Tuesday, 20 August 2024

2024 = 1929 2.0? Higher US Taxes? US Eggflation.

 Baltic Dry Index. 1708 +17      Brent Crude  77.10

Spot Gold 2502             US 2 Year Yield 4.06  unch.

The most dangerous man to any government is the man who is able to think things out for himself.

H. L. Mencken.

In the stock casinos, it’s still party time, but is it 1929 all over again?

If Vice President Harris wins in November, her proposal to raise corporate tax back to 28 percent and to bring in wage and price controls are likely to make any new US recession, (which I think already started in April or May,) much deeper than anything seen since 1929.

Below, more fantasy “economics” in the global stock casinos.

Japan’s Nikkei leads gains in Asia Pacific as investors assess RBA minutes; China holds key rates

Published Mon, Aug 19 2024 7:57 PM EDT

Asia-Pacific markets were mostly up on Tuesday, tracking Wall Street rally overnight, while investors also assessed minutes of the Reserve Bank of Australia’s latest meeting.

The region was led by Japan’s Nikkei 225, which gained over 2%, powered by utilities and healthcare stocks. The broad-based Topix was up 1.3%.

China’s loan prime rates were held at 3.35% for the one-year LPR and 3.85% for the five-year LPR, in line with expectations from a Reuters poll of economists.

The one-year LPR acts as the benchmark for most corporate loans, and the five-year LPR serves as a reference rate for mortgages.

Minutes from the Reserve Bank of Australia’s August meeting were released on Tuesday. At the meeting, the bank kept its benchmark interest rate at 4.35%, but noted that inflation remained “above target” and was “proving persistent.”

The central bank said in its release that the board members had considered the case for raising the interest rate, but decided to leave it unchanged as the flow of data since the previous meeting “had not been sufficient to warrant a change in the stance of monetary policy. “

However, the RBA warned that it was “unlikely” that rates would be reduced in the short term, adding that “it was not possible to either rule in or rule out future changes in the cash rate target.”

South Korea’s Kospi was 0.87% higher, and the small-cap Kosdaq rose 1%.

The country’s consumer sentiment in August retreated from a two year high of 103.6, coming in at 100.8, with South Korean media outlet Yonhap reporting that this was “due to U.S. recession woes and the subsequent stock market rout.” A figure above 100 indicates that optimists outnumber pessimists.

Australia’s S&P/ASX 200 climbed 0.28% after the RBA release.

However, Hong Kong’s Hang Seng index was down 0.42%, while the mainland Chinese CSI300 was 0.42% lower.

Shares of real estate firm Kaisa dropped 1.9% to 10.15 Hong Kong cents after jumping as much as 14% as the company announced a debt restructuring agreement, consisting of an issue of $5 billion in senior notes and $4.8 billion in mandatory convertible bonds.

In the U.S., all three major indexes advanced, with the S&P 500 and Nasdaq notching their eighth straight winning day.

The Dow Jones Industrial Average added 0.58%, while the S&P 500 rose 0.97%. The tech-heavy Nasdaq Composite jumped 1.39%.

Asia stock markets: China loan prime rates and RBA minutes in focus (cnbc.com)

European stocks head for mixed open as market uncertainty lingers

Published Tue, Aug 20 2024

LONDON — European stocks are expected to open in mixed territory Tuesday, with market uncertainty lingering over the outlook for interest rate cuts.

The U.K.’s FTSE index is expected to open 28 points lower at 8,334, Germany’s DAX flat at 18,426, France’s CAC 40 down 6 points at 7,499 and Italy’s FTSE MIB up 6 points at 33,368, according to data from IG.

Global markets will be focused on key Federal Reserve events this week. Minutes from the central bank’s most recent meeting will be released Wednesday, before Fed Chair Jerome Powell’s Jackson Hole, Wyoming, speech on Friday.

Both events could give investors more clarity on the outlook for interest rate cuts and what to expect at the Fed’s next meeting. Fed futures funds pricing indicates a roughly 76% likelihood of central bank policymakers lowering rates by 25 basis points in September, per the CME FedWatch Tool.

Asia-Pacific markets were mostly up on Tuesday, tracking the Wall Street rally Monday, while investors also assessed minutes of the Reserve Bank of Australia’s latest meeting. U.S. stock futures were flat last night after the S&P 500 and the Nasdaq Composite notched their longest winning streaks of 2024. 

Data releases in Europe Tuesday include Germany’s producer price index, the latest monetary policy decision from Sweden’s central bank and the EU’s final year-on-year inflation rate.

European markets: stocks, news, data and earnings (cnbc.com)

Harris proposes raising the corporate tax rate to 28%, rolling back a Trump law

Published Mon, Aug 19 2024 4:23 PM EDT Updated Mon, Aug 19 2024 5:01 PM EDT

Vice President Kamala Harris is calling for raising the corporate tax rate to 28%, her first major proposal to raise revenues and finance expensive plans she wants to pursue as president.

Harris campaign spokesman James Singer told NBC News that she would push for a 28% corporate tax rate, calling it “a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.”

“As President, Kamala Harris will focus on creating an opportunity economy for the middle class that advances their economic security, stability, and dignity,” Singer wrote in an email.

If enacted, the policy would raise hundreds of billions of dollars, as the nonpartisan Congressional Budget Office has projected that 1 percentage point increases in the corporate rate corresponds to about $100 billion over a decade. It would also roll back a big part of former President Donald Trump’s signature legislation in 2017 as president, which slashed the corporate tax rate from 35% to 21%.

Trump, meanwhile, recently said he would cut taxes even further if elected president, including on businesses.

The move comes as Harris slowly adds details to her governing vision on the week of the Democratic convention, including conveying to critics how she would seek to pay for costly ideas, such as expanding the child tax credit and easing the cost of housing and medical debt. She has not provided a cost estimate of her proposals so far or matched them with pay-fors.

A 28% corporate tax rate is lower than what Harris proposed in her failed 2020 presidential campaign, when she called for fully repealing Trump’s tax cuts, which would have returned the corporate rate to 35%. The new stance aligns Harris with President Joe Biden’s most recent budget proposal.

More

Harris proposes raising the corporate tax rate to 28%, rolling back a Trump law (cnbc.com)

In other news.

Gold set for fresh highs ahead of Fed rate decision — analysts see prices at $3,000 by next year

Published Mon, Aug 19 2024 3:53 AM EDT

Gold prices have been hitting new highs and analysts expect more records, with some forecasting the metal to hit $3,000 per ounce next year, as the U.S. Federal Reserve meeting draws closer.

Spot gold held steady at last session’s record high of $2,508.14 per ounce, according to data from FactSet, while U.S. gold futures jumped 0.16% to set a new record of $2,540.8 per ounce during Monday Asia hours, extending gains from Friday.

“2024 is the year where gold is supposed to reach multiple highs,” said Sabrin Chowdhury, head of commodities analysis at BMI, citing gold’s appeal as a safe haven asset. 

“Gold thrives from uncertainty… [and] uncertainty is at its peak,” she added, referring to 2024 being the year of elections, Ukraine’s recent incursion back into Russia and growing Middle East tensions.

Israel and Iran appear on the verge of a direct conflict after Iran vowed to retaliate following the assassination of Hamas political leader Ismail Haniyeh in Tehran earlier this month. Israel has placed its military on high alert, and the U.S. sent a carrier strike group and guided-missile submarine to the region to support its ally’s defense.

Another factor driving bullion prices is increasing chances of a Fed rate cut in September. July’s Fed meeting bolstered investor confidence that a rate cut next month is “on the table.”

“Once the Fed starts to cut rates, likely next month, gold could reach $2,700 an ounce,” said the BMI analyst. Other analysts share a similar bullish sentiment.

Lower interest rates reduce the opportunity cost of buying gold, making it more attractive, in relation to interest-bearing assets such as Treasurys, which compete with gold as a safe-haven offering.

Lower interest rates also pressure the dollar, making greenback-priced bullion attractive for holders of other currencies.

Gold investor sentiment looks set for the upside in the three to six months window, Citi analysts said in note on Monday. 

The bank added that they see a $3,000 per ounce target by the middle of 2025, and a fourth quarter average price forecast of $2,550 per ounce.

Traders will also be watching out for the annual economic policy symposium in Jackson Hole this week, which could offer greater clarity on the interest rate outlook, with Fed Chair Jerome Powell set to speak at the gathering.

Gold set for fresh highs ahead of Fed rate decision (cnbc.com)

Gold Bars Are Worth a Million Dollars for the First Time

By Jack Wittels  August 19, 2024 at 6:05 PM GMT+1

Subscription required.

Gold Bars Are Worth a Million Dollars for the First Time - Bloomberg

The 20 countries in the world most heavily in debt - UK at number 15

18 August 2024

The United Kingdom has placed higher than Sierra LeoneEgypt and Mozambique in a table of countries with the highest amount of debt as a ratio of gross domestic product (GDP).

With an estimated GDP of £3 trillion, the UK is said to have a debt totalling 106 percent of this amount making it the 15th placed country in the debt to ratio table.

Global debt has fallen in the years since the pandemic as fiscal support measures were withdrawn in its wake as well as the rebound in economic activity, inflation surprises, and interest rate hikes.

Despite this global trend, the UK's debt has risen in recent years, with estimates by the Office for Budget Responsibility (OBR) estimating that it will continue to rise over the next four years.

The UK is not the only leading economy inside the top 20 with France placing eleventh, the United States sixth and Japan coming out on top with an eye watering 252 percent.

Whilst the word 'debt' is often enough to send most people into a varying states of anxiety, when talking in terms of large economies, debt can often be a positive rather than a negative.

More

The 20 countries in the world most heavily in debt - UK at number 15 (msn.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.

Today, US consumer eggflation.

Egg prices are rising once again as bird flu limits supply

Published Sat, Aug 17 2024 8:44 AM EDT

Egg prices are climbing, placing the household staple back in the spotlight as consumers stay concerned not only about inflation but the absolute level of prices.

July marked a third straight month that egg prices rose on an annual basis, a reversal from a year of relative decreases. The culprit was a continued battle against the highly pathogenic avian influenza, known in short as HPAI or the bird flu.

Prices for the vital food ingredient soared 19.1% in July compared with the same month a year prior, according to consumer price index, or CPI, data released this week. By comparison, the entire CPI basket of items rose just 2.9% over the same period.

Inflation in egg prices became a focus for consumers during the pandemic given their ubiquity in everyday cooking. Increases in eggs and other groceries have been top of mind for consumers grappling with higher costs, in turn hurting consumer sentiment in recent years.

But the latest inflationary wave appears more connected to a spike of nearly 8% from March to April, which can be tied to seasonal patterns in the bird flu. That was largest month-over-month increase since the spring of 2023.

“The short answer, we think, is related to avian influenza,” said Caitlinn Hubbell, market research analyst at Purdue University’s Center for Food Demand Analysis and Sustainability in West Lafayette, Indiana. “As unfortunate as that is, the high-path avian influenza has continued to be around.”

The bird flu had a historic outbreak in 2022 and surged once again at the end of 2023. More recently, Hubbell said resurgences in Colorado and California have hurt supplies.

Egg demand is considered “inelastic,” Hubbell said, meaning consumers will usually buy the same amount regardless of price increases. On the flip side, she noted that consumers usually won’t stock up when they see lower costs.

Inelastic items tend to see big price changes from even small changes in supply, she said. That can underscore the impact of any bird flu outbreaks on the prices customers see on grocery store shelves.

For shoppers, this has resulted in higher prices. The average rate for a dozen large, Grade A eggs topped $3 in July for the first time in more than a year, according to the Bureau of Labor Statistics.

Despite this reacceleration, prices are still more than 20% below levels seen last year. Nonetheless, the price of eggs tracked within the CPI basket is up about 42% compared with July 2021.

Looking ahead, Hubbell said price movements will hinge on the state of the bird flu. But she’s hopeful consumers can see some relief with upcoming seasons less likely to bring outbreaks.

“It’s hard to tell,” Hubbell said. “It all depends on the impact in the size and scope of HPAI.”

Egg prices are rising once again as bird flu limits supply (cnbc.com)

Study Shows Renewables Raise Food Prices

Aug 12 2024

As countries including Australia embrace renewable energy production, a recent study sheds light on some overlooked impacts of this transition.

While the benefits of renewable energy are well-established, researchers are also examining the less discussed economic and social impacts of the move towards ‘green’ energy.

A recent study shows that the shift to renewable energy sources, such as solar and wind power, has led to increased food prices and a decrease in agricultural output.

"Our findings show that the energy transition is not a neutral process and that it carries significant consequences," says Professor Emilson Silva, director of the University of Auckland Energy Centre and co-author of the study.

"It directly impacts people's lives."

Professor Silva and co-author Dr Luccas Attílio from the Federal University of Ouro Preto, Brazil, analysed data from 32 OECD countries, including Australia, from 2000 to 2021.

Their findings show that nations more advanced in their renewable energy drive face more substantial effects, with higher food prices and more pronounced reductions in agricultural production, compared to those that are slower to adopt renewable energy sources.

"This evidence highlights a critical challenge," says Dr Silva. "As the push for renewable energy intensifies, so does the pressure on vulnerable populations who bear the brunt of rising food costs."

Dr Silva and Dr Attílio say governments need to consider income support programmes and adopt more nuanced approaches to the energy transition.

"While going ‘green' is essential for mitigating climate change, it must be balanced with strategies to protect those negatively impacted," says Dr Silva.

The study, detailed in the working paper 'Does the energy transition affect food prices and agricultural production?', originated from Professor Silva's observations of farmers’ recent protests in Australia and other countries against higher production costs associated with climate policies and the growth of renewable energy production.

“Some of the farmers had been grappling with rising work-related costs and issues stemming from their land being repurposed for solar and wind installations. So, I wanted to look at the data to find out what effect the uptake of renewable energy sources was actually having.”

Study Shows Renewables Raise Food Prices (azocleantech.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

Number of COVID-19 patients expected to reach 350,000 next week

14:22 August 19, 2024

SEOUL, Aug. 19 (Yonhap) -- The number of COVID-19 patients is expected to reach 350,000 next week, matching a peak seen in last year's summer wave, a senior health ministry official said Monday.

Hong Jung-ik, director-general in charge of infectious disease policy at the Korea Disease Control and Prevention Agency, told a radio interview that health authorities have no plan to raise an alert level for COVID-19, while supplying enough treatments and testing kits.

"Although the current number of patients is about half of what was reported in August last year, considering the summer season trends over the past two years, the weekly figure could reach 350,000 by the end of this month, similar to last year's peak," Hong said.

Health authorities have expected the current wave of COVID-19 to peak later this month.

Hong said that the government has been distributing COVID-19 treatments and noted that sufficient volume will be available at local pharmacies by the end of this month.

Last week, the presidential office said the country will supply treatments for 260,000 COVID-19 patients.

Hong added that the government will supply more than 5 million testing kits by the end of this month.

Number of COVID-19 patients expected to reach 350,000 next week | Yonhap News Agency (yna.co.kr)

Pfizer, BioNtech say combined flu-COVID vaccine misses a main goal of Phase 3 trial

By Deena Beasley

August 16, 2024 11:51 AM GMT+1

Aug 16 (Reuters) - Pfizer (PFE.N), opens new tab and BioNTech (22UAy.DE), opens new tab said a late-stage trial of their experimental mRNA vaccine to protect against influenza and COVID-19 found the combination shot failed to meet one of the study's two main goals and they are evaluating next steps.

The drugmakers said on Friday the Phase 3 trial showed the vaccine elicited a robust influenza A immune response, compared to a standard flu vaccine, but showed weaker results against the influenza B strain.

The formulation showed similar responses against SARS-CoV-2 as the companies' COVID-19 vaccine.

"We remain optimistic about our combination COVID-19 and influenza program, for which we are evaluating the next steps," Annaliesa Anderson, Pfizer's head of vaccine research and development, said in a statement.

The companies said they are discussing the findings with health authorities and evaluating adjustments to the candidate.

The trial, which compared the experimental vaccine to a licensed influenza vaccine and the companies' COVID-19 vaccine given at the same visit, enrolled 8,000 healthy adults.

The drugmakers said no safety issues with the combination vaccine have been identified.

Pfizer also said a Phase 2 trial of its second-generation mRNA flu vaccine candidate showed that the formulation elicited robust influenza A and B responses, with no safety issues reported.

It said data from the 450-patient flu vaccine trial would be made available at a later date.

Pfizer, BioNtech say combined flu-COVID vaccine misses a main goal of Phase 3 trial | Reuters

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.

Saudi: ACWA Power’s Al Rass solar power plant begins production

August 18, 2024 08:00 PM GST

Saudi Arabia’s ACWA Power Company announced on Sunday the Al Rass 1 solar photovoltaic project is now online and has started power generation in the kingdom’s Qassim province.

In a filing to the Saudi bourse Tadawul, ACWA Power said it received a notice from the Al Rass Renewable Energy Company on 15 August stating that upon obtaining the commercial operation certificate from the offtaker for the full 700 megawatt plant, the project is now online and has started power generation.

ACWA Power owns a 40.1% share in the Al Rass plant’s operating company and said it expects the project’s financial impact to be reflected from the second half of 2024 onwards.

The Saudi Power Procurement Company (SPPC) is the sole offtaker on this project and has signed a 25-year power purchase agreement with ACWA Power for an investment value of $450 million, which includes the plant’s development, construction and operations, to provide power for the national grid.

According to project information, the energy is being generated using bi-facial modules with tracking technology. The plant is capable of powering 132,000 homes, while offsetting nearly 1.5 million tons of emissions per year.

ACWA Power's Al Rass solar power plant begins production - Construction Week Online

Next, the world global debt clock. Nations debts to GDP compared.  

World Debt Clocks (usdebtclock.org)

There are many men of principle in both parties in America, but there is no party of principle.

Alexis de Tocqueville.

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