiotensin-converting enzyme 2 (ACE2) receptor—a cell surface protein—and enables the virus to enter cells. Like spike protein, these “rogue antibodies” might also bind to the ACE2 receptor and disrupt ACE2 signaling, which can cause conditions associated with long COVID.

“In my practice, the most severe cases of long-COVID are in vaccinated patients who also had severe and or multiple episodes of SARS-CoV-2 infection,” Dr. McCullough wrote on X. In his recent Substack post, he said he believes long COVID symptoms are due to the retention of SARS-CoV-2 spike protein in cells and tissues after SARS-CoV-2 infection.

More

Study Finds COVID Vaccination Independently Associated With Long COVID Syndrome | The Epoch Times

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

Breakthrough battery powers electric car for 1,000km from a single charge

Mass production of Nio’s next-generation battery is set to begin in April 2024

December 28, 2023

An electric car maker in China has demonstrated a new battery capable of powering a vehicle for more than 1,000km on a single charge.

Shanghai-based Nio claims that the next-generation battery will enter mass production in April 2024, offering a longer range than any other electric or fuel-powered car currently on the market.

Nio chief executive William Li drove the all-electric ET7 vehicle 1,044km (649 miles) during a 14-hour live-stream, which saw the car travel from Zhejiang province to Fujian province on Sunday at an average speed of 84km/h. A separate test of the breakthrough battery reportedly saw it cover 1,145km, however this was not broadcast.

“The completion of this endurance challenge proves the product power of the 150kWh ultra-long endurance battery pack,” Mr Li wrote in a post on the Chinese social media site Weibo.

“This battery is currently the battery pack with the highest energy density in mass production in the world and has excellent safety performance. More importantly, all models on sale can be flexibly upgraded to 150kWh batteries through the Nio battery swap system.”

Nio takes an unorthodox approach to charging vehicles, favouring a battery-swap system rather than plugging the car into an outlet and waiting for the battery to recharge.

A unique mechanism built into the vehicle means that an empty battery can be swapped with a fully charged battery in less than three minutes – roughly the amount of time it takes to refill a fuel-powered vehicle.

Customers are able to buy a vehicle without a battery and then pay a monthly subscription fee to use batteries within Nio’s network.

Nio’s president Qin Lihong said that buying the new battery outright would cost 298,000 yuan (£33,000) – roughly equivalent to the price of a Tesla Model 3 – which is why the company advocates the use of a hire scheme for its customers as well as for the electric vehicle industry as a whole.

More

Breakthrough battery powers electric car for 1,000km from a single charge | The Independent

Another weekend and a holiday year-end weekend too. What will 2024 bring to our war racked, stocks bubble, US Presidential election year world? Have a great weekend everyone.

A central banker walks into a pizzeria to order a pizza. When the pizza is done, he goes up to the counter get it. There a clerk asks him: "Should I cut it into six pieces or eight pieces?" The central banker replies: "I'm feeling hungry right now. You'd better cut it into eight pieces."