Baltic
Dry Index. 1397 -63
Brent Crude 82.66
Spot
Gold 2036 US
2 Year Yield 4.36 +0.07
Despite Evergrande’s liquidation
being decided by a court in Hong Kong, the vast bulk of the company’s assets
are held in mainland China.
This means Western investors who lent it
billions of dollars must
now proceed through the Chinese courts, pitting them against Beijing
policymakers, retail investors, and small suppliers.
Why China’s great property bust threatens to backfire on the West (msn.com)
Another month-end and a Fed meeting day two too. Must be time to dress up the stock indexes again. The Fed’s got the new tech. bubble covered, right?
Later today, the Fed’s interest rate decision and the financial Gospel according to Fed Chairman Powell. (No, chairman Powell is not a chair, couch, sofa, stool or pouffe, despite what some silly media keep confusing him with.)
Tomorrow, it’s the turn of The Old Bag
Lady of Threadneedle Street to leave
their key interest rate unchanged and give us the financial Gospel according to
BOE Governor Bailey.
European
stocks head for mixed open as markets look ahead to Fed decision
UPDATED WED, JAN 31 2024 12:30 AM EST
European stocks are heading for a mixed open
Wednesday as global markets look ahead to the latest monetary policy decision
from the U.S. Federal Reserve.
The fed funds futures market has
priced in a nearly 98% probability that the central bank will leave rates
unchanged this month, according to the CME FedWatch tool. Investors will be looking
for clues on shifts in the central bank’s policy stance in its post-meeting
statement and in Fed Chair Jerome Powell’s remarks.
Asia-Pacific markets fell ahead of the rate decision from the Fed, and as
investors assessed a slew of economic data from across the region, including
China and Australia.
European
markets live updates: stocks, news, data, Fed (cnbc.com)
Wall Street punishes Alphabet and Microsoft
despite earnings beats after stocks hit record
Results were good, but not good enough.
That’s Wall Street’s reaction to
quarterly results on Tuesday from Alphabet and Microsoft.
Both companies reported revenue and earnings that exceeded estimates, yet the
stocks sold off in extended trading.
In investor speak, the stocks were priced for perfection. Alphabet shares
are up 56% for the year and climbed
to a fresh high last week, exceeding the prior record from late
2021, the peak of the tech boom. Microsoft is up 70% over the past 12 months,
also reaching a fresh high recently and surpassing Apple as
the most
valuable publicly traded company.
The companies generated excitement
last year by riding the artificial intelligence wave, and were also lauded by
shareholders for their dramatic cost-cutting efforts, which included
eliminating thousands of jobs.
In the weeks heading into their
earnings reports, investors were buying as if they expected positive surprises.
They were left disappointed and nitpicking the numbers.
Alphabet on Tuesday reported 13%
revenue growth, the fastest rate of expansion since early 2022. Sales of $86.31
billion topped the average estimate of $85.33 billion, according to LSEG,
formerly Refinitiv. Earnings per share of $1.64 beat estimates by 5 cents.
Revenue
at Microsoft increased 18% to $62.02 billion, topping the
$61.12 billion average analyst estimate. EPS of $2.93 was 15 cents above
consensus.
Both companies also beat expectations in their cloud businesses, with
Google Cloud reporting 25% growth and Microsoft’s larger Azure and other cloud
services expanding by 30%.
The one
disappointment from Alphabet was in Google’s ad business, which delivered
revenue of $65.52 billion, trailing analysts’ estimates of $65.94 billion,
according to StreetAccount. Within ads, YouTube came in just shy of
expectations.
Stifel analysts, who
recommend buying the stock, said in a quick-take report on Tuesday that
Alphabet produced “healthy advertising results, but not enough.”
Brian Wieser, an
analyst at media and advertising consultancy Madison and Wall, said the market
has unrealistic expectations for Google given its size and dominance.
---- Alphabet shares dropped almost 6% after the report.
Microsoft’s drop was less severe. The stock initially fell by more than 2% and
then pared some of its losses.
Microsoft’s outlook was a bit
light, overshadowing the earning and revenue beat. The company called for
fiscal third-quarter sales between $60 billion and $61 billion, while analysts
polled by LSEG had expected $60.93 billion.
Shares of chipmaker AMD also
dropped despite better-than-expected
revenue numbers and profit that met estimates. The stock, which
is up 137% in the past year on excitement about its artificial intelligence
processors, fell almost 6% after the announcement.
Wall
Street punishes Alphabet and Microsoft despite earnings beats (cnbc.com)
Morning Bid: BOJ waxes hawkish but Powell at centre stage
January 31, 2024 5:32
AM GMT
A look at the day ahead in
European and global markets from Rae Wee
Signs of a hawkish tilt by the Bank of Japan prodded a bit of
life out of that country's bond and currency markets on Wednesday, while most
investors stayed focused on what Federal Reserve Chair Jerome Powell may have
to say later in the day.
A summary of the BOJ's January meeting showed a
growing view within the board that conditions were falling into place to pull
short-term interest rates out of negative territory.
"After assessing the degree of macroeconomic
effects of the Noto Peninsula Earthquake by monitoring its impact for about the
next one or two months, the bank is highly likely to reach a point where it can
normalise monetary policy," one board member was quoted as saying.
A rate rise in Japan would be the first since 2007.
The release of the summary prompted a brief blip
higher for the yen and the biggest jump in two-year Japanese government bond
yields in two months, but elsewhere traders seemed to prefer holding to the
sidelines until after the Fed.
A hold for U.S. rates in the
Fed policy announcement later today is considered a done deal, so investors
will focus on Powell's press conference afterwards, and a potential further turn in his
once-hawkish stance or hints on how soon the central bank could begin easing
rates.
The implied probability of a March rate cut has been pared back
from above 70% at the start of the year to roughly 44%, according to the CME
FedWatch tool.
More
Morning
Bid: BOJ waxes hawkish but Powell at centre stage | Reuters
In other news.
China’s
manufacturing activity shrank for the fourth straight month in January
China’s factory activity contracted for a fourth
consecutive month in January, underscoring the much-needed litany of policy
support for the world’s second-largest economy which Beijing announced last
week.
The official manufacturing
purchasing managers’ index rose slightly to 49.2 in January from 49 in
December, according to data from the National Bureau of Statistics released
Wednesday. It was in line with the median forecast in a Reuters poll.
The official non-manufacturing managers’ index rose to 50.7 in January
from 50.4 in December, according to NBS. Strength in the country’s services
industry helped offset weakness in the construction sector amid a slump in the
real estate sector.
A PMI reading above 50 indicates
expansion in activity, while a reading below that level points to a
contraction.
Of the five sub-indexes for the manufacturing PMI,
new orders marginally increased, though production jumped 1.1 percentage
points.
Employment for both
non-manufacturing and manufacturing sectors edged lower in December.
The business
activity index for the construction industry, included as part of the
non-manufacturing PMI, stood at 53.9 a decrease of 3.0 percentage
points.
Spring Festival
effect
Zhao Qinghe, a
senior statistician at China’s NBS, attributed the weakness in construction to
factors such as low temperature in winter and the approaching Spring Festival
holiday, which marks the start of industry’s off-peak season.
The annual Spring
Festival, also known as the Lunar New Year, starts Feb. 10 this year. China is
typically shut down for the annual week-long holiday.
The country’s
migrant workers typically take off earlier to spend more time with their
families in their hometowns, given that Spring Festival may be the only time in
the year that some see their families.
More
China
PMI: Manufacturing activity shrank for 4th straight month in January (cnbc.com)
Your Evening Briefing: A ‘White Swan’ May Be Coming for the US
January 30, 2024 at 11:38 PM GMT
Nassim Nicholas Taleb is famous for writing The Black Swan, but
these days he’s warning of a white swan, a risk that rather than being rare is
somewhat more probable—and in this case coming for America’s economy. Like an
increasing number of economic observers, Taleb says the cause of this
calamity-in-plain-sight is the federal budget deficit. He says it’s swelling by
such an extent that it would take a miracle to duck the damage that’s on the
way. And he’s not alone. Taleb joined former US Treasury Secretary Robert Rubin
and BlackRock Vice Chairman Philipp Hildebrand in sounding the alarm over
consequences stemming from exploding debt—let alone default—and what that could
mean for the dollar’s global status. “So long as you have Congress keep
extending the debt limit and doing deals because they’re afraid of the
consequences of doing the right thing...eventually you’re going to have a debt
spiral,” Taleb said. “And a debt spiral is like a death spiral.”
Here are today’s top stories
The
International Monetary Fund raised
its forecast for global growth this year on the expansion in the US and fiscal
stimulus in China. The world economy will grow 3.1% this year, up from the 2.9%
seen in October, the institution said Tuesday. Tighter central-bank policy to
fight inflation and public-spending cuts in some countries are among the
reasons why growth is expected to be slower than in the two decades before the
pandemic, when it averaged 3.8%. Still, given the scale of the Covid-19 price
shocks and the interest-rate hikes that followed, the IMF suggested things
could have gone much worse. “The global economy continues to display remarkable
resilience, and we are now in the final descent toward a soft landing with
inflation declining steadily and growth holding up,” IMF Chief Economist
Pierre-Olivier Gourinchas said. “But the pace of expansion remains on the slow
side,” he added, “and there might be turbulence ahead.”
More
Bloomberg
Evening Briefing: A ‘White Swan’ May Be Coming for the US Economy - Bloomberg
German economy
contracted in Q4, recession on cards in Q1
By Rachel More January 30, 2024 9:29 AM GMT
BERLIN, Jan 30 (Reuters) - The German economy shrank in the final three
months of 2023, the statistics office said on Tuesday, with economists
forecasting that Europe's largest economy will enter another technical
recession in the first quarter of 2024.
Gross domestic product contracted by 0.3% in the fourth quarter compared
to the previous quarter, in line with analysts' expectations, according to a
Reuters poll.
The German economy shrank by 0.3% over the course of last year, due to
persistent inflation, high energy prices and weak foreign demand.
However, because GDP stagnated in the second and third quarters, the
euro zone's largest economy was able to avoid another technical recession,
commonly defined as two successive quarters of contraction.
This is expected to be short-lived, with the Ifo institute forecasting
on Tuesday a 0.2% decline in GDP in the first quarter of 2024.
"Private consumption, on which the optimists are counting, has
disappointed right up to the end," said Commerzbank economist Joerg
Kraemer.
"The
recent fall in industrial production and the low level of the Ifo business
climate indicate that the German economy also contracted in the first
quarter," he added.
German economy contracted in Q4, recession on cards in
Q1 | Reuters
German woes darken
central Europe's recovery prospects
By Gergely Szakacs, Jason Hovet and Maria Martinez
January
30, 2024 6:55 AM GMT
BUDAPEST/PRAGUE, Jan 30 (Reuters) - The sickly state of the German
economy is the next big challenge for the export-reliant countries of central
Europe, which are still recovering from some of the world's worst inflation
spikes in the wake of the COVID-19 pandemic.
Close trade ties with Germany and its once-mighty auto sector were for
years a boon for the region since the collapse of communism. But now those ties
risk becoming a drag on the economies of Hungary, Czech Republic and Slovakia.
Already, some local companies reliant on ties with Germany are trying to
tap deeper into other overseas markets and branch into industries like defence
to mitigate the weakness of their large western neighbour, where another year
of near-recession looms.
However such efforts come at a time of major geo-political
uncertainties, with the Ukraine war, Middle East conflict and rising
protectionism. Despite the push into the defence sector, all of these factors
could hamper the efforts of the region's companies.
"Economic disruption in the region's most important trade partner,
and persistent weakness in the auto sector, pose additional risks of economic
setback to the CEE region," said Dawn Holland, Director, Economic Research
at Moody's Analytics.
Central Europe's inflation surge, led by eye-watering levels at 25% in
Hungary last year, has prompted central banks to lift borrowing costs to their
highest in two decades, with Czechs enduring the most sustained fall in real
wages, now spanning eight successive quarters.
German companies had annual turnover of some 250 billion euros ($270
billion) in central Europe in 2021, employing about 1 million people directly
and many more through suppliers, according to Germany's Bundesbank.
The Czech Republic and Hungary rely on Germany for a third and a quarter
of their exports respectively, with Slovakia sending a fifth of its exports
there based on a tally by S&P Global. Poland is seen less exposed because
of the strength of its more diversified domestic economy, with its exports less
dependent on car manufacturing.
The best scenario for most companies interviewed by Reuters would be
stagnation in turnover this year, though some did not rule out an outright
decline in revenue and possible job cuts.
More
German
woes darken central Europe's recovery prospects | Reuters
No country can
act wisely simultaneously in every part of the globe at every moment of time.
Henry Kissinger.
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.
30 Jan, 2024 07:04
Shop price inflation slows further in January
Shop price inflation saw a
notable slowdown at the start of the year, according to fresh data released on
Tuesday, as price growth reached its lowest level since May 2022.
The British Retail
Consortium (BRC) and NielsenIQ shop price index for 1
January to 7 January showed a significant drop in annual shop price inflation
to 2.9%, from 4.3% in December.
Within the index, non-food
inflation saw a substantial decrease, falling to 1.3% in January from 3.1% in
December.
That marked a sharp drop below
the three-month average rate of 2.4%, and positioned non-food inflation at its
lowest point since February 2022.
Food inflation experienced a
deceleration as well, declining to 6.1% in January from 6.7% in December.
The reduction in food inflation
was part of a consistent trend, with January marking the ninth consecutive
month of deceleration in the category.
It also brought food
inflation to its lowest level since June 2022.
“Some New Year cheer as
January shop price inflation slid to its lowest level since May 2022,”
said British Retail Consortium chief executive officer Helen
Dickinson.
“Non-food goods drove the
fall, as many retailers offered heavily discounted goods in their January sales
to entice consumer spend amidst weak demand.
More
Shop price inflation slows further in January -
Sharecast.com
Texas Manufacturing Index Plunges to Lowest Level Since the
Pandemic
January 29, 2024 11:36 am
The Dallas
Fed has grim details of a decline in manufacturing in Texas. Production,
employment, new orders, and capacity utilization all dropped steeply.
The Dallas Fed
reports Texas Manufacturing Activity Contracts in January
- The
production index, a key measure of state manufacturing conditions, dropped
17 points to -15.4—its lowest reading since mid-2020.
- The new
orders index ticked down from -10.1 to -12.5
- The capacity
utilization index dropped to a multiyear low of -14.9
- Shipments
index slipped 11 points to -16.6.
- The
employment index moved down seven points to -9.7, its lowest reading since
mid-2020. Fourteen percent of firms noted net hiring, while 23 percent
noted net layoffs. The hours worked index came in at -11.8 after a
near-zero reading last month.
---- For December, “Respondents continued to perceive worsening broader
business conditions, though pessimism waned further. The general business
activity index improved from -11.6 to -8.7, while the company outlook index
increased from -8.1 to -0.7. The outlook uncertainty index ticked up two points
to 12.6.”
The Dallas Fed report
is fresh on the heels of the Empire State Manufacturing Index Stunning Drop to -43.7, New
Orders -49.4
Nearly half of the New
York region manufacturers reported a decline in new orders. Did a recession
just start (or about to) as everyone gave up on the idea?
More
Texas Manufacturing Index Plunges to Lowest Level Since the Pandemic – MishTalk
Covid-19 Corner
This
section will continue until it becomes unneeded.
“Zombie” Virus Fragments Promote Immune Self-Attack in COVID-19
"Zombie"
virus fragments continue to cause inflammation after the virus is destroyed.
Published: January 30, 2024
There are many
lingering mysteries from the COVID-19 pandemic. For instance, why does
SARS-CoV-2, the virus behind the disease, cause severe symptoms in some
patients, while many other coronaviruses don’t? And what causes strange
symptoms to persist even after the infection has been cleared from a person’s
system?
The world may now
have the beginning of answers. In a study published today in the journal
Proceedings of the National Academy of Sciences, a UCLA-led multidisciplinary
research team explores one way that COVID-19 turns the immune system — which is
crucial for keeping people alive — against the body itself, with potentially
deadly results.
“What we found deviates from the standard
picture of viral infection,” said Wong, who is also a member of the California NanoSystems Institute
at UCLA. “The textbooks tell us that after
the virus is destroyed, the sick host ‘wins,’ and different pieces of virus can
be used to train the immune system for future recognition. COVID-19 reminds us
that it’s not this simple.
----The research team found SARS-CoV-2 fragments can imitate innate immune
peptides, a class of immune molecules that amplify signals to activate the
body’s natural defenses. Peptides are chains of amino acids like proteins, only
shorter. These immune peptides can spontaneously assemble into new structures
with double-stranded RNA, a special form of a molecule essential for
building proteins from DNA, typically found in viral infections or released by
dying cells.
The resultant hybrid complex of
the immune peptides and double-stranded RNA kicks off a chain reaction that
triggers an immune response.
More
“Zombie” Virus Fragments Promote Immune Self-Attack in COVID-19 | Technology Networks
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.
Battery
breakthrough that could slash price of electric cars
The
US is aiming for at least half of new vehicle sales to be electric by 2030
January 30, 2024
The recent Arctic blasts across the United States left some electric vehicle (EV) owners in a jam.
Fast-draining batteries, slow
charging, long queues, and cars being towed after running out of power were
reported from Illinois and Michigan to
Texas.
Sub-zero temperatures aren’t
great for EV battery life - neither, of course, are they for
gasoline-powered cars which more frequently break down in freezing
conditions. New research from a Norwegian breakdown service revealed that electric cars fail less in extreme
cold than fossil fuel-powered vehicles.
Nevertheless, concerns about the range and
longevity of EV lithium-ion batteries remain a sticking point for sales
An Ipsos study last year found that along with the cost, the barrier for many
people in buying an EV was concern about the lack of charging stations and
battery life.
---- But a recent breakthrough by a team of scientists at
Harvard University could help overcome these hurdles. Researchers from the School of
Engineering and Applied Sciences (SEAS) reported earlier this month that they have developed a new “solid-state”
battery that can be charged in the time that it takes to fill up a tank of gas
- and repeated at least 6,000 times.
At the moment, EVs, laptops
and other electronics that need energy storage, typically use lithium-ion
batteries in a flat, compact “pouch cell” design.
But the power of lithium-ion
batteries, as demonstrated, can only take larger machines so far. There has
also been evidence of these types of batteries catching fire.
Last June, four people died after a
lithium-ion battery caught fire in
an e-bike store in New York and spread to apartments above. In December, a fire broke out on a
cargo ship carrying nearly
2,000 tons of lithium-ion batteries off Alaska’s coast.
The race to develop
solid-state batteries has ramped up in the past few years as the technology is
widely considered essential to spurring a nationwide switch from gas-powered
cars to electric. Companies including Volkswagen and Toyota have been working
on their own solid-state batteries, aiming to get them into vehicles by the end
of the decade.
Dr Xin Li,
associate professor of materials science at Harvard, described solid-state
batteries as “the holy grail”.
While they look
similar to lithium-ion models on the outside, solid-state batteries replace the
liquid, organic electrolyte with a material like a high-tech ceramic.
“This conducts
better than liquid, and it’s non-flammable so it’s safer,” Dr Xin Li told The
Independent.
The Harvard team’s
postage stamp-sized battery retained 80 per cent capacity after 6,000 cycles,
and showed good performance at low temperatures.
It outperforms
other solid-state batteries on the market today, the scientists said, after
they discovered a new way to make it with a lithium metal anode, which has ten
times the capacity of the typical, commercial graphite anodes.
More
Battery breakthrough that could slash price of
electric cars | The Independent
It's never
happened in history that every region in the world could affect every other
region simultaneously. The Roman empire and the Chinese empire didn't know much
about each other and had no means of interacting. Now we have every continent
able to reach every other.
Henry Kissinger.
