Baltic
Dry Index. 1941 +22 Brent Crude 71.94
Spot Gold 2498 US 2 Year Yield 3.66 -0.09
The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
Ernest Hemingway.
A very sad 23rd anniversary comes this Wednesday. Never forget.
A difficult stock casinos trading week lies ahead. In addition to the sad anniversary of the terrorist attack on America, this week brings the latest US inflation figures of the PPI and CPI tomorrow and Wednesday, plus the ECB meeting on Thursday. Another interest rate cut coming?
Tomorrow, the Trump v Harris spectacle
debate.
The following week, the Fed meeting followed by the BOE meeting, where both are expected to cut their key interest rate by at least 25 basis points. But the ECB, US Fed and BOE are all cutting on rising signs that a new global recession is already underway.
In the Asian stock casinos, a rocky start to the week.
Nikkei leads losses in Asia; China inflation comes
in weaker than forecast
Published Sun, Sep 8 2024 7:44 PM EDT
Asia-Pacific markets fell on Monday, with
Japan’s Nikkei 225 leading
losses in the region, following the weaker-than-expected U.S. jobs report on
Friday.
U.S. nonfarm payrolls rose by 142,000
missing a 161,000 gain estimated by economists polled by Dow Jones. On the
other hand, the unemployment rate edged down to 4.2%, in line with
expectations.
Traders in Asia assessed Japan’s revised
GDP figure for the second quarter and China’s consumer price index report.
Japan’s second-quarter GDP came in at 2.9% on an
annualized basis, less than the 3.2% expected by economists polled by Reuters
and the advance figure of 3.1%. A softer GDP growth figure will constrain the
Bank of Japan’s options to raise rates.
China’s inflation rate grew 0.6% year on year, lower
than the 0.7% expected from economists polled by Reuters. On a month-on-month
basis, the CPI rose 0.4%, lower than the 0.5% expected.
The Nikkei lost 2.14% while the
broad-based Topix fell 1.99%. The Japanese yen weakened 0.3%
against the U.S. dollar to 142.71, coming off a nine-month low achieved on
Friday.
Yen traders will watch equities closely as
risk-off sentiment grows and the unwind of the yen carry trade is expected to
continue, Kathy Lien, managing director of FX strategy at BK Asset Management
told CNBC’s “Squawk Box Asia.” She also expects some periods of aggressive
selling in equities this month.
South Korea’s Kospi fell 0.88% while the
small cap Kosdaq was up 0.37%.
Australia’s S&P/ASX 200 declined
0.7%.
Hong Kong Hang Seng index lost 1.93%,
while the mainland Chinese CSI 300 slipped 1.09%. Early Monday, Chinese
electrical appliance manufacturer Midea Group announced a listing for 492.1
million shares in Hong Kong, with the offering priced between HK$52 and
HK$54.80 per share.
At the top end of that pricing range, the
offering would be valued at HK$26.97 billion ($3.46 billion), which will make
it the city’s largest listing in more than three years.
On Friday, the S&P 500 notched its worst
week since March 2023. The tech-heavy Nasdaq Composite recorded
its worst week since March 2022.
During Friday’s session, the broad index
slid 1.73% while the Nasdaq slid 2.55%. The Dow Jones Industrial Average fell
1.01%.
Asia stock markets: Japan Q2 GDP, China CPI (cnbc.com)
Stock futures slip after the S&P 500 suffers
its worst week since 2023: Live updates
Updated Sun, Sep 8 2024 6:57 PM EDT
U.S. stock futures were lower on Sunday
night following a tough week for the equity market.
S&P 500 futures dipped
0.1%, while Nasdaq 100
futures slid 0.2%. Futures
tied to the Dow Jones Industrial Average fell by 22 points, or less
than 0.1%.
The stock market suffered serious losses
to kick off its first trading week of September, a seasonally slow month for
equities. The S&P 500 tumbled
4.3%, registering its worst week since March 2023. The Nasdaq Composite plunged
5.8% for its worst weekly performance since 2022, while the 30-stock Dow dropped 2.9%.
These declines came after the August jobs
report stoked fears of a slowing labor market. Economic data released Friday
revealed that nonfarm payrolls grew
by just 142,000, missing the 161,000 gain expected by economists surveyed
by Dow Jones. On the other hand, the unemployment rate ticked lower to 4.2%, as
economists had expected.
This week, investors will watch out for
two key inflation reports that could further inform the Federal Reserve’s
decision at its next open market committee meeting. August’s consumer and
producer price reports are slated for release on Wednesday and Thursday
morning, respectively.
The market has now priced in a 71% chance
that the Fed could cut rates by 25 basis points at its next meeting and just a
29% chance of a 50-basis-point rate cut, according to CME Group FedWatch Tool. But Vincent Deluard, StoneX’s
director of global macro strategy, believes that even a weaker-than-expected
consumer or producer price report won’t be enough to spur a heftier rate cut.
“CPI is going to come in line with
consensus — it’s not going to change the needle — and PPI isn’t as important,”
he told CNBC in an interview. “Powell certainly wants to cut, but he’s a
reasonable guy. 50 basis points in September … Why take the risk?”
Stock market today: Live updates (cnbc.com)
In other news, China in deflation, Yellen in Wonderland.
China’s CPI climbs by a less-than-expected 0.6% as
transport and home goods prices fall
Published Sun, Sep 8 2024 9:33 PM EDT
BEIJING — China on Monday reported
its consumer price index rose by 0.6% year on year in August,
missing expectations as transportation and home goods prices, as well as rents
declined.
The CPI was estimated to have climbed 0.7%
year on year in August, according to a Reuters poll.
Food prices climbed by 2.8% year on year
in August, the first positive print since June 2023, according to Wind
Information data. Pork prices surged by 16.1% in August, while vegetable prices
climbed by 21.8%.
Pork, a food staple in China, has an
outsized weighting in the country’s consumer price index. Wang Yifan,
agricultural analyst at Nanhua Futures, said that breeding cycles indicate pork
prices can rise further in September and October, but will face pressure during
the rest of the year.
Core-CPI, which strips out food and energy
prices, climbed by 0.3% in August from a year ago, a slower rise for a
second-straight month.
The consumer price index rose by 0.4% in
August from July, also missing Reuters estimates of a 0.5% growth.
Consumer prices in China have remained
subdued amid lackluster domestic demand since the pandemic.
China’s former central bank head Yi Gang
said at a conference on Friday that the country needed to focus on “fighting
the deflationary
pressure.” He forecast the consumer price index would be slightly above
zero by the end of the year.
Retail
sales rose by just 2.7% in July from a year earlier. Retail sales and
industrial data for August are due out Saturday.
“The fiscal policy stance needs to become
more proactive in order to prevent the deflationary expectations from becoming
entrenched, in my view,” Zhiwei Zhang, president and chief economist at
Pinpoint Asset Management, said in a note.
The producer price index fell by 1.8% year
on year in August, more than the estimated 1.4% decline as per the Reuters
poll.
Oil, coal and other fuel industries
reported a 3% year-on-year drop in prices, reversing a 4.3% increase in July.
The downward pressure on the producer
price index remains large due to insufficient domestic demand and the drag from
real estate, said Bruce Pang, chief economist and head of research for Greater
China at JLL.
Within the consumer price index, he noted
that major categories outside of food, tobacco and alcohol posted declines in
August from the prior month, indicating the need for greater efforts to boost
domestic demand.
China CPI up by less-than-expected 0.6% as transport, home goods prices fall (cnbc.com)
Yellen says U.S. economy remains solid, on path to
‘soft landing’ with no meaningful layoffs
Published Sat, Sep 7 2024 7:05 PM EDT
Treasury Secretary Janet Yellen sought to
reassure the public on Saturday that the U.S. economy remains strong, despite a
string of weak job reports that have rattled investors and weighed on the stock
market.
“We’re seeing less frenzy in terms of hiring and job openings, but we’re not
seeing meaningful layoffs,” Yellen said at the Texas
Tribune Festival in
Austin. “I’m attentive to downside risk now on the employment side, but what I
think we’re seeing, and hope we will continue to see, is a good, solid
economy.”
Yellen said job growth has slowed compared
to the “hiring frenzy” when the U.S. reopened after the Covid-19 pandemic, but
the economy is “deep into a recovery” and “basically operating at full
employment.”
The treasury secretary’s comments come a
day after the Bureau of Labor
Statistics reported
another month of cooler-than-expected jobs data.
Nonfarm payrolls, a measure of
U.S. job creation, increased by 142,000 in August, lower than the Dow Jones
forecast of 161,000. The miss renewed worries about a slowing labor market,
with the S&P 500 falling Friday to finish out the worst week since
March 2023.
The unemployment rate, however, edged
lower to 4.2% and job growth in August was higher than July. The stock
market sold off steeply
early last month,
after the weak July report touched off renewed fears of a recession in the U.S.
Yellen on Saturday tried to calm jitters
about the state of the economy: “I don’t see red lights flashing.”
The jobs data has raised worries about
whether the Federal Reserve can clinch a so-called “soft landing,” raising
interest rates to bring inflation under control and then executing cuts before
the economy enters a recession. The Fed is widely expected to lower interest
rates this month.
Yellen said the U.S. is on that path: “It
really has been amazing to be able to get inflation down as meaningfully as we
have. This is what most people would call the soft landing,” she said.
Yellen says U.S. economy remains solid, heading toward 'soft landing' (cnbc.com)
Iron ore falls below $90 for the first time since
late 2022
September 9, 2024, 7:51:30 AM
IST (Published)
Iron ore hit a 22-month low — sinking
below the $90-a-ton threshold — as a slump in demand in biggest buyer China
drives losses.
Futures have fallen by more than a third
this year, tumbling almost 10% last week alone, with pressure ramping up as
flagging steel consumption batters loss-making Chinese mills. Still,
steel-buying typically picks up after the summer, which could provide a respite
for producers if it happens.
Consumption of steel in China has weakened because of the country’s protracted
real estate slowdown, with the world’s biggest steel producer, China Baowu
Steel Group Corp., saying the industry could be facing a worse crisis than the
downturns in 2008 and 2015. While exports and growth in other sectors are
softening the blow, cuts to steel output have left the iron ore market saddled
with excess supply.
On Friday, former People’s Bank of China Governor Yi Gang said his nation
should focus on ending deflation, in a rare admission by a prominent figure in
China that falling prices are threatening the country’s growth outlook.
More
Iron ore falls below $90 for the first time since late 2022 - CNBC TV18
Coinbase has
worst week of the year as crypto stocks plummet
Published
Fri, Sep 6 2024 7:58 PM EDT
Cryptocurrency
exchange Coinbase just wrapped up its worst week of the year. Bitcoin
miner Marathon Digital tumbled 20%. A basket of crypto-related equities
tracked by Schwab fell to its lowest level since February.
The
industrywide selloff reflected growing concerns about the health of the U.S.
economy and tracked a broader decline in prices of bitcoin, ether and
risky assets in general. The tech-heavy Nasdaq slid 5.8% for the week, its worst performance since January
2022.
In
addition to macro pressures, the calendar is doing crypto no favors. According
to CoinGlass, September is historically a difficult trading month for
crypto assets, with bitcoin notching an average loss of 4.8%. The Crypto
Fear & Greed Index, a gauge of crypto
market sentiment, is firmly in the “Extreme Fear” zone, indicating that
investors are worried about price moves.
Bitcoin
slipped to its lowest level since February, falling 4% in the last 24 hours to
around $54,000.
In a week
shortened by the Labor Day holiday, Tuesday saw the steepest selloff in the
broader market after weak manufacturing
data stoked fears of an economic
slowdown. The 11 U.S. spot bitcoin exchange-traded funds had their worst day in over
four months after the report, as more than $287
million was collectively withdrawn from the ETFs.
The data
was bad through the end of the week. On Friday, the Bureau of Labor
Statistics reported a cooldown in the labor market with August payrolls
falling short of expectations.
“The
recent U.S. labor market results acted as a moment of truth for risk-on assets
like bitcoin, as the labor market is considered the main sector that may
influence the Fed’s decision to cut rates this month,” said Leena ElDeeb, a
research analyst with ETF issuer 21Shares, in an email.
The total
market cap of crypto is down close to 30% from its 2024 peak of $2.67 trillion,
and is now at $1.9 trillion. Altcoins like Solana’s SOL token, XRP and
Cardano’s ADA all dropped more than 8% in the past week. Ether,
the world’s second-largest cryptocurrency, plunged 12% to around $2,200.
More
Coinbase, Marathon Digital, Riot Platforms lead drop in crypto stocks (cnbc.com)
Finally, did the BLS leak last Friday’s employment figures, or was it just coincidence that the Treasury 2 year to 10 year spread began un-inverting the week before?
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.
Reasons
why investors need to prepare for a US recession
The
Fed is unlikely to save the day as economic conditions deteriorate
Peter Berezin September 5 2024
If one places a warm glass of water in a freezer, its temperature will steadily
decline. Eventually the water will freeze, turning from a liquid to a solid.
Nothing new needs to happen to generate this “phase transition”. All that is
necessary is for the temperature in the freezer to remain below zero degrees
Celsius.
Now
replace “temperature in the freezer” with “the level of interest rates”. The US
economy is cooling in response to tight monetary policy, as evidenced by
falling inflation and wage growth. It has not frozen over yet because it was
running so hot two years ago. But if the economy’s temperature keeps falling,
it will freeze over.
In early 2022, there were two job openings for every unemployed worker. Anyone
who lost their job back then could walk across the street and find new work.
This prevented unemployment from rising.
Things
are not so simple any more. The job openings rate has dropped back down to
pre-pandemic levels. Those who lose their jobs are finding it increasingly
difficult to secure new ones. While an influx of people into the labour market
has contributed to a rising unemployment rate over the past 12 months, close to
half of the increase has been due to job loss.
A
softening labour market will undermine consumer spending. The personal savings
rate stood at 2.9 per cent in July, less than half of what it was in 2019.
Excess pandemic savings have been depleted. In inflation-adjusted terms, bank
deposits for the bottom 20 per cent of income earners are below where they were
in 2019. Consumer loan delinquency rates have risen to levels last seen in
2010, a year in which the unemployment rate was double what it is today.
The
housing market is showing renewed signs of stress. Homebuilder confidence
dropped in August to the lowest level so far this year. Home sales are weak.
Housing starts and permits have rolled over. The number of housing units under
construction has declined by more than 8 per cent since the start of this year.
Unlike in the past, construction employment has not fallen yet — perhaps
builders are hoarding labour — but if housing construction continues to weaken,
we will see a wave of lay-offs in that sector.
Commercial
real estate remains under duress. Office vacancy rates are at an all-time high
and are still trending upwards. Default rates are climbing in the office,
apartment, retail and hotel segments. Regional banks, which account for the
bulk of CRE lending, will experience more losses.
Manufacturing
activity is slowing again. The new orders component of the ISM manufacturing
index fell in August to the lowest level since May 2023. In real terms, core
capital goods orders have been trending lower for the past two years.
Construction spending has been subsidised by the stimulus provided by the Chips
Act and the Inflation Reduction Act. While still high in absolute terms, this
spending has peaked and will decrease over the coming quarters.
The
Federal Reserve is unlikely to save the day. The economy succumbed to recession
just months after the central bank started lowering rates in January 2001 and
September 2007.
The
market is currently expecting the Fed to cut rates by more than two percentage
points over the next 12 months. Long-term bond yields will not fall much from
current levels unless it delivers more easing than what the market is already
discounting. That is unlikely unless there is a recession.
Even
if the Fed does deliver more easing than is currently priced in, the impact
will only be felt with a lag. In fact, the average mortgage rate that
homeowners pay will almost certainly rise next year as low-rate mortgage debt
rolls off and is replaced by that with higher rates.
More
Reasons why investors need to prepare for a US recession (ft.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Covid-19 Tax Frauds
As Revenue Streams For Street Gangs
Sep 6, 2024,10:58am EDT
A homicide investigation
of a suspected gang member in San Diego has led to seventeen indictments of connected individuals accused of committing tax fraud.
A detective scrolling
through a gang member’s phone discovered a notice from the IRS alerting him to
a pending six-figure tax refund. This ultimately led to the discovery that four
street gangs had conspired to defraud the IRS out of $1.75 million in Covid-19
relief funds.
This revelation
highlights a potentially dangerous side effect to sloppy tax policy drafting
and policing: placing funds in the hands of criminal organizations and aiding
them in diversifying their revenue streams.
The fraud scheme was
simultaneously audacious and simple. Four gangs exploited a vulnerability in
the 2021 version of Form 7202, designed to provide
Covid-19 relief to self-employed individuals who took sick leave or cared for
family members during the pandemic.
The form allowed filers
to claim a credit for up to 60 days, but the gang-related filers claimed
credits for significantly more days – up to 15,678 days. This led to fraudulent
refund payouts from $97,000 to nearly $230,000 per individual. The scam ran
from April to October of 2022 and gang leaders took a cut from each refund. No
one in a position of authority, it seems, initially noticed that 15,678 is
significantly more than 60.
The move from traditional
street crime to financial fraud, like tax scams, may represent a calculated
shift by gangs toward more profitable and lower-risk ventures—or they may have
simply spotted a vulnerability in IRS oversight and taken advantage.
The profitability of
white-collar crime is undeniable and, in the realm of illicit activities, hard
to beat in terms of one’s return on investment. Each participant in the Form
7202 scam pocketed six-figure sums without ever having to engage in any confrontational
or high-risk interactions – they merely lied on a form.
White-collar crimes such
as tax fraud may thus be perceived as relatively low risk, as compared to
violent crime. Financial fraud doesn’t attract the same level of immediate law
enforcement attention as drug trafficking or robbery does. Suffice it to say a
bank robbery of $230,000 would not go unnoticed long enough for the bank robber
to deposit the sum into their bank account and begin making purchases.
Ultimately, there is a
simplicity to manipulating the tax system owing to a lack of oversight and
understaffing. In this instant case, credits were requested for a period of
days that is mathematically impossible – some returns reaching nearly 43 years’
worth of sick day credits – and yet, the scheme was not immediately detected.
More
Covid-19 Tax Frauds As Revenue Streams For Street Gangs (forbes.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.
UK's
First "Motionless" Wind Turbine: A Quieter, Wildlife-Friendly Energy
Source?
6 September 2024
The MINI plonked on top of a
BMW manufacturing plant in Oxford, England is no longer the only unusual sight
meeting passersby; it’s now been joined on the roof by the UK’s first
“motionless” wind energy system.
Designed by the company
Aeromine Technologies, the unit doesn’t exactly look like your
traditional wind turbine – no big blades in sight. Instead, it has a
large central column and vertical airfoils, the kind of curved structure that
you see in airplane wings.
This design is intended to
create a vacuum effect. With the unit placed on the edge of a building and
oriented towards the prevailing wind, according to Aeromine, the design accelerates the wind flowing into the unit even further,
which creates a region of low pressure behind the column seen in the middle.
As a result, the air is
pulled through the bottom of the unit, where there’s a propeller, which – much
like a regular wind turbine – spins a generator, and shazam, you’ve got
yourself some electricity.
The installation of the
turbine on BMW’s roof is part of the company’s aim to reduce its carbon
footprint, which has already seen solar panels placed across the site. While that project
has seen success, the problem is that it’s not quite so sunny in the UK during
the winter months, nor, for hopefully obvious reasons, in the evening.
However, those times do
happen to be fairly windy, which is what the unit is designed to capitalize on.
“Our 'motionless' wind energy technology is designed to work seamlessly
alongside solar systems, maximising the renewable energy output from rooftops,”
said Aeromine’s managing director Claus Lønborg in a statement.
According to Lønborg, the
turbine’s bladeless design could also help to “address challenges like noise
[and] vibrations” but may further act as a potential solution to a problem long
associated with traditional wind turbines: their impact on wildlife, and
primarily, birds.
Although it’s thought to be
a relatively small number of birds killed by wind turbines each year
in comparison to say, hungry housecats, or flying into buildings, it’s still
very much a concern, particularly if vulnerable species are involved.
The “motionless” wind turbine
might be one answer, but there are plenty of existing wind farms out there, and it would be far from cheap to
tear them all down and replace them. Others looking to make turbines safer have
had to get creative with what they already have – whether that’s by making
turbine blades stripy, or adding giant bird boxes.
UK's First "Motionless" Wind Turbine: A
Quieter, Wildlife-Friendly Energy Source? (msn.com)
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
If you
don't read the newspaper, you're uninformed. If you read the newspaper, you're
mis-informed.
Mark Twain.
No comments:
Post a Comment