Pouffe Powell’s Big Day! An Interest Rate Cut, But How Much?

 Baltic Dry Index. 1768 +09      Brent Crude  77.33

Spot Gold 2493             US 2 Year Yield 3.99 +0.07

The advocates of public control cannot do without inflation. They need it in order to finance their policy of reckless spending and of lavishly subsidizing and bribing the voters.

Ludwig von Mises.

Tomorrow’s weekend final YouTube diversion.  Inside the White House. Approx. 6 minutes.

In the Asian stock casinos, more wobble. What if Fed Chairman Chair Sofa Pouffe Powell underperforms?

What if in his speech later today he doesn’t promise a 50 basis point interest rate cut next month?

What if he goes off soft landing, Goldilocks message and tumbles into an employment recession disaster?

What if US voters put VP Harris in the White House promising higher corporation taxes, CEO wage controls and grocery and other food price controls?

How to prevent food shortages, a foodstuffs black market and a US economic decline?

Below, more wobble in the Asian stock casinos.

Asia markets mostly lower as investors await Powell’s speech at Jackson Hole, assess Japan inflation data

Published Thu, Aug 22 2024 7:53 PM EDT

Asia-Pacific markets mostly fell on Friday as investors awaited U.S. Federal Reserve Chairman Jerome Powell’s comments at Jackson Hole gathering of global central bankers.

In the past, Powell has outlined broad policy initiatives and provided clues about the U.S. policy path at Jackson Hole.

In Asia, data from Japan showed the country’s headline inflation at 2.8% in July, unchanged from the previous month.

Core inflation, which strips out prices of fresh food, stood at 2.7%, in line with expectations from economists polled by Reuters and higher than June’s figure of 2.6%.

However, the so called “core-core” inflation rate, which strips out prices of both fresh food and energy and is tracked by the Bank of Japan, fell to 1.9% in July from 2.2% in June.

This is the lowest the “core-core” inflation rate has reached since September 2022.

Japan’s Nikkei 225 reversed gains to drop 0.11%, while the Topix rose marginally.

Bank of Japan’s Governor Kazuo Ueda told the country’s parliament on Friday that the central bank will “remain highly vigilant” to market moves, adding that the markets remained unstable, Reuters reported.

South Korea’s Kospi was down 0.51%, and the small-cap Kosdaq fell 0.58%.

Australia’s S&P/ASX 200 slipped 0.43%.

Hong Kong’s Hang Seng index was down 0.73%, while mainland China’s CSI 300 extended losses to a fourth straight day, dipping marginally.

Early Friday, Chinese tech giant Alibaba Group said in a statement that it would convert its secondary listing in Hong Kong to a primary listing, making the company dual listed on both in Hong Kong and in New York.

“Our voluntary conversion to dual primary listing does not involve any issue of new shares and/or fund-raising,” it added.

Overnight in the U.S., the tech-heavy Nasdaq Composite saw the largest loss among all three major indexes, shedding 1.67% as technology stocks felt the brunt of Thursday’s declines.

The broad S&P 500 slipped 0.89%, while the Dow Jones Industrial Average ended down 0.43%.

Asia stock markets: Japan CPI, Jackson Hole (cnbc.com)

Here’s everything to expect from Fed Chair Powell’s speech Friday in Jackson Hole

Published Thu, Aug 22 2024 3:08 PM EDT

For all the attention being paid to Federal Reserve Chair Jerome Powell’s policy speech Friday, the chances of it containing any startling news seem remote.

After all, the market has its mind made up: The Fed is going to start cutting rates in September — and likely will keep cutting through the end of the year and into 2025.

While there are still some questions about the magnitude and frequency of the reductions, Powell is now left to deliver a brief review of where things have been, and give some limited guidance about what’s ahead.

“Stop me if you’ve heard this before: They’re still data dependent,” said Lou Crandall, a former Fed official and now chief economist at Wrightson-ICAP, a dealer-broker where he has worked for more than 40 years. He expects Powell to be “directionally unambiguous, but specifics about how fast and exactly when will depend on the data between now and the meeting. Little doubt that they will start cutting in September.”

The speech will be delivered at 10 a.m. ET from the Fed’s annual conclave of global central bankers in Jackson Hole, Wyoming. The conference is titled “Reassessing the Effectiveness and Transmission of Monetary Policy” and runs through Saturday.

If there were any doubts about the Fed’s intentions to enact at least a quarter percentage point cut at the Sept. 17-18 open market committee meeting, they were put to rest Wednesday. Minutes from the July session showed a “vast majority” of members in favor of a September cut, barring any surprises.

Philadelphia Fed President Patrick Harker drove the point home even further Thursday when he told CNBC that in “September we need to start a process of moving rates down.”

A main question is whether the first reduction in more than four years is a quarter point or half point, a topic on which Harker would not commit. Markets are betting on a quarter but leaving open about a 1-in-4 chance for a half, according to the CME Group’s FedWatch.

A half-point move likely would require a substantial deterioration in economic data between now and then, and specifically another weak nonfarm payrolls report in two weeks.

“Even though I think the Fed’s base case is they’ll move a quarter, and my base case is they’ll move a quarter, I don’t think they’ll feel the need to provide any guidance around that this far out,” Crandall said.

In previous years, Powell has used Jackson Hole speech to outline broad policy initiatives and to provide clues about the future of policy.

More

Here's everything to expect from Fed Chair Powell's speech Friday in Jackson Hole (cnbc.com)

Finally, Oh Canada! What else could possibly go wrong? Plenty!

Trains could start rolling 'within days,' labour minister says after sending dispute to binding arbitration

Canada's 2 major freight railways came to a full stop when labour talks collapsed

Catharine Tunney · CBC News · Posted: Aug 22, 2024 12:18 AM EDT 

Freight traffic on Canada's two largest rail networks could resume "within days," Labour Minister Steve MacKinnon said Thursday after sending two labour disputes to binding arbitration.

Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd. (CPKC) locked out 9,300 engineers, conductors and yard workers just after midnight Thursday, capping months of increasingly tense and bitter labour negotiations.

Less than 17 hours after the lockout began, MacKinnon announced he's using his powers as labour minister to step in.

Section 107 of the Canada Labour Code allows the government to refer a labour dispute to the Canada Industrial Relations Board (CIRB) to find a solution.

MacKinnon said he's directed the board to settle the outstanding terms of the collective agreements and impose final binding arbitration. 

"I have also directed the board to extend the term of the current collective agreements until new agreements have been signed, and for operations on both railways to resume forthwith," he said.

MacKinnon said he expects a resolution "very quickly" but stressed that it's an independent process.

Asked repeatedly when he thinks trains will start rolling, the minister said "within days."

Both rail companies released statements Thursday saying they would restart operations following MacKinnon's announcement, but neither offered a timeline.

MacKinnon said an agreement between the two sides has been "elusive" so far and talks were at an impasse.

"The parties remain very, very far apart on these issues," he said.

The union said Thursday that picket lines will remain in place and criticized the government for referring the dispute to arbitration.

"Despite claiming to value and honour the collective bargaining process, the federal government quickly used its authority to suspend it, mere hours after an employer-imposed work stoppage," the union said in a statement.

"The Teamsters Canada Rail Conference will review the minister's referral and the CIRB's response, consulting with legal counsel to determine the next steps. Meanwhile, picket lines remain in place."

Pressure from industry groups and provincial governments to resolve the conflict has been mounting for weeks.  

The companies haul a combined $1 billion in goods each day, according to the Railway Association of Canada. Many shipments were pre-emptively stopped to avoid stranding cargo.

More

Trains could start rolling 'within days,' labour minister says after sending dispute to binding arbitration | CBC News

Canada Cargo Snarls Risk Adding to Panic-Fueled Restocking

By Laura Curtis  August 22, 2024 at 12:00 PM GMT+1

North American importers and exporters are scrambling to find alternative transport services as a rail shutdown in Canada threatens to delay shipments, boost freight costs and cause pileups at US ports already handling a surge in cargo.

Canada’s two biggest railways halted operations early Thursday after talks with a union failed, blocking key arteries of supply chains stretching across the US to Mexico.

For the past several days, fears of a lockout or strike hindered the movement of goods including wheat, chemicals and fertilizers. The railways started a phased stoppage of their networks last week to ensure hazardous goods aren’t parked in unsafe places and crews aren’t stranded in remote areas.

Read More: US Shippers Brace for Port Strain as Canada Railways Shut Down

C.H. Robinson Worldwide has been diverting much of its US customers’ ocean cargo away from Canadian ports to marine terminals in Southern California and Washington state. Some retail customers are switching to trucks for time-sensitive goods, said Scott Shannon, the freight forwarding firm’s vice president for Canada.

Moody’s estimates a full-fledged rail strike would cost the Canadian economy C$341 million ($251 million) a day. The disruptions might also make things more expensive just as central bankers gather in Wyoming to discuss progress in tamping down inflation.

“A disruption to this crucial element of Canada’s transportation network would cripple the nation’s supply chains and threaten to reignite inflationary pressures,” Moody’s Analytics senior economist Brendan LaCerda said in a note Wednesday.

Shipping rates that were starting to soften may get a short-term bounce tied to the disruption. “We may see an immediate uptick in freight rates as market participants brace for significant disruptions,” said Christian Roeloffs, CEO of Germany-based Container xChange.

Other routes have their own uncertainty baked in. A union of 730 dock foremen in British Columbia — home to Canada’s busiest port in Vancouver — are also threatening to strike, pending a vote by the International Longshore & Warehouse Union Local 514.

Solidarity Snarls

Even if rerouting cargo is possible, some dockworker unions on the US West Coast may refuse to unload cargo originally bound for Canada if the BC longshore foremen elect to go out on strike, too.

Canada’s labor disputes are also coinciding with stalled talks covering about 45,000 dockworkers at every major seaport from Houston to Boston. The International Longshoremen Association called off wage negotiations earlier this summer and are preparing to strike if no deal is reached before the Sept. 30 expiration of their existing contract.

Rail paralysis in Canada is “a bad omen for the industry as US East Coast and Gulf Coast ports may shortly close too by Oct. 1,” said Peter Sand, chief analyst with Xeneta, an Oslo-based freight analytics platform. “The longer disruptions like this happen, the longer it takes to work through the backlogs and get back to ‘business as usual’ again.”

Supply Chain Latest: Canadian Rail Disruptions and Economic Impact - 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.

A recession is coming in the U.S., and ‘a few rate cuts’ won’t prevent it, says strategist

Published Thu, Aug 22 2024 9:54 PM EDT

Contrary to what many believe, investment research firm BCA Research sees that the economy is on the cusp of a recession, and the predicted upcoming U.S. Federal Reserve rate cuts will not be sufficient to steer markets out of it.

“Every single one of us now believes there’s a recession, and that’s exactly the opposite of what the market believes,” Garry Evans, BCA Research’s chief strategist of global asset allocation told CNBC’s “Squawk Box Asia.”

Evans pointed to signs of the economy slowing down, including what he called the “deteriorating” U.S. labor market. The U.S. Labor Department reported that the unemployment rate inched to 4.3% in July to its highest since October 2021, and a gauge for U.S. manufacturing activity fell to an eight-month low in the same month.

“There’s things that are breaking down quite rapidly now,” said the strategist.

The Fed funds futures market suggests that investors are expecting at least three rate cuts by the end of the year, according to the CME FedWatch Tool.

But according to Evans, that will not move the needle much on his projections.

“A few rate cuts are not going to prevent a recession. Average recession is 10 months… It takes something like a year before fed cuts actually start to give a boost to the economy,” he said.

“The market believes that the fed fund rate at the end of next year will be 3%. It’s currently at 5.3%. That will not happen unless there is a recession,” he added.

A recession typically occurs when there are two consecutive quarters of decline in a country’s real GDP.

Traders are also keeping their eye on 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 on Friday.

The U.S. economy has remained robust even amid ongoing inflation and elevated interest rates.

In the last century, there have been more than a dozen recessions, some lasting as long as a year and a half.

Although the U.S. isn’t officially in a recession, a survey conducted by Affirm reveals that about 3 out of 5 Americans think it is.

U.S. recession is coming and 'a few rate cuts' won't prevent it: Strategist (cnbc.com)

Target, Macy's feel the pinch as consumer spending softens

August 21, 2024

The pressure on the consumer is shifting to retailers, as earnings from industry giants Target (TGT) and Macy's (M) point to ongoing weakness in the consumer.

Target reported better-than-expected second quarter results, topping Wall Street expectations on profit and revenue. The retail powerhouse also saw a 3% increase in store traffic during the quarter. However, Target's full-year guidance remains cautious, reflecting the ongoing consumer spending slowdown.

In contrast, Macy's reported net sales of $4.9 billion, falling short of the $5.06 billion estimated. Same-store sales also disappointed, falling 4% where Wall Street had only been expecting a 0.27% drop.

Yahoo Finance executive editor Brian Sozzi breaks down the factors that drove Target's results, despite the consumer still being "choosy." This includes the company's efforts to lower prices and introduce more discount initiatives, which could position it for strength heading into the holiday season.

Meanwhile, Yahoo Finance senior reporter Brooke DiPalma dives into Macy's report, discussing what it revealed about the state of the consumer. She notes that discretionary consumer spending is still feeling squeezed, with even higher-end consumers feeling the pinch and the broader department store landscape continuing to struggle.

Target, Macy's feel the pinch as consumer spending softens (yahoo.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

This diet may reduce Covid-19 risk, new research suggests

August 21, 2024

A healthy diet has long been hailed by some experts as one potentially important factor influencing the risk of Covid-19, or how bad someone’s case gets.

But a team of researchers in Indonesia looked into how a specific lifestyle might affect these odds — finding that following the Mediterranean diet may reduce your risk of getting Covid-19, according to a review published Wednesday in the journal PLOS One.

“There have been numerous studies that heavily associated COVID-19 with inflammation (in the body), while the Mediterranean diet has been long-known for its anti-inflammatory properties,” said the review’s senior author Andre Siahaan, a lecturer and member of the Center of Evidence-Based Medicine at the University of North Sumatra in Indonesia, via email. “Through our study, we reported a link that further strengthened the connection between these two, in line with our hypothesis.”

Inflammation has been associated with both the development and severity of Covid-19.

Since the coronavirus struck in 2019, there have been more than 775 million reported cases of infection, according to the World Health Organization. That number is still growing, with more than 47,000 cases reported within just the week leading up to August 4 — the most recent statistic from the WHO. More than 7 million people have died from Covid-19.

To investigate whether the risk of infection and severity may be alleviated by the Mediterranean diet, the team reviewed six studies with more than 55,400 participants total across five countries and were published between 2020 and 2023. Participants reported their adherence to the Mediterranean diet using questionnaires.

To determine Covid-19 cases, four studies relied on participants’ reports on whether they had been infected, while another study identified cases by both self-reports and tests for antibodies. All studies with findings regarding symptom severity were also based on participants’ recollections.

Three studies found a “significant” association between the Mediterranean diet and reduced risk of coronavirus infection, while two other studies showed nonsignificant results. Across all these studies, participants following the Mediterranean diet had a lower risk of infection — which can’t be reliably quantified into a specific number partly due to the variance in significance across studies, Siahaan said.

But whether the diet could also reduce the number of symptoms or the severity of disease isn’t as clear, said the authors, who graded the evidence on these aspects as “low certainty.”

Only one study reported a significant link between greater adherence to the Mediterranean diet and fewer Covid-19 symptoms, yet three others found a nonsignificant relationship. One study found the diet reduced the likelihood of severe Covid-19, while two others had inconsistent findings.

More

This diet may reduce Covid-19 risk, new research suggests (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.

Graphene-metal metastructures offer new possibilities for efficient micropropulsion systems

August 21, 2024

(Nanowerk Spotlight) The concept of laser propulsion, introduced by Professor Arthur Kantrowitz in 1972, marked the beginning of a new era in space exploration technology. Since then, laser micropropulsion (LMP) has emerged as one of the most promising technologies for propelling miniature spacecraft, such as microthrusters, nanosatellites, and small unmanned aerial vehicles. The technology works by focusing a laser on the surface of a propellant, generating high energy densities that cause small amounts of material to be ejected, thereby producing thrust. However, the success of LMP systems depends heavily on the propellant material, which must balance efficiency, stability, and specific performance metrics like specific impulse and thrust per unit mass.

Traditional propellants, including metal and non-metal nanoparticles, have shown potential due to their strong light absorption and large surface areas. Yet, they are plagued by significant drawbacks, such as high thermal conductivity, instability, susceptibility to oxidation, and a tendency to aggregate. These issues are exacerbated by the plasma shielding effects that occur during interactions with pulsed lasers, which hinder the overall performance of pulsed laser micropropulsion (PLMP) systems.

Moreover, the high densities of metal nanoparticles present challenges in meeting the performance requirements of PLMP systems, as they result in smaller volumes for the same mass of propellant, which is undesirable for applications where space and weight are critical constraints.

To address these challenges, a novel approach has been developed that leverages the unique properties of metal-organic frameworks (MOFs) and graphene-metal metastructures (GMMs). MOFs, which consist of metal cations or clusters coordinated with organic ligands, serve as ideal precursors for creating hybrid structures that combine the benefits of both carbon and metal components. By employing ultrafast laser interactions with MOFs, researchers have been able to synthesize GMMs with precisely controlled metal nanoparticle sizes, graphene layers, and inter-particle gaps, all in an ambient air environment. These GMMs exhibit remarkable properties, including high light absorption efficiency, enhanced energy transfer, and improved material stability.

One of the key innovations in this research is the use of graphene, which has exceptional optical and electronic properties. In GMMs, graphene acts as an efficient carrier for metal nanoparticles, facilitating strong light-matter interactions through localized plasmon resonance (LPR). This interaction significantly enhances the absorption and conversion of laser energy, which is critical for improving the performance of PLMP systems. The precise control over the size and distribution of metal nanoparticles within the graphene matrix also prevents aggregation and improves electron transfer efficiency, further boosting the overall effectiveness of the propellant.

Experimental results from the study reveal that GMMs derived from various MOF precursors, including HKUST-1, Cu-MOF-2, Cu-MOF-74, and CPL-1, exhibit superior PLMP performance compared to traditional propellants. For instance, GMM-(HKUST-1) achieved a specific impulse of 1072.94 seconds, an ablation efficiency of 51.22%, and an impulse thrust per mass of 105.15 μN μg−1. These metrics surpass those of traditional propellants, highlighting the potential of GMMs to revolutionize micropropulsion systems. Additionally, GMMs exhibit significantly lower densities than conventional propellants, which allows for larger volumes of propellant to be used for the same mass, a critical advantage for space-constrained applications.

More

Graphene-metal metastructures offer new possibilities for efficient micropropulsion systems (nanowerk.com)

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

World Debt Clocks (usdebtclock.org)

Another weekend and finally a two horse race to the November US presidential election. And a very strange race at that. Two very weird contenders offer bizarre economic follies to the US voters. Both promise to run up Uncle Scam's federal debt in spades, yet no one in mainstream media seems to care. One day relatively soon they will. Have a great weekend everyone.

The worship of the state is the worship of force. There is no more dangerous menace to civilization than a government of incompetent, corrupt, or vile men. The worst evils which mankind ever had to endure were inflicted by governments.

Ludwig von Mises.