Baltic
Dry Index. 2240 -44
Brent Crude 85.85
Spot Gold 2167 US 2 Year Yield 4.62 +0.03
We must not forget that … monetary policy all over the world has followed the advice of the stabilizers. It is high time that their influence, which has already done harm enough, should be overthrown.
Friedrich August von Hayek.
In the stock casinos, with month-end and end of quarter fast approaching this would normally be a week to dress up the stock casinos for those all important money manager bonuses.
But this week, with two unstoppable wars raging, a terrorist atrocity in Moscow last Friday and the week’s key US inflation number to be published on the Good Friday holiday, it might turn into a week to book some profits rather than going gang busters on new buying.
Not helping either, a new 1930’s international trade war seems to have broken out.
Adding to the US drama this week, the corrupt
effort to bankrupt Republican candidate Trump out of the presidential race
against President Biden Joe Biden.
All in all, not a good week to be playing Russian roulette.
Asia-Pacific
markets mixed as investors await inflation data from the region this week
UPDATED MON, MAR 25 2024 1:25 AM EDT
Asia-Pacific markets were mixed on Monday as
investors awaited a slew of inflation reports from the region.
Singapore and
Malaysia will release their February inflation reports on Monday, while
Australia’s inflation numbers will be out on Wednesday.
Tokyo’s inflation
numbers are due Friday. The capital’s inflation numbers are widely seen as a
leading indicator of nationwide trends in Japan.
Hong Kong’s Hang Seng index was
0.42% higher, while mainland China’s CSI 300 index reversed losses and climbed
0.4%.
Japan’s Nikkei 225 slipped
0.66%, retreating from its all time-high set on Friday, while the broad based
Topix saw a larger loss of 0.81%.
South Korea’s Kospi was
dipped 0.31%, after opening higher and coming close to hitting two-year highs.
The small cap Kosdaq gained 1.13%.
In Australia, the S&P/ASX 200 was
up 0.53% and closed at 7,811.9, rebounding from Friday’s losses and edging
close to record highs.
On Friday in the U.S., the Dow Jones Industrial Average retreated
by over 300 points, or 0.77%, after back to back sessions where the index set
all time records. The S&P 500 fell
0.14%.
However, the Nasdaq Composite continued
its rally, adding 0.16% to close at 16,428.82 for another record.
“It’s a digestion period after a
really strong week,” said Truist’s co-chief investment officer Keith Lerner of
Friday’s moves. “Our view is that the overall trend is still positive for the
market, especially when you see this breakout of new highs, on track for your
fifth consecutive month of gains.”
Asia markets live
updates: Singapore CPI, Malaysia CPI (cnbc.com)
Stock futures
slip ahead of shortened trading week: Live updates
UPDATED MON, MAR 25 2024 1:17 AM EDT
Stock
futures were slightly lower Monday morning ahead of March’s last—and
shortened—trading week.
Futures tied to the Dow Jones
Industrial Average edged
lower by 63 points, or 0.16%. S&P futures and Nasdaq 100 futures lost
nearly 0.1%.
The market is on track for its
fifth consecutive month of gains, with the major U.S. stock benchmarks crossing
new all-time closing high levels last week. The S&P 500 added roughly 2.3%
last week, while the Dow gained just under 2% for its best
week since December, nearing the 40,000 level. The Nasdaq Composite,
meanwhile, jumped about 2.9% during the period.
These gains were fueled by the
Federal Reserve’s latest remarks that maintained
central bankers’ rate-cutting timeline for this year, as well
as investors’ ongoing enthusiasm for tech stocks amid the AI-powered
rally. Overall investor sentiment remains above its historical average,
according to the latest weekly American Association of Individual Investors Sentiment Survey,
reflecting persistent market optimism. Still, some investors fear the potential
impact of an overextended rally and higher-for-longer interest rates.
“Examining Fed rate cycles since
the 1970s has revealed that, generally speaking, investors have more to fear
from the first rate cut in a cycle than the pause, the period in which the
central bank stops tightening and has yet to ease,” Strategas Securities
analyst Ryan Grabinksi wrote in a Friday note.
This week, investors will gain
further insight about the path of inflation from the February personal
consumption expenditures price index, the Fed’s preferred inflation gauge,
released Friday morning. The market’s reaction will be determined on the following
Monday given the Good Friday holiday.
Stock market today: Live updates (cnbc.com)
In other news, has a 1930’s style trade war
broken out? Will planet Earth get the
same result if it has?
China’s new
guidelines block Intel and AMD chips in government computers: FT
China has rolled out new guidelines that will
phase out U.S. processors in government computers and servers, effectively
blocking chips from Intel and AMD, the Financial Times reported on Sunday.
The procurement
guidelines, unveiled on Dec. 26, are now being enforced and will also impact Microsoft’s
Windows operating system and foreign-made database software as they favor
Chinese alternatives, the report said.
Government agencies higher the township level
have been ordered to purchase “safe and reliable” processors and operating
systems, FT said.
AMD and Intel
declined to comment on the report.
This comes as China
has been boosting its domestic semiconductor industry as it seeks to reduce
reliance on foreign technology.
Semiconductors –
critical components found in a wide range of devices from smartphones to
medical equipment – have been at the center of a technology war between the
U.S. and China.
U.S. has implemented export restrictions to cut
off Beijing from key semiconductor equipment and technologies.
In October 2022, Washington introduced rules aimed at restricting China’s
ability to access, obtain or manufacture advanced semiconductor chips amid
concerns that China could use them for military purposes.
The U.S. then rolled out new
regulations in October 2023 to prevent
U.S. chip design firm Nvidia from selling advanced AI chips to China.
Since 2019, Chinese tech companies
such as Huawei and China’s biggest chipmaker SMIC have been
slapped with sanctions by the U.S. aimed at restricting their access to
advanced technology. SMIC has also been unable to obtain extreme ultraviolet
lithography machines critical for the making of advanced chips from firm ASML
The U.S.-led tech embargo has
helped boost revenues at China’s domestic chip equipment manufacturing firms.
China’s top 10 equipment makers reported revenue rose 39% in the first half of
2023 as compared to a year ago, according to Shanghai-based CINNO Research.
China's
new guidelines block Intel, AMD chips in government computers: FT (cnbc.com)
Gucci’s
China shock reverberates across the luxury landscape
Fears
of a slowdown among Chinese shoppers have dogged the luxury industry for the
better part of a year. Last week the scale of the problem hit home for one of
fashion’s biggest but most exposed brands, Gucci.
Mar 24, 2024
French
group Kering SA
saw $9 billion wiped off its market value after warning that sales of the
Italian label’s products in China have slumped this quarter. The slowdown is
also starting to show up in other corners of the luxury industry.
A separate report showed Swiss watch exports to the country — a leading
destination for high-end timepieces — tumbled last month. Analysts, meanwhile,
are predicting China’s luxury demand will cool further this year.
The
spate of sobering news provides the latest evidence that an anticipated surge
in spending by well-heeled Chinese freed from the world’s strictest Covid
lockdowns is failing to materialize. While some luxury companies are managing
the fallout better than others, the rest could be forced to rethink how they do
business in China — starting with Kering.
“I haven’t bought any Gucci bags myself for years,” said Wu Xiaofang, a
34-year-old banker living in Shanghai who was once so enamored with the brand
she bought three bags during a trip to Italy in 2016. “The new designs are
bad.”
Wu is among
a generation of Chinese luxury shoppers that has grown more selective about
where to spend its cash. Rising unemployment and a property downturn have hurt
consumer confidence, while deflationary pressures are fueling concern about
growth in one of the world’s largest consumer markets.
The bar to entice Chinese shoppers has therefore
risen. Gucci has seen a significant drop in Chinese online sales in recent
months — including from its official website and e-commerce platform on Tmall, said a person familiar with the situation who
asked not to be identified discussing confidential matters.
----Kering
stunned investors with its March 19 announcement that Gucci sales have fallen
nearly 20% this quarter, led by the Asia-Pacific region. The share price fell
the most in three decades.
The group started taking action to boost its
struggling label two years ago when it named a new fashion head for Gucci in
China and Hong Kong. Gucci then parted ways with Michele and hired De Sarno, a
lesser-known designer from Valentino. Next, Kering replaced Marco
Bizzarri, who’d headed Gucci for about eight years, with
Jean-Francois Palus, a longtime lieutenant of Pinault.
More changes could be needed to reassure
investors.
More
Gucci’s China shock reverberates across the luxury landscape (fashionnetwork.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.
Singapore February
core inflation rises to 3.6% y/y, highest since July 2023
Reuters March 25, 2024 5:20 AM GMT
SINGAPORE, March 25 (Reuters) - Singapore's core inflation rose 3.6% in
February from a year earlier, official data showed on Monday, above estimates
and the highest since July 2023 amid a rise in the cost of healthcare and
recreation goods and services.
The core inflation rate, which excludes private road transport and
accommodation costs, was faster than the 3.4% forecast by a Reuters poll of
economists and the 3.1% seen in January.
The February figure was the highest since the 3.8% in July 2023
according to LSEG data.
Headline consumer prices in February were up 3.4% from the same month
last year, stronger than the 3.3% forecast in the poll and the 2.9% rise in
January.
"This was driven by higher services and food inflation, partly
reflecting seasonal effects associated with the Chinese New Year," the
Trade Ministry and Monetary Authority of Singapore (MAS) said in a statement on
Monday.
Core inflation is expected to resume a gradual moderating trend over the
rest of the year, it said, as import cost pressures continue to decline and
tightness in the domestic labour market eases.
They projected both headline and core inflation to average 2.5% to 3.5%
for 2024.
While inflation has slowed from its peak of 5.5% in January last year,
it remains sticky amid slowing economic growth and an increase in goods and
service tax by one-percentage point this year.
More
Singapore
February core inflation rises to 3.6% y/y, highest since July 2023 | Reuters
It’s time to
be honest about America’s commercial real estate hangover
The ‘pretend and
extend’ tactics playing out in the sector need to end
That doughty —
somewhat dull — Canadian insurance company known as Manulife does not often
attract attention. This week, however, it caused a frisson in the real estate
world.
Shortly before Jay
Powell, Federal Reserve chair, announced that the central bank was keeping
benchmark rates at 5.25 per cent to 5.5 per cent, Colin Simpson, Manulife’s
chief financial officer, revealed that the group had written down the value of
its US office investments by 40 per cent from a pre-Covid peak.
“I like to think
our property portfolio is of reasonably high quality and quite
resilient,” Simpson told Bloomberg. “But the structural forces of higher
interest rates and trends around return-to-office make it a difficult market.”
In plain English: working from home has hurt.
At first glance,
that looks scary; 40 per cent is a big number. But in reality investors should
celebrate. One bit of good(ish) news is that Manulife has relatively deep
pockets, and thus can absorb this blow. The second, more important, point is
that Manulife’s move shows that some players are finally getting more honest
about America’s commercial real estate pain.
This is welcome —
and belated. For as hopes of US rate cuts have intensified in recent months,
CRE has tumbled into a debilitating pattern of “extend and pretend”: lenders
have essentially rolled over troubled loans, hoping for a miraculous future Fed
rescue.
However,
Wednesday’s Fed meeting underscored a key point: Powell’s priority now is not
to protect CRE, but to keep inflation under control at a time when consumer
activity remains surprisingly lively and inflation is moving sideways around 3
per cent. Thus the trillion-dollar question is how many other players will now
follow Manulife’s lead — and finally address one of the biggest hangovers from
the past decade’s cheap money party?
The answer matters
because the financial system is currently beset by a tottering pile of cheap
CRE loans. Research from Newmark last year suggests over half of this emanated
from banks; regional banks were particularly frenetic lenders when the Fed made
money almost free during Covid-19.
However, funding
has also come from private lenders and the commercial mortgage-backed
securities sector, often bundled into collateralised loan obligations.
Since Covid,
however, CRE values have fallen by 33 per cent on average, and as much as 60
per cent in some places, primarily for office buildings, according to Goldman
Sachs. And while demand for high quality properties remains high, the outlook
for low quality buildings is grim.
Flashes of pain
are appearing in capital markets: this week it emerged that delinquencies were
surging on CLOs. Some banks are stressed too: the New York Community Bank was
recently forced into an emergency $1bn capital raise due to CRE losses, and
this week the Klaros Group warned that more than 250 small banks out of the
4,500 existing banks in the US were also vulnerable.
But what is
striking is not that some flashpoints have emerged, but how little pain has
been crystallised so far. That is partly because capital market lenders are
rolling over bad loans: Newmark recently told clients that “out of an estimated
$163bn in 2023 CMBS maturities (based on original maturity date), $83.3bn
remain outstanding” — ie borrowers have exercised “extension options”.
However banks are
displaying forbearance too: Goldman Sachs estimates that $270bn of
commercial mortgages which were supposed to mature in 2023 have been extended
into 2024. As a result, a record high pile of cheap loans are supposedly due to
mature this year. Newmark estimates that there is now around $1.3tn of troubled
CRE debt, of which $670bn matures in the next two years.
More
It’s time to be honest about America’s commercial real estate hangover (ft.com)
Covid-19
Corner
This section will continue until it becomes unneeded.
FDA
agrees to remove COVID-19 posts warning against ivermectin use
The
FDA has three weeks to remove the offending article and social media posts
across multiple platforms.
Published: March 22,
2024 9:28pm
The U.S. Food and Drug
Administration has agreed to remove social media posts and online materials
warning against the use of ivermectin as a treatment for COVID-19 after a trio
of doctors sued the agency in 2022.
The posts in question
included one stating "You are not a horse. You are not a cow. Seriously,
y’all. Stop it" and a link to an article advocating against ivermectin use
as a COVID-19 treatment, according to The
Texan. The FDA agreed to remove its
posts as part of an agreement with Dr. Mary Talley Bowden, who was one of
the original three plaintiffs.
The case was initially
dismissed, though the 5th Circuit Court of Appeals revived the case and sent it
back to the lower court, which found that only Bowden had standing. Bowden had
highlighted that the accompanying article, entitled "Why You Should Not
Use Ivermectin to Treat or Prevent COVID-19," did not clarify that doctors
had legal right to prescribe ivermectin even though the FDA advocated against
doing so.
"After nearly two years
and a resounding rebuke by the Fifth Circuit Court of Appeals, the FDA has
agreed to remove its misleading social media posts and consumer directives
regarding ivermectin and COVID-19," Bowden told The Texan.
The FDA has three weeks to remove the offending article and
social media posts across multiple platforms.
FDA agrees to remove COVID-19 posts warning against
ivermectin use | Just The News
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.
Revolutionary
All-Solid-State Battery Design Paves the Way for Safer, Longer-Lasting Energy
By
Breakthrough
in all-solid-state battery technology with a novel electrodeposition method
increases efficiency and lifespan.
A research team, consisting of Professor Soojin Park from the Department
of Chemistry, PhD candidate Sangyeop Lee from the Division of Advanced
Materials Science, and Dr. Sungjin Cho and Master’s student Hyunbeen Choi from
the Department of Chemistry at Pohang University of Science and Technology
(POSTECH), and Dr. Jin Hong Kim and Dr. Hongyeul Bae from the POSCO N.EX.T Hub,
has recently enhanced the performance and durability of all-solid-state
batteries successfully. This breakthrough was made possible through the
implementation of a novel approach known as bottom electrodeposition.[1] Their research has been published in the
international journal Small.
---Innovations in Anode Protection
To address this issue, the research team collaborated with
the POSCO N.EX.T Hub to develop an anode protection layer composed of a
functional binder (PVA-g-PAA)[2] for
all-solid-state batteries. This layer exhibits exceptional lithium transfer
properties, preventing random electrodeposition and promoting a process of
‘bottom electrodeposition.’ This ensures that lithium is uniformly deposited
from the bottom of the anode surface.
Using scanning electron microscope (SEM), the research team
conducted an analysis that confirmed the stable electrodeposition and
detachment[3] of lithium ions. This significantly reduced
unnecessary lithium consumption. All-solid-state batteries developed by the
team also demonstrated stable electrochemical performance over extended periods
even with lithium metal as thin as 10 micrometers (μm) or less.
Professor
Soojin Park who led the research expressed his commitment by saying, “We have
devised an enduring all-solid-state battery system through a novel
electrodeposition strategy.” He added, “With further research, we aim to
provide more effective ways to enhance battery life and increase energy
density.” Building on the collaborative findings, POSCO Holdings plans to move
towards the commercialization of lithium metal anodes, a core material for the
next generation of secondary batteries.
Finally,
our latest new section, the world global debt clock. Nations debts to GDP
compared.
World Debt
Clocks (usdebtclock.org)
The Nobel Prize confers on an individual an authority which in economics no man ought to possess.
Friedrich August von Hayek.
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