InvestMacro

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 JustMarkets

The US stock indices continued their decline yesterday. Quarterly results fell short of estimates, with increasing negativity that the Federal Reserve will remain hawkish for a long time as the labor market shows little sign of easing. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.76%, and the S&P 500 Index (US500) fell by 0.76%. The NASDAQ Technology Index (US100) was down by 0.96% on Thursday.

About 190,000 people filed for unemployment claims in the US last week, well below economists’ forecast of 214,000. The strong labor market leaves the US Federal Reserve with room to raise rates further.

Fed spokeswoman Lael Brainard said Thursday that the Fed intends to stay the course on tightening monetary policy and will keep rates fairly restrictive for some time to ensure inflation returns to the Central Bank’s 2% target.

Netflix (NFLX) reported fourth-quarter results that fell short of net income expectations, but the number of new subscribers exceeded expectations. The company added 7.66 million subscribers, well above the 4.6 million expected. The company’s stock jumped by 7% after the report was released in the evening session.

Tesla (TSLA) decreased by 1% yesterday as investors worry that the electric carmaker’s quarterly results may not meet expectations amid slowing demand and production disruptions in China.

Norwegian Cruise Line (NCLH) shares are down more than 4%. The cruise company warned that it expects to report net losses for the quarter and a full year.

Stock markets in Europe were mostly down yesterday. Germany’s DAX (DE30) decreased by 1.72%, France’s CAC 40 (FR40) fell by 1.86%, Spain’s IBEX 35 Index (ES35) lost -1.60%, and the British FTSE 100 (UK100) closed down by 1.07%.

ECB head Christine Lagarde said yesterday that the labor market in Europe has never been as vibrant as it is now, and the economic outlook is much more positive. Given the latest Eurozone inflation data, analysts are leaning towards the ECB raising rates by 50 basis points in February and March and then by another 25 basis points in May, after which Europe’s central bank will take a pause for a few months.

Consumer sentiment in the UK has fallen to a nearly 50-year low. GfK research shows that fears about the economy and a sharp rise in the cost of living have added pressure to household finances. Energy bills and food prices have risen rapidly in recent months, eating away at households’ disposable income. Treasury Secretary Jeremy Hunt and Prime Minister Rishi Sunak cut a two-year household energy scheme that would have kept annual bills at £2,500.

The situation in Ukraine is heating up. According to foreign intelligence, Russia is preparing a new major offensive against Ukraine in the coming weeks. This is the reason the Western allies have become more active in providing weapons, including tanks. Today there will be an important meeting in Ramstein at the NATO base, where it will be decided how much and what weapons to give Ukraine to defend its territories. The front line has largely frozen over the past two months, and neither side has made much progress, despite heavy losses in positional fighting.

Oil prices rose about 1% on Thursday, even as inventories rose. The Energy Information Administration, or EIA, said in its weekly report that US crude inventories rose by 8.408 million barrels for the week. The main trigger for the rise is optimism about China’s opening. Oil demand in China is up nearly 1 million BPD from the previous month. The International Energy Agency said Wednesday that global oil demand could reach an all-time high in 2023 as China lifts blockages and restrictions.

Natural gas closed yesterday at June 2021 lows. A warm winter in Europe led to a sharp drop in gas consumption, which at current supply levels puts downward pressure on quotes. But the main weather forecast models, the Global Forecast System (GFS) and the European ECMWF model expect colder short-term temperature forecasts by the last week of January. This could cause a short-term rise in prices.

Asian markets traded yesterday without a single dynamic. Japan’s Nikkei 225 (JP225) decreased by 1.44% on Thursday, China’s FTSE China A50 (CHA50) added 0.15%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.12%, India’s NIFTY 50 (IND50) fell by 0.32%, and Australia’s S&P/ASXv200v(AU200) ended the day up by 0.57%.

Japan’s nationwide core CPI rose from 3.7% to 4.0% year-over-year, a 41-year high. Rising inflation in Japan adds to the likelihood that the central bank will reverse the policy to tighten the cycle in the spring.

S&P 500 (F) (US500) 3,898.85 −30.01 (−0.76%)

Dow Jones (US30) 33,044.56 −252.40 (−0.76%)

DAX (DE40) 14,920.36 −261.44 (−1.72%)

FTSE 100 (UK100) 7,747.29 −83.41 (−1.07%)

USD Index 102.07 −0.29 (−0.29%)

• – Japan National Core Consumer Price Index at 01:30 (GMT+2);
• – US FOMC Member Williams Speaks at 01:35 (GMT+2);
• – UK Retail Sales (m/m) at 09:00 (GMT+2);
• – World Economic Forum Annual Meetings at 10:00 (GMT+2);
• – Switzerland SNB Chairman Jordan Speaks at 10:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 12:00 (GMT+2);
• – Canada Retail Sales (m/m) at 15:30 (GMT+2);
• – US FOMC Member Harker Speaks at 16:00 (GMT+2);
• – US Existing Home Sales (m/m) at 17:00 (GMT+2);
• – US FOMC Member Waller Speaks at 20:00 (GMT+2).

By JustMarkets

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

By Caroline Wagner, The Ohio State University 

By at least one measure, China now leads the world in producing high-quality science. My research shows that Chinese scholars now publish a larger fraction of the top 1% most cited scientific papers globally than scientists from any other country.

I am a policy expert and analyst who studies how governmental investment in science, technology and innovation improves social welfare. While a country’s scientific prowess is somewhat difficult to quantify, I’d argue that the amount of money spent on scientific research, the number of scholarly papers published and the quality of those papers are good stand-in measures.

China is not the only nation to drastically improve its science capacity in recent years, but China’s rise has been particularly dramatic. This has left U.S. policy experts and government officials worried about how China’s scientific supremacy will shift the global balance of power. China’s recent ascendancy results from years of governmental policy aiming to be tops in science and technology. The country has taken explicit steps to get where it is today, and the U.S. now has a choice to make about how to respond to a scientifically competitive China.

Growth across decades

In 1977, Chinese leader Deng Xiaoping introduced the Four Modernizations, one of which was strengthening China’s science sector and technological progress. As recently as 2000, the U.S. produced many times the number of scientific papers as China annually. However, over the past three decades or so, China has invested funds to grow domestic research capabilities, to send students and researchers abroad to study, and to encourage Chinese businesses to shift to manufacturing high-tech products.

Since 2000, China has sent an estimated 5.2 million students and scholars to study abroad. The majority of them studied science or engineering. Many of these students remained where they studied, but an increasing number return to China to work in well-resourced laboratories and high-tech companies.

Today, China is second only to the U.S. in how much it spends on science and technology. Chinese universities now produce the largest number of engineering Ph.D.s in the world, and the quality of Chinese universities has dramatically improved in recent years.

Producing more and better science

Thanks to all this investment and a growing, capable workforce, China’s scientific output – as measured by the number of total published papers – has increased steadily over the years. In 2017, Chinese scholars published more scientific papers than U.S. researchers for the first time.

Quantity does not necessarily mean quality though. For many years, researchers in the West wrote off Chinese research as low quality and often as simply imitating research from the U.S. and Europe. During the 2000s and 2010s, much of the work coming from China did not receive significant attention from the global scientific community.

But as China has continued to invest in science, I began to wonder whether the explosion in the quantity of research was accompanied by improving quality.

To quantify China’s scientific strength, my colleagues and I looked at citations. A citation is when an academic paper is referenced – or cited – by another paper. We considered that the more times a paper has been cited, the higher quality and more influential the work. Given that logic, the top 1% most cited papers should represent the upper echelon of high-quality science.

My colleagues and I counted how many papers published by a country were in the top 1% of science as measured by the number of citations in various disciplines. Going year by year from 2015 to 2019, we then compared different countries. We were surprised to find that in 2019, Chinese authors published a greater percentage of the most influential papers, with China claiming 8,422 articles in the top category, while the U.S had 7,959 and the European Union had 6,074. In just one recent example, we found that in 2022, Chinese researchers published three times as many papers on artificial intelligence as U.S. researchers; in the top 1% most cited AI research, Chinese papers outnumbered U.S. papers by a 2-to-1 ratio. Similar patterns can be seen with China leading in the top 1% most cited papers in nanoscience, chemistry and transportation.

Our research also found that Chinese research was surprisingly novel and creative – and not simply copying western researchers. To measure this, we looked at the mix of disciplines referenced in scientific papers. The more diverse and varied the referenced research was in a single paper, the more interdisciplinary and novel we considered the work. We found Chinese research to be as innovative as other top performing countries.

Taken together, these measures suggest that China is now no longer an imitator nor producer of only low-quality science. China is now a scientific power on par with the U.S. and Europe, both in quantity and in quality.

Fear or collaboration?

Scientific capability is intricately tied to both military and economic power. Because of this relationship, many in the U.S. – from politicians to policy experts – have expressed concern that China’s scientific rise is a threat to the U.S., and the government has taken steps to slow China’s growth. The recent Chips and Science Act of 2022 explicitly limits cooperation with China in some areas of research and manufacturing. In October 2022, the Biden administration put restrictions in place to limit China’s access to key technologies with military applications.

A number of scholars, including me, see these fears and policy responses as rooted in a nationalistic view that doesn’t wholly map onto the global endeavor of science.

Academic research in the modern world is in large part driven by the exchange of ideas and information. The results are published in publicly available journals that anyone can read. Science is also becoming ever more international and collaborative, with researchers around the world depending on each other to push their fields forward. Recent collaborative research on cancer, COVID-19 and agriculture are just a few of many examples. My own work has also shown that when researchers from China and the U.S. collaborate, they produce higher quality science than either one alone.

China has joined the ranks of top scientific and technological nations, and some of the concerns over shifts of power are reasonable in my view. But the U.S. can also benefit from China’s scientific rise. With many global issues facing the planet – like climate change, to name just one – there may be wisdom in looking at this new situation as not only a threat, but also an opportunity.

About the Author:

Caroline Wagner, Milton & Roslyn Wolf Chair in International Affairs, The Ohio State University

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

By JustMarkets

The US Producer Price Index (PPI) fell more than expected in December. This data shows the rate of inflation between factories and plants. The lower PPI puts more pressure on the Fed to slow the pace of interest rate hikes. But despite the easing of inflationary pressures, the US indices declined yesterday. At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 1.81%, and the S&P 500 Index (US500) fell by 1.56%. The NASDAQ Technology Index (US100) lost 1.24% on Wednesday.

The latest economic data indicates that December was a tough month for consumers. This is evidenced by retail sales data, which decreased by 1.1% from the previous month. Early in the fourth quarter reporting season, major US banks increased their cash reserves in anticipation of more credit losses due to the tough economy. On the one hand, lower inflation is boosting stocks as potentially softer economic conditions create a more favorable trading environment for companies. On the other hand, amid weak retail sales, a sharp drop in industrial production, and news of new layoffs, fears that the US may already be in a recession are growing. This is the third consecutive month of declining industrial activity, with the decline in production looking widespread. The chief economist at RSM US believes that the current trajectory of the economy suggests a “soft recession” in 2023.

Fed spokesman Bullard thinks a 0.5% point rate hike at the next meeting is appropriate, even though inflationary pressures in the US are declining. Another Fed official, Barkin, is of the same opinion. But others are in favor of a 0.25% rate hike at the February 1 meeting. A 0.25% hike in February is considered the most likely (92%) scenario today.

Shares of Microsoft Corporation (MSFT) fell by 1.9% after the company reported cutting 10,000 jobs and receiving a $1.2 billion fine. Moderna, Inc. (MRNA) shares rose by 3.3% after the maker of the COVID-19 vaccine said it was successful in a trial of its experimental vaccine against RSV (contagious respiratory virus) in older adults.

Stock markets in Europe traded without a single trend. German DAX (DE30) decreased by 0.03%, French CAC 40 (FR40) gained 0.09%, Spanish IBEX 35 (ES35) added 0.40%, and British FTSE 100 (UK100) closed yesterday down by 0.26%.

The UK inflation rate fell from 10.7% to 10.5% year-on-year. Core inflation (excluding food and energy prices) remained at 6.3%. The underlying factor behind the decline in inflation is the December decline in energy prices. Money markets are highly confident in favor of a 50 basis point gain at the Bank of England’s February meeting.

Oil prices retreated from Wednesday’s highs amid a Chinese economic opening as US industrial, and retail trade data failed to meet economists’ expectations.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 2.5% on Wednesday, China’s FTSE China A50 (CHA50) decreased by 0.36%, Hong Kong’s Hang Seng (HK50) ended the day up by 0.47%, India’s NIFTY 50 (IND50) increased by 0.62%, and Australia’s S&P/ASX 200 (AU200) ended the day up by 0.10%.

Columbia University academic Takatoshi Ito, who is considered a candidate for governor of the Bank of Japan, said Thursday that higher-than-expected inflation could eventually push Japan’s central bank to extend the range of benchmark bond yields this year. It’s a step toward normalizing monetary policy. Japan’s consumer inflation data will be released this Friday and is expected to be 4%.

Australian labor market data indicates that the labor market is starting to cool off. Over the past month, the employment rate fell by 14.6k jobs, with an expected 58.3k growth. If this trend continues, it will give the Reserve Bank less economic room to raise interest rates.

S&P 500 (F) (US500) 3,928.86 −62.11 (−1.56%)

Dow Jones (US30) 33,296.96 −613.89 (−1.81%)

DAX (DE40) 15,181.80 −5.27 (−0.035%)

FTSE 100 (UK100) 7,830.70 −20.33 (−0.26%)

USD Index 102.40 +0.01 (+0.01%)

• – Australia Unemployment Rate (m/m) at 02:30 (GMT+2);
• – World Economic Forum Annual Meetings at 10:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 12:30 (GMT+2);
• – Eurozone ECB Monetary Policy Meeting Accounts at 14:30 (GMT+2);
• – US Building Permits (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+2);
• – US FOMC Member Brainard Speaks at 20:15 (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.