InvestMacro

By ForexTime

Investors and traders worldwide are keenly anticipating the European Central Bank’s policy announcements today.

Here are some major points to look out for:

1. The ECB’s first rate hike since 2011

It is widely expected that the ECB will raise its benchmark interest rates today for the first time since 2011.

What matters now is the size of the hike.

Markets have come to expect at least a 25 basis point hike. However, markets are also expecting about a 50% chance that we could see a larger-than-usual 50 basis point hike today (a la “two-in-one” hike).

This is because the ECB has to play catch up with record-high inflation. Europe’s June consumer price index (used to measure headline inflation) hit 8.6% in June – that’s over four times the ECB’s inflation target of 2%.

And with about 80 other central banks around the world already raising their respective rates, its high time that the ECB follows suit.

NOTE: Interest rate hikes are a central bank’s main tool for taming elevated inflation.

2. Anti-fragmentation tool

   As the ECB raises rates and gradually reduces its bond buying, investors have been following suit, selling off European bonds in tandem with the central bank. That has resulted in European bond yields moving higher.

   However, the fear is that “fragmentation” will occur, meaning to say that bond yields in more vulnerable economies down to the south (i.e. Italy) climb way higher relative to bond yields of relatively stronger economies (i.e. Germany).

   Much-higher yields then make it that much more expensive for a government to raise debt (get money from investors). As the government uses more money to pay interest on the debt that they issue, that money would then not be available to be spent on supporting its economy.

   Hence, soaring yields of highly-indebted members risks undermining the economy; a scenario that the ECB is trying to avoid.

   Today, the ECB is expected to announce details of a new tool to help limit these so-called fragmentation risks.

   More importantly, the ECB has to convince markets that this new tool can indeed achieve its goals.

When is it due?

Heads up, it’ll be later than usual.

• The policy statement is due at 12:15PM GMT (30 minutes later than past release times)
• ECB President Christine Lagarde is set to hold a press conference, starting at 12:45PM GMT (15 minutes later than past start times)

How could all this impact the euro currency?

• If the ECB triggers only a 25-basis point hike, that could prompt EURUSD to unwind recent gains. This may be because markets think the ECB is falling further behind in the race to combat inflation.

• If the ECB triggers a larger 50bps hike, that may only provide limited support for EURUSD, given that there are other major worries when considering the Eurozone’s economic outlook (more on this further down).

• If markets are not convinced that the ECB’s anti-fragmentation tool can do the job, that could further erode sentiment surrounding the euro.

• If markets are convinced about the efficacy of this new anti-fragmentation tool, that could help shore up the euro’s performance.

Also, expect a combination of the above scenarios.

Key support and resistance levels for EURUSD

• Resistance: 21-day simple moving average (SMA) around 1.027.
• Stronger resistance set to arrive around 1.035 region, which market the May and June lows.

• Support : Parity =1.000 psychologically-important mark

READ MORE: (July 14th) Why isn’t EURUSD below parity … yet?

• Stronger support perhaps to arrive at the recent cycle low of 0.99522.

Other major concerns to keep an eye on

• Italy’s political chaos

Italian Prime Minister Mario Draghi has resigned.

The political crisis in Europe’s third largest economy is a major concern for the ECB as policymakers try to combat record-high inflation without doing too much damage to the economy.

Such heightened uncertainty has already increased market fears surrounding Europe’s third-largest economy, prompting investors to sell Italian bonds and send their yields higher today, which exacerbates the “fragmentation risks” mentioned earlier.

 

• Europe’s potential energy crisis.

Russia today restored its gas supplies to Germany via the Nord Stream 1 pipeline.

In the lead up to today, markets had feared that Russia could decide not to turn on the taps again after the pipeline has completed its scheduled maintenance.
As I had written in last Thursday’s article:

“Such an apocalyptic event would spark an energy crisis in Europe, and further darken its economic outlook by making a recession all but certain. That could even send EURUSD careening past 0.95!”

 

So, phew … for now.

Still, energy supplies are expected to face further constraints further down the line, especially as we head closer to the winter. The lack of gas supplies may force factories and business to shutter operations, which would negatively impact the economy as well.

Back to today’s main event, if the ECB severely disappoints markets in just a few hours from now, we might even see in the coming sessions a new cycle low for EURUSD below parity.

In short, EURUSD is expected to remain firmly in its downtrend that its adhered to for the past year, with scant reason to expect a sustained recovery in the euro over the near-term.

Article by ForexTime

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

By George Prior

The Bank of England is failing the UK with its woeful inflation management, fuelling a painful cost of living crisis, and overseeing a British pound with sinking credibility.

This is the warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, as UK inflation hits a new 40-year high of 9.4%.

He says: “The UK’s historic cost of living crisis has officially got even worse for families and businesses across the country as inflation hit 9.4%, a fresh four-decade high.

“This shines the harsh spotlight again on how the Bank of England is failing the UK with its shamefully incompetent grip on the worst inflationary surge in 40 years.

“It underscores that the central bank was complacent and passive about consumer prices last year when the country emerged from coronavirus lockdowns.”

He continues: “Policymakers at the BoE will try and defend themselves by blaming external events, mainly the war in Ukraine – which, of course, haven’t helped.

“But the problems, including supply chain disruptions and massive fiscal spending for pandemic relief, were staring them in the face before the invasion. These issues did not spring out of nowhere.”

The historic 9.4% inflation will likely prompt the UK’s central bank to decide on a 50-basis point hike at its August policy meeting, says the deVere CEO, which also has inherent risks.

“The Bank of England has already failed on inflation with its grand-scale inaction and miscalculation early on.

“There’s now another risk that it hits the brakes too hard at its meeting next month, and future ones, with excessive rate hikes, which could push the consumer-led economy into not only a short-term but a longer-term recession.”

Last month, Nigel Green spoke publicly in support of the Wall Street giant Bank of America which recently claimed that the politicization of the Bank of England and a weakening economy risk turning the pound into an ‘emerging-market-like currency.

He said: “The well-flagged, international and domestic concerns that the Bank of England is in danger of losing its mandate as it struggles to contain inflation, could create the perfect storm for the pound.”

The deVere CEO concludes: “The Bank of England is failing, and its failure is hurting households and businesses across the country.

“If the public loses confidence in the ability of the central bank to control inflation – which is currently 7.4% higher than the bank’s target – there’s a real risk that people will demand wage increases to compensate, which could trigger a 1970s-style scenario that drives the cost of living even higher.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

By JustForex

US stock indices rose on Tuesday as investors temporarily put aside recession fears and dived into the reporting season. Investors are taking a close look at factors, how companies are struggling with higher costs and persistent supply problems, and how consumer behavior is changing amid persistently high inflation. As the stock market closed, the Dow Jones Index (US30) increased by 2.43%, and the S&P 500 Index (US500) added 2.76%. The NASDAQ Technology Index (US100) jumped by 3.11% yesterday.

The number of new homes in the US fell in June to its lowest level in over a year as demand declined due to the pandemic boom. Rising mortgage rates and record-high home prices have sidelined many potential buyers.

Twitter (TWTR) shares jumped nearly 3% after a Delaware Court of Chancery judge said the social network may accelerate its lawsuit against Elon Musk, setting a trial date in October. Shares of Lockheed Martin Corporation (LMT) fell by 0.7% after the military contractor said fighter jet sales fell and lowered its 2022 revenue and profit targets. Shares of Netflix increased by 7% on the report, despite the company losing 970,000 subscribers in the last quarter. But the outlook for the third quarter indicates that the company will return to customer growth and also plans to launch an ad-supported option. Tesla (TSLA), ASML (ASML), Abbott Labs (ABT), Biogen (BIIB), Baker Hughes (BKR), and United Airlines Holdings (UAL) all report today.

Stock markets in Europe were mostly up on Tuesday. German DAX (DE30) gained 2.69% yesterday, French CAC 40 (FR40) added 1.79%, Spanish IBEX 35 (ES35) gained 2.03%, British FTSE 100 (UK100) closed with 1.01% gain.

The annual inflation rate in the Eurozone in June 2022 was 8.6%, compared to 8.1% in May. A year earlier, the rate was 1.9%. The lowest annual rates were registered in Malta (6.1%), France (6.5%), and Finland (8.1%). Estonia (22.0%), Lithuania (20.5%), and Latvia (19.2%) registered the highest annual rates. European Central Bank policymakers are considering raising interest rates by more than 50 basis points at their meeting on Thursday to combat record-high inflation. The euro is strengthening on these expectations.

Investors are also watching the political drama in Rome as the Italian government is mired in uncertainty over whether Mario Draghi will remain as prime minister.

Nord Stream 1 resumes gas flows on Thursday after annual maintenance but at a reduced level.

In the oil market, traders continue to weigh limited inventories against the prospect of a recession that has brought the price back to $100 a barrel. Investors may see oil fall further if the economic outlook continues to deteriorate or if Saudi Arabia agrees to produce more oil. On the other hand, the summer season is in full swing, and the demand deficit is still there. These factors prevent the price from falling lower.

In metals, everything is the same. Gold and silver are inversely correlated to the dollar index and US government bond yields, which in turn are rising against a background of tighter monetary policy from the Fed. There are no fundamental reasons for buying now, and while the rates are going up, there won’t be. At the moment, buying gold and silver is possible only for speculative purposes for short periods.

Asian stocks are mostly rising at the market opening today. Japan’s Nikkei 225 (JP225) added 2.40% since opening, Hong Kong’s Hang Seng (HK50) jumped by 1.74%, and Australia’s S&P/ASX 200 (AU200) is trading up 1.58%.

RBA Governor Lowe said today that inflation in Australia would reach 6% or 7% this year, so the Central Bank will have to keep raising rates.

The Bank of Japan will also rule on policy on Thursday, but it is not expected to make any changes to its ultra-soft stance.

China and the European Union (EU) have agreed to work together to promote economic and trade cooperation and jointly address the global economy’s challenges. The two sides reached several outcomes and consensus on macroeconomic policy coordination, cooperation in production and supply chains, WTO reform, broader market opening, implementation of the China-EU geographical indications agreement, and regulatory cooperation.

S&P 500 (F) (US500) 3,936.69 +105.84 (+2.76%)

Dow Jones (US30) 31,827.05 +754.44 (+2.43%)

DAX (DE40) 13,308.41 +348.60 (+2.69%)

FTSE 100 (UK100) 7,296.28 +73.04 (+1.01%)

USD Index 106.71 −0.65 (−0.61%)

• – Australia RBA Governor Lowe Speaks at 02:10 (GMT+3);
• – UK Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Existing Home Sales (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (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 JustForex

On Monday, US stock indices closed in the negative territory. By the close of trading on the stock exchange Dow Jones Index (US30) decreased by 0.69%, S&P 500 Index (US500) lost 0.84%. The NASDAQ Technology Index (US100) decreased by 0.81%.

Shares of Apple fell by 2% after reports that the company will slow hiring and spending, becoming the next tech giant to take such a step as fears of an economic slowdown hit the sector. IT equipment and services maker IBM beat expectations for quarterly earnings on Monday but warned that the strong dollar would negatively impact the company’s results. The Federal Reserve’s hawkish activity and heightened geopolitical tensions have caused the dollar to rise against a basket of currencies over the past year, prompting companies with large international operations to temper their forecasts. A stronger dollar is eating into the profits of companies with extensive international operations and converting foreign currencies into dollars.

Companies like Johnson&Johnson (JNJ), Lockheed Martin (LMT), and Netflix (NFLX) report today.

The United States will impose harsh measures on countries that disrupt the international economic order, Treasury Secretary Janet Yellen said Tuesday. “Russia has turned economic integration into a weapon,” she said, calling on all responsible countries to unite against Russia’s war in Ukraine. The United States is pushing to expand trade ties with South Korea and other trusted allies to increase supply chain resilience and prevent possible manipulation by geopolitical rivals.

Stock markets in Europe mostly rose Monday. German DAX (DE30) gained 0.74% yesterday, French CAC 40 (FR40) added 0.94%, Spanish IBEX 35 (ES35) increased by 0.22%, British FTSE 100 (UK100) was up by 0.90%.

The European Central Bank is walking a tightrope in its planning for an anti-fragmentation instrument, which will be presented after the July 21 Board of Governors meeting. Doubts in Italy about Mario Draghi’s government, combined with the highest inflation in Germany since the 1970s, increased monetary tightening in the US, end of the ECB net bond purchases, and uncertainty about the war in Ukraine – all add to the Eurozone’s vulnerability. With Draghi facing a new vote of confidence in parliament on July 20, investors are concerned that if a new government is not formed on time, Rome may not meet the conditions for EU Next Generation financing. That would lead to a widening of spreads in the bond market between the stronger and weaker members of the monetary union. And it could depress the euro even further on foreign exchanges, another factor fueling inflation.

At the market’s opening today, Asian stocks are mostly down. Japan’s Nikkei 225 (JP225) added 0.74% from the opening bell, Hong Kong’s Hang Seng (HK50) decreased by 1.15%, and Australia’s S&P/ASX 200 (AU200) is trading lower by 0.66%.

Bank of Japan Governor Haruhiko Kuroda is more determined than ever to resist political and market pressures in pursuit of sustainable inflation. The BOJ is in no mood to give up stimulus. BOJ officials see some potential signs of sustainable inflation that need to be encouraged, not eliminated. That leaves the BOJ alone among major central banks in trying to keep rates near zero and limit bond yields.

The RBA intends to do whatever is necessary regarding inflation. The minutes of the Reserve Bank of Australia’s July meeting showed that further steps need to be taken to normalize monetary conditions in Australia in the coming months. Bank officials are considering further interest rate hikes of 25 or 50 basis points. Higher interest rates would also help strike a more sustainable balance between supply and demand for goods and services. Inflation is projected to peak later in 2022 and then fall back to 2-3% in 2023.

S&P 500 (F) (US500) 3,830.85 −32.31 (−0.84%)

Dow Jones (US30) 31,072.61 −215.65 (−0.69%)

DAX (DE40) 12,959.81 +95.09 (+0.74%)

FTSE 100 (UK100) 7,223.24 +64.23 (+0.90%)

USD Index 107.43 −0.63 (−0.58%)

• – Australia RBA Meeting Minutes (m/m) at 04:30 (GMT+3);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US Building Permits (m/m) at 15:30 (GMT+3);
• – UK BoE Gov Bailey Speaks at 20:45 (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 

Kenya has four presidential candidates in the August 2022 general election. They recently launched their manifestos and one thing ties them together: the economy.

In no other Kenyan election has the economy been such a key subject, not just for those seeking power, but for voters, too.

There are two reasons: a maturing democracy and recent developments that are affecting Kenyans’ pockets.

The candidates have made numerous promises. These include stipends to poor families, access to cheaper credit, land reform, unorthodox exports, farm subsidies and other interventions. But realistically, the country’s economic challenges will be difficult to overcome and there’s only so much that a government can do about them.

Shift of focus to economy

As a country develops, economic issues take centre stage. Kenya’s political leaders are shifting the campaign focus from personalities and ethnicity to economic well-being and growth. Having analysed politics in Kenya through an economic lens for more than 20 years, I have witnessed this shift.

Between 2015 and 2019, Kenya’s economic growth averaged 4.7% per year. The arrival of COVID-19 in 2020 disrupted this trajectory and the economy contracted by 0.3%.

Kenya rallied to register 7.5% economic growth in 2021 – higher than the 4% average recorded in sub-Saharan Africa. The World Bank has projected a moderation of this “remarkable recovery” in 2022. It expects the middle-income economy to grow 5.2%.

Rising prices

The lingering effects of the pandemic and the war in Ukraine have made life difficult for ordinary citizens. This has centred the state of the economy in daily conversations.

The rise in oil prices has led to inflation – where too much money chases too few goods. The World Bank projects that crude oil and natural gas prices will increase by 81% in 2022. And in June, the Kenya National Bureau of Statistics reported that the country’s year-on-year inflation rate had hit 7.9%.

This situation has especially affected the poor. For instance, the price of maize flour, a staple in Kenyan households, rose from Sh150 to Sh200 between mid-May and June 2022. Yet, no salary or wage has gone up by 33% over a similar period to protect consumers’ purchasing power.

There are others factors driving inflation. Elections in Kenya are expensive, which means there is a lot of money circulating. There are also jitters over the impending change of government, lowering investor confidence and reducing production.

What’s more, the rains in Kenya have been unreliable, leading to food shortages and a subsequent rise in prices.

The presidential candidates have noticed that voters are angry about the high costs of living, rising public debt and corruption. They are looking to offer economic solutions through their manifestos.

The promises

Former prime minister Raila Odinga is the Azimio One Kenya flagbearer. The coalition has promised a stipend of Sh6,000 (US$50) per month for vulnerable families. The World Bank puts the poverty line at US$57 a month. It’s not clear how these vulnerable families will be selected or how long the stipend will be in place for.

Kenya Kwanza – a coalition that’s fronting Deputy President William Ruto for the presidency – promises to make Sh50 billion (US$417 million) in credit available to “hustlers”, the men and women at the bottom of the economic pyramid. It hasn’t said how often this amount will be made available.

In Kenya, 83% of employers are in the informal sector, where “hustlers” work. Access to credit and job growth opportunities in this sector are limited. These “hustlers” make up the majority of the country’s 22 million voters, yet many of them live below the poverty line. The World Bank reports that 33.4% of Kenyans are poor.

Land reforms are targeted by both parties. Land ownership is an emotive issue in Kenya and is marked by inequalities that date back to colonialism.

Both manifestos are inward looking, focusing on local challenges and largely ignoring regional or international issues.

Roots Party’s George Wajackoyah launched a largely outward-looking manifesto, with China identified as a key source of export earnings. Should he be elected president, Wajackoyah expects to sell the Asian country hyena parts, and dog and snake meat. The party also wants cannabis legalised to allow for the crop’s export.

The party additionally says it would deport idle foreigners, hang the corrupt, shut down the Standard Gauge Railway and implement a four-day work week.

Roots Party’s economic ideas have brightened the campaign trail and captured the frustrations of ordinary Kenyans. During economic hardships, citizens are drawn to the extremes.

Agano Party has as its flagbearer David Waihiga. Its manifesto is both inward and outward looking. While it calls for the repatriation of Sh20 trillion (US$169 billion) stashed abroad, it also plans to offer tax waivers, subsidise maize and reduce corruption.

The hurdles

All four manifestos promise to create economic opportunities and lessen the suffering of ordinary Kenyans. But they need to be more realistic.

First, Kenyans’ thinking will not change overnight. Corruption thrives, undermining economic growth.

The current budget deficit is 8.1% of the country’s gross domestic product – the value of what it produces in a year. A budget deficit increases a country’s need to borrow. The World Bank estimates that if public debt gets to 77% of gross domestic product, then more borrowing reduces growth. Kenya will not raise the money it needs to turn the economy around if productivity doesn’t rise too.

Second, voting takes a day; economic growth takes years. Whoever wins the election will need to pool resources, adopt new technologies, secure new markets and shift citizens’ mindsets.

Three, politicians are constrained by the constitution, international obligations, vested interests and an ever-changing environment. Who foresaw COVID-19 or the war in Ukraine?

Four, the manifestos assume that the government drives the economy. The reality is that it’s citizens who do it through taxes. Yet, there is little focus on what individuals can do to uplift themselves.

Five, the manifestos are quiet on deeply entrenched issues that gnaw on the economy, such as tribalism, a culture of seeking handouts and population growth despite limited resources like land. These issues hinder the country’s productivity.

The four presidential candidates haven’t fully addressed the four factors of production: land, capital, labour and entrepreneurship. Land has been highlighted not as a factor of production, but for political reasons. Capital has been given the least attention – where will it come from beyond debt and taxes? Azimio la Umoja and Kenya Kwanza mention improving labour through education, but fail to detail the plan to make Kenyans more productive and entrepreneurial.

When the voting results are announced, reality will dawn. No jobs will be created overnight. Prices will not drop overnight. Voting is a sprint, economic growth is a marathon.

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 Nabil Nasr, Rochester Institute of Technology 

Nabil Nasr is the associate provost and director of the Golisano Institute for Sustainability at Rochester Institute of Technology. He is also the CEO of the Remade Institute, which was established by the U.S. government to conduct early-stage R&D to accelerate the transition to circular economy, which is a sustainable industrial model for improved resource efficiency and decreased systemic energy, emissions and waste generation. Below are highlights from an interview with The Conversation. Here, Nasr explains some of the ideas behind sustainable manufacturing and why they matter. Answers have been edited for brevity and clarity.

How would you explain sustainable manufacturing? What does the average person not know or understand about sustainable manufacturing?

When we talk about sustainable manufacturing, we mean cleaner and more efficient systems with less resource consumption, less waste and emissions. It is to simply minimize any negative impact on the environment while we are still meeting demand, but in much more efficient and sustainable ways. One example of sustainable manufacturing is an automotive factory carrying out its production capacity with 10% of its typical emission due to advanced and efficient processing technology, reducing its production waste to near zero by figuring out how to switch its shipping containers of supplied parts from single use to reusable ones, accept more recycled materials in production, and through innovation make their products more efficient and last longer.

Sustainability is about the proper balance in a system. In our industrial system, it means we are taking into account the impact of what we do and also making sure we understand the impact on the supply side of natural resources that we use. It is understanding environmental impacts and making sure we’re not causing negative impacts unnecessarily. It’s being able to ensure that we are able to satisfy our demands now and in the future without facing any environmental challenges.

Early on at the beginning of the Industrial Revolution, emissions, waste and natural resource consumption were low. A lot of the manufacturing impacts on the environment were not taken into account because the volumes that we were generating were much, much lower than we have today. The methods and approaches in manufacturing we use today are really built on a lot of those approaches that we developed back then.

The reality is that the situation today has drastically changed, but our approaches have not. There is plenty of industrialization going on around the globe. And, there is plenty of pollution and waste generated. In addition, a lot of materials we use in manufacturing are nonrenewable resources.

So it sounds like countries that are industrialized now picked up a lot of bad habits. And we know that growth is coming from these developing nations and we don’t want them to repeat those bad habits. But we want to raise their standard of living just without the consequences that we brought to the environment.

Yeah, absolutely. So there was an article I read a long time ago that said China and India either will destroy the world or save it. And I think the rationale was that if China and India copy the model and technologies used in the West to building its industrial system, the world will see drastic negative impact on the environment. The key factor here is the significantly high scale of activities needed to support their very large populations. However, if they are much more innovative and come up with much more efficient and cleaner methods better than used in the West to build up industrial enterprises, they would save the world because the scale of what they do is significant.

In talking about how these two countries could either ruin or save the world, do you remain an optimist?

Absolutely. I serve on the the United Nations Environment Program’s International Resource Panel. One of the IRP’s roles is to inform policy through validated independent scientific studies. One of the panel’s reports is called the Global Resources Outlook. The last report was published in 2019.

The experts are saying that if business as usual continues, we’re probably going to increase greenhouse gas emission by 43% by 2060. However, if we employ effective sustainability measures across the globe, we can reduce greenhouse gas emissions by a significant percentage, even by as much as 90%. A 2018 study I led for the IRP found that applying remanufacturing alongside other resource recovery methods like comprehensive refurbishment, repair and reuse could cut greenhouse gas emissions of those products by 79%–99% across manufacturing supply chains.

So there is optimism if we employ many sustainability measures. However, I’ve been around long enough to know that it’s always disappointing to see that the indicators are there; the approaches to address some of those issues are identified, but the will to actually employ them isn’t. Despite this, I’m still optimistic because we know enough about the right path forward and it is still not too late to move in the right direction.

Were there any lessons we’ve learned during the COVID-19 pandemic that we can apply to challenges we’re facing?

We learned a lot from the COVID crisis. When the risk became known, even though not all agreed, people around the globe took significant measures and actions to address the challenge. We accepted changes to the way we live and interact, we marshaled all of our resources to develop vaccines and address the medical supply shortages. The bottom line is that we rose to the occasion and we, in most part, took actions to deal with the risk in a significant way.

The environmental challenges we face today, like climate change, are serious global challenges as well. However, they have been occurring over a long time and, unfortunately, mostly have not been taken as seriously as they should have been. We certainly have learned that when we have the will to address serious challenges, we can meet them.

Final question. Give me the elevator pitch on remanufacturing.

Remanufacturing is a process by which we bring a product that has been used back to a like-new-or-better condition. Through a rigorous industrial process, we disassemble the product to the component level. We clean, inspect and restore it, qualifying every part. We then reassemble the product similar to what happened when it was built the first time. The reality is that by doing so, you’re using anywhere from 70% to 90% of the materials recovered from the use phase. This has significantly far lower impacts on the environment when compared to making new products from raw materials.

You don’t mine virgin material for that. You’re saving the energy that made those parts; you’re saving the capital equipment that made those parts; you’re saving the labor cost. So the savings are significant. The overall savings are about 50%. For example, a remanufactured vehicle part in the United States requires less than 10% of the energy needed to make a new one, and less than 5% of new materials. That means lower costs for the producer while providing the consumer with a very high-quality product. Examples of commonly remanufactured products are construction equipment, automotive engines and transmissions, medical equipment and aircraft parts. Those products are similar to brand-new products, and companies like Xerox, Caterpillar and GE all have made remanufacturing an important part of their overall operations.

About the Author:

Nabil Nasr, Associate Provost Academic Affairs and Director of GIS, Rochester Institute of Technology

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

By JustForex

Friday’s macro data showed that US retail sales rose more than expected in June. The Federal Reserve Bank of New York’s index of general business conditions increased to +11.1 from -1.2. A value above zero indicates growth and the July figure beat all forecasts in a Bloomberg survey of economists. At the same time, the Fed Bank Business Conditions Index fell more than 20 points to -6.2, the biggest drop since the terrorist attacks in September 2001. Also late last week the US Federal Reserve released fresh statistics on the change in assets on the balance sheet. The data showed a $69.2 billion drop in assets, while reserves in the banking system increased. The growing surplus of dollar liquidity in the financial system led to the closing of longs on the US currency, which led to some decline of the dollar on Thursday and Friday. At the same time, stock indices were rising for the last 2 days of last week. By the close of stock markets on Friday, Dow Jones (US30) gained 2.15% (+0.03% for the week), and S&P 500 (US500) added 1.92% (-0.46% for the week). The NASDAQ Technology Index (US100) jumped by 1.79% (-0.63% for the week).

The odds of a 100 basis point hike declined slightly after two of the Fed’s most hawkish spokesmen, Bullard and Waller, said Thursday that they would prefer a 75 basis point hike. Atlanta Fed President Rafael Bostic on Friday also warned the Central Bank against acting “too harshly” because it could undermine high hiring and other positive trends still seen in the economy. But a 20% chance of a 100 basis point rate hike remains, which is also significant.

The US bank reporting season began on a weak note. There will be a lot of big names reporting this week. Today investors should pay attention to the reports of Bank of America (BAC), IBM (IBM), Charles Schwab (SCHW), and Goldman Sachs (GS).

Equity markets in Europe were mostly up Friday. German DAX (DE30) gained 2.76% (+0.64% for the week), French CAC 40 (FR 40) jumped by 2.04% (+1.89% for the week), Spanish IBEX 35 (ES35) added 1.81% (-0.49% for the week), British FTSE 100 (UK100) was up by 1.69% (-0.52% for the week).

Europe is in a difficult position. Inflation is at record highs, with growing fears that Europe could be cut off from Russian natural gas, and that could be an uncontrollable and difficult variable for European economies. The ECB is in a quandary with Europe, trying to balance the need for higher interest rates against the impact that high rates could have on an already struggling European economy. A political crisis is also looming. Boris Johnson has already resigned in Britain. In Italy, Mario Draghi was also set to resign, but his resignation was not accepted. German Olaf Scholz is now under huge criticism.

Investors in Europe are also now focused on whether the critical Nord Stream 1 pipeline to Germany from Russia will reopen after being closed for maintenance last week. It is scheduled to reopen on July 21, but European governments are concerned that Moscow may extend it to limit gas supplies to Europe, disrupting plans for winter storage.

Traders should keep a close eye on the oil market this week. Preliminary information suggests that US President Joe Biden has reached an agreement with Saudi Crown Prince Mohammed bin Salman to produce more oil, so oil prices could be very volatile. White House officials also said ahead of Biden’s visit to the kingdom that they hoped OPEC and its non-OPEC partners would take additional measures to increase oil supplies to help deal with rising domestic gasoline prices. But officially at this point, Saudi Arabia has not made any specific commitments to the US to increase oil production and will only do so if there is a shortage in the market.

Asian markets traded lower last week. Japan’s Nikkei 225 (JP225) decreased by 0.39% for the week, Hong Kong’s Hang Seng (HK50) lost 5.46% for the week, and Australia’s S&P/ASX 200 (AU200) was down by 1.08% for the week. On Monday’s opening, the Asian market is increasing.

New Zealand’s consumer price index increased by 1.7% in the last quarter, (expected +1.8%). Annual inflation accelerated to 7.3% from 6.9%, the highest level since 1990. In May, the central bank projected that inflation would peak at 7% this year and then return to the upper end of the range by the end of 2023.

In the commodities market, natural gas futures (+17.92%) showed the biggest gain over the week. Futures on palladium (-15.56%), wheat (-12.39%), lumber (-9.25%), coffee (-9.21%), orange juice (-7.89%), copper (-7.86%), cotton (-7.24%), gasoline (-7.17%), WTI oil (-6.89%), platinum (-5.69%), Brent oil (-5.5%), corn (-4.26%), and silver (-2.99%) showed the biggest drop.

S&P 500 (F) (US500) 3,863.16 +72.78 (+1.92%)

Dow Jones (US30) 31,288.26 +658.09 (+2.15%)

DAX (DE40) 12,864.72 +345.06 (+2.76%)

FTSE 100 (UK100) 7,159.01 +119.20 (+1.69%)

USD Index 107.98 −0.56 (−0.52%)

• – New Zealand Consumer Price Index (m/m) at 01:45 (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 George Prior

The extreme heatwave crisis scorching parts of the UK, Europe, the U.S. and Asia underscores that private finance must be urgently unlocked and mobilized by the financial sector, as politicians continue to skirt the issue.

This is the call-to-arms cry from Nigel Green, the chief executive and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations.

He says: “The consequences of years and years of outrageous inaction from politicians on the climate crisis are now being laid bare.

“The UK’s Met Office has issued its first-ever ‘Red Extreme’ heat alert; the worst heat wave in Europe is causing an avalanche of devastating wildfires across Spain, Portugal, Croatia and France; a heat dome has formed over the southwest and central U.S, smashing temperature records; and almost 90 cities in China are living under heat alerts.

“Data shows heatwaves have been on the rise in recent years, yet governments around the world are either unwilling or unable to funnel the resources necessary to try and tackle the problem head-on.”

He continues: “Trillions of dollars are needed. This is why it is now critical that private money is unlocked and mobilized in the battle to mitigate the worst effects of human-created climate change.

“For this to happen, all sectors within the financial industry need to step-up, including financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks and auditors.

“If we fail on this, the level of finance will not be available, nor at the pace necessary, to halt the catastrophic effects of global warming.”

The deVere Group CEO’s calls come after he has publicly criticized some within the financial advisory industry who fail to urge clients to invest in Environmental, Social and Governance (ESG) orientated investments.

“I would say to that those in our industry who are looking to weaponize or politicize ESG investing by branding it as ‘woke virtue-signalling’, amongst other things, that they are placing themselves and their companies on the wrong side of history,” he wrote in a column in FT Adviser.

“The so-called ESG backlash is misguided and shallow.”

He goes on to add that clients’ investment strategies would also benefit.

“Funds investing in entities with robust ESG credentials have outperformed their benchmarks over recent years. From a risk management point of view, including these companies in your portfolio is, clearly, a sensible decision to take.”

It’s an issue on which Nigel Green’s been increasingly vocal in recent years. Last year ahead of COP26, deVere Group became one of 18 founding signatories of the UN-backed Net Zero initiative, the international alliance of powerhouse global finance companies that will help accelerate the transition to a net zero financial system.

The deVere CEO concludes: “If mega amounts of private money are not urgently put towards battling climate change – the defining issue of our time – we are doomed to fail.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.