InvestMacro

By JustMarkets

At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.08% (+1.61% for the week), and the S&P 500 (US500) added 0.25% (+2.32% for the week). The Technology Index NASDAQ (US100) gained 0.95% on Friday (+4.03% for the week).

The latest inflation data showed an improvement in the trajectory of core commodity prices and rate-sensitive components. The Fed’s favorite measure of Core PCE inflation fell from 4.7% to 4.4%, reinforcing the sense that interest rates are nearing a peak. Now the focus of policymakers has shifted to rebalancing the labor market and taking all measures to bring inflation to the target level. Will the Fed be able to do a “soft landing” of the economy, and what is the likelihood of the scenario? The data show an improving inflation picture, an orderly rebalancing of the labor market, and a relatively healthy consumer — all of these currently support the case for a “soft landing” more than a “hard landing.”

Many large companies report this week, so volatility in the stock market will increase substantially. Alphabet (GOOGL), Amazon.com Inc (AMZN), Apple Inc (AAPL), Exxon Mobil Corp (XOM), Caterpillar Inc (CAT), Advanced Micro Devices Inc (AMD), Meta Platforms Inc (META), Alibaba Group Holdings (BABA) are on the calendar.

Equity markets in Europe were mostly up on Friday. German DAX (DE30) gained 0.11% (+0.48% for the week), French CAC 40 (FR40) added 0.02% (+1.17% for the week), Spanish IBEX 35 (ES35) increased by 0.27% (+1.49% for the week), British FTSE 100 (UK100) gained 0.05% (-0.07% for the week).

The ECB will hold an important monetary policy meeting this week. The ECB is expected to raise the rate by 0.5%, and this scenario, according to economists, is already priced in. The rate is expected to peak in May 2023 at 3.25-3.5% (the current rate is 2.5%). Next, economists predict a pause until late 2023, when the deteriorating economy leads to a series of quarter-point cuts, which will begin in June 2024. Although the economy did better late last year, thanks to falling natural gas prices, government assistance to households and businesses, and easing supply disruptions, two-thirds of respondents still expect a shallow recession in the region.

The Bank of England will also hold an interest rate meeting this week, where a 0.5% increase is expected. This will raise the cost of borrowing from 3.5% to 4.0%. The rate is expected to peak in March 2023 at 4.25%. The overall inflation rate should also begin to decline at a faster pace starting in March as the impact of last year’s steep rise in energy bills fades, and the pressure on commodities and food begins to ease more noticeably. A rate cut is expected in early 2024.

Last week, Chinese markets celebrated the Lunar New Year. Economists predict that this will give a boost to optimism about oil demand ahead of this week. Early data released from China showed an increase in tourism spending and box office receipts with outbound travel in the first six days of the Lunar New Year, up 120% compared to the same period last year. This will serve to bolster markets’ confidence in the world’s largest oil importers moving forward. Also, this week is the OPEC+ meeting. Delegates expect the advisory committee of ministers to recommend that production levels remain unchanged as global demand shows signs of potential recovery. Given current production and increasing Chinese demand, fundamentally, this could serve as the basis for further gains in oil prices.

Asian markets mostly rallied last week. Japan’s Nikkei 225 (JP225) gained 1.87% over the week, China’s FTSE China A50 (CHA50) did not trade all week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) ended the week up by 5.46%, India’s NIFTY 50 (IND50) decreased by 2.67%, and Australia’s S&P/ASX 200 (AU200) ended the week up by 0.79%.

In the commodities market, lumber futures (+14.93%), coffee (+9.3%), sugar (+6.64%), and cocoa (+1.95%) showed the biggest gains last week. Natural gas futures (-10.11%), heating oil (-8.07%), palladium (-6.8%), WTI oil (-2.77%), platinum (-2.75%), and gasoline (-2.38%) showed the biggest drops.

According to strategists at Global Goldman Sachs, a key element of Japan’s ultra-easy monetary policy, known as yield curve control (YCC), has been the target of growing market skepticism in recent months, raising the possibility that the country may eventually abolish it entirely. The Bank of Japan originally introduced the YCC in September 2016 to prevent deflationary risks and to meet its 2% inflation target. But now, a number of factors, including the risk of inflation well above BOJ expectations, the prospect of higher wage growth, the deteriorating functioning of Japan’s government bond market, and the impending transition to a new BOJ governor, make a course change possible. The Bank of Japan may make further adjustments to the YCC as early as its next monetary policy meeting (MPM) in March.

According to Beijing University estimates, the number of Covid infections in China peaked in January. The subsequent higher level of immunity among the general population means that the secondary waves should have a smaller impact in terms of the number of severe cases. A recovery in Chinese consumption will be real but moderate. The housing market will face the prospect of a slower recovery than consumption or broad domestic demand.

S&P 500 (F) (US500) +4,070.56  +10.13 (+0.25%)

Dow Jones (US30) 33,978.08 +28.67 (+0.084%)

DAX (DE40) 15,150.03 +17.18 (+0.11%)

FTSE 100 (UK100) 7,765.15 +4.04 (+0.052%)

USD Index 101.92 +0.08 (+0.08%)

• – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+2);
• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
• – Germany GDP (q/q) at 11:00 (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.

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 1.10%, and the S&P 500 Index (US500) added 1.10%. Technology Index NASDAQ (US100) jumped by 1.76% yesterday.

According to the US Commerce Department, gross domestic product (GDP) grew by 2.9% in the latest quarter, less than the 3.2% quarter before but more than the market estimate of 2.6%. But a more detailed report shows signs of slowing growth. While consumer spending maintained a solid growth rate, most of the increase in consumption came at the start of the fourth quarter. Retail sales fell sharply in November and December. Business spending on equipment declined last quarter and is likely to remain low due to lower commodity demand. Futures markets are estimating a 25 basis point hike next Wednesday with a 95.8% probability and suggesting that the Fed’s overnight rate will be 4.45%, lower than the 5.1% rate that Fed officials had previously projected.

US durable goods orders jumped by 5.6%, but a more detailed report showed that business investment declined for four months. By some measures, US manufacturers are already in recession territory. They have cut production in response to the slowdown in new orders and may make further cuts if the economy continues to decline. Rising interest rates have been a major source of recent weakness. Higher borrowing costs are discouraging consumers from spending and businesses from investing.

Initial US jobless claims were 186,000, lower than the projected 203,000. The US labor market remains resilient, even though several big tech giants have been cutting jobs in recent days.

Renowned investor and Scion Asset Management hedge fund manager Michael Burry suggests that the current growth in the stock market is a mirage and very difficult times lie ahead. The investor draws parallels from September 2000 to early 2003 (the dot-com bubble era and the aftermath of 9/11). Between September 2001 and April 2002, the S&P 500 Index managed to rise twice. But then a four-month decline followed.

Stock markets in Europe were mostly up yesterday. German DAX (DE30) gained 0.34%, French CAC 40 (FR40) added 0.74%, Spanish IBEX 35 (ES35) jumped by 0.87%, and British FTSEv100 (UK100) was up by 0.21%.

A Reuters poll this week showed that markets expect the ECB to pause rate hikes in the second quarter of 2023 once the deposit rate reaches 3.25%. Although some analysts are confident that the ECB will bring the rate up to 4% by the summer, after which it will take a pause.

The bullish trend in gold continues. Yesterday there was another new seven-month high, right at the 1950 level. Gold has an inverse correlation to US government bond yields and the dollar index. As US yields fall as the Fed nears a potential policy change, this positively affects precious metal prices.

Oil prices rose about 2% on positive US economic data and expectations of higher global demand as China, the biggest oil importer, reopened its economy. OPEC+ will meet as early as February 1, where the cartel is likely to confirm the current levels of oil production, which may trigger further price growth. But an excessive growth of oil prices may cause a new round of inflationary pressure, and this is despite the fact that the interest rates are already high. So rising oil prices right now are not good for the global economy.

Asian markets traded yesterday without a single trend. Japan’s Nikkei 225 (JP225) decreased byv0.12%, and China’s FTSE China A50 (CHA50) was not trading. Hong Kong’s Hang Seng (HK50) was up by 2.37%, India’s NIFTY 50 (IND50) lost 1.25%, and Australia’s S&P/ASX 200 (AU200) was not trading yesterday due to Australia Day. On Friday, most Asian markets continued to rise as higher-than-expected economic growth data supported risk appetite.

Tokyo’s core consumer price index increased from 3.9% to 4.3% year-over-year. This is the highest rate of inflation in 41 years. This indicator is considered a leading indicator of inflation nationwide. Rising inflation in the country is expected to eventually end the bank’s ultra-soft stance, but traders are unsure when such a move might occur, leaving the outlook for Japanese stocks clouded with uncertainty.

S&P 500 (F) (US500) 4,060.43 +44.21 (+1.10%)

Dow Jones (US30) 33,949.41 +205.57 (+0.61%)

DAX (DE40) 15,132.85 +51.21 (+0.34%)

FTSE 100 (UK100) 7,761.11 +16.24 (+0.21%)

USD Index 101.82 +0.18 (+0.18%)

• – Japan Tokyo core CPI (m/m) at 01:30 (GMT+2);
• – Eurozone Spanish GDP (q/q) at 10:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 12:30 (GMT+2);
• – US PCE price index (m/m) at 15:30 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2);
• – US Pending Home Sales (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.

By JustMarkets

At the close of the stock market yesterday, the Dow Jones Index (US30) increased by 0.03%, and the S&P 500 Index (US500) was down by 0.02%. Technology Index NASDAQ (US100) lost 0.18% yesterday.

The US reporting season continues to gain momentum. Tesla (TSLA) had a great fourth quarter thanks to a 37% increase in revenue. Tesla stated that under any scenario, they are prepared for short-term uncertainty but are focused on the long-term potential of autonomy, electrification, and energy solutions. IBM Corporation (IBM) on Wednesday reported its highest annual revenue growth in a decade and beat Wall Street expectations for the fourth quarter. The company also projected year-over-year revenue growth. But despite the good report, the company’s stock fell on the release of the report. Economists attribute this to the fact that they are not confident that the company can deliver such results, given the weak macroeconomic backdrop. Shares of Alphabet (GOOGL) increased losses from the previous day, falling more than -2% after the tech giant cut another 1,800 jobs on Wednesday.

As expected, the Bank of Canada raised its overnight rate by 25 basis points to 4.5%. An accompanying statement said that if economic developments are broadly in line with MPR’s forecast, the Board of Governors expects to keep the discount rate at its current level. The Bank of Canada may be the first bank among major economies to end its tightening cycle.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.08% yesterday, French CAC 40 (FR40) gained 0.09%, Spanish IBEX 35 (ES35) lost 0.16%, and British FTSE 100 (UK100) was 0.16% lower.

The German government said on Wednesday that it expects economic growth this year, not a recession, as Europe’s largest economy has successfully weathered the energy crisis and supported consumers and businesses hurt by higher energy prices. The outlook for 2023 improved to 0.2% growth from a 0.4% contraction expected in October, when Germany feared it would run out of natural gas used to power factories, generate electricity, and heat homes this winter.

Recession risks in the UK are rising because of record shortages and falling production. Factories are cutting production at a record pace, business activity is falling, and the labor market is also starting to signal trouble. Traders are betting that the Bank of England will reverse course and cut its key interest rate later this year to support the weakening economy. But before the rate cut, the central bank is expected to make two more rate hikes of 0.25-0.5%.

Yesterday, Germany approved the supply of Leopard tanks to Ukraine. At the same time, the US also indicated that it would transfer 31 Abrams tanks. Following this news, the Russian embassy issued a tweet indicating that Germany’s decision to approve the delivery of Leopard tanks to Ukraine is extremely dangerous and takes the conflict to a new level. The conflict is expected to escalate in the coming weeks.

Volatility in the oil market has declined because of the holiday week in China. But optimism about the surge in demand from China remains, so with the current level of production by OPEC countries, analysts see further growth in oil quotes. The only constraint to growth is the increase in strategic crude stocks for the 4th week in a row.

Asian markets also traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.35%, and China’s FTSE China A50 (CHA50) did not trade and will not trade until the end of the week due to holidays. Hong Kong’s Hang Seng (HK50) also did not trade, India’s NIFTY 50 (IND50) decreased by 1.25%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.30%.

S&P 500 (F) (US500) 4,016.22 −0.73 (−0.018%)

Dow Jones (US30) 33,743.84 +9.88 (+0.029%)

DAX (DE40) 15,081.64 −11.47 (−0.076%)

FTSE 100 (UK100) 7,744.87 −12.49  (−0.16%)

USD Index 101.64 −0.28 (−0.27%)

• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+2);
• – US GDP (q/q) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US New Home Sales (m/m) at 17:00 (GMT+2);
• – US Natural Gas Storage (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.

By Noah Kaufman, Columbia University; Chris Bataille, Columbia University; Gautam Jain, Columbia University, and Sagatom Saha, Columbia University 

Rising trade tensions between the U.S. and the European Union, two of the most important global leaders when it comes to climate policy, could undermine key climate initiatives of both governments and make it harder for the world to put the brakes on climate change.

The two have clashed over the 2022 Inflation Reduction Act’s requirements that products be made in America to receive certain U.S. subsidies. The EU recently announced plans for its own domestic-only clean technology subsidies in response.

The U.S. and EU also now have competing carbon tariff proposals, and these could end up undermining each other.

In December 2022, the EU reached a provisional agreement on a carbon border adjustment mechanism. It will put carbon-based tariffs on steel, aluminum and other industrial imports that aren’t regulated by comparable climate policies in their home countries. The Biden administration, meanwhile, proposed a “green steel club” of nations that would cooperate on reducing emissions by levying tariffs on relatively high-emission imports.

At first glance, the two approaches might seem similar. But the EU and U.S. proposals reflect starkly different and arguably incompatible visions for the intersection of climate and trade policies.

A failure to align approaches risks further stoking trade tensions and would likely have international repercussions. Without multinational coalitions, dirtier, lower-cost competition will undercut emerging low-carbon technologies.

A strong transatlantic partnership is a prerequisite to greening the global economy. Without creative compromises and skillful diplomacy, the EU may find that its tariffs lead to reprisals rather than reciprocal action, and the U.S. quest to create climate clubs will not get off the ground.

EU’s textbook approach to tariffs

The carbon border adjustment mechanism, or CBAM, is tied to the EU’s flagship climate policy, its emission trading system. The system requires large European factories and other greenhouse gas emitters to purchase allowances for each ton of carbon dioxide they release. It’s a form of a carbon price.

However, if only European industries have to pay this carbon price, the EU risks domestic production’s losing out to imports from countries with weaker regulations on emissions. This phenomenon, referred to as “carbon leakage,” can result in even dirtier industrial production.

To date, the EU has avoided carbon leakage by compensating domestic producers of certain industrial products with free emissions allowances. But that approach is becoming increasingly expensive as the carbon price rises, with a recent trading range of 70 to 100 euros per metric ton. The CBAM makes it possible to phase out these free allowances by phasing in tariffs on imports from countries without comparable carbon pricing policies. Once finalized, the tariffs could be applied starting in 2026.

The CBAM has been met with some international outrage, with the “BRICS” countries – Brazil, Russia, India, China and South Africa – calling it “discriminatory” and a U.S. senator accusing the EU of going “rogue.”

In reality, the CBAM treats domestic products and imports equally by applying the same carbon price, just as any economics textbook recommends. It also aims to further global climate action by giving other countries the incentive to implement their own carbon pricing policies.

Biden’s climate club approach

Unlike the EU, the U.S. has failed to adopt a national carbon price despite several attempts. The Inflation Reduction Act instead fills the federal climate policy void largely by offering subsidies for producing clean energy.

However, subsidies to American producers won’t reduce emissions from other countries’ production of internationally traded products.

For example, steel accounts for 11% of global carbon dioxide emissions, with the vast majority from East Asia, including 53% of global production from China. Transforming Chinese production is therefore critical to lowering emissions.

Encouraging a global shift to cleaner production methods will require international cooperation, including trade measures that enable expensive low-carbon investments and penalize high-emissions steel production.

President Joe Biden needed an approach to climate tariffs that would benefit U.S. producers without requiring a politically untenable carbon price. His proposed green steel club is an agreement among countries that would commit their steel and aluminum industries to meeting certain emissions standards. Tariffs would be imposed on imports that exceed the standard or come from countries that are not signatories to the agreement.

Most U.S. manufacturers would benefit. U.S. steel typically produces fewer emissions than its competitors. The desire to exploit this “carbon advantage” has taken hold with politicians on both sides of the aisle.

Biden’s plan could be the first “climate club” of nations, consistent with the recommendations of an increasing number of policy experts. In a recent book, Charles Sabel and David Victor suggest building on the international success in phasing out ozone-depleting chemicals: The Montreal Protocol used a combination of cooperative learning, penalties and pools of resources for countries in need of technical and financial support.

Creative ways to cooperate

The two visions for climate policy tariffs involve different paths toward somewhat different goals, so they cannot easily be reconciled. The premise of the EU strategy is that tariffs are necessary to ensure that climate policies impose the same costs on domestic and foreign emitters. In contrast, the U.S. is proposing tariffs that penalize producers with high emissions.

The U.S. cannot pursue the EU approach without some form of a national carbon price. At the same time, the EU is unlikely to abandon its long-planned and laboriously negotiated CBAM, particularly to partner with a White House that may have a different occupant in two years.

There are, however, pathways forward that blend elements of both visions.

For example, parts of the CBAM, including the linkage to the EU carbon price, could be included as elements of climate clubs, including Biden’s green steel club. That may enable the EU to retain hard-fought progress on its emissions trading system.

Alternatively, some U.S. senators are pushing legislation to create a U.S. carbon border adjustment, including a domestic carbon price and a tariff on imports of some energy-intensive products like steel and aluminum. Bipartisan support for such legislation would create a basis for a durable compromise with the EU. However, even a narrow carbon price on industrial products may not be politically viable in the Republican-controlled House of Representatives.

Looking ahead

Any unilateral use of tariffs will strain sensitive geopolitical relationships.

By pursuing compromise rather than conflict, the U.S. and EU can leverage their joint economic strength to create a powerful coalition that encourages low-carbon industrial production around the globe, including in China and India, without ceding domestic advantages.

In our view, both sides have ample reasons to find common ground.

About the Author:

Noah Kaufman, Research Scholar in Climate Economics, Columbia University; Chris Bataille, Research Fellow in Energy and Climate Policy, Columbia University; Gautam Jain, Senior Research Scholar in Financial Markets, Columbia University, and Sagatom Saha, Research Scholar in Energy Policy, Columbia University

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

By JustMarkets

The US reporting season continues to gain momentum, but indices are reacting sluggishly. As the stock market closed yesterday, the Dow Jones Index (US30) increased by 0.31%, and the S&P 500 Index (US500) decreased by 0.07%. Technology Index NASDAQ (US100) lost 0.27%.

In the technology sector, gains in Apple (AAPL) stocks were offset by declines in Alphabet (GOOGL) stock. The US Department of Justice filed a lawsuit against Google, claiming that the search engine giant violated the antitrust laws by abusing its monopoly in advertising technology. Microsoft Corporation (MSFT), which ended the day just below opening levels, rose by 4% on the release of its report. The company’s quarterly earnings beat Wall Street estimates.

Investors are betting that the Fed will stop raising rates soon, pause briefly, and then begin cutting rates closer to the end of the year. Why are investors waiting for a rate cut? For investors, lower rates make borrowing less expensive and tend to raise the price of everything from stocks to bonds and digital assets. Fed officials predict that their key short-term rate, now at 4.5%, will eventually reach 5-5.25%. Futures markets show that most investors expect the rate to peak at 4.75-5%. Fed officials point to a robust labor market as a factor that can keep inflation high. Now at 3.5%, the unemployment rate is the lowest in 50 years. Businesses continue to raise wages to retain and attract workers, which boosts consumer spending. Employers, in turn, tend to pass on their higher labor costs to their customers in the form of higher prices. Both trends, the Fed fears, will keep inflation well above the 2% target. But the latest news suggests that the labor market is already starting to fall, and the Fed will be forced to stop raising rates.

Equity markets in Europe traded without a single dynamic on Tuesday. German DAX (DE30) yesterday declined by 0.07%, French CAC 40 (FR40) gained 0.26%, Spanish IBEX 35 (ES35) jumped by 0.33%, British FTSE 100 (UK100) yesterday closed the day down by 0.35%.

Yesterday, GfK Consumer Confidence data for Germany showed signs of further improvement. The seasonally adjusted S&P Global Eurozone PMI Composite Output Index was above the 50 mark, indicating that business activity in the region is recovering and the risk of recession is declining.

Norway’s gas riches are causing a wave of optimistic forecasts for the Norwegian krone. Danske Bank A/S and Bank of America Corp. believe the NOK currency is a bargain since Norway is now receiving trillions of kroner from energy exports. Over the past decade, the króna has lost about a third of its value against the euro. According to Morgan Stanley, the Norwegian currency is likely to rise 15% against the dollar this year.

Natural gas is rising cautiously amid projected colder weather. Growing rumors of cold weather approaching the United States and the rest of the Northern Hemisphere are boosting natural gas prices.

Asian markets also traded flat yesterday. Japan’s Nikkei 225 (JP225) added 0.57%, and China’s FTSE China A50 (CHA50) did not trade and will not trade until the end of the week due to the holidays. Hong Kong’s Hang Seng (HK50) also did not trade, India’s NIFTY 50 (IND50) decreased by 1.1%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.06%.

The Australian dollar reached a 5-month high on inflation growth. Consumer prices jumped from 7.3% to 8.4% on an annualized basis. The core CPI quarterly reading was 1.9% in December, instead of the expected 1.6% and 1.8% previously. The preferred RBA average CPI was 6.9% annualized through the end of 2022. Interest rate futures markets raised the likelihood of a 25 basis point RBA hike at the February 7 monetary policy meeting.

In New Zealand, the Consumer Price Index rose to a 7.2% annualized rate in the fourth quarter, slightly above analysts’ expectations of 7.1% but below the RBNZ forecast of 7.5%. The data suggests that the RBNZ will raise interest rates by another 0.5% at its next meeting.

The key consumer price indicator in Singapore remained at 5.1% y/y, slightly higher than forecast. Overall inflation fell to 6.5% year-on-year from 6.7%. The central bank has previously stated that core inflation is likely to remain around 5% in early 2023. It also forecast a core inflation rate of between 3.5% and 4.5% in 2023, with the overall inflation rate ranging from 5.5% to 6.5%.

The Japanese prime minister said Sunday that he would appoint a new governor of the Bank of Japan next month, as Kuroda’s second five-year term expires on April 8.

S&P 500 (F) (US500) 4,016.95 −2.86 (−0.071%)

Dow Jones (US30) 33,733.96 +104.40 (+0.31%)

DAX (DE40) 15,093.11 −9.84 (−0.065%)

FTSE 100 (UK100) 7,757.36 −27.31 (−0.35%)

USD Index 101.94 -0.20 (-0.20%)

• – Australia Consumer Price Index (q/q) at 02:30 (GMT+2);
• – Singapore Consumer Price Index (m/m) at 07:00 (GMT+2);
• – German Ifo Business Climate (m/m) at 11:00 (GMT+2);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+2);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – Canada BoC Press Conference at 18:00 (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.

By Joshua R. Smith, University of Washington and Zerina Kapetanovic, Stanford University

This experimental setup shows an ultra-low-power wireless communications device that could one day be used in tiny remote sensors.
Zerina Kapetanovic, CC BY-ND

A new ultra-low-power method of communication at first glance seems to violate the laws of physics. It is possible to wirelessly transmit information simply by opening and closing a switch that connects a resistor to an antenna. No need to send power to the antenna.

Our system, combined with techniques for harvesting energy from the environment, could lead to all manner of devices that transmit data, including tiny sensors and implanted medical devices, without needing batteries or other power sources. These include sensors for smart agriculture, electronics implanted in the body that never need battery changes, better contactless credit cards and maybe even new ways for satellites to communicate.

Apart from the energy needed to flip the switch, no other energy is needed to transmit the information. In our case, the switch is a transistor, an electrically controlled switch with no moving parts that consumes a minuscule amount of power.

In the simplest form of ordinary radio, a switch connects and disconnects a strong electrical signal source – perhaps an oscillator that produces a sine wave fluctuating 2 billion times per second – to the transmit antenna. When the signal source is connected, the antenna produces a radio wave, denoting a 1. When the switch is disconnected, there is no radio wave, indicating a 0.

What we showed is that a powered signal source is not needed. Instead, random thermal noise, present in all electrically conductive materials because of the heat-driven motion of electrons, can take the place of the signal driving the antenna.

No free lunch

We are electrical engineers who research wireless systems. During the peer review of our paper about this research, published recently in Proceedings of the National Academy of Sciences, reviewers asked us to explain why the method did not violate the second law of thermodynamics, the main law of physics that explains why perpetual motion machines are not possible.

Perpetual motion machines are theoretical machines that can work indefinitely without requiring energy from any external source. The reviewers worried that if it were possible to send and receive information with no powered components, and with both the transmitter and receiver at the same temperature, that would mean that you could create a perpetual motion machine. Because this is impossible, it would imply that there was something wrong with our work or our understanding of it.

One way the second law can be stated is that heat will flow spontaneously only from hotter objects to colder objects. The wireless signals from our transmitter transport heat. If there were a spontaneous flow of signal from the transmitter to the receiver in the absence of a temperature difference between the two, you could harvest that flow to get free energy, in violation of the second law.

The resolution of this seeming paradox is that the receiver in our system is powered and acts like a refrigerator. The signal-carrying electrons on the receive side are effectively kept cold by the powered amplifier, similar to how a refrigerator keeps its interior cold by continuously pumping heat out. The transmitter consumes almost no power, but the receiver consumes substantial power, up to 2 watts. This is similar to receivers in other ultra-low-power communications systems. Nearly all of the power consumption happens at a base station that does not have constraints on energy use.

A simpler approach

Many researchers worldwide have been exploring related passive communication methods, known as backscatter. A backscatter data transmitter looks very similar to our data transmitter device. The difference is that in a backscatter communication system, in addition to the data transmitter and the data receiver, there is a third component that generates a radio wave. The switching performed by the data transmitter has the effect of reflecting that radio wave, which is then picked up at the receiver.

A backscatter device has the same energy efficiency as our system, but the backscatter setup is much more complex, since a signal-generating component is needed. However, our system has lower data rate and range than either backscatter radios or conventional radios.

What’s next

One area for future work is to improve our system’s data rate and range, and to test it in applications such as implanted devices. For implanted devices, an advantage of our new method is that there is no need to expose the patient to a strong external radio signal, which can cause tissue heating. Even more exciting, we believe that related ideas could enable other new forms of communication in which other natural signal sources, such as thermal noise from biological tissue or other electronic components, can be modulated.

Finally, this work may lead to new connections between the study of heat (thermodynamics) and the study of communication (information theory). These fields are often viewed as analogous, but this work suggests some more literal connections between them.

About the Author:

Joshua R. Smith, Professor of Electrical and Computer Engineering and of Computer Science and Engineering, University of Washington and Zerina Kapetanovic, Acting Assistant Professor of Electrical Engineering, Stanford University

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

By JustMarkets

The US indices closed higher on Monday as shares of major technology companies and chipmakers were on the upside ahead of reports from tech giants. At Monday’s close, the Dow Jones Index (US30) increased by 0.73%, and the S&P 500 Index (US500) added 1.19%. NASDAQ Technology Index (US100) gained 2.01% yesterday.

Barclays Bank upgraded AMD (AMD), Qualcomm Incorporated (QCOM), and NVIDIA Corporation (NVDA) forecasts, raising shares by more than 9%, 6%, and 7%, respectively.

The Federal Reserve’s slowdown in interest rate hikes is becoming obvious. According to the latest Federal Reserve CME data, the US Federal Reserve is set to raise interest rates by 25 basis points at the FOMC meeting on February 1 and another 25 basis points at its next meeting in March. The US central bank will then hold rates until the fourth quarter. Investors also expect a US rate cut of about 50 basis points at the end of the year.

Stock markets in Europe mostly rose Monday. Germany’s DAX (DE30) gained 0.46%, France’s CAC 40 (FR40) added 0.52%, Spain’s IBEX 35 Index (ES35) jumped by 0.29%, Britain’s FTSE 100 (UK100) closed up by 0.18% yesterday.

According to Governing Council spokesman Klaas Knot, the European Central Bank should continue to raise interest rates by 0.5% at its next two meetings, and the time for slowing the pace of increases is “still a long way off.” The hawkish head of the Dutch central bank had already argued last week for the ECB to continue tightening policy, arguing that core inflation is still rising, even though the basic indicator is slowing.

China has been setting the trend for oil prices lately. The reopening of China’s economy has led to an increase in demand, which at the current supply level has given an impulse to oil prices. This week is a holiday week in China, so oil quotes will depend on the current demand/supply and the dynamics of the dollar index. Analysts expect a spike in COVID-19 cases after the holidays as the Chinese travel freely for the first time in three years.

Asian markets mostly rose yesterday. Japan’s Nikkei 225 (JP225) added 1.33%, and China’s FTSE China A50 (CHA50) was not trading and will not trade for the rest of the week due to the holiday. Hong Kong’s Hang Seng (HK50) was also not trading yesterday, India’s NIFTY 50 (IND50) increased by 0.50%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.07%.

In Australia, the manufacturing PMI index dipped below the 50 mark for the first time. The index fell from 50.2 to 49.8. The service sector PMI rose from 47.3 to 48.3. Tomorrow’s quarterly CPI data will be scrutinized for clues to the Reserve Bank of Australia’s interest rate decision. A survey of economists suggests that the overall Consumer Price Index will rise from 7.6% to 7.8% year-over-year. Rising inflation will undoubtedly force the RBA to act more aggressively.

S&P 500 (F) (US500) 4,019.65 +47.04 (+1.18%)

Dow Jones (US30) 33,628.84 +253.35 (+0.76%)

DAX (DE40) 15,102.95 +69.39 (+0.46%)

FTSE 100 (UK100) 7,784.67 +14.08 (+0.18%)

USD Index 102.07 +0.06 (+0.06%)

• – Australia Manufacturing PMI (m/m) at 00:00 (GMT+2);
• – Australia Services PMI (m/m) at 00:00 (GMT+2);
• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – French Manufacturing PMI (m/m) at 10:15 (GMT+2);
• – French Services PMI (m/m) at 10:15 (GMT+2);
• – Germany Manufacturing PMI (m/m) at 10:30 (GMT+2);
• – Germany 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);
• – Eurozone ECB President Lagarde Speaks at 11:45 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2);
• – US Services PMI (m/m) at 16:45 (GMT+2);
• – New Zealand Consumer Price Index (q/q) at 23:45 (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.

By ForexTime

Article by ForexTime

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

By Sam Polzin, Purdue University and Jayson Lusk, Purdue University 

Grocery prices soared by 11.8% in 2022 – the swiftest pace since the early 1980s. Rapid inflation is, naturally, leading to concerns that it’s getting harder for Americans to put food on the table.

Indeed, Feeding America, a nonprofit that supports and connects roughly 60,000 food banks and pantries nationwide, has said that at least half of its members are seeing more demand for their services. And many journalists are reporting about struggling parents waiting in long lines for free food.

We are experts on food and agricultural economics. Together we have created a new data dashboard that tracks U.S. food insecurity – the technical term for having trouble getting enough nutritious food – based on publicly available information.

The data we’re collecting ourselves, as well as the information that we’ve compiled from other sources, including the Census Bureau, isn’t yet reflecting a sharp uptick in households without enough to eat. U.S. food insecurity has remained at troubling and yet relatively flat levels.

Based on all the data we’ve included in our dashboard, we estimate that over the course of 2022 somewhere between 11% and 15% of those living in the U.S. struggled with securing their next meal.

This range relies, in part, on internet-based surveys that can often produce food insecurity estimates that are higher than official government data. Because it is expensive to reach a true random sample of Americans, cheaper online surveys are commonly unrepresentative of the U.S. population but still prove to be a key tool for measuring changes compared with previous online surveys.

Official estimates are delayed and possibly low

Food insecurity is officially assessed based on a series of survey questions developed by the U.S. Department of Agriculture Economic Research Service. Every December, the federal government uses this measure to assess food insecurity for the past year. Following extensive analysis, it releases that data in September of the next year.

The official food insecurity rate hovered around 10.5% from 2019 to 2021, according to the USDA.

During those same three years, however, other researchers detected both lower and much higher rates. Our average of these surveys suggests that national levels may have peaked at nearly 19% in the months following the onset of the COVID-19 pandemic the U.S. in March 2020.

Within about six months, food insecurity returned to the 10%-11% range, based on our average of available data.

A mismatch between the facts and the coverage

Why are reports of long lines at food banks and increased demand for free food apparently at odds with the relative stability in the national food insecurity rate?

One reason could be that food insecurity rates, which generally overlap with social and economic inequality, can differ sharply.

For example, Nassau County, which spans many of New York City’s largely affluent Long Island suburbs, had a food insecurity rate of 5.7% in 2020. In nearby Bronx County, New York state’s lowest-income county, the food insecurity rate was more than three times that, at 19.7%, according to Feeding America’s Map the Meal Gap study.

As a result, food security can get worse or better in particular communities without affecting the national rate.

Another explanation could be that government programs and nonprofits that help people get enough food are succeeding. The number of people getting Supplemental Nutrition Assistance Program benefits, sometimes referred to as “food stamps” and generally just called SNAP, increased by 2.8% from January to October 2022, to 42.3 million.

In some states, SNAP benefits remain at the elevated levels instituted when the COVID-19 pandemic began.

Survey data from our Consumer Food Insights reports also shows that the average length of time households receive SNAP benefits increased from 9.5 months to 12.4 months in 2022.

Nearly 7% of households were visiting food pantries in December 2022, according to the Census Bureau, up from 4.4% in 2019. At the same time, the USDA announced an additional US$2 billion in funding to emergency food providers to deal with elevated food costs.

The charitable food system is decentralized, making it hard if not impossible to determine whether the amount of food donated to Americans overall has changed. As Feeding America reports, the 2.5 billion meals that its network provided in the first half of 2022 came from a range of donors, with its corporate partners playing a big role.

The data further suggests that, while consumer confidence about the overall economy is at a historically low level, fears of an economic downturn don’t reflect the fact that many people still have more money saved up than they did before 2020. Similarly, unemployment, which dipped to 3.5% in December 2022, is at the historically low levels last seen before the COVID-19 pandemic.

Finally, researchers have found that incomes over time and accumulated savings are more closely tied to whether families will experience food insecurity than what their breadwinners currently earn. Because the disposable incomes of many Americans rose in 2020 and 2021, it will probably take a deeper economic shock than the nearly 12% increase in grocery prices registered between December 2021 and December 2022 to make food insecurity soar.

Getting clearer pictures

To be clear, we do not mean to suggest that food insecurity is not a serious issue or that having more than 1 in 10 Americans struggle to get enough to eat is acceptable.

Rather, we noticed that policy and research interest in food insecurity spiked in the year following COVID-19 shutdowns, resulting in much more data on the topic before dwindling in 2021. Today, the public is paying more attention to the topic again.

Food banks and SNAP benefits collectively have provided around $130 billion in annual economic relief for low-income Americans in recent years, a number that includes a sharp increase in benefits. We believe that these efforts are vital.

We propose that conducting and releasing more frequent high-quality surveys would help bring sustained attention to the issue, clarify trends and allow experts like us to make better predictions.

And because all food insecurity surveys are subject to sampling errors and offer only a snapshot regarding a single time frame, we believe that pooling the multiple surveys featured in our data dashboard can better inform policymakers and charities that seek to address food insecurity and rapidly respond when levels spike.

About the Author:

Sam Polzin, Food and Agriculture Survey Scientist, Purdue University and Jayson Lusk, Professor of Agricultural Economics, Purdue University

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

By JustMarkets

At the close of the stock market on Friday, Dow Jones (US30) gained 1.00% (-2.05% for the week), and S&P 500 (US500) increased by 1.89% (+0.30% for the week). The NASDAQ Technology Index (US100) jumped by 2.66% on Friday (+2.15% for the week).

The US government reached its $31.4 trillion borrowing limit on Thursday amid a spat between uncompromising Republicans and Democrats over raising the nation’s debt ceiling. But traders can be sure the politicians will eventually agree because they have no choice. It happens every year, and this time is no exception.

This week, investors will be treated to a wave of reports from major technology companies. Microsoft (MSFT), the second largest US company by market value, reports on Tuesday, followed by Tesla (TSLA) on Wednesday and Intel (INTC) on Thursday. The reporting season started sluggishly. According to Refinitiv, S&P 500 companies are expected to record a 2.9% drop in fourth-quarter earnings overall compared with the previous year.

Alphabet (GOOGL) said Friday that it is cutting about 12,000 jobs or 6% of its workforce. Last week, Microsoft on Wednesday said it would cut 10,000 jobs, while Amazon (AMZN) began notifying employees that it would cut 18,000 jobs. Apparently, the US job market is starting to fall, which will undoubtedly show up in the next labor market reports. For regular people losing their jobs is a serious blow. But for the stock market, it will be a boost as the US Federal Reserve will hold off on raising rates so as not to hurt the economy even more.

Stock markets in Europe were mostly up on Friday. German DAX (DE30) gained 0.76% (-0.52% for the week), French CAC 40 (FR 40) added 0.63% (-0.58% for the week), Spanish IBEX 35 (ES35) jumped by 1.38% (+0.13% for the week), British FTSE 100 (UK100) increased by 0.30% (-0.94% for the week).

In Canada, a federal government law designed to help the fossil fuel workforce transition to a greener economy has caused unions to be unhappy. The government of Alberta, Canada’s main oil-producing province, says the law will eliminate the oil and gas industry, which accounts for 5% of Canada’s GDP. Canada’s oil and gas sector employs about 185,000 people, and the bill could lead to significant job cuts.

The European Central Bank (ECB) is currently leading the charge against the US Federal Reserve. Last week, support for the euro was largely due to a sell-off in the dollar and a firm stance by ECB President Christine Lagarde on fighting inflation. The ECB head expressed concern that China’s opening will lead to higher energy prices in 2023, and the ECB will continue to raise interest rates to bring inflation down to 2%.

British Finance Minister Jeremy Hunt plans to extend the 5 pence reduction in gasoline prices for another year. On the one hand, this is good news because it will help reduce the cost of gasoline at gas stations. On the other hand, untargeted government spending may keep inflation high for longer, which will only make it harder for the Bank of England, which needs to keep raising rates while the economy is already in recession.

Inflation in Switzerland may have peaked, but it’s too soon to swear off new interest rate hikes, Swiss National Bank President Thomas Jordan said.

Asian markets mostly rose last week. Japan’s Nikkei 225 (JP225) gained 2.77% over the week, China’s FTSE China A50 (CHA50) gained 0.73%, Hong Kong’s Hang Seng (HK50) gained 1.04% over the week, India’s NIFTY 50 (IND50) added 0.16%, and Australia’s S&P/ASX 200 (AU200) was positive 1.69% over the week.

Bank of Japan Governor Haruhiko Kuroda on Friday defended the central bank’s decision to expand its trading range under its yield curve control program and pledged to continue the Bank of Japan’s soft monetary policy. Speaking at the World Economic Forum in Davos, Switzerland, Kuroda said it was “not wrong” for the BOJ’s board to widen its tolerance range for the yield on its 10-year government bond from 25 basis points to 50 basis points last month.

In the commodities market, cotton futures (+5.46%), gasoline (+4.23%), Brent crude oil (+2.79%), and WTI crude oil (+2.29%) showed the biggest gains last week. Futures on natural gas (-8.34%), palladium (-3.21%), cocoa (-2.94%), and platinum (-1.92%) showed the biggest drop.

S&P 500 (F) (US500) 3,972.61 +73.76 (+1.89%)

Dow Jones (US30) 33,375.49 +330.93 (+1.00%)

DAX (DE40) 15,033.56 +113.20 (+0.76%)

FTSE 100 (UK100) 7,770.59 +23.30 (+0.30%)

USD Index 101.99 -0.07 (-0.06%)

• – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 19:45 (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.