Baltic Dry Index. 1518 +15 Brent Crude 80.14
Spot Gold 2030 US 2 Year Yield 4.37 -0.02
There can be few fields of human endeavour in which history
counts for so little as in the world of finance. Past experience, to the extent
that it is part of memory at all, is dismissed as the primitive refuge of those
who do not have the insight to appreciate the incredible wonders of the
present.
John
Kenneth Galbraith.
In the US stock casinos, it’s bubble on like there’s no tomorrow. Of course there is a tomorrow and in the real world economy, where most people work for a living, that tomorrow is looking pretty bleak, if not outright recessionary.
But on Wall Street the Great Disconnect
Bubbles on. After all, when the next Giant Crash happens, as it will, The Fed
and Bidenomics will bail everyone out, right?
Dow closes above
38,000 for first time and S&P 500 scores back-to-back records
U.S. stocks closed
higher on Monday, with the Dow Jones Industrial Average finishing above the
38,000 milestone for the first time in history as fourth-quarter earnings
season ramps up.
What happened
· The
Dow Jones Industrial Average DJIA went
up 138.01 points or 0.4% to end at 38,001.81, its third record close this year,
according to Dow Jones Market Data. It is also the first time the index has
closed above 38,000 in history.
· The
S&P 500 SPX rose
10.62 points or 0.2% to finish at 4,850.43, its second record close in 2024.
· The
Nasdaq Composite COMP advanced
49.32 points or 0.3% to end at 15,360.29, its highest finish since Jan. 4,
2022.
What drove markets
Including Monday, it has been 25
trading days since the last 1,000-point milestone for the Dow, which is the
shortest time between milestones since the period between 33,000 and 34,000,
according to Dow Jones Market Data. Of course, such milestones are less
impressive on a percentage basis the higher the blue-chip index rises, with the
move from 37,000 to 38,000 representing a 2.7% rise.
Even with both the Dow and the S&P 500 logging new
all-time highs, stocks may still have more room to rise for the rest of the
year, according to Anthony Saglimbene, chief market strategist at Ameriprise
Financial.
“I think the outlook for this year was still pretty
positive, particularly if earnings can grow on a year-over-year basis,”
Saglimbene said in a phone interview.
“If we can get through the earnings season and outlooks
can be fairly positive, I do think stock prices will rise higher. And I do
think there’s opportunity outside of big tech for some of last year’s laggards
to start to participate,” he added.
Some other investors are more skeptical, questioning the
rally’s staying power given stretched valuations.
“With forward
multiples already at historic peaks and earnings forecasts for 12 months
forward ambitious, equity-market gains may stall in 2024, as better earnings
are met with lower valuation multiples characteristic of a midcycle or
soft-landing environment,” Lisa Shalett, chief investment officer at Morgan
Stanley Wealth Management, said in a note.
While 2023 S&P
500 index earnings are currently forecast to land at $219-$221, the 2024
consensus is running at $242-$244. Morgan Stanley’s estimates are slightly
below that, Shalett said.
“To push the index
through 5,000, investors will need to confidently price upside to $250 by
midyear. This is a potential stretch, given the level of uncertainty we
expect,” she wrote.
More
Dow
closes above 38,000 for first time and S&P 500 scores back-to-back records
- MarketWatch
Hong Kong stocks jump 3% after report on
more China stimulus; Bank of Japan keeps policy unchanged
UPDATED TUE, JAN 23 2024 12:13 AM EST
Hong Kong
stocks rebounded Tuesday after two straight days of declines, while Japan’s Nikkei 225 index
rose as the Bank of Japan kept its monetary policy unchanged in its first
monetary policy meeting of the year.
Hong Kong’s Hang Seng index jumped
as much as 3%, before paring gains to about 2.5%, with tech stocks leading the
charge. This comes after a Bloomberg reported that Chinese authorities are
considering a package of measures worth 2
trillion yuan ($278.53 billion) to stabilize its stock markets.
Mainland China’s CSI 300 was
trading 0.2% lower.
Videogame stocks in Hong Kong
rose after China’s gaming authority removed draft rules from its website.
The measures proposed last month would have restricted spending and rewards for
playing video games. The regulator’s website, however, was unavailable as of
Tuesday.
The Nikkei 225 rose
0.31% to hit a fresh 33-year peak. The Topix added 0.18%. The Nikkei will hit
an all-time high if it breaches the 38,915.871 hit on Dec. 29, 1989.
In Australia, the S&P/ASX 200 is
on pace for a third straight day of gains, rising 0.53%.
South Korea’s Kospi added
0.24%, while the small-cap Kosdaq index fell 0.6%.
Asia markets live
updates: BOJ meeting; Nikkei at 33-year highs; Hong Kong rebounds (cnbc.com)
European markets head for flat open, losing
positivity seen at the start of the week
UPDATED TUE, JAN 23 2024 12:29 AM EST
European markets are heading for a flat open
Tuesday, losing an air of positivity seen in the previous trading session.
In Asia-Pacific markets,
Hong Kong stocks rebounded Tuesday after two straight days of declines, while
Japan’s Nikkei 225 index
rose as the Bank of Japan kept its monetary policy unchanged in its first
monetary policy meeting of the year.
U.S.
stock futures were little changed Tuesday morning after the Dow
Jones Industrial Average surpassed 38,000 for the first time ever.
European
markets live updates: stocks, news, data and earnings (cnbc.com)
In other news, the Gaza war’s Red Sea
extension is generating big problems in Germany.
German chemicals
sector shows strain of Red Sea supply crisis
By Christoph
Steitz and Patricia Weiss January 22, 2024 12:15 PM GMT
FRANKFURT, Jan 22 (Reuters)
- Germany's chemicals sector, Europe's largest, is starting to feel the pinch
from delayed shipments via the Red Sea, becoming the latest industry to warn of
supply disruptions that have forced some companies to curb production.
Crucial Asian imports to
Europe ranging from car parts and engineering equipment to chemicals and toys
are currently taking longer to arrive as container shippers have
diverted vessels around Africa and away from the Red Sea and Suez Canal,
following attacks by Yemen's Houthis.
While German industry has
got used to supply disruptions in the wake of the pandemic and Ukraine war, the
impact of reduced traffic via the trade artery is starting to show, with
Tesla's (TSLA.O), opens new tab Berlin factory
the most prominent victim
so far.
Germany's chemicals sector, the country's third-biggest industry
after cars and engineering with annual sales of around 260 billion euros ($282
billion), relies on Asia for around a third of its imports from outside Europe.
"My procurement department is currently
working three times as hard to get something," said Martina Nighswonger,
CEO and owner of Gechem GmbH & Co KG, which mixes and bottles chemicals for
big industrial clients.
As a result of the delays, Gechem, which makes
annual sales in the double-digit millions of euros, has lowered production of
dishwasher and toilet tablets because it can't get enough trisodium citrate as
well as sulfamic and citric acid
The company is therefore
reviewing its three-shift system, Nighswonger said, adding the ripple effects
from the transport squeeze could remain a problem for the first half of 2024 at
least.
This is causing frank discussions with customers, Nighswonger
added.
"If we get three truck loads instead of six, each customer
only gets part of their order quantity, but at least everybody gets
something," she said.
Bigger speciality chemicals maker Evonik (EVKn.DE), opens new tab also said it was being
hit by "short notice routing changes and delays", adding some ships
had changed direction as many as three times within a few days.
The company said it was trying to mitigate the impact by
ordering earlier and switching to air freight, which is considered a stopgap
because some chemicals are not allowed to be transported by plane.
---- "The effects are
particularly noticeable in medium-sized fine and speciality chemicals
companies," VCI chief economist Henrik Meincke said, adding these
companies often source a sizeable proportion of their raw materials from Asia.
The Red Sea transport crisis comes as Germany's economy is
already under pressure due
to a recession, as well as high labour and energy costs. According to S&P
Global, Europe's chemicals sector, along with cars and retail, is seen as the
most vulnerable.
In addition to delayed imports, chemicals groups point to higher
fuel costs, as tankers transporting crucial raw materials take around 14 days
longer to arrive, adding these costs can only be partially passed on to
customers.
More
German chemicals sector shows strain of Red Sea supply
crisis | Reuters
Finally, China. Nothing good.
‘It’s really bad’: China strategist warns
of deflation and rock-bottom consumer confidence
Deflation may soon start biting into Chinese
growth, as Beijing looks at another three to six months of a “very painful
economy,” according to one analyst who covers the country.
“This is something investors need
to be cautious of. The economy here is bad, it’s pretty ... it’s really bad.
I’ve been in China for 27 years, and this is probably the lowest confidence
I’ve ever seen,” Shaun Rein, founder of the China Market Research Group, told
CNBC’s “Squawk Box Europe” on Monday.
“So deflation is starting to wield its ugly head. Consumers are waiting
for discounts. They’re very nervous.”
Linked to a decline in the prices
of goods and services, deflation is generally associated with an economic
slowdown — raising questions over the growth outlook for China, whose
post-Covid-19 recovery has already fallen short of some expectations in 2023.
In December, depressed prices for pork — which makes up around a fifth of
China’s CPI basket — heralded
the possible advent of deflation.
“Deflation is a serious issue, I
know the Chinese government doesn’t want me saying it, but it’s an issue that
we need to be worried about,” Rein stressed. “So I am kind of surprised that
they kept the prime rates unchanged. You know, it would have been nice if they
had lowered them to try to get some stimulus into the country.”
Earlier on Monday, the People’s
Bank of China held its one-year and five-year loan prime rates at 3.45% and
4.2%, respectively, in line with forecasts. These are the pegs for most
household and corporate loans in China and are one of many levers that the
PBOC usually pulls in an effort to stimulate the economy.
The decision comes amid infectious
expectations among investment banks that China’s economy will
expand at a more sluggish pace in 2024. Beijing has set an official growth
target of 5% this year, with Premier Li Qiang telling the World Economic Forum
in Davos, Switzerland, last week that the Chinese economy swelled by a marginally
higher 5.2% in 2023.
At the time, Li highlighted that China did not achieve its economic
development through “massive stimulus” and “did not seek short-term growth
while accumulating long-term risks.” “Rather, we focused on strengthening the
internal drivers,” Li said.
Despite this, the International
Monetary Fund in November outlined a
forecast for China’s growth to slow in 2024 to just 4.6%. In a more
recent Jan. 15 report, Moody’s
assessed that China’s real GDP growth would hit 4% this year
and in 2025, from an average of 6% between 2014 and 2023.
More
China
strategist warns of deflation and rock-bottom consumer confidence (cnbc.com)
China defies
sanctions to make Russia its biggest oil supplier in 2023
By Andrew Hayley January 22, 2024 1:22
AM GMT
BEIJING, Jan 20 (Reuters) - Russia leapfrogged
Saudi Arabia to become China's top crude oil supplier in 2023, data showed on
Saturday, as the world's biggest crude importer defied Western sanctions to
purchase vast quantities of discounted oil for its processing plants.
Russia shipped a record 107.02 million metric tons
of crude oil to China last year, equivalent to 2.14 million barrels per day
(bpd), the Chinese customs data showed, far more than other major oil exporters
such as Saudi Arabia and Iraq.
Imports from Saudi Arabia, previously China's
largest supplier, fell 1.8% to 85.96 million tons, as the Middle East oil giant
lost market share to cheaper Russian crude.
Shunned by many international buyers following
Western sanctions over the Kremlin's 2022 invasion of Ukraine, Russian crude
oil traded at significant discounts to international benchmarks for much of
last year amid a Western-imposed price cap.
Accelerating demand from Chinese and Indian refiners for the
discounted oil boosted the price of Russian ESPO crude through 2023, pushing past the
Group of Seven's $60 a barrel price cap imposed in December 2022 as alternative
shipping and insurance options to circumvent the sanctions proliferated.
---- At the same time, Saudi
Arabia raised prices for its signature Arab Light from July, pushing some
refiners to look for cheaper cargoes.
To support prices, Saudi Arabia and Russia, two of the world's
top three oil producers, announced output and export cuts last year. Saudi
Arabia is rolling over output
cuts of 1 million bpd this quarter, while Russia said it would deepen its cut
in exports this year to 500,000 bpd from 300,000 bpd.
Chinese refiners use intermediary traders to handle the shipping
and insurance of Russian crude to avoid violating the Western sanctions.
Buyers also use the waters off Malaysia as a trans-shipment
point for sanctioned cargoes from Iran and Venezuela. Imports tagged as
originating from Malaysia climbed 53.7% last year.
China reported no official shipments of Venezuelan crude in
December despite an easing of U.S. sanctions on Caracas in October following
a deal between
President Nicolas Maduro's administration and its political opposition.
More
China defies sanctions to make Russia its biggest oil
supplier in 2023 | Reuters
Moody’s is negative on Asia’s sovereign
creditworthiness in 2024 as China growth slows
PUBLISHED MON, JAN 22 2024 12:58
AM EST
Moody’s Investors Service has a negative outlook
for sovereign creditworthiness in Asia-Pacific this year, due to China’s slower
economic growth as well as tight funding and geopolitical risks.
China’s rebound from the Covid-19 pandemic wasn’t
as fast as several economists had expected at the start of 2023. The country’s GDP for the last three months of 2023 rose by 5.2%, according to the National Bureau of
Statistics, missing estimates of 5.3% in a Reuters poll.
In a Jan. 15 report, Moody’s predicted China’s
real GDP growth would slow to 4% this year and next, from an average of 6%
between 2014 and 2023. The credit rating agency said the slowdown in China’s
growth “significantly influences” APAC economies because of its strong
integration in global supply chains.
Goldman Sachs and Morgan Stanley, among other
major international investment banks, predict China’s economy to grow at a slower pace of 4.6% in 2024, down from 5.2% expected for 2023.
Tight funding
On top of the “lackluster situation in China,”
tight funding conditions will also weigh on Asia-Pacific sovereigns, Christian
De Guzman, senior vice president at Moody’s Investors Service, told CNBC.
“This is also predicated on global liquidity conditions where we
really don’t see the Fed easing until the middle of the year,” Guzman said on
CNBC’s “Squawk Box Asia” on Monday.
More
Moody's is negative on Asia's sovereign
creditworthiness (cnbc.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.
House prices and economy to get boost from easing inflation
January 22, 2024
Victory in the fight over inflation will
boost economic growth and house prices this year, according to the EY Item
Club, leaving families feeling better off.
UK GDP will grow by 0.9pc in
2024, the economic forecaster predicted, faster than the 0.7pc growth it had
previously anticipated.
The housing market should
stay roughly stable across the year, the EY Item Club predicted, which
represents an upgrade from its previous prediction that prices would drop 4pc
this year.
The City
forecaster upgraded its outlook after recent falls in inflation. Though the
headline rate rose for the first time in ten months in December, EY Item Club
said inflation is still set to drop to the Bank of England’s 2pc target by May.
This will allow officials to cut interest rates from their current level of
5.25pc to 4pc by the end of the year.
Lower borrowing costs will
boost the economy and inject more life into the housing market. It means the
period of stagnation that followed the pandemic and the cost of living crisis should
soon be at an end, said Martin Beck, chief economic adviser to the Item Club.
Economic recovery this year
will be driven by “real wage growth, interest rates coming down, the boost that
will deliver to confidence and sentiment, energy bills dropping 15pc in April,
and tax cuts – the ones we have already had and probably more at the Budget in
March,” he said.
Consumer spending should rise 0.9pc
across the year, more than the 0.7pc previously predicted.
The end of the energy price shock
will be particularly significant.
Mr Beck said: “The fall in energy
bills in April is looking even bigger than people thought – wholesale gas
prices are really dropping, they are lower than they were just before Ukraine
got invaded. That will filter through the wider economy.”
More
House prices and economy to get boost from easing
inflation (msn.com)
Bank credit is shrinking for the first time since the
Great Recession – and that's a red flag for the economy
January
20, 2024
A key gauge
of economic health in the US has sunk into negative territory, adding credence
to some of Wall Street's more pessimistic growth predictions.
Bank credit levels have now
fallen for three quarters in a row, according to the
Board of Governors of the Federal Reserve System – the first sustained contraction since 2010.
This is
only the second such decline in more than half a century. The last one was
during the Great Recession, brought about by the global financial crisis of
2008-2009.
The extended slump in bank
lending comes as many Wall Street experts continue to project a pessimistic
outlook for the economy, despite the surprisingly upbeat trend seen in 2023.
High-profile investor Jeffrey Gundlach sees a 75% chance of recession this year, while private-equity billionaire Henry Kravis has warned of heightened economic uncertainty.
Economists David Rosenberg
and Steve Hanke also expect a sharp downturn,
while market guru Gary Shilling has suggested a US recession may already be underway.
"Bank credit is
contracting for only the 2nd time in 50 years," Tilo Marotz, head of
liquid assets at German insurer Continentale Versicherungsverbund, pointed out in a LinkedIn post this week.
The credit contraction means
that companies are borrowing less, with higher interest rates making it more
expensive to take out loans. When it's harder to raise debt, businesses are
less likely to press ahead with spending projects, which can further drag on
economic growth.
More
Covid-19 Corner
This section will continue until it becomes unneeded.
Scientists discover key brain cells affected by COVID-19
January 22, 2024
By Dr.
Priyom Bose, Ph.D.
Several
studies have shown that severe acute respiratory syndrome coronavirus-2
(SARS-CoV-2), the causal agent of the coronavirus disease 2019 (COVID-19)
pandemic, affects multiple systems.
A
recent Cell Stem Cell study investigated
whether SARS-CoV-2 infection leads to dopaminergic neuron senescence.
Individuals
with SARS-CoV-2 infection commonly develop various neurological conditions such
as headaches, anosmia and dysgeusia.
Other abnormal
neurological symptoms found in these patients are seizures, acute inflammatory
polyradiculoneuropathy (Guillain-Barre syndrome) and stroke. Patients with
SARS-CoV-2 infection are also at a higher risk of developing psychiatric
disorders.
Human
pluripotent stem cells (hPSCs)-derived organoid models have revealed that
choroid plexus cells of the central nervous system (CNS) are highly susceptible
to SARS-CoV-2 infection. Despite this information, the tropism of SARS-CoV-2
for neurons has not been confirmed.
The
hPSCs-derived organoid/cell-based platform was previously utilized to study the
tropism of SARS-CoV-2. This platform revealed the association of hPSC-derived
midbrain dopamine (DA) neurons (primary neurodegeneration targets in
Parkinson’s disease [PD]) with SARS-CoV-2 infection.
A similar
experimental protocol indicated that hPSC-derived cortical neurons were not
permissive to SARS-CoV-2 infection. This finding suggested that all neurons are
not unilaterally permissive to SARS-CoV-2 infection.
The current
study investigated the DA neurons’ response to COVID-19. The molecular changes
triggered by SARS-CoV-2 infection were also assessed.
DA neurons
were differentiated from hPSCs using a previously published protocol. After
studying NURR1-GFP+ cells at day 25 of the differentiation, it
was confirmed that SARS-CoV-2 can infect DA neurons.
----- Taken together, this
study indicates that SARS-CoV-2 infection activates cellular senescence in DA
neurons, which could contribute to PD pathogenesis. Since lethargy and
anhedonia are two symptoms linked with long COVID, more research is required to
understand whether they are linked with DA neuron dysfunction due to SARS-CoV-2
infection.
More
Scientists discover key brain cells affected by COVID-19 (msn.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.
First
ever space-to-Earth solar power mission succeeds
January 18, 2024
A landmark test of beaming solar power to Earth from a satellite has concluded successfully after a year-long
mission.
The Space Solar
Power Demonstrator (SSPD-1) project
launched on 3 January last year with the goal of demonstrating the feasibility
of one day harvesting the Sun’s energy and transmitting it wirelessly back to
Earth on a commercial scale.
Led by scientists at the
California Institute of Technology (Caltech) in the US, the
mission completed all three of its primary experiments to test key technology
for such an endeavour. They included a new origami-inspired solar panel
structure, different cell designs, and a microwave transmitter.
Caltech
said the success of the mission would “help chart the future of space solar
power”, though warned that a lot more research needs to be done before it
becomes a reality.
“Solar power beamed from
space at commercial rates, lighting the globe, is still a future prospect,”
said Caltech president and professor of physics Thomas Rosenbaum. “But this
critical mission demonstrated that it should be an achievable future.”
Space-based solar arrays that
beam massive amounts of clean and renewable energy to Earth via microwaves were
first conceived more than 50 years ago, with scientists noting that such setups
are not limited by cloud cover or the Sun’s cycle.
Last year, Japanese space
agency JAXA announced that it planned to set up a commercial-scale solar farm in space by 2025, while the European Space Agency (ESA) is also
aiming to set up a development project through its Solaris programme.
JAXA first succeeded in
beaming solar power via microwaves in 2015, transmitting 1.8 kilowatts of power
to a receiver 55 metres away – roughly the same amount of electricity as it
takes to boil a kettle.
The latest experiments saw the first
ever successful demonstration of collecting solar power from a photovoltaic
cell and beaming it back to Earth.
“The space test has demonstrated the
robustness of the basic concept, which has allowed us to achieve a successful
deployment in spite of two anomalies,” said Sergio Pellegrino, a professor of
aerospace and civil engineering at Caltech. “The troubleshooting process has
given us many new insights.”
There are several challenges
to overcome before the researchers believe it can be a commercially feasible
prospect, including reducing the cost of materials and making the panels
resistant to space radiation.
Last year, scientists at the
University of Pennsylvania discovered how to double toe efficiency of an ultra-lightweight solar cell that could be potentially used in space-based solar
farms.
Separately, researchers at
the University of Sydney in Australia invented a type of self-healing solar
panel that is able to recover 100 per cent of its original efficiency after being damaged by space radiation.
First ever space-to-Earth solar power mission succeeds (msn.com)
"Indeed the temporary
breaks in the market which preceded the crash were a serious trial for those
who had declined fantasy. Early in 1928, in June, in December, and in February
and March of 1929 it seemed that the end had come. On various of these occasions
the [New York] Times
happily reported the return to reality. And then the market took flight again.
Only a durable sense of doom could survive such discouragement. The time was
coming when the optimists would reap a rich harvest of discredit. But it has
long since been forgotten that for many months those who resisted reassurance
were similarly, if less permanently discredited.”
J. K. Galbraith. The Great Crash: 1929.
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