Baltic Dry Index. 1668 -40 Brent Crude 80.01
Spot Gold 2459 US 2 Year Yield 4.16 -0.13
An optimist will tell you the glass is half-full; the pessimist, half-empty; and the engineer will tell you the glass is twice the size it needs to be.
Oscar Wilde.
A harsh reality hit the stock casinos yesterday. In the real world far from the stock casinos, the next recession seems to be turning up. Recessions are never good for the majority of stocks.
I think the USA entered recession in April or May and that most central banks have left it too late to begin cutting interest rates, but then I’ve only been following stock and commodity markets and booms and busts since 1968.
Below, a serious wobble or the start of a massive, wealth destroying rout? I think the latter and so apparently does the US bond market.
Later today, the latest US jobs report.
It looks like it’s going to be a long and trying summer from here.
Japan stocks plunge as much as 5% with Asia
markets broadly lower after Wall Street sell-off
Published Thu, Aug 1 20247:41 PM EDT
Japan’s benchmark indexes nosedived as much as 5% on Friday, with most Asia-Pacific markets lower after a sell-off on Wall Street overnight over recession worries.
The Nikkei extended its 2.62% slide on Thursday to lead losses in the region and reach its lowest level since February.
Both the Nikkei and Topix pared losses later in the session and were last trading at 4.56% and 4.47%, respectively.
Some heavyweight stocks that fell include Softbank Group, which tumbled over 5%, while trading houses Mitsui and Marubeni saw losses of over 8% and 6%, respectively. Semiconductor firm Tokyo Electron was down over 9%.
Japanese government bond yields fell, with the yield on the benchmark 10-year JGB falling below the 1% mark and hitting its lowest level since June 20.
South Korea’s Kospi tumbled 3.19%, dragged mostly by banking stocks, while the small-cap Kosdaq plunged 3.46%.
However, K-pop stocks were a bright spot for the market. Shares of all four listed K-pop companies defied the broader sell-off to climb on Friday, led by Hybe after the firm announced its new business strategy on Thursday after market hours.
Australia’s S&P/ASX 200 was down 2.14%, retreating from its all-time high on Thursday.
Hong Kong’s Hang Seng index was 2% lower,
while mainland China’s CSI 300 saw the smallest loss in Asia, down 0.66%
Separately, South Korea’s inflation numbers for July came in slightly higher than expected, with the country’s consumer price index climbing 2.6% year on year, compared to the 2.5% expected by economists polled by Reuters.
The gloomy sentiment in Asia markets comes after a sell-off on Wall Street in Thursday’s trading session, which saw all three major U.S. indexes plunge on recession fears.
The Dow Jones Industrial Average dropped 1.21%, while the S&P 500 shed 1.37% and the tech heavy Nasdaq Composite slipped 2.3%.
The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%.
In the U.S., fresh data stoked fears over a possible recession and apprehensions that the Federal Reserve could be too late in cutting interest rates.
Initial jobless claims rose the most since August 2023. The ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and signaling economic contraction.
After these data, the 10-year Treasury
yield dropped below 4% for the first time since February.
Asia stock markets: South Korea CPI, Nikkei sell off (cnbc.com)
Dow closes nearly 500 points lower Thursday as
investors’ recession fears awaken: Live updates
Updated Thu, Aug 1 20244:36 PM EDT
Stocks sold off Thursday, with the Dow Jones Industrial Average tumbling nearly 500 points, as investors’ fears over a recession surfaced.
The Dow dropped 494.82 points, or 1.21%, to end at 40,347.97. At its session lows, the 30-stock index lost 744.22 points, or about 1.8%. The S&P 500 shed 1.37% to end at 5,446.68, while the Nasdaq Composite slipped 2.3% to 17,194.15. The Russell 2000 index, the small-cap benchmark that has rallied lately, dropped 3%.
Some fresh data stoked fears over a possible recession and the notion that the Federal Reserve could be too late to start cutting interest rates. Initial jobless claims rose the most since August 2023. The ISM manufacturing index, a barometer of factory activity in the U.S., came in at 46.8%, worse than expected and a signal of economic contraction. After these releases, the 10-year Treasury yield dropped below 4% for the first time since February.
These weak data releases come a day after central bank policymakers chose to keep rates at the highest levels in two decades, when Fed Chair Jerome Powell gave investors some hope by signaling a September rate cut is on the table.
“The data we have got since the Fed meeting signals all of a sudden that people are now worrying that maybe it isn’t a soft landing and the Fed has vacillated too long,” said Tom Fitzpatrick, managing director for global market insights at R.J. O’Brien and Associates. “The bond market is already telling you that we’re behind the curve … the Fed is more prepared to make a different mistake for fear of making a similar mistake.”
Chris Rupkey, chief economist at FWDBONDS, added that Thursday’s data hinted at an economic downturn amid the volatility.
---- Even Big Tech
stocks such as Nvidia felt
the pain with the artificial intelligence chip leader off 6.7% as investors
took some chips off the table ahead of what could be a more volatile time for
the market as the November election approaches. The S&P 500 is up 14% for the
year still, coming off its eighth positive month in the last nine in July.
Stock market news for August 1, 2024 (cnbc.com)
Why the stock market is suddenly freaking out
Updated 4:03 PM EDT, Thu August 1, 2024
CNN — The narrative on Wall Street is shifting.
Traders have long placed their bets on the Federal Reserve cutting rates in September, and Fed Chair Jerome Powell basically confirmed as much Wednesday.
That rate cut, expected in six weeks, was priced in to stocks, which have been rising over the past few months in hopes of a cut. Rate cuts tend to juice stocks, because they lower borrowing costs for businesses and can help boost profits.
But now, fear is starting to take hold, as concerns mount that the Fed may not be acting quickly enough to keep America’s job market in good shape.
Powell warned Wednesday that cracks are starting to form in the labor market.
On Thursday, the stock market underwent a
bit of a reset, with the Dow
falling more than 600 points as America may be entering a new phase of
the economy — a slowdown in hiring. The broader S&P 500 tumbled 1.5% and the
tech-heavy Nasdaq Composite dropped a stunning 2.5%.
It’s been a turbulent few weeks for
markets, as some earnings reports have underwhelmed and fear about increased
regulation of tech and lackluster AI performance have soured investors’ moods.
Companies have reported US consumers have pulled back from restaurants and
retailers, and this week some
preliminary jobs data looked weak.
More
Why the stock market is suddenly freaking out | CNN Business
In other news.
Bank of England cuts interest rates for first time
since March 2020
Thursday 01 August 2024 12:02 pm | Updated: Thursday 01 August 2024 12:25 pm
The Bank of England voted to cut interest rates for the first time since March 2020 in a knife-edge decision.
Five members of the Monetary Policy Committee (MPC), including Governor Andrew Bailey, voted to reduce the Bank Rate by 25 basis points while four, including chief economist Huw Pill, backed another hold.
The decision means interest rates now stand at 5.0 per cent, having stood at 5.25 per cent since last August. That was the joint longest period that rates have been left on hold since the Bank gained independence in 1997.
“Ensuring low and stable inflation is the best thing we can do to support economic growth and the prosperity of the country,” he added.
Investors were genuinely uncertain about what the Bank would decide today given the different signals on inflation over the past few months.
Inflation has been at the two per cent target for the past two months, having come down from a peak of over 11 per cent back in Autumn 2022.
However, indicators of underlying inflation have come in ahead of the Bank’s forecasts over the past few months, raising fears that price pressures might be more persistent than feared.
Services inflation, which the Bank has
identified as a good gauge of domestic price pressures, remained stuck at 5.7
per cent in June, comfortably ahead of the Bank’s May forecasts.
Annual wage growth has also been running at 5.7 per cent, nearly twice the level consistent with inflation remaining at the two per cent target.
And even though rates have been held steady since last August, economic growth has actually accelerated in a sign that the economy is withstanding the pressure from tight monetary policy.
But, looking to the months ahead, members in favour of a cut saw enough evidence to suggest that inflationary pressures are slowly dissipating.
For the majority, the strength in services inflation reflected “more volatile” components rather than ingrained price pressures. The Bank’s own Decision Maker Panel suggests that wage and price pressures will continue to wane in future.
Despite the cut to Bank Rate, monetary policy will remain in restrictive territory which means it will bear down on demand. If demand remains weak, then firms may struggle to hike prices without losing customers.
“Domestic inflationary persistence is
expected to fade away over the next few years, owing to the restrictive stance
of monetary policy,” the statement said.
Still, the decision was “finely balanced”
for some of these members, reflecting the continued upside risks to
inflation.
Bank of England cuts interest rates for first time since March 2020 (cityam.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.
Conformity is the last refuge of the unimaginative.
Oscar Wilde.
This
yield curve-fueled recession indicator from the Fed shows a 70% probability of
a downturn. Here’s what its author says.
July
31, 2024
The
Federal Reserve seems poised to cut interest rates soon, and fear of a
recession is one driver why the central bank would want to slash borrowing
costs.
One
model used at the Fed was written in 2006. Titled
“the yield curve and predicting recessions,” the paper calculates
recession probabilities over the next 12 months using just three variables: the
10-year yield the 3 month yield and the current federal funds rate. Right now,
that indicator points to a 70% probability of a recession.
It
should be noted, however, that this recession indicator has flashed above 70%
two other times since the yield curve first became inverted in October 2022,
and the U.S. has not gone into a recession. The
blog Political Calculations joked that a triple top was forming
in the indicator.
Jonathan
Wright, the 2006 paper’s author, is now a professor of economics at Johns
Hopkins University. He acknowledges the yield curve can produce false positives
— like in 2019, when the curve inverted ahead of the COVID-induced recession.
“Still
the current circumstance where the Fed has deliberately restrictive monetary
policy to reduce inflation is exactly the economic story behind why the slope
of the yield curve does have forecasting power for recessions,” he said in an
email to MarketWatch.
He
said 70% “is way too high” a number, but there’s what he calls a material risk
that tight monetary policy could tip the economy into a recession.
“There
is a risk of a slowdown and some risk of a recession, not imminently, but in
the next few quarters. With inflation essentially at target that is going to
make the Fed ease up on the brakes a little bit,” says Wright.
Intel
to Cut Jobs and Suspend Dividend in Cost-Saving Push
Chip
maker posts disappointing quarterly sales as the company struggles to gain
foothold in AI chips
Updated Aug.
1, 2024 6:07 pm ET
Intel INTC -5.50%decrease;
red down pointing triangle plans to lay off thousands of employees
this year and pause dividend payments as part of a broad cost-saving drive more
than three years into Chief Executive Pat Gelsinger’s turnaround effort.
Gelsinger
laid out the plan to reduce costs by more than $10 billion next year as the
chip maker reported second-quarter sales of $12.8 billion, down 1% and below
analysts’ forecasts in a FactSet survey. Reaching that cost-reduction goal will
require cutting jobs and lowering capital expenditures, among other moves, the
company said.
The
company’s stock fell 20% in after-hours trading.
Intel
has struggled to gain a foothold in the market for artificial-intelligence
chips that have driven the sales and valuations of Nvidia and some
other rival chip makers. The heavy spending on those AI-focused chips to build
out big data centers also has cut into demand for the non-AI processors for
data centers that have long been central to Intel’s business.
“Clearly
market conditions, some were good and some not so good, and you have to adjust
the financial envelope appropriately,” Gelsinger said in an interview. “The AI
surge was much more acute than I expected, and you have to adjust to those
things.”
Intel
will lay off about 15,000 people, most of them by the end of this year,
Gelsinger said in the interview. The company reported about 116,500 employees
in its core business at the end of June.
Intel
reported a loss of $1.6 billion for the second quarter, compared with a $1.5
billion profit a year earlier. It said it expected sales of roughly $13 billion
in the third quarter, below analyst forecasts.
The
pause in the company’s dividend follows a 66% reduction of the payouts last
February.
More
Intel to Cut Jobs and Suspend Dividend in Cost-Saving Push - WSJ
Covid-19 Corner
This section will continue until it becomes unneeded.
Study
indicates vaccines targeting nose, mouth may be key to controlling spread of
COVID-19
July 31, 2024
The lightning-fast development of COVID-19 vaccines just months after the virus appeared was a triumph of modern science and saved millions of lives. But for all the good they did in reducing illnesses and deaths, the shots were unable to end the pandemic because of one notable weakness: They couldn't stop the spread of the virus.
A new study by researchers at Washington University School of Medicine in St. Louis indicates that next-generation vaccines that target the virus's points of entry—the nose and mouth—may be able to do what traditional shots cannot: contain the spread of respiratory infections and prevent transmission.
Using a nasal COVID-19 vaccine based on Washington University technology, approved for use in India and licensed to Ocugen for further development in the U.S., the researchers showed that vaccinated hamsters that developed infections did not pass the virus on to others, breaking the cycle of transmission. In contrast, an approved COVID-19 vaccine that is injected failed to prevent the spread of the virus.
The findings, published July 31 in Science Advances, provide further evidence that so-called mucosal vaccines sprayed into the nose or dropped into the mouth may be the key to controlling respiratory infections such as influenza and COVID-19 that continue to circulate and cause significant illness and death.
"To prevent transmission, you need to keep the amount of virus in the upper airways low," said senior author Jacco Boon, Ph.D., a professor of medicine, of molecular microbiology and of pathology & immunology.
"The less virus that is there to begin with, the less likely you are to infect someone else if you cough or sneeze or even just breathe on them. This study shows that mucosal vaccines are superior to injected vaccines in terms of limiting viral replication in the upper airways and preventing spread to the next individual. In an epidemic or pandemic situation, this is the kind of vaccine you're going to want."
Developing vaccines that can control virus levels in the nose has proven challenging. Viruses such as influenza virus, SARS-CoV-2 (the virus that causes COVID-19) and respiratory syncytial virus (RSV) multiply rapidly in the nose and spread from person to person within a few days of initial exposure.
Traditional injectable vaccines generate immune responses that can take a week to build to full strength and are much less potent in the nose than in the bloodstream, leaving the nose relatively unprotected against a fast-multiplying, fast-spreading virus.
In principle, a vaccine sprayed or dropped directly into the nose or mouth could limit viral reproduction and thereby reduce transmission by eliciting an immune response right where it's needed most. But gathering evidence that mucosal vaccines actually do reduce transmission has proven tricky.
Animal
models of transmission are not well-established, and tracking person-to-person
transmission is fiendishly complicated, given the number and variety of
encounters a typical person has on any given day.
More
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this section.
Updates as they get reported.
Graphene
Quantum Dots Combat Bacterial Infections
July 31, 2024
In
an article recently published in the journal International
Journal of Molecular Sciences, researchers investigated the feasibility
of graphene quantum dots (GQDs)-blue light combination as a treatment against
bacterial infections.
Novel
nanomaterials with potential against various human pathogens are increasingly
gaining attention to tackle antibiotic resistance. GQDs are two-dimensional
(2D) graphene structures, typically 10-100 nm in size, with exceptional
physical, biological, and chemical properties.
Although
GQDs consist of a carbon atom monolayer, most of the synthesized GQDs include
hydrogen and oxygen functional groups. GQDs offer several advantages over
conventional inorganic quantum dots, such as exceptional biocompatibility and
solubility, resistance to photobleaching, robust fluorescence, and facile
synthesis.
Thus,
GQDs have displayed significant potential across different applications,
including biosensing and drug delivery. Recent research has demonstrated that
GQDs can target several microorganisms, including pathogenic fungi and
antibiotic-resistant bacteria, indicating their potential as antimicrobial
agents.
Under
light exposure, GQDs can also generate singlet oxygen, which highlights their
effectiveness as photodynamic therapy (PDT) candidates. GQDs synthesized using
electrochemical methods produce singlet oxygen and different reactive oxygen
species under blue light exposure, leading to oxidative stress and human glioma
cell death.
Thus,
antimicrobial PDT can represent a promising alternative multidrug-resistant
microbe treatment. Although GQDs have shown the potential for antimicrobial
photodynamic treatment, the specific impact of these quantum dots on bacteria
has not been thoroughly explored.
In
this study, researchers studied the activity/photodynamic antibacterial
properties of three differently functionalized GQDs, including carboxylated
GQDs, aminated GQDs, and blue luminescent GQDs, against Escherichia
coli (E. coli), a Gram-negative bacterium prevalent in the human intestinal
microbiota. E. coli can cause both mild and life-threatening
infections, such as mild gastroenteritis, sepsis, and urinary tract infections.
More
Graphene Quantum
Dots Combat Bacterial Infections (msn.com)
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Another weekend and a weekend of recession panic.
What if this week’s US Labor report confirms recession? Have a great weekend
everyone.
With
age comes wisdom, but sometimes age comes alone.
Oscar Wilde.
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