Baltic
Dry Index. 1028 -25 Brent Crude 72.97
Spot Gold 2608 US 2 Year Yield 4.35 +0.10
Reasonable men are not reasonable when you're in the bubbles which have characterized capitalism since the beginning of time.
Paul Samuelson.
To no one’s surprise, the US central bank cut its interest rate by a quarter percent yesterday, but blew up Wall Street by suggesting that might be it.
Well with the election over and Trump 2.0 about to start and little love in the Fed for Donald J. Trump, the Powell Fed sees little need to provide more early 2025 easing to Team Trump 2.0.
A rocky 2025 now lies ahead for many stocks. Look away from that normalising US Treasury yield curve now.
Asia markets tumble after Fed’s cautionary outlook
prompts Wall Street sell-off; BOJ keeps rate on hold
Updated Thu, Dec 19 2024 12:33 AM EST
Asia-Pacific stocks and currencies fell
Thursday, amid a broader market sell-off after the U.S. Federal Reserve
delivered its third consecutive rate reduction and signaled fewer rate cuts
ahead.
Investors assessed the Bank of Japan’s decision to keep its policy rate
unchanged at 0.25% for the third straight meeting. After the
announcement, the Japanese yen weakened to 155.40 on the dollar versus 154.60
before the BOJ announcement.
In response to the central bank’s
move, the Nikkei 225 came
back online after a lunch break with narrower losses of 0.63% versus 0.96%
earlier. Topix was down 0.49%.
In South Korea, the Kospi index lost 1.65%
and the Kosdaq index was down by 1.65%. The South Korean won hovered near its
weakest level since March 2009, and was last trading at 1,450.46 on the U.S.
dollar.
Australia’s S&P/ASX 200 traded 1.96%
lower.
Hong Kong’s Hang Seng index declined
0.88% while the mainland China’s CSI 300 index shed 0.62%.
The Hong Kong Monetary Authority on
Thursday delivered a 25-basis-point interest rate cut in lock-steps with
the Fed. The country’s currency is tightly pegged to the U.S. dollar.
Elsewhere, New Zealand’s economy sank into
a recession, falling 1% in the September quarter from the prior
quarter, according to the official statistics agency Stats NZ. A recession is
defined as two consecutive quarters of decline.
Overnight in the U.S., the Dow Jones Industrial Average tanked
by 1,123.03 points, or 2.58%, to 42,326.87, posting its first 10-day losing
streak since 1974. The broad-based
S&P 500 dropped 2.95% to 5,872.16 and the Nasdaq Composite lost 3.56%
to 19,392.69.
The sell-off on Wall Street came after the
central bank lowered its overnight borrowing rate by 25
basis points to a target range of 4.25% to 4.5%. While the cut was widely
anticipated, the Fed indicated there will only be two rate cuts in 2025, fewer
than the four cuts in its previous forecast.
“We moved pretty quickly to get to here,
and I think going forward obviously we’re moving slower,” Fed Chair Jerome
Powell said at the post-meeting press conference.
Asia-Pacific markets live updates: Fed rate cuts, BOJ rate decision
Wall Street Pouts Over More Cautious Fed
December 18, 2024
Stocks headed for the basement Wednesday
as Wall Street traders pouted over the more cautious tone emanating from the US
Federal Reserve. After fulfilling all expectations by cutting rates another quarter point, Fed Chair Jerome Powell made clear
the central bank sees its mission now as one where it doesn’t need to be as quick to act. Having lowered their benchmark rate a
third consecutive time, officials reined in the number of cuts they expect in
2025. “We have lowered our policy rate by a full percentage point from its peak
and our policy stance is now significantly less restrictive,” Powell said
following the Fed’s decision. “We can therefore be more cautious as we consider further adjustments.”
Indeed, recent price data has raised concerns that inflation may be stalling
above the Fed’s 2% target, and the unpredictable nature of the incoming Trump
administration also has given officials pause. But apparently that wasn’t what
investors wanted to hear, as all of the major US indexes plummeted.
Here’s your markets wrap.
What You Need to Know Today
Remember the US commercial real estate
crisis? It’s possible it slipped your mind these past few months given the
presidential campaign, the election and its aftermath—both since Nov. 5 and
that yet to come. But don’t worry, it’s still here. The funny thing is that,
back in 2022 when rising interest rates turned the sector into a credit
desert, optimists told everyone to just hang on until 2025—by
then, inflation would be whipped, money would be cheaper and demand would tilt
in their favor. Well, 2025 is almost here and the landscape that awaits isn’t
so much green trees and rainbows as a densely-packed minefield, one filled with
losses that can no longer be put off. “I look at 2025 as a year of reckoning,”
says Tim Mooney, head of real estate at Värde Partners. “Lenders and borrowers
will acknowledge that lower interest rates aren’t going to save them.”
Wall
Street Pouts Over a More Cautious Federal Reserve - Bloomberg
CNBC Daily Open: Expectations on Fed cuts were the
lethal blow to markets
Published Wed, Dec 18 2024 7:57 PM EST
What you need to know today
A cut now, but fewer ahead
The
U.S. Federal Reserve lowered
interest rates by 25 basis points on Wednesday, taking its overnight
borrowing rate to a target range of 4.25%-4.5%. In the Fed’s dot plot
indicating expectations for rates in the years ahead, the central bank mostly
indicated just
two rate reductions for 2025, fewer than the four cuts previously projected
in September.
Sharp sell-off in markets
U.S. markets sold
off sharply on Wednesday. The Dow Jones Industrial Average lost
more than 1,000 points, dropping 2.58% for its 10th straight day of losses.
The S&P 500 retreated
2.95% and the Nasdaq
Composite sank 3.56%. The pan-European Stoxx 600 — which ended
trading before the Fed’s decision — added 0.15%.
Shares of Tesla reverse
Tesla shares slumped 8.3%
Wednesday, their steepest
fall since Donald Trump won the U.S. presidential elections in
November, amid heavy losses in the broader market. While shares are still up
75% since the elections on Nov. 5, the company’s stock seems “widely
disconnected … from fundamentals,” Barclay analysts wrote in a report on
Wednesday.
Disappointing guidance from Micron
Shares
of Micron plunged more
than 15% in extended trading after the company gave substantially
weaker-than-expected guidance, even though it beat expectations on earnings
for its last quarter. For the current quarter, Micron expects revenue to come
in around $7.9 billion. That’s far less than the $8.98 billion expected by
analysts, according to LSEG.
[PRO] Why markets were so disappointed
The
stock market took a battering after digesting the Fed’s forecast that monetary
policy in 2025 will remain tighter than previously forecast. CNBC’s Sarah Min
looks at why investors
were so disappointed, and what market observers think about the Fed’s
decision.
The bottom line
Wednesday’s dramatic sell-off in markets
is a stark reminder that forecasts influence stock movements much more than
current circumstances.
The Fed cut its key interest rate by 25
basis points. Borrowing costs will go down and corporate investment should be
stimulated, which should lead to job creation and boost growth. That, in turn,
theoretically pushes up stocks.
But investors were already confident
about the Fed’s cut Wednesday. Prior to the conclusion of the Fed’s December
meeting, the futures market indicated a 98% chance of a 25 basis points cut,
according to the CME FedWatch Tool. That means investors had already priced
in the benefits of the rate reduction into stocks. In other words, yesterday’s
cut would have little bearing on stock prices. Investors were
perhaps pricing in even more optimism than that single reduction in rates. Just
a day ago, investors were betting on an 81.6% chance of the Fed lowering rates
by another 25 basis points in January.
Fed Chair Jerome Powell squashed that
hope.
More
CNBC Daily Open: Expectations on Fed cuts were the lethal blow to markets
In other news.
UK factories report plunge in output, adding to
economic slowdown signs
18 December 2024
LONDON (Reuters) - British manufacturers
reported the biggest fall in output in late 2024 since the COVID-19 pandemic
and they are even more downbeat about the start of next year, according to a
survey that adds to signs of a loss of momentum in the economy.
The Confederation of British Industry said
a gauge of output over the three months to December in its monthly industrial
trends survey - published on Wednesday - fell to -25, its lowest since August
2020, down from -12 in the three months to November.
Expectations for output over the coming
three months dropped to -31, the weakest since May 2020, from +9.
Other surveys have shown a loss of
confidence among British employers after finance minister Rachel Reeves
announced an increase in social security contributions that firms must pay on
in her first budget on Oct. 30.
Official data has shown Britain's economic
output contracted in September and October in the run-up to the budget.
The CBI's measure of expectations among
firms for how much they will increase the prices they charge over the next
three months rose to +23 from +11 in November.
The survey was based on the responses of
331 manufacturers and was conducted between Nov. 25 and Dec. 11.
UK factories report plunge in output, adding to economic slowdown signs
Europe’s economy faces a bumpy ride in 2025. Here
are 5 things to watch
Published Wed, Dec 18 2024 1:18 AM EST
Between political upheaval, some weak economic data and warnings about falling
short of its growth potential, Europe’s had a tough year. Amid a downbeat
outlook, however, analysts say there could be some bright spots to watch for in
2025.
Economic growth in Europe isn’t expected
to charge ahead any time soon, with the European Central Bank last week cutting its growth
forecast for
2025 to 1.1%. ECB President Christine Lagarde, meanwhile, said risks to growth
“remain tilted to the downside.”
It comes as GDP is expected to expand by
0.8% in the euro area this year — that’s an improvement from 2023′s annual
growth rate of 0.4%, but a far cry
from 2022′s 3.4%. In comparison, U.S. officials expect 2.7% growth
this year.
Euro zone inflation is also in focus after
sinking briefly below the ECB’s target in the autumn to 1.8%, but
rising back above the 2% goal in November.
As investors and economists attempt to
decipher what’s next for the region, here are five key things they’re watching
as they weigh Europe’s prospects for 2025.
1. Monetary policy
Policymakers at the European Central Bank
announced their fourth and final rate cut of the year last Thursday. Markets are
pricing in another 25-basis-points cut when the ECB’s Governing Council makes
its first policy decision of 2025, according to overnight index swap data.
For Kallum Pickering, chief economist at
investment bank Peel Hunt, that isn’t going far enough.
“Economic logic argues for 50-basis-points
moves, [but] I don’t think they’ll go for 50 basis points,” he told CNBC’s
“Street Signs Europe.”
“I find the ECB’s tone much too hawkish,”
Pickering added, explaining that Europe’s economic issues had shifted from
supply shocks to demand-side problems — making it doubtful inflation would
still be “sticky” in six months’ time.
Index swap data suggests that, like
Pickering, the majority of traders are expecting the ECB’s key rate — currently
at 3% — to be reduced to 2% by mid-2025, with some anticipating further cuts in
the second half of the year.
In a note to clients at the end of
November, analysts at Bank of America declared 2025 “the year the [ECB’s]
policy rate goes below 2%.”
“A [deposit facility] rate of 1% is easily
thinkable,” they added.
2. Crisis of confidence
A cautious
consumer is
among the many headwinds Europe has faced this year.
In a flash
estimate for
November, the European Commission found consumer confidence fell 1.2 percentage
points year-on-year in the euro zone. Meanwhile, the European
Commission’s economic
sentiment indicator —
a confidence score derived from business and consumer surveys — while stable,
has remained below its long-term average all year, and is currently slightly
lower than where it ended 2023.
However, Sylvain Broyer, chief EMEA
economist at S&P Global Ratings, told CNBC that monetary policy changes in
Europe could help boost lagging confidence levels.
“We think the ECB is in a position to
accelerate rate cuts, which could help [growth] because confidence
is still low despite
the ongoing economic recovery,” Broyer — who is a member of the
ECB’s “shadow council” of economists — told CNBC’s “Squawk Box Europe”
last week.
“Fiscal policy has been restrictive over
the past two years, if you add the restrictive monetary policy, the two legs of
the policy mix in Europe have been restrictive — if we change that a little for
2025 that could help definitively.”
More
Europe's economy faces a bumpy ride in 2025. Here are 5 things to watch
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.
UK
inflation spikes ahead of Bank of England rates decision
Wednesday
18 December 2024 7:09 am
UK
inflation spiked to 2.6 per cent ahead of the Bank
of England’s meeting
to decide interest rates later this week.
Year-on-year
inflation matched expectations of 2.6 per cent in November, up from 2.3 per
cent in October, data from the Office for National Statistics revealed.
Meanwhile,
core inflation, which strips out volatile commodities like food and energy,
rose to 3.5 per cent from 3.3 per cent in October. However, this was slightly
below the expectations of 3.6 per cent.
Falling
inflation earlier this year had given members of the BoE’s Monetary Policy
Committee (MPC) confidence to lower interest rates in August and November.
The
headline rate fell to 1.7 per cent in September but has since been driven
higher by rising energy costs. Services inflation, which is being closely
monitored by the Bank of England for signs of domestic price pressures, has
also remained elevated.
However,
today’s figures showed that services inflation remained steady from last month
at five per cent, versus the 5.1 per cent figure expected by the market.
Despite
the numbers, the Bank of England is still expected to keep interest rates on
hold at its meeting later this week, and markets are still split over whether
it will cut rates at its meeting in February.
Inflation is expected
to rise further in the coming year, with the UK taking a more gradual approach
to easing monetary policy than other developed central banks.
“While
risks to this base case are tilted towards a more dovish outcome, given
increasing signs of overall economic momentum stalling, policymakers will be
rapidly seeking convincing signs of disinflationary progress being made, as the
economic cocktail facing UK Plc. increasingly becomes a stagflationary one,”
said Michael Brown, senior research strategist at Pepperstone.
The
news comes following data released on Tuesday that showed much higher than
expected wage growth, with average earnings, including bonuses, rising 5.2 per
cent compared to 4.6 per cent estimates and previous figures of 4.4 per cent.
More
UK inflation
spikes ahead of Bank of England rates decision
Americans may have to actually brace for stagflation with Trump tariffs
Published
6:30 AM EST, Tue December 17, 2024
Jamie
Dimon, head of America’s largest bank, JPMorgan Chase — and commonly referred
to as the ‘president of Wall Street’ — spent much of this past year warning
that there’s an
elevated risk that
the US experiences 1970s-esque stagflation, which is when economic growth
stagnates while inflation heats up.
“I
look at the amount of fiscal and monetary stimulus that has taken place over
the last five years — it has been so extraordinary; how can you tell me it
won’t lead to stagflation?” Dimon said at a conference in May.
His
prediction, however, has been pooh-poohed by many leading economic
voices; chief among them
was Federal Reserve Chair Jerome Powell, who said at a press conference in May,
“I don’t see the stag or the ‘flation.”
That,
of course, was before President-elect Donald Trump won the election. Now,
Americans may have to actually brace for stagflation — something the nation’s
economy hasn’t experienced in over half a century. This time around, though,
fueled by tariffs.
Just
over a month from now, Trump will have the power to levy tariffs on other
nations at the flick of a pen. And once
inaugurated on January 20, he has pledged to immediately impose a 25% tariff
on Mexican and Canadian imports and increase tariffs on Chinese goods by an
additional 10%.
On
the campaign trail, he also promised to levy a 10% to 20% tax on all imports
and increase tariffs on Chinese goods by at least 60%.
There
are some doubts as to whether Trump will follow through with these plans and,
instead, use them as a means to negotiate with other nations. However, if these
significant, broad-based tariffs go into effect, it could send the US economy
back to one of the most painful periods that took over a decade to resolve.
“I
was around for stagflation. It was 10% unemployment. It was high single-digits
inflation and very slow growth,” Powell said back in May, referring to when oil
prices spiked during the Arab oil embargo in the 1970s.
When
the Fed responded to high levels of unemployment in the 1970s by cutting rates
to relieve pressure businesses faced, it later had to contend with higher
inflation. To tackle higher inflation, central bankers raised interest rates.
But that ushered in more unemployment.
To
break that vicious cycle, the Fed opted to prioritize getting inflation down by
aggressively raising interest rates, even if it meant the economy would enter a
recession, which it did.
More
Americans may have to actually brace for stagflation with Trump tariffs | CNN Business
Covid-19 Corner
This section will continue until it becomes unneeded.
Sore throat could be Covid XEC strain Brits warned as 1,000 are hospitalised
in a week
18 December 2924
As the UK continues to
grapple with high coronavirus rates, an expert has shed light on how to
distinguish a Covid sore throat from one caused by strep or other infections.
With the arrival of colder weather and more indoor gatherings, we're at a
heightened risk of catching seasonal bugs.
But with so many viruses
circulating, it's tricky to pinpoint exactly what you might have caught. The
latest stats from the UK Health Security Agency (UKHSA) show that COVID-19
cases are still quite prevalent, with 1,081 confirmed in the week leading up to
4 December, alongside 122 Covid-related deaths in the week before 22 November.
Hospital admissions due to Covid also saw a slight increase of 1.5 percent,
with 1,085 patients admitted up to 30 November. Experts had previously
associated a spike in Covid cases with the emergence of the XEC variant, first
identified in Germany and noted for its high transmissibility due to several
mutations.
Adding to health
concerns, the NHS has recently highlighted the possibility of a
"quademic" hitting the UK, with flu, norovirus, respiratory syncytial
virus (RSV), and Covid potentially impacting many this winter.
Considering this, an
expert revealed how to identify the potential cause of a sore throat, including
other warning signs to look out for. Phil Day, superintendent pharmacist at
Pharmacy2U (pharmacy2u.co.uk), shared his insights, reports the Mirror.
If a sore throat is
accompanied by four other specific symptoms, it might indicate infection
with the XEC variant of Covid, according to Phil. He explained: "The XEC
variant of COVID-19 has added another layer of complexity to the sore throat
diagnosis. In many cases, a sore throat is one of the initial symptoms, often
accompanied by a dry cough, fatigue, fever, and sometimes a loss of taste or
smell. While most mild cases can be managed with rest and over-the-counter
remedies, it's crucial to assess whether COVID-19 could be the cause of your
symptoms."
For suspected Covid
cases, the NHS recommends staying at home and avoiding contact with others
until symptoms improve.
More
Sore throat could be Covid XEC strain Brits warned as 1,000 are
hospitalised in a week
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 wind power
hits record high as it provides 70% of electricity
17
December 2024
Tapping
renewable energy sources like wind and solar will be key to limiting carbon
emissions and avoiding a climate crisis.
Now it
seems Britain is well on its way to fully 'clean' energy, as it's now relying
on wind power more than ever.
Britain's
wind turbines have set a new maximum wind record, reaching 22,243 megawatts for
the first time on Sunday evening (December 15) – providing 54 per cent of
the country's electricity supply.
This
beat the previous maximum wind record of 21,998MW set on January 10, 2023,
reveals the National Energy System Operator (NESO).
Meanwhile,
at 4:30am on Monday morning, wind accounted for 70 per cent of the country's
electricity supply – or 21,123MW.
Wind
power is an environmentally friendly, renewable energy source, contrasting with
the likes of coal and gas (both fossil
fuels).
Dotted
around the UK, wind turbines harness energy from the wind using mechanical
power to spin a generator and create electricity.
The
new record comes as the government plans to make Britain's energy system
'clean' by
decarbonising the electricity grid by 2030.
The
new wind record was posted to X (Twitter) by NESO, which operates the UK's
electricity system and for planning the gas system.
It was
set because Britain experienced above-average winds on Sunday night, including
in Scotland,
which is heavily-populated with wind turbines.
In
all, 54 per cent of Britain's energy was supplied by gas at around 6:30pm on
Sunday, rising to 67 per cent Monday morning and since falling to 29 per cent,
as of Tuesday morning.
Barnaby
Wharton, director of future electricity systems at industry body RenewableUK,
said it's 'fantastic to see wind
energy breaking records'.
'[Wind
is] once again taking centre stage in our modern clean energy mix, keeping
Britain powered up at the coldest, darkest time of the year and strengthening
our energy security,' he said.
'We
know a system dominated by wind and solar is the lowest cost for bill payers,
and we look forward to working with government now that it has a clear road map
to achieving this.'
The UK
has several different sources of energy thrown into the so-called 'mix' – from
wind to gas, solar, biomass and nuclear.
Our
energy mix fluctuates daily depending on demand and the amount of energy
generated from each source.
More
UK wind power hits
record high as it provides 70% of electricity
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
In
every mutual fund prospectus, in every sales promotional folder, and in every
mutual fund advertisement (albeit in print almost too small to read), the
following warning appears: "Past performance is no guarantee of future
results."
Paul
Samuelson.
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