Baltic
Dry Index. 2284 -108 Brent Crude 86.47
Spot
Gold 2208 US 2 Year Yield 4.59 -0.09
What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.
Adam Smith. An Inquiry into the Nature and
Causes of the Wealth of Nations, 1776.
The Chairman Powell led, US central bank, completely captivated by Wall Street’s sharks, makes frontrunning the Fed the easy money gift that never stops giving.
The Fed, as predicted, left its key interest rate unchanged, while the latest dot plot release suggests that the Fed will likely cut interest rates three times by a quarter point in the second half of 2024.
To the Fed it’s Biden Joe Biden or
Bust, apparently.
Now on to today’s Bank of England interest
rate decision.
South Korea,
Japan stocks gain over 2% after Fed maintains rate forecast; Nikkei hits
all-time high
UPDATED THU, MAR 21 2024 1:46 AM EDT
Japan
stocks hit a fresh all-time high on Thursday as Asia markets climbed after the
Federal Reserve maintained its forecast for three rate cuts this year, while holding
rates at 5.25%-5.5% in its latest meeting.
The outlook for three cuts came
from the Fed’s “dot plot,” a closely watched matrix of anonymous projections
from the 19 officials who comprise the Federal Open Market Committee. The
chart provides no indication for the timing of the moves.
The updated dot plot indicated
three cuts in 2025 as well – one fewer than the last time the grid was updated
in December.
South Korea’s Kospi climbed
more than 2.35% to lead gains in Asia, hitting its highest level since April
2022, while the small-cap Kosdaq was up 1.29%.
Japan’s Nikkei 225 surged
2.01%, scaling a new all-time high as did the Topix, up 1.61%.
Hong Kong’s Hang Seng index gained
1.74%, while mainland China’s CSI 300 bucked the wider trend to drop 0.17%.
In Australia, the S&P/ASX 200 advanced
1.16% to close at 7,784.9, after flash data from Judo Bank showed that the
country’s business activity expanded at a faster pace in March compared with
the prior month.
The country’s composite purchasing managers index stood at 52.4, up from 52.1
in February.
Overnight in the U.S., all three major indexes
rose, with the Dow Jones Industrial Average and the S&P500 closing at
record highs.
The Dow Jones Industrial Average rallied
1.03% to finish at 39,512.13, while the S&P 500 gained
0.89% to close at 5,224.62. rising above the 5,200 level for the first time.
The Nasdaq Composite jumped
1.25%, powered by megacap tech stocks.
Asia
markets live updates: Fed decision, Japan Tankan, Australia PMI (cnbc.com)
Fed meeting
recap: Everything Powell said during Wednesday’s market-moving news conference
UPDATED WED, MAR 20 2024 3:22 PM EDT
The
Federal Reserve held steady on interest rates at the conclusion of its March
meeting, and it’s sticking with its forecast for three interest rate cuts.
During a news conference Fed Chair Jerome Powell noted that a strong jobs
market wouldn’t deter the central bank from cutting rates.
The Fed chair is looking for confirmation of last year’s low
inflation readings
Federal Reserve
Chair Jerome Powell will continue to seek confirmation inflation is moving
closer to the central bank’s 2% target, even after a recent spate of hotter
inflation readings.
“The other thing
is, in the second half of the year, you had some pretty low readings, so it
might be harder to make that 12 month window forward,” Powell said.
“Nonetheless, we’re
looking for data that confirm the low readings that we had last year,” Powell
continued. “And give us a higher degree of confidence that what we saw was
really inflation moving sustainably down to 2%.”
— Sarah Min
Strong hiring wouldn’t push Fed to delay rate cuts, Powell says
Continued strength
in the labor market wouldn’t be a reason to hold off lowering interest rates,
said Federal Reserve Chair Jerome Powell.
“Strong hiring in
and of itself would not be a reason to hold off on rate cuts,” he said, adding
that the job market by itself is not cause for concern around inflation.
Earlier, Powell said “an unexpected weakening in the labor market could also
warrant a policy response.”
— Alex Harring
Higher inflationary data hasn’t changed its overall trend
downward, Powell says
Major inflationary
data points — the consumer price index and personal consumption expenditure —
rose for both January and February. Fed Chair Jerome Powell thinks this data is
just further proof of inflation’s nonlinear path downwards.
“I think they
haven’t really changed the overall story, which is that of inflation moving
down gradually on a sometimes bumpy road toward 2%,” he said during a press
conference on Wednesday afternoon. “We’re not going to overreact to these two
months of data, nor are we going to ignore them.”
— Lisa Kailai Han
Powell needs a ‘good reason not to cut rates,’ says Principal
Asset Management’s Seema Shah
In response to the
Federal Reserve’s decision to hold rates steady, Principal Asset Management’s
chief global strategist Seema Shah said, “Powell has perhaps shown his cards:
he needs a good reason not to cut rates, rather than a reason to cut rates. Markets
perhaps couldn’t have asked for more from the Fed and equities will celebrate.”
“The Fed really
really wants its soft-landing ending. Stronger growth, lower unemployment,
higher inflation–and yet still no change to the median dot,” Shah continued.
She emphasized that cutting rates before inflation is close to the Fed’s 2%
target, and while GDP growth is above trend, is a “risky path.”
— Pia Singh
Market strategist: ‘Investors are relieved to see three cuts
stay in the dot plot’
Federal Reserve
chair Jerome Powell and the central blank are not faltering as inflation proves
to be sticky, said David Russell, global head of market strategy at investing
platform TradeStation. And he said the continued expectation for three
interest rate cuts this year is also promising.
“We had some
inflation bumps this year but Jerome Powell’s not blinking,” Russell said.
“Investors are relieved to see three cuts stay in the dot plot, supporting
markets and risk appetite.”
“The Fed might wake
up with a hangover, but the punchbowl isn’t going away yet,” he
said.
— Alex Harring
Fed
meeting today: Live updates on March Fed rate decision (cnbc.com)
Gold Jumps Above $2,200 an
Ounce for First Time on Dovish Powell
Thu, March 21, 2024 at 4:07 AM GMT
(Bloomberg) -- Gold jumped above $2,200 an ounce for the first time after the Federal Reserve maintained its outlook for three rate cuts this year, suggesting it isn’t alarmed by a recent uptick in inflation.
Bullion rose as much as 1.6% to a record of $2,220.89 an ounce in early trading, before paring about half of those gains. It’s surged since mid-February, underpinned by long-standing supports including heightened geopolitical risks and buying by central banks, led by China. The rapid ascent has surprised many seasoned market observers, however, as there hasn’t been a clear catalyst.
The rally
has been partially driven by expectations for looser monetary policy in the US,
and that was reaffirmed by the Fed on Wednesday. Chair Jerome Powell continued
to highlight officials would like to see more evidence that prices are coming
down, but “it’s still likely in most people’s view that we will achieve that
confidence and there will be rate cuts,” he said.
“What we
saw last night was the green light really for gold traders to come back in,”
said Chris Weston, head of research for Pepperstone Group Ltd. “The Fed have
said that right now they’re tolerant of the inflation that we’ve seen, they’re
tolerant that the labor market strength is not going to be the impediment.”
Speculation
around the timing of the Fed’s long-anticipated pivot may have provided the
trigger for recent gains, with data showing that traders boosted their net long
positions on gold last week by the most since 2019. The metal stands to benefit
even more when US interest rates actually do come down, as bullion-backed
exchange traded funds look likely to increase their holdings, according to UBS
Group AG.
More
Gold
Jumps Above $2,200 an Ounce for First Time on Dovish Powell (yahoo.com)
In other news:
‘First Shoe’ Drops in Obscure Corner
of Real Estate Finance
March 19, 2024 at 10:55
PM GMT
There’s a new red light flashing when it
comes to commercial real estate. An obscure investment product used to finance
risky projects is facing unprecedented stress as borrowers struggle to repay
loans tied to commercial property ventures.
Known as commercial real estate collateralized
loan obligations (CRE CLO), they bundle debt that would usually be seen as too
speculative for conventional mortgage-backed securities. In just the last seven
months, the share of troubled assets held by these niche products surged four-fold—rising by
one measure to more than 7.4%.
For the hardest hit, delinquency rates are in the double digits. That’s left major players in the $80 billion market rushing to rework loans while short sellers ramp up attacks on publicly-traded issuers.
The pain of course is part of a broader, post-pandemic shakeout in the $20 trillion US commercial real estate market, which almost brought down New York Community Bancorp and has elicited warnings from Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell.
Yet industry
observers say few products are more exposed than CRE CLOs. “The CRE CLO market
is the first shoe to drop in terms of defaults in the CRE debt markets,”
said Mark Neely, director of alternative investments at money manager
GenTrust. “The loans inside CRE CLOs tend to be for transitional properties, so
the borrowers are counting on reselling them before the loan matures. But today
many borrowers can’t sell properties for anywhere near where they bought them.”
Bloomberg Evening Briefing: ‘First Shoe’ Drops on
Obscure Real Estate Instrument - Bloomberg
Fed's Powell says
balance sheet drawdown taper coming soon
By Michael S. Derby March 20, 2024 10:26 PM GMT
WASHINGTON, March 20 (Reuters) - The Federal
Reserve is nearing a decision on slowing the pace of its balance sheet run-off,
central bank Chair Jerome Powell said on Wednesday, a tapering move that may
allow it to shed more bonds than it once expected.
Powell's remarks, the most explicit so far about
plans to slow a process that has seen about $1.4 trillion of bonds roll off the
Fed's balance sheet, was seen by several Wall Street analysts as a signal that
a tapering plan will be unveiled as early as the Fed's next meeting on April
30-May 1.
"It will be appropriate
to slow the pace of run-off fairly soon," Powell said at a press
conference following a Federal Open Market Committee meeting. He did not offer a
specific time frame for the decision, saying only that officials are now
debating the issue.
Powell was addressing the central bank's ongoing efforts to reduce the size of its holdings,
commonly referred to as quantitative tightening, or QT.
Officials aggressively increased the central bank’s
balance sheet as part of the response to the coronavirus pandemic. Starting in
the spring of 2020, the Fed bought Treasury and mortgage bonds in great
numbers, first to stabilize financial markets and then to provide stimulus when
the Fed’s interest rate target was at near zero levels and could be cut no
further.
That quantitative easing, or QE, caused Fed
holdings to more than double, topping out at $9 trillion by the summer of 2022.
The Fed began to shrink the size of its holdings later that year, having
embarked in March 2022 on what would be a robust campaign of interest rate
increases aimed at bringing high levels of inflation back to its 2% target.
Since the fall of 2022 the Fed has been allowing up
to $60 billion per month in Treasuries and $35 billion per month in mortgage
bonds to expire and not be replaced.
The Fed is seeking to reduce the size of its
holdings in a way that will ensure the financial system has enough liquidity
for the Fed to retain firm control over the federal funds rate, its chief tool
to influence the economy’s momentum, and to allow for normal levels of
volatility in money market rates.
To achieve that, Fed
officials have been signaling for some time that they would first lay out a
plan to slow, or taper, the pace of QT given uncertainty over how far they’ll
need to shrink their overall holdings.
Officials are mindful of the events of September 2019, when a QT
effort then in play unexpectedly drew too much liquidity out of the financial
system, causing significant interest rate churn, requiring the Fed to add
liquidity back by once
again expanding its balance sheet.
More
Fed's Powell says balance sheet drawdown taper coming soon | 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.
Inflation
drops faster than expected ahead of Bank of England’s interest rate decision
WEDNESDAY 20 MARCH 2024 8:03
AM
Inflation fell faster
than expected last month, dropping to its lowest level in nearly two and a half
years, as markets brace for the latest interest rate decision from the Bank of
England.
Figures from the Office for National Statistics (ONS) showed that the headline rate of inflation dropped to 3.4 per cent in February, down from four per cent the month before.
Economists had expected a reading of 3.6 per cent.
“Food prices were the main driver of
the fall, with prices almost unchanged this year compared with a large rise
last year, while restaurant and café price rises also slowed,” Grant Fitzner,
chief economist at the ONS said.
Food and alcohol prices rose five per
cent in the year to February, the lowest increase since January 2022 and down
from a seven per cent increase in January.
Prices for restaurants and hotels
fell to six per cent, down from 7.1 per cent. This helped to offset increases
in petrol prices and rental costs.
There was good news across the board,
with disinflationary pressures looking broad-based. Core inflation – which
strips out volatile components such as food and energy – dropped to 4.5 per
cent from 5.1 per cent in January.
Services inflation, which the Bank
has identified as a key gauge of domestic inflationary pressures, fell to 6.1
per cent from 6.5 per cent in January. While this was a sharp fall, it was
largely expected by the Bank.
“This notable decline is further evidence that the UK is fast approaching the finish line in its battle against surging inflation,” Suren Thiru, Economics Director at ICAEW, said.
Chancellor Jeremy Hunt said: “The plan is working. Inflation
has not just fallen decisively but is forecast to hit the two per cent target
within months.”
The figures come just
a day before the Bank of England announces its latest decision on interest
rates.
Having peaked at over
11 per cent in October 2022, inflation has fallen much more rapidly than
economists expected as the impact of the energy price shock has receded.
Many economists think
inflation will return to two per cent in the spring thanks to a sharp fall in
Ofgem’s energy price cap. Despite this, the Bank is likely to leave rates on
hold when it meets
tomorrow.
Alongside progress on
inflation, policymakers are looking for further easing in wage pressures.
Rate-setters are concerned that stubborn wage growth, which remains at more
than twice the level consistent with the Bank’s two per cent inflation target,
could prevent inflation returning to target.
More
Inflation falls fast ahead of Bank of England's interest rate decision (cityam.com)
Covid-19
Corner
This section will continue until it becomes unneeded.
People with hypermobility may be
more prone to long Covid, study suggests
People
with excessive flexibility 30% more likely to say they had not fully recovered
from Covid, research finds
Tue 19 Mar 2024 22.30
GMT
People with excessively flexible joints may be at
heightened risk of long Covid and persistent fatigue, research suggests.
Hypermobility is where some or all of a person’s joints
have an unusually large range of movement due to differences in the structure
of their connective tissues that support, protect and give structure to organs,
joints and other tissues.
Up to 20% of adults are hypermobile and many of them are
completely healthy. Hypermobility can even be beneficial, with many musicians and athletes having very flexible joints. However, it can also create problems, such as an
increased propensity to pain, fatigue, joint injuries and stomach or digestive
problems.
Dr Jessica Eccles, of the University of Sussex, and her
colleagues had been investigating a potential link between hypermobility,
myalgic encephalomyelitis/chronic fatigue syndrome (ME/CFS) and fibromyalgia (a
condition that causes pain all over the body), when the Covid pandemic hit.
“We started thinking, if hypermobility is potentially a
factor in ME/CFS, is it also a factor in long Covid?” Eccles said.
She teamed up with researchers from King’s College London
and examined data from 3,064 participants in the Covid symptom study (now the
Zoe health study) to see if they had hypermobile joints, had fully recovered
from their last bout of Covid, and if they were experiencing persistent
fatigue.
The research, published in BMJ Public Health,
found that people with hypermobile joints were about 30% more likely to say
they hadn’t fully recovered from Covid-19 than those with normal joints, and
were significantly more likely to be affected by high levels of fatigue.
Although the study doesn’t prove that hypermobility
caused their illness, there is a plausible mechanism through which it could
contribute symptoms such as fatigue, brain fog and postural tachycardia syndrome (PoTS) – where people’s heart rates rapidly increase when
they stand up.
More
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.
The Dawn of a New Era in Tech: Georgia Tech’s
Pioneering Development of a Graphene Processor
March 19, 2024
The Georgia Institute of Technology researchers
have made a major breakthrough in semiconductor technology by developing the
first operational graphene-based chip. This achievement could potentially
transform the electronics industry by indicating a future beyond the silicon
era, which has been the foundation of all modern electronic devices.
The study, released on 3 January in
Nature and spearheaded by Walt de Heer, a physics professor at Georgia Tech,
centers on harnessing epitaxial graphene, a carbon crystal structure bonded to
silicon carbide (SiC).
This new semiconducting material,
known as semiconducting epitaxial graphene (SEC) or epigraphene, features
improved electron mobility compared to traditional silicon, enabling electrons
to move with much less resistance. This results in transistors that can
function at terahertz frequencies, providing speeds 10 times faster than those
of the silicon-based transistors found in current chips.
De Heer describes the method used as
a modified version of an extremely simple technique that has been known for
over 50 years. “When silicon carbide is heated to well over 1,000 °C, silicon
evaporates from the surface, leaving a carbon-rich surface which then forms
into graphene,” says de Heer.
“The chips we use cost about [US]
$10, the crucible about $1, and the quartz tube about $10,” said de Heer.
For decades, the challenge was how to
turn graphene on and off so it can function like silicon, the semiconductor
that currently powers all our electronic devices. By figuring out how to grow
graphene on silicon carbide wafers, the team developed what’s known as
epitaxial graphene, which possesses the long-sought band gap.
“There has been some success with
graphene nanoribbons, but in principle this technology is very similar to
semiconducting carbon-nanotube technology which has not been successful after
30 years of nanotube research,” says de Heer.
Another approach to creating a
bandgap in graphene involves introducing wrinkles into the material. Mechanical
deformations can result in the opening of a bandgap, with demonstrated bandgaps
of up to 0.2 electron volts. (For context, silicon has a bandgap of 1.12 eV,
which is considerably larger.) The limited bandgap raises questions about the
potential applications of these materials, and the lack of information on their
mobilities further complicates the situation.
“Our research is distinct from these
other approaches because we have produced large areas of semiconducting SEC on
defect-free, atomically flat SiC terraces,” says de Heer. “SiC is a highly
developed, readily available electronic material that is fully compatible with
conventional microelectronics processing methods.”
The significance of this achievement
is underscored by graphene’s superior electron mobility—10 times greater than
that of silicon. This could lead to smaller, faster, and more efficient
electronic devices.
More
Finally,
our latest new section, the world global debt clock. Nations debts to GDP
compared.
World Debt Clocks
(usdebtclock.org)
There is no art which government sooner learns of another than that of draining money from the pockets of the people.
Adam Smith. The Wealth of Nations, 1776.
No comments:
Post a Comment