Baltic Dry Index. 1545 72 Brent Crude 82.19
Spot Gold 2024 U S 2 Year Yield 4.48 +0.02
You must always be prepared for
the unexpected, including sudden, sharp downward swings in markets and the
economy. Whatever adverse scenario you can contemplate, reality can be far
worse.
Seth Klarman.
This Special Update,
something a little different.
As promised during the
week, my case for the Great Stocks Crash of 2024.
First some qualifiers.
Though I could make a case for deflation in China and Germany likely to start
deflating the global economy and that spilling into recession in Asia and
Europe, in itself spilling into the USA, Canada and Mexico. There is little
need for me to get that complicated.
The disaster in the US
economy and the Great Disconnect between US stock casino fantasy and reality,
is a more direct route to why I think we get a stock casino crash later this
year.
I hope to be wrong, after
all this is a giant global government election year, with probably the most
important, the US presidential election, unfortunately timed for Guy Fawkes
night, November 5th. Good guy Guy, tried to blow up King James the I
and VI, and all of Parliament in 1605, but failed. At least the January 6th
rioters didn’t get that desperate.
I will try to keep this
simple and brief using my artificial intelligence, honed over the years since
November 26, 1949.
Simply put, I expect a
weaponised US fiat dollar debt crisis to hit this year.
The US stock casinos are
expecting the US central bank to cut interest rates this year by four to six
times at 25 basis points, each time. The
Fed Chairman Powell has said maybe only three rate cuts this year. Neel Kashkari, the president of the Federal Reserve Bank of
Minneapolis, said this week, perhaps by only two rate cuts in 2024.
Either will greatly disappoint the highly overpriced US stock
casinos. But it gets worse. Suppose there are no interest rate cuts outside of
a full-on US recession?
Suppose Fed Chairman Powell is forced to raise the Fed’s
interest rates, even in an election year?
Why could that happen?
Well Uncle Scam is a massive over indebted $34+ trillion in
existing debt, but US GDP is only officially $26.23 trillion. This gap gets
wider each year.
But the USA must sell another $1.4 to $1.7 trillion dollars
of new debt this year to cover its deficit. However, Uncle Scam racked up a new
$1 trillion of new debt merely between October and December! Hopefully, not a
precedent for the rest of 2024.
Unable to pay off existing debt, the USA must also rollover
some $8.9 trillion in expiring debt in the rest of 2024, most carrying an
interest rate of only 1 to 3 percent. The new debt will likely carry a new
interest rate of 3 to 5 percent, if not more, assuming willing buyers can be
found.
But President Biden Joe Biden has weaponised fiat
dollar debt, making many potential foreign buyers of that debt, (about 30
percent in 2023,) nervous and skittish about taking on weaponised US debt.
Domestic buyers will show up, of course, but at what cost?
Would they even tolerate a profligate USA starting to cut interest rates?
I could ramble off into US politics, where one of two dodgy
elderly white geezers seems likely to be the next US President for the next
four years. Not a great endorsement for taking trillions of new US debt by foreigners
holding existing US debt.
But it all gets much worse if a new US recession breaks out,
and very much worse if we start World War three, although worrying about stocks
will largely become moot for most.
If a new US recession hits, the US deficit will widen
substantially as tax receipts fall and subsidies to the unemployed rise. How
much would the US 2024 deficit widen? Probably by close to another trillion.
By now you get the picture, the US stock casinos, high on AI
hype and now relying on a reduced Magnificent 4 or 5, are recklessly detached from
a harsh reality.
But reality always trumps over fantasy in the end.
U.S. stocks have just accomplished something that hasn’t
happened since 1972
U.S. stocks have just
accomplished something that hasn’t been done since President Richard Nixon was
still occupying the White House.
The S&P 500 SPX has risen for the 14th week out of 15 on
Friday. According to Dow Jones Market Data, the last time the large-cap index
recorded a comparable stretch of weekly gains was March 10, 1972. This marks
the 13th time it has happened since the index’s inception in 1957.
However, investors
don’t need to look as far back to find a precedent for the magnitude of the
index’s rise over this period. The S&P 500 has risen 22.1% over the past 15
weeks as of Friday’s close, the largest 15-week advance since a 22.5% gain during
the period that ended Aug. 28, 2020, Dow Jones data show.
The index closed above
5,000 for the first time on Friday, its 10th record close of the year,
according to Dow Jones data.
To be sure, the S&P 500 isn’t
the only major U.S. equity index to score a historic winning streak on Friday.
The Nasdaq Composite COMP also climbed for the 14th week out of 15 as
well.
In the case of the
Nasdaq, investors don’t need to look quite as far back for precedent: the last
time the tech-heavy index landed a winning streak of this magnitude was a
15-week stretch that ended on Aug. 8, 1997.
For the Dow Jones Industrial
Average DJIA, which
barely managed to eke out a gain for the week on Friday, it marked the first
time this has happened since May 12, 1995. Winning streaks like this one have
only occurred 14 times since the index was created in the late 19th century.
For the Nasdaq, it was only the sixth time since
its inception that it reached such a milestone. One example was a 15-week
winning streak that ended on March 10, 1972.
U.S. stocks have seen a powerful rally since
hitting their most recent near-term bottom in late October, when the S&P
500 touched what was then its weakest level in five months.
The No. 1 factor that has driven markets higher
during this period has been the Federal Reserve pivoting away from hiking
interest rates, and toward holding them steady, or possibly cutting them later
this year, according to Chris Zaccarelli, chief investment officer at
Independent Advisors Alliance.
“The main reason the market has gone higher over
the past 15 weeks has been the Fed pivot, the idea that the Fed is done raising
interest rates to being on pause or cutting them. I think that’s a big catalyst
for the rally that we have seen,” Zaccarelli said.
More
U.S.
stocks have just accomplished something that hasn’t happened since 1972 -
MarketWatch
Global
Inflation/Stagflation/Recession Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians, inflation/recession now needs an entire
section of its own.
China's economic crisis takes huge
turn for the worse as inflation drops at fastest pace in 14 years
February
9, 2024
Consumer prices in China plummeted last month at the fastest pace since
the global financial crisis.
The Chinese government is facing growing pressure to support a crumbling
economy as experts warn that the consumer price index dropped 0.8 per cent in
January from a year ago.
On Thursday, the National Bureau of Statistics said the economy is the
weakest since September 2009.
It comes as calls mount for China to support an economic rebound.
The decline was worse than economists’ expectations for a 0.5 per cent
drop.
Despite China enforcing measures such as releasing long-term cash for
banks and issuing more government bonds to fund construction projects,
confidence in the world’s second-largest economy has flagged.
Last year the nation struggled with falling prices as China attempted to
revive domestic demand and consumer confidence.
Core CPI, which removes volatile food and energy costs, rose 0.4 per
cent, slower than December and the weakest rise since June last year.
Experts warn that the risk of deflation is a major concern.
If China is unable to turn the trend around, it risks a downward spiral
with people holding off on purchases due to expectations prices would continue
falling.
Economists suggest deflation could continue for at least another six
months.
Raymond Yeung, chief economist for Greater China at Australia & New
Zealand Banking Group Ltd said: "The prolonged property woes and stock
market volatility hurt household sentiment.
"Deflationary pressure remains strong," driven by a lack of
demand leading to overcapacity, he said.
Bank of England’s Mann warns of
’embedded’ inflation risk if demand picks up
THURSDAY 08 FEBRUARY 2024
4:04 PM
Improving prospects
for the UK economy could strengthen demand and risk “continued inflation
momentum”, a Bank of England rate-setter cautioned today.
Catherine Mann, one of
two members of the Bank’s Monetary Policy Committee (MPC) to back a further
interest rate hike last week, pointed to a number of recent pieces of evidence
on the UK economy which suggest demand could pick up in the coming months.
“Real household
incomes continue to rise as inflation falls, consumer confidence has improved,
indicators of services activity have come in strong, and forward-looking
measures of output and employment paint a positive picture,” she said in a
speech to the Official Monetary and Financial Institutions Forum (OMFIF).
Mann said these factors pointed to stronger demand over the coming
months. “Against a backdrop of sluggish supply growth and possible upside
shocks, I see risks of continued inflation momentum and embedded persistence,”
she warned.
She acknowledged that her decision to back a further hike was a “finely
balanced decision” given the progress on inflation in the final quarter of last
year.
Headline inflation has come down significantly from peaks of more than 11 per cent, currently standing at four per cent
The Bank’s own
forecasts suggest that inflation will touch
two per cent in the second quarter of the
year thanks to lower energy prices, although it will then pick up again
slightly.
Mann called attention
to the outsize influence of energy prices on the sharp fall in inflation.
“Stripping out the energy contribution to CPI inflation shows a much slower
deceleration,” she noted.
“Without energy
contributions, inflation in fact never reaches the two per cent target within
the next three years,” she continued.
Services inflation,
which is the strongest indicator of domestic inflationary pressures, is also
substantially higher than in the US or eurozone, Mann pointed out. In the UK it
is 3.3 percentage points above headline inflation, compared to 1.8 in the US and
0.7 in the eurozone.
Her comments come a
week after the Bank left interest rates on hold for the fourth
consecutive meeting last week, meaning the
Bank Rate remains at a post-financial crisis high of 5.25 per cent.
Although policymakers opened the door to cutting interest rates later this year, Andrew Bailey, governor of the Bank, said rate-setters needed “more evidence” that inflation would fall sustainably to target before rate cuts could begin.
Bank of England's Mann warns of 'embedded' inflation
risk (cityam.com)
This
section will continue until it becomes unneeded.
Why Do I Keep
Getting COVID-19 But Those Around Me Don’t?
February 8, 2024
COVID-19 doesn’t always affect people the same
way. If someone gets sick, for example, not everyone in that person’s close
social circle will get infected—even if they recently spent time together. But
why? In a paper
recently published in Nature Communications,
researchers delve into the different factors at play, from genetics to public
health interventions, all of which affect how a virus spreads from one person
to another.
They found that at the beginning of the pandemic, environmental factors
like social distancing, isolation, hand washing, mask wearing, and vaccination
played a bigger role in whether people got infected, while over time, genetic
factors have become more important. Now, genetics may account for anywhere from
30% to 70% of one’s chance of getting COVID-19, they concluded.
To reach that estimate, the researchers studied the health records from
more than 12,000 people (who came from about 5,600 families total) who tested
positive for COVID-19 at a large New York City hospital from Feb. 2020 to Oct.
2021. To capture the role that non-genetic factors, such as a person's
environment, play in their chance of getting infected with the virus or how
severely ill they got if they were infected, they also categorized each
person's potential exposure by weighing factors like who lived in their
household, contact with their extended family, and what kind of housing they
had.
More
Why Do I Keep Getting COVID-19 But Those Around Me
Don’t? (msn.com)
Technology Update.
With events happening fast in the
development of solar power and graphene, I’ve added this section.
Next this weekend’s better, if not
good news.
Self-extinguishing
lithium battery puts out its own fires
Loz Blain February 06, 2024
High-density lithium batteries hold vast amounts of energy – and
when they drop their guts, they can do so in absolutely spectacular destructive
fashion. So researchers have built fire extinguishing capabilities right into
the cells themselves.
The lithium
battery has been an enormous leap forward for mankind. Smartphones, multirotor
drones, long-distance electric cars, ebikes, all-day laptops, electric
monowheels and skateboards – we owe them all to lithium.
They don't go into thermal runaway and let go
often, particularly if they're well-built to tight standards and properly cared
for. But there are so many now in our homes and businesses, garages, backpacks
and vehicles – and so many cheap, non-standards-compliant cells out there
– that lithium battery fires are now a fact of life, with more than 200
incidents recorded in New York City alone in 2022. And you sure don't want to
be around when it happens.
"Fires" might not even be strong enough
language; even a small one can explode with enough force to blow the windows
out of a room. They can turn into molten-metal-spitting flamethrowers, setting
fire to nearby buildings and vehicles. They can be very difficult to suppress
once they get going. This video from the NYC Fire Department makes the case
fairly powerfully, complete with some sound advice – like for Pete's sake don't
charge an ebike in a hallway if it's the only way out of your home.
Handle high-density batteries
with care; enough said. But researchers from Clemson University and Hunan
University say they've made a breakthrough on a solution.
The team has created a new
type of rechargeable lithium battery by replacing the typical,
highly-combustible electrolyte fluid with ... well, more or less the stuff
you'd normally find in a fire extinguisher. Instead of using the normal,
flammable organic solvents for the battery electrolyte, the researchers used a
modified version of 3M's Novec
7300 non-flammable heat transfer
fluid.
"An electrolyte,"
writes one of the researchers in a piece for The Conversation,
"allows lithium ions that carry an electric charge to move across a
separator between the positive and negative terminals of a lithium-ion battery.
By modifying affordable commercial coolants to function as battery
electrolytes, we were able to produce a battery that puts out its own
fire."
The self-extinguishing
electrolyte performed well in both lithium and potassium-ion batteries,
refusing to catch fire even when nails were driven through them. The team
didn't supply video of these tests, but here's what it looks like when a
battery fails a nail penetration test. So just imagine the below video, except
that nothing happens.
The fire extinguisher solution performed well as an
electrolyte, too, working well between -100 to 175 °F (-75 to 80 °C), handling
extreme hot and cold significantly better than conventional electrolytes, and
in some cases retaining battery capacity over a considerably higher number of
charge cycles.
And the best news? It seems it should be remarkably
easy to roll out at commercial scale.
"Since our alternative electrolyte has similar
physical properties to currently used electrolytes," write the
researchers, "it can be readily integrated with current battery production
lines. If the industry embraces it, we expect that companies will be able to
manufacture nonflammable batteries using their existing lithium-ion battery
facilities."
Self-extinguishing lithium battery puts out its own
fires (newatlas.com)
This from Nixenepublishing.com in response to the above. They may have competition. My thanks to Adrian at the excellent Nixen Publishing.
GMC
and Rio Tinto launch joint battery development programme
Content summary:
• Graphene Manufacturing Group (GMG) is a graphene
applications company based in Australia
• They have had investment from shareholders and from
industrial partner Rio Tinto
• Refer to vol 7 iss 6 p.27 for details of the partnership
• The company has developed a graphene enhanced aluminium
ion battery • This has advantages over lithium-ion technology…
More
© Nixene Publishing Ltd 2023 | www.nixenepublishing.com |
Volume 7 issue 12
Nixene Journal
for Graphene News - Nixene Publishing
Below,
approx. 3 minutes.
Rio Tinto | Graphene
Manufacturing Group - partnering to develop graphene aluminium ion batteries
Below,
approx. 24 minutes.
Graphene Aluminum Ion
Battery w/ Craig Nicol | 1,000 Wh/kg?
Graphene
Aluminum Ion Battery w/ Craig Nicol | 1,000 Wh/kg? (youtube.com)
This weekend’s music diversion. The long forgotten London and Edinburgh based Franceso Barsanti. Approx. 8 minutes.
Franceso
Barsanti (1690-1772) - Concerto Grosso Op. 3 Nº 6
Franceso Barsanti (1690-1772) - Concerto Grosso Op. 3
Nº 6 (youtube.com)
Francesco Barsanti (1690–1775) was an Italian flautist, oboist and composer. He was born in 1690 in the
Tuscan city of Lucca, but spent most
of his life in London and Edinburgh.
Francesco
Barsanti - Wikipedia
This weekend’s chess
update. Approx. 12 minutes.
Power
Level Over 9000! || Levon vs Vincent || Chessable Masters (2024)
Power Level Over 9000! || Levon vs Vincent ||
Chessable Masters (2024) (youtube.com)
Finally, what’s gone
wrong at the Panama Canal. Plus, proposed alternate routes. Approx. 36 minutes.
Why
the Panama Canal is Dying
Why the Panama Canal is Dying (youtube.com)
Unprecedented
events occur with some regularity, so be prepared.
Seth Klarman.
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