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Supply Chain Problems Will Persist Because The System Is Being Sabotaged

Supply Chain Problems Will Persist Because The System Is Being Sabotaged Authored by Brandon Smith via Alt-Market.us, In a recent interview with Bloomberg, the executive vice president of UPS asserted that “regionalization” of the supply chain is critical to economic stability as geopolitcal conflicts expand. The word “regionalization” is basically a code word to describe decentralization, a concept which the UPS representative obviously did not want to dive into directly. Almost every trade expert and industry insider is admitting that supply chain problems are going to persist into the foreseeable future, and some are starting to also admit (in a roundabout way) that localized production and trade models are the key to survival. This is something that I and many other alternative economists have been talking about for a decade or more. The globalist dynamic of interdependency is a disaster waiting to happen, and now it’s happening. Without decentralized mining of raw materials, local manufacturing, locally sourced goods, local food production and locally integrated trade networks there can be no true stability. All it takes for the system to implode is one or two crisis events and the economy’s ability to meet public demand stagnates. The system doesn’t completely stop, but it does slowly shrivel and degrade. The war in Ukraine has been the go-to scapegoat the past few months for supply chain disruptions, but these issues started long before that. Years of central bank stimulus and fiat money creation have triggered the inevitable landslide of inflation/stagflation that alternative economists have been warning about. Price inflation is a direct contributor to production declines and supply chain disruptions because costs continually rise for manufacturers. Also, wages of workers cannot keep up with rising prices, inspiring many employees to quit and look for work elsewhere, or attempt to live off of government welfare. All of this leads to less supply, or slower production and thus, even higher prices. We were right, the mainstream media was wrong (or they lied). New York Times contributor Paul Krugman claimed that “no one saw this coming” when he was recently forced to admit that he was wrong on inflation. This is the same thing MSM economists said after the credit crash of 2008. It was a lie back then and it’s a lie now. Plenty of people saw it coming; we’ve been repeating our warnings for years, but they didn’t want to listen or they did not want us to be heard. Krugman is perhaps the worst and most arrogant economist/propagandist in the US, and though he belatedly acknowledged the inflation and supply chain threat after arguing for the past two years that it was “transitory,” he now claims that the traditionally accepted indicators of recession “don’t matter” anymore and that there is no downturn. How many times can this guy be proven ignorant and still keep his job? It’s this kind of disinformation that keeps the public in the dark on what is about to happen. Maybe it’s because of stupidity and ego, or maybe it’s a deliberate attempt to keep the population docile (I say it is deliberate), but in either case the American people are being put in great danger when it comes to the false narrative on inflation and the supply chain. The longer they are led to believe the disaster will simply go away on its own, the less time they have to prepare. The bottom line is this: Things are only going to get worse from here on. Maybe slowly, or maybe quickly depending on a handful of factors. Most of the world right now is focused on Taiwan and China’s persistent threats to invade. Nancy Pelosi’s widely publicized plan to visit the island nation (yes, CCP, it is a nation) is a bizarre act of non-discretion that is clearly meant to instigate wider tensions between the US and China. Why would Pelosi do this now? Well, she’s not doing it on her own and it’s certainly not the dementia addled Joe Biden’s idea. There are clearly other hands and other interests involved. The US sources around 20% of its retail goods from China as well as a large portion of it’s medical supplies. More concerning though is China’s near monopoly on Rare Earth metals which are integral to numerous electronic components. Furthermore, there is a pinnacle threat, which is China dumping trillions in US treasuries and dollar holding and virtually ending the dollar’s world reserve status. This is not to say China is in a great position financially – They are on the verge of debt crisis as well, which indicates to me that they will indeed invade Taiwan (and possibly other regions) as a means to expand their borders and consolidate resources. With billions of people to feed and control, the temptation for the CCP to seek military conquest is high. If they do, it will be soon – within the next couple of months when the weather in the Taiwan Strait is optimal for naval operations. The supply chain crisis is going to accelerate into winter as stagflation persists. Price inflation will remain high. The US is indeed officially in a recession today. Two consecutive negative GDP prints IS a recession, this is a fact that no one can change, including Joe Biden, Paul Krugman or Wikipedia. Reality does not answer to these people. The system is breaking, and certain people greatly benefit. A regional conflict with China on top of the Ukraine war could be the perfect smokescreen for a financial and supply chain collapse that was going to happen anyway. But when the mainstream media talks about the triggers and culprits, they’ll never mention central banks and political corruption, they will only talk about Russia and China. As I have noted in the past, the “Great Reset” agenda of the WEF, IMF, the BIS and other globalist organizations requires an extensive destabilization of the existing order. In other words, they need a controlled demolition of certain pillars of the economy. To frighten the public into accepting new collectivist and authoritarian models like the “Shared Economy” (where you will own nothing and like it), they will need a large and semi-chaotic disaster. People would have to be threatened with the loss of supply certainty and they would have to be unsure every day of where they will be able to get the necessities they need when they need them. This level of uncertainty drives calls for solutions, and the globalists will be there to offer their pre-planned objectives and “save the day.” Generally, inflation and shortages lead to price controls, government rationing, government “aid” with strings attached (Universal Basic Income), and eventually nationalization of all production as well as the attempted confiscation of supplies from people that prepared ahead of time. Redistribution will be the name of the game. Maybe not this year, maybe not next year, but soon enough. The limited corporate calls for “regionalization” are too little too late, just as the Federal Reserve’s interest rate hikes are too little too late. They all know it, and they don’t care. These actions are only designed to make it appear as if they tried to save the system so they have deniability of their involvement in the crisis. Stagflation and supply chain shortages are going to become the all encompassing issues of our era. They will be terms that are spoken about daily at every dinner table in America and probably through most of the world. These are dangers that were predicted extensively by the liberty media well ahead of time. They are NOT a surprise. And, there are plenty of institutions, corporate and government, that could have done something about them, but they chose not to. It’s important for people to accept the fact that this crisis is not a product of stupidity; it is a product of malicious motives and intent. *  *  * With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold. Tyler Durden Fri, 08/05/2022 - 16:20.....»»

Category: worldSource: nytAug 5th, 2022

Stockman: The Spasmodic Chaos Of The Post-Lockdown US Economy

Stockman: The Spasmodic Chaos Of The Post-Lockdown US Economy Authored by David Stockman via The Brownstone Institute, The Biden Administration’s utterly ridiculous plan to enact a three-month holiday from the 18.4 cents per gallon Federal gas tax should be a wake-up call with respect to a far broader and more destructive threat. To wit, the US economy has lost its market-based bearings and is now behaving like a spasmodic heap of discord, dislocation and caprice owing to repeated batterings via out-of-this-world government regulatory, fiscal and tax interventions. In combination, the Green Energy attacks, the Virus Patrol’s lockdowns and scare-mongering, the Fed’s insane money-pumping and Washington’s unprecedented $6 trillion fiscal bacchanalia of the last two years have deeply impaired normal economic function. Accordingly, the business sector is flying blind: It can’t forecast what’s coming down the pike in the normal manner based on tried and true rules of cause and effect. In many cases, the normal market signals have gone kerflooey as exemplified by the recent big box retailers’ warnings that they are loaded with the wrong inventory and will be taking painful discounts to clear the decks. Yet it is no wonder that they stocked up on apparel and durables, among others, after a period in which the Virus Patrol shutdown the normal social congregation venues such as movies, restaurants, bars, gyms, air travel and the like. And than Washington added fuel to the fire by pilling on trillions of spending power derived from unemployment benefits that reached to a $55,000 annual rate in some cases and the repeated stimmie checks that for larger families added up to $10,000 to $20,000. Employed workers didn’t need the multiple $2,000 stimmie checks because in its (dubious) “wisdom” the Virus Patrol forced them to save on social congregation based spending. Likewise, temporarily laid-off workers didn’t need the $600 per week Federal UI topper. For the most part they had access to regular UI benefits, and also suffered forced “savings” via the shutdown of restaurants, bars, movies etc. Even the so-called “uncovered” employees not eligible for regular state benefits didn’t need $600 per week of UI bennies. The targeted temporary coverages could have paid 65% of their prior wage for well less than $300 per week on average. So what happened is that the double whammy of forced services savings and the massive flow of free stuff from Washington created a tsunami of demand that sucked the inventory system and supply chains dry. For instance, here is the Y/Y change in inflation-adjusted PCE for apparel and footwear. The steady-state condition of the US economy for that sector oscillated right near the flat-line during 2012-2019. Then the Washington policy hurricanes hit. During the original Q2 2020 lockdowns, real spending  for apparel and footwear plunged by -27.0%, as Dr. Fauci and the Scarf Lady sent half of the American public scurrying for the fetal position in their bedrooms and man-caves. But it didn’t take the American public long to get the joke. They soon re-cycled their restaurant spending etc. and topped it up with a tsunami of Washington’s free stuff during the 18 months ending in September 2021. That literally turned spending patterns upside down. That is to say, the Amazon delivery boxes were declared “safe” once the CDC figured out that the virus didn’t pass on surfaces—so the public went nuts ordering apparel and footwear. By Q2 2021, especially after Biden idiotic $1.9 trillion American Rescue Act in March 2021, the Y/Y change had violently reversed to +57.1%. That’s whip-saw with malice aforethought. Left to their own devices consumers would never yo-yo their budgets in this manner, meaning, in turn, that retail, wholesale and manufacturing suppliers had no possible way to rationally cope with the Washington-fueled supply-chain upheavals. As is also evident from the chart, the inflation-adjusted Y/Y change in May plunged nearly back to normal—just +3.4%. Yet it will take years for supply chains and inventory levels and mixes to recover from the economic chaos generated by Washington. Y/Y Inflation-Adjusted Change PCE for Apparel And Footwear, 2012-2022 The same story holds for durable goods—with the yo-yo amplitude even more extreme. As shown by the chart below, the trend level of growth in real PCE for durables was 3.3% per annum during the 14 year period between the pre-crisis peak in October 2007 and the pre-Covid top in February 2020.  Other than during the 2008-2009 recessionary contraction, the numbers followed a stable pattern that businesses could cope with. And then came the Washington ordered whipsaws. During April 2020 real PCE plunged by -17.5%from prior year, only to violently erupt by +70.5% Y/Y in April 2021. Those stimmies and forced “savings” again! But now that’s over and done. During May 2022 the Y/Y change was -9.1%. Again, it is no wonder that businesses have the wrong inventories and supply chains have been monkey-hammered from one end of the planet to the other. Y/Y Change In Real PCE Durables, 2007-2022 In fact, that points to another dimension of the bull-whip story. To wit, the one time conversion of manufacturing to the global supply chain had a hidden vulnerability—-ultra JIT (Just-In-Time). That is to say, when shipping distances for goods went from 800 miles within the US to 16,000 miles (from factories in Shanghai to terminals in Chicago (or 68 days at sea), a prudent system would have built-in large amounts of redundant inventory to safeguard against the the sweeping disruptions of the past two years. But the carry-cost of in-depth inventory redundancy would have been extremely costly. That’s owing to working capital costs and the risk of stockpiling the wrong-mix of goods. That is, potential inventory costs and merchandise discounts and write-off would have eaten heavily into the labor arbitrage. But fueled by the Fed easy money and idiotic 2.00% inflation target, supply chains became ever more extended, brittle and vulnerable. That fact is now indisputable. As it happened, however, the push to ultra-JIT supply chains caused a massive one-time deflation of durable goods costs. In fact, the nearly 40% contraction of the PCE deflator for durables between 1995, when the China export factories first cranked-up, and the pre-Covid level of early 2020 is one of the great aberrations of economic history. We seriously doubt that the black line below actually happened, save for the BLS endless fiddling with hedonics and other adjustments to the CPI. Yes, toys, for instance plunged by upwards of 60% during this 25-year period, but then again did they make a whopping big negative hedonics adjustment to accounts for the China junk toy standard? Still, the deflationary free ride is over. Already, the durables deflator is up nearly 13% from the pre-Covid low and there is far, far more ground to recoup as global supply chains rework the busted JIT models that evolved prior to 2020. PCE Deflator for Durable Goods, 1995-2022 When it comes to Washington-induced whipsaws, however, there are few sectors that have been as battered as the air travel system. During April 2020, for instance, passenger boardings were down a staggering 96% from the corresponding pre-pandemic month, as in dead and gone. Moreover, this deep reduction pattern prevailed well into the spring of 2021. The airline shutdowns were not necessitated by public health considerations: Frequent cabin air exchanges probably made them safer than most indoor environments. But between the misbegotten guidelines of the CDC and the scare-mongering of the Virus Patrol, even as late as January 2022 loadings were still down 34% from pre-pandemic levels. The industry’s infrastructure got clobbered by these kinds of operating levels. Baggage handlers, flight attendants, pilots and every function in-between suffered huge disruptions in incomes and livelihoods—-even after Washington’s generous subsidies to the airlines and their employees. And then, insult was added to injury when pilots and other employees were threatened with termination owing to unwillingness to take the jab. The result was an industry to turmoil and sometimes even ruin. Then the traffic came flooding back. From 70% of pre-pandemic levels in mid-winter 2021-2022, boardings have subsequently rebounded to 90% in recent months. Alas, the air travel system is severely disorganized with labor shortages of every kind imaginable, leading to schedule gaps and cancellations like rarely before. And now the whipsaw is in the inflationary direction as desperate passengers pay previously unheard of prices to get scarce seats during the summer travel months. As CBS News recently reported, Airlines cancelled nearly 1,200 U.S. flights on Sunday and Monday, leaving passengers stranded and luggage piled up at airports across the the country. Thousands more trips were scrapped across the globe as the summer travel season kicks off. Now for the bad news: Airline analysts say delays and cancellations are likely to persist, and could even get worse. “We may not have seen the worst of this,” Kit Darby, founder of Kit Darby Aviation Consulting, told CBS MoneyWatch. Right now, when you have normal things like airplane maintenance or weather, delays are much more severely felt. There are no reserved extra pilots, planes, flight attendants — and the chain is only good as the weakest link,” Darby said. Many of these problems stem from airlines slashing staff early on in the pandemic, when air travel plummeted. Demand has since roared back faster than airlines have been able to ramp up hiring. “The biggest issue is they don’t have the capacity. They have not been able to bring back full capacity in terms of pilots, TSA checkpoints, vendors at the airport, baggage handlers, ground staff or flight attendants,” New York Times travel editor Amy Virshup told CBS News.  Right. But what is way up now is ticket prices. After plunging by -28% in May 2020 under Fauci’s benighted orders, May prices soared by +38% on a year-over-year basis. Again, what we have is an economy careening lower and then higher owing to massive and unnecessary government interventions. And in the case of energy, the mayhem is even more severe. For want of doubt, however, here is the inflation-adjusted level of airline personal consumption expenditures in recent years. In 2020, the proverbial trap-door literally opened up under the industry. Real output fell by $62.3 billion or 52%, then rebounded by 63% the following year. Real PCE for Air Transportation, 2002-2021 That’s surely some kind of destructive economic yo-yo. And it was all fueled by the Washington politicians and apparatchiks who have no clue that America’s grand $24 trillion economy is not some kind of glorified game of bumper cars. *  *  * This article is reprinted from David Stockman’s ContraCorner, which offers such analysis daily to subscribers. Pound-for-pound, Stockman’s daily analysis is the most comprehensive, salient, insightful, and data-rich of anything available today. Tyler Durden Thu, 06/23/2022 - 13:10.....»»

Category: blogSource: zerohedgeJun 23rd, 2022

8 Top CEOs Give Their Predictions for the Wild Year Ahead

(To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.) Nearly two years into the COVID-19 pandemic, business leaders are heading into 2022 facing the strong headwinds of the Omicron variant, continued pressure on supply chains, and the great resignation looming over the labor market. TIME asked top leaders… (To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.) Nearly two years into the COVID-19 pandemic, business leaders are heading into 2022 facing the strong headwinds of the Omicron variant, continued pressure on supply chains, and the great resignation looming over the labor market. TIME asked top leaders from across the world of business to share their priorities and expectations for the year ahead. Albert Bourla, CEO of Pfizer, wants to leverage the advances his pharmaceutical company has made in fighting COVID-19 to tackle other diseases, while Rosalind “Roz” Brewer, CEO of Walgreens Boots Alliance, has made improving access to healthcare one of her goals over the next year. GoFundMe CEO Tim Cadogan says building trust will be at the heart of decision-making at the crowdfunding platform—both with workers and its wider community. [time-brightcove not-tgx=”true”] Innovation is key to Intel CEO Patrick P. Gelsinger and Forerunner Ventures founder and managing partner Kirsten Green. And Rothy’s CEO Stephen Hawthornthwaite, Albemarle CEO Kent Masters, and Gene Seroka, executive director of the Port of Los Angeles, shared their suggestions for how companies and policymakers can respond to persistent supply chains problems. Read on to see how some of the most powerful people in business envision the coming year. (These answers have been condensed and edited for clarity.) What are the biggest opportunities and challenges you expect in the year ahead? Albert Bourla, CEO of Pfizer: The scientific advancements made by Pfizer and others over the past year have brought us very powerful tools to battle the worst pandemic of our lives. But, unfortunately, we don’t see everyone using them. I am concerned about the limited infrastructure and resources in the poorest countries as they struggle to administer their supply of COVID-19 vaccines to their people. Some of these countries have asked us to pause our deliveries of doses while they work to address these issues. While I am proud of the work Pfizer has done to make vaccines available to low- and lower middle-income countries over the past year, we need to find new ways to support the World Health Organization as they work with NGOs and governments to address these infrastructure issues. Getty ImagesAlbert Bourla, CEO, Pfizer Over the next year I’d like us to help find solutions to issues like the shortage of medical professionals, vaccine hesitancy due to limited educational campaigns, lack of equipment and even roads to allow timely delivery of vaccines. Throughout every chapter of this pandemic, we have been reminded of the importance of collaboration and innovative thinking. We need to work harder than ever before to address these health inequities so that people around the globe are protected from the virus. Pat Gelsinger, CEO of Intel: Throughout the history of technology, we’ve seen the pendulum swinging between centralized and decentralized computing. And there is still a tremendous untapped opportunity in edge computing as we bring greater intelligence to devices such as sensors and cameras in everything from our cars to manufacturing to the smart grid. Edge computing will not replace cloud; we’re swinging back to where decentralized compute becomes the primary growth for new workloads because the inference and AI analysis will take place at the edge. Technology has the power to improve the lives of every person on earth and Intel plays a foundational role within. We aim to lead in the opportunity for every category in which we compete. Roz Brewer, CEO of Walgreens: The pandemic affirmed Walgreens as a trusted neighborhood health destination to help our customers and patients manage their health. We provide essential care to our communities, including administering more than 50 million COVID-19 vaccines as of early December 2021. The opportunity ahead of us at Walgreens Health—our new segment launched this past fall—is to create better outcomes for both consumers and partners, while lowering costs across the care continuum. A year from now I want to look back on this time as an inflection point and a moment in time where real, lasting change happened—that we will all have collectively banded together to get through the pandemic and at the same time delivered real change toward improving accessible and affordable healthcare. I feel inspired and hopeful that some good will come out of this very difficult time in our country and the world’s history. Jason Redmond—AFP/Getty ImagesRosalind Brewer, CEO of Walgreens, speaks in Seattle, Washington on Mar. 20, 2019. Tim Cadogan, CEO of GoFundMe: We’re going to see continued disruption in the world and the workplace in 2022—this will require more people to come together to help each other. Our opportunity is to use our voice and platform to bring more people together to help each other with all aspects of their lives. Asking for help is hard but coming together to help each other is one of the most important and rewarding things we can do in life. We are continuously improving our product to make it easier for more people to both ask for and give help, whether it’s helping an individual fulfill a dream, working on a global cause like climate change, or supporting a family during a difficult time. Kirsten Green, founder and managing partner of Forerunner Ventures: We are nearly two years into the pandemic, and it is still ongoing. We must embrace this new normal and figure out how to make that reality work for our businesses, our consumers, and our people. Thankfully, we often see innovation come out of these periods of change and fluctuation. At the same time, it’s hard to come to terms with the fact that the world has evolved, and it is still important to understand that the ‘reset’ button just got hit for a lot of people. Values, goals, and core needs are being reevaluated and reestablished, and we as a society need to figure out how to move forward during a volatile period. Gene Seroka, executive director of the Port of Los Angeles: Our industry needs to help drive the American economic recovery amid the impact of the COVID-19 pandemic. The top priority remains getting goods to American consumers and creating a more fluid supply chain. We also need to address the growing trade imbalance. Imports are at all-time highs while U.S. exports have declined nearly 40% over the past three years in Los Angeles. We have to help American manufacturers and farmers get their products to global markets. With the passage of the Infrastructure Investment and Jobs Act, our team is working to get our fair share of federal funds to accelerate projects to improve rail infrastructure, local highways and support facilities. The Port of Los Angeles is the nation’s primary trade gateway, yet east and gulf coast ports have received most of the federal funding in the past decade. The best return on port infrastructure investment is in Los Angeles, where the cargo we handle reaches every corner of the country. Kent Masters, CEO of Albemarle: Challenges will likely continue to include competition for top talent, supply chain disruptions due to possible pandemic impacts to raw material availability and logistics, and potential inflation impacts to material and freight costs, all of which we’re monitoring closely so we can respond quickly. With the global EV market growing rapidly, we have a tremendous opportunity ahead of us for years to come. Next year, we’ll advance our lithium business through new capacity ramp-ups in Chile, Australia and China, and restart the MARBL Lithium Wodgina hard rock resource in Australia to help feed our new conversion assets and meet customer needs. We’re also keenly focused on organizational goal alignment and continuous improvement to drive greater productivity through our global workforce next year. What do you expect to happen to supply chains in 2022? Gelsinger: The unprecedented global demand for semiconductors—combined with the impact of the global pandemic—has led to an industry-wide shortage, which is impacting technology providers across the industry. Intel is aggressively stepping in to address these issues and build out more capacity and supply around the globe for a more balanced and stable supply, but it will take time and strong public-private partnerships to achieve. Read more: From Cars to Toasters, America’s Semiconductor Shortage Is Wreaking Havoc on Our Lives. Can We Fix It? Brewer: We learned a lot over the past two years and companies are taking action with investments in capacity, resiliency and agility for supply chains across the world. We will continue finding creative ways to increase manufacturing and shipping capacity. Manufacturers will continue expanding capacity and increasing the diversity in their supplier base to reduce reliance of single sourcing. Companies will continue to invest to increase resiliency through expanded inventory positions, extended planning horizons and lead-times, and increased agility in manufacturing and logistics capabilities to fulfill customer needs. As the marketplace changes, we must be agile and adapt quickly as we respond to shifts in consumer behavior. Investments in technology, such as real time supply chain visibility and predictive/prescriptive analytics, will enable companies to deliver the speed and precision expected by today’s consumer. Seroka: Goods and products will get to market. The maritime logistics industry must raise the bar and make advances on service levels for both our import and export customers. Retailers will be replenishing their inventories in the second quarter of the year. And by summer, several months earlier than usual, we’ll see savvy retailers bringing in products for back to school, fall fashion and the winter holidays. Despite the challenges, retail sales reached new highs in 2021. Collectively, supply chains partners need to step up further to improve fluidity and reliability. Stephen Hawthornthwaite, CEO of Rothy’s: In 2022, pressure from consumers for transparency around manufacturing and production, coupled with pandemic learnings about existing supply chain constraints, will push businesses to condense their supply chains and bring in-house where possible. I also predict that more brands will test make-to-demand models to better weather demand volatility and avoid supply surpluses—a benefit for businesses, consumers and the planet. Nimbleness and a willingness to innovate will be crucial for brands who wish to meet the demands of a post-pandemic world. At Rothy’s, we’ve built a vertically integrated model and wholly-owned factory, enabling us to better navigate the challenges that production and logistics present and unlock the full potential of sustainability and circularity. Courtesy of Rothy’sStephen Hawthornthwaite, chairman and CEO, Rothy’s Green: The pandemic crystallized what a lot of us knew to be true, but hadn’t yet evaluated: There’s not nearly as much innovation in the supply chain as a flexible world is going to need. What we’re seeing now is a giant wake-up call to the entire commerce ecosystem. This is more than a rallying cry; it’s a mandate to reevaluate how we’re managing our production processes, and 2022 will be the start of change. Expect a massive overhaul of the system, and expect to see more investment building innovation, efficiency, and sustainability into the supply chain space. Read more: How American Shoppers Broke the Supply Chain Masters: As the pandemic continues with new variants, we expect global supply chain issues to persist in 2022. To what degree remains to be seen, but I would expect impacts to some raw materials, freight costs, and even energy costs. On a positive note, we can successfully meet our customer obligations largely because of our vertically integrated capabilities. This helps us continue to be a reliable source of lithium, as well as bromine. Worldwide logistics issues are a factor, but more marginal in the supply question when the determining factor is the ability to convert feedstock to product and bolster the supply chain. In lithium, we have active conversion facilities running at full capacity now. As we bring more capacity online (La Negra III/IV, Kemerton I/II, Silver Peak expansion, and our Tianyuan acquisition in China) while making more efficient use of our feedstocks, it will help strengthen the global supply chain. How will the labor market evolve and what changes should workers expect in the coming year? Brewer: The labor market will continue to be competitive in 2022. I often say to my team: as an employer, it’s not about the products we make, it’s not about our brand. It’s about how are we going to motivate team members to feel good about themselves, fulfilled and passionate about their work, to contribute at their highest level of performance. How do we create a culture that means Walgreens Boots Alliance is the best place to work—so our team members say, “Yes, pay me for the work that I do, but help me love my job.” In the coming year and beyond, broadly across the market, we will see that managers will continue to become even more empathetic and listen more actively to their team members as people. Workers will expect that employers and their managers accept who they are as their whole, authentic selves, both personally and professionally. Read more: The ‘Great Resignation’ Is Finally Getting Companies to Take Burnout Seriously. Is It Enough? Gelsinger: Our employees are our future and our most important asset, and we’ve already announced a significant investment in our people for next year. As I’ve said, sometimes it takes a decade to make a week of progress; sometimes a week gives you a decade of progress. As I look to 2022, navigating a company at the heart of many of the pandemic-related challenges, we must all carefully consider what shifts are underway and what changes are yet to come. It will continue to be a competitive market and I expect you’ll continue to see companies establish unique benefits and incentives to attract and retain talent. We expect the “hybrid” mode that’s developed over the past years to become the standard working model going forward. Al Drago/Bloomberg—Getty ImagesPatrick Gelsinger, chief executive officer of Intel Corp., speaks during an interview at an Economic Club of Washington event in Washington, D.C., U.S., on Dec. 9, 2021. Bourla: The past couple of years have challenged our workforce in ways that we never would have imagined. Companies have asked employees to demonstrate exceptional flexibility, commitment, courage and ingenuity over the past two years—and they have risen to the challenge. I predict that we are likely to see an increase in salaries in the coming year due to inflation—and I believe this is a good thing for workers, as it will help close the gap in income inequality. That said, financial rewards are no longer the only thing that employees expect from their employers. Increasingly, people want to work for a company with a strong culture and a defined purpose. As such, companies will need to foster and promote a culture in which employees feel respected and valued for their contributions and made to feel that they are integral to furthering the purpose of their company. Businesses that are able to create such a culture will not only be able to attract the best talent, but also maximize the engagement, creativity and productivity of their people by enabling them to bring their best selves to every challenge. Green: For many years, Forerunner has been saying, “It’s good to be a consumer. Consumers want what they want, when they want it, how they want it, and they’re getting it.” That same evolution of thought has now moved into the labor market: It’s a worker’s market, not a company’s market, and the relationship between the worker and the employer needs to evolve because of that. Workers should expect to get more flexibility, respect, benefits, and pay in some cases—but they still need to show up and deliver impact at work. It’s a two-way street, and we need to tap into a broader cultural work ethic. As a society, we need to be more holistic in our approach to meeting both company and worker needs. Read more: The Pandemic Revealed How Much We Hate Our Jobs. Now We Have a Chance to Reinvent Work Seroka: There’s a need for more truck drivers and warehouse workers in southern California. President Biden’s new Trucking Action Plan funds trucker apprentice programs and recruit U.S. military veterans. It’s an important step forward to attract, recruit and retain workers. Private industry needs to look at improved compensation and benefits for both truckers and warehouse workers. We need to bring a sense of pride and professionalism back to these jobs. On the docks, the contract between longshore workers and the employer’s association expires June 30. Both sides will be hard at work to negotiate and reach an agreement that benefits the workers and companies while keeping cargo flowing for the American economy. Courtesy Port of Los AngelesGene Seroka, executive director, Port of Los Angeles. Masters: I think there will still be a fight for talent next year. It’s a tight labor market overall and Covid-19 restrictions are a challenge in some regions. Albemarle has a really attractive growth story and profile, especially for workers interested in combatting climate change by contributing in a meaningful way to the clean energy transition. We are embracing a flexible work environment, much like other companies are doing, and upgrading some benefits to remain an employer of choice in attracting and retaining the best people on our growth journey. And, of course, we should all expect pandemic protocols to continue next year to ensure everyone’s health and safety. How do you see your role as a leader evolving over the coming year? Bourla: We are entering a golden age of scientific discovery fueled by converging advancements in biology and technology. As an industry, we must leverage these advancements to make disruptive changes in the way we discover, develop and bring new medicines to patients. Since I became CEO of Pfizer, we have been working to reimagine this process by operating as a nimbler, more science-driven organization, focused on delivering true breakthroughs for patients across our six therapeutic areas. In the past few years, we have demonstrated our ability to deliver on this promise of bringing true scientific breakthroughs through our colleagues’ tireless work in COVID-19. But there is more work to be done to address the unmet need in other disease areas—and now is the time to do it. In the year ahead, my leadership team and I will focus on leveraging these advancements in biology and technology, as well as the lessons learned from our COVID-19 vaccine development program, so that we may continue to push this scientific renaissance forward. This is critical work that we must advance for patients and their families around the world who continue to suffer from other devastating diseases without treatment options. Gelsinger: We are in the midst of a digital renaissance and experiencing the fastest pace of digital acceleration in history. We have immense opportunities ahead of us to make a lasting impact on the world through innovation and technology. Humans create technology to define what’s possible. We ask “if” something can be done, we understand “why,” then we ask “how.” In 2022, I must inspire and ensure our global team of over 110,000 executes and continues to drive forward innovation and leadership on our mission to enrich the lives of every person on earth. Brewer: Purpose is the driving force at this point in my career. I joined Walgreens Boots Alliance as CEO in March of 2021, what I saw as a rare opportunity to help end the pandemic and to help reimagine local healthcare and wellbeing for all. Seven months later, we launched the company’s new purpose, vision, values and strategic priorities. My role as CEO now and in 2022 is to lead with our company’s purpose—more joyful lives through better health—at the center of all we do for our customers, patients and team members. I’m particularly focused on affordable, accessible healthcare for all, including in traditionally medically underserved communities. Healthcare is inherently local, and all communities should have equitable access to care. John Lamparski—Getty Images for Advertising Week New YorkTim Cadogan, CEO of GoFundMe, speaks in New York City on Sept. 26, 2016. Cadogan: The last two years were dominated by a global pandemic and social and geopolitical issues that will carry over into 2022. The role of leaders in this new and uncertain environment will be to deliver value to their customers, while helping employees navigate an increasingly complex world with a completely new way of working together. Trust will be at the center of every decision we make around product development and platform policies—do the decisions we are making align with our mission to help people help each other and do they build trust with our community and our employees? Green: Everything around us is moving at an accelerated pace, and being a leader requires you to operate with a consistent set of values while still leaning into opportunity. Arguably, the pandemic has been the most disruptive time in decades—a generational disruption on par with the Depression or WWII. People’s North Stars are in the process of transforming, and leaders need to figure out what that means for their companies, their cultures, and their work processes. How does this change require leaders to shift their priorities as a business? Courtesy, Forerunner VenturesKirsten Green, founder and managing partner, Forerunner Ventures Masters: My leadership style is to make decisions through dialogue and debate. I encourage teams to be curious about other perspectives, be contrarian, actively discuss, make decisions, and act. I wasn’t sure how well we could do this from a strictly remote work approach during the pandemic, but watching our teams thrive despite the challenge changed my mind. Our people adapted quickly to move our business forward. We’ve worked so well that we’re integrating more flexibility into our work environment in 2022. With this shift to hybrid work, it will be important for all leaders, myself included, to empower employees in managing their productivity, and ensure teams stay engaged and focused on our key objectives. We’re facing rapid growth ahead, so our culture is vital to our success. I’ll continue to encourage our teams to live our values, seek diverse viewpoints, be decisive, and execute critical work to advance our strategy. Courtesy of Albemarle Kent Masters, CEO of Albemarle Seroka: Overseeing the nation’s busiest container port comes with an outsized responsibility to help our nation—not just the Port of Los Angeles—address the challenges brought about by the unprecedented surge in consumer demand. That means taking the lead on key fronts such as digital technology, policy and operational logistics. On the digital front, our industry needs to use data better to improve the reliability, predictability, and efficiency in the flow of goods. Policy work will focus on improving infrastructure investment, job training and advocating for a national export plan that supports fair trade and American jobs. Operationally, we’ll look for new ways to improve cargo velocity and efficiency......»»

Category: topSource: timeJan 2nd, 2022

Futures Flat Ahead Of Historic Taper Announcement, China Warns Of "Downward Pressure" On Economy

Futures Flat Ahead Of Historic Taper Announcement, China Warns Of "Downward Pressure" On Economy US stock futures were flat ahead of today's Fed meeting, where the central bank is widely expected to announce the reduction of asset purchases with a majority of analysts expecting the Fed reducing its monthly purchases of Treasuries by $10 billion and mortgage- backed securities by $5 billion. Nasdaq 100 futures climbed 0.1% while S&P 500 and Dow Jones futures were little changed. Oil fell as the U.S. ramped up pressure on OPEC+ to boost supplies (which will bear zero results). The two-year Treasury yield was steady, while the 30-year rate shed two basis points. European stocks struggled for direction and the dollar fell less than 0.1%.   Despite turmoil in the bond market which sent the MOVE (or bond VIX) index to post-covid highs... ... stocks remain complacent and are likely not under stress “because we all think we know what will come out from today’s meeting: a gradual start of the tapering of the bond purchases program,” said Ipek Ozkardeskaya, senior analyst at Swissquote. A "taper announcement will likely be seamless, what may be less seamless is the rate discussion," she wrote in a note.  In recent weeks, policy makers have come under pressure to reassess their assessment of inflation being transitory, with bond and currency markets pricing in faster-than-expected rate hikes. “The big question will be whether they will signal anything about when the rate hikes will start,” Jeanette Garretty, chief economist at Robertson Stephens Wealth Management, said on Bloomberg Television. “I think they are going to try and avoid that.” Wall Street has also largely shrugged off concerns around rising price pressures and mixed economic growth, boosted by a stellar third-quarter earnings season and an upbeat commentary about growth going forward. In fact, there is absolutely nothing that can dent the ongoing market meltup which according to Morgan Stanley will continue until just around Thanksgiving. "Anything suggesting that the Fed is confident to keep withdrawing monetary policy support following a start today may allow equity investors to buy more," said Charalambos Pissouros, head of research at JFD group. "After all, they may have already digested the idea that interest rates will start rising at some point soon." Meanwhile, Chinese equities drifted lower after what Bloomberg called was a "dour warning" from Premier Li who cautioned about “downward pressure” for the economy. Hang Seng falls as much as 1.2% after tech shares resume slide. Here are some of the most notable premarket moves: Lyft rose after its third-quarter results showed a continued improvement in key metrics for the ride-sharing company. Zillow dropped as the decision to shut its home-flipping business raised questions about its ability to deliver growth. Shale oil producer Devon Energy rose 4.8% in premarket trading on topping earnings estimates as oil prices hit multi-year highs. Mondelez International added 1.9% after the Oreo maker raised its annual sales forecast, helped by price increases and strong demand from emerging markets. T-Mobile gained 3.4% after the U.S. wireless carrier beat third-quarter estimates for adding monthly bill paying phone subscribers. Activision Blizzard tumbled 12.0% after the videogame publisher delayed the launch of two much-awaited titles, as its co-leader Jen Oneal decided to step down from her role On the economic data front, October readings on ADP private payrolls, IHS Markit composite PMI and ISM non-manufacturing activity is due later in the day. Meanwhile, European stocks were flat as losses in energy stocks offset gains in basic resources shares.  Italy's FTSE MIB outperforms, rising as much as 0.3% while Spain's IBEX underperforms. Oil & gas, retail and utilities are the weakest Stoxx 600 sectors; miners and autos outperform. Asia’s equity benchmark was little changed as traders await the outcome of the U.S. Federal Reserve’s policy meeting, with an announcement expected on tapering amid concerns about elevated inflation. The MSCI Asia Pacific Index traded in a narrow range, with Alibaba Group, AIA Group and Samsung Electronics the biggest drags and Tencent among the winners. South Korea’s Kospi tumbled 1.3% on mounting selling by foreign funds. Hong Kong’s benchmark Hang Seng Index declined for a seventh day, extending its longest losing streak since July. The earnings season has failed to boost Asian shares, with the regional benchmark down more than 10% from a February peak as supply-chain and inflation worries persist. Traders will focus on the Fed’s policy move on Wednesday for cues at a time volatility in the bond market has heightened. “U.S. monetary policy has a very direct impact on the Asian market, especially with their plethora of dirty U.S. dollar pegs,” Jeffrey Halley, senior market analyst at Oanda, wrote in a note. Philippine stocks were among the top gainers, advancing for a second day after local Covid-19 cases fell to fewest since March. Stocks in Australia also rose after the country’s central bank scrapped a bond-yield target on Tuesday and said there’s still some time to go for rate hikes. Iron ore’s rebound on Wednesday also bolstered the mining sector. Japan’s equity market was closed for a holiday. Chinese stocks dripped after Premier Li Keqiang said China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies. Li did not specify the extent of the new “downward pressure” or its cause, but the phrase is generally used by Chinese officials to refer to a slowing economy. He has used the phrase before, including several times in 2019. The economy needs “cross-cyclical adjustments” to continue in a proper range, Li said during a visit to China’s top market regulator, state broadcaster CCTV reported. That phrase is associated with a more conservative fiscal and monetary approach that focuses more on the long-term outlook instead of immediate economic performance. “There are no obvious growth drivers now, so the government is looking for one,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd. “Small businesses’ investment can provide a source of healthier, longer-term growth, compared with government or property investment.” In rates, 10-year Treasury note futures are at the top of Tuesday’s range, gaining over Asia session while eurodollar futures are up 1-2 ticks in red and green packs as shares declined in China and Hong Kong ahead of today’s FOMC decision and after Premier Li’s warning of downward pressures to the economy. Treasury 10-year yields richer by 1.8bp on the day, flattening 2s10s spread with front-end yields unchanged -- bunds and gilts trade slightly cheaper vs. Treasuries. Cash Treasuries resumed trading in London after being closed in Tokyo for a Japanese holiday --curve has flattened with long-end yields richer by as much as 2bp. Focus on U.S. session includes ADP employment and durable goods data, refunding announcement before 2pm ET Fed rate decision. In Europe, Bunds bull flattened, helped in part by dovish comments from ECB’s Lagarde and Muller while peripheral spreads tightened with 10y Bund/BTP narrowing 3bps near 120bps. In FX, the Bloomberg Dollar Spot Index inched lower as the dollar fell versus most of its Group-of-10 peers and Treasury yields fell by up to 3 basis points, led by the long end of the curve. The euro gradually climbed toward the $1.16 handle while European government bonds yields fell and curves flattened. New Zealand’s dollar was among the top G-10 performers, and rose from a two- week low after the unemployment rate dropped more than economists predicted; the Kiwi and Aussie were also boosted by leveraged short covering. The pound inched up from a three-week low against the dollar before a speech by Bank of England Governor Andrew Bailey. Hedging the pound on an overnight basis is the costliest since March as traders focus on the upcoming meetings by the Federal Reserve and the BOE. In commodities, crude futures extend Asia’s softness; WTI drops over 2%, stalling near $82, Brent drops a similar magnitude to trade near $83. Spot gold drifts around Asia’s worst levels near $1,783/oz. Most base metals are up over 1% with LME aluminum and tin outperforming Looking at the day ahead the highlight will be the aforementioned Fed's policy decision along with Chair Powell’s subsequent press conference. Other central bank speakers include ECB President Lagarde, alongside the ECB’s Elderson, Centeno, de Cos and Villeroy. Data releases include the final October services and composite PMIs from the UK and the US, and other US data includes the ISM services index for October, the ADP’s report of private payrolls for October and factory orders for September. Finally, earnings today include Qualcomm, Booking Holdings, Fox Corp and Marriott International. Market Snapshot S&P 500 futures little changed at 4,622.00 STOXX Europe 600 little changed at 479.79 MXAP little changed at 197.87 MXAPJ little changed at 645.10 Nikkei down 0.4% to 29,520.90 Topix down 0.6% to 2,031.67 Hang Seng Index down 0.3% to 25,024.75 Shanghai Composite down 0.2% to 3,498.54 Sensex little changed at 59,993.78 Australia S&P/ASX 200 up 0.9% to 7,392.73 Kospi down 1.3% to 2,975.71 German 10Y yield little changed at -0.18% Euro little changed at $1.1587 Brent Futures down 1.8% to $83.23/bbl Gold spot down 0.3% to $1,782.83 U.S. Dollar Index little changed at 94.05 Top Overnight News from Bloomberg The Federal Reserve is widely expected to announce the reduction of asset purchases at the conclusion of its policy meeting Wednesday, which Chair Jerome Powell will likely say is not a step toward raising interest rates any time soon Traders have had a mixed view for most of this year about when emerging-Asia central banks will begin to normalize policy. Suddenly though, they are rushing to price in rate-hike bets across the region. The hawkish shift is most evident in South Korea and India, where markets are now anticipating at least a quarter-point increase in the next three months, while they are also building in Malaysia and Thailand over a two-year horizon China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies, according to the country’s Premier Li Keqiang More provinces in China are fighting Covid-19 than at any time since the deadly pathogen first emerged in Wuhan in 2019 The likelihood that elevated inflation will become entrenched is increasing, according to European Central Bank Governing Council member Bostjan Vasle A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed despite another encouraging handover from Wall Street where all major indices notched fresh record closing highs for the third consecutive day, and the DJIA breached the 36k level amid a slew of earnings and absence of any significant catalysts to derail the recent uptrend. Gains in APAC were also capped by holiday-thinned conditions with Japan away for Culture Day and as the FOMC announcement draws closer (full Newsquawk preview available in the Research Suite). The ASX 200 (+0.9%) outperformed amid a resurgence in the top-weighted financials sector as AMP shares were boosted after it announced to divest a 19.1% stake in Resolution Life Australasia for AUD 524mln and with CBA also higher as Australia’s largest bank is to offer customers the ability to conduct crypto transactions via its app. Conversely, the KOSPI (-1.3%) lagged after its automakers posted weak October sales stateside and following comments from South Korean PM Lee that they cannot afford additional cash handouts right now, while there was also attention on Kakao Pay which more than doubled from the IPO price on its debut. The Hang Seng (-0.3%) and Shanghai Comp. (-0.2%) were lacklustre and failed to benefit from the improvement in Chinese Caixin Services and Composite PMI data, amid ongoing concerns related to the energy crunch and with tech subdued after Yahoo pulled out of China due to a challenging business and legal environment. Furthermore, reports also noted that the Chinese version of Fortnite will close in mid-November, while a slightly firmer PBoC liquidity operation failed to spur Chinese markets as its efforts still resulted in a substantial net drain. Aussie yields continued to soften after the RBA affirmed its dovish tone at yesterday’s meeting and with the central bank also present in the market today for AUD 800mln in semi-government bonds which is in line with its regular weekly purchases, while a softer b/c at the 10yr Australian bond auction failed to unnerve domestic bonds and T-notes futures were steady overnight amid the looming FOMC. Top Asian News State Bank of India Profit Tops Estimates on Lower Provisions Chinese Copper Smelters Boost Exports to Ease Historic Squeeze China’s PBOC Says Digital Yuan Users Have Surged to 140 Million Malaysia Holds Rates on Recovery, ‘Benign’ Inflation Outlook European majors have adopted a similarly mixed performance (Euro Stoxx 50 -0.1%; Stoxx 600 Unch) as seen during the APAC session, as markets and participants count down to the FOMC policy decision, with the BoE and NFPs also on the docket for the rest of the week. US equity futures are also mixed but have been drifting mildly higher in European trade thus far, vs a flat overnight session. Back to Europe, there isn’t anything major to report in terms of under/outperformers among European majors, although Spain’s IBEX (-0.7%) lags in the periphery amidst losses in sector heavyweights. Sectors in Europe are mixed with no overarching theme. Basic Resources top the charts in a slight reversal of yesterday’s underperformance and amid a bounce in base metal prices. Travel & Leisure is propped up by Deutsche Lufthansa (+5.0%) post-earnings. Oil & Gas names are pressured by the decline across the crude complex in the run-up to tomorrow’s OPEC+ confab, whilst Banks are lacklustre as yields lose ground. In terms of individual movers, Vestas Wind System (-9.0%) is at the bottom of the Stoxx 600 after cutting guidance. BMW (+0.4%) is choppy after-earnings which saw EBIT top forecasts and targets confirmed, although the group noted that the rise in raw material prices have also had an impact on earnings, but they do not expect short-term magnesium shortage to affect production. Finally, Pandora (+0.8%) reported improvements on their metrics but warned that APAC performance, including China, remains weak and heavily impacted by COVID-19, with China expected to remain a drag on performance for the remainder of the year. Top European News BMW Muscles Through Chip Shortage With Profit Jump Nexans Drops as Morgan Stanley Says 3Q Results Were Weak Russia’s Biggest Alcohol Retailer Seeks $1.3 Billion in IPO LSE Boss Expects London Will Keep EU Clearing Role Post-Brexit In FX, far from all change, but the Kiwi has reclaimed 0.7100+ status against the Greenback and a firmer grasp of the handle in wake of significantly stronger than expected NZ labour market metrics via Q3’s HLFS update overnight, including jobs growth coming in five times higher than forecast and the unemployment rate falling sharply irrespective of a rise in participation. Nzd/Usd is hovering around 0.7135 and the Aud/Nzd cross is under 1.0450 even though the Aussie has regained some composure after its post-RBA relapse to retest 0.7450, albeit with assistance from the Buck’s broad pull-back rather than mixed PMIs and much weaker than anticipated building approvals. Indeed, the Franc has also rebounded from circa 0.9150 with no independent incentive and cognisant that the SNB will be monitoring moves as Eur/Chf meanders within its 1.0604-1.0548 w-t-d range. DXY/JPY/EUR/GBP/CAD - The Dollar index has drifted back down from a fractional new high compared to Tuesday’s best between 94.144-93.970 parameters vs a 94.136-93.818 range yesterday, and for little apparent reason aside from pre-FOMC tinkering and fine-tuning of positions it seems. Nevertheless, DXY components are mostly taking advantage of the situation, albeit in typically tight ranges seen on a Fed day, with the Yen holding above 114.00 on Japanese Culture Day, the Euro just under 1.1600 and amidst more decent option expiry interest (1.1 bn from 1.1585 to the round number), Sterling still trying to retain 1.3600+ status and also close to a fairly big option expiry (821 mn at the 1.3615 strike) and the Loonie striving to contain declines beneath 1.2400 against the backdrop of retreating oil prices. Note, some upside in the Pound via upgrades to UK services and composite PMIs, but limited and Eur/Gbp remains over 0.8500 in advance of the showdown between Britain and France on fishing tomorrow when the BoE also delivers its eagerly anticipated November policy verdict. SCANDI/EM - Not much adverse reaction to a slowdown in Sweden’s services PMI for the Sek, while the Nok is taking the latest downturn in Brent crude largely in stride on the eve of the Norges Bank meeting that is widely seen cementing rate hike guidance for next month. However, scant respite or solace for the Try from sub-consensus Turkish CPI as the near 20% y/y print means more divergence relative to the CBRT’s 1 week repo, and PPI accelerated again to heighten the build up of pipeline price pressures. Conversely, the Cnh and Cny are nudging back above 6.4000 after an encouraging Chinese Caixin services PMI and the Zar is on a firm footing awaiting results of SA local elections. RBNZ said the financial system is well placed to support economic recovery despite uncertainty and risks, while the more recent Delta outbreak is creating stress for some industries and regions, particularly in Auckland. RBNZ also noted that with the risk of global inflation heightened, already stretched asset prices are facing headwinds from rising global interest rates and that supply chain bottlenecks and inflation are adding to stresses in some sectors. Furthermore, they intend to increase the minimum CFR requirement to its previous level of 75% on 1st January 2022, subject to no significant worsening in economic condition, while capital requirements for banks are to progressively increase from 1st July 2022 and it is encouraging to see them increasing ahead of these requirements. (Newswires) In commodities, WTI and Brent front month futures are softer and in proximity to USD 82/bbl and USD 83/bbl respectively with losses today also potentially a function of the downbeat China COVID updates seen overnight. As a reminder, China's most recent COVID-19 outbreak is reportedly the most widespread since Wuhan with infection in 19 of 31 provinces, according to a major newswires article. It was also reported that around half the flights to and from Beijing city’s two airports were cancelled Tuesday, according to aviation industry data site VariFlight. Further, yesterday’s Private Inventory data was also bearish, printing a larger-than-expected build of 3.6mln bbl vs exp. +2.2mln, ahead of today’s DoEs which will take place 1hr earlier for those in Europe. Looking ahead to tomorrow’s OPEC+, markets expect a continuation of the current plan to ease output curbs by 400k BPD/m. Outside calls have been getting louder for the producers to open the taps more than planned amid inflationary feed-through to consumers and company margins, although ministers, including de-factor heads Saudi and Russia, have been putting weight behind current plans, with no pushback seen from members within OPEC+ thus far. Further, the COVID situation in China is deteriorating, hence ministers will likely express a cautious approach. Elsewhere, spot gold and silver are flat within overnight ranges, as is usually the case before FOMC. Base metals are staging a recovery with LME copper back above USD 9,500/t, whilst Chinese thermal coal futures rose some 10% following 10 days of declines US Event Calendar 8:15am: Oct. ADP Employment Change, est. 400,000, prior 568,000 9:45am: Oct. Markit US Services PMI, est. 58.2, prior 58.2 Oct. Markit US Composite PMI, prior 57.3 10am: Sept. Durable Goods Orders, est. -0.4%, prior -0.4% Sept. -Less Transportation, est. 0.4%, prior 0.4% Sept. Cap Goods Orders Nondef Ex Air, prior 0.8% Sept. Cap Goods Ship Nondef Ex Air, prior 1.4% 10am: Sept. Factory Orders, est. 0.1%, prior 1.2% Sept. Factory Orders Ex Trans, est. 0%, prior 0.5% 10am: Oct. ISM Services Index, est. 62.0, prior 61.9 2pm: FOMC Rate Decision DB's Jim Reid concludes the overnight wrap So after much anticipation we’ve finally arrived at the Fed’s decision day, where it’s widely anticipated (including by DB’s US economists) that they’ll announce a tapering in their asset purchases. Such a move has been increasingly anticipated over recent months, not least with the repeated upgrades to inflation forecasts over the course of 2021, and the FOMC themselves flagged this at their September meeting, where their statement said that “if progress continues broadly as expected … a moderation in the pace of asset purchases may soon be warranted.” In terms of what our economists are expecting, their view is that the Fed will announce monthly reductions of $10bn and $5bn in the pace of Treasury and MBS purchases respectively, with the first cut to purchases coming in mid-November. They see this bringing the latest round of QE to an end in June 2022, though this would also offer some flexibility to respond to any changes in the economic environment over the coming eight months should they arise. On the question of rate hikes, they think lift-off won’t take place until December 2022, but don’t see Chair Powell actively pushing back on current market pricing (a full hike nearly priced in by mid-year 22) given the elevated uncertainty about the outlook, particularly on inflation. You can see more details in their preview here. Of course since the Fed’s last meeting, many inflationary pressures have only grown, particularly given the fresh surge in energy prices that’s taken WTI oil up to $83/bbl, having been at just $72/bbl at the time of their September meeting. In turn, this has taken market expectations of future inflation up as well, with the 10yr breakeven now standing at 2.52%, up from 2.28% following Powell’s September press conference. And market pricing has also shifted significantly since the last meeting, with investors having gone from expecting less than one full hike by the December 2022 meeting to more than two. Ahead of all that, global risk assets continued to perform strongly and a number of major indices climbed to fresh all-time highs yesterday. The S&P 500 (+0.37%), the NASDAQ (+0.34%), the Dow Jones (+0.39%) and Europe’s STOXX 600 (+0.14%) all hit new records, whilst France’s CAC 40 (+049%) exceeded its previous closing peak made all the way back in 2000. Positive earnings news helped bolster those indices, with 27 of 29 S&P 500 reporters beating earnings estimates during trading, and 16 of 20 after-hours reporters beating earnings estimates. This included Pfizer during the day, which raised its full-year forecasts on the back of strong vaccine demand and noted it had the capacity to produce as much as 4 billion shots next year. However, the big winner yesterday (the biggest in the small-cap Russell 2000 yesterday) was Avis Budget Group (+108.31%) even if its performance actually marked a fall from its intraday high when the share price had more than tripled. Those moves occurred after Avis posted strong earnings driven by better-than-expected demand. Their CEO said they’d add more electric cars, whilst the stock also got attention on the WallStreetBets forum on Reddit, which readers may recall was behind some big moves at the start of the year in various "meme stocks” like GameStop. The banner day added $8.5bn to its market cap, which helped it leap frog fellow meme stock AMC to become the second biggest company in the Russell 2000 from third slot yesterday. In other such popular retail stocks, Tesla retreated -3.03% after Elon Musk cast some doubt the previous evening over the recently announced deal to sell 100,000 cars to rental car company Hertz. That said, the automaker has still added over $300 billion in market cap over the last month. Sovereign bonds were another asset class that put in a decent performance ahead of the Fed, with yields falling throughout the curve across a range of countries following the relatively dovish tone vs heightened expectations from the RBA yesterday morning. By the close, those on 10yr Treasuries were down -1.4bps to 1.54%, whilst their counterparts in Europe saw even steeper declines, including those on 10yr bunds (-6.3bps), OATs (-8.5bps) and BTPs (-14.1bps). BTPs were the biggest story and the move seemed to coincide with a reappraisal of ECB hike expectations, as pricing through December 2022 declined -6.5 bps, down from c.20 bps of expected tightening priced as of Monday. So a big decline. In Asia, the Shanghai Composite (-0.57%), the Hang Seng (-0.93%) and the KOSPI (-1.23%) are all trading lower. Japan’s markets are closed due to the Culture Day, meaning also that cash treasuries are not trading in the region. In data releases, the Caixin Services PMI for China rose to 53.8 versus 53.1 expected. However, Premier Li’s remarks about new “downward pressure” on China’s economy and latest COVID outbreak, which is now the most widespread since the first emergence of the virus, are weighing down on the sentiment. Meanwhile, China and Hong Kong are discussing reopening of the shared border. The S&P 500 futures (-0.01%) is pretty flat this morning. Aussie yields are again lower especially at the front end with the infamous April 24 bond around -7bps as we type. As we go to print the Associated Press have called the Virginia as a victory for the GOP Youngkin with New Jersey equivalent also looking likely to go to the GOP. So a big blow to the Democrats. Of those, Virginia was being more closely watched. As recently as the Obama years it was a fiercely contested battleground, but it’s trended Democratic over the last few cycles, with Biden’s 10 point margin of victory last year well exceeding his 4.4 point margin nationally. So this will not be good news for the Dems ahead of next year’s mid-terms. It will also increase the odds of legislative and fiscal gridlock after that - although the latter has been increasingly expected. Staying with US Politics, President Biden indicated in a news conference that he was getting closer to announcing whether or not he would re-nominate Fed Chair Powell for another term as head of the central bank, or if he would appoint a new Chair. He said an announcement will come “fairly quickly”. In terms of the latest on the pandemic, the US CDC’s advisory committee on immunization practices met and backed the Pfizer vaccine for 5-11 year olds, joining the FDA who gave the vaccine the green light for the same age group. There wasn’t much in the way of data releases yesterday, though we did get the final manufacturing PMIs from Europe, where the Euro Area PMI for October was revised down two-tenths from the flash estimate to 58.3. Germany also saw a downward revision to 57.8 (vs. flash 58.2), but Italy outperformed expectations with a 61.1 reading (vs. 59.6 expected). To the day ahead now, and the highlight will be the aforementioned policy decision from the Fed, along with Chair Powell’s subsequent press conference. Other central bank speakers include ECB President Lagarde, alongside the ECB’s Elderson, Centeno, de Cos and Villeroy. Data releases include the final October services and composite PMIs from the UK and the US, and other US data includes the ISM services index for October, the ADP’s report of private payrolls for October and factory orders for September. Finally, earnings today include Qualcomm, Booking Holdings, Fox Corp and Marriott International. Tyler Durden Wed, 11/03/2021 - 08:13.....»»

Category: blogSource: zerohedgeNov 3rd, 2021

Is The US About To Go Full Louis XVI?

Is The US About To Go Full Louis XVI? Authored by Simon Black via SovereignMan.com, On September 3, 1783, after nearly a year of excruciating back-and-forth negotiations, all sides had finally gathered together in Paris to sign a historic peace agreement. It was a pretty important peace deal. Because the Treaty of Paris, as it is now known, is what formally ended the American Revolution, and when Great Britain legally recognized the United States as an independent nation. The treaty was signed in Paris because France had been a major supporter of the US war effort. And just as soon as the ink was dry, French King Louis XVI ordered his finance minister to prepare an accounting of exactly how much money France had spent on US independence. The result was nothing short of astonishing—more than 1 billion livres. To put that number in context, the French Treasury’s entire annual revenue only amounted to around 200 million livres. So they had basically sunk FIVE YEARS worth of their tax revenue fighting someone else’s war. Granted, Britain was still one of France’s main rivals. And the French did not care for British King George III. But the American War was simply too costly, and France had already been on very shaky financial footing well before this point. Louis XIV had nearly bankrupted the country a century before. His successor, Louis XV, had to drastically slash expenses and could barely hang on financially. Then, in 1774, just prior to the American Revolution, Louis XVI became king at a time that France was rapidly deteriorating. You’d think that with so much economic turmoil at home that he would have focused on his own national interests… and, in lieu of money, weapons, and ships, he would have instead sent the royal thoughts and prayers to America. But no. Lucky for the United States, Louis XVI courageously fought the American Revolution down to the very last French taxpayer. Only after the war did Louis finally take stock of the situation and realize the truth: America was in a much better position. Britain was bruised but still powerful. Yet his own France was nearly bankrupt and desperately in need of cash. Not exactly a win/win. Louis XVI was King, but his powers were limited; he was beholden to the legislature, called the Estates-General, and he couldn’t simply decree new taxes without their consent. The King did, however, control the tax collectors. And Louis made sure they had every authority to coerce, harass, and intimidate money out of French citizens. French tax collectors had the authority to walk right into people’s homes unannounced, conduct surprise inspections to look for hidden wealth, and walk away with whatever money or property they felt would satisfy the peasant’s tax bill. This is actually a pretty common theme throughout history: governments that are on the ropes routinely resort to plundering the savings of their citizens. Several ancient Roman emperors, in fact, from Diocletian to Valentinian III, famously sent ruthless tax collectors to harass their citizens and steal their wealth. Several ancient Chinese dynasties did the same thing. So did the declining Ottoman Empire. Significantly ramping up tax collection efforts is typically a hallmark of an economy and empire in decline. So we can’t be too surprised that, in its latest legislative bonanza, the US government is setting aside $80 billion for IRS tax collection efforts. They’re calling the bill, of course, the Inflation Reduction Act. This is pure comedy—the legislation will do no such thing. Why would inflation, which in part was caused by excessive government spending, magically dissipate because of more government spending? It’s ludicrous. But inflation aside, front and center in the legislation is $80 billion in funding for the IRS, primarily to step up its tax collection and enforcement efforts. To put that number in context, the annual budget for the IRS is about $12 billion. So, even though the $80 billion will be leaked out over a period of several years, it constitutes a major increase in the IRS budget. The entire idea is based on a bizarre notion known as the ‘tax gap’. This is the difference between the amount of tax the government collects, versus the amount the government thinks they should collect. In other words, the tax gap represents how much they believe people are cheating. And the estimates vary wildly, from $100 billion per year to a whopping $1 trillion per year. Frankly these numbers have always seemed to me like they were completely made up. No one has explained how they actually come up with such estimates. They just barf up some number and pretend that it’s true. Obviously there are a whole lot of hardcore tax cheats out there, stealing and defrauding the system. But that’s not why the IRS is receiving an $80 billion boost. This money will go to hire a small army of tax inspectors who will fan out across the nation on a giant fishing expedition that will ensnare countless middle class Americans and small businesses. Certainly they’ll catch a few cheats along the way. And they may even find a few bucks to close that mythical ‘tax gap’. But at what cost? One of the biggest problems with the US economy right now is that it’s so much more difficult to produce goods and services. Over the past few years, the people in charge have put up endless road blocks and obstacles for small business. They vanquished the labor market and made it all but impossible to find workers. They destroyed the supply chain. They engineered historically high inflation. They came up with a myriad of costly new environmental and public health rules. On top of that they constantly create new rules and regulations, many of which step far beyond the government’s authority. (Last year, for example, the CDC Director decided in her sole discretion that she controlled the entire $10+ trillion US housing market.) 23% of full-time workers today require a government license to do what they do, according to the US Department of Labor. Even being a hairdresser is full of red tape and costly bureaucracy. This new threat of widespread tax audits is going to be yet another obstruction to Americans’ productivity…. at a time when the economy desperately needs maximum focus. Inflation is raging because there is a serious, global imbalance between the supply and demand of goods and services. Specifically, demand is too strong because they doled out trillions of dollars in free money. And supply is weak because nearly every single government policy makes it harder for people to produce (which is yet another hallmark of empires in decline). Now, on top of everything else, there is a very high likelihood of being harassed by the tax authorities. Audits are incredibly unpleasant, costly, and time-consuming. Even if all of your accounts are in order and you’ve done nothing wrong, a tax audit monopolizes a tremendous amount of time and money. It’s debilitating. Say goodbye to actually running your business, growing sales, or spending time with your family on nights and weekends… and say hello to preparing for your tax audit. Your time will now be spent digging up receipts, finding old contracts, and trying to recall specific details of trivial decisions you made years ago. Plus you’ll most likely have to pay outside experts to assist with the process, like CPAs and attorneys. And naturally the government does not reimburse you for such expenses. But at least you’ll get to deduct them… from your taxes. In the end, after endless financial scrutiny, the government may conclude that you owe them a few bucks because of some undocumented deduction from several years ago. So you write them a check for some trivial sum… after having spent countless hours and effort taken away from your productivity. The cost/benefit just doesn’t compute. And that’s why healthy, prosperous nations don’t engage in such absurd activities. They don’t need to. Taxes ultimately represent the government’s ‘slice’ of an economic pie. So when a country is prosperous and an economy is strong, the government’s slice continues to grow because the overall economic pie is constantly getting bigger. But nations in decline don’t see it this way. For them, the pie is shrinking. So they think the only way to increase their slice is to go after other people’s crumbs. History shows this is absolutely the wrong move. Raising tax rates, inventing new taxes, and recruiting armies of tax collectors only makes the pie shrink even more. Their efforts, instead, should be focused on making the pie bigger. But they don’t think that way. Bear in mind this is all brought to you by the same people who are shoveling your tax dollars out the door to Ukraine $50 billion at a time. It’s very ‘Louis XVI’ of them. All of these trends—the cannibalistic surge in tax authorities, the anti-productive regulations, the economic scarcity mentality—are all hallmarks of an empire in decline. The situation is NOT terminal. It is NOT irreversible. But it is reason enough to have a Plan B. Tyler Durden Wed, 08/10/2022 - 14:25.....»»

Category: personnelSource: nyt14 hr. 51 min. ago

10 European Stocks to Sell Before Recession Starts

In this article, we discuss 10 European stocks to sell before the recession starts. If you want to skip our discussion on the economic situation in Europe, go directly to 5 European Stocks to Sell Before Recession Starts. According to the chief economist of Nomura Holdings, a majority of the world’s top economies will enter […] In this article, we discuss 10 European stocks to sell before the recession starts. If you want to skip our discussion on the economic situation in Europe, go directly to 5 European Stocks to Sell Before Recession Starts. According to the chief economist of Nomura Holdings, a majority of the world’s top economies will enter a recession within the next year as the monetary policy gets tightened by central banks to combat rising inflation. On July 21, interest rates were risen by 50 basis points by the European Central Bank in line with its anti-inflationary stance. However, this move is being viewed as insufficient by analysts to address the multiplicity of economic problems being faced by the eurozone currently. Europe is expected to experience a serious economic contraction in the near term. One of the factors contributing to this is Russia squeezing the natural gas supply to the continent in retaliation for the region supporting Ukraine and for placing embargoes on Russia. Numerous notable companies like the Coca-Cola Company (NYSE:KO), McDonald’s Corporation (NYSE:MCD), and Starbucks Corporation (NASDAQ:SBUX) have already exited Russia. Until alternative supplies are not secured, heavy industries in Europe could have a tough winter season ahead as their production and output could suffer due to a shortage of natural gas. Russia has already reduced its natural gas supply to Germany to just 20% of its capacity since July 25. Although Russia is claiming the cut down in supply is due to technical reasons, Germany is not accepting this claim and calling it a farce. Europe is in a precarious situation as the continent is facing rampant inflation. The UK saw its inflation rise to a four-decade high of 9.4% in June 2022. Meanwhile, the conflict between Russia and Ukraine is taking a heavy toll on the supply chain that was already strained by the COVID-19 pandemic. Following Brexit, Germany has become the focal point of Europe. The largest economy in Europe is considered the driving force behind the continent’s economic expansion or contraction. Germany imports 66% of its natural gas from Russia and is concerned about how it will survive in case of a gas shortage. The heavy industries would have to make a sacrifice as priority will be given to residential users and critical facilities like airports and hospitals. An Uncertain Future S&P Global Market Intelligence sees a contraction in real GDP during Q2 2022 across key European economies like Italy, Netherlands, Spain, and the UK. One of the few silver linings is the recovery in tourism and consumer services that could give the region a lift during the summer months. On the other hand, Q4 2022 can become the most difficult period for Europe because of unreliable energy supplies due to extreme winters. Rising natural gas prices will result in higher electricity prices, which will make Germany less competitive on the global stage. Real GDP growth in Europe is expected to slow down from 5.4% in 2021 to 2.5% in 2022 and then to 1.2% in 2023 before recovering to 2% in 2024. Europe is already preparing itself for the tougher winter months ahead by securing big shipments of LNG from the Middle East and North America. However, this is a short-term and expensive solution. In the long run, Europe needs to come up with low-carbon and domestic energy alternatives that can be deployed on a mass level. Nuclear power is an option, but at present, the risks of producing electricity from nuclear sources outweigh the benefits. The recovery of the entire world following the COVID-19 pandemic stands in the balance, and it heavily depends upon how Europe performs in the coming months. Equity markets are always considered the bellwether of the economic outlook. Since June 1, SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ) has experienced a decline of over 10%. Meanwhile, the S&P 500 Index and the Nikkei 225 have observed an increase of 0.3% and 1%, respectively, during the same period. Luis Louro / shutterstock.com Our Methodology For this article we selected the European stocks most vulnerable to a possible recession. These stocks have bearish ratings from market analysts and have a high exposure to recession-sensitive market dynamics. 10 European Stocks to Sell Before Recession Starts 10. adidas AG (OTC:ADDYY) adidas AG (OTC:ADDYY) is a German sportswear manufacturer that is known for designing and manufacturing clothing, shoes, and accessories. On July 29, Zuzanna Pusz at UBS downgraded adidas AG (OTC:ADDYY) stock from a Buy to a Neutral rating and lowered the target price from $176 to $88. The revised target price provides a potential upside of only 3.7% from the closing price as of August 2. The analyst sees the 2025 targets set by adidas AG (OTC:ADDYY) as unachievable, following another warning of lower-than-expected profits. Pusz also added that the company’s new “Own the Game” growth strategy did not work well with consumers. The new strategy was rolled out in March 2021 to increase sales and gain market share by shifting towards a direct-to-consumer (DTC) business model and doubling its e-commerce sales by 2025. However, adidas AG (OTC:ADDYY) hasn’t been able to execute the strategy successfully till now. adidas AG (OTC:ADDYY) was discussed in the Q1 2022 investor letter of Oakmark Funds. Here’s what the investment management firm said: “adidas (NYSE:ADDYY) (Germany) is a global sportswear company. The business is a leader in athletic footwear and apparel with a brand quality that helps to drive superior sales and margins across multiple segments and geographies. In our view, adidas’ shift to a vertical-based model in the past several years led to superior innovations and more consistent product development. Moreover, we believe the improved product, brand perception, sales and profitability have positioned the company well. We think sustained investments in brand, product and distribution should support above-market growth rates and improved margins moving forward. We also appreciate that CEO Kasper Rorsted executed structural changes decided before his arrival, which should lead to improved growth, margins and capital management.” 9. Zalando SE (OTC:ZLNDY) Zalando SE (OTC:ZLNDY) is a German online retailer of beauty, fashion, and footwear with a presence in all the prominent European nations. On June 24, Guido Lucarelli at Citi lowered the price target on Zalando SE (OTC:ZLNDY) from $18.82 to $14.24 and reiterated a Neutral rating on the stock. The target price represents a potential upside of 7.7% from the closing price as of August 2. The multi-brand fashion platform has been working on launching itself in the US for the past several months. This revelation was made in a report published in Business Insider on August 1. Zalando SE (OTC:ZLNDY) had been working on “Project Kangaroo” in secrecy and was lining up a launch in early 2023. However, it has been revealed that Zalando SE (OTC:ZLNDY) has shelved these plans as the firm intends to focus on its existing markets. The company’s management believes the high levels of inflation are going to persist for a long period of time and that European consumer confidence is unlikely to rebound in the near future. The bearish outlook has led Richard Edwards at Goldman Sachs to see the company’s near-term earnings visibility as lacking. 8. InterContinental Hotels Group PLC (NYSE:IHG) Number of Hedge Fund Holders: 6 InterContinental Hotels Group PLC (NYSE:IHG) is a UK-based hospitality company and a part of the prestigious FTSE-100 Index. InterContinental Hotels Group PLC (NYSE:IHG) announced on June 27 that it would cease its operations in Russia after the embargoes placed by the UK, US, and the EU made it very challenging to continue business in the region. Earlier, companies like the Coca-Cola Company (NYSE:KO), McDonald’s Corporation (NYSE:MCD), and Starbucks Corporation (NASDAQ:SBUX) had also suspended their operations in Russia. The demand for hotel booking is expected to be dented by inflationary pressures as people are likely to find alternative lodging options, available on online marketplace like Airbnb, Inc. (NASDAQ:ABNB), more affordable. Furthermore, the COVID-19 lockdowns in China could adversely impact InterContinental Hotels Group PLC’s (NYSE:IHG) Q2 2022 results. The company is heavily reliant on growth from China as it has reached maturity in the African, European, North American, and Middle Eastern markets. Jamie Rollo at JPMorgan has given InterContinental Hotels Group PLC (NYSE:IHG) stock a Neutral rating with a target price of $71 in a research note issued on May 9. 7. ING Groep N.V. (NYSE:ING) Number of Hedge Fund Holders: 11 ING Groep N.V. (NYSE:ING) is a Dutch diversified financial services firm involved in asset management, banking, and insurance services across the world. Experts think that the diversified financial services firm has one of the highest interest rate sensitivities amongst the European banks. Since the start of 2022, the stock price of ING Groep N.V. (NYSE:ING) has lost 30% of its value as opposed to a 23.3% decline for the SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ). ING Groep N.V. (NYSE:ING) has also seen a significant increase in short interest in July. The short interest has increased from 6.18 million shares to 8.65 million shares as of July 15, reflecting an increase of 40%. ING Groep N.V. (NYSE:ING) is also one of the stocks Ray Dalio’s Bridge Water Associates went short on. In Q2 2022 results, ING Groep N.V. (NYSE:ING)  revealed that it had reduced its exposure in Russia from €6.7 billion at the end of February to €4.6 billion as of June. Furthermore, the company reported that its lending business declined in profitability compared to the first quarter of the year due to slower growth in net interest income. 6. Banco Santander, S.A. (NYSE:SAN) Number of Hedge Fund Holders: 15 Banco Santander, S.A. (NYSE:SAN) is a Spanish diversified financial services firm. It is the sixteenth biggest financial institution in the world, based out of Madrid. On July 29, Timo Dums at DZ Bank downgraded Banco Santander, S.A. (NYSE:SAN) stock from a Buy to a Hold rating and gave the stock a target price of $2.74. Banco Santander, S.A. (NYSE:SAN) is facing a macroeconomic headwind in the form of higher taxes imposed on banks by the government of Spain. The taxes are intended to provide relief to consumers in times of high inflation. The government expects the levied tax to generate $7.02 billion in the next two years. However, the tax will have a strong adverse impact on the bank’s margins. Banco Santander, S.A. (NYSE:SAN) is looking for new growth avenues. On July 29, the company reported that it would start to provide cryptocurrency trading services to its clients in Brazil. However, Banco Santander, S.A. (NYSE:SAN) would require a considerable period of time to establish its position in any other sector, given the economic situation.   Click to continue reading and see 5 European Stocks to Sell Before Recession Starts.     Suggested Articles: 10 Important Energy Stocks Making Moves After Earnings Top Ten Semiconductor ETFs to Buy in 2022 9 Tech Stocks that Cathie Wood is Giving Up On Disclose. None. 10 European Stocks to Sell Before Recession Starts is originally published on Insider Monkey......»»

Category: topSource: insidermonkeyAug 9th, 2022

There Is A Giant Illusion For The Majority Of Market Commentators Choosing Not To See It

There Is A Giant Illusion For The Majority Of Market Commentators Choosing Not To See It By Michael Every of Rabobank Holy Illusions Hands up how many of you had 528K down as your US payrolls guess? Nobody, because the Bloomberg survey low was 50K and the high 325K. While there are question marks over these data given Covid --nearly 3m people weren’t/couldn’t work due to it-- and the “birth/death” model, the household survey saw jobs +179K; backwards payroll revisions were +28K; total employment was back to pre-pandemic levels, albeit with reallocation away from sectors such as leisure and hospitality (-1,214K) towards others, such as transport (+745K); the participation rate edged down to 62.1%, so the jobless rate fell to 3.5%, but even using pre-Covid participation rates unemployment would have been 5.4%, down from 5.5%; and average hourly earnings rose much faster than expected at 0.5% m-o-m, 5.2% y-o-y (and 6.0% annualized). If it’s an illusion, and look at full-time vs. part-time and multiple jobs as a clue... ... it still convinced Larry Summers to warn that if US CPI falls back this week, the Fed must not pivot, and Krugman to add it’d be “no justification for a pivot toward easier money.” Indeed, it now seems the Fed may go another 75bps in September, and Bowman implies afterwards as well perhaps, and the Wall Street Journal underlines, “Witness the small army of Fed officials who have fanned out to warn markets that the Chairman didn’t mean what he supposedly wasn’t saying last week.” In short, the illusion of a Fed dovish pivot is dispelled, with 2-year Treasury yields up 16bp to 3.23% Friday, and 10s up 14bp to 2.83%. More to come: or record yield curve inversion. Add a Fed pivot to “transitory” inflation on the list of illusions fading for the same underlying reason: the global system is crumbling. They join EU energy, economic, and foreign policy, as the German regulator calls for 20% cuts in household gas usage, and the West’s ‘Great Illusion’ that war just can’t happen (to it) in the modern world. On which, Ukraine just got another $1bn in US arms as a new phase of the war looms around Kherson: a counter-attack appears imminent. However, don’t be under the illusion that the US can keep up that pace of arms supply - and its stocks can’t be replaced quickly once depleted. The same is true for Russia, and in terms of men, but their media says North Korea might strike a deal to send 100,000 soldiers to fight in Ukraine in exchange for food and energy(!) If so, the war escalates further, and the EU energy outlook darkens further. NATO member Turkey on Friday also struck a deal with Russia to deepen economic ties: that is a terribly muddied picture for the EU and US as they try to isolate Moscow. However, illusions abound on all sides: Russia just released a video aimed at attracting people to move there due to its ‘hospitality, vodka, and an economy that can withstand thousands of sanctions’. Elsewhere, Reuters warns Chinese military exercises around Taiwan could disrupt key shipping lanes, and Taipei states they “simulate an attack” on its main island, drawing condemnation from the G7, but Russian support. China has now halted: communication with US military theatre leaders; defence meetings; maritime security dialogue; and co-operation over illegal migration, criminal justice, transnational crime, narcotics, and the climate - the US says this “punishes the world." The White House is now leaning on Congress to delay the bipartisan Taiwan Policy Act of 2022, which designates it a major non-NATO ally, provides $4.5bn in military aid, upgrades its international status, and allows the imposition of sanctions, including SWIFT bans, on major Chinese financial institutions. As the Carnegie Endowment think-tank notes, “The US and China are seriously talking past each other…That disconnect will lead to a very unstable new baseline.” Linking back to today’s title, Friday saw the release of ‘Holy Illusions’, a report from a key think-tank backing UK PM candidate Truss. It argues, “Just as in the 1970s, the country faces many interconnected, serious but superficially very different problems.” True. Controversially, it diagnoses that “The most significant underlying economic problem… is the malign consequences of low to negative interest rates over a prolonged period.”  Artificially low rates, it says, have “gradually prevented the normal mechanisms of a market economy from working properly… there has been a greater and greater search for yield on riskier and riskier assets, with everything that follows upon that, notably, market instability, huge asset price inflation, and inequality. The lack of rewards to enterprise and the ease with which fundamentally unproductive “zombie” companies can be maintained have made it difficult to generate those normal improvement mechanisms of a market economy which drive productivity and growth.” It’s hard to disagree with that Austrian and Marxist assessment. The report then says other UK problems are manifold: “Implausible energy policies”; over-regulation, antipathy to risk; “Unsustainable” welfare; a shrinking labour force; a declining birth-rate (an issue in all major economies, except one); “Education systems that don’t educate”; and, it claims, high immigration. It warns that if current UK growth rates continue --and this was presumably before the BOE’s latest awful assessment-- then by 2035 the likes of Poland will “overtake” the UK: will they then import British plumbers? It unsurprisingly argues Brexit is not an issue, even if it means short-term costs (and clearly more immigration is not on the cards). It says the UK isn’t willing or able to do anything with the “full democracy” Brexit grants it, as “Our governing class seems to have forgotten how to govern, how to guide a state, and how to set a goal and direction of travel.” Then --perhaps contradicting itself for some readers-- it argues, “Given this set of daunting problems… there really ought to be strong political movements… to analyse and begin to deal with them. That is not the case. Instead we see the reverse - a refusal to get to grips with the problems or even to acknowledge them. It is easier to ignore the most pressing economic and societal issues of the day, pretend they don’t exist, or claim they will be solved automatically as normal conditions return. We are, it seems, studiously pretending to be asleep.” Again, no arguments here. To show it is not like the others, it dares to ask, “What is to be done?” - and it tells us government must: “Convince the public that change is needed. The public must come to feel that we have taken a wrong path and to react against it.” They are already there! Just as we have mortgage strikes in China, we may see energy strikes in the UK; and some warn of a looming ‘winter of discontent. (And don’t think Putin doesn’t see this too, and won’t act accordingly.) “Show the electorate an alternative,” which is “to increase the productive capacity of our economy (because without that other problems simply cannot be solved)”. They are with you! But here comes the rub. What does that mean on energy? Silence. Moreover, the government must “persuade the public… that collectivist, socialist solutions are incapable of achieving that.” But how do you get the private sector to invest productively when other governments will? See ‘how the US gave away a breakthrough battery technology to China’, because the inventor “talked to almost all major investment banks; none of them [wanted to] invest in batteries," as they “wanted a return on their investments faster than the batteries would turn a profit.” Will higher rates, lower taxes, and deregulation force banks to make loans to productive rather than “fictitious capital”? Austrians say yes: Marxists say not, and with the better track record; and they add that even productive loans will just be made abroad, where it is cheaper to invest. That gaping theoretical/policy hole is more evident when we are then told the government must “persuade the public that this alternative route is actually possible; that [it] has a plan to get the country onto it; that continuing on the current path will simply make the inevitable correction measures more painful; and that failure to take such measures will mean a materially worse outcome. [It must] make this alternative politically feasible and hence potentially attractive.” --But what alternative?!-- Its conclusion avoids the answer in saying that: “A successful nation state needs market economics to create prosperity, and requires solidarity and a clear sense of identity to sustain itself. A reform programme must be similarly broad-based. It should reject the artificial polarity between the “market”  --“right wing” economics and economic globalisation-- and “society” --“left wing” statism and solidarity-- but recognise instead that running a successful country involves elements of both.” It just doesn’t say how beyond rates, taxes, and fostering ‘national unity’: yet the latter alone was *wrongly* presumed by Smith and Ricardo to stop capitalists investing abroad at all, which we just edit out of our textbooks! If only we could edit it out of our financial flows so easily. Ironically, the report also says, ”the political difficulty is that governments and politicians have not for many years set out the reality of how economies work and how prosperity is created. Levels of understanding are low.” Yes, they are: if it was as simple as ‘getting the state out of the way’, China would not be an economic superpower and Afghanistan might be. Yet the underlying message that we been ‘getting GDP wrong’, and we can’t get it right by only focusing on GDP is arguably very valid, as is the criticism of relying on low rates policy. We *do* need a higher common purpose, and higher rates, and others are saying similar things: here is an example arguing, “Without that, any aspiring state is just a gated community for the working wealthy, much like the ones for old retirees in South Florida.” It’s just that we need *more* than that structurally to boot, and ‘Holy Illusions’ still seems to cling to its own in avoiding that conclusion. It *could* be seen as backing a neo-Hamiltonian free market behind high tariff barriers, with industrial policy, which was how the US (and China) developed. Yet that mercantilist model is also an illusion for the UK and others not large enough for economies of scale and a modern army, especially as large rivals *are* state-backed and have one; and as high debt levels logically require MMT and higher interest rates, if just to pay for that military. The flurry of legislation coming out of the US is not a million miles away from some of those ideas and developments. But if we need ‘Hamilton’ in blocs, the UK still just rejected being a member of one. Does that mean it will end up in a new Holy Anglosphere? Some say that’s no illusion, other that it is. Regardless, the above still implies global national-security/commodity/supply-chain/tech/values fragmentation ahead; and higher interest rates; and lower asset prices; and more productive, higher-wage investment - as we had already projected as a 2030 scenario. Unless that’s just my own holy illusion. What isn’t is that if you don’t keep track of these seemingly-esoteric developments, you won’t be in a position to call where rates are going - which is why nobody in markets called three (or four?) back-to-back 75bps Fed hikes this year. That was “not how the political economy works”. But the political economy had changed. To paraphrase Keynes, “When the facts change, I change my forecast. What do you do?” That is what you should be focused on: not the illusion of the relevance/positivity of Chinese July trade data released Sunday, which showed exports up 18% y-o-y and imports only 2.3%, for a staggering trade surplus of $101.3bn. Does anyone think this $1.2 trillion annualised figure is good news for anyone: not China (where it means no demand); not globally (where it means no local supply). There is a giant illusion for the majority of market commentators choosing not to see it. Tyler Durden Mon, 08/08/2022 - 09:04.....»»

Category: blogSource: zerohedgeAug 8th, 2022

Feed Shortage Leads To Pig Cannibalism, China"s Economy Worsens

Feed Shortage Leads To Pig Cannibalism, China's Economy Worsens Authored by Alex Wu via The Epoch Times (emphasis ours), A video showing pigs eating a deceased pig on a farm in China went viral recently. Some of the pig farmers, working for a major Chinese financial group, said that the cannibalism occurred because of feed shortages. One expert believes that feed shortages are a reflection of bigger problems in China’s economy. Pigs in a pen at a pig farm in Yiyang County, Henan Province, on Aug. 10, 2018. (Greg Baker/AFP/Getty Images) Since July 24, the video has been one of the most searched topics on Chinese social media, putting a spotlight on the listed company and a major pig farming company, Jiangxi Zhengbang Tech (whose subsidiary is Jiangxi Zhengbang Breeding Co.), that contracted the farmers to raise the pigs. Posts about the company have been circulating online, such as “the farmers’ pig feed supply was cut off,” “the chairman of Zhengbang was restricted from buying high-end products,” “the company’s fundraising was delayed,” and “the company’s court ordered total amount of compensation reached 100 million yuan (about $14.8 million),” etc. It caused the stock of Zhengbang Tech to fall 6.66 percent to 5.89 yuan (about $0.87) per share on July 25. The company then issued several announcements in response to the issues. On July 25, Zhengbang Tech admitted that there were interruptions to the pig feed supply in July, citing the downturn in pig prices in June, COVID-19, the company’s funds being tight, logistics issues, and problems in coordination with the feed producers. There’s no mention of compensation for the pig farmers in the statement. The company’s statements did not affirm or deny that pig cannibalism occurred on the farms. Bigger Financial Issues In addition, a “necessary reminder” was included in the Zhengbang statement. It said: “The company’s net profit in the first half of 2022 is expected to lose 3.8 billion to 4.6 billion yuan (about $563 million to $682 million).” The statement has increased worries from the outside world about the company’s “shortage of funds.” Independent current affairs commentator Tang Jingyuan told The Epoch Times on July 27, that there are two main reasons for Zhengbang Tech’s shortage of pig feed. “One is a shortage of funds, and there may even be a break in the capital chain. The other is that the COVID-19 epidemic has caused the logistics system to be blocked, which is the problem with the coordination of logistics distribution and feed mills mentioned in the company’s official statement. Behind these two reasons, the root cause is actually that the economic environment in mainland China has deteriorated due to the regime’s zero-COVID policy and measures, resulting in a vicious cycle of mutual causation between the two reasons mentioned above.” “The deterioration in China’s economy is largely caused by policy mistakes rather than a natural disaster. Zhengbang Tech is only one of the countless companies that pay for it,” he said. Tyler Durden Fri, 08/05/2022 - 21:00.....»»

Category: worldSource: nytAug 5th, 2022

Q2 Earnings Scorecard and Research Reports for Apple, Chevron & Toyota

Today's Research Daily features real-time update on the Q2 earnings season and fresh research reports on Apple (AAPL), Chevron (CVX), and Toyota (TM). Wednesday, August 3, 2022 The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features a real-time scorecard of the ongoing Q2 earnings season and new research reports on 16 major stocks, including Apple Inc. (AAPL), Chevron Corporation (CVX), and Toyota Motor Corporation (TM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>>Q2 Earnings Season Scorecard Including all of this morning's reports, we now have Q2 results from 357 S&P 500 members or 71.4% of the index's total membership. Total earnings for these 357 index members are up +7.3% from the same period last year on +14.7% higher revenues, with 77.3% beating EPS estimates and 66.7% beating revenue estimates. The proportion of these companies beating consensus EPS and revenue estimates still remains towards the lower end of the high-low range over the last 5 years for this group of companies. The earnings growth of +7.3% for Q2 has been dragged down by lower growth for the Finance sector and boosted by the Energy sector results. Excluding the Finance sector drag, Q2 earnings growth for the remainder of the index would be up +16.5%. The Q2 earnings growth pace turns negative on an ex-Energy basis (down -4%). Looking at Q2 as a whole, combining the actuals from the 357 companies that have reported with estimates for the still-to-come companies, total earnings are on track to increase +6.3% on +13.2% higher revenues.  The growth pace improves to +14% excluding the Finance sector and drops to a decline of -4.1% on an ex-Energy basis.Today's Featured Analyst ReportsApple shares have more than held their own in this year's uneven market, with the stock outperforming the S&P 500 -6.4% vs. -14.5% in the year-to-date period. The company’s third-quarter fiscal 2022 results have helped sustain this momentum, with the numbers benefiting from strong iPhone sales and continued momentum in the Services business.The segment benefited from the robust performance of Apple TV+ partially offset by unfavorable forex, the absence of revenues from Russia and the challenging macroeconomic environment. However, iPad sales were hurt by supply-chain constraints. Apple did not provide revenue guidance for the fourth quarter of fiscal 2022.Apple expects year-over-year revenue growth to accelerate during the fiscal fourth quarter on a sequential basis, despite the unfavorable year-over-year impact from forex. Services revenue growth is expected to be lower than the June quarter due to challenging macroeconomic conditions and unfavorable forex.(You can read the full research report on Apple here >>>)Chevron shares are down from their high in early June, but are still up +32.3% this year, outperforming the Zacks Energy sector's +22.9% gain. The company is considered one of the best-placed global integrated oil firms to achieve sustainable production ramp-up.America’s No. 2 energy company’s existing project pipeline is among the best in the industry, thanks to its premier position in the lucrative Permian Basin. However, Chevron was not immune to the commodity price crash of 2020, forcing it to cut spending substantially.The company’s high oil price sensitivity is a concern too. Moreover, the supermajor’s 10-year reserve replacement ratio of 100% is indicative of its inability to replace the amount of oil and gas produced. Finally, Chevron has been a laggard to jump into the net-zero bandwagon.(You can read the full research report on Chevron here >>>)Toyota Motor shares have declined -11.8% this year, outperforming the Zacks Auto sector's -20.9% decline. The stock has also held up better than Ford (down -24.2%) and GM (-35.9%) in the year-to-date period. While the company is faced with a host of near-term challenges, ranging from the chip crunch and logistical challenges, the scale and scope of its operations enable it to deal with these challenges better than its competitors. Also, Toyota’s electrification push including investment in BEVs, hybrids, batteries and fuel-cell vehicles is set to bolster prospects. It aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030.The Japanese auto giant forecasts a year-over-year growth in sales volume and revenues for the current fiscal year. The expanding portfolio of product lines, a robust lineup of trucks and SUVs, partnerships with Hino and Subaru and Mazda will steer long-term growth.(You can read the full research report on Toyota Motor here >>>)Other noteworthy reports we are featuring today include Exxon Mobil Corporation (XOM), ConocoPhillips (COP), and Chipotle Mexican Grill, Inc. (CMG).Sheraz Mian Director of ResearchNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadRobust Portfolio, Services Strength to Benefit Apple (AAPL) Chevron (CVX) to Gain from Massive Permian AcreageElectrification Drive Aids Toyota Motor (TM) Amid InflationFeatured ReportsConocoPhillips (COP) Banks on Oil-Rich Bakken Shale AssetsPer the Zacks analyst, ConocoPhillips' production outlook is bright since it holds core acres in the oil-rich Bakken shale play. But rising production & operating expenses is a concern.Chipotle (CMG) Banks on Digital Sales, Wage Inflation HighPer the Zacks analyst, digitalization will continue to play a crucial role in sustaining growth for restaurant operators. However, elevated wage inflation is a concern.IQVIA Benefits From Global IT Infrastructure, Liquidity LowPer the Zacks Analyst, IQVIA's strong healthcare-specific global IT infrastructure places it firmly in the life sciences space. Low liquidity remains a concern.Arista (ANET) Rides on Healthy Demand, Portfolio StrengthPer the Zacks analyst, Arista is likely to benefit from solid demand trends led by a software-driven, data-centric approach to help customers build cloud architecture and enhance their cloud footprintHDPE Project, A. Schulman Buyout Aid LyondellBasell (LYB)While LyondellBasell faces headwind from higher turnaround costs, it will gain from synergies of the A. Schulman buyout and higher capacity driven by the HDPE project, per the Zacks analyst. RenaissanceRe (RNR) Rides on High Premiums, Capital PositionPer the Zacks analyst, premium growth across Property plus Casualty and Specialty segments drives its top line. The company's robust capital position remains a key catalyst.Strategic Plan Aids Associated Banc-Corp (ASB), Costs AilsPer the Zacks analyst, strategic plan to expand lending capabilities, rising rates and a solid balance sheet will support Associated Banc-Corp. Yet, rising expenses and high debt levels are concerns.New UpgradesExxonMobil (XOM) Gains From Discoveries at Stabroek BlockPer the Zacks analyst, ExxonMobil's discoveries in the Stabroek Block will increase its recoverable resources' estimates to 11 billion oil-equivalent barrels.Strong Portfolio Aids Take Two (TTWO) Amid Stiff CompetitionPer the Zacks analyst, Take-Two's popular franchises including NBA 2K22 and Grand Theft Auto V is helping it to counter stiff competition from the likes of EA and Activision Blizzard.Strong Balance Sheet Supports UMB Financial (UMBF)Per the Zacks analyst, UMB Financial's strong loans and deposits and diversified fee income are likely to boost its financials. Further, enhanced capital-deployment activities are also tailwinds.New DowngradesIntel (INTL) Plagued by Component Shortage, Production DelaysPer the Zacks analyst, production delays and continued component shortage are hurting Intel's revenues, with forex woes and fresh lockdown restrictions further compounding problems.Supply Chain Issues to Mar Whirlpool's (WHR) PerformancePer the Zacks analyst, Whirlpool has been witnessing rising raw material costs and global supply chain disruptions, which have resulted in higher freight costs. This is likely to persist in 2022.Pricing Pressure Hindering Stryker's (SYK) Topline GrowthPer the Zacks analyst, unfavorable pricing environment is likely to act as a hindrance to Stryker's top-line growth in the near term. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report Toyota Motor Corporation (TM): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis Report ConocoPhillips (COP): Free Stock Analysis Report Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report IQVIA Holdings Inc. (IQV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksAug 4th, 2022

America"s Green Transition Sparks Power Grid Instability

America's Green Transition Sparks Power Grid Instability The U.S. might want to reconsider its energy transition after a surge in decommissioning fossil fuel power plants has outpaced new clean energy generation capacity, which has sparked the worst energy crisis in nearly five decades, one that is fraught with skyrocketing electricity prices and heightened risk of grid instability.  Power grids nationwide attempted to build new clean energy power generation without investing enough in conventional sources. Decarbonization trends on the grid have jeopardized energy security.  Grid operators have warned in the sweltering summer heat that blackouts are needed to rebalance supply and demand.  WSJ noted the proposed new legislation by Democrats to substantially reduce grid emissions in a $369 billion climate bill has been pitched to stabilize the grid but could take years to come to fruition.  "By a wide margin, this legislation will be the greatest pro-climate legislation ever passed by Congress," Senate Majority Leader Chuck Schumer said. "This legislation fights the climate crisis with the urgency the situation demands and puts the U.S. on a path to roughly 40% emissions reductions by 2030, all while creating new good-paying jobs in the near and long-term." The deal would accelerate wind and solar farm projects and add large-scale batteries to the grid. Expanding green energy sources sounds great but doesn't address the current crisis.  Even though the Biden administration despises long-term fossil fuel investments, officials in the White House have pushed for short-term production increases. President Biden's policies have been designed to reallocate oil/gas investment to the green movement, making any investment in fossil fuels hard to stomach for investors.  The belief that a green transition is possible by encouraging divestments in oil/gas is the reason for the grid's unprecedented challenge.  WSJ noted the heart of the problem of the faltering transition is the ability to replace conventional fossil fuel power with renewable energy, and large-scale batteries have hit a snag.  There was a time when it also seemed like it would be relatively easy to replace many fossil-fuel plants with renewable energy and large-scale batteries that store wind and solar power for use as fossil-fuel production declines. These energy sources became much less expensive over the last decade due to more efficient production as well as government subsidies that made renewables more attractive for investors. But as U.S. power supplies tighten, developers are struggling to build these projects quickly enough to offset closures of older plants, in part because of supply-chain snarls. -WSJ Another reason: It takes longer to approve their connections to the existing electricity grid. Such new requests neared 3,500 last year compared with roughly 1,000 in 2015, according to research from the Lawrence Berkeley National Laboratory. Typical time needed to complete technical studies needed for that grid approval is now more than three years, up from less than two in 2015. -WSJ Some grid operators, such as the Midcontinent Independent System Operator Inc. (MISO), are already under strain and fear that they are swapping out on-demand coal- and gas-fired power plants for less reliable energy sources, such as solar and wind.  Greenify the power grid is impossible without a parallel system of fossil fuel generation to meet demand during peak hours.  "The transition may require some scaffolding, and that scaffolding may be some gas plants," MISO Chief Executive John Bear.  California is the perfect example of decarbonizing its power grid and has already hit a roadblock with demand exceeding supply in the 2020 heatwave that triggered blackouts.  "You had too much capacity come off the market too quickly and now all the markets are scrambling for reliability," said billionaire natural gas traderJohn Arnold.  The obsession by Democrats to push policy hellbent on destroying fossil fuel-powered grids with unreliable solar and wind has created the completely artificial energy crisis that is by design.  Perpahs it's time to revisit the debate over nuclear power. It's clean, reliable, and space-efficient compared with solar and wind.  The problem we see is an expectation that politicians can solve energy problems but have made grid stability worse and will be long-lasting.  Tyler Durden Tue, 08/02/2022 - 22:25.....»»

Category: blogSource: zerohedgeAug 2nd, 2022

Climate change is disrupting our food system, which makes it vulnerable to new crises

Weather, the atmosphere, the oceans, and the climate are all changing. That has devastating effects on crops, livestock, and fisheries. Valerio Rojas picking up an old fishing net in Lake Poopó, Bolivia's second-largest lake, which has dried up because of water diversion for irrigation and a warmer, drier climate, on July 24, 2021.Claudia Morales/Reuters The climate crisis is making our food systems vulnerable, and scientists expect it to get worse. Extreme weather and long-term environmental changes harm crops, livestock, and fisheries. Researchers and scientific reports answer key questions about food and the climate crisis. In Kansas, more than 2,000 cattle died in a record heat wave. In Tunisia, fires razed fields of grain to the ground. In southern China, historic flooding damaged almost 100,000 hectares of crops. In northern Italy, a farm lobby warned that drought could claim half the region's agricultural output.That was just June.The global food supply is taking a hit from pandemic-driven labor shortages, supply-chain disruptions, and the war in Ukraine. Underlying it all is the climate crisis."Without a doubt, it's always there. And it's now always going to be there," said Ed Carr, the director of the International Development, Community, and Environment Department at Clark University.Federica Vidali, a 29-year-old agricultural entrepreneur, checking her damaged soy plant, which was affected by seawater flowing into the drought-hit Po river in Porto Tolle, Italy, on June 23.Guglielmo Mangiapane/ReutersRising temperatures have been changing weather conditions and ecosystems across the planet for decades, before the pandemic or the war began. That's chipping away at the security of our food system and priming it for new crises.It's not all bad news, but the future of food hangs in the balance. Here's what experts, scientific studies, and international climate reports tell us.Remind me: What is climate change? What's the big deal?When humans burn coal and oil for fuel, that releases carbon dioxide. The gas's concentration in the atmosphere has increased 50% since 1850, and the rate of increase has tripled since the 1960s. All that carbon dioxide (plus other emissions, such as methane, from our agriculture, garbage dumps, and land destruction) is trapping more and more of the sun's heat, raising global temperatures. Since 1850, humans' fossil-fuel dependence has caused global average temperatures to rise about 1.1 degrees Celsius, and scientists warn that we may face a catastrophic 1.5 degrees of warming in 20 years. That may not sound like much, but it's altering the planet's weather and ecosystems, to the detriment of global food supplies.So how exactly are climate change and the food crisis connected?A farmer standing in a wheat field burned by fire in Jendouba, Tunisia, on June 2.Jihed Abidellaoui/ReutersClimate change is making droughts, floods, wildfires, and heat waves more severe and more frequent, according to the sixth assessment of the United Nations' Intergovernmental Panel on Climate Change, published in installments over the past year.Scientists can't link every individual event to climate change, but research shows that rising temperatures affect the overall occurrence of extreme weather. Such events can devastate crops and kill livestock, as they did in Kansas, Tunisia, China, and Italy in June.A woman drying flood-damaged corn on a road near a damaged paddy field in a village in Assam state, India, on June 28.Anupam Nath/AP PhotoClimate change also does long-term, chronic damage to our food systems.As baseline temperatures steadily rise, scientists fear some regions of the world will become inhospitable to the foods economies rely on. Several studies have shown that rising temperatures can cut yields for the staple crops that account for two-thirds of all the calories humans eat: wheat, rice, maize, and soybean. Last year, a NASA study projected that the climate crisis would drive a 24% decline in yields of maize — a crop that factors into countless food products and feeds livestock across the globe.Withered corn, affected by a long drought, at a farm in 25 de Mayo, on the outskirts of Buenos Aires, Argentina, on January 24.Agustin Marcarian/Reuters"Most of the large grain-producing regions in the world are seeing some kind of climate signal, some kind of climate stress," said Carr, who is also a coauthor on the IPCC report.In 2021, Cornell University researchers calculated that global farming productivity was already 21% lower than it would be without climate change. Other research suggested that rising carbon-dioxide levels deplete nutrients in some crops."We see slightly less protein, less iron, less zinc in the grains at higher CO2 levels," said Toshihiro Hasegawa, who studies rice and co-led the IPCC report's chapter on food. "That's really concerning, alarming for people who depend mostly on the diet of the main staple foods."Farmers planting rice on a paddy field at night to avoid heat that's gotten worse over the years, in Hanoi, Vietnam, on June 25, 2020.Nguyen Huy Kham/ReutersThe oceans, too, are heating up. That's forcing the migration of fish populations — a critical source of protein for billions of people. Iceland, for example, is losing key fish, such as capelin and cod, as they swim north for cooler waters. Rivers are warming as well, driving a decline in salmon populations in the northwest US.The oceans have also become 30% more acidic as they absorb some of the carbon dioxide that human activities have added to the atmosphere. Shellfish, such as oysters, clams, and mussels, can't escape warming and acidifying waters, so they're more prone to die-offs.The IPCC report said the effects of climate change on particular fish populations were understudied, but it concluded that ocean warming and acidification were depleting fish stocks.Overall, the IPCC has already documented declines in food quality or yield on every continent because of climate change, as shown in the map below.That sounds bad. Is that the worst of it?No. If we don't reel in emissions, up to 10% of the planet's current crop and livestock areas could become unsuitable for agriculture by 2050, the IPCC projected.Especially in Africa, Australia, and the Mediterranean, scientists expect that heat and water scarcity will strain agriculture. If global temperatures rise 2 degrees Celsius above the preindustrial standard — which is well within our current trajectory — the IPCC expects increased malnutrition, mostly in sub-Saharan Africa, South Asia, Central and South America, and on small islands. Many of these places already struggle with hunger, and it could get much worse.Women who fled drought queuing to receive food distributed by local volunteers at a camp for displaced persons in the Daynile neighborhood of Mogadishu, Somalia, on May 18, 2019.Farah Abdi Warsameh/AP Photo"Unless we, as a global community, make very significant cuts to our greenhouse-gas emissions, we can anticipate having many more crises and incidents of acute food insecurity, as well as impacts in terms of food prices," said Rachel Bezner Kerr, the other coleader of the IPCC report's chapter on food.Climate change also means increasing risks to food safety. This year in the US, an avian flu outbreak drove an almost 300% increase in the price of eggs. The IPCC warns that there will likely be more infectious-disease outbreaks as rising temperatures allow new pests and pathogens to overlap with livestock and crops.Will my favorite foods get more expensive or hard to find?Grocery shopping in Rosemead, California, on April 21.Frederic J. Brown/AFP/Getty ImagesIt's unclear. Many factors influence food prices, including labor supply, international relations, efficiency of food production, and consumer demand for particular foods.For now, major foods aren't in imminent danger of disappearing, but a few consumer favorites, such as coffee, chocolate, and wine, are especially vulnerable to climate change."It really will come down to: How much are you willing to pay? Or I guess, maybe given inequality within our country: How much are you able to pay for your favorite food?" Carr said.Elena Biondetti, a confectioner apprentice, stirring liquid chocolate in a bowl during the production of Easter bunnies at Confiserie Baumann in Zurich on March 11, 2021.Arnd Wiegmann/ReutersCoffee-growing areas in Central and South America, Vietnam, and Indonesia are likely to see average temperature increases that make the crop harder to grow. A January study in the journal PLOS One projected a "drastic," about 50%, decrease in areas suitable for coffee cultivation by 2050. Already, between 2020 and 2021, extreme weather in Brazil drove the cost of coffee up 70%, The New York Times reported, citing data from the International Monetary Fund.A fully formed coffeeberry, left, is pictured next to a coffeeberry damaged by drought, in a coffee farm in Santo Antônio do Jardim, Brazil, on February 6, 2014.Paulo Whitaker/ReutersCoffee may become "more of a specialty drink, or a treat that you have occasionally," Bezner Kerr said.Chocolate could undergo a similar decline. Most of the world's cocoa — 70% of it — grows in Ivory Coast and Ghana, the World Economic Forum said, where drier conditions might make cocoa farms unsuitable for the plants.Climate disruptions are leading to shortages worldwide. Wildfires and droughts are besieging wine-grape vineyards in California and the Mediterranean. Severe drought in Mexico is cutting chili-pepper yields and driving a Sriracha shortage. Apples suffered from last year's extreme heat and late-spring frosts in the US. In France and Canada, mustard-seed growers reported a changing climate had cut production in half in 2021.The climate crisis isn't new. How did things get so bad this year?A Ukrainian service member standing on a burning wheat field near the front line, on a border between the Zaporizhzhia and Donetsk regions, during Russia's attack on Ukraine on July 17.Dmytro Smolienko/ReutersDamages from climate change and disruptive events, such as the war in Ukraine and the coronavirus pandemic, compound one another. The war, for example, is exacerbating a preexisting fertilizer shortage and cutting off a crucial global supply of wheat.Even places that don't rely on Ukraine's wheat or fertilizer suffered from the rise in global food prices. For instance, in Malawi farmers were already reeling from a late start to the rainy season, which brought extreme flooding. The country turned to imports to replace its lost crops, but now global price hikes could make imported food too expensive for many Malawians, leading to food shortages.Children showing off their catch, near a wreck washed away during Tropical Storm Ana on the flooded Shire river in Chikwawa district, southern Malawi, on January 26.Eldson Chagara/Reuters"Climate by itself, right now, generally doesn't lead to terrible" food-access outcomes, Carr said, adding, "But it's intersecting with a lot of other stressors that are out there." The coronavirus pandemic dealt a major blow to supply chains and is still driving labor shortages. That weakened the food-supply chain from farm to plate and drove costs higher."You get these worsening impacts from the interaction between a non-climatic factor, such as a conflict, and a climatic factor, such as drought, in a particular region, leading to really severe food crises," Bezner Kerr said.Can we fix this?"Letzte Generation" (Last Generation) activists blocking a highway to protest against food waste and for reducing agricultural greenhouse-gas emissions, in Berlin, on February 4.Christian Mang/ReutersWe can't stop the globe from warming in the years ahead since the greenhouse gases we've already added to the atmosphere will continue to trap heat. But we can reduce the greenhouse gases we're emitting and adapt our food systems to the changes that are already happening.Those adaptations look different depending on the region and the climate problems it faces. Some farms have already seen success with new water-management tactics, the diversification of crops, and the integration of crops with livestock and forests to improve soil quality. Research institutions are also developing more drought-resistant varieties of staple crops, such as corn.A Karbi tribal woman, whose agricultural land had been transferred to build a solar-power plant, grazing her cow near the plant in northeastern Assam state, India, on February 18.Anupam Nath/AP PhotoResearchers need to study those solutions more to know if they'll work at scale.To stop the crisis from accelerating even more, we must stop adding carbon to the atmosphere and transition away from fossil fuels to more renewable energy sources, such as solar and wind power.We need to make those changes now, or "the future looks grim," Bezner Kerr said. "I think it's an opportunity, a hopeful opportunity, and it's a closing window."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 1st, 2022

The Challenges Ahead For Britain"s New Prime Minister

The Challenges Ahead For Britain's New Prime Minister Authored by Alasdair Macleod via GoldMoney.com, Britain’s next Prime Minister must address two overriding problems: London is at the centre of an evolving financial and currency crisis brought forward by a change in interest rate trends; and the reality of emerging Asian superpowers must be accommodated instead of attacked. This article starts by examining the economic challenges the next Prime Minister faces domestically. Are the two candidates equipped with a strategy to improve the nation’s economic prospects, and why can we expect them to succeed where others have failed? It is unlikely that either candidate is aware that there has been a fundamental shift in the direction of interest rates, the consequences of which are undermining debt mountains everywhere. The problem is particularly acute for the euro system. As well as for other major currencies, London operates as the clearing centre for transactions between the Eurozone’s commercial banks. If the euro system fails, London’s survival as a financial centre could be jeopardised. The other major challenge is geopolitical. Being tied into America’s five-eyes intelligence network, coupled with policies to remove fossil fuels as sources of energy Britain is condemned to falling behind the Asian superpowers, and sacrificing trading relationships with which her true interests must surely lie. And then there were two… The selection process for a new Conservative Prime Minister has whittled it down to two — Rishi Sunak and Liz Truss. The former is a wealthy meritocrat, former Goldman Sachs employee and hedge fund manager, the latter a self-made woman. Sunak was Chancellor (finance minister). Among several other high-office roles, Truss has been First Secretary to the Treasury. Both, in theory at least, should understand government finances. Both studied PPE at Oxford, so are certain to have been immersed in the Keynesian version of economics, which also informs Treasury thinking. Despite their common Treasury experience and being on that same page, Sunak’s and Truss’s pitches on economic affairs have been very different. Sunak aims to maintain a balanced budget, reducing taxes afterwards as economic growth increases tax revenues. This is Treasury orthodoxy. Truss is claiming she will cut taxes more immediately in an emergency budget to stimulate growth. She is emulating the Thatcher/Reagan supply-side playbook. The politics are straightforward. The electorate is comprised of about 160,000 paid up Conservative Party members, mostly leaning towards less government, free markets, and lower taxes. As a subset of over 40,000,000 voters nationwide, they may be reasonably representative of a silent majority in the middle classes which believe in conservative societal values. The one issue that matters above all for Conservative Party members is taxes. Given their different stances on tax, Truss has emerged as the early favourite. Furthermore, to the disadvantage of Sunak very few Chancellors make it to Prime Minister for a reason: like Sunak, they nearly always push the Treasury line on maintaining balanced budgets over the cycle, which means that they are for ever trying to pluck the goose for more tax with the minimum of hissing. Don’t expect geese to willingly vote for yet more exfoliation. The issue of less government in the total economy is not properly addressed by either candidate or is restricted to vague promises to do something about unnecessary bureaucracy. In arguing for free markets, Truss is stronger in this respect than Sunak who appears to be more captured by the permanent establishment. With the exception of Treasury ministers, all politicians in office are naturally inclined to seek increased departmental budgets, which is a problem for all tax cutters. But to understand the practical difficulties of reducing government spending, we must make a distinction between departmental expenditure limits and annually managed expenditure. The former is budgeted for by the Treasury in its allocation of financial resources. The latter can be regarded as including additional costs arising from public demand for departmental services. This explains why total departmental expenditure for fiscal 2020-21 was £566.2bn, representing about half of total government spending of £1,112bn.  With government spending split 50/50 overall on departmental expenditure limits and public demands for services, both issues must be addressed when reducing costs meaningfully. Failing to do so means only departmental expenditure limits are tackled, resulting in less resources to deliver mandated public services. That would be seen by the opposition and the public to be a government failing. Therefore, it is not sufficient to merely say to ministers that they must cut departmental expenditure, but laws and regulations must also be changed to reduce public service obligations as well. That takes time. Imagine tackling this problem with respect to the National Health Service. The NHS takes 34% of total departmental expenditure limits, yet it clearly fails to efficiently provide the public with the services required of it. Health ministers always argue that it needs more financial resources. This is followed by education (13% of total departmental expenditure). What do you do: sack teachers? And Scotland at 8% is another no-go area, where cuts would likely encourage the nationalist movement. And that is followed to a similar extent by defence spending at a time of a proxy war against Russia… One could go on about other ministry spending and the costly provision of their services, but it should be apparent that any realistic cuts in public services are likely to be minor and overwhelmed by rising and unbudgeted departmental input costs which are indirectly the consequence of the Bank of England’s monetary policies. It is therefore hardly surprising that neither Sunak nor Truss is seriously engaged with the subject of reducing state spending, merely fluffing around the topic. But total state spending is going to be an overriding problem for the future PM. Figure 1 shows the long-term trend of total managed expenditure relative to GDP, admittedly exacerbated by covid. Since then, there has been a recovery in GDP to £2,239bn in the four quarters to Q1 2022, and covid related disbursements have materially declined, so that in the last fiscal year, total government spending is estimated to have dropped to 46.5% of GDP from the high point of 51.9%. However, rising interest rates globally are set to drive the UK economy into recession. Even if the recession is mild, while GDP falls this will increase public spending on day-to-day public services back up to over 50% of GDP. The philosophical problem for the new PM can be summed up thus: with half the economy being unproductive and the productive economy shouldering the burden, how can economic resources be restored to producers in a deteriorating economic outlook? Inflation is not going away Orthodox neo-Keynesians in the government and its (supposedly) independent Office for Budget Responsibility do not recognise that the root of the inflation problem is the debasement of currency and credit. Furthermore, by thinking it is a short-term supply chain problem, or a temporary energy price spike due to sanctions against Russia, the OBR, in common with the Bank of England takes the view that consumer price rises will return to the targeted 2% level. Only, it might take a little longer than originally thought. Figure 2 shows the OBR’s latest forecasts (in March) for inflation (panel 1) and real GDP (panel 2). Note how the October forecast failed to reflect an annual CPI rising to more than 4%. In March that was raised to 8%, which is already outdated. Price inflation rising to over 10% is on the cards, and it should be noted that the retail price index, abandoned by government because of the cost of using it for indexation, already shows annual consumer inflation to be rising at 11.8%. The OBR’s response to these unwelcome developments is simply to push out an expected return to the 2% inflation target a little more into the future. Similarly, it expects the trajectory of GDP growth will be maintained, having just slipped a little. On this evidence, the OBR’s advice to a future prime minister and his chancellor will be badly flawed. Instead of going down the macroeconomic approach of modelling the economy, instead we need to apply sound, unbiased economic and monetary theories.  We know that the Bank of England’s monetary policies have debased the currency, reflected inevitably in a falling purchasing power for the pound. That is what drives the increase in the general level of prices. The primary cause is not, as government and central bank officials have stated, supply chain disruptions and the consequences of the war in Ukraine. That has only made things worse, in the sense that higher energy and commodity prices along with supply bottlenecks have encouraged the average citizen to adjust the ratio of personal liquidity to purchases of goods and services, bringing forward purchases and driving prices even higher. The debasement of fiat currencies everywhere is encouraging their users to dump them in what appears to be a slowly evolving crack-up boom encouraged by a background of product shortages. The common view that consumer price inflation is a temporary phenomenon is little more than wishful thinking, as is the latest argument developing, that rising interest rates will deflate economic demand. The official line is that lower demand will lead to lower prices. Realistically, less demand is the product of less supply, so it does not lead to lower prices. And here we must turn to the second panel in Figure 2, of the OBR’s modelling of real GDP. With the annual increase in the RPI already at 11.8% and that of the CPI at 9.1%, a bank rate of 1.25% fails to recognise the changed environment. Interest rates, bond yields and therefore the cost of government funding are all set to rise substantially. The consequences for financial assets will be to drive their market values lower. And unprofitable businesses relying on finance for their existence risk being wiped out, either because they will lose hope of ever being economic, or bank credit will be withdrawn from them. All empirical evidence is that currency debasement accompanies the destitution of an economy. Therefore, it is a mistake to think that a slump in business activity will neutralise the inflation problem. To deal with the inflation problem, the new prime minister will have to resist intervening and let all failing businesses go to the wall. But whoever becomes PM, there is no mandate to simply let events take their course. Instead, the burden of sustaining a failing economy will certainly lead to a soaring fiscal deficit — financed, of course, by yet more monetary debasement. Without quantitative easing, the appetite of commercial banks for financing the fiscal deficit at a time of rising bond yields is uncertain. It is a different environment from a long-term trend of declining interest rates, underwriting bond prices. A trend of rising interest rates is likely to lead to funding dislocations, as we saw in the 1970s. Furthermore, commercial banks have more urgent problems to deal with, which is our next topic. Banks will be in self-preservation mode GDP is no more than a measure of currency and credit in qualifying transactions. Growth in nominal GDP is a direct consequence of an increase in currency and bank credit, particularly the latter. An old rule of thumb was credit was larger than currency in the ratio of perhaps ten to one. The evolution of banking, the war on cash, and the advent of debit cards have changed that, and since covid, the ratio has increased to 37:1. This means that changes in nominal GDP are almost entirely dependent on the supply of bank credit for the production of goods and services. The availability of customer deposits to draw down for spending reflect the commercial banking network’s willingness to maintain the asset side of their balance sheets, comprised of lending and financial investment. Customer deposits, which are a bank’s liabilities, will contract if bank lending, recorded as a bank’s assets, contract. This is already evident in the slowing down of broad measures of money supply growth. Given that bank balance sheets are highly leveraged, and that the economic outlook is deteriorating, bank lending is almost certainly beginning to contract. This vital point appears to be completely absent in the OBR’s modelling of the economic outlook. By the usual metrics, commercial banks are extremely over-leveraged after thirteen years of the current bank credit cycle, in other words since the Lehman failure. Table 1 below summarises the position of the three British G-SIBs (designated global systemically important banks). They can be regarded as a banking proxy for exposure to global systemic risks. Important points to note are that balance sheet leverage, the relationship of assets to total equity, are as much as double multiples of between eight and twelve times at the top of a normal bank credit cycle. Balance sheet equity includes accumulated undistributed profits as well as the common equity entitled to them.[i] All three banks’ common shares trade at substantial discounts to their book value.  Their share prices tell us that markets have assessed that there is a high level of systemic risk in these banks’ shares. It would be extraordinary if the directors of these banks are blind to this message. Before covid when economic dangers were less apparent, it would have been understandable though not necessarily excusable for them to use this leverage to maximise profits, particularly since all banks were following similar lending policies.  Covid came, and all banks had no option but to extend loan facilities to businesses affected, for fear of triggering substantial loan losses on a scale to take down the banks themselves. Furthermore, the government put in loan guarantee schemes. Post-covid, bankers face the withdrawal of government loan guarantees, rising interest rates and the consequences for their risk exposure to higher interest rates, as well as declining values for mark-to-market financial assets — the latter affecting both bank investments and collateral against loans. Clearly, the cycle of bank credit is on the turn and will contract. The dynamics behind this phase of the cycle indicate that to take leverage back down to more conservative levels the contraction will have to be severe. But an excessive restriction of credit both causes and produces a run for cash notes and gold. And thus, without intervention banks and businesses all collapse in a universal crash.  With very little of GDP recorded in pound notes and coin, as a statistic it is driven overwhelmingly by the quantity of bank credit outstanding. In a credit contraction the GDP statistic will collapse — unless the Bank of England takes upon itself the replacement of credit in a massive economic support programme.  The consequences are sure to undermine government finances badly. Sunak’s hope that a balanced budget can be maintained, let alone permit him to oversee tax cuts when government finances permit, becomes a fairy tale when tax revenues slump and spending commitments increase. So, too, is Truss’s belief that immediate tax cuts will benefit economic growth and restore tax revenues. The reality of office is likely to decree fiscal policies very different being those being touted by both candidates. The impending collapse of the euro system I wrote recently for Goldmoney about the inevitable crisis developing in the euro system, here. Since that article was published, the European Central Bank has raised its deposit rate to zero and instituted a rescue package for the highly indebted PIGS in its awkwardly named Transmission Protection Instrument. In plain language, the ECB will continue to buy PIGS government debt to ensure their yields do not rise much further relative to benchmark German bunds. It is increasingly clear that the euro system is in deep trouble, caught out by the surge in consumer price inflation. Rising interest rates, which have only just started, will undermine Eurozone commercial bank balance sheets because they obtain much of their liquidity by borrowing through the repo market.[ii] TARGET2 imbalances threaten to collapse the system from within as the interest rate environment changes. The ECB and its shareholding network of national central banks all face escalating losses on their bonds, which earlier this month I calculated to be in the region of €750bn, nearly seven times the combined euro system balance sheet equity. Not only does the whole euro system require to be refinanced, but this is at a time when the Eurozone’s G-SIBs are even more highly leveraged than the three British ones. Table 2 updates the one in my article referred to above. With the average Eurozone G-SIB asset to equity ratios of over 20 times, the euro’s G-SIBs are one of the two most highly leveraged networks in global banking, the other being Japan’s. The common factor is negative interest rates imposed by their central banks. The consequence has been to squeeze credit margins to the extent that the only way in which banks can sustain profit levels is to increase operational gearing. Furthermore, an average balance sheet leverage of over 20 times does not properly identify systemic risks. Bank problems come from extremes, and we can see that at 27 times, Group Credit Agricole should concern us most in this list. And we don’t see all the other Eurozone banks trading internationally that don’t make the G-SIB list, some of which are likely to be similarly exposed. The problem for Britain is twofold. Including its banks, Britain’s financial system is more exposed to Eurozone risks than any other, and a Euro system failure would be a catastrophe for it. Furthermore, Eurozone banks and fund managers use UK clearing houses for commercial euro settlements. Counterparty failures will contaminate systemically all participants, not only dealing in euros but all the other major currencies settled in London as well. The damage is sure to extend to forex and credit markets, including all OTC derivatives which are an integral part of bank clearing facilities. At the last turn of the bank lending cycle, it was the securitisation of liar loans in the US which led to what is commonly referred to as the Great Financial Crisis. This is a term I have rarely used, preferring to call it the Lehman Crisis because I knew, along with many others, that the non-resolution of the excesses at the time would store up for an even greater crisis in the future. We can now begin see how it will be manifested. And this time, it looks like being centred on London as a financial centre rather than New York. We must hope that a collapse of the euro system will not happen, but there is mounting evidence that it will indeed occur. The falling row of dominoes is pointing at London, and it could even happen before the Conservative Party membership have voted for either Truss or Sunak in early-September. Dealing with a banking crisis fall out On the advice of the Bank for International Settlements, following the Lehman crisis the G20 member states agreed to make bail-ins mandatory, replacing bailouts. This was a politically motivated move, fuelled by the emotive belief that bailing out banks are at the taxpayers’ expense. In fact, bank bailouts are financed by central banks, both directly and indirectly. The only taxpayer involvement is marginally through their aggregated savings in pension funds and insurance companies. But these funds have been over-compensated with extra cash through quantitative easing. The audit trail leads to the expansion of currency and credit every time, and not to taxes as the phrase “taxpayer liabilities” implies. All the G20 nations have passed legislation enabling bail-in procedures. In the Bank of England’s case, it retains discretion to what extent bail-in as opposed to other rescue methods might be used. As to specifics for the other G20 members it is unclear to what extent they have retained this flexibility and understand bail-in ramifications. And it could be an additional confusion likely to complicate a global banking rescue, compared with the previously accepted bail-out procedures. In theory, a bail-in reallocates a bank’s liabilities from deposits and loans into shareholders’ capital — excepting, perhaps, smaller depositors covered by deposit guarantee schemes. But even that is at the authorities’ discretion.  The objective can only make sense for single bank, as opposed to systemic failures. But if it were to be applied to an individual banking failure in the current unstable situation, it would almost certainly undermine other banks, as bank loans and other non-equity interests would be generally liquidated, and deposits flee to banks deemed to be safer as panic sets in. The risk is that bail-in procedures could set off a system-wide failure, particularly of the banks rated by the market with substantial discounts to book value — including all the UK’s G-SIBs (see Table 1 above). Even assuming the Bank’s bail-in procedures are ruled out in dealing with a systemic banking crisis, to keep banks operating will require a massive expansion of credit from the Bank of England. In effect, the central bank will end up taking on the entire banking system’s obligations. With London at the centre of a global banking crisis, all other major central banks whose banking and currency networks are exposed to it must be prepared to take on all their commercial banking obligations as well. Britain’s place in the world must be secured The problems attendant on currencies afflict all the majors, with the UK at the centre of the storm because of its pre-eminent role in international markets. There is no evidence that the leadership at the Bank of England is equipped to understand and deal with an increasingly inevitable economic and monetary crisis which will take sterling down. Nor has there been any attempt by the Treasury to rebuild the nation’s depleted gold reserves to protect the currency, which is a gross dereliction of public duty. But we must now turn our attention to geopolitical matters, where there is currently no pragmatism in Britain’s foreign policies. Since President Trump’s aggressive stance against the challenge to America from Chinese technology, the UK as America’s most important partner in the five-eyes intelligence sharing agreement has sided very firmly with America against both Chinese and Russian interests. The recent history of the five-eyes partnership is one of political blindness — ironic given its title. Wars against terrorism, more correctly US intelligence operations which destabilise Muslim nations before the military go in to sort the mess out have been a staple since the overthrow of Saddam Hussein. A series of wars in the Middle East and Afghanistan have yielded America and her NATO allies only pyrrhic victories at best, created business for the US armaments industry, and resulted in floods of refugees attempting to enter Europe. Meanwhile, these actions have only served to cement the partnership between Russia, China, and all the Asian members of the Shanghai Cooperation Organisation amounting to over 40% of the world population. They have a common mission to escape from the dollar’s hegemony. America’s abandonment of Afghanistan was pivotal. As America’s closest intelligence partner, Britain following Brexit is no longer a direct influence in Europe’s domestic politics. Together, these factors have surely encouraged Putin to adopt more aggressive tactics with the objective of undermining the NATO partnership, always seen as the principal threat to Russia’s borders. This is the true objective behind his proxy war against Ukraine. Supported by Britain, the US response has been to fuel the Ukrainian proxy war by supplying military hardware. But the biggest mistake made by the NATO partnership has been to impose sanctions on Russian trade. The consequences for energy and other vital commodity prices do not bear unnecessary repetition. The knock-on effects for global food prices and the shortages emerging ahead of the winter months are still evolving. Sanctions have become NATO’s suicide note — it is beginning to look like a modern version of Custer’s last stand.  It is surely to the private horror of Western strategists that the sense behind Putin’s strategy is emerging: it is to further the economic consolidation of Asia with the unfettered advantages of fossil fuels traded at significant discounts to world prices. At their own behest, America and its NATO allies are shut out of it entirely. Global fears of climate change and the war against fossil fuels are essentially a Western concept, not shared by the great Asian powers and the Middle East. The hysteria over fossil fuel consumption has led European nations to eliminate their own production in favour of renewables. Consequently, to make up energy shortfalls they have become dependent on imported oil and gas from Russia. And that is what will split Europe away from US hegemony. Unrestricted energy supply is crucial for positive economic outcomes. The result of US-led sanctions is that energy starvation faces all her allies, including Britain and the members of the European Union. As an oil-producing nation herself, America is less affected, her allies suffering the brunt of sanctions against Russian energy supplies.  By committing to policies to lessen climate change without fossil fuel sources of energy, the economic prospects for Europe and the UK are of economic decline.  Only last weekend agreements have been signed between Russia, Iran, and Turkey, with Iran due to become a full member of the Shanghai Cooperation Organisation later this year. Other than Turkey’s wider economic interest, it is essentially about oil. In addition to these developments, Russia’s Foreign Secretary Sergei Lavrov went on to address the Arab League in Cairo. It is clear that Russia is building its relationship with oil producers in the Middle East as well, whose members are faced with declining Western markets and growing Asian demand. Therefore, British policy tied into US hegemony with a self-imposed starvation of energy is untenable. It is worse than being on the losing side. It guarantees economic decline relative to the emerging Asian powers. A future Prime Minister needs to pursue a more pragmatic course than the bellicose stance against Russia and China, currently espoused by Liz Truss. As Britain’s current Foreign Secretary, she is briefed by the UK’s intelligence services, which are closely aligned with their American colleagues. There is groupthink going on, which must be overcome. The interest rate trend and the looming threat of the mother of all financial crises on London’s doorstep requires a leadership strong enough to take on the civil service, always complacent, and guide the wider electorate through some troubling times. Following the financial and currency crisis, mindsets must be radically changed, steered away from perpetual socialisation of economic resources back towards free markets. Which of these two candidates for the premiership see us through? Probably neither, though being less a child of the establishment Liz Truss might offer a slim chance. The task is not impossible. Currencies have completely collapsed before, and nations survived. Instead of being restricted to one or a group of nations, the looming crisis threatens to take out what we used to call the advanced economies in their entirety, so it will be a bigger deal. Fortunately for Britain, her citizens are less likely to riot than their continental cousins. But as a warm-up for the main event, our new leader will have to navigate through growing discontent brought on by rising prices, labour strikes and all the other forms of economic pestilence which bought Margaret Thatcher to power. Tyler Durden Mon, 08/01/2022 - 05:00.....»»

Category: personnelSource: nytAug 1st, 2022

3 Aerospace-Defense Stocks to Watch Amid Supply Chain Challenges

Aerospace-defense stocks are expected to return to their prior growth trajectory, buoyed by solid air traffic trends, amid supply chain challenges. You may keep NOC, GD and LDOS in your wishlist. Increased spending by global air tourists as projected by the International Air Transport Association (IATA) in June is expected to aid commercial jet makers. Also, the recently sanctioned National Defense Authorization Act by the U.S. House has set the stage for companies more focused on the defense business to win more contracts. However, pandemic-induced supply-chain disruption in the U.S. defense electronics space remains a threat to stocks in the aerospace-defense space. Nevertheless, recovering air traffic trends should keep investors interested in this industry. The frontrunners in the aerospace-defense industry are Northrop Grumman NOC, General Dynamics GD and Leidos Holdings LDOS.    About the IndustryThe Zacks Aerospace-Defense industry comprises companies that primarily design and manufacture heavy-built products like commercial as well as military jets and helicopters, tankers and other combat vehicles, missiles, combatant ships as well as auxiliary ships, submarines, bombs, guns, space transportation vehicles, military satellites and a few more. The industry also includes cyber security players who offer information technology (IT) services and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) solutions. A portion of revenues comes from defense contractors, offering spare parts, aircraft modification, ship repair and overhaul services and supply chain management services.3 Trends Shaping the Future of the Aerospace-Defense IndustryImproved Air Traffic Outlook Boosts Prospects: Recovering global air traffic data in recent times has boosted the near-term growth prospects of the industry. As stated in a report published by the International Air Transport Association (IATA) this June, tourists traveling by air globally in 2022 are projected to spend $672 billion – a sizable increase of 78.2% over 2021’s figure. Such impressive projections bode well for commercial aerospace giants, which have long borne the brunt of poor air travel in the form of delayed jet deliveries and, in some cases, cancellation of their orders altogether by airlines. Notably, as of June 2022, airlines are scheduled to take delivery of more than 1,200 aircraft this year, reflecting almost 50% from around 800 in 2020. This should boost the top-line performance of commercial jet manufacturers and aircraft parts making companies, thereby bolstering their near-term growth prospects.Expanding Defense Budget Remains a Growth Catalyst: While the commercial aerospace market has been recovering steadily over the past couple of quarters, the defense side of the industry has stood its ground amid the COVID-19 crisis, cushioned by steady government support. Indeed, expansionary budgetary amendments adopted by the U.S. government for defense in recent times have acted as a major catalyst for this. To this end, it is imperative to mention that the U.S. House passed the $839 billion National Defense Authorization Act, this July, thereby authorizing the U.S. government to spend $37 billion more than what President Joe Biden had requested in his budget for national security spending. Such improved budgetary provisions set the stage for industry players who are more focused on the defense business to win more contracts, which in turn should enhance their top line. Supply Chain Issues May Hurt: Significant supply-chain disruption has been observed in the Aerospace and Defense industry, of late, courtesy of the pandemic-induced lower aircraft demand and restrictions on the movement of people and goods. This primarily affected smaller suppliers, like aircraft parts makers, especially those with heavy exposure to commercial aerospace and the aftermarket business. Although the situation is improving, the entire impact of coronavirus on the global economy and the threat of U.S. defense electronics supply-chain disruption are unlikely to subside soon. Notably, management of Boeing, a major player in this industry, stated in a Reuters report that the company expects supply chain problems to persist almost until the end of 2023, led by labor shortages at mid-tier and smaller suppliers, partly due to the faster-than-expected return of demand. This, in turn, might keep the growth trajectory of the U.S. aerospace and defense industry constricted, to some extent, in the near term.Zacks Industry Rank Indicates Bleak ProspectsThe Zacks Aerospace-Defense industry is housed within the broader Zacks Aerospace sector. It currently carries a Zacks Industry Rank #143, which places it in the bottom 43% of more than 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.The industry’s position in the bottom 50% of the Zacks-ranked industries is due to a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have lost confidence in this group’s earnings growth potential over the past few months. Evidently, the industry’s earnings estimate for the current fiscal year has gone down 17.5% to $4.34 since Mar 31.Before we present a few aerospace-defense stocks that you may want to add to your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.Industry Lags S&P 500 & SectorThe Aerospace-Defense industry has underperformed the Zacks S&P 500 composite as well as its own sector over the past year. The stocks in this industry have collectively lost 36.5% compared with the Aerospace sector’s decline of 22.1%. In contrast, the Zacks S&P 500 composite has gone down 10.7% in the said timeframe.One-Year Price PerformanceIndustry's Current ValuationOn the basis of the trailing 12-month EV/Sales ratio, which is used for valuing capital-intensive stocks like aerospace-defense, the industry is currently trading at 1.65, compared with the S&P 500’s 3.47 and the sector’s 2.09.Over the past five years, the industry has traded as high as 1.82X, as low as 1.34X, and at the median of 1.60X, as the charts show below.EV-Sales Ratio TTM 3 Aerospace-Defense Stocks to Keep in Your WatchlistLeidos Holdings: Based in Reston, VA, Leidos Holdings is a global science and technology leader that serves the defense, intelligence, civil and health markets. Its core capabilities include providing solutions in the fields of cybersecurity; data analytics; enterprise IT modernization; operations and logistics; sensors, collection and phenomenology; software development; and systems engineering. The company won a $291 million worth contract in July to support the Navy's Program Executive Office Integrated Warfare Systems Directorate. Per the terms of the agreement, Leidos will perform a range of support services, including shipboard modernization, curriculum development, training conduct, depot support, technical data, maintenance planning and management.  Such contract wins should significantly boost the company’s top line.The Zacks Consensus Estimate for Leidos Holdings’ 2022 sales implies an improvement of 3.2% from the 2021 reported figure. The company delivered an average earnings surprise of 3.22% in the last four quarters. LDOS currently carries a Zacks Rank #1 (Strong Buy).Price & Consensus: LDOS Northrop Grumman: Based in Falls Church, VA, Northrop Grumman is one of the top U.S. defense contractors in terms of revenues. Its product line is well positioned in high-priority categories, such as defense electronics, unmanned aircraft and missile defense. Northrop successfully completed the third captive flight test of its prototype missile development series recently. This should enhance the company’s position in the missile defense market.Northrop Grumman currently boasts a long-term earnings growth rate of 6.1%. The company delivered an average earnings surprise of 6.7% in the last four quarters.  NOC currently holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.  Price & Consensus: NOC  General Dynamics: Based in Falls Church, VA, General Dynamics is the leading designer and builder of nuclear-powered submarines and a leader in surface combatants and auxiliary ship design and construction for the U.S. Navy. It is also a premier manufacturer and integrator of land combat solutions worldwide along with renowned business jets. The company expects G800 customer deliveries to begin in 2023 while G400 deliveries are anticipated to begin in 2025. This should bolster General Dynamics’ position in the aircraft market.GD boasts a long-term earnings growth rate of 9.8%. The company delivered an average earnings surprise of 3.09% in the last four quarters. General Dynamics currently holds a Zacks Rank #3.Price & Consensus: GD  Just Released: Zacks Top 10 Stocks for 2022 In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022? From inception in 2012 through 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Northrop Grumman Corporation (NOC): Free Stock Analysis Report General Dynamics Corporation (GD): Free Stock Analysis Report Leidos Holdings, Inc. (LDOS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 27th, 2022

Amusing Tales Of A Coal Bottleneck In Germany & The Failure To Plan

Amusing Tales Of A Coal Bottleneck In Germany & The Failure To Plan Authored by Mike Shedlock via MishTalk.com, Germany is increasingly dependent on coal, but river levels are too low to transport it. Let's also compare Germany's failure to plan vs Biden's lack of planning. Shipping News, Coal Edition Here's an amusing story about Germany's increasing dependence on coal via Eurointelligence.  One of the more shocking statistics about German electricity production is that coal constituted some 32% in the third quarter of 2021. Coal is not only the largest single source of power generation in Germany. Its share has been rising, up from 26.4% from a year earlier. The reason is the increase in gas prices. The withdrawal of three nuclear power stations at the beginning of this year, and the remaining three at the beginning of next year, will lead to a further increase in the proportion of coal in energy production. Robert Habeck [Vice-Chancellor of Germany] wants coal to become the fallback in case Russia cuts off the gas. So there could a massive short-term increase in coal production. Except the industry is not ready for it. One big problem is transportation. We reported on the falling levels of the river Rhine, and its huge role for Germany’s supply chain. This is where all the heavy stuff is transported, like coal. Germany has no problems importing coal, but struggles to get the coal to power stations. Apart from low water levels, the capacity of Germany’s logistics industry is being used up to transport wheat and other cereals from Ukraine. The rail system is also overloaded. Transportation infrastructure is fixed in the short run. And since coal production is ultimately doomed, nobody has invested in long-term transportation infrastructure projects, and we presume nobody will. The reason for the lack of investment is the government's plan to phase out coal production by 2030. What they did not see coming is the reversal of the downward trend in global production that started last year and that, we presume, will have continued this year. Habeck’s plan to expand coal production further in case of a Russian gas embargo came as a shock to the industry, as Bild reports. They were not prepared for this. It means the decommissioned coal-fired power stations would have to be dusted off and rekindled. They also haven't invested in staff. Remarkably Stupid in Many Ways Angela Merkel mothballed nuclear power plants to appease the Greens. The Nord Stream II natural gas pipeline is ready to deliver gas but is totally shut down due to sanctions Nord Stream I needs repairs but sanctions limited availability of parts Rather than put the nuclear plants back in production Germany is resorting to more coal but supply constraints hinder getting the coal to the plants. German Greens would rather use more coal than nuclear. Sanctions have driven up the price of natural gas so much that Germany is discussing rationing natural gas. Coal is the single largest method of generating electricity in Germany, 32 percent in the third quarter of 2021 up from 26.4 percent. It's use is undoubtedly higher today. Well Done Germany! Also note Germany's Climate Protection Minister Mandates More Coal to Produce Electricity And Let's Investigate Alleged EU Environmental and Climate Change Progress This is what happens when you mandate green energy and have no legitimate plan to get there.  US vs Germany In the US, president Biden had no realistic plan to phase out fossil fuels but sought to mandate targets anyway. Fortunately, on July 15, I was pleased to report Hooray! Senator Manchin Finally Kills Biden's Build Back Better Initiative Unfortunately, Biden Declares Climate Emergency to demand more green energy. Fortunately, I expect the Supreme Court to nix whatever Progressive nonsense Biden concocts to deal with climate change. See the above link for discussion. *  *  * Please Subscribe to MishTalk Email Alerts. Tyler Durden Sun, 07/24/2022 - 09:20.....»»

Category: blogSource: zerohedgeJul 24th, 2022

"Bitcoin Will Bottom As We Get Closer To The Fed Pivot": Lawrence Lepard

"Bitcoin Will Bottom As We Get Closer To The Fed Pivot": Lawrence Lepard Submitted by QTR's Fringe Finance Friend of Fringe Finance Lawrence Lepard released his most recent investor letter a few days ago with his updated take the Fed, crypto, gold and macro. Larry has joined me for several interviews over the last year and I believe him to truly be one of the muted voices that the investing community would be better off for considering. He’s the type of voice that gets little coverage in the mainstream media, which, in my opinion, makes him someone worth listening to twice as closely.   Larry was kind enough to allow me to share his most recent thoughts. You can read Part 1 of this letter, released days ago, here. Crypto And Bitcoin There was probably no greater poster child for the speculative expansion of this bubble than the enormous growth in the crypto currencies and Bitcoin. From a starting point of only 50 crypto currencies back in 2013, when Bitcoin began to emerge, there are now over 20,000 crypto currencies. Reliable estimates suggest that the entire crypto market was $3 Trillion at its peak in November of 2021; today it is  approximately $866 Billion, or a decrease of 71%. The paper value attributed to these trading vehicles  in such a short period of time is stunning; demonstrating that when crowd psychology chases perceived  easy wealth it can go much further than expected, yet it always ends badly. A perfect example is Dogecoin named after a dog and started as a joke, but it caught favor with celebrities and Elon Musk and went on to achieve a peak market valuation of $87.5 Billion before collapsing 90%. Notably it still trades at a $9 Billion market cap which is $9 Billion too much, in our opinion.  Given the unregulated nature of crypto and the rise of many offshore exchanges, there was a lot of  leverage being used in this space, and there was also a lot of fraud. Many crypto currencies were built  on faulty premises and were nothing more than sophisticated pump and dump schemes. A notable  example is Luna/Terra which hawked an algorithmic stable coin that was designed to give investors a  20% annual yield. How they were able to generate these kinds of returns was never specifically  explained. Like Gold, Bitcoin and cryptos do not provide yield. Thus, for any arranged scheme to provide yield, it clearly would imply that lots of leverage was employed. In our low-rate world where money is  priced too cheaply, hucksters were bound to show up to sell to the masses.   The fraud that was Luna Terra coin traded at a peak market cap of $18B before a run on the bank caused the entire scam to collapse to worthlessness. This is not the only crypto related entity which has collapsed  to worthlessness - Celsius, the hedge fund 3 Arrows Capital, Voyager Digital, and Compass Mining have also collapsed. We believe there is a lot more pain to come.   At the heart of all of this crypto meltdown is “phantom collateral” (i.e., lenders think they have real collateral backing their loan; but alas they don’t, and often the borrower has borrowed from others using  the same phantom collateral. Yet, like in musical chairs, when the music stops and loans are called in – collateral either doesn’t exist or multiple parties have claims on the same collateral, or it was worthless  to begin with. We saw this in the 2008 housing bubble with Collateralized Debt Obligations (CDO) and  CDO squared type scams.  As we saw in this draw down many crypto currency holders also held Bitcoin, and in a leveraged unwind  they were forced to dump their Bitcoin on the market.  Today’s article is not behind a paywall, because I believe its content to be too important - but if you have the means and wish to support my work, I’d love to have you as a subscriber: Subscribe now Bitcoin Is Not Crypto It is important to distinguish between Bitcoin and all other crypto currencies. We strongly oppose all  other crypto currencies, which when boiled down to it are just a bunch of middlemen trying to take their  “toll” on the highway of the blockchain/Bitcoin by playing levered, fiat games. We strongly believe in Bitcoin, and are what the world calls, Bitcoin maximalists.   Bitcoin is a unique technical invention. It is a software protocol and a network of 10s of 1000s of nodes  globally that provides a secure, immutable open ledger (i.e., records can’t be modified). On this network  flows a digital currency that is scarce and will continue to get more scarce overtime as the supply of new  coins decreases. There will only be 21 million Bitcoin in total issued (19.1 million coins have been  issued, thus far). This scarcity and security are obtained by using a blockchain with a proof of work  algorithm which prevents the “double spend” problem. The rules of the network are ironclad,  mathematical and could only be changed with consent of 51% of the decentralized network nodes which  are spread across the world. No human can mess with the pre-coded software formula, and economic  incentives make such a change unlikely. It is just math. Thus, Bitcoin represents, in our view, a digital  form of gold or a sound monetary medium that will be the leading form of payment and store of value in  the future.  Crypto currencies do not have the characteristics of Bitcoin. Most are based upon a Proof of Stake (POS) model which allows the largest holders to set and change the rules. This is a huge deal because it means  that the issuance policies of all other crypto currencies are subject to change by the people at the top of  the chain (the leading stakeholders) – meaning they are centralized, not decentralized like Bitcoin. Take Ethereum for example, it is controlled by a small group and the token supply issuance policy has changed 6 times during its life and counting. We do not trust or believe in any other crypto currencies as a store  of value. It is possible that useful good cryptos will emerge, but with 20,000 to choose from we have no idea which ones are likely to succeed. Furthermore, these are likely to emerge with different use cases  than secure store of value, which is where Bitcoin excels.  Conversely, we are witnessing consistent growth of the Bitcoin network as many are drawn to the  favorable features that we outlined above. As long as adoption and usage continue to grow, when  compared to a fixed supply, it is not hard to see what will happen to price. We think it is sad that the frauds and promotion surrounding many crypto currencies have damaged Bitcoin and scared people away  from the one true technical development which we strongly believe will succeed over the long run.   The schedule below shows an Elliott Wave technical analysis of Bitcoin since 2016. As we can see, there  was an impulse move which launched the coin in late 2020 and now we are in a full- fledged correction. Bitcoin has gone through this cycle several times before at smaller scale.  To review how we have invested in this area, we presently hold roughly 3% of the Fund in the coins and  roughly 14% of the Fund in private companies which provide services related to Bitcoin. Even after this  draw down in the price of Bitcoin, our cost basis in Bitcoin related investments is $3.9 million and they  are currently valued at $7.0 million (roughly 18% of the Fund). So we are well ahead on our Bitcoin  investments. We have been adding to our coin holdings at this level because Bitcoin has only been this  cheap compared to its 200-day moving average for 3% of the days it has existed. We expect the price of Bitcoin to find a bottom as we get closer to the Fed pivot. We still maintain that  it has the most asymmetric upside of any financial asset in the world. We believe that on the other side  of the crypto meltdown, Bitcoin’s strength will grow as it is seen to be the one true crypto currency which  represents an innovation and does what it claims to do. Bitcoin will no longer compete with other cryptos,  it will have won. Some regulation will be required and indeed will likely be a key catalyst to wider adoptions by institutions.   Monetary Chaos: Inflation or Deflation Ever since we pivoted the Fund in 2008 to focus on gold and silver mining stocks, and subsequently  added Bitcoin to the mix, we have been using the term “monetary chaos” to describe the world we are  living in. The Fed’s low interest rate policies and QE have destroyed true price discovery in open markets.    As the chart above shows, the Fed decision to hold interest rates at the zero bound for 7 years, when  coupled with massive QE which fueled credit growth, has created an economy that is so distorted that  nobody knows what the true value of anything is anymore. The Taylor Rule is a model developed by  economist John Taylor which adjusts the FF rate to account for inflation and the GDP output gap. In the  past, the Fed has used it to guide policy. The important take away from this chart is that in today’s  conditions, the Taylor rule suggests that the FF Rate should be almost 8%, a number which would be  devastating to the US economy given the 125% Debt to GDP level.  Of course, the “Everything Bubble” which occurred in all financial assets was not just driven by the Fed,  the US Government helped with its programs to spend freely to counter the COVID driven economic  downturn. The growth in US Treasury debt over the same time frame has been truly extraordinary and it  has accelerated recently. Looking at the chart above, it is hard for an economist or an investor to answer the question: how does  this not end badly? Our society is so leveraged and so addicted to mispriced cheap money that, if the  Fed ever decides to seriously increase the cost of capital in order to defend the integrity of the dollar, the  resulting deflationary collapse is going to rival or exceed the Great Depression (1929-1940).   A higher cost of capital will collapse all risk asset markets and the negative wealth effect creates a  negative feedback doom loop. There will be a mad scramble for dollars and liquidity and prices for  everything will plunge. We are seeing the early signs of that rush to dollars in the DXY, the collapse in  stock markets, housing demand softening, and used car prices correcting. This is exactly what happened  in the 1920’s and 1930’s – the last time the world witnessed the collapse of several sovereign debt  bubbles.   There are only two alternatives for the US: Default on the massive debt load or inflate our way out of  the mess. Historically, inflation has been the more politically palatable choice. The Fed’s Actions Will Work…Until Stuff Breaks Currently, because the inflation problem appears to be the most pressing political issue, the Fed is focused  on taming inflation via demand destruction with interest rate hikes and withdrawals of QE (QT). Let’s  face it, things were very frothy, and the Fed should’ve started this process well over a year ago. Year  over year house prices were up 20% per year. Rent prices year over year were up similarly: 17%.  Unemployment is very low and labor is pushing hard for wage increases to counter higher living costs.  The crypto market was a cornucopia of speculation and price bubbles.  The problem the Fed will face is that this may not work. Some of the inflation is structural and long term  in nature and will only be solved by bringing more supply capacity online. However, adding capacity  requires capital investment and they just raised the price of capital. Not what would be necessary to  encourage new investments.  The Fed knows that part of the inflation problem is “inflationary expectations”. That is, if people expect  inflation, they will spend more quickly thereby creating more demand and driving more inflation. We  think this is why the Fed has been so aggressive with its anti-inflation rhetoric and in slowing the y/y  money supply growth (see chart below).   So a deflationary impulse has been created as seen in the softening of almost all asset classes. Yet, given  the fragility of the levered global system and some of the cracks beginning to emerge (e.g., Japan,  Emerging Markets and some Credit Default Swaps), we also think that the Fed is going to be forced to  reverse course, and probably fairly quickly. As a very wise investor recently described the Fed’s  predicament:  “We are in a period, a temporary period, that will probably last 6 to 12 months of a tightening  in monetary policy. But that will be the correction in the trend. That tightness will produce  weakness in markets and the economy, to be followed by another round of easing.”  - Ray Dalio, June 2022 Recall that the Fed has two formal mandates (full employment and price stability) and one informal  mandate (functioning financial markets). Powell has referred to this third shadow mandate multiple times  including during the March 2020 COVID crisis when the US Treasury bond market went no bid.  Whereupon he instituted extensive monetary stimulus with a “whatever it takes” policy to keep the  Treasury and other markets functioning.  We believe that this short-term deflationary impulse / market correction will be short-lived. It is only a  matter of time until something major breaks in the financial markets. As aggressively as the Fed has  tightened, it will likely have to stimulate just as aggressively when something breaks. This will lead to  even greater monetary debasement.   As one of the wags on Twitter likes to say, you cannot taper a ponzi. In our view, the current deflation  is moving quickly, and this reversal will have to happen faster than the market currently anticipates.  There are multiple signs that the new “tough guy” Fed policy is creating problems which will force them  to pivot. We have seen this movie before from the Fed when QT failed, and a Fed U-Turn was required  as the chart below shows.  As the brilliant macro analyst, Luke Gromen, describes it, the Fed thinks they are operating with a dial,  but in reality, they have more of a nuclear reactor on/off switch. As Luke stated recently:  “Given that severe bond (and equity) market dysfunction has now begun, before the Fed even  officially begins QT, the Fed is left with only a choice of how they want to lose their credibility:  1. Via the stock and bond market crashing before the Fed even starts QT, or;  2. By the Fed stopping tightening and then loosening policy into an inflation spike.” About Larry Lepard Larry manages the EMA GARP Fund, a Boston based investment management firm. Their strategy is focused on providing "Monetary Debasement Insurance". He has 38 years experience and an MBA from Harvard Business School. On Twitter he is @LawrenceLepard Managing Partner and, via email, he is llepard@ema2.com Disclaimer: QTR is long various gold and silver miners and have both long and short exposure to the market through equities and derivatives. I have no position in Larry’s funds. Larry is a subscriber to Fringe Finance and has been on my podcast. The excerpts from Larry’s letter, above, shall not be construed as an offer to sell, or the solicitation of an offer to sell, any securities or services. Any such offering may only be made at the time a qualified investor receives from EMA formal materials describing an offering plus related subscription documentation. There is no guarantee the Fund’s investment strategy will be successful. Investing involves risk, and an investment in the Fund could lose money. The strategy is also subject to the following risks: Currency Risk, Non-US Investment Risks, Issuer Specific Risk. QTR’s Fringe Finance is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber: Subscribe now Tyler Durden Sat, 07/23/2022 - 17:30.....»»

Category: smallbizSource: nytJul 23rd, 2022

Top Research Reports for Visa, Abbott & Salesforce

Today's Research Daily features new research reports on 16 major stocks, including Visa Inc. (V), Abbott Laboratories (ABT) and Salesforce, Inc. (CRM). Friday, July 22, 2022The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Visa Inc. (V), Abbott Laboratories (ABT) and Salesforce, Inc. (CRM). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>>Visa shares are down -2% in the year-to-date period, outperforming Mastercard's -5.2% decline and the S&P 500 index's -22.7% drop. Driving this positive outperformance is the company’s favorable long-term growth outlook, which reflects a combination of attractive buyouts and alliances and investments in technology.A shift in payments to the digital mode is a boon. The coronavirus vaccine rollouts and the gradual revival of consumer confidence will keep driving spending, expanding business volumes in turn. Backed by its strong cash position, it remains committed to boost its shareholder value. Its balance sheet strength is commendable.However, high operating expenses stress the margins. Ramped-up client incentives will dent the top line. Its declining cash volume from the Asia Pacific bothers. Its volumes will likely suffer due to the Russia-Ukraine situation.(You can read the full research report on Visa here >>>)Abbott shares have declined -10.1% over the past year against the Zacks Medical sector's decline of -17.5% and the S&P 500 index's -16.9% pullback. While Abbott is faced with the negative repercussions of a voluntary recall of certain powder formulae produced at one of its U.S. plants, it remins well positioned for robust organic sales growth across core operating segments, barring Nutrition.The Diabetes Care business should continue to benefit from the growing sales of sensor-based continuous glucose monitoring system, FreeStyle Libre. The zacks analyst is particularly upbeat about the receipt of FDA clearance for the company’s FreeStyle Libre 3 system in May 2022. Over the past year,(You can read the full research report on Abbott here >>>)Salesforce shares have enjoyed a nice bounce back in recent days, but the stock is still down -28.5% in the year-to-date period vs. -38.8% for the Zacks Tech sector and -22.7% for the S&P 500 index. The biggest worry weighing on the stock is uncertainty about technology spending that remains a headwind for the entire software group in the current uncertain macro backdrop. Also weighing on near-term profitability are unfavorable currency fluctuations and increasing investments in international expansions and data centers.However, the company is benefiting from a robust demand environment as customers are undergoing a major digital transformation. The rapid adoption of its cloud-based solutions is driving demand for its products. Salesforce’s sustained focus on introducing more aligned products as per customer needs is driving its top-line.Continued deal wins in the international market is another growth driver. Furthermore, the recent acquisition of Slack would position the company to be a leader in enterprise team collaboration solution space and better compete with Microsoft’s Teams product(You can read the full research report on Salesforce here >>>)Other noteworthy reports we are featuring today include Wells Fargo & Company (WFC), Intuit Inc. (INTU), and Centene Corporation (CNC).Sheraz Mian Director of ResearchNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadVisa (V) Banks on Renewed Agreements, Rising Costs HurtOrganic Sales Gain, Rise in Fiscal View Aid Abbott (ABT)Digital Transformation and Acquisitions Aid Salesforce (CRM)Featured ReportsCost Control Aids Wells Fargo (WFC) Amid Declining RevenuesPer the Zacks analyst, Wells Fargo's cost-saving measures like branch closures and headcount reduction will help offset falling revenue trends due to business divestures and volatile fee income.Intuit (INTU) Rides on Product Refresh, Higher SubscriptionsPer the Zacks analyst, Intuit is benefiting from frequent product refreshes, which help it to gain customers. Moreover, increase in subscriptions is driving stable revenue growth for the company.Centene (CNC) Rides on Growing Revenues Amid Rising CostsPer the Zacks analyst, solid Medicaid business, several contract wins and acquisitions continue to drive the company's revenues. However, elevated expenses remain a concern.General Mills (GIS) Gains From Focus on Accelerate StrategyPer the Zacks analyst, General Mills is gaining from its Accelerate strategy, as part of which it is competing efficiently via brand building, investing in saving initiatives and reshaping portfolio.Cost Management & Regulated investment Aid Exelon (EXC)Per the Zacks analyst Exelon's cost management initiatives will have positive impact on margins and its planned $29B investments through 2025 will strengthen its operation.Biogen's (BIIB) Upcoming Product Launches May Revive GrowthThe Zacks analyst says that potential new product launches like lecanemab, zuranolone and additional biosimilars can help revive growth at Biogen, which is facing multiple challenges at present.Nokia (NOK) Rides on Healthy Demand Trends, 5G TractionPer the Zacks analyst, Nokia is poised to benefit from the increasing demand for next-generation connectivity as it aims to accelerate product roadmaps and cost competitiveness through 5G investments.New UpgradesTechnology, DARTs, High Rates Aid Interactive Brokers (IBKR)Per the Zacks analyst, Interactive Brokers' focus on developing of proprietary software have resulted in higher revenues and daily average revenue trades (DARTs). Rising rates will aid the top line.Reliable Assets, Free Cash Flow Plan Aid CNX Resources (CNX)Per the Zacks analyst CNX Resources' Marcellus and Utica shales assets will continue to boost production and long-term plan to generate $3.3 billion free cash flow will help to fortify balance sheet.Higher Gas Processing Capacities to Aid Crestwood (CEQP)The Zacks analyst likes Crestwood since the master limited partnership has entered into highly synergetic transactions that will boost its natural gas processing capabilities in Delaware. New DowngradesLow Commodity Prices & High Expenses to Hurt Wheaton (WPM)The Zacks Analyst is concerned that decline in the commodity prices as well as higher expenses related to mine exploration, development and acquisitions will impact Wheaton's results.Elevated Costs to Hurt DICK'S Sporting's (DKS) Gross MarginPer the Zacks analyst, DICK'S Sporting witnesses soft gross margin trend on elevated supply chain costs, rising occupancy costs and the current geopolitical issues. This is likely to persist in 2022.Inflationary Pressures Hurt BJ's Restaurants (BJRI) ProspectsPer the Zacks analyst, BJ's Restaurants has been witnessing elevated costs owing to higher inflation in food and labor costs. Also, decline in traffic from pre-pandemic levels is a concern. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Wells Fargo & Company (WFC): Free Stock Analysis Report Abbott Laboratories (ABT): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report Salesforce Inc. (CRM): Free Stock Analysis Report Intuit Inc. (INTU): Free Stock Analysis Report Centene Corporation (CNC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 23rd, 2022

Bitso"s $2 billion rise shows the power of crypto innovation in Latin America

Bitso "paved the way for much of the crypto ecosystem in Latin America," one expert said, and helped drive El Salvador's bitcoin experiment. Kazi Awal/InsiderDaniel Vogel, Bitso's cofounder and CEO.Bitso Bitso is Latin America's leading crypto exchange, with over 4 million users across five nations. In Latin America, the firm hopes crypto can help with high inflation and devalued currencies. This article is part of "Master Your Crypto," a series from Insider helping investors improve their skills in and knowledge of cryptocurrency. El Salvador has famously been rolling out a crypto wallet to the nation's 6.5 million citizens. The digital wallet is run in part by a startup in Mexico called Bitso, whose name is a mash-up of bitcoin and peso. If you're tracking the ascendance of crypto in Latin America, Bitso is the startup to watch.The Quantcast and Harvard Business School alumnus Daniel Vogel launched the crypto exchange in 2014, long before market downturns in 2017 and this year rattled trust in cryptocurrencies around the world. After Bitso secured seven funding rounds totaling $314 million by mid-2021, its valuation topped $2 billion, cementing the company as Latin America's first crypto unicorn, startup-speak for passing the $1 billion-valuation mark. It allows users to trade various coins using pesos, among other features, including international money transfers."There's no doubt Bitso paved the way for much of the crypto ecosystem in Latin America, starting before mainstream investors understood the potential for decentralized finance," Claire Diaz-Ortiz, an angel investor focused on Latin America at the firm VC3, told Insider.While US crypto is a nice-to-have, it's a need-to-have in Latin AmericaA virtual-currency ad on March 17 in Buenos Aires, Argentina.Ricardo Ceppi/Getty ImagesVogel sought to fill a hole in Mexico's banking system, citing a significant number of unbanked citizens with little affordable access to financial mechanisms like money transfers.Eight years later, Bitso is one of the only internationally regulated crypto platforms in Latin America, offering low-cost remittance options — the ability for migrants to send digital currency back home — and 35 cryptocurrencies to its 4 million users in Mexico, El Salvador, Brazil, Colombia, and Argentina. The latter three of those countries are among the 20 nations with the most crypto adoption, according to a 2021 report from the blockchain-data firm Chainalysis.While crypto disciples may be largely driven by ideology, Latin Americans may have immediate fundamental needs digital currencies can help solve, as the BBC noted in April.Take Argentina, for example, whose previous economic crises have sent its citizens' trust in its financial institution plummeting in recent decades. The country is dealing with an annual inflation rate of 61%, Bloomberg reported. The latest US measure, for comparison, was 9% — and that was a record thanks to supply-chain issues and surging oil prices.Bitso moved into Argentina in 2020. In that market, Diaz-Ortiz said, if you work for an overseas company that deposits your salary in a local bank, your dollar will be turned into pesos at about 130 pesos per dollar, rather than the free market value of 300 pesos or more per dollar. Crypto "is arguably a smarter choice than the Argentine peso," she added.About 6 billion people worldwide are estimated to have a bank account, according to a 2021 report from the World Bank.Throughout the world, at least 2 billion people either lack a bank account or don't have access to a full suite of banking tools, Diaz-Ortiz said, adding: "Most of those people live in countries with economic systems that look like nothing like the USA and could benefit from decentralized-finance solutions."But crypto is likely not the end-all-be-all solution — especially as sufficient adoption stalls, national debts balloon, and the industry remains riddled with fraud and theft.Latin American market isn't immune to crypto's strugglesA Chivo sign in El Salvador.Camilo Freedman/NurPhoto via Getty ImagesChivo, the name of El Salvador's digital wallet and slang for "cool," was supposed to be an easy gateway into crypto for the nation's population and an integral step in the government's experiment with a digital national currency.But it saw lackluster use from individuals and merchants, hacking issues, and technical problems.Sixty-one percent of Salvadorans abandoned the app after downloading and withdrawing the $30 sign-up bonus that came with it, according to an April report from the US's National Bureau of Economic Research.And like any crypto player, Bitso has faced chilly winds in the crypto winter. It laid off 80 of its 700 employees in May alongside other Latin American crypto startups, citing the need to rethink skills.Despite the wobbly start, Diaz-Ortiz said Latin America was still primed for crypto adoption."Ultimately, the best solutions in decentralized finance are always going to come from founders experiencing these problems and using their resilience to innovate," she said. Hence why, she added, Latin America is such a great place for web3 right now.This article is intended to provide generalized information designed to educate a broad segment of the public; it does not give personalized investment, legal, or other business and professional advice. Before taking any action, you should always consult with your own financial, legal, tax, investment, or other professional for advice on matters that affect you and/or your business.Read the original article on Business Insider.....»»

Category: worldSource: nytJul 20th, 2022

Los Angeles Port Boss: Fix Rail Service Or Risk "Nationwide Logjam"

Los Angeles Port Boss: Fix Rail Service Or Risk "Nationwide Logjam" By Greg Miller of FreightWaves The Port of Los Angeles released record results for June on Wednesday. Neighboring Port of Long Beach followed suit with its own records later in the day. Gene Seroka, the executive director of the Port of Los Angeles, also highlighted a major risk to the country’s supply chain if rail service is not improved. The shortfall of rail service to handle import cargo — which is causing more containers to pile up at terminals for longer — is front and center, he said during a press conference. “All eyes are focused on improving the rail product. Full stop. The bottom line is that we must take action on this issue immediately to avoid a nationwide logjam,” he warned. Best June ever for Los Angeles throughput The Port of Los Angeles handled 876,611 twenty-foot equivalent units of total throughput for last month, making it the highest-performing June ever. Total throughput was up less than 1% year on year (y/y) but up 15% versus the prior five-year average for that month. Exports came in at 93,890 TEUs, down 2% y/y, with 338,041 empty containers shipped, up 8% y/y. There were 444,680 TEUs of imports, down 5% y/y but up 12% from the trailing five-year average. It was the second-best June on record for Los Angeles imports. June imports were down 11% sequentially — by 55,280 TEUs — from imports in May. However, ships with a total capacity of 91,664 TEUs were waiting in Los Angeles’ offshore queue at the end of June. Asked during the press conference whether the decline in June versus May was due to rail issues that limited terminals’ capacities and their ability to unload ships faster, Seroka replied: “If we’re not moving in sync, we’ve got to handle containers more than once and that takes time and money and it takes efficiencies out of the system. So, if we have these 20,000 aging rail containers [dwelling nine days or more] on the ground, sure, it causes problems.” Terminal congestion ‘nowhere near’ Q4 ‘dire straits’ Seroka maintained that current conditions “are nowhere near the inundation of containers on these terminals in the fourth quarter [of 2021]. I don’t see us in the dire straits I witnessed last year ahead of the holiday season.” He emphasized that the total number of import containers on the port — 71,013 as of Wednesday — was down 25% from peak levels in late October. (However, port statistics show that that there haven’t been this many import containers in Los Angeles since Nov. 10.) Seroka also stressed that long-dwelling containers are now mostly bound for rail transport, which was not the case in Q4 2021. “The rail cargo sitting nine days or longer now makes up 75% of all our aging cargo, which is why I’m advocating that we need to kick it into gear to get this problem solved. “Everyone has a role to play. Cargo owners must pick up their boxes at inland rail terminals faster than they are today. The railroads need to get crews and engine power and rail cars back to the West Coast faster. And the marine terminals, shipping lines and ports need to provide key data to help prioritize the evacuation of this cargo.” Peak season should be ‘strong’ but ‘tapered’ Seroka remains confident on peak season import volumes despite macroeconomic headwinds from inflation and inventories.   “Even though some retailers have high inventories and may look to discount goods, I expect imports to remain strong — although a tapered version of last year,” he said. Index of ocean bookings from all destinations to Los Angeles by date of scheduled departure. Index: 100 = Jan. 2019. Wednesday’s reading: 143 “The volume you’re seeing coming through right now was ordered about three or four months ago. The cargo that’s going to come over during the next couple of months is going to look different. “Looking at the back half of the year, we’ll be seeing back-to-school, fall fashion, Halloween and the all-important year-end holiday goods coming across the Pacific,” he said. “During the pandemic, we saw many Americans buying goods they don’t normally buy. A new couch. A new refrigerator. In my case, I picked up golf again and bought new clubs. It really didn’t help my game. We were spending on goods we don’t necessarily repeat buying. So, you’ll start to see those level off but other [buying] will continue.” Record June for Port of Long Beach The Port of Long Beach reported Wednesday that it handled total throughput of 835,412 TEUs last month, up 15.3% y/y, making it the strongest June in the port’s history. Exports fell 1.4% y/y to 115,303 TEUs and empties surged 21.6% to 304,433 TEUs. Long Imports came in at 415,677 TEUs. That’s down 5% sequentially from May, but up 16.4% y/y, making it the port’s best June ever for imports. Tyler Durden Fri, 07/15/2022 - 08:10.....»»

Category: personnelSource: nytJul 15th, 2022

The Corporate Layoffs Have Started And Leftist Big Tech Is Leading The Pack

The Corporate Layoffs Have Started And Leftist Big Tech Is Leading The Pack There are two major forces at work within the US economy today that pull in different directions but end up in the same place:  These forces are price inflation caused by central bank stimulus along with supply chain instability and recession triggered by rising interest rates.   Immense corporate and consumer debt also play a role, but this ties in directly with the interest rate issue. In other words, we are looking at a classic stagflationary scenario amplified by years of fiat dollar printing by the Federal Reserve.  The only element that has been missing is rising unemployment, until now.   The word “recession” is being used liberally lately and there is a good reason for this – It is vague and gives the public little to no idea of what to expect or how bad the economic downturn could get.  It is also a convenient distraction from the much more dangerous issue of rising prices.  If a “recession” is on the way, won't this mean prices will fall?  Not necessarily, at least not anytime soon.   With high retail prices leading to less purchasing power among US consumers and less spending, corporations are going to have to cut costs somewhere.  They can only raise prices so high for goods and services before they will inevitably turn to mass layoffs to gain breathing room.  And, the first companies that are going to have to face the music are the most frivolous business models that don't produce necessities (i.e. Big Tech).   At least 143 US tech companies have laid off around 24,000 employees this year and this is just the beginning.  There are the more publicized layoffs at streaming services like Netflix which fired around 500 regular workers and canceled operations with numerous contractors.  The company lost 200,000 subscribers in the first quarter of this year and expects to lose 2 million more subscribers in the near term.  It's another case of “Get Woke, Go Broke,” but it's also a reflection of the changing tech environment as inflation in necessities strangles consumer wallets.  There is no doubt Netflix will see continued layoffs through the rest of this year.   Then there are the more quietly publicized employment issues at social media giants like Facebook and Twitter.  Twitter announced mass layoffs were in the works last week as uncertainty over the company's acquisition by Elon Musk grew.  Now that it is clear that Musk will not be buying the platform, they face serious decisions on cuts in order to remain afloat as their stock price tanks.  So far, Twitter has laid off over 30% of its talent division and announced a hiring pause.  In a recent leaked memo, Facebook executives have informed managers that “low performance” employees have no place at the company and will need to be cut, indicating that a philosophy of meritocracy is returning to the otherwise woke world of social media.   Facebook has been bleeding money for years now and in February it's stock prices plummeted after it announced that it has lost subscribers for the first time in its 18 year history.  The shares have collapsed by 50% since February and are still dropping.  Mark Zuckerberg personally lost at least $32 billion in stock holdings in February alone.  Multiple Big Tech and high concept companies that rely heavily on tech have announced hiring freezes or layoffs in the past month, including Apple, Uber, Lyft, Snap, Hopin and Coinbase.   Financial problems at proto-news websites like Buzzfeed and Vox have been well known for months as the venture capital artificially propping up these companies has finally run out.  But extensive losses have been felt throughout the corporate media and leftist web media in particular.  Even CNN is floundering with its abrupt cancellation of streaming service CNN+ and the layoff of staffers.  Most or all of these corporations represent peripheral digital products and services that the vast majority of Americans have no use for and which serve no core purpose. A moderate recession might actually be useful is separating the wheat from the chaff within the current corporate climate, and with inflation rising there is the good chance that the Federal Reserve will not choose to step in to pour more stimulus dollars into dead companies that are dragging the economy down.  Just because they did it in 2008/2009 does not mean they will do it now.  However, it's unlikely that the downturn will remain limited and merely clean out bad business.  The word “recession” is misleading; what we are really facing is a historic breakdown of the system which will affect the majority of the public.   If the current stagflation trend continues, layoffs will accelerate into the end of this year and into 2023, likely on a scale similar to 2009.  Yet prices on most necessities will remain high and it will be the worst of both economic worlds.  Big tech companies will only survive with extreme changes to their customer and performance models as advertising dollars dry up completely.  Either that, or they will require some kind of government assistance beyond what they have already received, though this will only expose them to more consumer scrutiny and more losses in their user numbers. It is perhaps the one bright spot in an otherwise dismal economic forecast; that some of these platforms which have politically abused their customers for so long will finally suffer some karma.     Tyler Durden Thu, 07/14/2022 - 21:20.....»»

Category: worldSource: nytJul 14th, 2022

Philips (PHG) Expands AI Portfolio With SmartSpeed Solution

Koninklijke Philips (PHG) announces that its latest AI-powered MR acceleration software SmartSpeed will be showcased as part of the AI-powered precision diagnosis portfolio at ECR. Koninklijke Philips (PHG) recently announced that its latest AI-powered MR acceleration software SmartSpeed has received U.S. Food and Drug Administration’s (FDA) 510(k) clearance. The new software will be showcased as part of an AI-powered precision diagnosis portfolio at the European Congress of Radiology (ECR).The rising global aging population, high levels of clinical burnout and increasing shortage of staff are putting radiology departments under increasing pressure to improve performance, productivity and profitability.Philips SmartSpeed increases image resolution by 65% and scans three times faster compared to conventional MR scans available in the market currently.It helps in improving diagnostic decisions as it supports 97% of current clinical protocols like advanced contrasts and diffusion-weighted imaging and quantitative imaging such as T1 or T2 mapping brain, liver, heart of musculoskeletal.Koninklijke Philips N.V. Price and Consensus Koninklijke Philips N.V. price-consensus-chart | Koninklijke Philips N.V. QuotePhilips Banks on AI-based Solutions to Drive Top LinePhilips has been unable to meet the rising demand with proper supply due to the severe global shortage of chips, which has disrupted the manufacturing of life-saving medical devices and the supply chain system.The chip shortage is happening at a time when chronic diseases are on the rise again, while wars and economic issues globally are posing a severe threat to people’s lives.Due to the current macro-economic scenario, growth prospects are sluggish in the healthcare market worldwide, as evident from the negative share price movement of Philips and its peers operating in the broader medical sector, including Aclaris Therapeutics ACRS, Abeona Therapeutics ABEO and General Electric GE subsidiary GE Healthcare.Philips’ short-term growth looks tepid, and its shares currently have a Zacks Rank # 4 (Sell). The company's shares have fallen 55% in the year-to-date (YTD) period compared with the Zacks Medical-Products industry and the Medical sector’s decline of 32.1% and 18.1%, respectively.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Aclaris shares have fallen 8.7% in the YTD period, compared with the Zacks Medical - Drugs industry’s decline of 21.4%.Abeona shares have plunged 34.5% in the YTD period compared with the Zacks Medical - Biomedical and Genetics industry’s decline of 20.6%.General Electric shares have slumped 38.9% in the YTD period compared with the Zacks Diversified Operations industry’s decline of 29.7%.However, the Russia-Ukraine war and the pandemic have exposed various issues in healthcare and highlighted how new trending technologies like AI and virtual care solutions are required to support patients in these trying times effectively.Effective crisis management has given rise to healthcare companies like Philips integrating the benefits of the cloud and software as a service (SaaS) in the healthcare industry.The development of Philips’ latest AI-based products will aid in providing diagnosis faster, even through virtual sessions to patients who have no access to hospitals.Philips SmartSpeed is the latest addition to the company’s AI-driven, smart, connected imaging and smart workflow solutions that help in solving the problems plaguing the healthcare industry, especially the radiology staff. The latest AI- software helps in achieving the company’s quadruple aim of improving diagnostic outcomes and enhancing patient and staff experiences while simultaneously reducing healthcare costs overall amid rising inflation.The development of its AI-based solutions separates the company’s services from its peers and is likely to aid the company in winning market share as the healthcare industry bounces back in the long run. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report General Electric Company (GE): Free Stock Analysis Report Koninklijke Philips N.V. (PHG): Free Stock Analysis Report Abeona Therapeutics Inc. (ABEO): Free Stock Analysis Report Aclaris Therapeutics, Inc. (ACRS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJul 13th, 2022

Democrats Demand $650 Billion In IMF Aid For Ukraine War Relief – In The Form Of SDRs

Democrats Demand $650 Billion In IMF Aid For Ukraine War Relief – In The Form Of SDRs As the discussion on Central Bank Digital Currencies (CBDCs) has grown over the past two years, one issue consistently pops up in relation – The creation of a global currency system.  And along with that idea there is always another term mentioned – Special Drawing Rights (SDRs).  In the face of multiple global crisis events, the IMF is enjoying an elevated position as the “problem solver” most nations turn to for help.  The Ukraine war is no exception. It is perhaps not surprising that Democrat leaders in the US are calling for even more money for the Ukraine war, but what is interesting is that this time they want the IMF to step in with SDRs.  The global banking institution already created $650 billion in SDRs last year for “covid relief,” but most countries used the mechanism to purchase vaccine stockpiles.  Now, with price inflation dragging national economies down and supply chain problems continuing to stifle trade and retail, the issuance of fiat stimulus by central banks has taken a back seat to interest rate hikes. Central banks were the lender of last resort, but now the IMF is being presented as the new monetary savior.  The more SDRs the IMF creates and issues, the more the trade mechanism proliferates and the more acceptable it becomes as a possible replacement for the US dollar as the world reserve currency.  Each new crisis brings global banks closer to their goal; the introduction of national digital currencies and the SDR basket becoming the defacto reserve trading tool for the world.       Billions upon billions in international aid has already flooding into Ukraine, some of it for civilian relief and some of it for weapons.  The US alone has spent at least $54 billion in the past couple months in Ukraine.  That's around the same amount of money America spent during the first year of the war in Iraq, but Democrats keep demanding more.   As Bloomberg notes, the call for exceeding the $650 billion SDR issuance from last August isn’t an entirely new one. Back in 2020, just before Biden’s election, former Treasury Secretary Larry Summers, who advised the campaign on economic policy, and former U.K. Prime Minister Gordon Brown called for an issuance of “well over $1 trillion.” This time, the claim is that relief is needed for Ukraine AND any other countries affected by conditions caused by the conflict.  This demand is led by Representative Pramila Jayapal, the head of the Progressive Caucus, and Senator Elizabeth Warren: “Russia’s war on Ukraine has decimated the Ukrainian economy and disrupted the global food and energy supply, contributing to millions more struggling with hunger and poverty worldwide,” Jayapal said in a statement. “The administration must act without delay, to meet the dire need, demonstrate global leadership, and strengthen the effectiveness and credibility of our multilateral institutions in the face of this crisis.” This is of course rather arbitrary.  Joe Biden seems to think inflation in the US is being caused by Russia and the Ukraine war; does this mean the US should get an influx of SDRs?  This kind of faulty argument will surely be made by numerous countries in order to get a piece of the SDR pie. As a reminder, the creation of any amount up to about $650 billion is a proposal that the US can put forward at the IMF board without congressional authorization, because the US allocation wouldn’t exceed its current quota, or share, of the fund. This bigger issue, however, is the increasing economic dependency of national governments on globalist institutions with each passing crisis.  Why do Democrats specifically want aid denominated in SDRs?  Because funding allocations in the US have already hit their maximum and new funding bills are being defeated in the Senate.  At the IMF, there are no checks and balances.  They can ask for almost any amount of money in the form of SDRs without oversight.  There are always strings attached  when it comes to the IMF, and in exchange for SDRs, the globalists will certainly want more centralized control. Tyler Durden Wed, 07/13/2022 - 06:55.....»»

Category: worldSource: nytJul 13th, 2022