Baltic Dry Index. 1943 -18 Brent Crude 85.13
Spot Gold 2341 US 2 Year Yield 4.69 Tues.
In
the run up to the UK General Election on July 4, the LIR will play its part.
Politics is the art of looking for trouble, finding it, misdiagnosing it and then misapplying the wrong remedies.
Anon.
Today, it is the Old Lady of Threadneedle Streets turn to make a giant interest rate mistake, by following the Fed, rather than following the ECB and cutting its key interest rate.
But two weeks out from a UK general election, an interest rate cut would incur the political accusation of interfering in the election to assist the Tory Party facing extinction, at least according to every poll.
But leading economist Claudia Sahm, creator of the Sahm Rule for recognising US recessions, has a warning for the US central bank and the other lesser central banksters.
I think that the US economy is already in a
stealth recession, but more on that in the weekend LIR update.
Asia-Pacific
markets are mostly lower as China keeps benchmark lending rates steady
Asia-Pacific markets were mostly lower on Thursday
as China kept its one- and five-year loan prime rates unchanged.
The one-year loan prime rate serves
as a benchmark for most corporate and household loans, while the five-year rate
serves as a peg for property mortgages. The one-year LPR currently stands at 3.45%, while the
five-year LPR is at 3.95%.
Earlier this week, the People’s
Bank of China kept the 1-year medium-term lending facility rate steady
at 2.5%.
Mainland China’s CSI 300 dipped
0.49% after the announcement, while Hong Kong’s Hang Seng index fell
by 0.48%.
Top losers in Hong Kong include hot
pot chain Haidilao which
plummeted 6.13%, as well as Shenzhou
International Group and
Budweiser Brewing Company APAC, which lost 4.31% and 3.73% respectively.
South Korea’s Kospi gained 0.42%, while the
small-cap Kosdaq slipped 0.41%. Shares of HMM, the country’s largest container
ship, climbed more than 3%.
Japan’s Nikkei 225 fell
0.15% and the broad-based Topix slipped 0.36%.
The Taiwan Weighted Index touched
new highs for the third day in a row and was up 0.43%.
Australia’s S&P/ASX 200 dipped
0.15%. Shares of Mexican-themed fast food chain Guzman y Gomez rose as much as
3.91% after its market debut on the Australian Stock Exchange on Thursday.
Data out of New Zealand showed the
economy exited a technical recession, growing 0.2%
quarter-on-quarter in the first three months of the year and beating Reuters
poll expectations of a 0.1% expansion. On a year-on-year basis, the economy
grew 0.2%.
Futures for the S&P
500 and Nasdaq
Composite were up 0.04% and 0.19%, respectively, while Dow Jones Industrial Average futures were down 0.17%. U.S. markets were
closed on Wednesday for a holiday.
Asia markets live:
China keeps LPR steady, New Zealand exits recession (cnbc.com)
European markets
head for mixed open as UK awaits Bank of England’s rate decision
LONDON — European stocks are expected to open in
mixed territory Thursday, with U.K. investors looking ahead to the Bank of
England’s policy rate decision.
The U.K.’s FTSE index
is expected to open 16 points higher at 8,212, Germany’s DAX up
21 points at 18,087, France’s CAC 40 up
3 points at 7,568 and Italy’s FTSE MIB up
10 points at 33,192, according to IG.
U.K. traders will be focused on the
Bank of England’s rate decision Thursday, although the central bank is widely
expected to hold rates steady at a 16-year high of 5.25%, with the majority of economists polled by Reuters forecasting
a cut in August after the country’s July 4 election.
Data released Wednesday showed U.K.
inflation rose by an annual 2.0% in May, hitting the BoE’s inflation target.
Investors will be keeping an eye out on earnings
from Boohoo Group and DS Smith. On the data front, flash consumer confidence
figures from the euro zone for June will be released.
Overnight, Asia-Pacific markets were
mostly lower on Thursday as China kept its one- and five-year loan prime rates unchanged. Meanwhile, S&P
500 futures were little changed on Wednesday as investors look
for the benchmark to add to
its latest record high.
On the data front, flash consumer
confidence figures from the euro zone for June will be released.
European markets: stocks, news, Bank of England rate decision (cnbc.com)
In other news Claudia Sahm says the Fed is “playing with fire.”.
The Fed is
‘playing with fire’ by not cutting rates, says creator of ‘Sahm Rule’ recession
indicator
The Federal Reserve is risking tipping the economy
into contraction by not cutting interest rates now, according to the author of
a time-tested rule for when recessions happen.
Economist Claudia
Sahm has shown that when the unemployment rate’s three-month average is half a
percentage point higher than its 12-month low, the economy is in recession.
As the jobless level has ticked up in recent
months, the “Sahm
Rule” has generated increasing talk on Wall Street that what has
been a strong
labor market is showing cracks and pointing to potential
trouble ahead. That in turn has generated speculation over when the Fed finally
will start reducing interest rates.
Sahm, chief
economist at New Century Advisors, said the central bank is taking a big risk
by not moving now with gradual cuts: By not taking action, the Fed risks the
Sahm Rule kicking in and, with it, a recession that potentially could force
policymakers to take more drastic action.
“My baseline is not
recession,” Sahm said. “But it’s a real risk, and I do not understand why the
Fed is pushing that risk. I’m not sure what they’re waiting for.”
“The worst possible
outcome at this point is for the Fed to cause an unnecessary recession,” she
added.
Flashing a warning sign
As a numeric
reading, the Sahm Rule stood at 0.37 following the May
employment report from the Bureau of Labor Statistics that showed the
unemployment rate rising to 4% for the first time since January 2022. That’s
the highest the Sahm reading has been on an ascending basis since the early
days of the Covid pandemic.
The value essentially represents the percentage
point difference from the three-month unemployment rate average compared to its
12-month low, which in this case is 3.5%. A reading of 0.5 would represent an
official trigger for the rule; a couple more months of 4% or better readings on
the unemployment rate would make that happen.
The rule has
applied for every recession dating back to at least 1948 and thus works as an
effective warning sign when the value starts to increase.
Even with the
rising jobless level, Fed officials have expressed little concern about the
labor market. Following its meeting last week, the rate-setting
Federal Open Market Committee labeled the jobs market as
“strong,” and Chair Jerome
Powell at his press
conference said conditions “have returned to about where they
stood on the eve of the pandemic — relatively tight but not overheated.”
In fact, officials
sharply lowered their individual forecasts for rate cuts this year, going from
three expected reductions at the March meeting to one this time around.
The move surprised
markets, which still are pricing in two cuts this year, according to the CME
Group’s FedWatch measure of fed funds futures
market contracts.
“The bad outcomes
here could be pretty bad,” Sahm said. “From a risk management perspective, I
have a hard time understanding the Fed’s unwillingness to cut and their just
ceaseless tough talk on inflation.”
‘Playing with fire’
Sahm said Powell
and his colleagues “are playing with fire” and should be paying attention to
the rate of change in the labor market as a potential harbinger of danger
ahead. Waiting for a “deterioration” in job gains, as Powell spoke of last
week, is dangerous, she added.
“The recession
indicator is based on changes for a reason. We’ve gone into recession with all
different levels of unemployment,” Sahm said. “These dynamics feed on
themselves. If people lose their jobs, they stop spending, [and] more people
lose jobs.”
More
Economist
Sahm, who devised recession rule, says the Fed is 'playing with fire'
(cnbc.com)
China Eyes Trade War Targets Across Europe for Counterstrikes
Foodstuffs,
alchohol are among products hinted at by Beijing
France,
Spain will get hit — Germany too if cars make the list
June 19, 2024 at 11:00
PM GMT+1
Subscription required
EU-China Trade War: The Likely Targets of China's Retaliation for EU Tariffs - Bloomberg
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 to two per cent ahead of Bank of
England interest rate decision
WEDNESDAY 19 JUNE 2024 7:25 AM
Inflation returned to
the two
per cent target in May for the first time
since July 2021 as markets prepare for the Bank of England’s latest interest
rate decision tomorrow.
Prices just rose 2.0
per cent in the year to May, according to the Office
for National Statistics (ONS), down
from 2.3
per cent in April. This was in line with
economists’ expectations.
Core inflation, which
strips out volatile components such as food and energy, fell to 3.5 per cent,
down from 3.9 per cent previously and in line with expectations.
Easing food inflation was the biggest
contributor to the lower level of inflation, with food and drink prices
actually falling in May.
Prices for bread, vegetables and
sugary treats all fell in the month, bringing the annual rate of food inflation
to 1.7 per cent, its lowest level since October 2021.
This was partially offset by higher
transport prices, which increased on an annual basis for the first time since
October 2023 on the back of higher motor fuel prices.
Even though inflation has returned to
the two per cent target, the Bank of England is very unlikely to cut interest
rates tomorrow. Policymakers at the Bank are cautious of lowering rates when
there are still signs of inflationary pressures in the domestic economy.
The figures showed that services inflation, which is a more accurate gauge of domestic inflationary dynamics, only fell to 5.7 per cent from 5.9 per cent in April.
More
Inflation drops to two per cent ahead of Bank of England decision (cityam.com)
US
retail sales rise less than expected in May
June
18, 2024
WASHINGTON
(Reuters) -U.S. retail sales barely rose in May and data for the prior month
was revised significantly lower, suggesting that economic activity remained
lackluster in the second quarter.
Inflation and
higher interest rates are forcing households to prioritize essentials and cut
back on discretionary spending. Last month's less-than-expected increase in
retail sales bolstered economists' expectations that the Federal Reserve could
still start cutting interest rates in September.
U.S. central bank
officials last week saw the anticipated rate cut delayed to perhaps as late as
December.
"Maybe
households aren't quite as impervious to higher interest rates as we were
beginning to believe," said Paul Ashworth, chief North America economist
at Capital Economics. "Admittedly, we don't expect a full-blown slump in
consumption but, at the margin, even a modest slowdown in consumption growth
and consequently GDP growth too could be enough to tip a finely balanced Fed in
favor of a rate cut in September."
Retail sales
rose 0.1% last month after a downwardly revised 0.2% drop in April, the
Commerce Department's Census Bureau said on Tuesday. Retail sales were
previously reported to have been unchanged in April.
Economists
polled by Reuters had forecast retail sales, which are mostly goods and are not
adjusted for inflation, gaining 0.3% in May. Retail sales have in recent months
been distorted by an early Easter.
Nonetheless,
the trend in sales growth has been slowing also as banks are tightening access
to credit against the backdrop of lower income borrowers increasingly
struggling to keep up with their loan payments.
Though the
labor market remains on a solid footing, it is becoming a bit difficult for
people who lose their jobs to quickly find new work and wage increases are
moderating.
More
US retail sales rise less than expected in May
(msn.com)
Evidence
is mounting that the American shopper is cutting back
June 18, 2024
Sales at US retailers rose
last month at an unexpectedly weak pace as Americans continue to deal with
still-high inflation and elevated interest rates.
Retail sales rose just 0.1%
in May from the prior month, the Commerce Department reported Tuesday. That’s
better than April’s downwardly revised 0.2% decline but below the 0.3% gain
economists projected in a FactSet poll. The figures are adjusted for seasonal
swings but not inflation.
Sales declined the most at
gas stations, down 2.2% in May. Excluding that, sales were up by 0.3% last
month. American shoppers also pulled back on purchases at furniture stores
(-1.1%) and shops that sell building materials and garden equipment (-0.8%).
Meanwhile,
spending was the strongest at specialty stores that sell sporting goods, books,
and musical instruments, which jumped by 2.8% last month.
Monthly retail sales have increased
four times over the past six months through May, but figures for April and
March were revised lower, the Commerce Department said Tuesday.
Inflation is down from the
40-year highs of two years ago, but it remains elevated. Meanwhile,
interest rates are at their highest in nearly a quarter century after the
Federal Reserve launched an aggressive rate-hiking campaign in 2022 to rein in
price hikes. Household savings accumulated during the Covid-19 pandemic are
dwindling, and may have already been exhausted.
---- Evidence is starting to
mount that US consumers are pulling back as they face tough economic hurdles.
Retailers such as Walmart, Kohl’s and
Target have said that shoppers are feeling pinched and are starting to cut
back. While lower-income Americans were already struggling, the pain has now
spread to middle-income consumers.
“Our customers continue to be
pressured by a number of economic factors, including high interest rates and
inflation,” Kohl’s CEO Thomas Kingsbury said in an earnings call earlier this
month. “Our middle income customer continues to be impacted.”
There are
signs that even wealthier shoppers are feeling strained. Walmart, America’s
largest retailer, said higher-income consumers have been flocking to its stores
in search of bargains. High-end retailers have also sounded the alarm of a
broad and ongoing slowdown in luxury spending.
More
Evidence is mounting that the American shopper is cutting back (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
New
research on long COVID prevalence and risk factors
June 18, 2024
Early in the pandemic, many people who had
SARS-Cov-2 infection or COVID-19 began to report that they couldn't shake off
their symptoms even after a month or more-;unusually long for a viral infection
of the upper respiratory tract-;or developed new, persistent symptoms soon
after the infection cleared.
Although it's still not clear what
causes post-COVID-19 conditions or "long COVID" (symptoms and
conditions that develop, linger, or reoccur weeks or months after SARS-CoV-2
infection), a new study by researchers at Columbia University Vagelos College
of Physicians and Surgeons confirms the high burden of long COVID and sheds
light on who's at greatest risk.
The study found that people with a
milder infection-;including those who were vaccinated against SARS-CoV-2 and
those who were infected with an Omicron variant-;were more likely to recover
quickly.
Recovery time was similar for
subsequent infections.
----The study
involved over 4,700 participants from the Collaborative Cohort of Cohorts
for COVID 19 Research(C4R), who were asked to report their time to recovery
after infection with SARS-CoV-2.
The study found that, between 2020
and early 2023, the median recovery time after SARS-CoV2-infection was 20 days,
and more than one in five adults did not recover within three months.
Women and adults with pre-pandemic
cardiovascular disease were less likely to recover within three months. Other
pre-pandemic health conditions-;including chronic kidney disease, diabetes,
asthma, chronic lung disease, depressive symptoms, and a history of
smoking-;were linked to longer recovery times, but these associations were no
longer significant after accounting for sex, cardiovascular disease,
vaccination, and variant exposure.
"Although studies have suggested
that many patients with long COVID experience mental health challenges, we did
not find that depressive symptoms prior to SARS-CoV-2 infection were a major
risk factor for long COVID."
Other groups disproportionately
affected by long COVID were American Indian and Alaska Native participants, in
whom severe infections and longer recovery times were more common.
"Our study clearly establishes
that long COVID posed a substantial personal and societal burden," says
Oelsner. "By identifying who was likely to have experienced a lengthy
recovery, we have a better understanding of who should be involved in ongoing
studies of how to lessen or prevent the long-term effects of SARS-CoV-2
infection."
New research on long COVID prevalence and risk factors
(msn.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.
'Weightless'
battery stores energy directly in carbon fiber structures
C.C. Weiss June 18, 2024
Building on the trailblazing
carbon-fiber-as-a-battery work started at Sweden's Chalmers University of
Technology, deep-tech startup Sinonus is working to commercialize a
groundbreaking new breed of multifunctional carbon fiber. In its vision, the
wonder-composite will save weight not merely because of its famously low base
weight but because it will double as a set of energy-managing electrodes,
becoming a structural battery that cuts reliance on the traditional standalone
battery pack. The company believes this style of energy storage could help
revolutionize everything from electric aircraft to windmills.
Imagine an electric car that isn't weighed down
by a huge, kilowatt-hour-stuffed battery. It wouldn't need as much power to
drive it forward and could rely on a smaller motor, saving yet more weight. Or
imagine an eVTOL that could take off without lifting a lithium-ion anchor that
requires it to be back on the ground within an hour for charging. Or a windmill
with blades that work as their own batteries, storing energy during low demand
periods for distribution at peak hours.
Sinonus hopes to write a
future in which all those visions come true. It's hard at work on a new breed
of smart carbon fiber capable of serving as the electrodes of an integrated
battery.
The Swedes have long been
working on structural composites capable of storing electricity. We first heard
tell of the work over a decade ago when Volvo publicized its participation in
a research
project it had undertaken in
cooperation with a number of academic partners, including Chalmers.
Chalmers picked up the ball and ran with it,
and a few years later, it had identified a specific
subset of carbon fibers that could
deliver just the right blend of electrical conductivity and structural
stiffness. It eventually went on to develop a prototype
"massless" carbon battery.
----Sinonus says that it has already proven its concept in
the lab by replacing AAA batteries with its carbon-electrode battery in
low-power applications. To go where it wants to go, it will have to scale power
up in a major way, first with devices like IoT hardware and computers, and
eventually upward to power-hungry equipment like electric cars and aircraft.
“Storing electrical energy in
carbon fiber may perhaps not become as efficient as traditional batteries, but
since our carbon fiber solution also has a structural load-bearing capability,
very large gains can be made at a system level,” Zetterström explains.
Of course, that "not as
efficient as traditional batteries" isn't something to skip over. Sinonus
has not yet published an energy-density figure for its battery concept, but
2021's Chalmers lab prototype had a paltry density of 24 Wh/kg, a fraction of
what you get from the modern lithium-ion packs found in everything from
smartphones to electric
cars and airplanes.
Sinonus remains optimistic, pointing to a
previous Chalmers study that found structural carbon fiber batteries had the
potential to increase EV range by up to 70%. The lower energy density could
also prove a positive, the company suggests, eliminating volatile chemicals and
high energy concentrations to ultimately decrease the chances of catastrophic
failure.
More
'Weightless' battery stores energy directly in carbon
fiber structures (newatlas.com)
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
The most dangerous man to any government is the man who is able to think things out for himself.
H. L. Mencken.
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