13 Dec

Why fusion ignition is being hailed as a major breakthrough in fusion – a nuclear physicist explains

By Carolyn Kuranz, University of Michigan 

American scientists have announced what they have called a major breakthrough in a long-elusive goal of creating energy from nuclear fusion.

The U.S. Department of Energy said on Dec. 13, 2022, that for the first time – and after several decades of trying – scientists have managed to get more energy out of the process than they had to put in.

But just how significant is the development? And how far off is the long-sought dream of fusion providing abundant, clean energy? Carolyn Kuranz, an associate professor of nuclear engineering at the University of Michigan who has worked at the facility that just broke the fusion record, helps explain this new result.

An image of the Sun.
Fusion is the same process that powers the Sun.
NASA/Wikimedia Commons

What happened in the fusion chamber?

Fusion is a nuclear reaction that combines two atoms to create one or more new atoms with slightly less total mass. The difference in mass is released as energy, as described by Einstein’s famous equation, E = mc2 , where energy equals mass times the speed of light squared. Since the speed of light is enormous, converting just a tiny amount of mass into energy – like what happens in fusion – produces a similarly enormous amount of energy.

Researchers at the U.S. Government’s National Ignition Facility in California have demonstrated, for the first time, what is known as “fusion ignition.” Ignition is when a fusion reaction produces more energy than is being put into the reaction from an outside source and becomes self-sustaining.

A gold and plastic canister.
The fuel is held in a tiny canister designed to keep the reaction as free from contaminants as possible.
U.S. Department of Energy/Lawrence Livermore National Laboratory

The technique used at the National Ignition Facility involved shooting 192 lasers at a 0.04 inch (1 mm) pellet of fuel made of deuterium and tritium – two versions of the element hydrogen with extra neutrons – placed in a gold canister. When the lasers hit the canister, they produce X-rays that heat and compress the fuel pellet to about 20 times the density of lead and to more than 5 million degrees Fahrenheit (3 million Celsius) – about 100 times hotter than the surface of the Sun. If you can maintain these conditions for a long enough time, the fuel will fuse and release energy.

The fuel and canister get vaporized within a few billionths of a second during the experiment. Researchers then hope their equipment survived the heat and accurately measured the energy released by the fusion reaction.

So what did they accomplish?

To assess the success of a fusion experiment, physicists look at the ratio between the energy released from the process of fusion and the amount of energy within the lasers. This ratio is called gain.

Anything above a gain of 1 means that the fusion process released more energy than the lasers delivered.

On Dec. 5, 2022, the National Ignition Facility shot a pellet of fuel with 2 million joules of laser energy – about the amount of power it takes to run a hair dryer for 15 minutes – all contained within a few billionths of a second. This triggered a fusion reaction that released 3 million joules. That is a gain of about 1.5, smashing the previous record of a gain of 0.7 achieved by the facility in August 2021.

How big a deal is this result?

Fusion energy has been the “holy grail” of energy production for nearly half a century. While a gain of 1.5 is, I believe, a truly historic scientific breakthrough, there is still a long way to go before fusion is a viable energy source.

While the laser energy of 2 million joules was less than the fusion yield of 3 million joules, it took the facility nearly 300 million joules to produce the lasers used in this experiment. This result has shown that fusion ignition is possible, but it will take a lot of work to improve the efficiency to the point where fusion can provide a net positive energy return when taking into consideration the entire end-to-end system, not just a single interaction between the lasers and the fuel.

A hallway full of pipes, tubes and electronics.
Machinery used to create the powerful lasers, like these pre-amplifiers, currently requires a lot more energy than the lasers themselves produce.
Lawrence Livermore National Laboratory, CC BY-SA

What needs to be improved?

There are a number of pieces of the fusion puzzle that scientists have been steadily improving for decades to produce this result, and further work can make this process more efficient.

First, lasers were only invented in 1960. When the U.S. government completed construction of the National Ignition Facility in 2009, it was the most powerful laser facility in the world, able to deliver 1 million joules of energy to a target. The 2 million joules it produces today is 50 times more energetic than the next most powerful laser on Earth. More powerful lasers and less energy-intensive ways to produce those powerful lasers could greatly improve the overall efficiency of the system.

Fusion conditions are very challenging to sustain, and any small imperfection in the capsule or fuel can increase the energy requirement and decrease efficiency. Scientists have made a lot of progress to more efficiently transfer energy from the laser to the canister and the X-ray radiation from the canister to the fuel capsule, but currently only about 10% to 30% of the total laser energy is transferred to the canister to the fuel.

Finally, while one part of the fuel, deuterium, is naturally abundant in sea water, tritium is much rarer. Fusion itself actually produces tritium, so researchers are hoping to develop ways of harvesting this tritium directly. In the meantime, there are other methods available to produce the needed fuel.

These and other scientific, technological and engineering hurdles will need to be overcome before fusion will produce electricity for your home. Work will also need to be done to bring the cost of a fusion power plant well down from the US$3.5 billion of the National Ignition Facility. These steps will require significant investment from both the federal government and private industry.

It’s worth noting that there is a global race around fusion, with many other labs around the world pursuing different techniques. But with the new result from the National Ignition Facility, the world has, for the first time, seen evidence that the dream of fusion is achievable.The Conversation

About the Author:

Carolyn Kuranz, Associate Professor of Nuclear Engineering, University of Michigan

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

 

Economics & Fundamentals Opinions
13 Dec

Expert Says Gold Is Misunderstood, but It Is Bottoming

Source: Adrian Day  (12/12/22)

 Expert Adrian Day takes a look at gold and discusses why he thinks a turn is very close. Day also recommends his top stocks to buy if you do not already own.

Gold is flirting with US$1,800, and it’s only a matter of time before it breaks through.

Gold shines when the market senses that the central banks will be unable to contain inflation.

Many gold fans believed that this year, with a war in Europe, rising inflation, and a shaky stock market, should have been gold’s year to shine, leaving many disappointed, frustrated, and worse. Gold’s performance should be put in context, however.

Now, as I write, gold is within kissing distance of breaking even (in U.S. dollar terms) for the year, down less than 2% year, while the dollar (per the DXY index) remains up almost 10%.

In addition, in a period of deflating asset prices, gold has held up far better than U.S. and foreign stocks and bonds, as well as other assets such as crypto. This is quite amazing comparative strength for bullion.

Should Investors Be Disappointed in Gold’s Performance This Year?

There are some misunderstandings in the simple narrative that gold “should” be higher.

• Wars or other geopolitical events tend to have only a short-lived effect on the price unless there is concern about it spreading; the Russia-Ukraine conflict has
been contained.

• High inflation in itself is not in fact the main driver of gold, as we shall discuss below.

• And although weak stocks can be positive for gold, much depends on the reasons for the weakness.

Offsetting those ostensibly bullish factors for gold have been two critical negatives: rising interest rates and a strong dollar. For much of the year, a relentlessly strong dollar was a significant headwind for gold, but all along, gold’s decline was meaningfully less than the dollar’s strength.

Inflation Alone Is Not Good for Gold

Inflation itself is not necessarily the optimum environment for gold. Markets, being forward-looking, fear central bank tightening in an inflationary environment. If the market believes that central banks will be able to contain inflation, even as it rages, that is negative for gold.

Gold shines when the market senses that the central banks will be unable to contain inflation.

One only has to look to the inflationary decade of the 1970s to see this. The market did not have confidence that Arthur Burns, as Fed Chairman, would succeed in bringing down inflation.

But far higher inflation under Volker resulted in gold falling because the market believed he would control inflation. The market was correct in both cases.

When Will Gold Move Up?

Since gold’s drop in March, my response to repeated questions about when gold will “finally” respond to inflation has been the same: gold will turn when more investors realize that the Federal Reserve will be unlikely to achieve its 2% inflation goal. Its current policies — the most rapid interest rate appreciation ever — will likely provoke a serious recession, and at that point, it will not follow through and quash inflation.

In short, the market is beginning to sense that the Fed will not be able to bring inflation down towards its target any time soon and certainly will be unable to do so without provoking a recession that could be quite serious.

For most of this year, investors swallowed the Fed narrative; all indicators of inflation expectations, from surveys to markets such as the TIPs, were for inflation to drop significantly next year towards the Fed’s target and for it to happen without a recession. If you believe that, then you do not need gold.

Now, though, expectations are starting to shift. Although inflation expectations two and more years out are still in line with the Fed’s own targets, for next year, investors are forecasting a higher inflation rate than the Fed. And concerns about a recession have increased.

In short, the market is beginning to sense that the Fed will not be able to bring inflation down towards its target any time soon and certainly will be unable to do so without provoking a recession that could be quite serious (though FedHead Jerome Powell still believes a soft landing is possible).

Why a Recession Can Be Good for Gold

Again, since markets are forward-looking, a recession would be positive for gold if the market sees a shift in Fed policy towards easing. The Fed does not have to “pivot” — a misunderstood phenomenon in any event — for gold to move.

The market simply has to believe that the Fed will have to because it will be unable to achieve its inflation goals without a recession. Tough talk from Powell following this week’s final Fed meeting for the year might see gold pullback; that might be our last, best opportunity to load up.

The Economic Pain Is Only Beginning

The signs of an imminent recession are becoming more and more clear if, indeed, the U.S. is not already in one. The Fed recently noted Milton Friedman’s dictum that monetary policy acts with long and variable lags. Indeed, the effects of what the Fed has already done have barely registered so far in the headline numbers.

Even if the Fed were to pause right now, more economic harm is already baked in. Interest rate-sensitive sectors such as housing and automobiles are the first to feel the impact of rising (or indeed declining) rates.

For other sectors, the impact can be delayed, and it can be nine or 18 months before it is clear; meanwhile, everything looks rosy on the surface.

The Fed will likely try to tame optimism in the stock market — it doesn’t really care about gold — but that will also have the effect of dampening the gold price. That may well be a great opportunity to buy.

Retail sales are a good example. Since March, retail sales have been mostly flat or moderately higher. On the surface, there appears to be no problem. Dig deeper, and some things become apparent.

First, if consumer prices are increasing at a nearly 10% rate, then if sales remain flat, that means that people are, in effect, buying nearly 10% fewer goods.

Second, look at other indicators: the savings rate has collapsed to a 17-year low, while credit card debt has shot up at its fastest rate in over 20 years. (Vanguard reported last week that it had experienced record “emergency” withdrawals from 401k plans, another sign of consumer stress.)

Consumers are not buying from income; depleting savings and running up debt can last only so long. It is only a matter of time before the stress shows up in declining retail sales. As it becomes obvious that the U.S. is in a recession without the inflation goal being achieved — a stagflationary environment — then the focus becomes when the Fed will ease.

Gold and Gold Stocks Are Inexpensive

We are, then, entering the sweet spot for gold. A recession will result in a lower dollar and falling stock prices–the result of a weak economy — while gold looks to the eventual Fed reaction. The outlook is positive, and while gold has moved convincingly off its lows, it remains low relative to its price for most of the past two years. With gold almost $200 off the October lows, there has been very little response by investors in the gold ETFs, another indication of the lack of interest among investors in general for gold.

Last week’s action was perhaps a little aggressive for gold, particularly ahead of the last Fed meeting of the year. The Fed will likely try to tame optimism in the stock market — it doesn’t really care about gold — but that will also have the effect of dampening the gold price. That may well be a great opportunity to buy.

It is an anomaly for gold miners to be less expensive, have better balance sheets, and pay higher dividends than the broad market, and investors should take advantage of the opportunities in bullion and in the stocks before the crowd starts buying.

The gold stocks (per the XAU index), meanwhile, though up over 30% in the last two months, are trading, for the most part, well below their average historical valuations. The stocks are near their lows relative to bullion itself. While gold is up around 550% since 2000, gold stocks are up a little more than 100% and are still well below their levels from 2009 to 2013.

Let’s not forget that with the gold price at almost US$1800 and all-in-sustaining costs (AISC) below US$1,200 an ounce, while cash costs are far lower, margins are very strong. The sector in aggregate is net cash positive, while valuations are low: price-to-cash flow of fewer than nine times against 13.7 times for the S&P; price-to-NAV of 0.65 times against a seven-year average 50% higher; and with a yield 25% above that of the broad market.

It is an anomaly for gold miners to be less expensive, have better balance sheets, and pay higher dividends than the broad market, and investors should take advantage of the opportunities in bullion and in the stocks before the crowd starts buying.

From our list, the top stocks to buy if you do not own them would be Barrick Gold Corp. (ABX:TSX; GOLD:NYSE); Midland Exploration Inc. (MD:TSX.V); Lara Exploration Ltd. (LRA:TSX.V); and Orogen Royalties Inc. (OGN:TSX.V). Some of these I suspect we shall be able to buy at a somewhat lower price over the next week or two, but you should be alert if you do not currently own positions.

Adrian Day Disclosures:

Adrian Day’s Global Analyst is distributed for $990 per year by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. www.AdrianDayGlobalAnalyst.com. Publisher: Adrian Day. Owner: Investment Consultants International, Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2022. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

Disclosures:

1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: All. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management, which is unaffiliated with Adrian Day’s newsletter, hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services, or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees, or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in the securities mentioned. Directors, officers, employees, or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company release.

Metals Opinions
13 Dec

Ichimoku Cloud Analysis 13.12.2022 (EURUSD, XAUUSD, USDCAD)

By RoboForex.com

EURUSD, “Euro vs US Dollar”

The currency pair is testing the signal lines of the Cloud. The instrument is going above the Ichimoku Cloud, which suggests an uptrend. A test of the Kijun-Sen line at 1.0550 is expected, followed by growth to 1.0725. An additional signal confirming the growth will be a bounce off the lower border of the Triangle pattern. The scenario can be cancelled by a breakaway of the lower border of the Cloud and securing under 1.0385, which will mean further falling to 1.0295. The growth will be confirmed by a breakaway of the upper border of the Triangle and securing above 1.0615.

EURUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

XAUUSD, “Gold vs US Dollar”

Gold is correcting after a bounce off the resistance level. The instrument is going above the Ichimoku Cloud, which suggests an uptrend. A test of the upper border of the Cloud at 1780 is expected, followed by growth to 1840. An additional signal confirming the growth will be a bounce off the lower border of the bullish channel. The scenario can be cancelled by a breakaway of the lower border of the Cloud and securing under 1760, which will mean further falling to 1710.

XAUUSD
Risk Warning: the result of previous trading operations do not guarantee the same results in the future

USDCAD, “US Dollar vs Canadian Dollar”

The currency pair is pushing off the support level. The instrument is going above the Ichimoku Cloud, which suggests an uptrend. A test of the upper border of the Cloud at 1.3595 is expected, followed by growth to 1.3845. An additional signal confirming the growth will be a bounce off the lower border of the bullish channel. The scenario can be cancelled by a breakaway of the lower border of the Cloud and securing under 1.3475, which will mean further falling to 1.3385.

USDCAD

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Financial News Forex and Currency News
13 Dec

The Analytical Overview of the Main Currency Pairs on 2022.12.13

By JustMarkets

The EUR/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.0528
  • Prev Close: 1.0537
  • % chg. over the last day: +0.09 %

The US consumer price data will be released today, and an important interest rate meeting of the Federal Reserve will be held tomorrow. Analysts forecast that the consumer inflation rate will fall from 7.7% to 7.4% year-over-year, and core inflation (which excludes food and energy prices) will fall from 6.3% to 6.1%. Amid the slowdown in rate hikes, investors will turn their attention to riskier assets such as the euro. Also, on Tuesday, Germany will publish inflation data where inflationary pressures are also expected to decrease. Thus, volatility in currency pairs with the US dollar and euro will be extremely high.

Trading recommendations
  • Support levels: 1.0510, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
  • Resistance levels: 1.0583, 1.0610

The trend on the EUR/USD currency pair on the hourly time frame is bullish. But at the moment, the price is forming a wide-volatile flat. The MACD indicator has become inactive. Under such market conditions, moving to lower time frames or waiting for an impulse movement is necessary. Buy trades are best considered from the support level of 1.0483, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0584, but it is better with a confirmation in the form of a reverse initiative or a false breakout, as the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend will likely resume.

EUR/USD
News feed for 2022.12.13:
  • – German Consumer Price Index (m/m) at 09:00 (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).

The GBP/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.2245
  • Prev Close: 1.2264
  • % chg. over the last day: +0.16 %

The Bank of England and the UK Treasury have already acknowledged that the country is in recession. However, technically, there have not been two consecutive quarters of negative growth so far. There has only been one-quarter of negative growth. The latest GDP data showed that the UK economy grew by 0.5% in the last month. Since the last Bank of England meeting, the data have been consistent with the recession estimate but not as bad as expected. This creates a difficult scenario for the Bank of England as inflation is still in double digits, and therefore the Bank of England is likely to raise its rate by 0.5% this Thursday.

Trading recommendations
  • Support levels: 1.2177, 1.2024, 1.1964, 1.1684, 1.1476, 1.1418
  • Resistance levels: 1.2304, 1.2381, 1.2431

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading at the level of the moving averages, but there are signs of liquidity narrowing. The MACD indicator has become inactive. Under such market conditions, buy trades are better to look for from the support level of 1.2177, but with confirmation on intraday time frames. Sell trades are best looked for from the resistance level of 1.2304 but also better with confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: if the price breaks down from the 1.2100 support level and fixes below it, the downtrend will likely resume.

GBP/USD
News feed for 2022.12.13:
  • – 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);
  • – UK BoE Gov Bailey Speaks at 13:00 (GMT+2).

The USD/JPY currency pair

Technical indicators of the currency pair:
  • Prev Open: 136.55
  • Prev Close: 137.64
  • % chg. over the last day: +0.79 %

The situation on the USD/JPY currency pair has not changed. Fundamentally, in the medium term, USD/JPY quotes are inclined to grow as the difference between the interest rates of the US Federal Reserve and the Bank of Japan is increasing. On Wednesday, the Fed will raise the rate by at least another 0.5%, while the Bank of Japan is firmly committed to a soft monetary policy until spring 2023. This divergent policy contributes to the decline of the Japanese currency against the dollar.

Trading recommendations
  • Support levels: 137.13, 135.33, 133.53
  • Resistance levels: 139.09, 140.75, 143.17, 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the positive zone, and the buyer’s pressure on the intraday time frames is increasing, but there are the first signs of divergence. Sell deals can be looked for from the resistance level of 139.09 if there is a reverse reaction. Buy trades are best considered on intraday time frames from the support level of 137.13, but only with confirmation.

Alternative scenario: If the price fixes above 139.00, the uptrend will likely resume.

USD/JPY
There is no news feed for today.

The USD/CAD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.3633
  • Prev Close: 1.3633
  • % chg. over the last day: 0.00 %

Oil prices jumped by 3% yesterday. Oil was supported by the continued closure of the pipeline that connects Canadian oil to the US Gulf Coast. How long it will take Canada’s TC Energy Corp to clean up and restart its Keystone pipeline is still unknown. The Canadian dollar is a commodity currency, so rising oil prices have strengthened the Canadian dollar. A decline in US inflation today may trigger a further rise in oil prices.

Trading recommendations
  • Support levels: 1.3621, 1.3518, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
  • Resistance levels: 1.3690, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price is trading at the level of moving averages, and the MACD indicator has become inactive. Such market conditions significantly complicate the search for good entry points. Buy trades should be considered from the 1.3621 support level, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3690 but with confirmation in the form of a reverse initiative or after a false breakout, as the level has already been tested.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.

USD/CAD
There is no news feed for today.

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.

Financial News Forex and Currency News
13 Dec

Oil rises amid stoppage of key gas pipeline. A decline in US inflation could trigger a rally in stock indices

By JustMarkets

The Federal Reserve Bank of New York’s Microeconomic Data Center yesterday released its November 2022 Survey of Consumer Expectations, which shows that inflation expectations have declined in the short, medium, and long term. According to the report, expectations for rising home prices will continue to decline while the labor market will continue to strengthen. Household income growth expectations rose to a new high. Investors renewed their optimistic bets ahead of the release of economic data on inflation and the Federal Reserve’s interest rate decision, which is expected later this week. As the stock market closed Monday, the Dow Jones Index (US30) increased by 1.58%, and the S&P 500 Index (US500) added 1.43%. Technology Index NASDAQ (US100) gained 1.26% on Monday. All three indices closed the day in positive territory.

As a reminder, this is one of the busiest macroeconomic weeks of the year, with the four major central banks holding their final policy meetings of the year and data on US consumer inflation, which could play a major role in determining the outlook for the US interest rate and the dollar.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE30) decreased by 0.45%, France’s CAC 40 (FR40) lost 0.41%, Spain’s IBEX 35 (ES35) was down by 0.37%, Britain’s FTSE 100 (UK100) closed Monday at minus 0.41%.

UK GDP for October rose by 0.5%, up from minus 0.6% in September and ahead of the consensus forecast of 0.4%. The Bank of England and the UK Treasury have already acknowledged that the country is in recession, although technically, there have not been two consecutive quarters of negative growth so far. There has only been one-quarter of negative growth. Typically, negative economic growth during a recession leads to lower inflation, often to the point of deflation. This gives central banks plenty of room for easing and the government plenty of room to spend. But Britain’s spending is already well above its means, and its debt is too high. High inflation means that the Bank of England cannot begin easing. In fact, it may have to continue tightening, exacerbating the recession. Current market expectations call for the Bank of England to reach its peak rate of around 4% in 2023, and a rate cut is now planned for 2024.

Oil prices jumped by 3% yesterday. Oil was supported by the continued closure of the pipeline that connects Canadian oil to the US Gulf Coast. How long it will take Canada’s TC Energy Corp to clean up and restart its Keystone pipeline is still unknown. TC Energy closed the pipeline after a leak. More than 14,000 barrels of oil leaked from the pipeline last week, the largest US crude oil spill in nearly a decade. A decline in US inflation today could spark further gains in oil prices.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.21%, China’s FTSE China A50 (CHA50) was down by 0.08%, Hong Kong’s Hang Seng (HK50) fell by 2.20%, India’s NIFTY 50 (IND50) gained 0.01%, and Australia’s S&P/ASX 200 (AU200) ended Monday down by 0.45%.

According to data released Monday by the People’s Bank of China (PBOC), Chinese banks provided 1.21 trillion yuan ($173.48 billion) in new yuan loans, almost double October’s 615.2 billion yuan but below analysts’ expectations. Economists are confident that China’s central bank will focus on supporting the slowing economy. The PBOC has already cut the reserve requirement ratio for banks by 25 bps since December 5, freeing up about 500 billion yuan in long-term liquidity to support the fragile economy due to the Covid outbreak.

In Australia, the NAB business confidence index has become negative for the first time since December 2021. Orders declined from +14 in September to +5 in November, indicating a not-rosy outlook. In fact, the gap between current business conditions and business confidence is now at a record low, indicating heightened concerns about the sustainability of the economy next year. The main reasons for the decline in business confidence are high inflation and rising interest rates, which are putting pressure on consumers.

S&P 500 (F) (US500) 3,990.56 +56.18 (+1.43%)

Dow Jones (US30) 34,005.04 +528.58 (+1.58%)

DAX (DE40) 14,306.63 −64.09 (−0.45%)

FTSE 100 (UK100) 7,476.63 +4.46 (+0.06%)

USD Index 105.02 +0.21 (+0.20%)

Important events for today:
  • – Australia NAB Business Confidence (m/m) at 02:30 (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);
  • – German Consumer Price Index (m/m) at 09:00 (GMT+2);
  • – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
  • – UK BoE Gov Bailey Speaks at 13:00 (GMT+2);
  • – US Consumer Price Index (m/m) at 15:30 (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.

Energy Financial News
12 Dec

Fed wants inflation to get down to 2% – but why not target 3%? Or 0%?

By Veronika Dolar, SUNY Old Westbury 

What’s so special about the number 2? Quite a lot, if you’re a central banker – and that number is followed by a percent sign.

That’s been the de facto or official target inflation rate for the Federal Reserve, the European Central Bank and many other similar institutions since at least the 1990s.

But in recent months, inflation in the U.S. and elsewhere has soared, forcing the Fed and its counterparts to jack up interest rates to bring it down to near their target level.

As an economist who has studied the movements of key economic indicators like inflation, I know that low and stable inflation is essential for a well-functioning economy. But why does the target have to be 2%? Why not 3%? Or even zero?

Soaring inflation

The U.S. inflation rate hit its 2022 peak in July at an annual rate of 9.1%. The last time consumer prices were rising this fast was back in 1981 – over 40 years ago.

Since March 2022, the Fed has been actively trying to decrease inflation. In order to do this, the Fed has been hiking its benchmark borrowing rate – from effectively 0% back in March 2022 to the current range of 3.75% to 4%. And it’s expected to lift interest rates another 0.5 percentage point on Dec. 14 and even more in 2023.

Most economists agree that an inflation rate approaching 8% is too high, but what should it be? If rising prices are so terrible, why not shoot for zero inflation?

Maintaining stable prices

One of the Fed’s core mandates, alongside low unemployment, is maintaining stable prices.

Since 1996, Fed policymakers have generally adopted the stance that their target for doing so was an inflation rate of around 2%. In January 2012, then-Chairman Ben Bernanke made this target official, and both of his successors, including current Chair Jerome Powell, have made clear that the Fed sees 2% as the appropriate desired rate of inflation.

Until very recently, though, the problem wasn’t that inflation was too high – it was that it was too low. That prompted Powell in 2020, when inflation was barely more than 1%, to call this a cause for concern and say the Fed would let it rise above 2%.

Many of you may find it counterintuitive that the Fed would want to push up inflation. But inflation that is persistently too low can pose serious risks to the economy.

These risks – namely sparking a deflationary spiral – are why central banks like the Fed would never want to adopt a 0% inflation target.

Perils of deflation

When the economy shrinks during a recession with a fall in gross domestic product, aggregate demand for all the things it produces falls as well. As a result, prices no longer rise and may even start to fall – a condition called deflation.

Deflation is the exact opposite of inflation – instead of prices rising over time, they are falling. At first, it would seem that falling and lower prices are a good thing – who wouldn’t want to buy the same thing at a lower price and see their purchasing power go up?

But deflation can actually be pretty devastating for the economy. When people feel prices are headed down – not just temporarily, like big sales over the holidays, but for weeks, months or even years – they actually delay purchases in the hopes that they can buy things for less at a later date.

For example, if you are thinking of buying a new car that currently costs US$60,000, during periods of deflation you realize that if you wait another month, you can buy this car for $55,000. As a result, you don’t buy the car today. But after a month, when the car is now for sale for $55,000, the same logic applies. Why buy a car today, when you can wait another month and buy a car for $50,000 next month.

This lower spending leads to less income for producers, which can lead to unemployment. In addition, businesses, too, delay spending since they expect prices to fall further. This negative feedback loop – the deflationary spiral – generates higher unemployment, even lower prices and even less spending.

In short, deflation leads to more deflation. Throughout most of U.S. history, periods of deflation usually go hand in hand with economic downturns.

Everything in moderation

So it’s pretty clear some inflation is probably necessary to avoid a deflation trap, but how much? Could it be 1%, 3% or even 4%?

Maybe. There isn’t any strong theoretical or empirical evidence for an inflation target of exactly 2%. The figure’s origin is a bit murky, but some reports suggest it simply came from a casual remark made by the New Zealand finance minister back in the late 1980s during a TV interview.

Moreover, there’s concern that creating economic targets for economic indicators like inflation corrupts the usefulness of the metric. Charles Goodhart, an economist who worked for the Bank of England, created an eponymous law that states: “When a measure becomes a target, it ceases to be a good measure.”

Since a core mission of the Fed is price stability, the target is beside the point. The main thing is that the Fed guide the economy toward an inflation rate high enough to allow it room to lower interest rates if it needs to stimulate the economy but low enough that it doesn’t seriously erode consumer purchasing power.

Like with so many things, moderation is key.The Conversation

About the Author:

Veronika Dolar, Assistant Professor of Economics, SUNY Old Westbury

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

 

Economics & Fundamentals Opinions
12 Dec

Drill Results Show Grade and Growth Possibilities

Source: Geordie Mark  (12/12/22)

The first holes from the copper-gold-silver deposit in British Columbia highlighted updip and downdip extension potential of the mineralization there, noted a Haywood Securities report.

NorthWest Copper Corp.’s (NWST:TSX.V; NWCCF:OTCQX) maiden drill results from its Stardust deposit in British Columbia’s Quesnel Trough mining belt showed continuity and potential for extension of mineralization, reported Haywood Securities analyst Dr. Geordie Mark in a Nov. 16 research note. Stardust will be included in the upcoming preliminary economic assessment (PEA), expected by year-end.

The mineralization at Stardust “exhibits high variability in grade and continuity with drilling highlighting updip and downdip extension potential, probably warranting a niche program focused on testing these facets in 2023,” Mark wrote.

Release of those plus more from drill results from the Kwanika deposit is expected in 2022 and may boost NorthWest Copper’s share price.

Haywood recommends Buying shares of NorthWest Copper at the current price of about CA$0.22 per share. In comparison, Haywood’s target price on the Canadian copper explorer is CA$1.10, implying a significant potential return for investors.

The just released Stardust drill results are for eight holes of a 10-hole program testing whether the copper-gold-silver mineralization there is continuous and if there is likely more of it. Data so far are positive for both.

Results 

Mark presented the holes with standout results and what each of them indicates.

  • Hole DDH22-SD-476: 75.95 meters (75.95m) of 0.98% copper equivalent (Cu eq), including 8.45m of 3.14% Cu eq

This hole shows wide mineralization and potential for downdip extension of it.

  • Hole DDH22-SD-478: 21.1m of 2.41% Cu eq, including 1.55m of 16.64% Cu eq, within 44.2m of 1.31% Cu eq
  • Hole DDH22-SD-480: 35.55m of 0.91% Cu eq, including 11.2m of 2.91% Cu eq

These holes demonstrate the potential for updip expansion of high-grade mineralization at each intersection.

  • Hole DDH22-SD-479: 46.05m of 1.4% Cu eq, including 6.4m of 3.05% Cu eq
  • Hole DDH22-SD-481: 18.9m of 1.14% Cu eq, including 3.85m of 2.98% Cu eq

These holes show a continuity of alteration and mineralization that remains open at depth.

The results of the other two holes drilled at Stardust are pending. Release of those plus more from drill results from the Kwanika deposit is expected in 2022 and may boost NorthWest Copper’s share price. Another impending stock catalyst is the combined Kwanika and Stardust PEA, due out by year-end.

Disclosures:
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.

3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.

4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures For Haywood Capital Markets, NorthWest Copper Corp., November 16, 2022

Analyst Certification: I, Geordie Mark, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures: Of the companies included in the report the following Important Disclosures apply: Haywood Securities, Inc. has reviewed lead projects of this company and a portion of the expenses for this travel may have been reimbursed by the issuer.

 

Financial News Metals
12 Dec

Brent Lost 11% Over Week

By RoboForex Analytical Department

The crude oil market keeps trying to stabilise but fails. Brent barrel started this week by an attempt to reach 76.55 USD.

On the whole, the probability of an equally fast decline looks limited. Nonetheless, investors may react negatively to the oil demand forecasts presented by OPEC and the IEA. However, market participants can use the fact that the Keystone Pipeline that delivers crude oil from Canada to the US is still laying idle.

According to Baker Hughes, the number of active drills in the US has dropped by 2 over a week, reaching 625 units.

On H4, Brent has reached the local goal of the wave of decline at 75.33. Today the market is forming a structure of a wave of growth to 89.40. A link of correction to 82.30 is expected, followed by growth to 101.00. Technically, this scenario is confirmed by the MACD: its signal line is headed strictly upwards to zero. A breakaway and further growth to new highs should follow.

On H1, Brent has formed the first impulse of growth to 77.00. A link of correction to 76.06 is not excluded. Then a new structure of growth is expected to develop to 78.78. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is under 80, headed strictly down to 50. A bounce off it and growth back to 80 are expected.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Energy Financial News
12 Dec

Trade Of The Week: Heavy Event Week To Trigger GBPUSD Breakout?

By ForexTime 

Watch this space as the GBPUSD could enter into the holiday season with a bang!

Later this week, investors will be served a super combo of top-tier economic data and central bank meetings featuring not only the Federal Reserve (Fed) but European Central Bank (ECB) and Bank of England (BoE). With so much going on over the next few days, volatility could be the name across currency, commodity, and equity markets.

Our focus falls on the GBPUSD which is up roughly 10% quarter-to-date. After staging a powerful rebound back in late September, prices have been supported by fundamental and technical forces. With the dollar losing its grip on the FX throne as aggressive Fed rate hike bets cool, this has fuelled sterling’s upside gains. The currency pair is bullish and could experience a breakout with the right fundamental drivers. Before we discuss what to expect from the Fed and BoE this week, it is worth keeping in mind that the USD has depreciated against every single G10 currency since the start of Q4.

On the monthly charts, bulls seem to be stealing more control with prices currently testing a sticky level around 1.2300.

The same can be said on the weekly timeframe with 1.2300 just below the 50-week SMA. Nevertheless, prices are still bullish as there have been consistently higher highs and higher lows.

Whatever the outcome of the policy meetings between the two central banks, it most likely will set the tone for the GBPUSD for the rest of 2022.

What to expect from the Fed?

The Fed is widely expected to shift into lower gear on rates in December, hiking by 50 basis points compared to the 75-basis point increases they’ve undertaken over the last four policy meetings.

Indeed, signs of easing inflationary pressures have reduced the pressure on the Fed to raise interest rates aggressively. On top of this, such a move would be consistent with recent dovish speeches from Fed officials, including Jerome Powell. The million-dollar question is what the Fed does at its next policy meeting in February 2023. Jerome Powell’s press conference and information from the December meeting could provide investors with some important insight.

Before the heavily anticipated meeting on Wednesday, all eyes will be on the latest US inflation figures on Tuesday. Inflation is expected to have slowed to 7.3% in November compared to the 7.7% witnessed in October. A figure that meets or prints below expectations may further pare back interest rate hike bets, weakening the dollar. Alternatively, a hot print could result in the Fed raising rates for longer than anticipated – boosting dollar bulls as a result.

How about the BoE?

Markets widely expect the Bank of England to hike rates by a further 50 basis points this month.

Early signs of easing inflationary pressures have reduced the pressure for the BoE to move ahead with another jumbo 75 basis point rate hike. Indeed, the latest UK CPI data for November is expected to show inflation cooling to 10.9% on an annual basis. If expectations become reality, this may suggest that inflation may have peaked at 11.1% back in October. Nevertheless, inflation is still well above the central bank’s 2% target – forcing the BoE to continue raising interest rates in 2023.

It may be wise to keep a close eye on the latest UK jobs, retail sales and PMI figures which may offer additional insight into the health of the economy. But given how the UK economy is likely in recession, the central bank is trapped between a rock and a hard place on rates and economic growth. Ultimately, investors will closely observe the meeting for clues on the pace of future rate hikes in the New Year.

GBPUSD gearing to push higher?

A weaker dollar remains one of the major driving forces behind the GBPUSD’s upside momentum. However, prices remain within a minor range with support at 1.2120 and resistance at 1.2300.

The currency pair is firmly bullish on the daily charts as there have been consistently higher highs and highs and higher lows. Prices are trading above the 50, 100, and 200-day SMA while the MACD trades above zero. A solid breakout and daily close above 1.2300 may open the doors towards 1.2460 and 1.2650. Alternately, a move back below 1.2120 (where the 200-day SMA resides) could signal a selloff towards 1.1900 and 1.1750, respectively.

Forex-Time-LogoArticle by ForexTime

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Forex and Currency News Opinions
12 Dec

Will price caps on coal and gas bring power prices down? An expert isn’t so sure

By Bruce Mountain, Victoria University 

In a bid to arrest escalating power prices, Australia’s federal, state and territory governments have agreed to impose caps on the wholesale price of coal and gas.

Announcing the decision after National Cabinet met on Friday, Prime Minister Anthony Albanese said parliament would be recalled next week to pass the necessary legislation. He indicated there was enough crossbench support for this to be a formality.

There will also be $1.5 billion to subsidise electricity bills for households and small businesses. This will be administered by state and territory governments starting in April 2023, and for households it will be subject to means tests.

For the next year, coal used in Australia cannot be sold in wholesale markets for more than $125 a tonne. Gas used in Australia cannot be sold in wholesale markets for more than $12 a gigajoule.

At the time of writing, the short-term (spot) market price for coal at the Newcastle export terminal was $580 a tonne. Gas could be bought at the Wallumbilla hub near Brisbane for $22 a gigajoule.

With such a big gap between spot coal and gas prices and the announced caps, can we expect much lower gas and electricity prices?

In short, maybe or maybe not.

The aphorism “the devil is in the detail” is made for questions like this. This is because of the complex ways domestic coal and gas markets are linked to export markets, how supplies are contracted, and the lack of publicly available information on supply and demand in these markets.

Effect on coal price

The majority of Australia’s coal-fired electricity generators get their coal from nearby mines. Much of this coal cannot be exported, either because of its low quality (such as the brown coal of Victoria’s Latrobe Valley) or because the transport infrastructure doesn’t exist.

This “mine mouth” coal is therefore unaffected by export prices. Its price is based on extraction and delivery costs, plus a margin (of course). In all cases this is well below the $125 per tonne cap.

There are exceptions. Two of Queensland’s eight coal-fired generators – the government-owned Stanwell and the privately owned Gladstone – are supplied by mines able to divert some coal to export markets.

In NSW, coal from most of the mines that supply the state’s six coal-fired stations can, to varying degrees, be diverted. But much of this supply is already contracted for years ahead, so the export price is unlikely to be an accurate estimate of the price power stations will pay.

As best we know, only the Eraring station, near Newcastle in NSW’s Hunter region, is currently paying a price higher than the cap.

In the National Energy Market covering eastern Australia the price of the most expensive generator sets the price all generators receive. The coal price cap is therefore likely to make a difference to wholesale electricity prices when the Eraring power station is setting the market price.

This happens about 30% of the time, according to the publicly available data. So capping the coal price Eraring will pay much below what it is now paying could have a big effect on electricity prices.

But there’s a caveat. How will Eraring’s coal supplier respond?

Will it continue to supply coal at the lower capped price? Or will it decide to divert that coal to more lucrative export markets?

If the former, we can reasonably say the cap will reduce electricity prices.

If the latter, we could potentially be facing a supply crisis, with much higher electricity prices. If Eraring, the largest generator in eastern Australia, sits idle for want of coal to burn, more expensive gas generators (if available) will have to take its place.

Effects on gas price

What about gas? It’s a similar story to coal, although diverting gas to the export market is easier than for coal (because gas is much easier to move than coal and the pipeline network is much more extensive than the coal freight network).

As a result, domestic spot gas prices are more closely linked to export prices.

Like the coal price cap, the gas price cap is much lower than spot gas price. So the question is whether gas suppliers will sell uncontracted gas at the capped price, or politely decline.

The government hopes the Heads of Agreement with gas suppliers will ensure supply. It remains to be seen whether such a deal will ensure supply at a much lower price than we see in the gas markets today, at least for spot market purchases.

Imperfect information

None of this is to suggest the decision to impose price caps is necessarily flawed.

I do not have the necessary information about the existing situation, or accurate foresight of what lies ahead, to pass a categorical judgement. Presumably neither do any of our governments. None of us can confidently predict success or failure.

At the media briefing to announce the policy, Albanese was asked to quantify the effect on prices. He wisely refused to name a number, but insisted the policy would place “downward pressure” on prices. Presumably the government intends that the rebates (to be funded by federal taxpayers and the jurisdictions) will kick in if the wholesale caps don’t work as hoped.

Are there obviously better solutions?

Orthodox economists would suggest these challenges should be handled outside the market (for example through coal and gas export taxes, which would provide income to bail out exposed customers).

Sounds easy, but here too many devils lurk in the details.The Conversation

About the Author:

Bruce Mountain, Director, Victoria Energy Policy Centre, Victoria University

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

 

Energy Opinions
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