Archive for Economics & Fundamentals – Page 117

30 Mar

The US and European stock indices rise as the banking crisis eases

By JustMarkets

The US stock indices rose sharply on Wednesday as concerns about stress in the banking sector eased, while upbeat earnings reports and growing expectations that the Federal Reserve will halt interest rate hikes further boosted sentiment. As the stock market closed yesterday, the Dow Jones Index (US30) increased by 1.00%, and the S&P 500 Index (US500) added 1.42%. The NASDAQ Technology Index (US100) jumped by 1.79%.

Micron Technology Inc (MU) was up more than 7% after the chipmaker predicted that artificial intelligence would significantly boost its sales in 2025. Lululemon Athletica (LULU) Inc’s papers jumped by 12.9% after an optimistic outlook for its annual results, giving the Nasdaq a significant boost.

For now, banking stress in the United States seems to be under control. Leading US banking regulators said Monday that they plan to tell Congress that the overall financial system remains on solid footing, despite recent bank failures. On Tuesday, Michael Barr, the Fed’s vice chairman for oversight, told the Senate Banking Committee that Silicon Valley Bank’s problems stemmed from “terrible” risk management, suggesting it could be an isolated incident.

Canadian Finance Minister Chrystia Freeland’s promise of a fiscally prudent budget in the face of high inflation has disappointed some strategists who had hoped for restrained spending by the government. Analysts said increased spending in Canada’s budget leaves the government with fewer reserves to fight a possible economic downturn, and it could prevent the Bank of Canada from moving to cut interest rates. Analysts are concerned that the deficit, estimated at 43 billion Canadian dollars ($31.7 billion) from 2022-2023, or 1.5% of GDP, is larger than it should be at this stage of the economic cycle.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) increased by 1.23%, France’s CAC 40 (FR40) added 1.36%, Spain’s IBEX 35 (ES35) was up by 1.41%, and the British FTSE 100 (UK100) closed up by 1.07%.

ECB spokesman Kazimir said yesterday that the ECB should keep a close eye on the situation and be ready to take any steps to ensure price and financial stability in the Eurozone. For now, the ECB is expected to continue to raise rates aggressively at its next meeting.

Oil rose slightly on Wednesday as supply shortage fears following an unexpected drop in US crude inventories and the halt of oil exports from Iraqi Kurdistan were partially offset by a smaller-than-expected decline in Russian production. Russian oil production fell by about 300,000 BPD in the first three weeks of March, below the planned 500,000 BPD cut. The US crude inventories unexpectedly declined last week, the Energy Information Administration said Wednesday, as refineries ramped up production after the maintenance season and US imports declined.

Asian markets rose steadily yesterday. Japan’s Nikkei 225 (JP225) gained 1.33%, China’s FTSE China A50 (CHA50) added 0.17%, Hong Kong’s Hang Seng (HK50) jumped by 2.06%, India’s NIFTY 50 (IND50) gained 0.76%, and Australia’s S&P/ASX 200 (AU200) ended Wednesday with a 0.23% gain.

Broader Asian stocks rose yesterday as US regulators’ comments confirmed the strength of the banking system and blamed the recent Silicon Valley Bank collapse on mismanagement rather than systemic risk. But most Asian stocks started lower in early trading Thursday, with Chinese indices under pressure over concerns about slowing economic growth and deteriorating Sino-US relations, while Australian shares rose on the prospect of an imminent pause in the Reserve Bank’s rate hike. Analysts lowered their expectations for Australia’s interest rate cap because of signs that inflation has peaked and economic growth has slowed. But the RBA is expected to raise rates one more time before announcing a pause.

Alibaba has announced plans to become a holding company, splitting its divisions into six independent companies. Each of these companies will be able to seek outside financing and will eventually be spun off. Alibaba’s action was seen as reassuring investors and regulators, leading to a jump in stock prices. It is hoped that this could be a sign that the regulatory measures that have dragged down the Chinese economy are ending.

S&P 500 (F) (US500) 4,027.81 +56.54 (+1.42%)

Dow Jones (US30)32,717.60 +323.35 (+1.00%)

DAX (DE40) 15,328.78 +186.76 (+1.23%)

FTSE 100 (UK100) 7,564.27 +80.02 (+1.07%)

USD Index 102.68 +0.25 (+0.24%)

Important events for today:
  • – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+2);
  • – Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
  • – German Consumer Price Index (m/m) at 15:00 (GMT+2);
  • – US GDP (q/q) at 15:30 (GMT+2);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
  • – US Treasury Sec Yellen Speaks at 22:45 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
29 Mar

Scientists are using machine learning to forecast bird migration and identify birds in flight by their calls

By Miguel Jimenez, Colorado State University

With chatbots like ChatGPT making a splash, machine learning is playing an increasingly prominent role in our lives. For many of us, it’s been a mixed bag. We rejoice when our Spotify For You playlist finds us a new jam, but groan as we scroll through a slew of targeted ads on our Instagram feeds.

Machine learning is also changing many fields that may seem surprising. One example is my discipline, ornithology – the study of birds. It isn’t just solving some of the biggest challenges associated with studying bird migration; more broadly, machine learning is expanding the ways in which people engage with birds. As spring migration picks up, here’s a look at how machine learning is influencing ways to research birds and, ultimately, to protect them.

Sandhill cranes flying above the Platte River in Nebraska.
shannonpatrick17/Flickr, CC BY

The challenge of conserving migratory birds

Most birds in the Western Hemisphere migrate twice a year, flying over entire continents between their breeding and nonbreeding grounds. While these journeys are awe-inspiring, they expose birds to many hazards en route, including extreme weather, food shortages and light pollution that can attract birds and cause them to collide with buildings.

Our ability to protect migratory birds is only as good as the science that tells us where they go. And that science has come a long way.

People in Alaska, Washington state and Mexico explain what migratory birds mean to them.

In 1920, the U.S. Geological Survey launched the Bird Banding Laboratory, spearheading an effort to put bands with unique markers on birds, then recapture the birds in new places to figure out where they traveled. Today researchers can deploy a variety of lightweight tracking tags on birds to discover their migration routes. These tools have uncovered the spatial patterns of where and when birds of many species migrate.

However, tracking birds has limitations. For one thing, over 4 billion birds migrate across the continent every year. Even with increasingly affordable equipment, the number of birds that we track is a drop in the bucket. And even within a species, migratory behavior may vary across sexes or populations.

Further, tracking data tells us where birds have been, but it doesn’t necessarily tell us where they’re going. Migration is dynamic, and the climates and landscapes that birds fly through are constantly changing. That means it’s crucial to be able to predict their movements.

Using machine learning to forecast migration

This is where machine learning comes in. Machine learning is a subfield of artificial intelligence that gives computers the ability to learn tasks or associations without explicitly being programmed. We use it to train algorithms that tackle various tasks, from forecasting weather to predicting March Madness upsets.

But applying machine learning requires data – and the more data the better. Luckily, scientists have inadvertently compiled decades of data on migrating birds through the Next Generation Weather Radar system. This network, known as NEXRAD, is used to measure weather dynamics and help predict future weather events, but it also picks up signals from birds as they fly through the atmosphere.

A tall metal tower with a spherical radar receiver on top.
A NEXRAD radar at an operation center in Norman, Okla.
Andrew J. Oldaker/Wikipedia, CC BY-SA

BirdCast is a collaborative project of Colorado State University, the Cornell Lab of Ornithology and the University of Massachusetts that seeks to leverage that data to quantify bird migration. Machine learning is central to its operations. Researchers have known since the 1940s that birds show up on weather radar, but to make that data useful, we need to remove nonavian clutter and identify which scans contain bird movement.

This process would be painstaking by hand – but by training algorithms to identify bird activity, we have automated this process and unlocked decades of migration data. And machine learning allows the BirdCast team to take things further: By training an algorithm to learn what atmospheric conditions are associated with migration, we can use predicted conditions to produce forecasts of migration across the continental U.S.

BirdCast began broadcasting these forecasts in 2018 and has become a popular tool in the birding community. Many users may recognize that radar data helps produce these forecasts, but fewer realize that it’s a product of machine learning.

BirdCast provides summaries of radar-based measurements of nocturnal bird migration for the continental U.S., including estimates of numbers of birds migrating and their directions, speeds and altitudes.

Currently these forecasts can’t tell us what species are in the air, but that could be changing. Last year, researchers at the Cornell Lab of Ornithology published an automated system that uses machine learning to detect and identify nocturnal flight calls. These are species-specific calls that birds make while migrating. Integrating this approach with BirdCast could give us a more complete picture of migration.

These advancements exemplify how effective machine learning can be when guided by expertise in the field where it is being applied. As a doctoral student, I joined Colorado State University’s Aeroecology Lab with a strong ornithology background but no machine learning experience. Conversely, Ali Khalighifar, a postdoctoral researcher in our lab, has a background in machine learning but has never taken an ornithology class.

Together, we are working to enhance the models that make BirdCast run, often leaning on each other’s insights to move the project forward. Our collaboration typifies the convergence that allows us to use machine learning effectively.

A tool for public engagement

Machine learning is also helping scientists engage the public in conservation. For example, forecasts produced by the BirdCast team are often used to inform Lights Out campaigns.

These initiatives seek to reduce artificial light from cities, which attracts migrating birds and increases their chances of colliding with human-built structures, such as buildings and communication towers. Lights Out campaigns can mobilize people to help protect birds at the flip of a switch.

As another example, the Merlin bird identification app seeks to create technology that makes birding easier for everyone. In 2021, the Merlin staff released a feature that automates song and call identification, allowing users to identify what they’re hearing in real time, like an ornithological version of Shazam.

This feature has opened the door for millions of people to engage with their natural spaces in a new way. Machine learning is a big part of what made it possible.

“Sound ID is our biggest success in terms of replicating the magical experience of going birding with a skilled naturalist,” Grant Van Horn, a staff researcher at the Cornell Lab of Ornithology who helped develop the algorithm behind this feature, told me.

Taking flight

Opportunities for applying machine learning in ornithology will only increase. As billions of birds migrate over North America to their breeding grounds this spring, people will engage with these flights in new ways, thanks to projects like BirdCast and Merlin. But that engagement is reciprocal: The data that birders collect will open new opportunities for applying machine learning.

Computers can’t do this work themselves. “Any successful machine learning project has a huge human component to it. That is the reason these projects are succeeding,” Van Horn said to me.The Conversation

About the Author:

Miguel Jimenez, Ph.D. student in Ecology, Colorado State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Financial News Programming
29 Mar

Watermarking ChatGPT, DALL-E and other generative AIs could help protect against fraud and misinformation

By Hany Farid, University of California, Berkeley 

Shortly after rumors leaked of former President Donald Trump’s impending indictment, images purporting to show his arrest appeared online. These images looked like news photos, but they were fake. They were created by a generative artificial intelligence system.

Generative AI, in the form of image generators like DALL-E, Midjourney and Stable Diffusion, and text generators like Bard, ChatGPT, Chinchilla and LLaMA, has exploded in the public sphere. By combining clever machine-learning algorithms with billions of pieces of human-generated content, these systems can do anything from create an eerily realistic image from a caption, synthesize a speech in President Joe Biden’s voice, replace one person’s likeness with another in a video, or write a coherent 800-word op-ed from a title prompt.

Even in these early days, generative AI is capable of creating highly realistic content. My colleague Sophie Nightingale and I found that the average person is unable to reliably distinguish an image of a real person from an AI-generated person. Although audio and video have not yet fully passed through the uncanny valley – images or models of people that are unsettling because they are close to but not quite realistic – they are likely to soon. When this happens, and it is all but guaranteed to, it will become increasingly easier to distort reality.

In this new world, it will be a snap to generate a video of a CEO saying her company’s profits are down 20%, which could lead to billions in market-share loss, or to generate a video of a world leader threatening military action, which could trigger a geopolitical crisis, or to insert the likeness of anyone into a sexually explicit video.

The technology to make fake videos of real people is becoming increasingly available.

Advances in generative AI will soon mean that fake but visually convincing content will proliferate online, leading to an even messier information ecosystem. A secondary consequence is that detractors will be able to easily dismiss as fake actual video evidence of everything from police violence and human rights violations to a world leader burning top-secret documents.

As society stares down the barrel of what is almost certainly just the beginning of these advances in generative AI, there are reasonable and technologically feasible interventions that can be used to help mitigate these abuses. As a computer scientist who specializes in image forensics, I believe that a key method is watermarking.

Watermarks

There is a long history of marking documents and other items to prove their authenticity, indicate ownership and counter counterfeiting. Today, Getty Images, a massive image archive, adds a visible watermark to all digital images in their catalog. This allows customers to freely browse images while protecting Getty’s assets.

Imperceptible digital watermarks are also used for digital rights management. A watermark can be added to a digital image by, for example, tweaking every 10th image pixel so that its color (typically a number in the range 0 to 255) is even-valued. Because this pixel tweaking is so minor, the watermark is imperceptible. And, because this periodic pattern is unlikely to occur naturally, and can easily be verified, it can be used to verify an image’s provenance.

Even medium-resolution images contain millions of pixels, which means that additional information can be embedded into the watermark, including a unique identifier that encodes the generating software and a unique user ID. This same type of imperceptible watermark can be applied to audio and video.

The ideal watermark is one that is imperceptible and also resilient to simple manipulations like cropping, resizing, color adjustment and converting digital formats. Although the pixel color watermark example is not resilient because the color values can be changed, many watermarking strategies have been proposed that are robust – though not impervious – to attempts to remove them.

Watermarking and AI

These watermarks can be baked into the generative AI systems by watermarking all the training data, after which the generated content will contain the same watermark. This baked-in watermark is attractive because it means that generative AI tools can be open-sourced – as the image generator Stable Diffusion is – without concerns that a watermarking process could be removed from the image generator’s software. Stable Diffusion has a watermarking function, but because it’s open source, anyone can simply remove that part of the code.

OpenAI is experimenting with a system to watermark ChatGPT’s creations. Characters in a paragraph cannot, of course, be tweaked like a pixel value, so text watermarking takes on a different form.

Text-based generative AI is based on producing the next most-reasonable word in a sentence. For example, starting with the sentence fragment “an AI system can…,” ChatGPT will predict that the next word should be “learn,” “predict” or “understand.” Associated with each of these words is a probability corresponding to the likelihood of each word appearing next in the sentence. ChatGPT learned these probabilities from the large body of text it was trained on.

Generated text can be watermarked by secretly tagging a subset of words and then biasing the selection of a word to be a synonymous tagged word. For example, the tagged word “comprehend” can be used instead of “understand.” By periodically biasing word selection in this way, a body of text is watermarked based on a particular distribution of tagged words. This approach won’t work for short tweets but is generally effective with text of 800 or more words depending on the specific watermark details.

Generative AI systems can, and I believe should, watermark all their content, allowing for easier downstream identification and, if necessary, intervention. If the industry won’t do this voluntarily, lawmakers could pass regulation to enforce this rule. Unscrupulous people will, of course, not comply with these standards. But, if the major online gatekeepers – Apple and Google app stores, Amazon, Google, Microsoft cloud services and GitHub – enforce these rules by banning noncompliant software, the harm will be significantly reduced.

Signing authentic content

Tackling the problem from the other end, a similar approach could be adopted to authenticate original audiovisual recordings at the point of capture. A specialized camera app could cryptographically sign the recorded content as it’s recorded. There is no way to tamper with this signature without leaving evidence of the attempt. The signature is then stored on a centralized list of trusted signatures.

Although not applicable to text, audiovisual content can then be verified as human-generated. The Coalition for Content Provenance and Authentication (C2PA), a collaborative effort to create a standard for authenticating media, recently released an open specification to support this approach. With major institutions including Adobe, Microsoft, Intel, BBC and many others joining this effort, the C2PA is well positioned to produce effective and widely deployed authentication technology.

The combined signing and watermarking of human-generated and AI-generated content will not prevent all forms of abuse, but it will provide some measure of protection. Any safeguards will have to be continually adapted and refined as adversaries find novel ways to weaponize the latest technologies.

In the same way that society has been fighting a decadeslong battle against other cyber threats like spam, malware and phishing, we should prepare ourselves for an equally protracted battle to defend against various forms of abuse perpetrated using generative AI.The Conversation

About the Author:

Hany Farid, Professor of Computer Science, University of California, Berkeley

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions Programming
29 Mar

Inflation in Australia is falling. US stock indices are under pressure from rising government bond yields

By JustMarkets

The US indices fell on Tuesday under pressure from rising Treasury yields amid signs that consumers remain optimistic. If the consumer confidence index is rising, it indicates the economy is not all bad, which in turn could increase the likelihood of another rate hike by the US Fed. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.12%, and the S&P 500 Index (US500) fell by 0.16%. The NASDAQ Technology Index (US100) was down by 0.45% on Tuesday.

Shares of Apple (AAPL), Meta Platforms (META), Alphabet (GOOGL), and Microsoft (MSFT) ended the day down, with Microsoft coming under regulatory scrutiny. The German antitrust authority said Tuesday that it is examining Microsoft for potentially anti-competitive practices. Meanwhile, Alibaba (BABA) shares rose more than 14% after detailing plans to split the business into six divisions, each of which could raise outside capital, including through initial public offerings.

Equity markets in Europe were mostly up yesterday. German DAX (DE30) gained 0.09%, French CAC 40 (FR40) added 0.14%, Spanish IBEX 35 (ES35) increased by 0.41%, and British FTSE 100 (UK100) closed up by 0.17% on Tuesday.

European stock indexes rose for a second session on Tuesday, driven by commodities and banking stocks after a deal to buy out a bankrupt Silicon Valley bank raised hopes of containing the banking crisis. Economically sensitive sectors such as oil and gas, mining, and insurance companies were among other growth leaders in Europe.

European Central Bank (ECB) Supervisory Board Chairman Andrea Enria weighed in on further updates to the EU banking system, supporting the need for “strong and demanding supervision,” which he said is needed now more than ever. Another ECB Governing Council spokesman Mario Centeno said Monday that the European Central Bank should consider recent financial market stress when deciding on interest rates. Still, the main task now is to control inflation and bring it down to 2%.

The OPEC+ coalition shows no sign of adjusting oil production ahead of next week’s meeting, sticking to its previously set production plan. OPEC+ leader Saudi Arabia has publicly stated that the 23-nation alliance should maintain stable supplies throughout 2023. Last week, crude oil prices fell to a 15-month low on fears that the economic fallout from the Silicon Valley Bank collapse and the Credit Suisse Group AG takeover would hurt oil demand. But oil prices have since recovered.

Gold is approaching $2,000, even as the US banking crisis subsides. The yellow metal’s behavior suggests that investors don’t think the mini-banking crisis is behind us.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.15%, China’s FTSE China A50 (CHA50) gained 0.19%, Hong Kong’s Hang Seng (HK50) ended the day up by 1.11%, India’s NIFTY 50 (IND50) was down by 0.20%, and Australia’s S&P/ASX 200 (AU200) ended Tuesday positive by 1.04%.

Japan’s parliament on Tuesday approved a record budget of 114.38 trillion yen ($870 billion) for the new fiscal year beginning in April to strengthen defense capabilities in the face of security threats from neighbors and to support the economy in fighting inflation. The defense budget will reach 6.82 trillion yen, the largest ever. Prime Minister Fumio Kishida’s government intends to double its annual defense budget from the current 1% to about 2% of the Gross Domestic Product. About one-third of the budget of 114 trillion yen, or 36.89 trillion yen, will be used to cover social welfare costs, as Japan’s population is one of the fastest ageing in the world. Separately, the Cabinet decided to use 2.22 trillion yen ($16.82 billion) of reserve funds for the current fiscal year ending Friday to finance a new package of inflation-reducing measures. Mitsubishi UFJ Research and Consulting estimates that average Japanese households will have to spend 60,000 yen more on food in 2023 than a year earlier, as businesses are expected to raise prices in the coming months.

Australia’s inflation rate has fallen from 7.4% to 6.8% year-on-year. Such data increases the likelihood that the Reserve Bank of Australia will not raise interest rates further and will end its tightening cycle at its next meeting.

S&P 500 (F) (US500) 3,971.27 −6.26 (-0.16%)

Dow Jones (US30)32,394.25 −37.83 (−0.12%)

DAX (DE40) 15,142.02 +14.34 +(0.095%)

FTSE 100 (UK100) 7,484.25 +12.48 (+0.17%)

USD Index 102.43 −0.43 (−0.42%)

Important events for today:
  • – Australia Consumer Price Index (m/m) at 03:30 (GMT+2);
  • – US Pending Home Sales (m/m) at 17:00 (GMT+2);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
28 Mar

Silicon Valley Bank sale returned optimism to financial markets, but the situation remains tense

By JustMarkets 

In the run-up to the European session yesterday, there was news about the sale of Silicon Valley Bank to another bank, First Citizens Bancshares, one of the most prominent regional banks in the United States, which could become one of the top 20 banks in the United States. The Federal Deposit Insurance Corporation (FDIC) has confirmed that all of SVB’s deposits and branches will go under the new management. Shares of Citizens Bancshares jumped by 53% yesterday. The deal helped calm investor fears about the banking crisis. There are also hopes for additional support for bank financing as the US authorities are discussing expanding emergency lending facilities. At the close of the stock market yesterday, the Dow Jones Index (US30) gained 0.60%, and the S&P 500 Index (US500) added 0.16%. The Technology Index NASDAQ (US100) decreased by 0.47% on Monday.

Most economists predict that the United States is likely to enter a recession this year and face high inflation in 2024. More than two-thirds of respondents to the National Association for Business Economics (NABE) indicated that inflation would remain above 4% later this year.

Minneapolis Fed President Neel Kashkari said Sunday that central bank officials are watching the situation very closely to assess whether bank stress has led to a credit crunch that has threatened to tilt the economy into recession.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) increased by 1.14%, France’s CAC 40 (FR40) added 0.90%, Spain’s IBEX 35 (ES35) raised by 1.44%, and Britain’s FTSE 100 (UK100) closed down by 0.90% on Monday.

Bank of England Governor Andrew Bailey said yesterday that inflation remains the main driver of monetary policy decisions. Bailey also made it clear that the bank would be prepared to provide tighter monetary policy if signs of persistent inflationary pressures became more evident.

In Germany, 24-hour strikes called by the Verdi union and the railway and transport union EVG have hit Europe’s largest economy. Airports, including Germany’s two largest in Munich and Frankfurt, suspended flights, while railway operator Deutsche Bahn canceled rail services. The Airports Association estimated that 380,000 airline passengers were affected. In Frankfurt alone, nearly 1,200 flights were canceled for 160,000 passengers. Employees are pushing for wage increases to reduce the impact of inflation, which reached 9.3% in February. Germany, which was heavily dependent on gas from Russia before the war in Ukraine, has been hit particularly hard by the price increase as it struggles to find new sources of energy.

Russian Deputy Prime Minister Alexander Novak said Moscow is close to reaching its goal of cutting oil production by 500,000 barrels per day (BPD) to about 9.5 million. Russia is trying to keep oil prices from falling, as oil and gas have become almost the only source of income for Russia since sanctions were imposed for its invasion of Ukraine. Russian President Vladimir Putin’s plans to deploy tactical nuclear weapons in Belarus further increased tensions in Europe, which contributed to the rise in oil prices yesterday.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.33% yesterday, China’s FTSE China A50 (CHA50) decreased by 0.48%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.75%, India’s NIFTY 50 (IND50) gained 0.24%, and Australia’s S&P/ASX 200 (AU200) was positive by 0.10% by Monday’s end.

China’s industrial profits fell by 22.9% in the first two months of this year. Factories and large industrial companies struggled to recover from COVID-related disruptions. Overall, investor sentiment in Asia remains jittery due to concerns about banking stress and its impact on global growth.

S&P 500 (F) (US500) 3,977.53 +6.54 (+0.16%)

Dow Jones (US30)32,432.08 +194.55 (+0.60%)

DAX (DE40) 15,127.68 +170.45 (+1.14%)

FTSE 100 (UK100) 7,471.77 +66.32 (+0.90%)

USD Index 102.83 -0.28 (-0.27%)

Important events for today:
  • – Australia Retail Sales (m/m) at 03:30 (GMT+2);
  • – Japan BoJ Governor Kuroda Speaks at 07:00 (GMT+2);
  • – UK BoE Gov Bailey’s Speech at 11:45 (GMT+2);
  • – US Richmond Manufacturing Index (m/m) at 17:00 (GMT+2);
  • – US CB Consumer Confidence (m/m) at 17:00 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
28 Mar

Market Mood Improves As Banking Fears Ease

By ForexTime 

European markets flashed green on Tuesday along with Asian equities as fears over a looming banking crisis eased.

A deal backed by U.S regulators for First Citizens Bank to purchase failed Silicon Valley Bank (SVB) has boosted global sentiment and cooled jitters over the banking sector. The renewed appetite for risk is likely to stimulate demand for global equities at the expense of safe haven assets. However, some caution still lingers from the recent market chaos and this could encourage investors to think twice before jumping on the risk train. U.S futures are pointing to a mixed open as market players await the Senate hearings on Silicon Valley Bank. Looking at commodities, gold struggled to nurse wounds from Monday’s selloff as easing bank fears dulled its allure.

This week, financial markets will focus on key inflation figures from across the globe, speeches by Fed officials, and the U.S Senate hearings on Silicon Valley Bank. Although some normality seems to be returning to markets, this could easily be disrupted by negative news or data that rekindle concerns not only over the banking sector but also inflation.

More Pain Ahead For USD?

The past few weeks have not been kind to the dollar.

It has weakened against most G10 currencies since the start of March thanks to growing expectations around the Federal Reserve slowing and eventually halting rate hikes in the face of the banking turmoil. Although fears of a full-blown crisis have cooled, markets still expect the Fed to cut its benchmark rates by 50 basis points by September.

These expectations could be intensified by the upcoming hearings on Silicon Valley Bank’s collapse and U.S inflation data on Friday. If the mid-week hearings before the House and Senate reveal fresh information on the chaos witnessed in the U.S banking sector, this could rekindle contagion fears, ultimately hitting the dollar as rate cut expectations mount. Regarding the inflation data, the Core PCE Deflator for February is expected to show inflation rising 4.7%, which would match January’s annual figure. Ultimately, a report that meets or prints below forecasts could fuel speculation around the Fed’s next move being a rate cut. Although the path of least resistance for the dollar is starting to point south, hawkish commentary from Fed officials could limit downside losses.

Currency spotlight: EURUSD

It could be a wild week for the EURUSD due to high-risk events and key inflation data.

The currency pair has kicked off the week on a positive note, pushing higher thanks to a weaker dollar. Given how the looming US Senate hearings and speeches from Fed officials mid-week will influence the dollar, this could translate to more volatility in EURUSD. Things could really spice up on Friday due to inflation data from the eurozone and the United States. Headline eurozone inflation is expected to fall sharply in March to 7.1% from 8.5% seen in the previous month. But the ECB is more focused on the core readings, so if these decline, this may weaken the euro as investors ponder whether the ECB may pause rate hikes down the road.

Looking at the technical picture, the EURUSD has the potential to push higher towards 1.09 if a solid daily close above the 1.08 level is achieved. Should bulls run out of steam, prices may slip back towards 1.0750 and 1.0710, respectively.

Commodity spotlight – Gold

Investor appetite for gold has been dampened by a combination of technical and fundamental forces.

After kissing the psychological $2000 level three times last week, bears have exploited this stubborn resistance to attack, with easing banking fears further dulling the metal’s safe haven allure. While prices could trade lower in the shorter term to medium term, the longer term still remains in favour of bulls due to expectations around the Fed cutting interest rates in September.

Looking at the technical picture, gold seems to be experiencing a pullback after failing to conquer the $2000 level. This could see the precious metal dip once again towards $1955 and $1935 before the bulls re-enter the scene. If prices break below $1925, gold is likely to test $1900.

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ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Financial News
27 Mar

The fall of Deutsche Bank has renewed tensions in the banking sector. Oil prices are under pressure

By JustMarkets

At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.40% (+1.15% for the week), and the S&P 500 (US500) added 0.41% (+1.37% for the week). The NASDAQ Technology Index (US100) gained 0.31% on Friday (+1.80% for the week).

The Federal Reserve raised interest rates by 25 basis points last week, in line with expectations, but signaled that the hike cycle might be coming to an end in response to nervousness about US banks after the unexpected collapse of two medium-term regional small banks. According to analysts, the turmoil in the banking sector, which caused turmoil on Wall Street earlier this month, is likely to lead to a credit crunch for households and businesses in the coming months, creating a meaningful process of disinflation. This will ease the pressure on the central bank, limiting the need for overly restrictive policies. The economy does not yet reflect the real problems that will result from a significant tightening of lending standards, but the negative effects will soon become visible.

While Fed officials still view the possibility of additional rate hikes as a high probability, financial markets are now leaning toward a probability (85%) that there will be no rate hike at all at the Central Bank’s next policy meeting in May.

Equity markets in Europe were mostly down on Friday. German DAX (DE30) decreased by 1.66% (+1.64% for the week), French CAC 40 (FR40) fell by 1.74% (+1.65% for the week), Spanish IBEX 35 (ES35) lost 2.10% (+1.26% for the week), British FTSE 100 (UK100) was down by 1.26% (+0.95% for the week).

On Friday, bank stocks in Europe fell sharply, with Deutsche Bank and UBS Group suffering the most due to fears that problems in the banking sector may persist. Investor attention has recently focused on the German giant Deutsche Bank. Its shares have lost more than a quarter of their value this month, including an 8.5% drop on Friday, and the cost of default protection on its bonds has risen sharply. German Chancellor Olaf Scholz said Friday at a news conference in Brussels that Deutsche Bank “has carefully reorganized and modernized its business model and is a very profitable bank,” adding that there was no reason to speculate about its future. But that hasn’t reassured investors. Kristalina Georgieva, head of the International Monetary Fund, said Sunday that risks to financial stability had risen and urged continued vigilance.

The shadow banking sector is a “weak point in the financial system” and could trigger the next financial crisis, European Central Bank (ECB) vice president Luis de Guindos has warned. In his opinion, the European banking sector is “reliable and stable,” but the non-banking sector “could become a source of problems for the entire financial sector.

Ukraine demands an extraordinary meeting of the UN Security Council over Putin’s intentions to deploy tactical nuclear weapons on the territory of Belarus. NATO criticizes Putin for his “dangerous and irresponsible” nuclear rhetoric. While the US downplayed concerns about Putin’s statement, NATO said the Russian president’s pledge of nuclear non-proliferation was far from the truth.

The consequences of banks weakening their role in commodities could be far-reaching and negative. How are banks related to oil? No barrel of crude oil can move without financing or liquidity provided by banks. Banks are market makers for all commodities, not just oil, because they bring buyers and sellers together. Therefore, independent oil and gas producers may have limited ability to hedge price risks associated with investments and inventories. A possible recession in the United States, sanctions against Russia over the invasion of Ukraine, the release of strategic reserves, and strikes at refineries in France are all shaking up oil markets. For the growth of oil prices now, it is necessary for the situation in the banking sector to calm down, and demand in China began to recover on the threshold of summer.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) gained 0.56% for the week, China’s FTSE China A50 (CHA50) jumped by 2.18% for the week, Hong Kong’s Hang Seng (HK50) ended the week up by 2.91%, India’s NIFTY 50 (IND50) decreased by 0.07%, and Australia’s S&P/ASX 200 (AU200) ended the week down by 0.56%. Most Asian stocks fell Monday amid renewed fears of new bank defaults in the US and Europe, with Chinese markets falling the most as weak results drove oil and gas stocks lower.

In the commodities market, futures on cocoa (+5.19%), orange juice (+4.7%), copper (+4.64%), silver (+4.02%), WTI oil (+3.39%), gasoline (+3.17%) and Brent (+2.78%) showed the biggest gains last week. Futures on lumber (-8.46%), natural gas (-6.72%), soybeans (-3.18%), and wheat (-2.89%) showed the biggest drop.

S&P 500 (F) (US500) 3,970.99 +22.27 (+0.56%)

Dow Jones (US30)32,237.53 +132.28 (+0.41%)

DAX (DE40) 14,957.23 −253.16 (−1.66%)

FTSE 100 (UK100) 7,405.45 −94.15 (−1.26%)

USD Index 103.12 +0.58 (+0.57%)

Important events for today:
  • – German Ifo Business Climate (m/m) at 11:00 (GMT+2);
  • – UK BoE Gov Bailey’s Speech at 20:00 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
24 Mar

Global markets turbulent on bank fears, investors eye buying opportunities

By George Prior

Heightening volatility in major stock markets around the world, triggered by concerns of the global banking system, will be used by investors as a buying opportunity, affirms the CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The observation from deVere Group’s Nigel Green come as US stock futures fell on Friday, the pan-European Stoxx 600 index was down 1.5% by mid-morning, following a mixed session in Asia-Pacific markets.

He says: “Deutsche Bank shares have dropped for a third consecutive day – they’re now down 13% – and have now lost more than a fifth of their value so far this month.

“The emergency rescue of Credit Suisse by UBS, in the wake of the collapse of the US based Silicon Valley Bank and Signature Banks, has triggered a wave of contagion fears among investors, which was further exacerbated by more monetary policy tightening from the US Federal Reserve on Wednesday and the Bank of England on Thursday.”

The deVere CEO continues: “The growing sense of unease about the global banking system is heightening volatility in stock markets around the world.

“Savvy investors will be using this turbulence as a buying opportunity because the current creeping fearful sentiment doesn’t just hit the banking sector, it becomes more generalised.

“This brings down the prices of other high-quality stocks and investors seize on this to top-up their portfolios at lower entry points.

“Clearly, they won’t want to miss out on some key opportunities, but they must also avoid the ‘buy everything’ mindset.”

Whilst inflation remains a major headwind, Nigel Green explains, investors should “remain alive to other metrics” in investment decision-making.

When costs are going up, investors should increasingly be looking at a company’s ability to maintain margin.

“Investors should be paying close attention to margin because it can indicate how well a company is managing costs and competing in its industry.

“It can also impact a corporation’s ability to invest in growth opportunities or pay dividends” to shareholders.

“A good fund manager will help investors seek out the opportunities and mitigate potential risks as and when they are presented to generate and build their wealth.”

The deVere CEO concludes: “As concerns about the stability of banks persist, we expect further and intensifying market volatility.  This will be used, as it always is, by investors to bolster their investment portfolios.

“This can prove to be an extremely effective strategy, but advice should be sought from a quality fund manager.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of offices across the world, over 80,000 clients and $12bn under advisement.

Economics & Fundamentals Financial News
24 Mar

TikTok may be banned in the United States. The world’s central banks continue to raise rates

By JustMarkets

At the close of the US stock market yesterday, the Dow Jones Index (US30) increased by 0.23%, and the S&P 500 Index (US500) added 0.30%. Technology Index NASDAQ (US100) gained 1.01%. Investors are still trying to understand why the Fed keeps raising rates when risks in the financial sector have risen. According to a new batch of published Fed projections, interest rates will peak this year at 5.1%, which implies another rate hike. The Fed Funds rate futures now indicate mixed expectations for the next FOMC meeting on May 3. They imply the likelihood of either a pause in rate hikes or another quarter percentage point increase.

Elon Musk commented on the Federal Reserve’s (Fed) statement on the reliability of the US banking industry. Musk assessed the state of the US banking system with the words: “It can’t get any worse.” Earlier, on March 22, the Fed said that the US banking system is reliable and stable. But the charts show differently. The decline in the US banking sector continues. The KBW Commercial Banks Index and SPDR S&P Regional Banking ETF KRE continue to decline for the second straight day. The decline in banks came even after Treasury Secretary Janet Yellen said Thursday that the government is willing to step in again if necessary to ensure the stability of regional banks.

TikTok and ByteDance could potentially be banned from the United States. TikTok CEO Shaw Zee Chu is on Capitol Hill to testify before Congress as lawmakers mull whether to ban the app amid concerns over the app’s data privacy and possible ties to the Chinese Communist Party.

Europe’s stock indices traded flat yesterday on Wednesday. German DAX (DE30) decreased by 0.04%. French CAC 40 (FR40) gained 0.11%, Spanish IBEX 35 (ES35) lost 0.44%, and British FTSE 100 (UK100) closed yesterday with a 0.89% loss.

Norges Bank raised rates yesterday by 25 basis points to 3.0%. Although domestic inflation is falling faster than previously expected thanks to lower energy prices, the central bank pointed to rising wages and a weak currency as drivers of further price pressures and eventually promised to raise rates again at its next meeting in May. In a new set of economic forecasts, Norges Bank reported at least two more rate hikes before peaking at 3.50% this summer.

The Bank of England raised its interest rate by 25 basis points Thursday to 4.25%, in line with expectations, and said further tightening would be required if there was evidence of more sustained price pressures. According to the Bank of England, fiscal support for the economy will add 0.3% to GDP.

The Swiss National Bank (SNB) also raised its discount rate by 50 basis points to 1.5%. The Central Bank seeks to balance its fight against inflation with fears of financial market turmoil. Inflation in Switzerland stands at 3.4%. The SNB also said that the measures announced over the weekend by the authorities against Credit Suisse “stopped the crisis.” Together with the Swiss government and financial market regulator FINMA, the Swiss National Bank (SNB) helped organize an emergency takeover of Credit Suisse (CS) by UBS (UBS) on Sunday to prevent the collapse of the country’s second-largest bank.

Gold returned to the $2,000 mark on Thursday. Yields on 2-year Treasuries fell again yesterday, indicating the debt market is unsure about the likelihood of another rate hike. Gold has an inverse correlation to government bond yields, so while the dollar index and yields are down, precious metal prices are rising.

Asian markets traded yesterday without a single trend. Japan’s Nikkei 225 (JP225) declined 0.17%, China’s FTSE China A50 (CHA50) gained 0.68%, Hong Kong’s Hang Seng (HK50) jumped by 2.34%, India’s NIFTY 50 (IND50) fell by 0.44% lower, while Australian S&P/ASX 200 (AU200) was 0.67% lower on the day.

In Japan, consumer price inflation slowed in February for the first time in 13 months, mostly due to the government energy subsidy program. Consumer prices fell from 4.3% to 3.3% y/y. Some Bank of Japan policymakers noted the possibility that inflation could exceed initial expectations as price and wage growth showed signs of expansion.

S&P 500 (F) (US500) 3,948.72 +11.75 (+0.30%)

Dow Jones (US30)32,105.25 +75.14 (+0.23%)

DAX (DE40) 15,210.39 −5.80 (−0.038%)

FTSE 100 (UK100) 7,499.60 −67.24 (−0.89%)

USD Index 102.54 +0.20 (+0.19%)

Important events for today:
  • – Australia Manufacturing PMI (m/m) at 00:00 (GMT+2);
  • – Australia Services PMI (m/m) at 00:00 (GMT+2);
  • – Japan National Core CPI (m/m) at 01:30 (GMT+2);
  • – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
  • – Japan Services PMI (m/m) at 02:30 (GMT+2);
  • – German Manufacturing PMI (m/m) at 10:30 (GMT+2);
  • – German Services PMI (m/m) at 10:30 (GMT+2);
  • – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
  • – UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
  • – UK Services PMI (m/m) at 11:30 (GMT+2);
  • – Canada Retail Sales (m/m) at 14:30 (GMT+2);
  • – US Durable Goods Orders (m/m) at 14:30 (GMT+2);
  • – US Manufacturing PMI (m/m) at 15:45 (GMT+2);
  • – US Services PMI (m/m) at 15:45 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
23 Mar

Silicon Valley Bank, Silvergate and “The Everything Bust”

“The pressure on banks will rise”

By Elliott Wave International

The phrase “Everything Bust” means a bust in just about every financial risk-asset of which you can think, as well as the economy and, I dare say, the financial system itself.

Indeed, in a section titled “The Everything Bust Is on The Way,” the December Global Market Perspective, a monthly Elliott Wave International publication which covers 50-plus financial markets, noted:

The pressure on banks will rise as the economy heads south.

And, now, we have these headlines:

  • Silicon Valley Bank Fails After Run on Deposits (The New York Times, March 10)
  • Crypto-focused bank Silvergate is shutting operations and liquidating after market meltdown (CNBC, March 8)

Silicon Valley’s collapse was the biggest bank failure since Washington Mutual in 2008 and the second largest bank failure in U.S. history.

Many of those on Wall Street blamed the bank failures for triple-digit declines in the Dow Industrials on the day the news came out. However, the real “bust” in the Dow Industrials and S&P 500 began a year earlier, in January 2022. It reflected a downturn in a social mood; today’s bank failures have the same roots that stretch back months and months. And since social mood is showing no signs of improvement, it’s likely not over.

The “Everything Bust” is on — in stocks, real estate, bonds, the world of crypto, SPACs (a.k.a. special purpose acquisition companies) and elsewhere in the world of finance, including the subprime auto market.

This chart and commentary are from the March Global Market Perspective:

The percentage of subprime auto borrowers who are at least 60 days late on payments surged to 6.05% in December, more than double the seven-year low of 2.58% recorded in April 2021, and eclipsing the peak reading of 5.7% during the Great Recession of December 2007 to June 2009.

As a March 10 New York Post headline said:

Silicon Valley Bank meltdown sparks contagion fears: ‘We found our Enron’

Whether you want to call it “contagion fears” or the manifestation of an increasingly fearful mood, don’t be surprised if more bank failures appear on the horizon sooner rather than later.

Also, don’t be surprised if more triple-digit declines occur with the Dow Industrials.

The Elliott wave pattern of this senior U.S. index is revealing what very well may be next for U.S. stocks.

If you’re unfamiliar with Elliott wave analysis, or simply need a refresher, read Frost and Prechter’s Elliott Wave Principle: Key to Market Behavior. Here’s a quote from the book:

Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market’s position within the behavioral continuum and therefore about its probable ensuing path. The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable. Many areas of mass human activity display the Wave Principle, but it is most popularly used in the stock market.

If you’d like to read the entire online version of this Wall Street classic, you may do so for free once you become a member of Club EWI, the world’s largest Elliott wave educational community (around 500,000 worldwide members).

A Club EWI membership is also free and members enjoy complimentary access to a range of Elliott wave resources on investing and trading.

Join Club EWI now by following this link: Elliott Wave Principle: Key to Market Behavior — get free and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Silicon Valley Bank, Silvergate and “The Everything Bust”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Economics & Fundamentals Financial News
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