Baltic Dry Index. 1891 -11 Brent Crude 73.68
Spot Gold 2562 US 2 Year Yield 3.61 +0.02
When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe.
Frederic Bastiat.
As expected, the US central bank cut its key interest rate yesterday, but by 50 basis points rather than 25.
Despite the soothing, oily words used to describe the larger interest rate cut, it probably reflects the Fed’s internal research showing a rapidly weakening US economy. Look away from that flattening US yield curve now.
In the stock casinos, was it yet another case of buy the rumour, sell the fact? By the end of today we’ll know.
Up next today, the BOJ and BOE, who were both expected to leave rates unchanged, but with the Fed cutting by 50, will the BOE now cut by 25 points?
Japan’s Nikkei leads gains in Asia-Pacific markets
as investors digest outsized Fed rate cut
Published Wed, Sep 18 2024 7:49 PM EDT
Asia-Pacific markets rose in choppy
trading Thursday, as investors assessed the Federal Reserve’s decision to cut
interest rates by a half-percentage point.
Japan’s Nikkei 225 rose 2.49%, while
the broad-based Topix climbed 2.34%. The Japanese yen weakened 0.68% to
143.24 against the U.S. dollar.
The Fed lowered its benchmark borrowing
rate by a half percentage point, bringing its target range to 4.75% to 5%.
In lockstep with the Fed, the Hong Kong
Monetary Authority cut its interest rate by 50 basis points to 5.25, as the
city’s currency is pegged to the greenback.
Hong Kong’s Hang Seng index climbed
1.20%. Hong Kong-listed shares of property developer China Vanke rose 7.4%.
Mainland China’s CSI 300 was 1.29% higher,
led by real estate stocks up nearly 4%.
South Korea’s blue-chip Kospi slipped
0.30% after opening higher, while the small-cap Kosdaq climbed 0.11%.
Australia’s national seasonally adjusted
unemployment rate remained steady in August at 4.2%, according to Australian Bureau of Statistics, in line
with Reuters-polled analysts’ expectation, while employment additions at 47,500
surpassed estimates of 25,000 additions.
Australia’s S&P/ASX 200 rose 0.35%.
New Zealand’s GDP for the second quarter
contracted by 0.2% from the previous quarter, according to the official data released Thursday morning, less than Reuters
poll estimates of a 0.4% decline.
Bank of Japan is poised to kick off a
two-day meeting ending Friday, where the central bankers will make a key rate
decision, after the central bank ended its decades-long ultra-low interest
rates regime earlier this year.
Taiwan’s central bank is set to make a key
rate decision Thursday, and release its revised economic growth and inflation
forecasts for this year.
The Taiwan Weighted Index rose 1.01%.
Overnight in the U.S., all three major
indexes fell, with the Dow
Jones Industrial Average down 0.25% to 41,503.1, while the S&P 500 fell 0.29% to end
at 5,618.26. The Nasdaq
Composite fell 0.31% to 17,573.3.
The Dow Jones Industrial Average and the
S&P 500 surged to fresh highs during intraday trading before reversing
course to close lower.
Asia-Pacific markets live: Fed rate cut, BOJ meeting, New Zealand GDP (cnbc.com)
Stock futures rise as traders weigh Fed’s
super-sized rate cut: Live updates
Updated Thu, Sep 19 2024 12:12 AM EDT
U.S. stock futures rose early Thursday as
traders digested the Federal Reserve’s earlier decision to lower
interest rates by a half percentage point.
Dow Jones Industrial Average futures rose
259 points, or 0.6%. Futures
tied to the S&P 500 climbed about 1%, while Nasdaq 100 futures added
1.4%.
The U.S. central bank slashed its
overnight lending rate to a range of 4.75% to 5.00% from 5.25% to 5.5% on
Wednesday, which came as a surprise to some investors who criticized the size
of this initial cut. This is the first rate reduction delivered by the Fed in
four years.
After seesawing for most of the afternoon,
stocks ultimately closed Wednesday’s session lower. Both the S&P 500 and
30-stock Dow initially
rallied to new record highs right after the Fed announced its interest rate cut
decision.
Tom Porcelli, chief U.S. economist at PGIM
Fixed Income, attributed the market’s Wednesday move lower to Powell’s emphasis
that an initial 50 basis point rate cut does not set the precedence for further
drastic rate reductions to follow.
“The market was thinking to itself, ‘If
you go 50, another 50 has a high likelihood.’ But I think he really dashed that
idea to some extent. It’s not that he thinks that’s not going to happen, it’s
that he’s not pre-committing to that to happen. That is the right call,”
Porcelli said.
Darden
Restaurants, shipping giant FedEx and
homebuilder Lennar will
report their earnings Thursday. Traders will also watch out for August’s
existing home sales and the latest weekly jobless claims.
6 Hours Ago
DoubleLine’s Gundlach says he
expects more weak data, rate cuts to benefit small caps
DoubleLine Capital CEO Jeffrey Gundlach, who
correctly called Wednesday’s super-sized rate cut, said he believes the
incoming economic data will show more signs of weakness in the U.S.
“I expect to see weaker economic
data in coming reports, I still think there’s a good shot that the history
books will say September 2024 was the start of a recession,” Gundlach said on
CNBC’s “Closing Bell.”
As for the market impact from rate
cuts, Gundlach believes the easing cycle could provide a bigger boost to
small-cap stocks than their large-cap counterparts. That’s because much of the
S&P 500 companies have fixed-rate debt, while Gundlach estimated that 45%
of the Russell 2000 companies, excluding financials, have floating-rate debt.
“I’m pretty sure that this fed
cycle will create a much bigger tailwind for the Russell 2000 than the S&P
500,” he said.
Stock market today: Live updates (cnbc.com)
Fed meeting recap: Chair Jerome Powell defends
central bank’s decision to go big with first cut
Updated Thu, Sep 19 2024 7:09 PM EDT
The Federal Reserve surprised Wall Street
with a half-point rate cut on Wednesday, bringing its target range to 4.75% to
5.00%. The decision was not unanimous, as Fed Governor Michelle Bowman called
for a quarter-point
cut instead. At his press conference, Chair Jerome Powell called the
rate reduction a “recalibration” of central bank policy, noting that the Fed
will continue to make decisions meeting by meeting.
9 Hours Ago
Risk of downturn not heightened following
rate decision, Powell says
Federal Reserve Chair Jerome Powell does
not see the risk of an economic downturn being “elevated” following the
super-sized cut.
“I don’t see anything in the economy right
now that suggests that the likelihood of a recession, sorry, of a downturn, is
elevated,” he said.
“I don’t see that,” he continued. “You see
growth at a solid rate. You see inflation coming down. You see a labor market
that’s still at very solid levels. So, I don’t really see that now.”
9 Hours Ago
‘We are not going back’ to world of
ultra-low interest rates
Federal Reserve Chair Jerome Powell does
not expect the era of cheap money to return.
“Intuitively, most — many, many people
anyway — would say we are probably not going back to that era where there were
trillions of dollars of sovereign bonds trading at negative rates, long-term
bonds trading at negative rates,” he said.
“My own sense is that we are not going
back to that,” Powell added.
He feels the neutral rate is likely
significantly higher than it was back then, although he does not know yet how
high it is.
Fed meeting recap: Chair Powell defends central bank's decision to go big with first cut (cnbc.com)
In other news, Boeing’s firing, not hiring.
Boeing starts furloughing tens of thousands of
employees amid machinist strike
Published Wed, Sep 18 2024 11:55 AM EDT
Boeing will
temporarily furlough thousands of U.S. executives, managers and other staff,
citing the ongoing machinist
strike as the company races to preserve cash, CEO Kelly Ortberg told
employees Wednesday.
The furloughs will affect tens of
thousands of Boeing employees, a company spokesperson said.
The plan came less than a week after
Boeing’s more than 30,000 machinists in the Seattle area and Oregon
overwhelmingly voted
down a new labor contract and 96% voted to strike, walking off the job
just after midnight on Friday.
Negotiations between the two sides
continued this week with a mediator. Boeing had offered a 25% raise and the
union endorsed the tentative contract. But some workers told CNBC that the
contract offer was rejected because the raises weren’t sufficient enough to
match the increase in the cost of living in the Seattle area and it didn’t
restore their pensions.
“We will not mince words - after a full
day of mediation, we are frustrated,” the union said in a statement Tuesday.
Ortberg, who has been
in the job for just under six weeks, said in a staff memo that
affected employees would take one week of furlough every four weeks for the
strike’s duration and he and his team would take “commensurate” pay cuts during
the strike.
“While this is a tough decision that
impacts everybody, it is in an effort to preserve our long-term future and help
us navigate through this very difficult time. We will continue to transparently
communicate as this dynamic situation evolves and do all we can to limit this
hardship,” Ortberg said in his message.
Boeing’s CFO, Brian West, earlier this
week said the company would freeze
hiring and raises to cut costs, and would let “non-essential
contractors” go temporarily.
The financial impact of the strike will
depend how long it lasts, West said, but it adds to pressure on Boeing’s
leaders, who are trying to move the company past safety and quality crises,
including the fallout from a near-catastrophic door plug blowout in January,
and $60 billion in debt.
Ortberg said that “activities critical to
our safety, quality, customer support and key certification programs will be
prioritized and continue” including production of its 787 Dreamliners, which
are made in a nonunion facility in South Carolina.
Boeing starts furloughing 'large number' of employees amid strike (cnbc.com)
Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.
Frederic Bastiat.
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.
Below,
if flooding and smashing things is so good for the economy, why not flood
everywhere and smash up all major cities? See today’s final article for the
answer.
Deadly
floods in Europe: How much is it going to cost?
18
September 2024
Economic
losses due to the latest flooding in central Europe are significant. The first
estimations show that the cost of the current floods alone could surpass a
billion euros, but the precise costs are yet to be summed up as the torrential
rain from Storm Boris keeps pounding the region, leaving a mounting death toll
and considerable damage behind.
One
estimation suggests that the bill could range from several hundred million
euros to more than one billion euros, reported Reuters, citing early estimates
from Credit rating agency Morningstar DBRS.
Mario
De Cicco, vice president of global insurance and pension ratings at Morningstar
DBRS, told Euronews Business in emailed comments that “based on the latest
information available, the highest insured losses could possibly occur in Czech
Republic, one of the countries most impacted by the recent adverse weather
events,” adding that the insurance for natural disasters is more prevalent in
the country than in the other affected ones.
In
Europe, flood is already the costliest natural hazard, according to UK
Environmental consultant JBA Risk Management. River flooding alone costs €7.8
billion each year and it is expected to increase as economies continue to grow
in high flood-risk areas and climate change leads to greater and more intense
precipitation.
This
time, the flooding has swamped parts of Austria, the Czech Republic, Poland and
Romania and it is expected to affect Slovakia and Hungary too.
Hundreds
of millions of euros’ worth of emergency funds have been freed by the Polish,
Romanian and Austrian governments and the Czech government is considering
altering its 2024 budget due to the flood-related damages.
Overall
the damage to infrastructure, buildings and property and the increase in rescue
and relief expenditure, can also trigger a decrease in production and economic
activity, according to Grzegorz Dróżdż, market analyst at Conotoxia Invest.
“These
factors usually lead to a negative impact on budgets and trade, manifested as
an increase in the deficit and a worsening of the trade balance, due to a
decrease in exports and a rise in imports.”
“The
flooding that Poland, the Czech Republic and Austria are currently facing will
certainly now be very painful and costly for the population and will negatively
affect already burdened budgets," said Dróżdż.
How
businesses are affected?
Poland’s
biggest insurer PZU is facing a 10% in its profit due to weather-related
claims, reports Bloomberg citing data from Ipopema brokerage.
Some
of the factories and stores affected by the floods shut down production lines,
among them the BorsodChem chemical plant in Ostrava, Czech Republic,
Czech-based drinks maker Kofola CeskoSlovensko, and the OKK Koksovny coking
plant - one of the largest producers of foundry coke in Europe - stopped
chemicals production, reported Reuters.
Cross-border
rail services have been suspended between Poland and the Czech Republic as well
as Hungary and Austria.
Regarding
the overall impact on the economy, analysts at Erste Group expect a contained
impact, adding that it is too early to see clearly.
Katarzyna
Rzentarzewska, Chief CEE Macro Analyst of Erste Group said to Euronews,
"For example, in Czechia we would see the combined economic impact related
to damages to property and production could be 0.2-0.5% of GDP with the overall
impact on GDP growth much smaller, likely at the lower-end of this range."
She
expects that in the short term (by the end of this year), the industrial sector
would receive a negative impulse in all countries impacted by the flooding and
tourism in the regions may suffer as well. "Finally, the damages to crops
may have inflationary effects," said Rzentarzewska.
Analysts
also agree that in the long term, the picture is quite different, as
restoration work is going to give a boost to the construction sector,
"adding to the GDP in the medium-term horizon," said Rzentarzewska.
"It
can also stimulate new investment in modern technology, as well as more
resilient and developed infrastructure,” said Dróżdż.
Deadly floods in Europe: How much is it going to cost? (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
The road to hell…., comes to mind.
Man, 27, dies weeks after receiving Covid vaccine he was wrongly invited to take by NHS
18
September 2024
A
man who died three weeks after receiving the AstraZeneca Covid-19 jab was given
the vaccine despite not being eligible, an independent investigation has found.
A
probe into failings linked to the death of Jack Last, a young
man who died in April 2021 from a blood clot linked to the Oxford-AstraZeneca
jab,
revealed the 27-year-old was wrongly called up early for the vaccine by his GP
- and so, did not receive a jab deemed safer for under 30s.
The
report found his death was “a consequence of a
combination of system shortcomings, human error, and tragic
unfortunate timing”.
His
family have accused the NHS of a “litany
of errors” that cost a “fit and healthy” young man his life.
They
said: “Sharing the horrific ordeal that Jack was put through is something that
must be done to highlight the litany of errors that have cost Jack his
life…Jack died following days of agony, with immense internal damage throughout
his body, bleeding and clots in his brain.”
These
failures, according to the report, also included a “lack of urgency” in getting
him a CT head scan treatment for possible blood clots and a misdiagnosis of his
scan once it had been done.
The
three-year long investigation into his death, carried out by consultancy Facere
Melius, found Suffolk GP Federation was forced to expand the number of people
receiving the AstraZenenca jab amid fears over vaccine wastage at
the height of the pandemic.
The
report said Suffolk GP services were being “proactive” in extending their
vaccine invitations and doing their best to vaccinate people against Covid.
Days
before his vaccination, on 30 March, the GP services had received “a large
delivery of the AstraZeneca vaccine that was due to expire within a few days”.
Despite
Mr Last not being eligible for a vaccine because he was not clinically
vulnerable, nor was he living with clinically vulnerable people, he was invited
to have a vaccine and given the AstraZeneca version.
According
to the investigation report, inaccurate GP records for his family and a lack of
checks when he came into the vaccine centres meant Mr Last received the jab
shortly before warnings over its use in under 30s.
More
Man, 27, dies weeks after receiving Covid vaccine he was wrongly invited to take by NHS (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.
Graphite
oxidation experiments reveal new type of oscillating chemical reaction
Date: September
17, 2024
Source:
Umea University
Summary:
A reaction that puzzled scientists for 50 years has now been
explained by researchers at Ume University. Rapid structural snapshots captured
how graphite transforms into graphite oxide during electrochemical oxidation,
revealing intermediate structures that appear and disappear over time. The
researchers describe this as a new type of oscillating reaction.
Oscillating
chemical reactions are fascinating to watch and important for developing an
understanding of how complex systems work, both in chemistry and in nature.
Classical
visual examples of such reactions show how the colors of a solution change back
and forth, cycling through different states and producing a final product after
each cycle.
Umeå
researchers recently published a study in the scientific journal Angewandte
Chemie, reporting a rather different and new type of oscillating reaction
during electrochemical oxidation of graphite.
"It
has been known for 50 years that some voltage oscillations spontaneously occur
when a charge is applied to a graphite electrode immersed in sulphuric acid
solution. The end product of this reaction is graphite oxide, a material
consisting of layers of graphene oxide. However, what happens to the structure
of the material during the reaction at every oscillation cycle had remained a
complete mystery," says Alexandr Talyzin, Professor in the Department of
Physics at Umeå University.
Thanks
to new synchrotron methods, researchers can record X-ray diffraction scans in a
matter of a few seconds, providing snapshots of the material's structure
changes during oxidation.
Surprisingly,
the experiments revealed an intermediate phase with a specific structure that
appears at one part of the cycle, disappears in the next stage and then
reappears, repeating the cycle.
"Soon
we realised that we had observed a new -- to the best of our knowledge -- type
of oscillating reaction. What began as a detailed study of a particular
chemical reaction suddenly appeared to be a lot more interesting from the point
of view of fundamental chemistry. Bartosz Gurzeda, the first author of the
study, also recorded a beautiful video showing periodic changes in the
appearance of a sample every few minutes," says Alexandr Talyzin.
More
Graphite oxidation
experiments reveal new type of oscillating chemical reaction | ScienceDaily
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
The Broken Window Fallacy: Definition and Examples in Economics
By Andrew Beattie Updated April
22, 2024
The broken window fallacy is a parable that is
sometimes used to illustrate the problem with the notion that going to war is
good for a nation's economy. Its wider message is that an event that seems to
be beneficial for those immediately involved can have negative economic
consequences for many others.
The broken window fallacy was first expressed by the
19th-century French economist Frederic Bastiat.1
Key Takeaways
- The
core of the broken window fallacy argues that spending money on items that
have been destroyed does not lead to economic gain.
- The
broken window fallacy suggests that an event can have unforeseen negative
ripple effects if money is redirected to repairing broken items rather
than to new goods and services.
- The
theory suggests that a boost to one part of the economy can cause losses
to other sectors of the economy.
- The
parable used in the broken window fallacy illustrates the negative
economic effects of going to war: money is diverted from creating consumer
goods and services to creating weapons, and money is further spent on
repairing the damages from a war.
Understanding the Broken Window Fallacy
In Bastiat's tale, a boy breaks a
window. The townspeople looking on decide that the boy has actually done the
community a service because his father will have to pay the town's glazier to
replace the broken pane. The glazier will then spend the extra money on
something else, jump-starting the local economy. The onlookers come to believe
that breaking windows stimulates the economy.
Bastiat points out that further
analysis exposes the fallacy. By forcing his father to pay for a window, the
boy has reduced his father's disposable income. His father will not be
able to purchase new shoes or some other luxury goods. Productivity has also
decreased, as the time the father spends dealing with the broken window could
have been put to better use. Thus, the broken window might help the glazier,
but at the same time, it robs other industries and reduces the amount spent on
other goods.
Bastiat also noted that the
townspeople should have regarded the broken window as a loss of some of the
town's real value. Moreover, replacing something that has already been
purchased represents a maintenance cost, not a purchase of new
goods, and maintenance doesn't stimulate production. In short, Bastiat suggests
that destruction doesn't pay in an economic sense.
The Broken Window
Fallacy: Definition and Examples in Economics (investopedia.com)
The
real cost of the State is the prosperity we do not see, the jobs that don’t
exist, the technologies to which we do not have access, the businesses that do
not come into existence, and the bright future that is stolen from us. The
State has looted us just as surely as a robber who enters our home at night and
steals all that we love.
Frederic
Bastiat.
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