Market comment 2023

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Oil prices spiked late Sunday, after Saudi Arabia led a surprise oil production cut across several OPEC+ nations that will remove more than 1 million barrels of oil a day from May. In an announcement on Sunday, Saudi Arabia’s Ministry of Energy stated that the kingdom will implement a voluntary cut of 500,000 barrels a day from May until the end of 2023, in conjunction with other countries. It said that the “voluntary cut is in addition to the reduction in production” agreed at the OPEC meeting in October and “is a precautionary measure aimed at supporting the stability of the oil market.” OPEC+ agreed in October to cut production by two million barrels a day from November, a move that angered the Biden administration. Russia’s deputy prime minister, Alexander Novak, said his country would extend a March production cut of 500,000 barrels a day through the end of the year. OPEC+ is made up of members of the Organization of the Petroleum Exporting Countries and its allies, including Russia.

Oil prices soar after Saudi Arabia leads coordinated OPEC+ cuts totaling more than 1 million barrels a day

• A cartel led by autocratic regimes abusing market power in an inflationary world.. what could go wrong?
  

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AI language models are the shiniest, most exciting thing in tech right now. But they’re poised to create a major new problem: they are ridiculously easy to misuse and to deploy as powerful phishing or scamming tools. No programming skills are needed. What’s worse is that there is no known fix.  Tech companies are racing to embed these models into tons of products to help people do everything from book trips to organize their calendars to take notes in meetings. But the way these products work—receiving instructions from users and then scouring the internet for answers—creates a ton of new risks. With AI, they could be used for all sorts of malicious tasks, including leaking people’s private information and helping criminals phish, spam, and scam people. Experts warn we are heading toward a security and privacy “disaster.”  Here are three ways that AI language models are open to abuse.

Three ways AI chatbots are a security disaster  | MIT Technology Review

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Europe has failed to secure enough long-term contracts for liquefied natural gas to offset cut-off Russian gas imports, which may prove costly next winter as a rebound in Chinese demand could sharply tighten the market, according to a new analysis this week from Reuters. Europe imported 121M metric tons of LNG last year ahead of the 2022-23 winter season to replace Russian gas - 60% more than the previous year - to help the continent to get through winter with higher than expected gas storage levels. But Europe bought much of its LNG last year on the spot market, where prices are often much higher than gas bought under long-term contracts, and analysts warn additional demand from China could push prices even higher, Reuters reports.

Europe faces cost crunch next winter with too few long-term LNG contracts (NYSEARCA:UNG) | Seeking Alpha

That data showed job openings fell to a 21-month low of 9.9 million in February, down from a revised 10.6 million for the prior month. Soon after those figures came out, alongside a report revealing factory orders declined a third time in the past four months, investors flocked to the safety of Treasurys — everything from 6-month T-bills

'We are going to see parts of the economy break': Recession fears move back to the forefront of markets

When the Biden administration greenlighted the enormous $8 billion Willow oil project on Alaska’s North Slope last month, many decried the move as a betrayal of the United States’ pledge to move away from fossil fuels in the fight against climate change. But an analysis of global data shows that Willow represents a small fraction of hundreds of new oil and gas extraction projects approved in the past year across the world, including many more in the United States. And in the coming months, dozens of additional projects are expected to be approved.

 It’s Not Just Willow: Oil and Gas Projects Are Back in a Big Way

If this domino falls we can forget a mini recession – Britain faces the whole shebang A slumping housing market will set off a chain reaction that puts the UK at real risk

If this domino falls we can forget a mini recession – Britain faces the whole shebang

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Germany’s final three nuclear power plants close their doors on Saturday, marking the end of the country’s nuclear era that has spanned more than six decades. Nuclear power has long been contentious in Germany. There are those who want to end reliance on a technology they view as unsustainable, dangerous and a distraction from speeding up renewable energy. But for others, closing down nuclear plants is short-sighted. They see it as turning off the tap on a reliable source of low-carbon energy at a time when drastic cuts to planet-heating pollution are needed.

‘A new era’: Germany quits nuclear power, closing its final three plants

• How stupid is this? Can't they wait at least until the war has ended and the energy supply situation becomes clearer? Could still be a difficult winter ahead with the Chinese coming back to the LNG market.
  

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What does it take to be middle class? Roughly $82,000 a year in household income in San Francisco, $74,000 in Seattle and $60,000 in Washington, D.C., a new study says, but only $24,000 in Cleveland. Researchers at SmartAsset, the consumer finance site, tabulated the low and high end of middle-class salaries in 100 large cities and every state.

The Hill

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Global energy prices have collapsed, and the price of food on international commodity markets is coming down too, so it’s hard any longer to blame Vladimir Putin for inflation being so sticky. Nor is it immediately obvious why junior doctors should be the fall guys. Despite attempts by ministers to finger workers for the persistence of the cost of living crisis, there is no real evidence that this is the case. Both the International Monetary Fund and the European Central Bank have looked at whether higher wages are driving up prices, and neither of those august bodies thinks that is happening. What they have found is that companies have been able to use the crisis to drive up prices and boost profit margins. The IMF and the ECB wouldn’t put it in these terms, of course, but both support the idea that companies are gouging their customers when they can. The non-technical term for what is going on is greedflation.

This isn’t wage-price inflation, it’s greedflation – and big companies are to blame | Larry Elliott | The Guardian

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Lots of measures have shown that businesses and consumers have found it more challenging to obtain financing recently, particularly in the wake of major regional bank failures in March. For example, recent data from the Federal Reserve show that commercial bank lending fell by over $100 billion in the two weeks ending March 29. That is the largest two-week cutback in overall bank lending, in dollar terms, in records going back half a century. This same two-week period also saw the largest decline in commercial and industrial loans on record. And the largest decline on record in lending to real estate, and the largest decline on record in bank holdings of mortgages.

There’s a credit crunch all across the country. Here’s why.

The new Covid variant concerning experts worldwide has claimed its first victim, health officials have announced. The first death from the Arcturus strain, thought to be around 1.2 times more infectious than the last major sub-variant, was recorded in Thailand on Thursday, amid a surge in cases across the globe. Dr Supakit Sirilak, director-general of the Medical Sciences Department, revealed today that it was an unnamed elderly man died from the new variant. He told Thailand’s PBS news station that the man who died was “an elderly foreigner” with underlying health conditions. “His death, therefore, may not directly reflect the severity of this subvariant but rather its impact on other risk factors,” he added.

First person dies with new Covid variant as cases rise globally

• Just when you think it's all over..
  

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“I think that the debt ceiling is the biggest buy-the-rumor-sell-the-news event, because the lead-up to the debt ceiling has actually been a major driver of liquidity being pumped into this market,” she told CNBC in an interview late Wednesday. “When the Treasury has been spending down its cash balance instead of issuing new bonds, the end result is that it increases reserves in the system and adds liquidity and that’s one of the reasons why growth stocks, technology stocks, speculative stocks have been up year to date,” said the former Bank of America equity analyst. “But when we get past the debt ceiling, the Treasury will start issuing new bonds and that will have the net effect of taking liquidity out of this market,” removing a tailwind for equities, said Dawson.

Debt ceiling is a buy-the-rumor but sell-the-news event, cautions this strategist

Telecoms giant BT is to shed up to 55,000 jobs by the end of the decade, mostly in the UK, as it cuts costs. Up to a fifth of those cuts will come in customer services as staff are replaced by technologies including artificial intelligence. The headcount reduction from the current workforce of 130,000 includes staff and contractors. "Whenever you get new technologies you can get big changes," said chief executive Philip Jansen. He said "generative AI" tools such as ChatGPT - which can write essays, scripts, poems, and solve computer coding in a human-like way - "gives us confidence we can go even further".

BT to cut 55,000 jobs with up to a fifth replaced by AI

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Billionaire activist investor Carl Icahn said that bets he made that the stock market would crash in recent years were likely a mistake. "I've always told people there is nobody who can really pick the market on a short-term or an immediate-term basis," Icahn told the Financial Times in an interview published on Thursday. " Maybe I made the mistake of not adhering to my own advice in recent years." Icahn reportedly lost about $1.8 billion in 2017 on hedging positions that would have paid if asset prices tumbled and he lost an additional $7 billion between 2018 and Q1 of this year, according an FT analysis

Billionaire Carl Icahn says bearish market bets were a mistake - report | Seeking Alpha

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China says it has become the world's biggest exporter of cars after overtaking Japan in the first three months of the year. Officials figures released in the last week show China exported 1.07 million vehicles in the period, up 58% compared to the first quarter of 2022. At the same time Japan's vehicle exports stood at 954,185, after edging up 6% from a year earlier. China's exports were boosted by demand for electric cars and sales to Russia.

 China overtakes Japan as world's top car exporter - BBC News

• Monumental change..
  

A South Korean firm has announced the world’s first production line for perovskite-silicon tandem solar cells, which promise an increase in efficiency of between 50-75 per cent compared to standard solar panels. The commercialisation of solar cells that use perovskite follows years of breakthroughs with the mineral, which has been hailed as a ‘miracle material’ for its potential to transform various industries, including renewable energy. Seoul-based Qcells said it will invest $100 million to roll out the next-generation solar cell technoloy, which until now has been limited to lab tests and academic research.

 Solar panel efficiency to increase 50% with first production of ‘miracle’ tandem cells | The Independent

• More monumental change..