The Stocks Bubble’s Back! Bitcoin Mania Starts.

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The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.

Sir John Templeton.

In the stock casinos, the Great Stock Bubble is back. But for how long now that the U.S. Securities and Exchange Commission has just approved 11 Bitcoin ETFs?

Bitcoin Mania now comes next, sucking the gamblers cash out of stocks and bonds until like all manias, it ends in a spectacular crash.

That Bitcoin itself, is in my opinion a gigantic scam, counts for nothing. As the great economist J. K. Galbraith put it,

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.

Japan’s Nikkei breaches 35,000 mark; South Korea stocks rise after central bank decision

UPDATED THU, JAN 11 2024 12:19 AM EST

Japan led the advance in Asia markets, extending its record-breaking rally ahead of U.S. inflation data for December, while South Korea stocks clung on to gains after the Bank of Korea held interest rates.

Japan’s benchmark Nikkei 225 popped 1.92% to hold above the 35,000 mark for the first time since February 1990. The Topix also gained 1.81% to hit fresh 33-year highs.

South Korea’s Kospi inched up 0.17%, while the small cap Kosdaq rose 0.47%.

The Bank of Korea left its main lending rate unchanged at 3.50% for the eightth time in a row, in line with expectations of economists polled by Reuters.

Hong Kong’s Hang Seng index opened 0.46% higher, while China’s CSI 300 index rose 0.1%.

In Australia, the S&P/ASX 200 rose 0.5% to close at 7,506, rebounding from Wednesday’s losses.

Overnight in the U.S., all three major indexes gained, with traders awaiting the release of fresh U.S. inflation data and earnings.

Investors will also be looking out for the U.S. consumer price index report slated for release Thursday. Economists polled by Dow Jones expect the CPI to have risen 3.2% year over year in December. The producer price index reading is due on Friday.

The S&P 500 gained 0.57%, while the Dow Jones industrial Average added 0.45% Wednesday. The tech heavy Nasdaq Composite advanced 0.75% to settle at 14,969.65.

Asia markets today: Bank of Korea, Australia trade data, Japan Nikkei (cnbc.com)

European markets set to rebound at the open ahead of U.S. inflation data

UPDATED THU, JAN 11 2024 12:15 AM EST

European markets are set to rebound at the open Thursday after several days of trading in mixed territory.

All eyes are on the release of the latest U.S. consumer price index report Thursday, with economists polled by Dow Jones expecting prices to have risen 3.2% year over year in December.

Investors will look through the reports for clues on when the Federal Reserve will start cutting rates. Some of those expectations have been dialed back in recent days, although the odds hover at around 64%, according to CME Group’s FedWatch tool.

U.S. stock futures tied to the S&P 500 inched up Wednesday evening as Wall Street prepared for the latest inflation data and the start of the fourth-quarter earnings season.

Meanwhile, in Asia markets overnight, Japan’s benchmark Nikkei 225 led the advance, extending its record-breaking rally ahead of U.S. inflation data.

European markets live updates: stocks, news and U.S. inflation data, (cnbc.com)

S&P 500 futures tick higher as investors brace for December inflation report: Live updates

UPDATED THU, JAN 11 2024 12:34 AM EST

Futures tied to the S&P 500 inched up Thursday morning as Wall Street prepared for the latest inflation data and the start of the fourth-quarter earnings season.

S&P 500 futures added 0.16%, while Nasdaq 100 futures advanced 0.3%. Dow Jones Industrial Average futures gained 47 points, or 0.12%.

In after-hours action, KB Home shares lost 1%. The homebuilder posted fourth-quarter results, issuing full-year revenue guidance of $6.4 billion to $6.8 billion, while analysts polled by FactSet called for $6.62 billion.

Stocks are coming off a winning session, with all three major indexes rising. The S&P 500 added 0.57%, while the Nasdaq Composite gained 0.75%. The 30-stock Dow advanced 0.45%.

Investors are turning their attention toward December’s consumer price index report due Thursday morning. Economists polled by Dow Jones predict that the CPI rose 0.2% in December, or 3.2% on a year-over-year basis.

The inflation data will be a key catalyst for markets and could provide evidence as to whether the Federal Reserve’s tightening measures have done enough to tamp down prices. The results could also test the market’s expectations for six rate cuts in 2024, versus the central bank’s forecast for three cuts this year.

Elsewhere, the U.S. Securities and Exchange Commission on Wednesday approved rule changes, opening the door for bitcoin exchange-traded funds. The long-awaited move would expand investors’ access to the flagship crypto. Bitcoin ticked down after the news Wednesday evening, while ether climbed.

Investors are also eyeing the kickoff of the fourth-quarter earnings season, which will see banking behemoths Bank of America and JPMorgan Chase report results Friday.

Stock market today: Live updates (cnbc.com)

Spot ETFs offer an easier and cheaper way to invest in bitcoin

PUBLISHED WED, JAN 10 2024 5:18 PM EST

It’s cheaper than ever to buy bitcoin.

After 10 years of rejections, the U.S. Securities and Exchange Commission on Wednesday approved 11 applications for bitcoin exchange-traded funds submitted by some of the biggest asset managers in the world, including BlackRock and Fidelity. In many cases, investors will pay lower fees than they would if they bought the digital currency from a crypto exchange directly.

Instead of having to go to an asset exchange such as Kraken, Binance or Coinbase to purchase and hold a token like bitcoin, traders can now turn to a so-called spot bitcoin ETF for direct exposure to the digital asset market. An ETF allows investors to buy a product that tracks the price of bitcoin through the same mechanism they already use to buy stock and bond index funds. This also eliminates the burden of managing their holdings, which typically involves maintaining a cryptocurrency wallet and cold storage to safeguard that investment.

More than 52 million Americans own crypto today, but industry participants are hopeful that the slew of approvals will draw in new retail and institutional investors who have been waiting on the sidelines until traditional financial firms offered an alternative on-ramp to crypto.

“Imagine what will happen once ETFs are introduced and widely available,” Coinbase Chief Operating Officer Emilie Choi said on the company’s most recent earnings call in November. “RIAs, retirement funds, and other institutions that have been precluded from this asset class historically will gain access to crypto for the first time, and that’s very powerful.”

Prior to Wednesday’s approval, the $30 trillion advised wealth management industry in the U.S. had been mostly locked out from accessing the crypto asset class.

Traders are now flush with options for direct exposure to bitcoin, and institutional players are racing to get in the game. In the runup to the SEC’s ultimate decision to approve spot bitcoin ETF applications, many issuers began slashing fees, as recently highlighted by CNBC’s Bob Pisani. The fees are calculated as a percentage of the holdings.

More

Spot ETFs offer an easier and cheaper way to invest in bitcoin (cnbc.com)

Finally, back in the real world where people work for a living,  the beginning of the end for the EUSSR? GB left just in time.

German railways grind to near halt in three-day train drivers strike

By Stephane Nitschke and Andreas Kranz  January 10, 2024 10:30 AM GMT

COLOGNE, Germany, Jan 10 (Reuters) - Hundreds of thousands of people faced train cancellations across Germany from Wednesday, as a three-day nationwide rail strike added to travel chaos in Europe's largest economy, where farmers' protests have blocked highways and snarled traffic.

The strikes, called by the GDL train drivers' union from Wednesday to Friday evening, have forced national rail operator Deutsche Bahn to run only stripped-back emergency timetables.

One in five long-distance high-speed rail services were running and regional services have been "massively thinned out", a Deutsche Bahn spokesperson told reporters at Berlin's central station, empty of its usual crowds.

At Cologne railway station in western Germany, commuters wrapped up against freezing temperatures checked departure boards for timetable changes.

After Ulrich Linke's first train failed to show up, he said he would hang around to see if the next one appears. "I'll wait for three-quarters of an hour at minus seven degrees here in the main station," he told Reuters.

----The head of the German farmers' association DBV vowed to ramp up their protests on Wednesday, after convoys of tractors and trucks blocked roads across the country earlier this week.

 

The strikes and protests add to pressure on Chancellor Olaf Scholz's coalition government, which faces growing economic problems, including weak macroeconomic data, high interest rates and a budget mess.

The long-running row over train drivers' pay and working hours flared up again following a three-week truce over Christmas, and after an effort by Deutsche Bahn to block the latest strikes with a court injunction did not succeed.

 

The GDL is seeking a reduced working week for its shift workers, from 38 to 35 hours, on current wages. Deutsche Bahn has offered flexibility on working hours but refused to reduce them without a pay cut.

The train operator argues that the union's demands would lead to a 50% hike in staffing costs, partly because it would have to hire more workers as Germany faces a skilled labour shortage.

"We are prepared to make compromises and gradually reduce the weekly working hours so that the employer side also has the opportunity to train staff," GDL boss Claus Weselsky told the ZDF public broadcaster.

"If we get nothing by Friday, we'll take a break then enter the next round of industrial action," he added.

Cargo train drivers are also striking until Friday, leading to supply chain concerns, with almost one-fifth of German freight traffic transported via railway.

German railways grind to near halt in three-day train drivers strike | Reuters

German wholesalers sound alarm as sentiment 'on the floor'

January 10, 2024

BERLIN (Reuters) - German wholesalers expect their revenues to fall 2% in nominal terms this year, continuing a downward trajectory after a 3.75% decline last year, the BGA lobby group said on Wednesday, saying sentiment in Europe's biggest economy was "on the floor".

In real terms, the association of wholesalers and exporters expects a 1% decline for this year following a 4.25% contraction in 2023.

"The results of our current company survey are alarming. While other economies have already recovered, Germany is stuck in an economic dead end," Dirk Jandura, president of the BGA, said.

Its survey of members showed that sentiment had deteriorated by 8.2 points to 69.4 points in the last year, hit by geopolitics and the challenges of digitalisation and decarbonisation.

"Sentiment is on the floor, it is at one of the worst levels in the last 25 years and has returned to levels seen in the coronavirus pandemic. In addition, German government policies are placing a massive burden on companies," Jandura said.

The BGA criticised the government following a constitutional court ruling in November that forced Chancellor Olaf Scholz to rethink its entire budgetary framework and make unexpected cuts.

"Reliability and predictability are important factors for companies in deciding on a location. If this is no longer the case, the economy will come to a standstill," Jandura said.

Some 90% of the BGA's members want big changes including a reduction in bureaucracy and costs.

The BGA expects economic stagnation, chiming with estimates from the Bundesbank, which said last month the economy would barely grow this year due to weak demand from abroad, curbs made to subsidies for a green transition and high interest rates.

German wholesalers sound alarm as sentiment 'on the floor' (msn.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.

You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.

Peter Lynch.

Euro zone facing weak growth, possible recession, ECB's de Guindos says

January 10, 2024 9:05 AM GMT

FRANKFURT, Jan 10 (Reuters) - The euro zone may have been in recession last quarter and prospects remain weak, European Central Bank Vice President Luis de Guindos said on Wednesday, adding that the recent rapid slowdown in inflation is likely to take a pause now.

Euro zone growth has been hovering on either size of zero for most of 2023 and only a mild pick up is seen this year, helping to cool inflation, which has overshot the ECB's target for years and forced policymakers to raise interest rates to record highs last year.

"Soft indicators point to an economic contraction in December too, confirming the possibility of a technical recession in the second half of 2023 and weak prospects for the near term," de Guindos said in Madrid.

"Incoming data indicate that the future remains uncertain, and the prospects tilted to the downside," he said.

De Guindos said that economic weakness was broad-based, with construction and manufacturing hit particularly hard and services likely to follow in the coming months.

On policy, de Guindos offered no new message, merely repeating the ECB's guidance that a 4% deposit rate, maintained for a "sufficiently long duration", will help cut price growth back to the ECB's 2% target.

Investors see at least five rate cuts this year with the first move coming in March or April, a timeline several policymakers have called excessive given lingering price pressures.

Inflation fell rapidly through most of 2023 but jumped back to 2.9% last month, mostly on technical factors, and may hold around this level for some time.

"Positive energy base effects will kick in and energy-related compensatory measures are set to expire, leading to a transitory pick-up in inflation," de Guindos said.

ECB projections see inflation back at target only next year but a host of private forecasters disagree and think the ECB is underestimating disinflation much the same way it missed inflation on the way up.

Euro zone facing weak growth, possible recession, ECB's de Guindos says | Reuters

China's policy dilemma: is boosting credit deflationary?

By Kevin Yao  January 10, 2024 6:07 AM GMT

BEIJING, Jan 10 (Reuters) - China's central bank faces a major hurdle in quelling the threat of deflation: more credit is flowing to productive forces than into consumption, exposing structural flaws in the economy and reducing the effectiveness of its monetary policy tools.

The People's Bank of China (PBOC) is under pressure to cut interest rates as falling prices raise real borrowing costs for private businesses and households, curbing investment, hiring and consumer spending.

Deteriorating asset quality from the property crisis and local government debt woes is also pressuring central bankers to release liquidity into the banking system by cutting reserve requirements to fend off any risks of a funding crunch.

 

But both moves share a common problem: demand for credit in China mainly comes from the manufacturing and the infrastructure sectors, whose overcapacity issues are exacerbating deflationary forces in the economy.

 

Beijing has been redirecting money flows from its ailing property sector towards manufacturing in a bid to move its industries up the value chain. Infrastructure spending has been responsible for China's high investment rates for decades, diverting economic resources away from households.

 

"Much of the credit is going to the infrastructure sector and also into some of the excess capacity," said Hong Hao, chief economist at Grow Investment Group. "That way, it actually creates further deflationary pressures. That's the problem."

The PBOC "will continue to ease, but I think monetary policy at this juncture is less effective than it should be," he said.

Analysts say the PBOC's predicament increases the urgency for the government to speed up structural reforms to boost consumption, a long-standing deficit in policies it has vowed to address throughout 2023, but struggled to make significant progress on.

China's consumer prices fell by 0.5% year-on-year in November, the fastest in three years, while factory-gate prices tumbled by a whopping 3.0%, underscoring the weakness of both external and domestic demand relative to production capacity.

 

December inflation data is due on Friday, while the PBOC could decide its next move on its benchmark rate on Jan. 22.

A sustained period of falling prices may discourage further private sector investment and consumer spending, which in turn can hurt jobs and incomes and become a self-feeding mechanism that weighs on growth, as seen in Japan in the 1990s.

More

China's policy dilemma: is boosting credit deflationary? | Reuters

Covid-19 Corner

This section will continue until it becomes unneeded.

AI assist allows humble chest X-ray to diagnose COVID with 98% accuracy

By Paul McClure  January 08, 2024

Researchers have developed a deep learning-based AI algorithm that automatically analyzes chest X-rays to rapidly detect COVID-19 infection with more than 98% accuracy, distinguishing between normal X-rays and X-rays from people with pneumonia, which often presents with the same symptoms as COVID.

Real-time reverse transcription-polymerase chain reaction (RT-PCR) testing is the most widely used method of diagnosing COVID-19 infection. But there are issues with using real-time PCR testing: it’s costly, results can be slow, and it’s prone to producing false negatives. As an adjunct, CT scans of the chest and chest X-rays also play a role in the timely detection and management of contagious infections, especially when RT-PCR returns a negative result.

COVID-19 produces particular radiological ‘signatures’ in chest X-rays that radiologists use to diagnose infection with the virus. However, meticulously examining X-rays for signs of infection is time-consuming and, because it relies on the human eye, may not always be accurate. So, researchers at the University of Technology Sydney (UTS) enlisted the help of AI to streamline the diagnostic process.

“The most widely used COVID-19 test, real-time polymerase chain reaction (PCR), can be slow and costly and produces false negatives,” said Amir Gandomi, corresponding author of the study. “To confirm a diagnosis, radiologists need to manually examine CT scans or X-rays, which can be time-consuming and prone to error.”

The other complicating factor is that the symptoms of COVID-19 infection – fever, cough, difficulty breathing, sore throat – can be difficult to distinguish from other respiratory viral infections, such as flu or pneumonia.

In recent years, machine learning algorithms have gained popularity in medicine, assisting doctors in diagnosing Parkinson’s disease, detecting breast cancer, and predicting stroke and heart failure. Deep learning, a subfield of AI, is particularly well-suited to creating a model that can produce accurate results from input data without requiring manual feature extraction. In the current study, the researchers developed a deep-learning-based algorithm called a Custom Convolutional Neural Network (Custom-CNN), specifically designed for diagnosing COVID-19.

Two freely available chest X-ray datasets were used to test and train the AI model. The datasets comprised three categories of chest X-ray images: normal, coronavirus-positive, and viral pneumonia. To train the Custom-CNN model, 80% of the total images were used, while 20% were reserved for testing.

The objective of the study was to assess the model's effectiveness in examining various relationships, including coronavirus and viral pneumonia, normal and viral pneumonia, and coronavirus and normal, and the associations among the three classes of X-ray images. Results demonstrated that the Custom-CNN model achieved a classification accuracy of 98.19% in its classification of COVID, normal and pneumonia image samples. Comparing the model’s results to those obtained using other models, the Custom-CNN outperformed them all.

“Deep learning offers an end-to-end solution, eliminating the need to manually search for biomarkers,” Gandomi said. “The Custom-CNN model streamlines the detection process, providing a faster and more accurate diagnosis of COVID-19.”

The early diagnosis of COVID-19 infection can ensure that patients get the correct treatment, including antivirals, which work best if taken within five days of the onset of symptoms. It could also encourage them to isolate and protect others from getting infected.

“The new AI system could be particularly beneficial in countries experiencing high levels of COVID-19 where there is a shortage of radiologists,” said Gandomi. “Chest X-rays are portable, widely available and provide lower exposure to ionizing radiation than CT scans.”

The study was published in the journal Scientific Reports.

AI assist allows humble chest X-ray to diagnose COVID with 98% accuracy (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.

Scientists alter rice plant microbiome for better resistance to pathogens

By Ben Coxworth  January 05, 2024

The "microbiome" is the unique population of microorganisms found in and on every plant and animal. Scientists have now genetically altered that population in rice plants, making them more resistant to harmful bacteria. The technology could one day reduce the need for pesticides.

In the initial phase of the study, the researchers identified a gene in rice plants which is responsible for their production of lignin (a biopolymer that makes up plants' cell walls).

The scientists suspected that this gene also affects the makeup of rice plants' microbiome, so they deactivated the gene to see what would happen. Sure enough, populations of beneficial Pseudomonadales bacteria in the microbiome dropped when this was done.

Next, the researchers genetically altered the gene to make it overproduce a specific metabolite during the lignin-synthesis process. As was suspected would happen, Pseudomonadales populations climbed to higher than normal levels as a result.

When the altered plants were subsequently exposed to Xanthomonas oryzae – a harmful bacteria which causes a disease known as leaf blight – they were significantly more resistant to the pathogen than a control group of unmodified rice plants.

"This breakthrough could reduce reliance on pesticides, which are harmful to the environment. We’ve achieved this in rice crops, but the framework we’ve created could be applied to other plants and unlock other opportunities to improve their microbiome," said the University of Southampton's Assoc. Prof. Tomislav Cernava. "For example, microbes that increase nutrient provision to crops could reduce the need for synthetic fertilizers."

A paper on the study – which also involved scientists from China, Germany and Austria – was recently published in the journal Nature Communications.

Scientists alter rice plant microbiome for better resistance to pathogens (newatlas.com)

If there is one common theme to the vast range of the world’s financial crises, it is that excessive debt accumulation, whether by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.

Carmen Reinhart.