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 Nicholas Peters, University of Tennessee 

Unhackable communications devices, high-precision GPS and high-resolution medical imaging all have something in common. These technologies – some under development and some already on the market all rely on the non-intuitive quantum phenomenon of entanglement.

Two quantum particles, like pairs of atoms or photons, can become entangled. That means a property of one particle is linked to a property of the other, and a change to one particle instantly affects the other particle, regardless of how far apart they are. This correlation is a key resource in quantum information technologies.

For the most part, quantum entanglement is still a subject of physics research, but it’s also a component of commercially available technologies, and it plays a starring role in the emerging quantum information processing industry.

Pioneers

The 2022 Nobel Prize in Physics recognized the profound legacy of Alain Aspect of France, John F. Clauser of the U.S. and Austrian Anton Zeilinger’s experimental work with quantum entanglement, which has personally touched me since the start of my graduate school career as a physicist. Anton Zeilinger was a mentor of my Ph.D. mentor, Paul Kwiat, which heavily influenced my dissertation on experimentally understanding decoherence in photonic entanglement.

Decoherence occurs when the environment interacts with a quantum object – in this case a photon – to knock it out of the quantum state of superposition. In superposition, a quantum object is isolated from the environment and exists in a strange blend of two opposite states at the same time, like a coin toss landing as both heads and tails. Superposition is necessary for two or more quantum objects to become entangled.

Entanglement goes the distance

Quantum entanglement is a critical element of quantum information processing, and photonic entanglement of the type pioneered by the Nobel laureates is crucial for transmitting quantum information. Quantum entanglement can be used to build large-scale quantum communications networks.

On a path toward long-distance quantum networks, Jian-Wei Pan, one of Zeilinger’s former students, and colleagues demonstrated entanglement distribution to two locations separated by 764 miles (1,203 km) on Earth via satellite transmission. However, direct transmission rates of quantum information are limited due to loss, meaning too many photons get absorbed by matter in transit so not enough reach the destination.

Entanglement is critical for solving this roadblock, through the nascent technology of quantum repeaters. An important milestone for early quantum repeaters, called entanglement swapping, was demonstrated by Zeilinger and colleagues in 1998. Entanglement swapping links one each of two pairs of entangled photons, thereby entangling the two initially independent photons, which can be far apart from each other.

Quantum protection

Perhaps the most well known quantum communications application is Quantum Key Distribution (QKD), which allows someone to securely distribute encryption keys. If those keys are stored properly, they will be secure, even from future powerful, code-breaking quantum computers.

While the first proposal for QKD did not explicitly require entanglement, an entanglement-based version was subsequently proposed. Shortly after this proposal came the first demonstration of the technique, through the air over a short distance on a table-top. The first demonstrations of entangement-based QKD were published by research groups led by Zeilinger, Kwiat and Nicolas Gisin were published in the same issue of Physical Review Letters in May 2000.

These entanglement-based distributed keys can be used to dramatically improve the security of communications. A first important demonstration along these lines was from the Zeilinger group, which conducted a bank wire transfer in Vienna, Austria, in 2004. In this case, the two halves of the QKD system were located at the headquarters of a large bank and the Vienna City Hall. The optical fibers that carried the photons were installed in the Vienna sewer system and spanned nine-tenths of a mile (1.45 km).

Entanglement for sale

Today, there are a handful of companies that have commercialized quantum key distribution technology, including my group’s collaborator Qubitekk, which focuses on an entanglement-based approach to QKD. With a more recent commercial Qubitekk system, my colleagues and I demonstrated secure smart grid communications in Chattanooga, Tennessee.

Quantum communications, computing and sensing technologies are of great interest to the military and intelligence communities. Quantum entanglement also promises to boost medical imaging through optical sensing and high-resolution radio frequency detection, which could also improve GPS positioning. There’s even a company gearing up to offer entanglement-as-a-service by providing customers with network access to entangled qubits for secure communications.

There are many other quantum applications that have been proposed and have yet to be invented that will be enabled by future entangled quantum networks. Quantum computers will perhaps have the most direct impact on society by enabling direct simulation of problems that do not scale well on conventional digital computers. In general, quantum computers produce complex entangled networks when they are operating. These computers could have huge impacts on society, ranging from reducing energy consumption to developing personally tailored medicine.

Finally, entangled quantum sensor networks promise the capability to measure theorized phenomena, such as dark matter, that cannot be seen with today’s conventional technology. The strangeness of quantum mechanics, elucidated through decades of fundamental experimental and theoretical work, has given rise to a new burgeoning global quantum industry.

About the Author:

Nicholas Peters, Joint Faculty, University of Tennessee

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

By Andrian Lee, University of Wisconsin-Milwaukee and Melissa Scanlan, University of Wisconsin-Milwaukee 

When storms like Hurricane Ian strike, many people have to cope afterward with losing water service. Power outages mean that pumps can’t process and treat drinking water or sewage, and heavy stormwater flows can damage water mains.

Ian’s effects echoed a similar disaster in Jackson, Mississippi, where rising river water overwhelmed pumps at the main water treatment plant on Aug. 29, 2022, following record-setting rain. The city had little to no running water for a week, and more than 180,000 residents were forced to find bottled water for drinking and cooking. Even after water pressure returned, many Jackson residents continued to boil their water, questioning whether it was really safe to drink.

Jackson had already been under a boil-water notice for more than a month before the crisis, which arrived like a slow-motion bullet to the city’s long-decaying infrastructure. Now, Jackson and its contractors face lawsuits and a federal investigation.

We study water policy with a focus on providing equitable access to clean water. Our research shows that disadvantaged communities have suffered disproportionately from underinvestment in clean and affordable water.

However, a historic increase in federal water infrastructure funding is coming over the next five years, thanks to the Infrastructure Investment and Jobs Act that was enacted in 2021.

If this funding is managed smartly, we believe it can start to right these wrongs.

A complex funding mix

Water infrastructure has two parts. Drinking water systems bring people clean water that has been purified for drinking and other uses. Wastewater systems carry away sewage and treat it before returning it to rivers, lakes or the ocean.

Money to build and maintain these systems comes from a mix of federal, state and local sources. Over the past 50 years, policymakers have debated how much each level of government should contribute, and what fraction should come from the most prized source: federal money that does not need to be repaid.

The 1972 Clean Water Act created a federal grant program, managed by the Environmental Protection Agency, to help states and municipalities build wastewater treatment plants. Under the program, federal subsidies initially covered 75% of project costs.

In the 1980s, the Reagan Administration challenged this arrangement. Conservatives argued that the grant program’s main purpose – addressing the need for more municipal wastewater treatment – had been fulfilled.

In 1987, Congress replaced wastewater grants with a loan program called the Clean Water State Revolving Fund, which still operates today. The EPA uses the fund to provide seed money to states, which offer low-interest loans to local governments to build and maintain wastewater treatment plants. Congress created a corresponding program, the Drinking Water State Revolving Fund, in 1996 to fund drinking water infrastructure.

As a result, U.S. water infrastructure now is funded by a mix of loans that must be repaid, principal forgiveness awards and grants that do not require repayment, and fees paid by local users. The larger the share that can be shifted into grants and principal forgiveness, the less pressure on local ratepayers to foot the bill for long-term infrastructure investments.

What’s in the infrastructure law

The Infrastructure Investment and Jobs Act authorizes more than US$50 billion for water infrastructure over the next five years. This won’t close the gap in funding needs, which the EPA has estimated at $472.6 billion from 2015 through 2034 just for drinking water systems. But it could support tangible improvements.

When water systems that serve low-income communities borrow money from state programs, even at low interest rates, they have to pay the loans off by raising rates on customers who already struggle to pay their bills. To reduce this burden, federal law allows state programs to provide “disadvantaged communities” additional subsidies in the form of principal forgiveness and grants. However, states have broad discretion in determining who qualifies.

The infrastructure law requires that 49% of federal funding for both drinking water and wastewater infrastructure must be awarded as additional subsidies to disadvantaged communities. In other words, almost half the money that states receive in federal funds must be awarded as principal forgiveness or outright grants to disadvantaged communities.

Who counts as ‘disadvantaged’?

In March 2022, the EPA released a memorandum that calls the infrastructure law a “unique opportunity” to “invest in communities that have too often been left behind – from rural towns to struggling cities.” The agency pledged to work with states, tribes and territories to ensure the promised 49% of supplemental funding reaches communities where the need is greatest.

This is an issue where the devil truly is in the details.

For example, under Mississippi’s definition of “disadvantaged community,” Jackson’s 2021 award for principal forgiveness was capped at 25% of the original principal. In its March 2022 memorandum, the EPA identified such caps as obstacles for under-resourced communities.

Mississippi appears to have responded by using a new standard for funds coming from the infrastructure law. Beginning this year, communities whose median household income is lower than the state median household income – including Jackson – will be awarded 100% principal forgiveness, which makes the funding effectively a grant.

Additionally, the EPA discourages using population as a factor to define “disadvantaged communities.” Communities with smaller populations struggle to cover water systems’ operating costs, so that challenge is important to consider. But using population as a determining factor penalizes larger cities that may otherwise be disadvantaged.

For example, in 2021, when determining principal forgiveness, Wisconsin awarded a higher financial need score to communities with populations below 10,000. This penalized Milwaukee, the state’s largest city, with almost a quarter of its people experiencing poverty.

In September 2022, Wisconsin updated its definition to consider additional factors, such as county unemployment rate and family poverty percentage. With these changes, Milwaukee now qualifies for the maximum principal forgiveness.

Mississippi and Wisconsin previously relied on factors too narrow to reach many disadvantaged communities. We hope the steps they have taken to update their programs will inspire similar actions from other states.

Getting the word out

In our view, the Infrastructure Investment and Jobs Act is a once-in-a-generation opportunity to correct decades of underinvestment in disadvantaged communities, especially with the EPA pushing the states to do so.

Historically under-resourced communities may not be aware of these state program funds, or know how to apply for them, or carry out infrastructure improvements. We believe the EPA should direct states that receive federal funds to help under-resourced communities apply for and use the money.

Recent events in Jackson and Florida show how natural disasters can overwhelm water systems, especially older networks that have been declining for years. As climate change amplifies storms and flooding, we see investing in water systems as a priority for public health and environmental justice across the U.S.

About the Author:

Andrian Lee, Water Policy Specialist, University of Wisconsin-Milwaukee and Melissa Scanlan, Professor and Lynde B. Uihlein Endowed Chair in Water Policy, UW-Milwaukee School of Freshwater Sciences; Director of the Center for Water Policy; Affiliate Faculty, University of Wisconsin Law School, University of Wisconsin-Milwaukee

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

By JustForex

The US 10-year bond yields rose nearly 10 basis points to 3.85% after Minneapolis Fed President Neel Kashkari said yesterday that the central bank is “very far” from suspending its tightening campaign. Kashkari’s comments followed a series of hawkish remarks from other officials. Federal Reserve Bank of Chicago President Charles Evans said Thursday that the US Central Bank’s discount rate is likely to reach 4.5-4.75% by the spring of 2023 as the Fed increases the cost of borrowing to reduce too much inflation. A day earlier, San Francisco Federal Reserve President Mary Daly said that investors are wrong to anticipate monetary policy easing in 2023. Such hawkish rhetoric brought negativity back to the financial markets, which triggered some sell-off in stocks.

At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 1.15%, and the S&P 500 Index (US500) fell by 1.30%. Tech Index NASDAQ (US100) closed the day down by 0.35%. At the Fed meeting in November, money markets are pricing in a more than 85% chance of a fourth straight 75 basis point rate hike.

Today, the main focus for investors will be on the US labor market data. If the report turns negative, it could trigger a drop in the dollar index and a rise in stock indices on expectations that the US Federal Reserve will be less aggressive in tightening monetary policy further. But if the non-farm payrolls report is positive and shows the strength of the labor market, the opposite reaction could follow a sell-off in the stock market plus an increase in the dollar index and treasury yields. Weekly labor market data showed that the number of Americans filing new jobless claims rose more than expected last week, but the labor market remains strong even as demand declines amid higher interest rates.

Stock markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.37%, French CAC 40 (FR40) fell by 0.82%, Spanish IBEX 35 (ES35) lost 0.92%, British FTSE 100 (UK100) closed down by 0.78%.

The report on the ECB’s September 7-8 monetary policy meeting released yesterday showed that an absolute majority approved a 75 basis point rate hike of the Governing Council. The report also indicated that in the medium term, a 50 basis point hike would be part of a sustainable path toward more neutral rate levels, and such a dynamic would be sufficient to alleviate inflationary pressures and not “drop” the economy deep into recession. But all inflation forecasts for 2023 and 2024 have been revised upward.

In August 2022, seasonally adjusted retail sales were down by 0.3% in the Eurozone. Retail sales also declined by 0.4% in July. This is negative data, which indirectly points to high inflationary pressures.

Oil prices rose about 1% on Thursday, holding at a three-week high after OPEC+ agreed to cut global supply by 2 million BPD, the biggest cut since 2020. Saudi Arabia’s energy minister said the real supply cut would be 1 million to 1.1 million BPD. Experts believe that such a move by OPEC+ will not only boost oil prices but also cause a new round of unwinding inflation, which central banks around the world are actively fighting.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.70%, Hong Kong’s Hang Seng (HK50) decreased by 0.42%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.03%.

A report released Thursday by the Bank of Japan (BOJ) indicates that most regional economies in Japan are seeing a moderate rebound, with some firms considering wage increases, stressing the hope that household incomes will rise enough to offset rising costs of living.

OPEC+ will no longer meet monthly. Meetings will now be held every two months.

S&P 500 (F) (US500) 3,744.40 −38.88 (−0.20%)

Dow Jones (US30) 29,926.47 −347.40 (−1.15%)

DAX (DE40) 12,470.78  −46.40 (−1.21%)

FTSE 100 (UK100) 6,997.27 −55.35 (−0.78)

USD Index 112.22 +1.14 (+1.02%)

• – US FOMC Member Waller Speaks (m/m) at 00:00 (GMT+3);
• – US FOMC Member Mester Speaks (m/m) at 01:30 (GMT+3);
• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (GMT+3);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
• – US FOMC Member Williams Speaks (m/m) at 17:00 (GMT+3).

By JustForex

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 JustForex

The US 10-year bond yields rose nearly 10 basis points to 3.85% after Minneapolis Fed President Neel Kashkari said yesterday that the central bank is “very far” from suspending its tightening campaign. Kashkari’s comments followed a series of hawkish remarks from other officials. Federal Reserve Bank of Chicago President Charles Evans said Thursday that the US Central Bank’s discount rate is likely to reach 4.5-4.75% by the spring of 2023 as the Fed increases the cost of borrowing to reduce too much inflation. A day earlier, San Francisco Federal Reserve President Mary Daly said that investors are wrong to anticipate monetary policy easing in 2023. Such hawkish rhetoric brought negativity back to the financial markets, which triggered some sell-off in stocks.

At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 1.15%, and the S&P 500 Index (US500) fell by 1.30%. Tech Index NASDAQ (US100) closed the day down by 0.35%. At the Fed meeting in November, money markets are pricing in a more than 85% chance of a fourth straight 75 basis point rate hike.

Today, the main focus for investors will be on the US labor market data. If the report turns negative, it could trigger a drop in the dollar index and a rise in stock indices on expectations that the US Federal Reserve will be less aggressive in tightening monetary policy further. But if the non-farm payrolls report is positive and shows the strength of the labor market, the opposite reaction could follow a sell-off in the stock market plus an increase in the dollar index and treasury yields. Weekly labor market data showed that the number of Americans filing new jobless claims rose more than expected last week, but the labor market remains strong even as demand declines amid higher interest rates.

Stock markets in Europe were mostly down yesterday. German DAX (DE30) decreased by 0.37%, French CAC 40 (FR40) fell by 0.82%, Spanish IBEX 35 (ES35) lost 0.92%, British FTSE 100 (UK100) closed down by 0.78%.

The report on the ECB’s September 7-8 monetary policy meeting released yesterday showed that an absolute majority approved a 75 basis point rate hike of the Governing Council. The report also indicated that in the medium term, a 50 basis point hike would be part of a sustainable path toward more neutral rate levels, and such a dynamic would be sufficient to alleviate inflationary pressures and not “drop” the economy deep into recession. But all inflation forecasts for 2023 and 2024 have been revised upward.

In August 2022, seasonally adjusted retail sales were down by 0.3% in the Eurozone. Retail sales also declined by 0.4% in July. This is negative data, which indirectly points to high inflationary pressures.

Oil prices rose about 1% on Thursday, holding at a three-week high after OPEC+ agreed to cut global supply by 2 million BPD, the biggest cut since 2020. Saudi Arabia’s energy minister said the real supply cut would be 1 million to 1.1 million BPD. Experts believe that such a move by OPEC+ will not only boost oil prices but also cause a new round of unwinding inflation, which central banks around the world are actively fighting.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.70%, Hong Kong’s Hang Seng (HK50) decreased by 0.42%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.03%.

A report released Thursday by the Bank of Japan (BOJ) indicates that most regional economies in Japan are seeing a moderate rebound, with some firms considering wage increases, stressing the hope that household incomes will rise enough to offset rising costs of living.

OPEC+ will no longer meet monthly. Meetings will now be held every two months.

S&P 500 (F) (US500) 3,744.40 −38.88 (−0.20%)

Dow Jones (US30) 29,926.47 −347.40 (−1.15%)

DAX (DE40) 12,470.78  −46.40 (−1.21%)

FTSE 100 (UK100) 6,997.27 −55.35 (−0.78)

USD Index 112.22 +1.14 (+1.02%)

• – US FOMC Member Waller Speaks (m/m) at 00:00 (GMT+3);
• – US FOMC Member Mester Speaks (m/m) at 01:30 (GMT+3);
• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (GMT+3);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3);
• – US FOMC Member Williams Speaks (m/m) at 17:00 (GMT+3).

By JustForex

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

Markets have of late dared to revive bets over a “dovish pivot” by the Fed, which has helped gold prices recover back above $1700 this week.

However, whether such a recovery can be sustained over the immediate term may all boil down to the upcoming US inflation data release (and also the US jobs report due later today – Friday, October 7th).

For the week ahead, here are the key scheduled economic data releases and events that could move markets:

Monday, October 10

• USD: Speeches by Fed Vice Chair Lael Brainard and Chicago Fed President Charles Evans
• EUR: Speeches by ECB Chief Economist Philip Lane and Banco de Portugal Governor Mario Centeno

Tuesday, October 11

• JPY: Japan August trade balance and current account
• AUD: Australia September household spending and business confidence, October consumer confidence
• IMF publishes World Economic Outlook
• EUR: ECB Chief Economist Philip Lane speech
• GBP: BOE Governor Andrew Bailey speech, UK August 3-month unemployment rate, September jobless claims
• USD: Cleveland Fed President Loretta Mester speech
• Meta Platform’s virtual conference

Wednesday, October 12

• EUR: ECB President Christine Lagarde speech, Eurozone August industrial production
• GBP: UK August monthly GDP, industrial production, trade balance
• GBP: Speeches by BOE’s Jonathan Haskel, Catherine Mann, and Huw Pill
• Brent: OPEC publishes Monthly Oil Market Report
• USD: US September PPI, FOMC minutes, speeches by Fed Governor Michelle Bowman, Minneapolis Fed President Neel Kashkari

Thursday, October 13

• JPY: Japan September PPI
• AUD: Australia October consumer inflation expectations
• EUR: Germany September CPI (final)
• Brent: IEA publishes Oil Market Report
• US crude: EIA weekly oil inventory report
• USD: US September CPI, US weekly initial jobless claims

Friday, October 14

• NZD: New Zealand September manufacturing PMI
• CNH: China September CPI, PPI, external trade
• GBP: BOE due to end its emergency bond buying
• USD: US September retail sales, October consumer sentiment
• CAD: Canada August manufacturing sales, September existing home sales
• S&P 500: US earnings season begins with Wall Street banks (JPMorgan, Wells Fargo, Citigroup, Morgan Stanley)

At the time of writing, although gold has managed to clamber back above the psychologically-important $1700 mark, prices have been resisted at the 50-day simple moving average (SMA) and have since eased slightly.

And the next US inflation data, as measured by the consumer price index (CPI), could dictate gold’s next big move.

Markets are currently expecting the September headline US CPI to have risen by 8.1% compared to the same month last year (September 2021).

If so, that would mark a third consecutive month whereby the headline CPI figure has eased lower since June’s 9.1% – the highest CPI year-on-year print in over 40 years!

A lower-than-expected headline CPI print this coming Thursday may embolden the “dovish pivot” narrative (which is to say that markets expect the Fed to have less impetus to keep US interest rates higher for longer on signs that US inflation has peaked).

 

If so, that lower-than-8.1% CPI figure may help push gold even higher:

• If the 50-day SMA isn’t already breached in the immediate aftermath of today’s US jobs report, then that would be another key area of interest for bullion bulls.
• Markets are rather pessimistic about spot gold’s chances of hitting the psychological $1800 mark, allocating a mere 5.6% chance of such an event happening over the next one week.
• However, a shockingly-low CPI print may just do the trick for gold bulls (those hoping gold prices can keep marching higher).

A higher-than-8.1% CPI print on Thursday however may dash gold’s recent recovery:

• Gold may well falter back below $1700 (if it hasn’t already done so following today’s NFP print). However, markets are relatively cautious about such prospects (gold falling below $1700 over the next week), with such odds now standing at just 38%, given that the US jobs report remains a massive unknown.
• Immediate support may arrive around the $1680 mark (July low, also where spot gold’s 21-day SMA currently resides).
• Stronger support may arrive around the mid-$1600 region, as was the case around mid-September.

Article by ForexTime

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

By JustForex

After a smaller-than-expected interest rate hike by the RBA this week and the UN asking central banks to slow interest rate hikes, the fundamental narrative shifted toward a potential “turnaround” by the Fed toward a slower interest rate hike. This has helped support stock markets. On the other hand, the US Consumer Confidence and Service Sector Activity Index data were better than expected, suggesting that the US economy is holding up relatively well so far. Thus, the US Fed may not shy away from its hawkish bias, which will once again put pressure on stocks.

As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.14%, and the S&P 500 Index (US500) lost 0.20%. NASDAQ technology index (US100) fell by 0.30%.

Mary Daley, President of the San Francisco Federal Reserve, said that the Fed’s goal is to keep tightening monetary policy until interest rates are at a restrictive level. The policymaker added that the US Federal Reserve does not expect interest rates to fall in 2023.

Credit Suisse’s credit risk continues to rise sharply. Yesterday, SocGen analysts wrote that Credit Suisse must actively deleverage its investment banking operations or risk default. But analysts at HSBC said Credit Suisse has no immediate concerns about liquidity and funding.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) was 1.21% lower, French CAC 40 (FR40) fell by 0.90%, Spanish IBEX 35 (ES35) decreased by 1.52%, British FTSE 100 (UK100) was 0.48% lower.

With almost 90% of the storage capacity in the EU, Europe will survive the coming winter with only a few scratches, barring any political or technical surprises, but the real difficulties will start in February or March when the storage capacity needs to be filled again.

The German economy minister blamed the United States and other “friendly” gas-supplying countries for the astronomical prices of their supplies. According to the minister, some gas suppliers are profiting from the consequences of the war in Ukraine, which has led to a sharp rise in global energy prices. Russia’s invasion of Ukraine continues to undermine energy markets, global supply chains remain trapped in China’s COVID-19 strategy, and advanced economies are moving ever closer to stagflation.

Leaders from more than 40 countries, meeting Thursday in the Czech capital, are set to create a “European Political Community,” which aims to increase security and prosperity across the continent. But critics say the new forum is an attempt to stall the expansion of the European Union.

OPEC+ countries have agreed to cut oil production by 2 million BPD. OPEC+ oil production cuts will take effect in November. Oil producers do not want to allow oil prices to fall and will reduce production to maintain “profit.” In a statement issued after the OPEC+ decision, the White House said it was disappointed by the short-sighted decision to cut production quotas at a time when the world economy is facing the continued negative impact of Putin’s invasion of Ukraine. Biden also directed the Energy Secretary to explore additional actions to increase domestic fuel production. Goldman raised its oil forecast immediately by $10 to $110 by the end of the year.

OPEC+ will no longer meet monthly. Meetings will now be held every two months.

Bond yields have corrected downward in recent days amid speculation that the Fed may move to a less aggressive policy in the near future amid growing tensions in financial markets and fears of a global recession. This situation supported gold and silver prices, causing a sharp rally in recent days. But the outlook for gold and silver remains bearish in the medium and long term as the tightening cycle goes on.

Asian markets traded higher yesterday. Japan’s Nikkei 225 (JP225) increased by 0.48%, Hong Kong’s Hang Sengv(HK50) jumped by 5.90%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 1.74%.

S&P 500 (F) (US500) 3,783.28 −7.65 (−0.20%)

Dow Jones (US30) 30,273.87 −42.45 (−0.14%)

DAX (DE40) 12,517.18 −153.30 (−1.21%)

FTSE 100 (UK100) 7,052.62 −33.84 (−0.48%)

USD Index 111.15 +1.09 (+0.99%)

• – Japan BOJ Gov Kuroda Speaks at 03:30 (Tentative);
• – UK Construction PMI (m/m) at 11:30 (GMT+3);
• – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustForex

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 XN Iraki, University of Nairobi 

President William Ruto has nominated Njuguna Ndung’u to head Kenya’s National Treasury. A Central Bank of Kenya governor for eight years between 2007 and 2015, Ndung’u is also an accomplished researcher and a University of Nairobi academic. He has extensive expertise in macroeconomics (inflation, economic growth, national income and unemployment) and poverty reduction.

If parliament approves his nomination, Ndung’u will lead the treasury in difficult circumstances. The country is just emerging from divisive electoral campaigns. It also faces economic challenges.

The government is spending more than it gets in revenue, inflation is rising and the value of the shilling is tumbling against major currencies.

Ndung’u has his work cut out for him. Ruto campaigned on the platform of mending a broken economy and redistributing growth dividends to low-income earners.

With a PhD in economics, Ndung’u has a deep understanding of both local and global economic trends. His latest stint was as executive director of the Africa Economic Research Consortium, a research and policy think-tank.

He has been an advisor to international organisations, such as the Brookings Institution and the International Development Research Centre (Africa’s regional office).

The job at hand

The Treasury Cabinet Secretary (finance minister) manages the revenues and expenditures of the country.

The government gets its revenue from taxes, grants, debts and dividends paid by state-owned enterprises. The treasury (ministry of finance) delegates powers to raise such revenues.

On the spending side, the ministry has to contend with the dictates of other institutions like parliament, the central bank and multilateral organisations like the World Bank and the International Monetary Fund. Decisions have to be made about how the revenue is shared and used – for recurrent expenditure like paying salaries and debt, and for development such as building roads or hospitals.

In Kenya, the decision is complicated by another factor. The money must be shared with 47 counties.

What he brings to the position

Ndung’u will have to make Ruto’s bottom-up economics model work. That means focusing on the people at the bottom of the pyramid who lack capital and opportunities to run businesses. The expectation is that empowering this segment of society would create more jobs and give more citizens a higher standard of living. This model is contrasted with trickle-down economics, which gives resources to a few at the “top” in the hope that it spreads down to the masses.

Ndung’u previously worked at the Kenya Institute of Public Policy Research and Analysis, which advises government departments, including the National Treasury, on policy issues. In 2001, he helped develop a macroeconomics model to analyse Kenya’s economy.

He is back in familiar waters, having been a central bank governor at the chaotic start of Mwai Kibaki’s second term in 2008, when post-election violence and the global financial crisis slowed down the Kenyan economy. He was a member of the National Economic and Social Council that Kibaki put together to lift the economy.

His most valuable experience for the task at hand is, perhaps, his mastery of monetary tools as a central banker. His new role focuses on fiscal policy (spending, tax and debt).

He is likely to work in tandem with the central bank, avoiding fiscal policies that upset monetary measures (like interest rates). Harmony between fiscal and monetary policies would be good for stability of the currency (as the UK is finding out).

Ndung’u is also known to have championed financial inclusion, mainly through mobile banking. This implies mass access to affordable payments, savings, credit and insurance.

He was bold in getting banks to accept mobile money, which was unpopular at the time. This may be a quality needed to drive bottom-up economics. There will have to be institutional changes to accommodate bottom-up economics and some resistance is to be expected. Kenyans are used to trickle-down economics.

Missing in his tool box

But Ndung’u lacks political experience in a cabinet dominated by politicians. He is a technocrat and, as Uhuru Kenyatta’s first term showed, some technocrats find it hard to fit into a new political dispensation. Political experience matters even in the most technical of jobs. In addition, Kenyatta lost his political clout partly because his cabinet, dominated by technocrats, lacked the political weight to sell government programmes to his core support base.

Ruto, too, needs to be careful, in my view. The Treasury under his regime should give free markets a human face. For example, the removal of subsidies could be seen as heartless.

What may not change

I doubt debt taps will close during Ndung’u’s tenure. The debt ceiling may be raised again in the new administration. Given the country’s budget deficit, which is about 6.2% of annual production (GDP), borrowing is bound to continue.

If there is change, it might come in the mixture of debt between long term and short term, as well as bilateral and multilateral loans.

At the moment, Kenya borrows equally from local and foreign lenders. Ruto wants Kenyans to save more, reducing the need for external borrowing. This is unlikely in the short run because of the poverty levels. People save after taking care of the basics, like food and shelter.

Inflation is also likely to remain an issue. Will interest rate hikes slow down inflation? Will government raise wages and salaries to cushion workers? Could cutting taxes be a better option despite fears of stoking inflation? The UK is a good case study – its tax cuts have led to a weaker currency, which implies higher inflation.

Finally, reliance on fiscal and monetary tools may not bear fruit. Kenya is a very informal economy. Tools like interest rate cuts may not work effectively when people borrow mostly informally.

Foreign direct investment and increased trade would be more effective than borrowing, as long as the business environment is attractive to investors.

About the Author:

XN Iraki, Associate Professor, Faculty of Business and Management Sciences, University of Nairobi

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

By Mathew Barlow, UMass Lowell and Suzana J. Camargo, Columbia University 

When Hurricane Ian hit Florida, it was one of the United States’ most powerful hurricanes on record, and it followed a two-week string of massive, devastating storms around the world.

A few days earlier in the Philippines, Typhoon Noru gave new meaning to rapid intensification when it blew up from a tropical storm with 50 mph winds to a Category 5 monster with 155 mph winds the next day. Hurricane Fiona flooded Puerto Rico, then became Canada’s most intense storm on record. Typhoon Merbok gained strength over a warm Pacific Ocean and tore up over 1,000 miles of the Alaska coast.

Major storms hit from the Philippines in the western Pacific to the Canary Islands in the eastern Atlantic, to Japan and Florida in the middle latitudes and western Alaska and the Canadian Maritimes in the high latitudes.

A lot of people are asking about the role rising global temperatures play in storms like these. It’s not always a simple answer.

It is clear that climate change increases the upper limit on hurricane strength and rain rate and that it also raises the average sea level and therefore storm surge. The influence on the total number of hurricanes is currently uncertain, as are other aspects. But, as hurricanes occur, we expect more of them to be major storms. Hurricane Ian and other recent storms, including the 2020 Atlantic season, provide a picture of what that can look like.

Our research has focused on hurricanes, climate change and the water cycle for years. Here’s what scientists know so far.

Rainfall: Temperature has a clear influence

The temperature of both the ocean and atmosphere are critical to hurricane development.

Hurricanes are powered by the release of heat when water that evaporates from the ocean’s surface condenses into the storm’s rain.

A warmer ocean produces more evaporation, which means more water is available to the atmosphere. A warmer atmosphere can hold more water, which allows more rain. More rain means more heat is released, and more heat released means stronger winds.

These are basic physical properties of the climate system, and this simplicity lends a great deal of confidence to scientists’ expectations for storm conditions as the planet warms. The potential for greater evaporation and higher rain rates is true in general for all types of storms, on land or sea.

That basic physical understanding, confirmed in computer simulations of these storms in current and future climates, as well as recent events, leads to high confidence that rainfall rates in hurricanes increase by at least 7% per degree of warming.

Storm strength and rapid intensification

Scientists also have high confidence that wind speeds will increase in a warming climate and that the proportion of storms that intensify into powerful Category 4 or 5 storms will increase. Similar to rainfall rates, increases in intensity are based on the physics of extreme rainfall events.

Damage is exponentially related to wind speed, so more intense storms can have a bigger impact on lives and economies. The damage potential from a Category 4 storm with 150 mph winds, like Ian at landfall, is roughly 256 times that of a category 1 storm with 75 mph winds.

Hurricane Ian’s water vapor on Sept. 28, 2022, meant heavy rainfall for large parts of Florida.
NOAA

Whether warming causes storms to intensify more rapidly is an active area of research, with some models offering evidence that this will probably happen. One of the challenges is that the world has limited reliable historical data for detecting long-term trends. Atlantic hurricane observations go back to the 1800s, but they’re only considered reliable globally since the 1980s, with satellite coverage.

That said, there is already some evidence that an increase in rapid intensification is distinguishable in the Atlantic.

Within the last two weeks of September 2022, both Noru and Ian exhibited rapid intensification. In the case of Ian, successful forecasts of rapid intensification were issued several days in advance, when the storm was still a tropical depression. They exemplify the significant progress in intensity forecasts in the past few years, although improvements are not uniform.

There is some indication that, on average, the location where storms reach their maximum intensity is moving poleward. This would have important implications for the location of the storms’ main impacts. However, it is still not clear that this trend will continue in the future.

Storm surge: Two important influences

Storm surge – the rise in water at a coast caused by a storm – is related to a number of factors including storm speed, storm size, wind direction and coastal sea bottom topography. Climate change could have at least two important influences.

Stronger storms increase the potential for higher surge, and rising temperatures are causing sea level to rise, which increases the water height, so the storm surge is now higher than before in relation to the land. As a result, there is high confidence for an increase in the potential for higher storm surges.

Speed of movement and potential for stalling

The speed of the storm can be an important factor in total rainfall amounts at a given location: A slower-moving storm, like Hurricane Harvey in 2017, provides a longer period of time for rain to accumulate.

There are indications of a global slowdown in hurricane speed, but the quality of historical data limits understanding at this point, and the possible mechanisms are not yet understood.

Frequency of storms in the future is less clear

How the number of hurricanes that form each year may change is another major question that is not well understood.

There is no definitive theory explaining the number of storms in the current climate, or how it will change in the future.

Besides having the right environmental conditions to fuel a storm, the storm has to form from a disturbance in the atmosphere. There is currently a debate in the scientific community about the role of these pre-storm disturbances in determining the number of storms in the current and future climates.

Natural climate variations, such as El Niño and La Niña, also have a substantial impact on whether and where hurricanes develop. How they and other natural variations will change in the future and influence future hurricane activity is a topic of active research.

How much did climate change influence Ian?

Scientists conduct attribution studies on individual storms to gauge how much global warming likely affected them, and those studies are currently underway for Ian.

However, individual attribution studies are not needed to be certain that the storm occurred in an environment that human-caused climate change made more favorable for a stronger, rainier and higher-surge disaster. Human activities will continue to increase the odds for even worse storms, year over year, unless rapid and dramatic reductions in greenhouse gas emissions are undertaken.

About the Author:

Mathew Barlow, Professor of Climate Science, UMass Lowell and Suzana J. Camargo, Lamont Research Professor of Ocean and Climate Physics, Columbia University

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