Archive for Economics & Fundamentals – Page 83

Colleges face gambling addiction among students as sports betting spreads

By Jason W. Osborne, Miami University 

Three out of four college students have gambled in the past year, whether legally or illegally, according to the National Council on Problem Gambling.

An estimated 2% to 3% of U.S. adults have a gambling problem. The portion of college students with a problem, however, is potentially twice that number – up to 6%.

As an educational psychologist who follows gambling in America, I foresee the potential for gambling on campus to become an even bigger problem. Sports betting continues to expand, including on college campuses, since a 2018 Supreme Court ruling allowing states to make it legal.

As a faculty fellow at an institute that promotes responsible gaming, I know that colleges can take steps to curtail problem gambling among students. It is all the more urgent given that adolescents in general, including college students, are often uniquely susceptible to gambling problems, both because of their exposure to video games – which often have hallmarks of gambling behavior – and the stress and anxiety of college life, which can lead to using gambling as a coping strategy.

The spread of legal sports betting

As of November 2023, sports betting is legal in some form in 38 states and Washington, D.C. Further, 26 states allow sports betting online. Bills have been introduced – and some recently passed – in more states. These states include Vermont, Missouri and North Carolina. Thanks to technology, sports betting is now accessible beyond casinos. Anyone can access it online and on their smartphone.

More than US$268 billion has been gambled legally on sports betting between June 2018 and November 2023. Revenue in all U.S. gaming sectors has increased significantly, with sports betting growing the fastest, at an estimated 75% annually. It has generated about $3.9 billion in tax revenue to date.

Sports betting is also becoming more accessible on college campuses. A New York Times investigation found that sports betting companies and universities have essentially “Caesarized” college life. That is to say, they’ve made campuses resemble elements of the world famous casinos by introducing online gambling to students.

College betting scandals shine light on campus wagering.

These profits have driven increased advertising. Some estimate that total advertising through all media channels could approach $3 billion annually. This includes social media platforms like TikTok, where young adults are more likely to see ads for gambling. A study in the United Kingdom found that 72% of 18- to 24-year-olds have seen gambling ads through social media.

While advertisers reportedly focus on young adults of legal age, research suggests that children under 18 are also being exposed to advertising related to gambling. The intensity of advertising activity on social media has raised concerns and brought scrutiny. Earlier this year, for example, prosecutors in the Massachusetts attorney general’s office expressed concern that sports betting and other gambling might spread quickly through college campuses as a result of advertising.

Why college students are at greater risk of gambling addiction

Gambling addiction affects people from all backgrounds and across all ages, but it is an even bigger threat to college students. Adolescents of college age are uniquely likely to engage in impulsive or risky behaviors because of a variety of developmental factors, leaving them more susceptible to take bigger risks and experience adverse consequences.

It’s no secret that drinking alcohol is prevalent on college campuses, and this can increase the likelihood of other risk-taking behaviors such as gambling. Like other addictive behaviors, gambling can stimulate the reward centers of the brain, which makes it more difficult to stop even if someone is building up losses.

What colleges and universities can do to help

If you’re worried a student in your life might have a gambling problem, the Mayo Clinic describes signs to look for. These include restlessness or irritability when attempting to stop or reduce gambling, gambling more when feeling distressed, and lying to hide gambling or financial losses from it. Gamblers Anonymous provides a 20-question, self-diagnostic questionnaire to help people identify problems or compulsive gambling.

For more resources, organizations like the Gateway Foundation offer information and support to help someone with a gambling problem. Immediate help is available at the national problem gambling helpline, 1-800-GAMBLER. The National Council on Problem Gaming has lists of resources within each state that can provide more local support and assistance.

At the Miami University Institute for Responsible Gaming, Lottery and Sport, my colleagues and I are working to ensure that the recent dramatic expansion of legalized gaming is matched by effective guidance for policymakers and leaders within higher education. Many institutions, like the University of Oregon, have begun to acknowledge that widespread legalized sports betting and gambling can affect their students. A comprehensive and coordinated approach is required to protect them from harm.

There are resources available to help institutions, such as the “get set before you bet” initiative adopted by the University of Colorado, Boulder and others. This gives students practical tips to follow if they are going to gamble, such as setting time and money limits before they start.

Colleges and universities could do even more. According to the International Center for Responsible Gaming, institutions can address gambling risks to students by:

  • Ensuring there are clear policies on gambling and making sure they align with alcohol policies. United Educators provides examples of how institutions can create effective policies and support student wellness, like Arizona State’s policy. Theirs prohibits legal and illegal gambling at any event related to ASU and reinforces that alcohol possession, consumption or inebriation is illegal for all students under 21.
  • Promoting awareness of addiction as a mental health disorder and making resources for getting help available to students.
  • Ensuring those who work in campus counseling and health services are familiar with gambling addiction and prepared to support students struggling with addiction or problem behavior. Providers should also be aware that multiple addictions can be present, enhancing the challenges to management and recovery.
  • Surveying student attitudes toward gambling to track changes in attitudes, behaviors and norms.

With various sports championships, including in baseball, football and college basketball, taking place throughout the academic year, there’s no shortage of occasions for universities to check in with students about sports betting on campus. Gambling addiction is treatable, but preventing it from the start is the best solution.The Conversation

About the Author:

Jason W. Osborne, Professor of Statistics, Miami University

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

 

The holiday shopping season provides support for US stock indices. Asian indices are growing amid expectations of a positive NVDA report

By JustMarkets

US stock indices continued their rally yesterday. At the close of the stock exchange, the Dow Jones Index (US30) rose by 0.58%, and the S&P 500 Index (US500) gained  0.74%. The NASDAQ Technology Index (US100) closed positive by 1.13% on Monday. At the same time, the S&P 500 Index (US500) and Dow Jones (US30) hit 3-month highs, and the NASDAQ Index (US100) reached a year high. Rising technology stocks led the overall market higher, with Microsoft (MSFT) and Nvidia (NVDA) rising to record highs amid optimism about artificial intelligence.

Favorable outlooks for the holiday shopping season are also lending support to stocks. According to a Deloitte survey, consumers plan to spend an average of $567 during Black Friday and Cyber Monday, up 13% from last year. Additionally, the National Retail Federation predicts that 182 million people will shop between Thanksgiving and Cyber Monday, the highest number since 2017.

Bearish factors include hawkish comments from FRB President Richmond Barkin, who said he favors raising the interest rate for longer due to unsustainable inflation. US leading indicators for October declined by 0.8% m/m, slightly weaker than expectations of 0.7% m/m and the largest decline in 6 months.

Microsoft Corporation (MSFT) shares hit record highs yesterday after recently fired OpenAI CEO Sam Altman joined the tech giant.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) decreased by 0.11%, France’s CAC 40 (FR40) added 0.18% on Monday, Spain’s IBEX 35 (ES35) jumped by 0.79%, and the UK’s FTSE 100 (UK100) closed negative by 0.11%.

Ahead of the release of this week’s Autumn Budget, UK Prime Minister Rishi Sunak promises to cut debt and cut taxes to further boost the country’s economy. Today, Prime Minister Sunak tweeted, “Now that inflation is halved, we can turn our attention to cutting tax… We will reward work by cutting taxes and reforming our benefits system so work always pays.” In another tweet, Prime Minister Sunak added: “I will do what is necessary to get our debt down and provide financial security. That will help keep inflation falling and get mortgage rates back down to affordable levels.”

Monday’s decline in the dollar index to a 2.5-month low helped energy prices. Crude oil prices also rose amid concerns that OPEC+ countries may extend and even deepen oil production cuts at a meeting this weekend. OPEC+ will meet in Vienna on November 25-26 to discuss extending oil production cuts. Geopolitical concerns have heightened shipping risks in the Middle East due to the war between Israel and Hamas and are supporting crude prices after a Japanese-chartered Israeli ship was hijacked Sunday in the Red Sea by Iranian-backed Houthi rebels. The rebels have said they support Hamas in the conflict and will continue attacks on Israeli territory and ships.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) decreased by 0.59% yesterday, China’s FTSE China A50 (CHA50) added 0.33% on Monday, Hong Kong’s Hang Seng (HK50) was up by 1.86% on the day, and Australia’s ASX 200 (AU200) was positive by 0.13%. Most Asian stocks rose at the open on Tuesday. Optimism about a recovery in China’s real estate sector is boosting sentiment. Yesterday, there were reports that the Chinese government plans to take additional measures to support the sector.

Nvidia (NVDA) will report its earnings for September on Tuesday after the US market close. EPS is estimated to be $3.36 on revenue of $16.18 billion. For the past three quarters, Nvidia has consistently beaten forecasts, citing a huge increase in demand due to advances in artificial intelligence. The company develops chips that are specifically used to develop and power artificial intelligence platforms that place high demands on computing resources. Nvidia’s strong results invariably spark a rally in Asian chip companies and have also been the driving force behind a significant rally in Japanese stocks this year. Nvidia recently unveiled a new flagship chip for AI development, the H200.

S&P 500 (F)(US500) 4,547.38 +33.36 (+0.74%)

Dow Jones (US30) 35,151.04 +203.76 (+0.58%)

DAX (DE40)  15,901.33 −17.83  (−0.11%)

FTSE 100 (UK100) 7,496.36 −7.89 (−0.11%)

USD Index  103.49 −0.43 (−0.41%)

News feed for 2023.11.21:
  • – Australia RBA Bullock Speech at 01:00 (GMT+2);
  • – Australia RBA Meeting Minutes at 02:30 (GMT+2);
  • – Switzerland Trade Balance at 09:00 (GMT+2);
  • – Hong Kong Inflation Rate at 10:30 (GMT+2);
  • – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
  • – US Existing Home Sales (m/m) at 17:00 (GMT+2);
  • – Eurozone ECB President Lagarde Speaks at 18:00 (GMT+2);
  • – US FOMC Meeting Minutes at 21:00 (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.

PBoC left key rates unchanged. OPEC+ plans to cut production to support oil prices

By JustMarkets

At Friday’s close, the Dow Jones Index (US30) added 0.01% (+2.01% for the week), while the S&P 500 Index (US500) increased by 0.13% (+2.44% for the week). On Friday, the NASDAQ Technology Index (US100) closed positive by 0.08% (+2.76% for the week). The broad market initially went down on Friday as bond yields rose following Friday’s economic news from the US showing an unexpected increase in October housing starts and building permits, a hawkish factor for Fed policy. However, bond yields retreated from highs towards the end of the trading session, allowing stocks to recover towards the end of the trading session.

On Friday, Fed Vice Chairman for Supervision Michael Barr said he believes the Fed is at or near peak interest rates, but San Francisco Fed Chair Mary Daly and Boston Fed President Susan Collins emphasized the need for more evidence of cooling inflation.

According to Bank of America, EPFR Global data showed global equity funds attracted US$23.5 billion in the week to November 15, the second-largest inflow this year. This indicates that funds are building up positions in equities and, therefore, believe in further growth amid the end of the tightening cycle by the US Federal Reserve.

X (formerly Twitter) billionaire owner Elon Musk has been ratcheting up tensions with his posts on the platform supporting an anti-Semitic conspiracy theory. IBM, NBCUniversal, and parent company Comcast said they would stop advertising on X after it was reported that their ads appeared alongside content supporting the anti-Semitic movement. On Thursday and Friday, ads from Apple, Oracle, Amazon, and NBA Mexico were also placed next to anti-Semitic material on X, and there is a high probability that these companies will also stop using the platform. The value of company X continues to plummet. Twitter was sold for $44 billion dollars, and X is now valued at $11 billion dollars.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) gained 0.84% (week-to-date +4.15%), France’s CAC 40 (FR40) added 0.91% (week-to-date +2.32%) on Friday, Spain’s IBEX 35 (ES35) jumped by 0.97% (week-to-date +3.74%), and the UK’s FTSE 100 (UK100) closed positive by 1.26% (week-to-date +1.95%).

On Friday, ECB Governing Council representative and Bundesbank President Nagel said that borrowing costs should remain high for a sufficient period of time and an ECB rate cut is highly unlikely in the near term. His colleague, ECB Governing Council representative Holzmann, also said that it would be too early for the ECB to start cutting interest rates in the second quarter of next year, and in general, market expectations for a rate cut are premature. At the moment, the ECB still prefers to stick to tight monetary policy, but if the pace of wage growth starts to shift downward in the near future, the current ECB stance will soften sharply, and the door for rate cuts will be open.

A new budget will be presented in the UK this week. UK Treasury chief Jeremy Hunt said that the government can afford to cut some taxes in the face of lower inflation, but cuts to social benefits will accompany any cut. Hunt also said the government needs to reform the welfare system to get more people back to work. Economists believe Wednesday’s autumn budget will also include relief for businesses and wealthy property owners. The tax cuts, along with improvements in the labor market, will improve economic performance but could be factored in more persistent inflation next year.

Crude oil and gasoline prices rose sharply Friday and recovered much of Thursday’s sharp sell-off. Oil prices also rose after Goldman Sachs said it expects OPEC to act to support oil prices. As early as next Sunday, OPEC+ will consider deepening oil production cuts. This could lead to a sharp gap up at the market opening on Monday, November 27. Goldman Sachs believes OPEC+ countries will ensure Brent Crude oil prices in the $80 to $100 range in 2024, providing a moderate deficit.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) gained 2.34% for the week, China’s FTSE China A50 (CHA50) declined 0.04% over five trading days, Hong Kong’s Hang Seng (HK50) ended the week up by 1.11%, and Australia’s ASX 200 (AU200) ended the week positive by 1.04%.

The People’s Bank of China (PBoC), as expected, kept key lending interest rates near record lows. At the same time, the People’s Bank of China injected about 80 billion yuan of additional liquidity into the markets. However, Chinese equities were mostly supported by the rise in real estate stocks after Chinese regulators pledged to provide additional policy support to the struggling real estate sector.

S&P 500 (F)(US500) 4,514.02 +5.78 (+0.13%)

Dow Jones (US30) 34,947.28 +1.81 (+0.01%)

DAX (DE40)  15,919.16  +132.55 (+0.84%)

FTSE 100 (UK100) 7,504.25 +93.28 (+1.26%)

USD Index  103.82 −0.53 (−0.51%)

News feed for 2023.11.20:
  • – China PBoC Loan Prime Rate (m/m) at 03:15 (GMT+2);
  • – German Producer Price Index (m/m) at 09:00 (GMT+2);
  • – UK BoE Gov Andrew Bailey’s Speech at 20:45 (GMT+2);
  • – New Zealand Trade Balance 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.

Oil prices fell to a 4-month low. China’s economy shows signs of recovery

By JustMarkets

US stock indices traded flat yesterday amid disappointing corporate earnings results. Cisco Systems (CSCO) fell by 11%, sending technology stocks tumbling after cutting its full-year earnings forecast. Also down more than 7% were shares of retailer Walmart (WMT) after it struck a cautious tone on the outlook for US shoppers. In addition, a more than 3% drop in the price of WTI crude oil to a near four-month low pressured energy stocks. At the stock market close, the Dow Jones Index (US30) was down by 0.13%, while the S&P 500 Index (US500) jumped by 0.12%. The Nasdaq Technology Index (US100) is up by 0.07%.

US weekly jobless claims rose by 32,000 to a two-year high of 1.865 million, indicating a weak labor market versus expectations of 1.843 million. Additionally, October manufacturing production fell by 0.7% m/m, weaker than expectations of 0.4% m/m and the largest decline in 4 months.

The US Senate voted 87-11 on Wednesday night to pass a temporary funding measure to avert a government shutdown. President Biden will now sign the bill into law. The measure would fund some parts of the government through January 19 and others through February 2.

Equity markets in Europe traded all without any momentum. Germany’s DAX (DE40) rose by 0.24%, France’s CAC 40 (FR40) fell by 0.57% yesterday, Spain’s IBEX 35 (ES35) jumped by 0.28%, and the UK’s FTSE 100 (UK100) closed negative by 1.01%.

Crude oil and gasoline prices fell sharply on Thursday, with crude oil falling to a 4-month low and gasoline falling to an 11-month low. Crude oil prices weathered Wednesday’s negative impact when the EIA reported that weekly crude inventories rose more than expected. Additionally, crude oil funds saw selling on Thursday as weaker-than-expected global economic news weighs on the energy demand outlook.

Natural gas prices declined on Thursday after the EIA’s weekly natural gas inventories rose more than expected. Natural gas inventories rose 60 Bcf last week, above expectations of 42 bcf and well above the 5-year average of 20 bcf.

Asian markets were mostly falling yesterday. Japan’s Nikkei 225 (JP225) was down by 0.28% for the day, China’s FTSE China A50 (CHA50) decreased by 0.79%, Hong Kong’s Hang Seng (HK50) lost 1.36% for the day, and Australia’s ASX 200 (AU200) was negative by 0.67% for Thursday.

Yesterday, Australian employment data for October was released, which showed a good result: plus 55k jobs vs. 22.8k expected, while the unemployment rate rose from 3.6% to 3.7%, in line with expectations. AUD/USD reaction was subdued as markets remain convinced that the RBA has peaked on interest rates.

The Bank of Japan (BoJ) is the only major central bank in the world to maintain negative interest rates and has yet to show any signs of abandoning unprecedented easing measures. Moreover, Wednesday’s dismal GDP report, which showed that the economy contracted for the first time in three quarters, should allow the BoJ to postpone any policy changes, retreating from its ambitious monetary easing course. This, in turn, could undermine the Japanese yen (JPY) and contribute to a new rise in USD/JPY quotes.

Data from China’s National Bureau of Statistics (NBS) showed on Wednesday that retail sales of consumer goods, a key indicator of consumption growth, rose 7.6% year-on-year in October, the fastest pace since May and accelerating from the 5.5% growth recorded in September. Industrial production also beat market expectations, rising at a 4.6% annualized rate in October, accelerating from September’s 4.5% increase. This growth was also the strongest since April. Employment remained broadly stable, with the unemployment rate at 5% in October, unchanged from September. Considering the main economic indicators, the economy has maintained a steady recovery momentum and has laid a solid foundation for achieving full-year growth targets.

S&P 500 (F)(US500) 4,508.26 +5.38 (+0.12%)

Dow Jones (US30) 34,945.60 −45.61 (−0.13%)

DAX (DE40)  15,786.61 +38.44 (+0.24%)

FTSE 100 (UK100) 7,410.97 −75.94 (−1.01%)

USD Index  104.42 +0.02 (+0.02%)

News feed for 2023.11.17:
  • – UK Retail Sales (m/m) at 09:00 (GMT+2);
  • – Switzerland Industrial Production (m/m) at 09:30 (GMT+2);
  • – Eurozone ECB President Lagarde Speaks at 09:30 (GMT+2);
  • – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
  • – Canada Producer Price Index (m/m) at 15:30 (GMT+2);
  • – US Building Permits (m/m) at 15:30 (GMT+2);
  • – US FOMC Member Daly Speaks 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.

Fresh water is a hidden challenge − and opportunity − for global supply chains

By Dustin Cole, Auburn University 

Reports of lengthy shipping delays for vessels traveling through the Panama Canal this year have highlighted the critical but often overlooked role that fresh water plays across global supply chains. Drier than normal conditions in Panama, brought on by El Niño, have left the region drought-stricken and water levels in the locks that feed the canal lower than normal. This has led to fewer ships being able to pass through the canal each day: only 31 ships currently, compared with 36 to 38 under normal conditions. This means longer waits to move products through the canal and onto store shelves.

The slowdown at the Panama Canal shows how access to fresh water is key to the way goods are made and shipped, affecting everything from the price of groceries to retail forecasts for the upcoming holiday shopping season. As a professor of supply chain management, I think businesses would be wise to pay closer attention to this issue.

But first, you might ask: What does fresh water have to do with ocean freight? Plenty, it turns out.

Water, water everywhere, and not enough to share

The Panama Canal is a freshwater connection between two oceans – not a saltwater link, as one might assume. A series of locks on each side of the canal raise cargo freighters nearly 100 feet to human-made lakes that extend across Panama’s isthmus and lower them down to sea level on the other side.

Each crossing by a ship requires 52 million gallons of fresh water from lakes, rivers and streams across this small country. This creates a trade-off between preserving water for local needs and using it to allow ships to traverse the canal. Less water allocated to the canal means fewer ships can pass through.

This isn’t an isolated phenomenon. Periodic low water levels in the Mississippi River and the Rhine River in Germany have impeded barge traffic for years, disrupting supply chains while stoking debate about how to divide limited amounts of fresh water. Recent plans by communities in northern Colorado to build their own reservoirs on tributaries of the Colorado River highlight questions about who owns access to local waterways and how this resource is governed.

An ancient challenge

The need to manage water resources isn’t new, with complex water management systems dating back to the Roman Empire and even earlier. Humankind has made great progress on water management over the centuries, but in recent years the issue has often taken a back seat to other pressing environmental concerns such as global warming.

Water management is complicated by the fact that businesses and communities sometimes find themselves in conflict: Businesses want to use water for their operations, while communities want to preserve water supplies to ensure that residents’ basic needs are met. At the same time, communities also need the jobs and services that businesses provide. Examples such as the Panama Canal highlight this tension.

Balancing these seemingly contrary needs calls for a deeper look into how much water is used in the making of products people buy and use every day.

As my colleagues and I show in a recent journal article, water is an important component of almost everything people buy. For example, roughly 2,600 gallons of water goes into making the fabric for a single pair of jeans. From growing cotton for the fibers needed to manufacturing the denim and getting those jeans onto shelves at The Gap, more and more water is embedded into each pair as it moves through the supply chain.

Essentially, businesses use water to transport water embedded in virtually all products they sell. This is why businesses have more than purely altruistic reasons to address water-related problems: It isn’t just good for society but also their own operations. A lack of water can hamper production and disrupt the supply chains that businesses rely on.

Inside the world’s largest cargo shipping bottleneck. | WSJ.

Solutions for businesses

There are a number of ways in which businesses can improve their water management to reduce their own consumption – and costs – while limiting their exposure to water risks.

First, companies should realize that not everything requires clean water. Wastewater from one process can be used for another that doesn’t require clean water. Similarly, not every process pollutes water, so reuse is easy for wastewater resulting from those processes, such as water used for cooling.

Second, firms can share wastewater between facilities for reuse, a concept called industrial ecology. For example, nutrient-rich water from food production can be used for farm irrigation rather than being discharged.

And third, since water is an excellent medium for heat transfer, rather than trying to cool one area and heat another, companies can connect the systems. For example, global aluminum giant Novelis is deploying hot water used in the casting process at one of its plants in Europe to heat a neighboring building.

Opportunities abound for improving management of fresh water – one of our most precious resources. While stronger government regulations and expanded reporting requirements will help, decisions by businesses themselves can move that needle even more.

For those who do, their standing in the communities in which they operate will surely benefit – as will their bottom lines.The Conversation

About the Author:

Dustin Cole, Assistant Professor of Supply Chain Management, Auburn University

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

Japan’s GDP contracted in the third quarter. The UK has seen inflation fall sharply

By JustMarkets

Stocks rose sharply on Tuesday and bond yields were down after US consumer prices fell more than expected in October, reinforcing expectations that the Fed will maintain its pause. As of Tuesday’s stock market close, the Dow Jones Index (US30) was up by 1.43%, while the S&P 500 Index (US500) jumped 1.91%. The Nasdaq Technology Index (US100) jumped by 2.37%. Meanwhile, the S&P 500 (US500) and Dow Jones (US30) indices hit two-month highs, while the Nasdaq (US100) index hit a 3-month-high.

October US CPI declined to 3.2% y/y from 3.7% y/y in September, which was better than expectations of 3.3% y/y. In addition, the core CPI excluding food and energy declined to 4.0% y/y from 4.1% y/y in September, which was better than expected and the smallest increase in two years.

Comments from FRB President Richmond Barkin indicated that he favors maintaining a pause in Fed rate hikes when he stated that the impact of rate hikes may be delayed, but with rates capped, the Fed has time to monitor the economy.

A negative factor for stocks continues to be a possible US government shutdown. The US lawmakers have until Friday evening to pass a temporary spending bill before funding runs out and the government shuts down.

Equity markets in Europe rose steadily on Tuesday. Germany’s DAX (DE40) rose by 1.76%, France’s CAC 40 (FR40) gained 1.39% yesterday, Spain’s IBEX 35 (ES35) jumped by 1.72%, and the UK’s FTSE 100 (UK100) closed positive by 0.20%.

Good news for the Bank of England: services inflation fell even more than expected. Services inflation came in below the Bank of England’s October forecast and that pretty much rules out further rate tightening this year. Last year’s 25% rise in household energy tariffs disappeared from annual comparisons, and electricity/gas prices fell by 7% in October this year. And while that drop was a much smaller factor, food price inflation also slowed significantly. As a result, the core CPI is now at 4.6% y/y, down from 6.7% y/y in September.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) was up by 0.34% for the day, China’s FTSE China A50 (CHA50) added 0.02%, Hong Kong’s Hang Seng (HK50) decreased by 0.17% for the day, and Australia’s ASX 200 (AU200) was positive 0.83%.

The People’s Bank of China (PBOC) injected additional funds to support the weak economy. Although the one-year medium-term lending rate (1Y MLF) was left at 2.5%, the Bank of China injected 600 billion yuan (over and above the amount due) to support stimulus spending. Increased funding will support a recovery in activity.

A former senior Japanese financial official said on Wednesday that the weakening yen could be caused not only by the interest rate differential between Japan and the US, but also by structural factors such as the deteriorating fiscal situation. Under such conditions, any currency interventions by the authorities will not help to reverse the situation on the market.

Japan’s gross domestic product contracted by 0.5% in Q3. On an annualized basis, Japan’s economy contracted by 2.1%, well above expectations of a 0.6% contraction and a sharp pullback from the 4.5% growth in the previous quarter. The figure was the first contraction in Japan’s GDP in three quarters and signaled that consumption-driven growth in Japan’s economy may be slowing after booming earlier this year.

S&P 500 (F)(US500) 4,495.70 +84.15 (+1.91%)

Dow Jones (US30) 34,827.70 +489.83 (+1.43%)

DAX (DE40)  15,614.43 +269.43 (+1.76%)

FTSE 100 (UK100) 7,440.47 +14.64 (+0.20%)

USD Index  104.08 −1.55 (−1.47%)

News feed for 2023.11.14:
  • – Japan GDP (q/q) at 01:50 (GMT+2);
  • – Australia Wage Price Index (q/q) at 02:30 (GMT+2);
  • – China Industrial Production (m/m) at 04:00 (GMT+2);
  • – China Retail Sales (m/m) at 04:00 (GMT+2);
  • – China Unemployment Rate (m/m) at 04:00 (GMT+2);
  • – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
  • – UK Producer Price Index (m/m) at 09:00 (GMT+2);
  • – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
  • – Eurozone Trade Balance (m/m) at 12:00 (GMT+2);
  • – US Retail Sales (m/m) at 15:30 (GMT+2);
  • – US Producer Price Index (m/m) at 15:30 (GMT+2);
  • – US FOMC Member Barr Speaks at 16:30 (GMT+2);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).

By JustMarkets

 

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

US CPI surprisingly cool boosting end of year market rally – what investors should do

By George Prior 

US inflation (CPI) comes in cooler than expected but investors still need to adjust to a ‘higher-for-longer’ interest rate environments, warns CEO of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The warning from Nigel Green of deVere Group comes as the October consumer price index was flat month on month, and up 0.2% when excluding food and energy for the core CPI reading.

He notes: “The surprisingly cool CPI solidifies our expectations that the Federal Reserve is done with hiking rates this year and will hold them steady in December.

“However, we believe there will be a sustained period of slower progress than we’ve seen up to this point against inflation in the flight to get it back to the 2% target. The process is going to be more gradual moving forward.

“Therefore, we except one more hike from the Fed next year to boost that progress a little.”

Furthermore, the deVere CEO also says the US CPI readings support his anticipation of a year-end market rally in 2023.

At the end of October he told the media: “We’re about to see a year-end rally, which investors would not want to miss out on as markets turn bullish on the Fed likely holding rates steady.”

As interest rates are anticipated to remain elevated for an extended period and a year-end market rally is expected, investors must adopt a prudent approach to navigate these evolving financial landscapes.

They should strategically consider sectors that exhibit resilience and potential for sustained growth.

“One such sector to contemplate is tech, given its capacity for continuous innovation and the increasing reliance on digitalization across industries. Technology companies often have robust fundamentals and can adapt to changing economic conditions, making them appealing in a rising interest rate scenario,” says Nigel Green

“Additionally, healthcare is another sector worth attention, as demographic trends, an aging population, and ongoing medical advancements contribute to the sector’s long-term stability. The demand for healthcare services tends to persist regardless of economic cycles, providing a defensive quality for investors.

“Furthermore, the financial sector may benefit from higher interest rates, as it can enhance profit margins for banks and financial institutions. As interest rates rise, these entities often experience improved net interest income, which can positively impact their overall performance.

“Most importantly, as ever, maintaining a diversified portfolio remains crucial.” Reassess your investment goals, risk tolerance, and time horizon to ensure your portfolio aligns with your financial objectives.

He concludes: “We’re in a new investment era. Your investment mix needs to reflect this to build your wealth.”

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.

Japanese policymakers are ready to intervene to support the yen. In the US, inflationary pressures are expected to ease

By JustMarkets

At Monday’s stock market close, the Dow Jones Index (US30) was up by 0.16%, while the S&P 500 Index (US500) decreased by 0.08%. The Nasdaq Technology Index (US100) lost 0.22%. The broad market recovered from early losses on Monday after bond yields reversed to the downside, prompting coverage of short positions in equities. In addition, optimism that Tuesday’s US consumer price report for October would show an easing of price pressures gave stocks a boost.

On Friday, Moody’s Investors Service downgraded its outlook on the US credit rating from stable to negative, citing rising budget deficits and political polarization. The US lawmakers have until Friday evening this week to pass a temporary spending bill before funding runs out and the government shuts down.

Today, the US will release its CPI report. The Consumer Price Index is on the US Federal Reserve’s list of monitored indicators when regulating monetary policy. This report will measure the Fed’s progress in the fight to reduce inflation. Economists expect consumer inflation to show an increase of 0.1% on a monthly basis, while on an annualized basis, it is expected to decline from 3.7% to 3.3%. A sharper weakening in inflation could lead to renewed talk of a rate peak, fueled by the October jobs report, which pointed to weakening labor market conditions. But a cooling in demand is needed for Fed officials to have confidence that they are convincingly moving toward an inflation target. Demand is expressed in consumer spending, and that is usually retail sales and other related reports on how Americans spend money. Therefore, tomorrow’s retail sales data will give a better indication of the US Fed’s future trajectory.

Equity markets in Europe rallied solidly on Monday. Germany’s DAX (DE40) rose by 0.89%, France’s CAC 40 (FR40) gained 0.60% yesterday, Spain’s IBEX 35 (ES35) jumped by 0.96%, and the UK’s FTSE 100 (UK100) closed positive by 0.89%.

Inside the ECB, there is growing uncertainty over future plans. A representative of the ECB Governing Council, Kazaks, said yesterday that further ECB policy tightening seems to have become less necessary. His colleague, ECB Vice President Gindos, on the other hand, did not share this thought. Gindos said it was “premature” to discuss interest rate cuts because “we expect a temporary rebound in inflation in the coming months as the base effect of the sharp rise in energy and food prices in the fall of 2022 fades.”

Crude oil and gasoline prices rose moderately on Monday. A weaker dollar on Monday provided support for energy prices. In addition, expectations of increased fuel demand in the US during the Thanksgiving holiday are a favorable factor for crude oil prices.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) added 0.05% for the day, China’s FTSE China A50 (CHA50) decreased by 0.44%, Hong Kong’s Hang Seng (HK50) added 1.30% for the day, and Australia’s ASX 200 (AU200) was negative by 0.40% for Monday.

Japan’s Finance Minister Shunichi Suzuki said on Monday that policymakers will respond to sharp fluctuations in the yen as needed. The Bank of Japan is unhappy with the recent decline in the yen, which has fallen by 1.45% against the US dollar in the past week alone. According to analysts, if the yen breaks through the 152 mark, there is a high probability of currency intervention by the Japanese authorities.

Goldman Sachs Group Inc. expects inflation in Australia and New Zealand to fall to just below 3% by the end of 2024, which would be in line with both central banks’ targets and pave the way for lower interest rates. The cooling in prices will be driven by global commodity inflation, lower labor demand, and wage pressures. This would open the door for both central banks to begin easing monetary policy from late next year. Goldman’s view diverges sharply from forecasts by Australia’s central bank, which last week raised interest rates to a 12-year high of 4.35%, predicting CPI will exceed its 2-3% target until mid-2025. On Monday, acting Reserve Bank of Australia assistant governor Marion Kohler said the next phase of inflation’s return to target is likely to be more “protracted.”

S&P 500 (F)(US500) 4,411.55 −3.69 (−0.084%)

Dow Jones (US30) 34,337.87 +54.77 (+0.16%)

DAX (DE40)  15,345.00 +110.61 (+0.73%)

FTSE 100 (UK100) 7,425.83 +65.28 (+0.89%)

USD Index  105.68 −0.19 (−0.18%)

News feed for 2023.11.14:
  • – Australia NAB Business Confidence (m/m) at 02:30 (GMT+2);
  • – Sweden Inflation Rate (m/m) at 09:00 (GMT+2);
  • – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
  • – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
  • – UK Unemployment Rate (m/m) at 09:00 (GMT+2);
  • – Switzerland Producer Price Index (m/m) at 09:30 (GMT+2);
  • – Switzerland Chairman Jordan Speaks at 09:45 (GMT+2);
  • – Eurozone GDP (q/q) at 12:00 (GMT+2);
  • – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+2);
  • – US FOMC Member Barr Speaks at 17:00 (GMT+2);
  • – US FOMC Member Mester Speaks at 18:00 (GMT+2);
  • – US FOMC Member Goolsbee 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.

US stock indices reached 2-month highs. The earning season met investors’ expectations

By JustMarkets

On Friday, gains in chip stocks and technology megamergers drove the overall market higher. As of Friday’s stock market close, the Dow Jones Index (US30) was up by 1.15% (+0.56% for the week), while the S&P 500 Index (US500) was up by 1.56% (+1.17% for the week). The NASDAQ Technology Index (US100) closed positive by 2.05% (+2.10% for the week). The S&P 500 (US500) and the Dow Jones Industrials (US300) reached 7-week highs and the NASDAQ (US100) tested a 2-month-high.

Friday’s Fed comments had a mixed impact on stocks. On the negative side, Atlanta Fed President Bostic spoke in favor of pausing Fed rate hikes, stating, “I think we will reach the 2% target level without having to do anything else.” On the other hand, San Francisco Fed President Daly said that if inflation continues to move sideways and the labor market and GDP growth remain steady or strong, it will probably be necessary to raise rates again. Currently, markets are betting on a 10% probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 and a 24% probability of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting.

In the US, the risk of a government shutdown is back on the table. If lawmakers in Washington fail to pass measures by Friday to at least temporarily fund the federal government’s operations, there is a threat of a shutdown. On Saturday, House Speaker Mike Johnson unveiled a Republican temporary funding measure aimed at averting a partial shutdown, but members of both parties quickly criticized the unorthodox plan. The new controversy could reignite concerns about the management of the world’s largest economy.

According to FactSet, the current earnings reporting season has been much better than analysts expected and is likely to show the first earnings-per-share growth in a year for companies in the S&P 500.

The University of Michigan’s US Consumer Sentiment Index for November fell by 3.4 to a 6-month low of 60.4, weaker than expectations of 63.7. The University of Michigan’s US Inflation Expectations Index for November unexpectedly rose to a 7-month high of 4.4% from 4.2% in October, versus expectations of a decline to 4.0%. In addition, 5-10-year inflation expectations rose to a 12-year high of 3.2%.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down by 0.77% (+0.10% for the week), France’s CAC 40 (FR40) fell by 0.96% (-0.30% for the week), Spain’s IBEX 35 (ES35) lost 0.36% (+0.81% for the week), and the UK’s FTSE 100 (UK100) closed negative by 1.28% (-0.77% for the week).

Friday’s comments from ECB President Lagarde indicate that she favors a pause in ECB rate hikes. Lagarde stated that keeping the deposit rate at the current level of 4% should be sufficient to contain inflation. There is a growing possibility that the ECB has peaked on rates, just like the US Fed.

UK GDP unexpectedly beat forecasts on most indicators. Over the last month, the economy grew by 0.2% (forecast 0.0%). However, the overall picture shows the economy is still depressed, with the 3-month average hitting annual lows and near negative territory.

Oil prices rose about 2% on Friday as Iraq voiced support for OPEC+ oil production cuts ahead of a meeting in two weeks on November 26. Amid weak economic data from China, the US, and the UK last week, concerns about the outlook for global demand offset worries about possible production disruptions related to the Middle East conflict. Analysts believe OPEC+ could continue to cut supplies if prices continue to fall.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) was up by 0.36% for the week, China’s FTSE China A50 (CHA50) was down by 0.04% over five trading days, Hong Kong’s Hang Seng (HK50) fell by 3.97% for the week, and Australia’s ASX 200 (AU200) was negative by 0.02% for the week.

Joe Biden and Xi Jinping are due to meet this week on the sidelines of the Asia-Pacific Economic Cooperation summit amid hopes for improved relations between the two largest economies.

S&P 500 (F)(US500) 4,347.35 +67.89 (+1.56%)

Dow Jones (US30) 34,283.10 +391.16 (+1.15%)

DAX (DE40)  15,234.39 −118.15 (−0.77%)

FTSE 100 (UK100) 7,360.55 −95.12 (−1.28%)

USD Index  105.80 −0.11 (−0.10%)

News feed for 2023.11.13:
  • – Japan Producer Price Index (m/m) at 01:50 (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.

Biden – Xi meeting: Global markets will be cheered by better ties

By George Prior 

Despite low expectations for “a long list of outcomes,” global markets will welcome US President Joe Biden’s highly anticipated meeting with Chinese President Xi Jinping on Wednesday in the San Francisco Bay Area.

This is the bullish assessment from Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory asset management and fintech organizations.

It comes ahead of the first meeting between the two world leaders in a year – and the first time Xi has been in the US since 2017 – as ties between the superpower rivals are at their most tense point in decades.

Of the meeting a senior Wite House official told reporters: “We’re not talking about a long list of outcomes or deliverables…The goals here really are about managing the competition, preventing the downside risk of conflict and ensuring channels of communication are open.”

Nigel Green comments: “This meeting is mostly about symbolism, rather than deliverables. But this high-stake symbolism is important for global markets.

“Improved diplomatic relations, clearing up misperceptions and circumnavigating surprises between the two economic powerhouses will contribute to enhanced market stability.

“The China-US trade tensions that have characterized recent years have often resulted in market fluctuations and increased uncertainty.”

Investors, sensitive to geopolitical risks, tend to react nervously to trade disputes and political tensions between major economies. “A more amicable relationship can only mitigate these risks, creating an environment where markets operate with greater predictability.”

Furthermore, a positive turn in China-US ties is likely to open new avenues for collaboration and economic partnerships.

“Both countries possess immense economic influence, and their cooperation can drive global economic growth. Increased trade opportunities, reduced tariffs, and a more open economic dialogue will stimulate cross-border investments and facilitate the flow of capital between the two nations,” says the deVere CEO.

This collaborative approach should act as a catalyst for global financial markets, promoting economic interconnectedness and diversification.

The potential for eased trade tensions also bodes well for multinational corporations operating in both China and the United States.

Nigel Green notes: “A more harmonious relationship will translate into a friendlier business environment, with reduced regulatory uncertainties and fewer trade barriers. This, in turn, can positively impact corporate earnings, driving investor confidence and stock market performance on a global scale.”

Moreover, an improved relationship can contribute to the stabilisation of global supply chains. The trade tensions of recent years have prompted companies to reconsider their supply chain strategies, often leading to disruptions and increased costs.

A more cooperative stance between China and the United States would alleviate these concerns, providing a conducive environment for businesses to optimize their supply chains and operate more efficiently. This, in turn, can have a “cascading effect on the financial markets” as companies benefit from improved operational efficiency and cost-effectiveness.

The deVere CEO concludes: “As the world eagerly watches the diplomatic developments unfold between Biden and Xi this week, financial markets will be buoyed from signs of a more cooperative and connected global economic landscape.”

About:

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