Baltic
Dry Index. 1554 -110 Brent Crude 78.89
Spot Gold 2034 US 2 Year Yield 4.26 -0.11
The world is a stage, but the play is badly cast.
Oscar Wilde.
Today, the crude oil price surges as the Washington/London/NATO War Party gets its wider war.
In the USA inflation starts rising again. Stocks drift. The end of the Feds emergency rescue program for banks, the Bank Term Funding Program, ends on March 11, but are the US banks ready or able to deal with that cutoff date?
In yet another sign that the global economy is
in trouble, China’s exports fell in 2023.
Asia markets
mixed as China consumer prices fall and exports beat expectations; Japan
extends record-breaking rally
UPDATED THU, JAN 11 2024 11:38 PM EST
Asia-Pacific markets were mixed after China
posted softer-then-expected deflation data for December, while Japan’s markets
continued their record breaking rally.
Hong Kong’s Hang Seng index was
up marginally, while the mainland Chinese CSI 300 dipped 0.17%. China’s
consumer price index fell 0.3%, softer than a 0.4% expected by a Reuters poll
of economists, and also lower than the 0.5% fall seen in November.
China’s
exports for December beat expectations, but overall, total
trade declined in 2023 for the world’s second largest economy.
Separately, both the benchmark Nikkei 225 and
Topix are at their highest levels since 1990, having surged in the past week.
The Nikkei advanced 1.18%, paring some gains
after surging 2.1% at open, while the broader Topix was up 0.23%.
In Australia, the S&P/ASX 200 slipped
0.27%, while South Korea’s Kospi fell
0.7% and the small-cap Kosdaq was down 1.7%.
Overnight in the U.S., all three major indexes
ended Thursday close to the flat line even as U.S. inflation for December came
in higher than expected.
December’s consumer
price index report came out slightly higher-than-expected,
reflecting a 0.3% increase
in consumer prices for the month, pushing the annual rate to
3.4%, compared to the 3.2% expected by economists polled by Dow Jones.
The Nasdaq Composite closed
at the flat line, while the Dow Jones
Industrial Average eked
out a gain of 0.04%.
The S&P 500 edged
lower by 0.07%, although earlier in the session, the broad market index briefly
traded above its record closing high of 4,796.56.
Asia markets today:
China inflation, China trade data, Nikkei high (cnbc.com)
Consumer prices
rose 0.3% in December, higher than expected, pushing the annual rate to 3.4%
PUBLISHED THU, JAN 11 2024 8:32
AM EST
Prices that consumers pay for a variety of goods
and services rose more than expected in December, according to a Labor
Department measure Thursday that shows inflation still holding a grip on the
U.S. economy.
The consumer price index increased
0.3% for the month, higher than the 0.2% estimate at a time when most
economists and policymakers see inflationary pressures easing. On a 12-month
basis, the CPI closed 2023 up 3.4%. Economists surveyed by Dow Jones had been
looking for respective readings of 0.2% and 3.2%.
Excluding volatile
food and energy prices, so-called core CPI also increased 0.3% for the month
and 3.9% from a year ago, compared to respective estimates of 0.3% and 3.8%.
Much of the increase came do to rising shelter costs. The category
rose 0.5% for the month and accounted for more than half the core CPI increase.
On annual basis, shelter costs increased 6.2%, or about two-thirds of the rise
in inflation.
----Food prices increased 0.2% in December, the
same as in November. Egg prices surged 8.9% on the month, but were still down
23.8% annually. Energy posted a 0.4% gain after sliding 2.3% in November as
gasoline rose 0.2% but natural gas declined 0.4%.
In other key price indexes, motor vehicle
insurance bounced 1.5% higher, medical care accelerated by 0.6% and used
vehicle prices, a key contributor in the initial inflation surge, increased
another 0.5% after being up 1.6% in November.
Wages adjusted for inflation posted a 0.2% gain on
the month, while rising a modest 0.8% from a year ago, the Bureau of Labor
Statistics said in a separate release.
The inflation readings cover the same month that
the Fed held its key borrowing rate steady for the third straight meeting.
Along with that decision, policymakers indicated that they could begin cutting
rates this year so long as the inflation data continue to cooperate.
Despite the higher than expected inflation
readings, futures traders continued to assign a strong possibility that the Fed
would start cutting interest rates in March. The CME Group’s FedWatch gauge of
futures pricing indicated about a 63% probability of a March reduction,
slightly lower than where it stood Wednesday.
More
Oil prices jump
more than 2% as U.S., Britain strike Iran-backed Houthis
Oil prices rose after Britain and the United
States carried out military
strikes against targets in Houthi-controlled areas of Yemen, as
tensions in the Red Sea mount further.
Global benchmark Brent jumped 2.25%
higher to $79.15 a barrel Friday Asia trading hours, while the U.S. West Texas Intermediate futures
climbed 2.4% to $73.75 per barrel.
“These targeted strikes are a clear
message that the United States and our partners will not tolerate attacks on
our personnel or allow hostile actors to imperil freedom of navigation in
one of the world’s most critical commercial routes,” U.S. President Joe Biden
said in a statement Thursday evening.
While the U.S. has carried out
strikes on Iranian proxies in Syria and Iraq since the outbreak of the Gaza
war, this would be the first known strike against the Iran-backed Houthis in
Yemen.
The Houthis have been attacking vessels in the Red
Sea, targeting global shipping vessels including those from the U.S. and
Israel, in retaliation for the war in Gaza that has so far killed nearly 23,000 people in
the Palestinian enclave.
Major shipping companies stopped
traversing the Suez Canal and Red Sea routes in early December, choosing to
reroute via southern Africa instead. That’s resulted in longer and more
expensive journeys which pushed up ocean freight rates.
In a
televised speech on Thursday, the leader of Yemen’s Houthis,
Abdul-Malik al-Houthi, vowed that any American attack on the group will not go
without response.
“We will confront the
American aggression. Any American aggression will never remain without a
response,” he said, cautioning that the response will be greater than “at the
level of the recent operation” that the group is carrying out at sea.
In announcing the
strikes on Thursday, Biden vowed he “will not hesitate to direct further
measures to protect our people and the free flow of international commerce as
necessary.”
Oil
prices jump as U.S., Britain strike on Houthis in Yemen (cnbc.com)
Red Sea Shipping Turmoil Leads to a Drop
in European Goods Trade
By Brendan Murray January 11, 2024 at 12:00 PM GMT
Europe’s economy is starting to feel the first wave from
the Red Sea shipping disruptions.
The latest Kiel Trade Indicator released Thursday shows the European Union’s
imports dropped 3.1% in December from the previous month and exports were down
2%. In Germany, the world’s No. 3 exporter, imports fell 1.8% and exports were
off 1.9%.
The gauge revealed global trade fell 1.3% last month from
November, capping a seesaw year for international commerce:
Among the
reasons for the softness: Containers hauled through the Red Sea — where ships
are subjected almost daily to attacks by Houthi militants —
plunged by more than half. Currently, about 200,000 containers are crossing the
waterway each day, down from 500,000 in November, the Kiel report said.
More
Supply Chain Latest: Europe’s Trade Slump From Red Sea
Turmoil - Bloomberg
China’s
annual exports drop for the first time in seven years
BEIJING — China’s annual exports
fell for the first time in seven years in 2023, even as shipments in December
beat expectations, customs data showed Friday.
Exports rose by 2.3% year on year
in U.S. dollar terms last month, more than the 1.7% increase forecast by a
Reuters poll.
Imports rose by 0.2% in December
from a year earlier in U.S. dollar terms. That’s slightly less than the 0.3%
increase expected by analysts polled by Reuters.
But for 2023, exports fell 4.6%,
the first such annual drop since a 7.7% decline in 2016, according to Wind
Information.
Imports dropped by 5.5% last
year. Their last decline was in 2020, the year the Covid-19 pandemic began.
China’s trade with its major
partners declined in 2023 as demand for Chinese goods fell amid slower global
growth.
The Association of Southeast
Asian Nations was China’s largest trading partner on a regional basis in 2023,
followed by the European Union.
By country, the U.S. remained
China’s largest trading partner.
Russia was a rare bright spot,
with China’s exports to the country climbing nearly 47% in 2023, and imports
rising almost 13%.
More
China's
annual exports drop for the first time in seven years (cnbc.com)
In cryptoland, let the feeding frenzy begin.
Why a US bitcoin ETF
is a game-changer for crypto
By Hannah Lang January 11, 2024 1:41 AM GMT
Jan 10 (Reuters)
- The U.S. Securities and Exchange Commission (SEC) on Wednesday approved
exchange-traded funds (ETFs) that track the price of bitcoin in a game-changer
for the cryptocurrency industry which has been trying for more than a decade to
launch such a product.
Multiple asset
managers have applied for bitcoin ETFs since 2013, but the SEC rejected them on
the grounds they would be vulnerable to market manipulation. In August,
however, a court found the SEC was wrong to reject Grayscale Investments'
bitcoin ETF application, forcing the agency to rethink its stance.
On
Wednesday, SEC approved applications from ARK Investments, BlackRock (BLK.N) and Fidelity,
among others. Here is how the products work and why the approval is seen as a
big deal:
HOW WILL THE ETFS WORK?
They
will be listed on Nasdaq, NYSE and the CBOE. Their assets will comprise
physical bitcoin purchased from crypto exchanges and held via custodians like
Coinbase Global (COIN.O).
The products
track a bitcoin benchmark. Some track an index provided by CF Benchmarks, a
subsidiary of crypto exchange Kraken, which aggregates trading data from
multiple Bitcoin-USD markets operated by big cryptocurrency exchanges.
To address the
SEC's manipulation concerns, Nasdaq and CBOE have created a market surveillance
mechanism with Coinbase, the largest U.S. cryptocurrency exchange.
Issuers plan to
charge fees ranging from 0.20% to 0.8%, well below the broader ETF market
average.
IS IT DIFFERENT TO BUYING BITCOIN OUTRIGHT?
Yes. A spot
bitcoin ETF allows investors to gain exposure to the price of bitcoin without
the complications and risks of owning bitcoin directly. Those include setting
up crypto wallets and accounts with crypto exchanges, some of which have poor
cyber security records and are prone to hacks.
The
industry has also experienced a string of bankruptcies and scandals, including
the implosion of crypto exchange FTX, whose founder Sam Bankman-Fried was found
guilty of fraud.
Other
exchanges have been accused of flouting U.S. securities laws, while Binance,
the world's largest crypto exchange, recently pleaded
guilty to breaking U.S. anti-money
laundering laws. All this continues to make many investors wary.
In contrast, ETFs
are listed on tightly-regulated stock exchanges and are therefore accessible
through retail investors' existing brokerage accounts, which are also closely
supervised.
The ETF structure
also boosts the accessibility of bitcoin for institutional investors, some of
whom are barred from investing directly in alternative assets.
WHY IS IT DIFFERENT TO EXISTING BITCOIN
FUTURES ETFS?
The
SEC in 2021 approved bitcoin futures ETF, which track agreements to buy or sell
bitcoin at a pre-agreed price. But those products don't
track price movements precisely, and the cost
of rolling over futures contracts can eat into returns, making them less
desirable for many investors.
AREN'T THERE SPOT BITCOIN ETFS IN CANADA AND
EUROPE?
Yes. But the
United States is the world's largest capital market, home to some of the
globe's largest asset managers and institutional investors.
More
Why a US bitcoin ETF is a game-changer for crypto |
Reuters
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.
JP
Morgan CEO warns high inflation is echo of 1970s as he rubbishes 'Goldilocks'
economic scenario
January
10, 2024
The CEO of JP
Morgan has warned that the current high inflation rate echoes back to the
1970s, a period marked by widespread unemployment.
Jamie Dimon
has cautioned that interest rate cuts are not guaranteed, due to rising prices,
stagnant growth and massive government spending.
He mirrored
the current financial outlook with the 1970s, a time when staggering inflation
and energy crises battered the US.
Dimon, who is
regarded by many as a cautionary voice on Wall Street, said that a recession
could happen.
His comments
echoed statements made by other economists and firms, including Wells Fargo,
who said that a recession could take place this year.
Speaking to
Fox Business Network, Dimon shared his thoughts on potentially decreasing
interest rates: “I'm a sceptic. I think because of fiscal spending and other
factors.
“I look at a
lot of things - forget about economic models - $2trillion of fiscal deficit,
the infrastructure and IRA act, the green economy, the remilitarization of the
world, the restructuring of trade, are all inflationary.
“That looks a
little more like the 1970s to me.
“So I think
there's a chance here that people should be prepared that inflation comes down
but then bounces around three [per cent] and maybe even bounces up a little bit
and those implied curves will change. Are people ready for that? I'm not sure.”
Deutsche Bank
also made similar predictions back in October, harkening back to the period of
high unemployment 50 years ago, known as “The Great Inflation”.
More
Largest US banks set to log sharp rise in
bad loans Earnings are expected to have shrunk in last quarter of 2023 due to
unpaid debts and impact of high interest rates
JANUARY 8 2024
A pile-up of bad debt threatens to sour investors’ growing optimism about the prospects for the US’s largest banks when they report fourth-quarter earnings this week.
Non-performing loans — debt tied to borrowers who have not made a payment in at least the past 90 days — are expected to have risen to a combined $24.4bn in the last three months of 2023 at the four largest US lenders — JPMorgan Chase, Bank of America, Wells Fargo and Citigroup, according to a Bloomberg analysts’ consensus. That is up nearly $6bn since the end of 2022.
The analysts estimate bank earnings shrunk in the final three months of 2023, dragged down by those unpaid loans as well as the lingering impact of higher interest rates, which has raised the cost of deposits. In addition, in December, a number of big banks said they planned to take a one-time charge by the end of the year to pay for a special assessment being imposed by the Federal Deposit Insurance Corporation to recover the $18.5bn last year’s failures of Silicon Valley Bank and Signature cost the regulator’s insurance fund.
Cost-cutting also continues. Citigroup, which is in the middle of its largest reorganisation in years, is likely to take a charge to cover lay-offs and other related expenses. Wells Fargo last month said it was setting aside $1bn for severance costs in the fourth quarter.
In all, earnings at the six big banks, which includes Goldman Sachs and Morgan Stanley, are forecast to have dropped an average of 13 per cent in the last three months of 2023 compared with the same period a year earlier.
“Year-ahead outlooks get a lot of attention in fourth-quarter earnings calls,” said Jason Goldberg, an analyst at Barclays. “I’m expecting that banks will indicate that the recent drop in net interest income will hit its trough this year.”
Despite the expected earnings drop, investors have been buying up bank shares, which have risen 20 per cent since the end of October, according to the KBW Nasdaq Bank index. Fuelling the rally is the Federal Reserve’s signal late last year that it is probably done raising interest rates. Higher rates hit banks in 2023, raising deposit costs and lowering the value of their bond portfolios.
“Banks are very interest rate-driven,” said Matt Anderson, a banking industry analyst at commercial property research group Trepp. “And investors have an optimistic read on the economy in 2024.”
But even as interest rate pressures are easing, a jump in unpaid loans could continue to hold down bank profits.
The current level of non-performing loans is still below the $30bn peak of the pandemic. The big banks have indicated they think the rise in unpaid debts could slow soon. A number of banks cut the amount of money they put away for future bad loans, so-called provisions, in the third quarter.
Provisions are expected to have shrunk again in the final three months of the year. But if the money that banks are putting away for bad loans unexpectedly jumps, that could raise alarms for investors.
“Credit is still very much a wild card,” said Scott Siefers, a bank analyst at Piper Sandler. “It has been very good, but I think we are going to continue to see a deterioration from here.”
Commercial property, and in particular mortgages on less-full office buildings, had been one of the biggest factors pushing up problem debts.
More recently though, delinquencies have been rising on consumer loans, particularly credit cards and car debt. That has made some analysts nervous, especially because what the banks are putting away for loan-loss reserves now is considerably smaller than what they set aside when bad loans were rising at the start of the pandemic.
“Bank
reserves are adequate right now because we are nowhere near the stress levels
of back then,” said Gerard Cassidy, a bank analyst at RBC Capital Markets. “But
have they reserved enough for an economic hard landing? The answer is no.”
Largest US banks set to log sharp rise in bad loans (ft.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Scientists discover how to 'switch off' Covid-19 using
UV light and clean public spaces
Researchers
have found a way to 'switch off' harmful coronavirus particles like the
notorious Covid-19 using UV light, which could help clean public spaces.
18:17, Wed, Jan 10, 2024 |
UPDATED: 23:42, Wed, Jan 10, 2024
Scientists
have discovered a way to "switch off" harmful Covid-19 particles using ultraviolet (UV) light, potentially
helping to clean public spaces.
The team from the University
of Southampton found that UV laser light can target the virus's genetic core
and protein spikes, both needed for infection.
Professor Sumeet Mahajan, who
led the study, said UV light could be useful for decontamination where
conventional methods weren't suitable.
He added
that Sars-CoV-2, which caused Covid-19, was
especially sensitive to genomic damage, making it a perfect target for
light-based decontamination.
Prof Mahajan said:
"Light deactivation of airborne viruses offers a versatile tool for
disinfection of our public spaces and sensitive equipment that may otherwise
prove difficult to decontaminate with conventional methods."
Mahajan added: "Now we understand the
differential sensitivity of molecular components in viruses to light
deactivation this opens up the possibility of a finely tuned disinfection
technology."
A university representative revealed: "By
using a specialised ultraviolet laser at two different wavelengths the
scientists were able to determine how each viral component degraded under the
bright light.
"They discovered that the genomic material was
highly sensitive to degradation and protein spikes lost their ability to bind
to human cells."
In 2021, Las Vegas-area schools began using UV
light as a classroom germ-killer in the battle to stop the spread of COVID-19.
The blue-light-emitting tower can disinfect a
1,000-square-foot (93-square meter) indoor space in seven minutes, destroying
more than 99.99 percent of surface and airborne pathogens, accoording to Grant
Morgan, chief executive and co-founder of Utah biosafety startup R-Zero.
Scientists discover how to 'switch off' Covid-19 using UV light | Express.co.uk
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.
Anker’s Colossal Battery Pack
Can Power Your Entire Home
Wed, January 10, 2024 at
2:47 PM GMT
Anker now makes a battery pack
that can power your entire home—air-conditioning included—for a whole weekend.
We're totally used to
carrying battery packs to recharge our
phones and laptops, but what about powering your home? That's where oversized powerpacks like Anker's new Solix F3800 come in. They can keep you running during summer
power outages caused by air-conditioners overloading the grid and smooth the
intermittent supply from home solar. But they're also giant batteries, with all
the environmental concerns of smaller batteries, only bigger.
"As an electrical engineer
deeply involved in green energy initiatives, I see giant battery packs as a
crucial bridge toward a sustainable future. They play a pivotal role in
overcoming the intermittent nature of renewable sources like solar. Rather than
a gimmick, they are instrumental in ensuring a stable power supply, especially
during cloudy days or nighttime," electrical engineer Stellar Jackson told
Lifewire via email.
Anker Watts
The new Solix starts at $3,999.
This base unit holds 3.84kWh of charge and can supply it at up to 6,000 Watts
at 120 volts (or 3,000 Watts at 240v). That's enough to power your air
conditioning or any other home appliance.
You can also expand the storage
capacity to 53.8kWh with Anker's expansion batteries. To give you some context
for these numbers, the average US home gets through around 29.2kWh per day, so the full setup could keep you going without
switching anything off.
And that's in the US, where the
typical home refrigerator uses more power in a year than is
consumed by an entire human in
the rest of the world. So you could probably power a typical European city
apartment on a much smaller rig.
But why bother? After all, we're
almost all connected to the grid. Batteries may be a pretty inefficient way to
store power, but because the energy source (the Sun) is limitless, inefficiency
doesn't matter so much, and you'll never have to buy power from the grid.
"The main problem with solar
adoption isn't the cost of the panels themselves. In fact, the PV panels are
considered the cheapest part of the entire system. The problem is the output
intermittency, or what's called the solar power duck curve. Simply put, solar
panels generate most of their electricity at midday when the energy demand is
at its lowest," Kami Turky,
CEO of Solar
Energy Hackers, told Lifewire via
email.
"One popular way to do this
is to use the excess electricity to pump water up a reservoir. When we need
this energy back, this water can be released down through a turbine, and as the
turbine spins, it generates electricity. Batteries are just a way to convert
electrical energy to chemical energy."
More
Anker’s Colossal Battery Pack Can Power Your Entire
Home (yahoo.com)
Another weekend and a wider war gets underway. In the Gaza Ghetto, a murderous war on women and children continues in full frenzy.
In the Hague, the International Court of Justice is hearing the preliminary case of genocide as defined in the 1940s treaty against Israel, with a decision expected in a few weeks. No one expects their decision to end the murders. But more of the world turns anti-west with each passing deadly week.
It doesn’t seem appropriate to end this week with the usual, have a great weekend
everyone. Does no one in Washington have
any humanity left?
A gentleman is
one who never hurts anyone's feelings unintentionally.
Oscar Wilde.
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