Baltic
Dry Index. 2091 -02 Brent Crude 78.78
Spot
Gold 2045 US
2 Year Yield 4.33 unch.
If a government resorts to inflation, that is,
creates money in order to cover its budget deficits or expands credit in order
to stimulate business, then no power on earth, no gimmick, device, trick or
even indexation can prevent its economic consequences.
Henry Hazlitt.
In
the stock casinos, an ominous start to 2024. While the stock casinos are
pricing in six interest rate cuts by the US central bank, the Fed itself has
only hinted at three 25 basis points cuts. The global stock casinos are over
priced.
Not
that it might matter much anyway. Someone, somewhere, is going all out to provoke
a much wider Middle East war. For much of the world that someone is the USA and
Israel.
If
a wider war actually starts, it probably ends in a nuclear exchange. That, of
course would be a disaster for the over priced stock casinos, although a stock
casino crash would be the least of our troubles in the world.
Japan leads losses in Asia as investors assess
Fed minutes; India stocks rise
UPDATED WED, JAN 3 2024 11:25 PM
EST
Japan’s Nikkei led losses in Asia-Pacific
markets Thursday, as the country resumed trading after an extended New Year’s
holiday during which it witnessed an earthquake and an accident involving Japan
Airlines.
The benchmark Nikkei 225 shed
0.76%, while the broader Topix edged up 0.32% as Japan kicks off its first day
of trade in 2024.
Markets in Asia also took cues
from global stocks after minutes of the U.S. Federal Reserve’s meeting
in December showed interest
rate cuts were likely in 2024, but provided little clarity on when
that might happen.
Stocks in India, however, bucked
the trend, with the Nifty 50 index adding
0.4% in its first hour of trading after falling for two straight sessions.
South Korea’s Kospi was
down 1.02%, and the small-cap Kosdaq was lower by 0.98%.
In Australia, the S&P/ASX 200 retreated
further from Wednesday, losing 0.35%.
Hong Kong’s Hang Seng index shed
0.45%, while China’s CSI 300 index fell 1.4%.
On Friday in the U.S., all three major indexes lost
ground after the
Fed minutes revealed officials concluded that interest rate
cuts were likely in 2024, though they appeared to provide little in the way of
when that might occur.
The Dow Jones Industrial Average dropped
0.76%, while the broad-market S&P500 lost
0.8%. The Nasdaq Composite lost
1.18%, marking its fourth consecutive losing day.
Asia markets today:
Japan markets, Fed December minutes (cnbc.com)
Fed officials in December saw rate cuts likely,
but path highly uncertain, minutes show
Federal
Reserve officials in December concluded that interest rate cuts are likely in
2024, though they appeared to provide little in the way of when that might
occur, according to minutes from the meeting released Wednesday.
At the meeting, the rate-setting Federal Open
Market Committee agreed to hold its benchmark rate steady in a range between
5.25% and 5.5%. Members indicated they expect three quarter-percentage point
cuts by the end of 2024.
However, the meeting summary noted a high level of
uncertainty over how, or if, that will happen.
“In discussing the policy outlook, participants
viewed the policy rate as likely at or near its peak for this tightening cycle,
though they noted that the actual policy path will depend on how the economy
evolves,” the minutes said.
Officials noted the progress that has been made in
the battle to bring down inflation. They said supply chain factors that
contributed substantially to a surge that peaked in mid-2022 appear to have
eased. In addition, they cited progress in bringing the labor market better
into balance, though that also is a work in progress.
The “dot plot” of individual members’ expectations
released following the meeting showed that participants expect cuts over the
coming three years to bring the overnight borrowing rate back down near the
long-run range of 2%.
“In their submitted projections, almost all
participants indicated that, reflecting the improvements in their inflation
outlooks, their baseline projections implied that a lower target range for the
federal funds rate would be appropriate by the end of 2024,” the document said.
However, the minutes noted an “unusually elevated
degree of uncertainty” about the policy path. Several members said it might be
necessary to keep the funds rate at an elevated level if inflation doesn’t
cooperate, and others noted the potential for additional hikes depending on how
conditions evolve.
“Participants generally stressed the importance of
maintaining a careful and data-dependent approach to making monetary policy
decisions and reaffirmed that it would be appropriate for policy to remain at a
restrictive stance for some time until inflation was clearly moving down
sustainably toward the Committee’s objective,” the minutes stated.
Despite the cautionary tone from Fed officials,
markets expect the central bank to cut aggressively in 2024.
Fed funds futures trading points to six
quarter-point cuts this year, which would take the fed funds rate, which
primarily sets what banks charge each other for overnight loans but also
influences multiple consumer debt products, down to a range between 3.75%-4%.
More
Fed
minutes December 2023: Rate cuts likely, but path highly uncertain (cnbc.com)
US chip stocks tumble
after strongest year since 2009
By Noel Randewich
January 4, 20241 2:09 AM GMT
Jan 3 (Reuters) -
U.S. chip stocks added to a string of losses on Wednesday, with Wall Street's
main semiconductor benchmark tumbling from record highs following its strongest
year since 2009, when the sector bounced back after the financial crisis.
Drops
of over 2% in Advanced Micro Devices (AMD.O), Qualcomm (QCOM.O) and Broadcom (AVGO.O) weighed most on the
PHLX semiconductor index (.SOX), which was down 2.1%.
The chip index
has now declined almost 7% since reaching a record high close on Dec. 27.
---- Fueled by optimism about artificial intelligence and
more recently by expectations the Fed will cut interest rates this year, the
PHLX surged 65% in 2023, its strongest performance since 2009. That compares to
annual gains of 43% and 24%, respectively, for the Nasdaq (.IXIC) and S&P 500 (.SPX).
Chip stocks have also benefited from bets that a downturn in
global demand last year that saw memory chip makers cut production has largely
bottomed out.
More
US
chip stocks tumble after strongest year since 2009 | Reuters
Why I don’t think the
Magnificent 7 can save the US stock market from crashing
US indexes trounced global share markets in 2023. The S&P
500 ended the year up 25% and the Nasdaq 100 55%.
Powering them to near record highs, were a narrow group of stocks, dubbed the
‘Magnificent 7’. But as valuations reach insane levels, I see only one outcome:
a stock market crash.
Valuations matter
Wall
Street analysts believe that the Magnificent 7 are bulletproof companies,
primed to be major beneficiaries of the artificial intelligence gold rush. This
faith is demonstrated by the hefty price-to-earnings multiples placed on them.
I
believe that it’s way too early to know which, if any, will emerge as the
market leaders from the AI revolution.
My argument is not that these companies aren’t highly profitable
with sizeable moats. Instead, it’s based on the fact that too many investors
are looking in the rear-view mirror when it comes to both valuing them and
projecting their growth into the future.
Concentration of stocks
They
say that history never repeats itself, but it often rhymes. If history has
taught us anything, it’s that whenever stock market gains are confined to a
handful of stocks, it never ends well.
In the early 1970s, a narrow group of 50 (coined the
Nifty-Fifty) stocks, led by the likes of Procter & Gamble, IBM, Xerox and
Polaroid were viewed as indestructible. As a consequence, valuations became
stretched. During the bear market of 1973-74, they lost nearly 75% of their
value.
Today’s market dynamics are unprecedented and make
those 50 stocks look like a well-diversified portfolio compared to just the
Magnificent 7! Both Apple and Microsoft alone
account for 14% of the overall weighting in SPY S&P 500,
the largest exchange-trade fund (ETF) in the world. For QQQ,
which tracks the Nasdaq, it’s an astonishing 21%.
Changing capital dynamics
The
emergence of generative AI clearly represents a paradigm shift. But the way
it’s being marketed to investors is no different from previous technological
breakthroughs.
Leading
up to the 1973 crash, Xerox was one of the most innovative companies in the
world. It marketed its photocopier as the office of the future. And it was
right. The problem was that it took nearly 30 years before its share price
revisited its peak.
More
Why I don’t think the Magnificent 7 can save the US
stock market from crashing (msn.com)
Wall
Street Breakfast: Record Debt
Jan. 03, 2024 7:30 AM ET
Record debt
The
United States is ringing in the new year with a lot of red ink as the national
debt surpassed $34T for the first time. The gloomy fiscal milestone, reported
by the Treasury Department, comes as Congress braces for another fight over federal spending. Unless lawmakers can agree on
another short-term continuing resolution to fund the government, or pass
appropriations bills by Jan. 19 (and others by Feb. 2), the U.S. would face its
first federal shutdown since 2019.
On the rise: Not only is the overall balance
increasing, but the cost of servicing the national debt is rising at a rapid
clip. "The interest paid on the federal debt so far this fiscal year is
$900B, but this is soon going to reach $1T... and [it] is clear that the
situation is unsustainable," SA analyst WWS Swiss Financial Consulting wrote in The Fed And The Debt.
Higher deficits can also make inflation a bigger problem for the central bank,
which uses monetary policy to keep prices stable but has little say over what
happens on the fiscal side, where outsized spending has been the norm across
both parties.
Credit rating agencies are also taking notice, with Moody's recently cutting its credit outlook on the U.S. to negative
from stable, citing heavier downside risks to the country's fiscal strength.
Fitch lowered America's credit rating following the debt ceiling
drama last summer, while S&P was the first to downgrade U.S. government debt in 2011. Kicking the can
further down the road also makes the issue harder to resolve and can result in
drastic action instead of phasing things in like lower spending or higher
taxes.
Tipping point? There's no magic number or
level for when a government's debt begins to hurt its economy, and the U.S. has
easily handled a much heavier debt load than was once thought possible despite
doomsday warnings for several decades. However, extreme partisanship has left
both parties pointing fingers, with the GOP citing bloated federal
spending programs that passed during the Biden administration - like the
Infrastructure Investment and Jobs Act, the CHIPS and Science Act and the
Inflation Reduction Act - and Democrats referencing the "trillions spent
on Republican tax cuts skewed to the wealthy and big corporations." Hard
compromises will have to be made over tax increases, while the parties must be
willing to tinker with the government's biggest expenses, such as Medicare,
Social Security and the military.
Wall
Street Breakfast: Record Debt | Seeking Alpha
Finally, shipping and EV news.
Factbox-Shipping firms react
to Houthi attacks in the Red Sea
January
2, 2024.
(Reuters)
-Iranian-backed Houthi militants in Yemen have stepped up attacks on vessels in
the Red Sea to show their support for Palestinian Islamist group Hamas fighting
Israel in Gaza.
The attacks
impact a route vital to East-West trade, especially of oil, as ships access the
Suez Canal via the Red Sea.
In response,
some shipping companies have instructed vessels to instead sail around southern
Africa, a slower and therefore more expensive route.
Below are
actions take by companies (in alphabetical order):
C.H. ROBINSON
The global
logistics group said on Dec. 22 it had rerouted more than 25 vessels around the
Cape of Good Hope over the past week, and that number would likely grow.
"Blank
sailings and rate increases are expected to continue across many trades into Q1
of 2024," it added.
CMA CGM
The French
shipping group is planning a gradual increase in the number of vessels
transiting the Suez Canal, it said on Dec. 26. "This decision is based on
an in-depth evaluation of the security landscape and our commitment to the
security and safety of our seafarers," CMA CGM said in a statement.
The company
had previously rerouted several vessels via the Cape of Good Hope.
More
Factbox-Shipping firms react to
Houthi attacks in the Red Sea (msn.com)
Nissan
and GM warn Trump’s plans to gut Inflation Reduction Act will hurt US EV sales
Threats
could impact inward car and battery investment by international groups, note
analysts
January 3, 2024
Carmakers have warned that tearing up the Inflation Reduction Act will hurt the growth of US electric vehicle sales, after former president Donald Trump’s advisers revealed plans to gut the country’s cornerstone green legislation if he is elected.
The IRA is intended to drive EV manufacturing in the US by offering consumer incentives if they buy battery cars where certain parts are sourced from the US or its trading partners.
The measure, which
is intended to dissuade consumers from buying Chinese technology, has sparked
tens of billions of dollars of investment into the US from battery and auto
groups.
But in November, Trump’s senior campaign officials and advisers told the Financial Times that he was planning to overhaul US policy during a second term. As the growth of EV sales slow, and carmakers pull back on some spending plans, industry executives now fear that without the incentives EV sales will stumble.
General Motors chief financial officer Paul Jacobson said the IRA had “tremendous benefit” to the EV market, helping stimulate sales. “We don’t want to end up saying this vehicle program is really good with the IRA, only to have the IRA go away, and now suddenly, the vehicle can’t make money.”
---- EVs made up 9 per cent of all new vehicle sales in the first nine months of 2023, according to data group BloombergNEF. The Biden administration wants electric vehicles to reach 50 per cent of all new sales by the end of the decade.
Across the world, EV sales are still rising, although largely in areas that have generous incentives. However, rates of growth are slowing in large markets, including the US and Europe, as mass-market buyers remain sceptical of EVs’ higher prices and perceived inconveniences, such as charging.
In the US, the generous
tax credits offered to consumers who buy EVs and to domestic manufacturers have
helped carmakers increase their EV offerings. The companies are conscious that
watering down the programme will also make it harder to sell the vehicles
profitably.
More
Nissan and GM warn Trump’s plans to gut Inflation Reduction Act will hurt US EV sales (ft.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.
US bankruptcies
surged 18% in 2023 and seen rising again in 2024 -report
January 3, 2024 9:36
PM GMT
Jan 3 (Reuters) - U.S. bankruptcy
filings surged by 18% in 2023 on the back of higher interest rates, tougher
lending standards and the continued runoff of pandemic-era backstops, data
published Wednesday showed, although insolvency case volumes remain well below
the level seen before the outbreak of COVID-19.
Total bankruptcy filings -
encompassing commercial and personal insolvencies - rose to 445,186 last year
from 378,390 in 2022, according to data from bankruptcy data provider Epiq
AACER.
Commercial Chapter 11 business
reorganization filings shot up by 72% to 6,569 from 3,819 the year before, the
report said. Consumer filings rose 18% to 419,55 from 356,911 in 2022.
For the final month of the year, total
filings dipped to 34,447 from 37,860 in November, though they were up 16% from
a year earlier.
Bankruptcy case counts are expected to
keep climbing in 2024, though there is still some distance to go to top the
757,816 bankruptcies filed in 2019, the year before the pandemic struck.
"As
anticipated, we saw new filings in 2023 increase momentum over 2022 with a
significant number of commercial filers leading the expected increase and
normalization back to pre-pandemic bankruptcy volumes," said Michael
Hunter, vice president of Epiq AACER. "We expect the increase in number of
consumer and commercial filers seeking bankruptcy protection to continue in
2024 given the runoff of pandemic stimulus, increased cost of funds, higher
interest rates, rising delinquency rates, and near historic levels of household
debt."
Household debt did, in fact, stand at a
record high $17.3 trillion at the end of the third quarter, according to data
from the New York Federal Reserve. Delinquency rates are also edging higher,
that data showed, but they also remain below rates from just before the
pandemic.
Financial conditions for businesses
and households have tightened significantly over the last two years thanks to
the Fed's aggressive interest rate hikes to contain inflation. Rates on
mortgage loans, for instance, in the second half of last year shot to their
highest since the start of the century.
More
US
bankruptcies surged 18% in 2023 and seen rising again in 2024 -report | Reuters
Red Sea attacks could push up prices, UK firms warn
January
2, 2024
"Some of
our costs have gone up 250%".
That is the
reality for Thomas O'Brien, boss of family-run Boxer Gifts, which designs games
and seasonal presents.
Their products
are made in China so the Leeds-based firm relies heavily on global shipping.
But attacks on commercial vessels in the Red Sea have prompted long diversions
to avoid one of the world's busiest shipping lanes.
Mr O'Brien is
among business owners who have told the BBC this could lead to delays and price
rises.
It follows a
warning from the British Retail Consortium (BRC) that the disruption could have
a knock-on effect on product availability and prices.
Chief
executive Helen Dickinson said this was "as a result of higher
transportation and shipping insurance costs".
"Over the
coming months, some goods will take longer to be shipped," she added.
Guy Platten,
secretary general of the International Chamber of Shipping warned "we
won't see much of an impact until later on in January".
The attacks are being
carried out by the Houthi group which has declared support for Hamas and has
said it was targeting ships travelling to Israel. It is not clear if all the
ships that have been attacked were actually heading to Israel.
Because of this and the
threat of future assaults, several of the world's largest shipping firms,
including Mediterranean Shipping Company and Maersk, have diverted vessels away
to a much longer route around Africa's Cape of Good Hope and then up the west
side of the continent.
Mr O'Brien
said this had led to shipping companies increasing their container costs. For
Boxer Gifts that has amounted to a 250% increase in shipping rates in the past
two weeks, he said.
The company
said it would continue to absorb rising costs as much as possible, but if that
prices rose further, the cost would have to be passed on. Delays are a problem
too.
"We just
about got used to shipments arriving on time after Covid, but at the moment
with the Red Sea, that's adding another 10 to 14 days to shipments," Mr
O'Brien said.
"You end
up with a two or three week delay. We've got Valentine's Day products that are
likely to be delayed and miss Valentine's Day.
"The same
effect is going to be felt on Mother's Day meaning a huge chunk of our selling
time for these games is missed".
The German
shipping giant Hapag-Lloyd told the BBC it would continue to avoid the Red Sea
route until at least 9 January. It sends an average of 50 ships a month through
the Suez Canal. Some 25 ships were diverted in the last half of December and
15-20 more will be impacted by today's decision.
MSC and Maersk
two of the largest shipping lines in the world have paused journeys through the
Red Sea until further notice. While, France's CMA-CGM is increasing its rates
between Europe and the Mediterranean.
While there
has been some disruption to supply chains already, Mr Platten, from the
International Chamber of Shipping said it would take a few weeks before the
problems are really noticed.
More
Red Sea attacks could push up prices, UK firms warn
(msn.com)
Shop price inflation steady in December as food
prices fall
January
2, 2024
Shop price inflation remained
steady in December but at its lowest since June 2022, the latest figures show.
Shop prices remained 4.3%
higher than a year ago, below the three-month average rate of 4.6%, according
to the British Retail Consortium (BRC)-NielsenIQ
Shop Price Index.
Households did have reason to celebrate as food inflation fell
for the eighth consecutive month to 6.7%, down from 7.7% in November and also
slowing to its lowest rate since June 2022.
Fresh food inflation slowed
even further, to 5.4% from the previous month’s 6.7%, to reach its lowest point
since May 2022.
Non-food
products had a more challenging December, with inflation rising again to 3.1%
from 2.5% in November following retailers’ investment in Black Friday
discounting and ahead of the January sales.
BRC chief executive Helen
Dickinson warned that new border
checks for EU imports and higher business rates bills from April were
“obstacles on the road ahead”.
She said: “Government should think twice before imposing new costs on
retail businesses that would not only hold back vital investment in local
communities, but also push up prices for struggling households.”
More
Shop price inflation steady in December as food prices
fall (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Today, off topic but interesting.
New antibiotic family kills superbugs in a way they
can't resist
Michael Irving January 01, 2024
Antibiotic-resistant bacteria
are poised to become a global
health concern in the coming
decades. In the race to develop new weapons, scientists from Texas A&M have
created a novel family of antibacterial polymers that can kill 'superbugs' in a
way they can't evolve resistance to.
The discovery of penicillin
was one of the most important scientific breakthroughs of the 20th century.
Suddenly infections were far more survivable, with antibiotics opening up more surgical
and medical treatments to more people. But the arms race was just beginning.
Bacteria are adaptable little
pests, and so they quickly evolved defenses against antibiotics. Scientists in
turn developed new ones, but of course bacteria soon evolved resistance to
those too, in a cycle that lasted decades. Unfortunately, in recent years the
tides have begun to turn in favor of bacteria – we’re running out of new drugs,
but they’re not running out of evolution. Our last lines of defense are beginning
to fail, and there are now strains of
superbugs that are immune
to anything and everything we can
throw at them.
We need brand new tactics if
we’re going to prevent a global health crisis, and antibiotic polymers are a
decent step in that direction. These synthetic
molecules latch onto and disrupt
the outer membranes of bacteria, in a form of attack that the bugs can’t
develop resistance to.
In the new study,
the Texas A&M team developed new polymers that are more customizable,
allowing them to be tuned to fight superbugs even more effectively. The key is
a catalyst called AquaMet, which can handle a high concentration of charges and
is water-soluble. That charge tolerance is important – antibacterial polymers
work because their positive charge attracts them to the negative charge of the
bacteria.
The team’s new
method of making these polymers allows for more precise placement of where
particular parts can be added to the molecule, which previous work has
suggested could improve their performance.
In lab tests, the
new polymers were found to be active against the two main groups of bacteria –
gram-positive, such as Methicillin-resistant Staphylococcus aureus (MRSA),
and gram-negative, such as E. coli. This suggests the molecules
will work against a variety of superbugs. Importantly, the drugs also worked at
low concentrations.
The main complication of
antibacterial polymers is that red blood cells also have a negative charge,
meaning the drugs can be attracted to them too. But in this case, the team’s
method of more customization of the molecules allowed them to be more selective
for bacteria. This area does still need more work though, the team says, which
is the current focus of the next round of research.
The research was published in
the journal PNAS.
New antibiotic family kills superbugs in a way they can't resist (newatlas.com)
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.
Solar power set to help harvest atmospheric water
January 3, 2024
More than 2.2-billion
people currently live in water-stressed countries, and the United Nations
estimates that 3.5-million die every year from water-related diseases. Because
the areas most in need of improved drinking water are also located in some of the
sunniest places in the world, there is strong interest in harnessing sunlight
to help obtain clean water.
Researchers
from Shanghai Jiao Tong University in China developed a promising new
solar-powered atmospheric water harvesting technology that could help provide
enough drinking water for people to survive in those difficult, dryland areas.
They published their work in Applied Physics Reviews, an AIP Publishing
journal.
“This
atmospheric water harvesting technology can be used to increase the daily water
supply needs, such as household drinking water, industrial water, and water for
personal hygiene,” said author Ruzhu Wang.
Historically,
researchers have faced challenges when injecting salt into hydrogels as the
higher salt content reduced the swelling capacity of the hydrogel due to the
salting-out effect. This led to salt leakage and the water absorption capacity
decreased.
“We were
impressed that even when up to 5 grams of salt was injected into 1 gram of
polymer, the resulting gel maintained good swelling and salt-trapping
properties,” said Wang.
The
researchers synthesized a super hygroscopic gel using plant derivatives and
hygroscopic salts that was capable of absorbing and retaining an unparalleled
amount of water. One kilogram of dry gel could adsorb 1.18 kilograms of water
in arid atmospheric environments and up to 6.4 kilograms in humid atmospheric
environments. This hygroscopic gel was simple and inexpensive to prepare and
would consequently be suitable for large-scale preparation.
In addition,
the team adopted a prototype with desorption and condensation chambers,
configured in parallel. They employed a turbofan in the condensation chamber to
increase the recovery of desorbed water to more than 90%.
In an outdoor
prototype demonstration, the team found it released adsorbed water even in the
morning or afternoon when the sun is weak. The system could also achieve
simultaneous adsorption and desorption during the daytime.
The team will
work to achieve simultaneous adsorption and desorption using renewable energy
to maximize daily water yield per unit mass of adsorbent to further optimise
the system’s performance for practical applications in water generation.
In addition to
daily water production, sorbent materials that harvest atmosphere water could
also play an important role in future applications such as dehumidification,
agriculture irrigation, and thermal management for electronic devices.
Solar power set to help harvest atmospheric water
(msn.com)
The only way government bureaucrats know of keeping prosperity going is to inflate some more - to increase the deficit or to pump more money into the system.
Henry Hazlitt.
No comments:
Post a Comment