Baltic Dry Index. 1999 +22 Brent Crude 74.61
Spot Gold 2639 US 2 Year Yield 3.57 +0.02
Nothing is more securely lodged than the ignorance of the experts.
Friedrich August von Hayek.
In the stock casinos, a Chinese punchbowl is brought out. Shame it’s too late to save the global economy from entering recession or, as I suspect, worse, a 1929 ending.
An increasingly desperate Boeing makes a “final” take it or leave it, 30 percent wage hike offer. The union says we’ll leave it. Boeing, Boeing, Gone?
That US east coast port strike is now only six days away.
With our Great Nixonian Error fiat money world increasingly falling apart, how close are we to the brave new world of Central Bank Digital Currencies?
Chinese stocks lead Asia gains as PBOC announces
slew of policy easing measures in rare briefing
Published Mon, Sep 23 2024 8:00 PM EDT
Asia-Pacific markets climbed on Tuesday,
led by Chinese stocks as Beijing announced a slew of policy easing
measures in a rare briefing from central bank governor Pan
Gongsheng.
The PBOC will cut
the reserve requirement ratio for banks by 50 basis points, although
it did not provide a specific timeline. It also announced it would cut the
seven-day reverse repurchase rate from 1.7% to 1.5%.
Pan also said that authorities could cut
the loan prime rate by 0.2 to 0.25 percentage points, without specifying
whether he was referring to the one-year or five-year. The one-year LPR
currently stands at 3.35% and five-year LPR is at 3.85%.
Other measures also include reducing down
payments for second homes, as well as 1 trillion yuan ($141.78 billion) of
long-term funds.
Winnie Wu, China strategist at Bank of
America, described the move on CNBC’s “Street Signs Asia” as “a big
bang to boost investor confidence in market.”
For the short term, they have a positive
view on sectors like banking and insurance, but Wu added that domestic
consumption recovery will take longer to recover. She said more is needed from
fiscal policy and structural reform to make a market rally sustainable.
Hong Kong’s Hang Seng index surged 2.35%
on its open, while the mainland Chinese CSI 300 was up 1%. Real estate stocks
led gains on the CSI 300, while basic materials stocks were the largest gainers
on the HSI.
Australia’s central bank held its
benchmark policy rate at 4.35%, in line with expectations from economists
polled by Reuters.
The Commonwealth Bank of Australia said in
a note last week that the economic data flow since the last meeting “has either
been softer or in line with the RBA’s expectations.” As such, CBA expects a
slightly less hawkish statement, but does not see a material shift in language
or tone.
Australia’s S&P/ASX 200 fell 0.31%.
Japan’s Nikkei 225 was 1.37% higher,
while the Topix gained 1% as Japanese markets returned from a holiday. This
marks the first time that the Nikkei has crossed the 38,000 mark since Sept. 3.
South Korea’s Kospi was flat, while the
small-cap Kosdaq rose 0.85%.
Overnight in the U.S., the Nasdaq Composite ticked up
0.14%, also mirroring gains made by the other two major U.S. indexes.
The S&P 500 and Dow Jones Industrial Average touched
new closing highs in Monday’s trading session.
The broad market index added 0.28% to end
at 5,718.57, while the Dow
Jones Industrial Average gained 61.29 points, or 0.15%, to close at
42,124.65.
Asia markets: PBOC presser; S&P new record; RBA rate decision (cnbc.com)
China central bank releases slate of support
measures amid a deepening economic slump
Published Mon, Sep 23 2024 8:29 PM EDT
BEIJING — China will cut the amount of
cash banks need to have on hand, known as the reserve requirement ratio or RRR,
by 50 basis points, People’s
Bank of China Gov. Pan Gongsheng said during a press conference on
Tuesday.
Pan, who was speaking to reporters
alongside two other financial regulator heads, did not indicate exactly when
the central bank will ease the policy but said it would be in the near term.
Depending on conditions, there may be another cut of 0.25 to 0.5 basis points
by the end of the year, Pan added.
He also said the PBOC would cut the 7-day
repo rate by 0.2 percentage points.
Lynn Song, chief economist for greater
China ING, called the repo rate cut announcement “the most important” move made
during the press conference.
“Markets had been leaning toward expecting
multiple 10bp rate cuts, so a 20bp cut represents a slightly stronger than
expected move,” he said in a note on Tuesday. “However, the net impact will
depend on whether we see further cuts ahead or whether the PBOC falls into a
wait-and-see mindset after today’s policy package.”
The RRR cut was more a move to boost
sentiment, since the challenge is not banks lacking the funds to lend, but
limited demand for borrowing, Song added.
Later in the press conference, Pan
signaled that a 0.2-0.25% cut in the loan prime rate could follow, without
specifying when or if he was referring to the one-year or five-year LPR. Last
Friday, the PBOC kept its main benchmark lending rates unchanged at the monthly
fixing. The LPR affects corporate and household loans, including mortgages.
Pan also outlined plans to further support
the struggling property market, including extending measures for two years
and cutting the interest rates on existing mortgages.
The official policy announcements will be
published on the central bank’s website, Pan added, without
specifying exactly when.
China’s 10-year government bond yield
hit a record low of 2% amid Pan’s lengthy address.
The rare high-level press conference was
scheduled after the U.S. Federal
Reserve cut interest rates last week. That kicked off an easing cycle
that gave China’s central bank further room to cut its rates and boost growth
in the face of deflationary
pressure.
“We feel today’s measures are a step in
the right direction, especially as multiple measures have been announced
together, rather than spacing out individual piecemeal measures to a more
limited effect,” ING’s Song said.
“We continue to believe that there is
still room for further easing in the months ahead as most global central banks
are now on a rate-cut trajectory,” he said. “If we see a large fiscal policy
push as well, momentum could recover heading into the fourth quarter.”
More
China central bank releases slate of support measures amid a deepening economic slump (cnbc.com)
Boeing sweetens labor proposal in ‘best and final’
offer as strike enters second week
Published Mon, Sep 23 2024 2:14 PM EDT
Boeing on
Monday sweetened its contract offer and said it was its “best and final”
proposal for its more than 30,000 machinists as their strike,
which has halted most
of the aerospace giant’s aircraft production, entered its second week.
The labor union criticized the offer,
saying Boeing didn’t negotiate it and calling it an attempt at bypassing the
union.
Boeing’s new offer would boost general
wages by 30% over four years, up from a previously proposed 25%. It also
doubled the ratification bonus to $6,000, reinstated an annual machinist bonus
and raised the company’s 401(k) match.
The International Association of
Machinists and Aerospace Workers District 751, the workers’ union, said the new
offer “was thrown at us without any discussion.”
Boeing said the offer is contingent upon
ratification by Friday at 11:59 p.m. PT. But the union, said the time frame
doesn’t give it enough time to present details to members or “secure all voting
locations.”
It said the company “has refused to meet
for further discussion; therefore, we will not be voting on the 27th.”
However, it said that it will survey
members about Boeing’s new offer.
“We will gather your opinion on whether
this offer meets your demands,” it said.
Boeing didn’t immediately respond to the
union’s message.
The new offer was Boeing’s latest attempt
to end a costly strike, the unionized work group’s first since 2008, as
pressure is mounting on new CEO Kelly Ortberg to reach a deal.
Bank of America analyst Ron Epstein
estimated the strike is costing Boeing $50 million a day, and ratings agencies
have said the company risks a downgrade the longer the strike lasts.
In the first few days of the strike,
Boeing said it started temporarily
furloughing nonunion workers including managers, and implemented other
cut costs such as a hiring freeze, reduced travel, and the elimination of
first- and business-class air tickets for employees.
Both Boeing and the union said they were
disappointed with negotiations last week.
The strike came as workers voted 94.6%
against the previous proposal that the union had endorsed.
Machinists on picket lines in Renton,
Washington, told
CNBC last week that they rejected the first contract with higher pay
because they wanted their wages to keep up with the sharp increase in the cost
of living in the Seattle area.
Some workers said in interviews that they
have prepared for a long strike and have begun taking side jobs like delivering
food or working in warehouses.
Boeing sweetens labor proposal in 'best and final' offer (cnbc.com)
In other news.
China’s youth unemployment hits fresh high amid
economic slowdown and restrictive hiring policies
Published Mon, Sep 23 2024 12:34 AM EDT
China’s youth unemployment rate in August
rose to the highest level since the new system of record-keeping began in December,
driven by an economic slowdown and restrictive hiring policies, according to
analysts.
The jobless rate for people in China ages
16 to 24, and not in school, rose to 18.8% last
month,
data from the National Bureau of Statistics showed Friday. That’s up from
17.1% in July,
and 13.2% in June. China’s urban unemployment rate across all age categories
rose 5.3% in August, compared to a 5.2% rise in July.
“It’s increasingly hard for young people
to find high paying jobs as before, because in the past three years, the high
value-added city services sectors which used to absorb many fresh graduates
were in sharp contraction, in particular real estate, finance and IT,” said Dan
Wang, chief economist at HSBC.
China’s youth unemployment has also been
affected by restrictive hiring policies amid a struggling economy as companies
are refusing to hire recent college graduates due to the difficulty and costs
involved in firing workers in China.
“Many companies are refusing to hire
recent college graduates now because they worry about the costs and legal
difficulties if they have to let someone go a year down the line if the economy
remains in the doldrums,” said Shaun Rein, founder of China Market Research
Group. .
“Companies have to pay n+2. If someone
works for 2 years, i.e. a 30 day notice plus 2 months salary. This is expensive
so no one wants to fire anyone now or hire anyone new,” he noted.
“That’s why the [overall] unemployment
rate isn’t that bad but the unemployment rate for youths is so high,” Rein
added.
More
China's youth unemployment hits fresh high in August as economy slows (cnbc.com)
Chipotle Starts Replacing Workers With Robots to Bypass
California’s Minimum Wage Laws
by Ben Kew Sep. 22, 2024 7:20 pm
The popular burrito chain Chipotle has
found an innovative way of bypassing California’s minimum wage laws.
According to Mail Online, the company will
shortly begin rolling out automated robots at some of their restaurants in the
Golden State as a way of avoiding paying workers a $20 minimum wage.
The report states:
Chipotle has introduced
two robots that can take over tasks normally done by its
workers. The ‘autocado’ can peel, stone and cut an avocado for guacamole
in 26 seconds. Meanwhile, a ‘digital makeline’ portions up salads and bowls
based on orders on the app.
The machines are part of an automation
drive that Chipotle bosses hope will cut down the number of workers
needed – slashing rising labor costs.
It is not yet clear how the production
costs of using Chipotle’s new machines compares to human labor when making
Chipotle menu items. It is also not yet apparent how many items the digital
assembly line can make per hour compared to staff.
The price of fast food restaurants in
California surged after Governor Gavin Newsom signed the proposed minimum wage
legislation into law
back in March.
Many restaurants, including some popular
chains such as Subway and McDonalds, have also had to shut down as they are no
longer able to afford the necessary workers. Just this week, comedian Kevin
Hart’s vegan restaurant Hart House closed its four
locations across the state.
According to an analysis from Kalinowski
Equity Research, fast-food restaurants across California hiked prices by around
eight percent in the first month since the legislation was implemented, with
that figure likely to have risen since then.
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.
Euro
zone business activity unexpectedly contracts in September, PMI shows
By Jonathan Cable September 23, 2024 10:12 AM GMT+1
LONDON,
Sept 23 (Reuters) - Euro zone business activity contracted sharply and
unexpectedly this month as the bloc's dominant services industry flatlined
while a downturn in manufacturing accelerated, a survey showed on Monday.
The
downturn appeared broadbased with Germany, Europe's largest
economy, seeing its decline deepen while France - the currency union's second
biggest - returned to contraction following August's Olympics boost.
HCOB's
preliminary composite euro zone Purchasing Managers' Index (PMI), compiled by
S&P Global, sank to 48.9 this month from August's 51.0, below the 50 mark
that separates growth from contraction for the first time since February.
A
Reuters poll predicted a modest decline to 50.5.
"As
the Olympic flame was extinguished, so was euro zone optimism. The August
uptick in the PMI was met by a sharp decline in September. This further fuels
growth concerns in the bloc as inflation worries fade," said Bert Colijn,
an economist at ING.
Overall
demand fell at the fastest rate in eight months. The new business index plunged
to 47.2 from 49.1.
A
services PMI sank to 50.5 from 52.9, below all expectations in the Reuters poll
which had predicted a more modest decline to 52.1.
PRICE
PRESSURES EASE
The
drop came despite firms increasing charges at a shallower rate. Services
inflation eased and the output prices index came in at 52.0 versus August's
53.7, its lowest reading since April 2021.
"The
one positive development is that price pressures are easing. This will be
reassuring for the ECB and perhaps raises the chance that policymakers will cut
the deposit rate again in October," said Andrew Kenningham at Capital
Economics.
----A
PMI covering euro zone manufacturing, which has been sub-50 for over two years
and was forecast at 45.6, dropped to 44.8 from 45.8. An output index fell to
44.5 from 45.8.
Business
optimism waned, suggesting purchasing managers do not expect an imminent
turnaround, while the factory future output index sank to an 11-month low of
52.0 from 57.5.
Euro zone business
activity unexpectedly contracts in September, PMI shows | Reuters
UK
factory export orders fall at fastest pace since Dec 2020
23
September 2024
ONDON
(Reuters) - British manufacturers reported the fastest fall in export demand
this month since December 2020, just before Britain left the European Union's
single market, the Confederation of British Industry said on Monday.
The
CBI's monthly industrial trends survey showed that the export order balance
sank to -44 in September from -22 in August. The overall order book fell to a
10-month low of -35 from -22, in contrast to economists' expectations in a
Reuters poll for it to hold broadly steady.
"This
was a uniformly disappointing set of results for the manufacturing sector, with
output falling over the past quarter, order books deteriorating and
manufacturers expecting activity to soften further in the remaining months of
the year," CBI economist Ben Jones said.
The
weak export figures chime with a continued slide in euro zone manufacturing
activity in September purchasing managers' index data published earlier on
Monday - although the UK manufacturing PMI continued to show expanding
activity.
The
CBI data showed a sharp fall in factory output for the third quarter, and
expectations for a further smaller decline in the final quarter of this year.
UK
factory export orders fall at fastest pace since Dec 2020 (msn.com)
Will
a Jumbo Interest Rate Cut Be Followed by a Recession? It's Happened Before
By Terry Lane Published September 20, 2024 10:35 AM EDT
When
the Federal Reserve starts a rate cut cycle with a jumbo-sized slash in the
past, it hasn’t always worked out well for the economy.
After
holding its key interest rates at decades-high levels in a bid to bring down
inflation, the Federal Reserve made its first
rate cut in four years on Wednesday. While the Fed generally reduces
the federal funds rate a
quarter-of-a-percentage point at a time, the central bank was more aggressive
this week, reducing rates by 50 basis points.
In
some recent cases, super-sized rate cuts have come before a recession. The Fed,
and some economists, think there are reasons that won't happen this time.
Has
This Happened In the Past?
This
isn't the first time the Fed has taken a bigger swing at rates to open a
rate-cut cycle.
In
2001 and 2007, the Fed faced similar situations. After keeping interest rates
elevated for an extended period, central bankers cut them quickly by 50 basis
points (bp). In these cases, the sharp cuts to interest rates weren’t enough to
stave off a recession.1
“On
all the recent occasions when the Fed has accelerated up to 50bp cuts, bad
things have then happened,” wrote a team of Deutsche Bank analysts led by
research strategist Jim Reid this week.
But
while the rate cuts didn't avert an economic slowdown, the size of the cuts may
not have been the problem, Deutsche Bank wrote in its note. “Correlation isn’t
causation, and it’s hardly like the GFC (Great Financial
Crisis)
only happened because the Fed opened with 50 bps,” the note said.
Will
It Happen This Time?
By
most accounts, economists still predict that the Federal Reserve will achieve
a soft landing, in which the
economy slows enough to tame inflation but not so much that it tips into a
recession.
“Recession
alarm bells should sound a bit muted with an encouraging employment report,
solid gains in retail sales, and a rebound in industrial production easing
fears of an economy on the precipice of a downturn,” wrote Oxford Economics US
Economist Matthew Martin on Wednesday.
Unlike
in 2001 and 2007, the Federal Reserve is working offensively rather than
defensively, Deutsche Bank said Friday. In both historical examples, economists
said the Federal Reserve was cutting to try to stabilize an already volatile
economy.
Today,
central bankers are trying to navigate an economy that has been anything but usual
in the wake of the pandemic.
"The
2024 cut reflects a more complex balancing act," Deutsche Bank analysts
wrote. "The Fed is navigating a post-pandemic world grappling with
persistent inflation while trying to achieve a 'soft landing' for the
economy."
Will a Jumbo
Interest Rate Cut Be Followed by a Recession? It's Happened Before
(investopedia.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Researchers
identify new oscillatory patterns in COVID-19 cases across the U.S.
September
22, 2024
In-depth
analysis uncovers north-south oscillations in COVID-19 cases, revealing how
regional waves shape the pandemic across the U.S. and providing key insights
for future health interventions.
In
a recent study published in the journal Scientific Reports, researchers
analyze previously unrecognized spatiotemporal oscillations in coronavirus
disease 2019 (COVID-19) cases throughout the United States.
COVID-19
trends in the U.S.
Since
January 2020, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2),
which is the pathogen that causes COVID-19, has infected nearly 100 million
individuals, over one million of whom have succumbed to the disease in the U.S.
Spatiotemporal patterns of SARS-CoV-2 transmission have been observed since
emerging in the U.S., with COVID-19 cases often surging during the winter and
varying based on different regions.
Further
research is needed to elucidate the mechanisms involved in these patterns,
enhancing our understanding of disease dynamics, improving the accuracy of
forecasting future surges, and optimizing public health interventions.
About
the study
Daily
COVID-19 case rates were acquired from The New York Times for the 48
continental states. Data were obtained from the beginning of the epidemic
through August 15, 2022, which led to a total of 937 days of observation
included in the analysis. Although data were available beyond this date,
reporting accuracy and frequency diminished, particularly in the later stages
of the pandemic.
----- Study
findings
A
prominent north-south oscillation of COVID-19 case rates was identified using
state-level data. The hierarchical clustering analysis revealed distinct
clusters of states, with a boundary between northern and southern states
observed along the 37°-38° north latitude.
A
cross-date state rank correlation matrix showed a structured
"checkerboard" pattern, with blocks of internally high correlations
lasting about three months. These blocks indicated recurring cycles of case
rate similarities across states. The matrix also revealed parallel diagonal
bands, with strong correlations observed in state rankings from one and two
years earlier.
The
emergence of the SARS-CoV-2 Omicron variant temporarily disrupted this pattern.
However, these trends resumed following the peak of Omicron cases, in which
consistent oscillations were observed between northern and southern regions of
the U.S.
More
Researchers identify new oscillatory patterns in COVID-19 cases across the U.S. (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.
Running
an electric car is twice as expensive as a petrol one
21 September 2024
Electric cars are up to twice as expensive as petrol or diesel vehicles to run,
new figures have suggested.
Running an electric vehicle (EV) can cost more than 24p per mile, while a
diesel vehicle is 12.5p.
It costs as much as 80p per
kilowatt hour to charge an EV using a rapid or ultra-rapid device on the
roadside, according to data from the app ZapMap.
A typical electric car will
travel 3.3 miles for every kWh of electricity used, meaning rapid and
ultra-rapid chargers currently cost the equivalent of 24.1p per mile,
calculations by The Times suggest.
Slower chargers cost 16.4p
per mile.
This is about double the
average diesel car, which will do 43 miles per gallon, resulting in a cost of
12.5p per mile at current prices. A typical petrol car costs 14.5p per mile,
according to the analysis.
A return journey from London
to Penzance would cost £148 in an electric car using rapid chargers, The Times said, compared with £77 in a diesel
car and £89 using petrol.
It added that at-home
charging is much cheaper, at less than a third of the price of the average
rapid charger.
ZapMap found that prices at
rapid chargers have increased by 5 per cent over the past year, despite a 30
per cent decrease in the wholesale cost of electricity.
This has coincided with a
fall in the price of oil.
Even drivers who choose
slower public chargers – the threshold is 50 Wh of power, allowing a full
recharge in around 30 minutes – are paying more per mile than petrol and diesel
drivers.
There was a 40 per cent
increase in the number of rapid or ultra-rapid charging stations across
Britain, bringing the total to more than 12,500.
However, recent figures show
sales of electric cars have significantly slowed.
They account for 17.2 per
cent of all new registrations since the beginning of 2024. This marks a
decrease from the 18.7 per cent high in the latter half of 2022.
According to analysis, rapid
and ultra-rapid chargers currently cost electric car drivers the equivalent of
24.1p per mile, while slower chargers cost the equivalent of 16.4p per mile.
Mike Hawes, the chief
executive of the Society of Motor Manufacturers, told The Times: “It’s tough
out there. Levels of demand are much, much softer.”
Sales of electric cars in Europe are performing even worse than in the UK, with figures showing registrations were down by 44
per cent in August.
More
Running an electric car is twice as expensive as a petrol one (msn.com)
And what I’m about to do this week or next, as I replace my 26
year old Ford Fiesta.
More
Brits turn to used petrol cars despite potential fuel rises
A new study
has found that sales of used petrol models have risen sharply since Labour's
election victory, despite their encouragement of electric vehicles.
By Jack Mortimer 08:35, Thu, Sep 19, 2024 |
UPDATED: 08:37, Thu, Sep 19, 2024
The automotive data
analyst Marketcheck UK has revealed that a growing number of Brits are buying used petrol-powered models, despite the risk of measures that could make running them more
expensive in the near future.
Using data from June and July
2024, before and after the general election, the company found that sales of
petrol models increased by 6.49 percent.
Alastair Campbell, motoring
expert for Marketcheck UK, highlighted that there was a stark difference in the
number of petrol and electric cars sold.
He explained: "These
figures are perhaps surprising. They show a clear spike in the sale of used petrol cars immediately following the election, as well
as an increase in both diesel and hybrid.
Most interestingly, despite
rises across the board - EV sales remained flat, with almost zero
growth."
More
Brits turn to used petrol cars despite potential
fuel rises | Express.co.uk
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Nobody
with open eyes can any longer doubt that the danger to personal freedom comes
chiefly from the left.
Friedrich
August von Hayek
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