Baltic Dry Index. 1796 -08 Brent Crude 81.38
Spot Gold 2334 US 2 Year Yield 4.91 +0.05
It
takes some skill to spoil a breakfast - even the English can't do it.
John Kenneth Galbraith.
Was that the top? It’s far to early to know, but it’s the giant question od the day, week and month as the stock casinos head into the last trading week of May.
In the real world economy, inflation might be coming back led by food price inflation and higher shipping costs.
The central banks might have to delay interest rate cuts until the end of the year.
Sell in May, go away, might be a good strategy
in an increasingly iffy 2024.
Japan, Hong Kong
stocks lead Asia markets lower; investors assess inflation data
UPDATED FRI, MAY 24 2024 10:30 PM EDT
Asia-Pacific
markets fell on Friday, with markets in Hong Kong and Japan leading losses as
investors digested inflation data.
The Nikkei 225 slid
1.24%, while the broad-based Topix fell 0.49%. Investors assessed April
inflation from Japan for clues on the Bank of Japan’s monetary
policy moves.
Japan’s core inflation — which
strips out fresh food and energy — eased to 2.2% from 2.6% in March, in line
with expectations. Headline inflation slowed to 2.5%, down from March’s 2.7%
figure.
Hong Kong’s Hang Seng index fell
1.35%, while the mainland Chinese CSI 300 dipped 0.22%.
In South Korea, the Kospi was
about 1% lower, dragged by heavyweight Samsung Electronics, while the small-cap
Kosdaq lost 0.45%.
Heavyweight chipmaker Samsung
Electronics shares fell 2.4% after Reuters reported that the South Korean
tech giant’s latest high bandwidth memory (HBM) chips are not yet ready for use
by U.S. chipmaker Nvidia.
The Australian S&P/ASX 200 also
fell 1.06%.
Wall Street continued to extend losses, despite
a post-earnings rally in tech darling Nvidia.
The chipmaker’s shares
rose 9.3% on Thursday, following a stellar
earnings that topped expectations.
Overnight in the U.S., the Dow Jones Industrial Average marked
its worst
session of the year as it slid 1.53%, with aircraft
manufacturer Boeing falling
7.6% — the biggest laggard in the index.
The S&P 500 dropped
0.74%, and the Nasdaq Composite tumbled
0.39%. Earlier in the session, both the broad-market index and the tech-heavy
benchmark had hit record highs.
Asia markets live updates: Japan CPI, Nvidia earnings (cnbc.com)
Stock futures are
little changed after Dow posts worst session since March 2023: Live updates
UPDATED FRI, MAY 24 2024 7:57 PM EDT
Stock
futures were little changed on Thursday evening, following the worst session in
more than a year for the Dow Jones Industrial Average.
Futures tied to the 30-stock Dow hovered
near the flatline. S&P 500
futures ticked
up by 0.06%, while Nasdaq 100 futures inched
higher by 0.04%.
In after-hours trading, Intuit
shares slid 6% on soft guidance for the current quarter.
During Thursday’s session,
chipmaker Nvidia added more than 9%, propelled by strong guidance in addition
to an earnings
beat and a 10-for-1 stock
split. Nvidia has become a key bellwether for the broader market,
and it is the de facto leader of the so-called “Magnificent Seven.”
The rise in the artificial
intelligence darling did not help the market, however, with more than 400
stocks in the S&P 500 closing
lower. The broad market index lost 0.74%, while the Nasdaq Composite fell
0.39%. The Dow suffered
a 1.53% decline for its worst session since March 2023, weighed down by a 7.6%
drop in Boeing.
“Markets tend to take breather
heading into a long holiday weekend,” said Jamie Cox, managing partner at
Harris Financial Group. “The Fed
minutes provided the catalyst and not even Nvidia could refocus
markets on the positives.” Indeed, at their latest meeting, central bank
policymakers had expressed worries over the lack of progress in tamping down
inflation.
Robust economic data on Thursday
further dented investors’ hopes for rate cuts from the Federal Reserve. May
services and manufacturing data surpassed forecasts from economists, while
initial jobless claims for the week ending May 18 came in at 215,000. Economists
surveyed by Dow Jones expected a reading of 220,000.
To that end, the S&P 500 is
tracking for a weekly loss of 0.7%, while the Dow is on pace to drop about
2.4%. The Nasdaq is the outperformer, with a modest gain of 0.3%.
On Friday, traders will be
watching for April’s durable goods report and May’s reading of the University
of Michigan’s consumer sentiment index.
Stock
market today: Live updates (cnbc.com)
Dow falls 600
points in worst day of 2024 as Nvidia’s blockbuster earnings fail to lift
broader market: Live updates
UPDATED THU, MAY 23 2024 4:36 PM EDT
Stocks fell
Thursday, with the Dow Jones
Industrial Average registering
its worst day of 2024, as a post-earnings rally in Nvidia failed
to lift the broader market.
The 30-stock Dow slid 605.78
points, or 1.53%, and closed at 39,065.26 for its worst session of the year. Boeing was
the biggest laggard in the Dow, falling 7.6%. The S&P 500 dropped
0.74%, closing at 5,267.84, and the Nasdaq Composite tumbled
0.39% to end at 16,736.03. Earlier in the session, both the broad-market index
and the tech-heavy benchmark reached record highs.
---- Nvidia’s results have been a focal
point for Wall Street, as traders hoped for signs that the excitement around AI
is not waning. With its market cap of more than $2.5 trillion, Nvidia also has
considerable sway over the broad S&P 500.
However, the majority of the
stocks in the broad market index turned negative Thursday, indicating a lack of
market breadth. More than 400 names in the S&P 500 were lower, and
information technology was the only positive sector for the day.
Stronger than expected economic
data also evaporated the rally on Thursday as investors cut their odds of a
rate cut in September. Services and manufacturing data for May both topped
economists’ expectations, according to purchase manager surveys from S&P Global released Thursday. Initial
jobless claims for the week ending May 18 came in at 215,000, while economists
polled by Dow Jones called for 220,000. The results added to investors’
concerns that the Federal Reserve will not lower interest rates soon.
Traders are currently pricing
just a 51% chance the Fed will cut rates in its September meeting, down from
58% a day ago and nearly 68% in the prior week, according to the CME FedWatch Tool. When the probability
falls below 60%, it’s viewed as no longer likely that the Fed will take action.
The market has “some loose
footing,” Piper Sandler chief market technician Craig Johnson wrote in a
Thursday note. “This market’s strange mix of leadership, combined with
breakdowns in transportation stocks and mediocre breadth readings, makes us not
so confident that a new leg higher will be sustained from current levels.”
Stock market news for May 23, 2024 (cnbc.com)
In real US economy news, far from the Wall
Street stock casinos, Bidenomics isn’t working for many.
Deere
announces more Iowa layoffs as sales slow amid gloomy farm income forecast
May 23, 2024
The
John Deere plant in Waterloo is laying off 192 workers effective June 22.
The
company posted the notice on Iowa's Worker Adjustment
and Retraining Notification, or WARN, website.
The
latest announcement follows layoffs of 308
in Waterloo announced in late March as well as layoffs of 150 workers
from Deere's Ankeny
facility the same month.
In a statement
to KWWL-TV
in Waterloo, Deere said managers met with employees to inform them of the
layoffs.
"Each
John Deere factory balances the size of its production workforce with the needs
of the individual factory to optimize the workforce at each facility," it
said.
It
said Deere employs 5,200 people in Waterloo, with about 3,300 of them working
in production and maintenance.
Plunge in farm income leads to inventory backup
Net
sales for Deere’s production and precision agriculture segment dropped 16% to
$6.6 billion during the second quarter of 2024, compared to $7.8 billion during
the same period last year, primarily due to lower shipment volumes. Large
agriculture equipment sales in the U.S. and Canada are expected to be down 15%
for the year.
Farm
income is expected to slide 25.5% to $116.1 billion this year from 2023,
according to the U.S. Department of Agriculture, set for a second consecutive
annual drop, as corn and soybean prices plummet and production costs increase.
Higher
interest rates also have piled pressure on farmers, prompting some equipment
dealers to offer discounts or auction off machines at lower
prices to manage bloated inventories, forcing Deere and peers to
cut production.
“While ag prices have increased a bit recently, most crop prices remain
much lower than 2023, suggesting that revenues will continue to be stressed in
the year ahead. Interest rates will also likely remain higher into 2025 as ag
credit conditions could be limited for some time,” Nationwide Senior Economist
Ben Ayers wrote.
Deere, the world's largest maker of farm machinery, is headquartered in
Moline, Illinois, in the Quad Cities, but most of its U.S. production is in
Iowa.
With sales slowing, Deere lays off more in Iowa
(desmoinesregister.com)
Finally, in commodities news, a growing
shortage of robusta coffee.
World heads for fourth year of
shortages for instant coffee beans
Volcafe
forecasts a global robusta deficit of 4.6 million bags in 2024/25, smaller than
the 9-million-bag deficit seen in the previous season.
By Ilena Peng and Dayanne Sousa, Bloomberg 23 May
2024 08:30
Volcafe, one of the
world’s top coffee traders, sees an “unprecedented” fourth year of deficits for
robusta beans used in instant coffee, as top producer Vietnam continues to face
dry weather.
The crop potential
for Vietnam in the 2024/25 season is seen at 24 million bags, the lowest in 13
years, according to a Volcafe report seen by Bloomberg. Poor rainfall in
Vietnam has caused “irreversible damage” to coffee blossoms, while lower
fertiliser use and the expansion of durian trees at the expense of coffee
acreage have also weighed on production.
Volcafe forecasts a
global robusta deficit of 4.6 million bags in 2024/25, smaller than the
9-million-bag deficit seen in the previous season. Each bag of coffee is 60
kilograms. Supply tightness has fueled a robusta rally this year, with futures
traded in London surging to a fresh intraday high above $4,300 in late April.
Futures have since
pared back, but “a solution to the current robusta deficit requires higher
prices” to pressure demand or prompt buyers to use more arabica coffee, Volcafe
said in the report.
The forecast is
unwelcome news for coffee drinkers, who are already paying more for their daily
brew. The world is facing a shortage of the cheaper robusta variety as El Niño
weather conditions continue to harm crops in Southeast Asia.
Still, demand for
robusta beans — driven by the rising popularity of instant coffee — hasn’t
weakened in emerging markets, but is projected to slow once price increases are
passed on, the report said.
“Coffee prices for
robusta heavy product blends remain at a substantial discount to arabica
containing blends and thereby consumers seeking value continue to choose the
former for now,” the report said.
Industry demand has
begun to move toward arabica beans in the last six months, but a bigger shift
or more robusta demand destruction is needed to remove tightness, according to
the report.
Record exports in
the prior season from Brazil, the world’s second-largest robusta producer, are
offsetting the robusta supply shortfall in Asia, but output from the country is
also expected to drop in 2024/25. Severe drought and heat waves last fall reduced
crop potential, Volcafe said.
The supply outlook
for the arabica variety is brighter, and global coffee supplies are still
expected to exceed consumption in the 2024/25 season. But the “surplus has
practically disappeared” to just 700 000 tons as poor weather affects crops in
Brazil, Vietnam and Central America, Volcafe said.
World heads for fourth year of shortages for instant coffee beans - Moneyweb
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.
Sudden
container crunch sends ocean freight rates soaring, setting off global trade
alarm bells
A perfect storm in global trade is creating a
shipping container capacity crunch, fueling a sudden and surprise spike in
ocean freight rates.
The beginning of peak
shipping season, coupled with the longer
transits to avoid the Red Sea, and bad weather in Asia, have hit the
flow of trade on key routes. Ocean carriers are skipping ports or decreasing
their time at port, and not picking up empty containers, in an effort to keep
vessels on track for delivery.
The supply chain cost issues come at a time when consumer goods for back
to school and the holidays are set to be moved on the water.
“From the Far East into the U.S.
West Coast, it is likely spot rates will surpass the level seen at the height
of the Red Sea crisis earlier this year, which demonstrates how dramatic the
recent increases have been,” said Emily Stausbøll, senior shipping analyst at
Xeneta.
Xeneta ocean freight rates show the
rallying spot market and the widening spread between spot and long-term rates.
“The bigger the spread between long and short term rates, the greater the risk
of cargo being rolled, which we know is already happening,” she said.
Spot rates had fallen after the
sharp rise triggered by Red Sea tensions in early 2024, but since the end of
April they began spiking by as much as $1,500, on average, on routes to the
U.S. coasts, and now some of the highest contract rates charged by shippers are
over double the rates of just a month ago.
---- Early Xeneta data suggests rates will
increase further at the start of June.
DHL has been warning
about about a container crunch since January because of the longer routes
needed to avoid the Red Sea since the Houthi attacks began. Containers are out
on the water longer and as a result not available to be reloaded. The
availability of containers has been slowed even further by the bad weather
impacting port operations in China, Malaysia, and Singapore.
---- Judah Levine, Freightos’ head of
research, says that in March and April, ocean carriers were able to use idle
vessels as well as ships from other lanes to help offset the longer voyages,
keep containers moving and for the most part keep to weekly departure
schedules. “But this has meant there is no excess capacity in the market,” he
said.
Bad weather in East
Asia at the end of April created some further delays, which was one factor
leading ocean carriers to skip some port calls or shorten their turnaround at
destination ports to make up time. That also means fewer empty containers have
been brought back to China.
More
A
sudden container crunch is sending ocean freight rates soaring (cnbc.com)
Bundesbank warns of inflation risk as wages rise more
than expected
May
22, 2024
FRANKFURT
(Reuters) - Wages in Germany have been rising faster than expected, casting
some doubt on expectations for a continued fall in inflation, the country's
central bank said Wednesday.
The European Central
Bank is all but certain to begin lowering interest rates next month, with
President Christine Lagarde saying on Tuesday she was "really
confident" inflation was now "under control".
But the ECB's
biggest shareholder, Germany's Bundesbank, struck a more cautious tone on
Wednesday, warning of inflation risks from higher wages as Europe's largest
economy recovers.
"There
are still risks to the fundamental disinflation process," the Bundesbank
said in its monthly report. "Wage growth has recently been stronger than
expected. This could mean that the still high price pressure on services in
particular could last longer."
It said
collectively agreed earnings, including fringe benefits, rose by 6.2%
year-on-year in the first quarter of the year, compared to 3.6% in the last
three months of 2023.
Excluding
one-off payments, collectively agreed wages increased by 3.0% annually in the
last quarter, also faster than three months earlier.
"This
extends the upward trend in real earnings since spring 2021, which has been
quite high in a long-term context," the Bundesbank added.
The Bundesbank
expects German inflation to rise in May from April's 2.4% and hover at slightly
higher level in the coming months, mainly due to an unfavourable comparison to
last year, when train ticket prices had been slashed and fuel costs had fallen.
It also sees
Europe's largest economy continuing to recover in the second quarter of the
year thanks to a rebound in services.
Bundesbank warns of inflation risk as wages rise more
than expected (msn.com)
Most Americans falsely think the
U.S. is in recession, poll shows
May
22, 2024
More than half of Americans think
the United States is in
an economic recession, although gross domestic product has
been increasing for the past several years.
According
to a new Guardian/Harris poll,
56% of respondents said they believe the U.S. is in a recession and 58% say
that President Joe Biden is responsible for what they see as an economic
downturn.
A recession is an extended period of economic decline, usually
designated when GDP has declined for two or more consecutive fiscal quarters.
Under those terms, the U.S.
is definitively not in a recession.
GDP grew by 1.6% in the first
quarter of 2024. Granted, that is a decelerated rate from the 3.3% growth of
the fourth quarter of 2023, but it is not recessionary. U.S. GDP growth has
been outpacing that of other developed nations.
"America has the best
economy in the world," Biden told NBC's
"TODAY" in April.
The Guardian/Harris poll is
yet another example of an ongoing gap between economic data and economic
feelings that has nagged the Biden administration in recent months.
Despite some positive signals
that the economy is recovering from the pandemic chaos that disrupted supply
chains and sent inflation skyrocketing, consumer attitudes have
lagged, often driven by the high costs of daily living caused by stubbornly
high inflation.
More
Most Americans falsely think the U.S. is in recession, poll shows (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Could FLiRT Variants Cause Another Covid-19 Surge?
May
21, 2024
A new Covid-19
variant known as KP.2, or FLiRT, began to emerge in the United States in early
March of this year. At that time, KP.2 represented only 0.4% of all SARS-CoV-2
strains being sequenced, but it has skyrocketed in the last two months to
become the predominant strain
of the virus, making up 28.2% of sequences as of May 11. This dramatic rise
signals that KP.2 has properties that promote viral transmission and has
experts discussing whether another Covid-19 surge is on the horizon.
What Is A FLiRT Variant?
Since the Covid-19
pandemic began, the virus has undergone genetic changes—or mutations—as the
number of human infections has increased. In 2022, the Omicron variant emerged
as the dominant strain, leading to dramatic rise in cases worldwide. The KP.2
variant is a descendant of Omicron and has several mutations in the gene
encoding for the spike protein, which facilitates binding of the virus to
receptors on a host cell. The spike protein is also the target for antibodies
generated in response to Covid-19 vaccination.
Several mutations in
KP.2 have led to amino acid changes in the spike protein—an “F” to “L”
mutation and an “R” to “T” mutation—thus giving the variant family
the name FLiRT. These mutations likely allow the virus to
evade neutralizing antibodies produced in response to prior infection or
vaccination. In some ways, it’s like the virus has put on a disguise, allowing
it to go unrecognized by the immune system.
Do FLiRT Variants Cause Worse Disease?
Although it may be
too early to know for sure, it does not appear that KP.2, or other members of
the FLiRT variant group, cause unique symptoms or more significant disease. If
symptoms do occur, KP.2 infection tends to be associated with a fever, sore
throat, cough and body aches. Loss of taste or smell can also occur, as well as
“brain fog,” which has been described for past variants.
Although FLiRT
variants do not seem to cause more severe disease, it is important to highlight
that as the number of infections increase, the likelihood of a susceptible
individual (e.g., an immunocompromised host) becoming infected and developing
severe symptoms also increases.
More
Could FLiRT Variants Cause Another Covid-19 Surge? (forbes.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.
Electric cars kill pedestrians at twice the rate of
petrol or diesel vehicles, study finds
May 22, 2023
Electric cars kill
pedestrians at double the rate of petrol or diesel vehicles,
a study in a BMJ journal has found.
Experts said that electric or
hybrid cars were twice as likely to be involved in a road accident with a
bystander than a petrol or diesel car over the same distance.
The researchers suggested the
vehicles’ quieter engines were a significant factor in higher fatality rates
and called on the Government to mitigate the risks as it phases out petrol and
diesel cars in pursuit of net zero.
The study looked at the number of
casualties from road collisions in Britain between 2013 and 2017 using Road
Safety Data and calculated the number of pedestrians that had been hit by
different types of cars.
Over the period, 96,285 pedestrians
were hit by a car or taxi. While three-quarters of these people had been hit by
a car with a combustion engine, this was because they covered significantly
more miles.
To overcome this, the researchers calculated the rate of
casualties per 100 million miles covered by electric
and hybrid cars compared with petrol and diesel
cars.
They found that 5.16 people
on average were hit by an electric or hybrid car for every 100 million miles
that type of vehicle had driven, compared with 2.4 people for petrol and diesel
cars.
The road accident data were
cross-referenced with annual mileage figures from the National Travel Survey,
with 32 billion miles of electric and hybrid vehicle travel
and three trillion miles of petrol and diesel vehicle travel included in the
analysis.
Two per cent of the
pedestrian casualties were caused by an electric vehicle, while 24 per cent of
the accidents did not have a record of the engine type.
The researchers said that
even in an “extreme case” scenario where all of these were accidents involving
traditional combustion engine cars, the casualty rate would have been 3.16 per
100 million miles, still 63 per cent lower than seen with electric cars.
More
Electric cars kill pedestrians at twice the rate of
petrol or diesel vehicles, study finds (msn.com)
Fire
burns for five days at huge lithium-ion energy storage facility
Lithium-ion battery fires are rare
but extremely hard to put out and have blackened image of key clean energy technology
Published 20 May 2024,
11:05
A fire at a California lithium-ion battery energy storage
facility once described as the world’s largest has burned for five days,
prompting evacuation orders.
The fire broke out on Wednesday at the 250MW Gateway
Energy Storage facility owned by grid infrastructure developer LS Power in San
Diego.
A fire crew managed to get the blaze at the 16,000-square
foot facility under control after around 24 hours, lifting evacuation orders
that were made.
But the fire has twice re-ignited and has now caused
“major damage” to the building, including burning through part of the roof,
prompting evacuation orders to be reinstated.
The California fire department said that “harmful gases”
were making access an issue for firefighters.
In a Sunday evening update, the fire department said
conditions have “improved greatly, though light wispy smoke is still visible.”
It has taken 40 firefighters to contain the blaze, it
said.
The San Diego battery
facility came online in
2020 and was billed at the time by grid infrastructure
developer LS Power as the largest battery energy storage project in the world.
Using LG Chem Lithium-ion cells, it beat the previous
record held by a 150MW project in Australia, although has since been surpassed
by other facilities.
Rev Renewables, the LS Power subsidiary that
owns and operates the Gateway facility, said in a statement to The Dan
Diego Union-Tribune on Sunday that it has been in contact with the
fire department over the blaze.
Lithium-ion battery fires are rare but have blackened the
image of a clean energy technology essential to the energy transition.
Such fires are difficult to put out because lithium-ion
battery fires generate their own oxygen. So while water-based fire
extinguishers help cool down blazing batteries they only rarely put out fires
entirely, as demonstrated by the recent blaze.
Concerns over fires and the toxic gasses they can emit
are now a frequent source of opposition to lithium-ion energy storage
facilities near residential areas.
The
energy storage sector meanwhile continues to come up with alternatives marketed as safer
options to lithium-ion, which has long been the industry-leading
battery storage technology.
Energy storage is crucial to the energy transition, as it
saves excess wind and solar power for when the sun isn’t shining and the wind
isn’t blowing.
The International Energy Agency estimates that 1,500GW of
energy storage capacity, six times today’s level, is needed to help the world
meet its goal of tripling renewable energy by 2030.
Fire burns for five days at huge lithium-ion energy
storage facility | Recharge (rechargenews.com)
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Another weekend and the first general
election campaign weekend in the UK. Still as Mark Twain reputedly quipped, “if
voting made any difference, they wouldn’t let us do it.” Have a great weekend
everyone. If in the UK, watch out for on the make Pols out to steal your vote.
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