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USD/KRW Declines As South Korea Exits Recession in Q3

USD/KRW Declines As South Korea Exits Recession in Q3

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Korean won banknotesThe South Korean won is recording modest gains against multiple currency rivals on Tuesday as the nation’s economy returned to growth in the third quarter. After enduring the sharpest economic downturn in more than a decade, Seoul was able to resuscitate the economy through a series of COVID-19 stimulus measures and surging exports.

During the July-to-September period, the gross domestic product (GDP) advanced 1.9%, following a 3.2% slide in the second quarter. The market had penciled in an expansion of 1.7% in the three months ending in September. This is the fastest quarterly expansion since the January-to-March period of 2010.

The economy rebounded mainly due to a 15.6% surge in exports, exceeding the 4.9% boost in imports.

South Korea saw growth in manufacturing (7.6%) and services (0.7%), but the East Asian powerhouse reported a contraction in construction (-5.5) and utilities (-7.4%). Moreover, consumption slid 0.1%, and gross fixed capital formation dropped 1.9%.

The Bank of Korea is projecting a 1.3% slide for the year. But Alex Holmes, an economist at research firm Capital Economics, told Reuters that he only anticipates a 1% contraction in GDP for all of 2020, alluding to COVID-19 risks continuing in the US and Europe.

While this would be the worst performance since 1998, it would still make Korea one of the best-performing economies in the world this year.

In the aftermath of the coronavirus public health crisis, the South Korean government unleashed $275 billion in fiscal stimulus measures to support the economy and limit the downturn. The central bank also slashed interest rates to an all-time low of 0.5%.

Later this week, consumer and business confidence, construction output, retail sales, and manufacturing and industrial production data will be released.

Overall, foreign investors appear to be bullish on the South Korean economy. Foreigners were net buyers of $92.62 million worth of shares on the leading benchmark index, Kospi. The bond market saw higher yields as the benchmark 10-year yield climbed 1.6 basis points to 1.499%. The highly liquid three-year Korean Treasury bond yield edged up 0.9 basis point to 0.917%.

On Monday, Seoul reported 88 confirmed cases of the coronavirus, down from 119 on Sunday. South Korea has had more than 26,000 infections, with a death toll of only 460.

The USD/KRW currency pair dropped 0.35% to 1,128.50, from an opening of 1,132.51, at 17:11 GMT on Tuesday. The EUR/KRW tumbled 0.18% to 1,334.96, from an opening of 1,337.43.


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When Will Royal Caribbean, Carnival, Norwegian Drop Vaccines, Testing?

One of the big three cruise lines just extended its covid-related protocols in the United States until the end of September.

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One of the big three cruise lines just extended its covid-related protocols in the United States until the end of September.

The cruise industry got hit by a perfect storm when the covid pandemic hit. 

For an industry vulnerable to storms in general, it was a terrible combination of events that left the industry shuttered, while hotels, theme parks, arenas, and other venues all remained closed for much less time.

That's because the United States government only has limited control over how private industry operates. 

A local municipality may shutdown industries like the way New York closed Broadway or California shut down its theme parks — but the federal government only has limited power for certain things.

When it comes to cruise lines, however, the federal government has an incredible amount of power. 

That's because all the major cruise lines including Royal Caribbean (RCL) - Get Royal Caribbean Group Report, Carnival Cruise Lines (CCL) - Get Carnival Corporation Report, and Norwegian Cruise Line (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report flag their ships outside the U.S. 

That allows the Centers for Disease Control (CDC) to regulate how the cruise lines operate.

During the pandemic the CDC made an example of the cruise industry, It shut down cruising from North American between March 2020 and July 2021, ignoring the industry's extensive efforts to show it could operate safely. 

Eventually the CDC relented, allowing limited-capacity sailings with a lot of rules beginning in early July 2021.

Now, most of those protocols have gone away as the CDC has lost its leverage with the rest of the country returning to pre-pandemic operating standards. 

The cruise lines, however, still have certain rules in place and two key ones aren't going anywhere any time soon.

Dukas/Universal Images Group via Getty Images

What Are Cruise Covid Protocols Like Now?

Royal Caribbean recently told its booked passengers that it plans to keep its current covid protocols in place through the end of September. 

Currently, Carnival, Norwegian, and Royal Caribbean all have similar Covid-19 rules

They require:

  • All passengers 12 and over must be fully vaccinated at least two weeks before sailing.
  • A vaccine card — not a digital copy — must be shown before boarding.
  • All passengers must present a negative Covid test (which must be a proctored test) taken no more than two days before their cruise. 

All three cruise lines have made masks optional while onboard. 

In addition, Royal Caribbean, Carnival, and Norwegian all operate with a fully-vaccinated crew and have procedures designed to handle when passengers or crew members show Covid symptoms during a sailing.

When Will Cruise Lines Drop Vaccine and Testing Requirements?

Many passengers and future passengers want to know how long these protocols will be in place. 

Some people who are not vaccinated want to return to cruising, while others who are vaccinated simply don't want the added hassle of proving it.

The cruise lines, of course, must balance people wanting a return to normal with other passengers who like sailing with fully-vaccinated passengers who have also recently tested negative.

Currently, Carnival, Royal Caribbean, and Norwegian all participate in a voluntary safe sailing program led by the CDC which sets testing and vaccination standards.

It's possible the CDC changes these requirements, but probably not any time soon, according to former Food and Drug Administration chief Scott Gottlieb, a physician who serves as chairman of Norwegian Cruise Line Holdings’ SailSafe Council.

 “I think that it’s likely to be a requirement that is in place through this fall and winter,” Gottlieb said. 

“I’m talking more about CDC and the policy environment. I think that the public health officials, CDC, is going to want to see what the epidemiology of this disease is when it gets to a quote, unquote, ‘normal’ state."

Gottlieb said he does not expect the CDC to make any changes until it sees a period of time where no new variants flare up. 

He said he thinks the federal agency will wait until 2023 and not even first thing next year.

“The short answer to the question is: I think this is kind of a springtime thing from a CDC policy standpoint," he said. 

"They are going to want to make a decision around this after we get through another fall and winter with covid and see if we are truly in an endemic phase with this.”

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Swiss Watch Shortage Spreads From Rolex To Cartier And Tudor

Swiss Watch Shortage Spreads From Rolex To Cartier And Tudor

A top retailer of Swiss luxury watches warns robust demand and the lack of supply…

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Swiss Watch Shortage Spreads From Rolex To Cartier And Tudor

A top retailer of Swiss luxury watches warns robust demand and the lack of supply have sparked a perfect storm of global Rolex shortages that has spread to other leading brands, including Cartier and Tudor. 

CEO Hugh Brian Duffy of Watches of Switzerland Group Plc, with a network of 171 retail stores between the UK and the US, told Bloomberg on Thursday morning that sales of Rolex, Patek Philippe, and Audemars Piguet had only "modest" increases in the retailer's 2022 fiscal year, primarily because of limited supply. He said this drove demand for other high-end brands. 

"We more than doubled our increases with them," Duffy said, citing Rolex sister brand Tudor, independent Breitling, LVMH's Tag Heuer, Swatch Group's Omega, and Richemont's Cartier. 

He said the Rolex shortage had increased so much demand for certain Cartier and Tudor models, that now those are experiencing supply issues. 

"We can't get enough Santos," he said, referring to the Cartier aviator watch, adding Tudor's chronograph models are in short supply.

Sales of Swiss watches went through the roof during the pandemic as classic high-end timepieces were in high demand as central banks worldwide pumped trillions of dollars into the financial system. Hot money had to end up somewhere, and some wound up in Rolexes and other luxury Swiss brands. 

Duffy concluded the interview by saying retail demand for Rolex, Patek Philippe, and Audemars Piguet watches outweighs supply: "Demand is just off the scale for those brands. We would love to have more of them." 

And when does this Swiss watch bubble end? Will it be when central banks spark the next global recession from aggressive monetary tightening? 

Tyler Durden Sat, 05/21/2022 - 08:45

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Let Them Eat Bugs… How Out-Of-Touch Elites Reveal Their Contempt, & What Comes Next

Let Them Eat Bugs… How Out-Of-Touch Elites Reveal Their Contempt, & What Comes Next

Authored by Nick Giambruno via InternationalMan.com,

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Let Them Eat Bugs... How Out-Of-Touch Elites Reveal Their Contempt, & What Comes Next

Authored by Nick Giambruno via InternationalMan.com,

Upon being told that the people had no bread, Marie Antoinette reportedly responded, “let them eat cake.”

These infamous words were a stark illustration of the French elite’s careless indifference to the plight of ordinary people. Moreover, they likely fueled the anger that sparked a revolution that overturned the French ruling system.

Had Marie Antoinette not been so out of touch, she might have had a better choice of words.

Although history doesn’t repeat itself, it does rhyme.

I am bringing this up because recently, modern political, financial, and media elites have made numerous “let them eat cake” remarks.

They similarly reveal how oblivious they are to the average person’s problems as inflation spirals out of control, shortages spread, the stock market crashes, and economic prospects look dimmer by the day.

Let’s look at them and examine what they could mean for the social and political environment in the future… and what you can do about it.

Example #1: Inflation Is Good

First central bankers, the mainstream media, and academia tell you there is no inflation.

Then, when inflation becomes undeniable, they tell you not to worry because inflation is only “transitory.”

Then, when it becomes apparent that it’s not merely transitory, they tell you not to worry because inflation is actually a good thing.

It’s not uncommon to see ridiculous headlines like this:

Example #2: No More Turkey at Thanksgiving

After inflation broke through multi-decade highs, it’s no longer possible to maintain the farce that “inflation is good.”

So the elite’s messaging has pivoted to ways the plebs can cope with ever-decreasing living standards.

Last Thanksgiving, it was impossible for the Federal Reserve to ignore the soaring costs of turkey. So, instead, the St. Louis branch had a helpful suggestion for those struggling—substitute delicious turkey for cheaper heavily-processed industrial sludge.

Example #3: Let Your Pets Die

Recently, Bloomberg published an article titled “Inflation Stings Most If You Earn Less Than $300K. Here’s How to Deal.”

It recommended rethinking providing medical treatment to your pets:

“If you’re one of the many Americans who became a new pet owner during the pandemic, you might want to rethink those costly pet medical needs.”

Example #4: Gas Is Too Expensive? Buy a Tesla

As gas prices skyrocket, transportation Secretary Pete Buttigieg suggests buying an electric vehicle. That way, the plebs can stop complaining and will “never have to worry about gas prices again.”

The thought of whether people could afford an expensive electric vehicle in the first place didn’t seem to cross his mind.

Example #5: Housing Is Too Expensive? Live in a Pod or Move Back In With Your Parents

With soaring prices making housing unaffordable in many big cities, living in pods is promoted.

For example, in California, a three-bedroom home that used to house a single family has been converted into a unit that includes pods for 13 people.

Similar stories are sprouting up across other cities. The media is celebrating this not as a significant downgrade but rather as an eco-friendly solution to rising housing costs.

They also recommend moving back in with your parents.

Example #6: Meat Is Too Expensive? Eat Bugs and Industrial Sludge

With inflation making meat unaffordable for many, the elite are looking to keep the plebs happy by guilting them into thinking that meat is bad for the environment.

That’s a big reason why there’s been a flurry of articles in the mainstream media condemning meat consumption and promoting cheap alternatives.

Their solution is to give the plebs fake meat made of heavily-processed industrial sludge and feed them bugs.

Bill Gates recently said: “I think all rich countries should move to 100% synthetic beef.”

“You can’t have cows anymore,” and governments can “use regulation to totally shift the demand.”

An article in The Economist notes: “We’re not going to convince Europeans and Americans to go out in big numbers and start eating insects… The trick might be to slip them into the food chain on the quiet.”

The Guardian tells us eating bugs can assuage your climate sins and that “if we want to save the planet, the future of food is insects.”

Here’s Bloomberg:

These are a couple of examples of a much broader push against meat.

Here’s the bottom line.

The elite have been informed that meat is becoming too expensive for the average person. Their answer: “Let them eat bugs.”

Conclusion

This overview is by no means a complete collection of recent “let them eat cake” statements. However, it is enough to understand what the elites think and their contempt for the average person.

These are the same people who engaged in—or closely benefited from—the rampant money printing and other policies responsible for the rising prices ravaging regular people in the first place.

And when the pain of inflation became apparent, their response has been… inflation is good… no more turkey at Thanksgiving… let your pets die… buy an expensive electric vehicle… live in a pod or move back in with your parents… and eat bugs.

Instead of looking at these examples separately, take a step back and reflect on the Big Picture they paint. That will help us better understand the social and political situation, where things might be headed, and what we should do.

With that in mind, two things seem clear.

1) The current crop of political, financial, and media elites are ensconced in a bubble, carelessly indifferent to the problems of ordinary people—much like Marie Antoinette was.

2) Anger is building up as people feel increased economic pain.

Nobody knows how the situation will resolve itself, but I think it would be foolish not to prepare yourself—and your portfolio—for turbulence in the months ahead.

*  *  *

The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation. That’s precisely why bestselling author Doug Casey and his colleagues just released an urgent new PDF report that explains what could come next and what you can do about it. Click here to download it now.

Tyler Durden Sat, 05/21/2022 - 08:10

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