Baltic
Dry Index. 1690 +103
Brent Crude 90.24
Spot
Gold 2383 US
2 Year Yield 4.97 -0.04
Markets can remain irrational longer than you can remain solvent.
John Maynard Keynes.
In the US stock casinos, more AI hype and
bubble inflation.
Asia markets
mixed ahead of China trade data; Singapore first-quarter GDP expands 2.7%
UPDATED FRI, APR 12 2024 9:59 PM EDT
Asia-Pacific markets were mixed Friday after an
inflation-fueled selloff in the previous session, with investor assessing
economic data from Singapore and South Korea while awaiting China trade
numbers.
China’s trade data for March will
be released later in the day, with exports forecast to fall 2.3% year on year
by economists polled by Reuters. This follows a weaker-than-expected rise in
the country’s inflation on Thursday.
Singapore’s first-quarter gross
domestic product climbed 2.7% year on year, advance estimates showed,
faster than the 2.2% growth recorded in the last quarter of 2023.
The city-state’s central bank
held its monetary policy steady, leaving the width and level of its policy band
unchanged. In contrast to other countries, Singapore uses exchange rate
settings for its monetary policy, instead of a benchmark interest rate.
South Korea’s March unemployment
rate rose to 2.8%. The country’s benchmark Kospi index was down 0.26%, but the
small-cap Kosdaq gained 0.82% after South Korea’s central bank kept policy
rates unchanged at 3.5%, a 15-year high.
Japan’s Nikkei 225 climbed
0.36%, while the broad-based Topix rose 0.48%.
In Australia, the S&P/ASX 200 slipped
0.30%.
Hong Kong’s Hang Seng index traded
0.67% lower in its first hour of trade. China’s CSI 300 inched up 0.28%.
Overnight in the U.S., tech shares pulled both
the S&P 500 and Nasdaq Composite into
positive territory, with both indexes gaining 0.74% and 1.68%, respectively.
On the other hand, the Dow Jones Industrial Average slipped
2.43 points, or 0.01%.
Nvidia jumped
4.1%, while Amazon added
1.7% to hit an all-time high in the session, and Alphabet gained
more than 2%.
Apple popped
4.3% after Bloomberg News reported that the company
would transition its Mac product line to artificial intelligence-focused chips.
The iPhone maker registered its best day since May 2023.
Asia
markets live updates: China trade, Singapore GDP Taylor Swift boost (cnbc.com)
Stock futures are
little changed as Wall Street awaits bank earnings: Live updates
UPDATED FRI, APR 12 2024 8:49 PM EDT
Stock
futures flickered near the flatline on Thursday night as traders looked ahead
to the release of corporate earnings from major U.S. banks.
Dow
Jones Industrial Average futures rose
by 18 points, or 0.05%. S&P 500
futures and Nasdaq 100 futures were
little changed.
The action follows a sharp
rebound for the S&P 500 and
the Nasdaq Composite as
tech shares led a comeback from Wednesday’s inflation-fueled sell-off. On
Thursday, Nasdaq gained 1.68% to close at a record, while the S&P 500 advanced
0.74%. The 30-stock Dow inched
lower by 0.01%, posting its fourth straight losing day.
Apple was
among the Magnificent Seven names rallying Thursday. The iPhone maker jumped
4.3% after Bloomberg News reported the company’s
plans to overhaul its Mac products with new artificial intelligence-focused
chips. Apple had its best day since May 2023.
AI darling Nvidia also
popped 4.1%, and Amazon leapt
to an all-time high before closing up 1.7%.
Going forward, the AI tail wind
will be key in determining which stocks lead the current bull run, said Thomas
Martin, senior portfolio manager at Globalt Investments.
“Today’s divergence between the
Nasdaq and the Dow is pretty telling … it is still a bifurcated market with
things being driven by AI.” he told CNBC. “That’s what you’re looking for going
forward, that’s what you have to have to be sustainable.”
Thursday’s tech-centric rally
curtailed the S&P 500′s weekly losses, as it’s now down 0.1% for the
period. The Nasdaq is on pace to close the week 1.2% higher. The Dow is the
underperformer, pacing for a 1.1% decline week to date.
The first-quarter earnings season kicks off in earnest Friday, with a slew of major U.S. financial institutions set to report earnings before the bell. These include JPMorgan Chase, Wells Fargo, Citigroup, BlackRock and State Street
Stock
market today: Live updates (cnbc.com)
What to expect from bank earnings as high
interest rates pressure smaller players
The benefits of scale will never be more obvious
than when banks begin reporting quarterly results on Friday.
Ever since the
chaos of last year’s regional banking
crisis that consumed three institutions, larger banks have
mostly fared better than smaller ones. That trend is set to continue,
especially as expectations for the magnitude of Federal Reserve interest rates
cuts have fallen sharply since
the start of the year.
The evolving picture on interest rates — dubbed
“higher for longer” as expectations for rate cuts this year shift from six
reductions to perhaps three – will boost revenue for big banks while squeezing
many smaller ones, adding to concerns for the group, according to analysts and
investors.
JPMorgan
Chase,
the nation’s largest lender, kicks off earnings for the industry on Friday,
followed by Bank of America and Goldman Sachs next
week. On Monday, M&T Bank posts
results, one of the first regional lenders to report this period.
The focus for all
of them will be how the shifting view on interest rates will impact funding
costs and holdings of commercial real estate loans.
“There’s a handful
of banks that have done a very good job managing the rate cycle, and there’s
been a lot of banks that have mismanaged it,” said Christopher McGratty, head of U.S. bank
research at KBW.
Pricing pressure
Take, for instance, Valley Bank,
a regional lender based in Wayne, New Jersey. Guidance the bank gave in January
included expectations for seven rate cuts this year, which would’ve allowed it
to pay lower rates to depositors.
Instead, the bank might be forced to slash its
outlook for net interest income as cuts don’t materialize, according to Morgan Stanley analyst
Manan Gosalia, who has the equivalent of a sell rating on the firm.
Net interest income
is the money generated by a bank’s loans and securities, minus what it pays for
deposits.
Smaller banks have
been forced to pay up for deposits more so than larger ones, which are
perceived to be safer, in the aftermath of the Silicon
Valley Bank failure last year. Rate cuts would’ve provided some
relief for smaller banks, while also helping commercial real estate borrowers
and their lenders.
Valley Bank faces
“more deposit pricing pressure than peers if rates stay higher for longer” and
has more commercial real estate exposure than other regionals, Gosalia said in
an April 4 note.
More
Bank
earnings: High interest rates set to pressure small players (cnbc.com)
Morning Bid: Fed
leads race to cut last
By Reuters April 12, 2024 5:51 AM GMT+1
A look at the day ahead in
European and global markets from Kevin Buckland
The question over which big central bank will be the last to cut
rates took a major twist this week following dovish signals from the ECB's
policy meeting and a U.S. CPI shock that's still
reverberating in markets.
The focus in Europe now falls on the UK, with the release of
monthly GDP for February for the latest clues on when the Bank of England will
move.
BoE policymaker Megan Greene pushed back against punters
betting the UK will cut before the Fed, arguing inflation in Britain was even
stickier than it was in the U.S.
Markets can look forward to potential policy hints from ECB
officials including Pablo Hernandez de Cos, Luis de Guindos and Frank Elderson
at various events over the course of the day, with the Fed's Jeffrey Schmid,
Raphael Bostic and Mary Daly also on speaking duty.
Currently, traders expect an
ECB cut in June, a BoE easing in August, and a Fed reduction in September. The
currency market reflects that shift, with the dollar sitting near multi-month
high to both the euro and sterling .
The yen , meanwhile, is clinging to the 34-year low against the
greenback from Thursday, prompting another round of intervention warnings from Japan's finance
minister.
More
Morning Bid: Fed leads race to cut last | Reuters
Finally, more EV distress.
Bumpy ride for electric
cars in Europe
Lillestrøm (Norway) (AFP) – Electric cars are a key part of Europe's green
transition plans but the road ahead remains littered with obstacles with 10
years to go before a crucial milestone.
Issued
on: 11/04/2024 - 07:29 Modified: 11/04/2024 - 07:27
Despite the
fact that the sale of new petrol and diesel cars will be banned in the European
Union as of 2035, sales of plug-in "zero emission" vehicles have
stalled in the region in recent months.
The market
share for electric cars has shrunk from 14.16 percent last year to 12 percent
or less since the start of this year, a drop attributed mainly to Germany's
decision to abruptly halt subsidies for electric car purchases on Europe's
biggest market at the end of 2023.
Sigrid de
Vries, director general of the European Automobile Manufacturers' Association
(ACEA), expressed "concern".
Fewer than 30
percent of Europeans say they plan to buy an electric vehicle (EV), according
to the ACEA, and more than half refuse to pay more than 35,000 euros ($37,750)
for a car, a price level offering few EVs.
The "2035
deadline... is really just around the corner, especially when you talk
production cycles," de Vries told an EV conference last week in
Lillestrom, Norway.
"We need
to go from 15 percent (zero-emission cars) to 100 percent in about just around
10 years," she said.
At the end of
2023, EVs passed the "tipping point" of five percent -- considered
the point of mass adoption -- in 31 countries around the world, according to
the Bloomberg news agency.
But only
two-thirds of the EU's 27 member states have surpassed this level.
Norway,
a non-EU member -- and also a major oil and gas producer -- is a leader in EV
adoption.
Led by
Tesla, electric vehicles accounted for 90 percent of new car registrations in
Norway in the first quarter thanks to generous tax incentives.
The
country aims to reach the 100 percent mark by 2025.
Carmakers
like Volkswagen and Volvo have already ended sales of their combustion models
in Norway.
Elsewhere,
the industry's electrification is largely sluggish.
Britain
has pushed back by five years its ban on the sale of new combustion cars, now
expected in 2035, and many see this target as unrealistic to reach in Europe.
But
Nissan, one of the first traditional carmakers to roll out a plug-in with its
Leaf model, says sales that yo-yo are not a concern.
"It
see-saws and it will always be like that," Guillaume Pelletreau, Nissan's
vice president of electrification and connected services, told AFP.
----
One of the main hurdles cited by industry experts is the difficulty to roll out
the necessary EV infrastructure quickly and broadly.
More than half
of the EU's charging stations are found in just two countries: Germany and the
Netherlands, according to the ACEA.
In Spain for
example, where people replace their cars only every 14 years on average, 65
percent of owners park them in the street, making charging a challenge, said
Isabel Gorgoso, head of "new mobility" at energy group Cepsa.
More
Bumpy ride for electric cars in Europe (france24.com)
Vietnam EV maker
VinFast's challenges escalate risk for parent Vingroup
By Francesco
Guarascio, Phuong Nguyen and Miyoung Kim
HANOI, April 12 (Reuters) -
As Vietnam's biggest conglomerate Vingroup (VIC.HM) doubles down on its
electric vehicle business with ambitious global expansion plans, it faces
growing financial risks stemming from loss-making unit VinFast Auto .
VinFast's rapid growth has hinged on sales to affiliated
companies that are set to continue this year, according to Reuters' analysis of
a recent securities filing and information provided by the firm, as it
struggles to attract retail buyers and faces weakening global EV demand.
The findings also underscore the risks for parent
Vingroup, as VinFast lost a combined $5.7 billion over the past three years.
Vingroup's share price has plunged 38% since VinFast's U.S. listing last
August, and its borrowing costs have increased.
VinFast received $11.4 billion of capital
injections from Vingroup, its affiliates and the group's billionaire founder
Pham Nhat Vuong between its inception in 2017 and Dec. 31, 2023, according to a
U.S. Securities and Exchange Commission filing in late March.
Vingroup last month
announced a $1.6 billion stake and asset sale in its retail unit Vincom Retail (VRE.HM, one of its key profit engines
alongside real estate subsidiary Vinhomes (VHM.HM, which remains profitable but
faces a challenging property market. Vingroup told Reuters a portion of the
proceeds would go to VinFast, which it said has higher growth potential.
But struggling to penetrate even its home market, VinFast last
year generated 82% of its $1.1 billion of vehicle sales from companies that are
part of Vingroup or owned by Vuong, who is also VinFast's CEO and effectively
controls nearly 98% of the Nasdaq-listed EV maker.
Nearly all of VinFast's retail sales in Vietnam
were also aided by hefty discounts offered through a joint marketing campaign
with Vinhomes, Reuters has found.
The extent of VinFast's reliance on Ving
More
Vietnam EV maker VinFast's challenges escalate risk for parent Vingroup | 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.
Credit-Card Delinquency Rates
Were Worst on Record in Fed Study
Wed, April 10, 2024 at 8:14 PM GMT+1
Bloomberg) -- US credit-card delinquency rates were the highest on record in the fourth quarter, according to a Federal Reserve Bank of Philadelphia report.
Almost 3.5% of card balances were at
least 30 days past due as of the end of December, the Philadelphia Fed said.
That’s the highest figure in the data series going back to 2012, and up by
about 30 basis points from the previous quarter. The share of debts that are 60
and 90 days late also climbed.
“Stress among cardholders was further
underscored in payment behavior, as the share of accounts making minimum
payments rose 34 basis points to a series high,” according to the report.
Nominal credit card balances set a
new series high and card utilization also rose, as consumers stretched credit
lines further. Inflation-adjusted credit card balances remained below
fourth-quarter 2019 levels.
The numbers signal added pressure on
US household finances amid higher costs of living. About 10% of credit-card
borrowers now have an account balance that exceeds $5,200, according to the
Philadelphia Fed. One-quarter of active accounts have a balance of over $2,000
for the first time.
But, underscoring the dichotomy among
consumers, about one-third of card holders pay their balance in full every
month.
The Philadelphia Fed found that
credit scores at the 10th and 25th percentiles of cardholders decreased to
their lowest levels since the first quarter of 2020, indicating further
performance deterioration could be on the horizon.
Issuers have responded by lowering
the credit limit for new accounts. The median account opened with a $3,000
limit in the fourth quarter, down from the $3,368 high in the second quarter.
The data series, which started in the
third quarter of 2012, covers loans by large lenders with at least $100 billion
of assets, representing roughly four-fifths of total bank card balances.
Credit-Card Delinquency Rates Were Worst on Record in Fed Study (yahoo.com)
Investors
pile into British debt as hopes of Fed rate cut wane
April
10, 2024
Investors are
racing to buy British debt as traders ramp up bets that the Bank of England
will start cutting interest rates before the US Federal Reserve. Official data
showed the US rose by more than expected in March in a blow to US rate cut
hopes.
Stock markets
fell and global borrowing costs jumped on the back of the figures as traders
reappraised their rate cut predictions.
Traders now
believe the Fed will only cut interest rates twice instead of three times this
year, with the first reduction pushed back from September to November.
The figures
were released just hours after the UK sold £5bn in short-term gilts, with
demand outstripping supply almost four times over.
This is the
strongest demand for UK debt since April 2020, when recession fears saw
investors plough billions of pounds into gilts during the first pandemic
lockdown.
Imogen Bachra,
a rates strategist at Natwest, said the recent strong demand for short-term
debt was driven by expectation that the UK will cut rates before the Fed.
She said:
“Investors that think that the Bank could cut before the Fed and more than the
market is currently pricing.”
Traders now
believe the Bank of England will begin cutting rates from 5.25pc in August,
three months before the Fed and a month after the European Central Bank.
More
Investors pile into British debt as hopes of Fed rate
cut wane (msn.com)
Bank
of England: Interest rate cuts should ‘still be way off’, MPC member Greene
warns
THURSDAY 11 APRIL 2024 9:26 AM
Interest rate cuts
should still be a “way off” given the danger of persistent
inflation in the UK, a Bank of England
rate-setter said.
“The UK economy has
faced the double whammy of a
very tight labour market and a terms of
trade shock from energy prices,” Megan Greene, an external member of the
Monetary Policy Committee (MPC) said.
“Inflation persistence
is therefore a greater threat for it than the US. But market pricing for
interest rates does not reflect this,” she warned in a
Financial Times column.
Traders think the Bank
of England is likely to start cutting interest rates in the summer. In the US,
in contrast, markets have increasingly pushed back the timing of the first rate
cut.
Following yesterday’s
inflation overshoot, the third consecutive upside surprise, markets think there
is just a
20 per cent chance that the Fed will cut rates in June. Some economists have even raised the possibility there
will be no rate cuts in 2024.
Greene argued that the
UK was actually more at risk of persistent inflation than the US because it has
“much more constraint” on the supply side.
The Bank of England
estimates that the UK’s potential growth rate, which combines potential
productivity growth and labour supply, will rise from just one per cent this
year to 1.3 per cent by 2026.
The Congressional Budget Office
meanwhile estimates US potential growth at 2.2 per cent over the same period.
“This means the US economy can
withstand more demand in the economy before it turns inflationary,” she said.
More
Interest rate cuts 'still way off', warns Bank of
England's Greene (cityam.com)
Covid-19
Corner
This section will continue until it becomes unneeded.
Off topic today, but relevant.
Serious illness warning at holiday hotspots as
Department for Health highlights increase of potentially lethal virus
April
10, 2024
The Department for Health has
highlighted an outbreak of a disease hitting some holiday hotspots - which is
potentially fatal. Travel Health Pro, an official government advice site used
by the Foreign Office highlighted the rise of Yellow fever.
It said that people going to the
Caribbean, parts of Africa, Central and South America should watch out for the
virus in a new update. It became well known in the 18th century when it was
frequently called ‘Yellow Jack’ and caused huge fatalities among soldiers and
sailors serving overseas, especially in the tropics.
It is spread by mosquitos and can
cause a serious haemorrhagic illness that can be fatal for humans, and it can
be prevented by vaccination. A cruel feature of the virus is the patient
appears to recover - then 24 hours later gets much worse with up to 50 per cent
of people reaching this stage dying.
The World Health Organisation advises
yellow fever vaccine for all travellers aged nine months and older visiting
areas with a risk of yellow fever. Countries which have suffered recent
outbreaks of yellow fever include Trinidad in the Caribbean, Burkina Faso,
Cameroon, Central African Republic, Chad, Republic of the Congo, Côte d’Ivoire,
Democratic Republic of the Congo, Guinea, Niger, Nigeria, South Sudan, Togo and
Uganda.
In South America, seven confirmed
Yellow fever cases, including four fatal cases, have been reported between 1
January and 19 March 2024 in Colombia (three fatal cases), Guyana (two cases)
and Peru (two cases, including one death). Brazil has reported confirmed Yellow
fever in monkeys which indicates it is circulating in the country.
Travel Health Pro said as well as
getting vaccinated people might need an International Certificate of
Vaccination or Prophylaxis (ICVP) for yellow fever when they arrive in the
country.
Symptoms
The infection has an incubation
period from being bitten by a mosquito of three to six days. Initial symptoms
include myalgia (muscle pain), pyrexia (high temperature), headache, anorexia
(lack of appetite), nausea, and vomiting. In many patients, there will be
improvement in symptoms and gradual recovery three to four days after the onset
of symptoms.
Within 24 hours of an apparent
recovery, 15 to 25 per cent of patients progress to a more serious illness.
This takes the form of an acute haemorrhagic fever, in which there may be
bleeding from the mouth, eyes, ears, and stomach, pronounced jaundice (yellowing
of the skin, from which the disease gets its name), and renal (kidney) damage.
The patient develops shock and there is deterioration of major organ function;
20 to 50 percent of patients who develop this form of the disease do not
survive. Infection results in lifelong immunity in those who recover.
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.
90-GWh
thermal energy storage facility could heat a city for a year
Paul Ridden April 09, 2024
An energy supplier in Finland has announced the upcoming
construction of an underground seasonal thermal energy storage facility about
the size of two Madison Square Gardens that could meet the heating demands of a
medium-sized city for up to a year.
Though renewable energy systems play an important part in the
supply matrix, the wind doesn't always blow and long days of sunshine are not
guaranteed. We've seen a number of energy storage solutions being proposed to
deal with the intermittent nature of such setups over the years, including
a hibernating
battery, rechargeable
aluminum, and an industrial-scale
sand battery.
"The world is
undergoing a huge energy transition," said Vantaan Energia's CEO, Jukka
Toivonen. "Wind and solar power have become vital technologies in the
transition from fossil fuels to clean energy. The biggest challenge of the
energy transition so far has been the inability to store these intermittent
forms of energy for later use. "Unfortunately, small-scale storage
solutions, such as batteries or accumulators, are not sufficient; large,
industrial-scale storage solutions are needed."
The company's
solution for the city of Vantaa in the south of Finland is to construct huge
underground caverns to store thermal energy, which can then be pumped to homes
and business via an existing district heating network when needed.
The project has a
total volume of 1.1 million cubic meters (38.85 million cubic feet), including
processing facilities, and will be built into the city's bedrock at around 100
m (330 ft) below ground – though the deepest parts of the setup could go down as
far as 140 m. Three caverns will be created, each measuring 300 m (984.25 ft)
in length, 40 m (131.2 ft) in height and 20 m (65.6 ft) in width.
These will be
filled with hot water by a pair of 60-MW electric boilers, powered by
renewables when it's cheap to do so. Pressure within the space allows for
temperatures to get as high as 140 °C (284 °F) without the water boiling over
or steaming away. Waste heat from industry will also feed the setup, with a
smart control system balancing energy sources.
The Varanto facility is reported to have a total thermal
capacity of 90 GWh when "fully charged" – enough to meet the
year-round domestic heating needs of a "medium-sized Finnish city."
More
90-GWh thermal energy storage facility could heat a
city for a year (newatlas.com)
Finally,
our latest new section, the world global debt clock. Nations debts to GDP
compared.
World Debt
Clocks (usdebtclock.org)
Another weekend and yet another war
weekend in Ukraine, the Gaza Ghetto, Sudan and Myanmar. Does no one on planet
Earth care anymore? Are there no peacemakers left on planet Earth?
In the Arctic, the sea ice is now
contracting again, in the Antarctic the sea ice has been expanding for about
three to four weeks.
Have a great weekend everyone.
There is nothing so disastrous as a rational investment policy in an irrational world.
John Maynard Keynes.
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