RoboForex becomes the Official Sponsor of the South American Football Club Cienciano

October 27, 2022

Belize City, Belize

RoboForex, a leading global provider of services on financial markets, announces to become an official sponsor of the professional football club Cienciano. Cienciano is a professional football club based in Cusco, Peru that currently plays in the Peruvian Primera División. The contract is for the period 2022-2023.

RoboForex has among its priorities the realization of works with which it can demonstrate social responsibility. Without geographic limits, and without distinction of areas of concern (sports, health, environment, community, education…) this company tries to give back to society all the trust and solidarity that have been granted to it since the beginning of its operations. Recently, a part of this social responsibility has taken shape in Peru.

In this Latin American nation, RoboForex has built a productive and harmonious link with a football team that enjoys well-deserved and traditional popular support. Club Cienciano has to its credit two international trophies that place it on the world football stage. Born in Cusco on July 8, 1901, it is considered one of the oldest football clubs in the country and is called “America’s Dad”. Its stadium is named after a Spanish-Inca writer known as Inca Garcilaso de la Vega.

The outstanding trajectory of this club and its deep-rooted fans are the reasons why RoboForex participates in a sponsorship agreement that favours the training and performance of Cienciano football. Initially, this sponsorship agreement will be in force until 2023. It is expected that RoboForex’s contribution will help the club to increase its potential and win every match and every championship. In addition, it is projected that the city of Cusco and Peru as a whole will obtain important benefits that go beyond sports. RoboForex, in alliance with Club Cienciano, intends to carry out social works that have an impact on the welfare of several communities. Indeed, on September seventeenth of this year, two hundred football balls were donated. This donation benefited schools in Cusco that need support to develop their sports activities.

In the officialization activity the CBO of the RoboForex company in Latin America Sami Otman has expressed, “We have been captivated by Peru, by its people, its culture, its history and by the great club that is Cienciano. Which reaffirms the commitment RoboForex has made to the club and to all of Peru”

The cheers that Peruvians dedicate to their football club will encourage RoboForex’s performance as a financial company with social responsibility.

About RoboForex

RoboForex is a company which delivers brokerage services. The company provides traders who work in financial markets with access to its proprietary trading platforms. RoboForex Ltd has the brokerage licence FSC 000138/333. More detailed information about the Company’s products and activities can be found on the official website at roboforex.com.

The UK is facing an economic crisis – here’s why it needs to find a global solution

By Muhammad Ali Nasir, University of Leeds 

Recent changes in the UK’s top job have had a positive effect on pound sterling and long-term sovereign bond yields. But the financial market reaction has been muted compared with the financial turmoil blamed on former prime minister Liz Truss and ex-chancellor Kwasi Kwarteng in recent weeks.

After the mini-budget on September 23, the markets reacted to a bad policy: Truss’s strategy to undertake massive tax cuts without providing much certainty on how this would be funded. Its reversal brought bond yields down from recent highs (essentially reducing the cost of government borrowing) and saw the pound appreciate. But overall, the market losses seen following the mini-budget have barely been recovered.

To investors, sound and stable economic policies matter much more than the person residing in Number 10. And that’s why, even with a new prime minister, recent market movements indicate investors continue to see more significant issues with the UK economy, both immediately and over the longer term.

In the short term, yields on UK sovereign bonds have shot up after the mini-budget, increasing the government’s cost of borrowing. The lack of an accompanying forecast by the Office of Budgetary Responsibility (OBR) exacerbated this negative reaction.

Before this, the Bank of England had been contemplating a bond-selling exercise to try to bring rising inflation back to its 2% target by reducing the supply of money in circulation (this is known as quantitative tightening). Instead, it had to quickly change course after the mini-budget. It not only postponed this tightening, but also restarted quantitative easing and bond purchases, promising to buy up to £10 billion in gilts per day to address a related crisis among pension funds.

Two things will now determine future sovereign bond yield dynamics and dictate government borrowing costs.

First, clarity on how long the Bank of England plans to continue its policy of quantitative easing (buying bonds to keep yields low) before it reverts to quantitative tightening again. Markets are watching these actions very carefully and any suggestion that this support by the Bank will be cut off could make traders and investors nervous.

Second, the government’s medium-term fiscal plan, currently scheduled for October 31, will also affect bond yields. Unlike the mini-budget, this plan will come with an in-depth assessment from the OBR, giving markets more information. Plus, the current chancellor, Jeremy Hunt, has brought some of the fiscal plan measures forward to ease market concerns.

It’s still unclear what kind of plan it will be, however. A debt-cutting strategy from Hunt and the new government headed by Rishi Sunak should assure the markets about the UK’s fiscal stability, but it’s still unknown whether this would happen via more taxes or less spending. Some evidence on what would be best for the economy supports raising capital income taxes (capital gains tax and inheritance tax) rather than cutting public spending or raising income taxes.

In the long term, the UK’s major problems are stagnating growth and lack of productivity. And if the new government addresses current problems by raising taxes and cutting spending – alongside higher interest rates from the Bank of England – there will be more economic pain.

Changing global economy

Many countries are suffering similar issues to the UK, contributing to a weak global economic outlook in general right now. After a prolonged period of historically ultra-low interest rates, increases – so-called normalisation of monetary policy – were expected in most countries. But a sharp surge in inflation due to Russia’s invasion of Ukraine and pandemic-era supply chain issues have caused most central banks to scramble to tighten monetary policy even further by increasing rates more rapidly.

Recent rate changes by central banks

Graph showing changes in central bank base rates over the past decade, with a sharp rise in early 2022.
Interest rate changes by central banks in the UK, Japan, the US and the Eurozone between October 2012 and October 2022.
Author’s chart using Bank for International Settlements data.

These rate hikes and policy tightening strategies by central banks could create significant financial and fiscal instability. Already, the US Federal Reserve’s unwinding of its balance sheet from a peak of US$8.97 trillion (£7.9 trillion) in April 2022, for example, caused the dollar to appreciate by more than 13% in the last six months. This has created challenges for emerging market currencies, as well as major currencies – the yen, pound sterling and the euro – which have all depreciated considerably against the US dollar.

This has added to inflationary pressures, particularly in the Eurozone and UK, but it also affects sovereign bond yields, challenging economic stability in these countries. Since August, the cost of borrowing has more than doubled for many.

The rising cost of government borrowing

Line graph showing the rising cost of borrowing in recent months for governments in the UK, US, Germany, Italy, Canada, France and Greece.
10-year sovereign bond yields from August to October 2022.
Author’s chart using Thomson Reuters data.

But to address rising inflation, even more central banks will want to shrink their balance sheets by selling bonds. The total size of the asset purchase programmes of the main four central banks alone is about US$26.7 trillion. With a weak global economy and these other financial fragilities, this is going to be a painful exercise for the global economy.

Indeed, such tightening will increase the cost of government borrowing further, creating major issues, particularly for highly leveraged governments, and those still paying off pandemic-era support such as the UK and Eurozone.

The UK specifically, is also dealing with a shift in the global economic centre of gravity away from its economy. In less than two decades, the UK has shrunk in relative terms from being an economy larger than China to being about nine times smaller. And the pound no longer enjoys the same status as the US dollar, meaning financial markets will punish it severely if it steps out of line.

This means the new UK government faces a tricky task in reigniting global investor confidence in its economic stability, even with a new prime minister widely seen as a steady hand.The Conversation

About the Author:

Muhammad Ali Nasir, Associate Professor in Economics, University of Leeds

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

Ichimoku Cloud Analysis 27.10.2022 (GBPUSD, AUDUSD, USDCHF)

Article By RoboForex.com

GBPUSD, “Great Britain Pound vs US Dollar”

The pair is testing the Tenkan-Sen line. The pair is going above the Ichimoku Cloud, which means an uptrend. A test of the Kijun-Sen line is expected at 1.1550, followed by growth to 1.1955. 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 1.1305, which will mean further falling to 1.1210.

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

AUDUSD, “Australian Dollar vs US Dollar”

The pair is growing inside a bullish channel, going above the Ichimoku Cloud, which means an uptrend. A test of the Tenkan-Sen line is expected at 0.6440, followed by growth to 0.6720. 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 0.6205, which will mean further falling to 0.6105.

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

USDCHF, “US Dollar vs Swiss Franc”

The pair is pushing off the signal lines of the indicator, going below the Ichimoku Cloud, which means a downtrend. A test of the Kijun-Sen line is expected at 0.9905, followed by falling to 0.9735. An additional signal confirming the decline will be a bounce off the upper border of the descending channel. The scenario can be cancelled by a breakaway of the upper border of the Cloud and securing above 0.9975, which will mean further growth to 1.0065.

USDCHF

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.

Japanese Candlesticks Analysis 27.10.2022 (USDCAD, AUDUSD, USDCHF)

Article By RoboForex.com

USDCAD, “US Dollar vs Canadian Dollar”

On H4, at the support level, the pair has formed a Harami reversal pattern. Currently, the pair may go by the signal, forming an ascending wave. The goal of growth will be 1.3690; it may be later broken away so that the price will continue the uptrend. However, the quotes may still pull back to 1.3490 before growing.

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

AUDUSD, “Australian Dollar vs US Dollar”

On H4, at the support level, the pair has formed a Hammer reversal pattern. Currently, the pair is going by the signal in an ascending movement. The goal of growth may be 0.6600. After testing the resistance level, the quotes have a chance to bounce off it and develop a descending wave again. However, the price may just drop to 0.6450 without testing the resistance level.

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

USDCHF, “US Dollar vs Swiss Franc”

On H4, at a pullback near the support level, the pair has formed a Hammer reversal pattern. The pair may currently go by the signal in an ascending wave. The goal of growth is 0.9920. After testing the resistance level, the pair will have a chance for breaking through it and continuing the uptrend. However, the price may still pull back to 0.9825 before growing.

USDCHF

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.

The whole world is facing a debt crisis – but richer countries can afford to stop it

By Patrick E. Shea, University of Glasgow 

Countries across the world are drifting towards a debt crisis. Economic slowdowns and rising inflation have increased demands on spending, making it almost impossible for many governments to pay back the money they owe.

In normal times, those countries could simply take on new debt to replace the old debt. But international conditions have made it much more difficult to do this.

As a result, some of those approaching repayment deadlines will simply not be able to meet them. Sri Lanka and Zambia have already missed payments, throwing both countries into an economic tailspin, and offering perhaps a preview of impending global problems.

One of the main reasons for this worrying scenario is that countries across the world are essentially compelled to borrow money in US dollars or Euros, and keep foreign currency reserves for future debt payments.

But those reserves face other vital demands. They are needed to purchase oil and other imports, and well as maintaining the credible value of their domestic currency.

Unfortunately for many emerging economies, the reserves they hold are simply not enough to cover all of these demands – especially after energy prices soared when Russia invaded Ukraine.

At the same time, foreign currencies have become more expensive to buy because the US Federal Reserve and the European Central Bank are raising interest rates. Sri Lanka reportedly has no reserves left, while Pakistan is said to be operating on a month-to-month basis.

Countries usually issue new bonds (think of them as tradeable IOUs) to roll over old debt, a process that works just fine – until it doesn’t. In July 2022, no emerging countries issued any new bonds, indicating that investors are alarmed by the risk of low currency reserves, and are no longer interested in lending to them.

China too has scaled back its lending since the beginning of the pandemic to limit its exposure to global risk. So without bond markets or China, countries are turning to alternative sources of credit.

Kenya and Ghana for example, recently took out bank loans to alleviate budget shortfalls. And while the precise terms of these loans are not known, banks usually demand higher interest rates and shorter repayment periods, which may only add to a country’s financial stress levels.

Other countries are turning to some of the oil-rich gulf states currently profiting from high energy prices. Egypt and Pakistan have received loans from Saudi Arabia, the United Arab Emirates (UAE) and Qatar, while Turkey has also borrowed from the UAE. These loans may be welcome lifelines, but they also create opportunities for richer countries to effectively buy influence and generate dependency.

Overall then, a multitude of factors are working against some of the world’s poorest and indebted countries. If a global debt crisis does ensue, expect political turmoil to follow.

Sri Lanka’s default prompted wide spread protests, forcing the president to resign. And research shows that extremist parties perform better after a financial crisis.

Liquidity and transparency

But it is not too late for the international community to help avoid such a scenario.

First off, the US and the EU should slow down their interest rate hikes. These US and EU rate hikes slow economic growth around the world, as the United Nations warned, and they are draining countries’ foreign currency reserves.

It is also not clear that these interest rate hikes are addressing domestic inflation problems. If wealthier countries wish to lower inflation without igniting a global debt crisis, they should lower the trade barriers that artificially raise prices. For example, both the US and EU levy tariffs on imported agricultural products, which increase the price of food for their consumers.

Second, the International Monetary Fund (IMF) should drop or at least soften the austerity requirements linked to its emergency lending. For example, Zambia’s new IMF deal requires lower government subsidies on fuel and food at a time when prices are increasing. These policies are politically unpopular and encourage countries to seek help from China and oil-rich states instead.

Those countries that are compelled to borrow from the IMF face the risk of emboldening extremist political elements. Now is not the time to push orthodox fiscal requirements that are questionable in their effectiveness. Instead, the IMF should prioritise global liquidity during these difficult economic conditions.

Finally, China should take a leading, transparent role in debt negotiations. Many of the countries facing debt problems owe money to China, a process often shrouded in secrecy.

We know, for instance, that China has agreed to participate in restructuring negotiations in Zambia but has not done the same in Sri Lanka. China has provided emergency loans and debt relief to Pakistan and Argentina, though the effectiveness or extent of this aid is unknown.

A more transparent approach would reduce uncertainty in global markets and allow other creditors to coordinate with China. While China’s lending has not been transparent up until this point, more clarity would benefit China’s overseas investments as well as the global debt market.

Time is running out before many debt distressed countries face repayment day. Debt problems are contagious, as was seen with the Latin American debt crises of the 1980s, the Asian financial crises of the 1990s, and the Eurozone debt crises of the 2010s. The global community should work together to avert another global economic spiral, and help millions of people avoid needless suffering.The Conversation

About the Author:

Patrick E. Shea, Senior Lecturer in International Relations and Global Governance, University of Glasgow

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

The Analytical Overview of the Main Currency Pairs on 2022.10.27

By JustMarkets

The EUR/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 0.9964
  • Prev Close: 1.0078
  • % chg. over the last day: +1.14 %

The European Central Bank will hold its monetary policy and interest rate meeting today. The analyst expects the ECB to raise the interest rate by 0.75%, although some European leaders stressed the risk of recession and suggested not to sharply increase the cost of borrowing in the Eurozone. Also today, the US will release data for the third quarter, where analysts expect to see a growth of 2.3%. Falling GDP figures may cause a surge in volatility as it will be a sign of a slowing economy, forcing policymakers to be less aggressive in the interest rate hike cycle. Still, it will be positive for the euro.

Trading recommendations
  • Support levels: 1.0032, 0.9969, 0.9873, 0.9835, 0.9755, 0.9601
  • Resistance levels: 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and the buyers’ pressure remains. Under such market conditions, buy trades should be considered from the support level of 1.0032 or 0.9969, but with additional confirmation in the form of reverse initiative. Sell deals may be considered from the resistance level of 1.0111, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9834 and fixes below it, the downtrend will likely resume.

EUR/USD
News feed for 2022.10.27:
  • – Eurozone Monetary Policy Statement at 15:15 (GMT+3);
  • – Eurozone Interest Rate Decision at 15:15 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US GDP (q/q) at 15:30 (GMT+3);
  • – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
  • – Eurozone ECB Press Conference at 15:45 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:
  • Prev Open: 1.1463
  • Prev Close: 1.1615
  • % chg. over the last day: +1.33 %

The pound sterling continued its rally against the US dollar, rising more than 4% for the week as political uncertainty in the UK dissipated. The new British Prime Minister, Rishi Sunak, postponed the announcement of the financial plan from October 31 to 17. Details of the budget have not yet been released, but Rishi Sunak confirmed that fighting inflation will be the government’s focus. Economic stability and restoring confidence will also be a priority.

Trading recommendations
  • Support levels: 1.1382, 1.1338, 1.1172, 1.1093, 1.0915, 1.0817
  • Resistance levels: 1.1478, 1.1693, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the levels of the moving averages. The MACD indicator is in the positive zone, there is still buying pressure, but the first signs of divergence have appeared, which indicates that the growth is limited. Under such market conditions, buy trades can be considered from the support level of 1.1467 or 1.1337, but better after confirmation. Sell trades are best sought on intraday time frames. The nearest resistance level is 1.1698, but also better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

GBP/USD
There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:
  • Prev Open: 147.98
  • Prev Close: 146.38
  • % chg. over the last day: -1.09 %

The strengthening of the Japanese Yen in recent days is mainly due to a decrease in the dollar index amid rumors that the US Federal Reserve should be less aggressive in its interest rate hike cycle to prevent a steep decline in economic indicators and GDP. But investors should keep in mind that the Bank of Japan and the US Fed are still looking the other way. The Bank of Japan is pursuing a soft monetary policy, while the US Fed is in a tightening cycle. And the situation has stayed the same, even despite the currency interventions, so analysts do not recommend investors sell Japanese currency prematurely. Experts point out that in April 2023, the second five-year term of Governor Haruhiko Kuroda expires, which offers the prospect of a gradual withdrawal of his radical economic stimulus program.

Trading recommendations
  • Support levels: 144.91, 144.19, 143.00
  • Resistance levels: 148.79, 147.75, 148.64, 148.64, 150.00, 151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bearish. The price has consolidated below the priority change level and is trading below the moving averages. The MACD indicator has become negative, and there is slight seller pressure, but there are also signs of weakness in the form of divergence. Under such market conditions, buy trades can be looked for on intraday time frames from the 144.91 or 144.19 support level. Sell trades can be looked for from the 146.79 resistance level, but only with additional confirmation.

Alternative scenario: If the price fixes above 150.00, 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: 1.3610
  • Prev Close: 1.3554
  • % chg. over the last day: -0.41 %

The Bank of Canada raised its interest rate by 0.5% to 3.75%, which came as a surprise to analysts, as most had expected a move of 0.75%. At a press conference, Bank of Canada Governor Tiff Macklem said higher interest rates are starting to curb economic growth. This is increasingly evident in areas of the economy that are sensitive to interest rates, such as housing and household spending. Thus, the Bank of Canada is beginning to be more cautious in its rate hike cycle, and it is highly likely that the rest of the central banks will have to do the same, or a global recession is inevitable.

Trading recommendations
  • Support levels: 1.3535, 1.3454
  • Resistance levels: 1.3678, 1.3795, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price has consolidated below the priority change level and is trading below the moving averages. The MACD indicator is in the negative zone, but there is a divergence, which indicates the weakness of the sellers. The best way to sell is to consider the resistance level of 1.3678, but only after the additional confirmation in the form of reverse initiative. Buy trades should be considered on the lower time frames from the support level of 1.3534, but it is better after confirmation.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3855, the uptrend 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.

A game of numbers: How air defense systems work and why Ukraine is eager for more protection

By Iain Boyd, University of Colorado Boulder 

Ukraine has received a broad array of military supplies from the U.S. and other allies. Recently, Ukrainian President Volodymyr Zelenskyy made an urgent plea specifically for additional air defense resources from the West in response to increased air attacks by Russia.

To understand Zelenskyy’s emphasis on air defense, it’s important to look at the types of air weapons that Ukraine faces and how air defenses work to counteract those threats. It’s also important to understand why this type of warfare is all about the number of assets each side has at its disposal.

Increased air attacks

On Oct. 10, 2022, Russia launched a large barrage of airborne weapons against a variety of targets in Ukraine. The types of weapons involved in the attack included short-range ballistic missiles and cruise missiles.

Ballistic missiles are accelerated by rockets from the ground or from aircraft, tend to follow a predictable path and are somewhat easier to track. Cruise missiles carry a propulsion system that allows them to maintain speed and fly more unpredictable flight paths, including trajectories that are close to the ground. They are much more difficult to detect, track and shoot down.

Then, on Oct. 17, Russia launched a barrage of explosive drones at Ukraine’s capital city, Kyiv. Explosive drones, known as loitering munitions, tend to be small weapons that are difficult to defend against. By circling overhead, they are able to surveil a region of interest, gathering information before identifying a specific target to attack. Russia has acquired explosive drones from Iran, according to U.S. officials.

Air defense systems

The defense against all such air threats involves an integrated system of several elements.

Early warning radars located at Ukraine’s borders first detect the approach of missiles. These weapons are further tracked along their flight trajectories by a dispersed network of additional radars. The primary defensive countermeasure against ballistic and cruise missiles involves surface-to-air missiles (SAMs): You destroy a missile using a missile. This is no easy feat because the SAM must track, home in on and hit a high-speed target that may be changing direction.

a diagram showing the trajectory of a missile along with a radar system tracking the missile and a defensive missile intercepting the attacking missile
The fundamental elements of a missile defense system.
Nguyen, Dang-An et al., CC BY-NC

In the U.S., key strategic assets such as the White House are protected against aerial attack by the National Advanced Surface-to-Air Missile System (NASAMS). NASAMS was designed to counteract a variety of incoming threats, including cruise missiles, aircraft and drones. Each NASAMS contains 12 interceptor SAMs. No information is available publicly on its effectiveness. NASAMS is one of the options being considered by the U.S. to help support Ukraine.

Another notable example of an air defense system is the Israeli Iron Dome. The system is designed to defend against rockets and artillery shells launched from up to 155 miles (250 kilometers) away. Each Iron Dome missile battery consists of three to four missile launchers, each with up to 20 interceptor SAMs.

The system is reported to have a 90% kill rate for rockets launched against Israel. Veteran national security correspondent Mark Thompson described Iron Dome as possibly the most effective missile defense system the world has seen.

Both NASAMS and Iron Dome are reported to be effective against drones. However, SAMs are an expensive way to defend against such low-cost targets, and they could be overwhelmed by large numbers of drones. Directed energy weapons such as high energy lasers are being developed and deployed to provide a potentially more cost-effective approach to neutralizing low-cost drones.

A numbers game

The significance of the plea by Zelenskyy for additional air defense systems can be understood in the context of a numbers game. Different air defense systems have a range of effectiveness against different aerial threats. However, none of the defense systems is 100% effective.

Moreover, an adversary can significantly reduce the effectiveness of air defense by launching salvos of multiple weapons simultaneously. Therefore, an attacker can always overwhelm a defender if the attacker has more attack missiles than the defender has defensive missiles. Conversely, a sufficient number of defensive systems may cause an attacker to stop firing altogether. It becomes a war of attrition, with the winner being the side with the most missiles.

Ukraine likely has sufficient air defenses to protect strategic military targets such as command and control centers and ammunition dumps. They do not have coverage of many other key assets such as transportation hubs and power and water facilities, the types of targets Russian forces have been targeting in recent days.

Should the West agree to provide significant numbers of air defense systems to Ukraine, it could significantly change the course of the conflict. At some point, Russia will have to confront the finite depth of its missile stockpile. The number of remaining Russian high-precision missiles is already reported to be running low.

Without the ability to wear down and demoralize Ukraine through airstrikes, Russia would be faced with the much more daunting and drawn-out prospect of relying solely on ground forces to grind out its objectives.The Conversation

About the Author:

Iain Boyd, Professor of Aerospace Engineering Sciences, University of Colorado Boulder

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

The US Real Estate market continues to decline. ECB to raise interest rate today

By JustMarkets

The US stock indices were trading yesterday without a single trend. By the close of trading, the Dow Jones Index (US30) gained 0.01%, while the S&P 500 Index (US500) decreased by 0.74%. The NASDAQ Technology Index (US100) fell by 2.04% on Wednesday.

The US economic data released by the US Commerce Department showed that home sales in September fell by 10.9% from the previous month, while August’s 685,000 unit figure was revised downward to 677,000, indicating that the Federal Reserve’s aggressive policies continue to hold back the real estate market.

Shares of Meta Platforms Inc (Facebook) fell more than 20% on the report after third-quarter earnings missed Wall Street estimates.

Visa, meanwhile, closed 5% higher after posting quarterly results that beat net income estimates, driven by continued consumer spending and a recovery in activity.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 1.09%, France’s CAC 40 (FR40) added 0.41%, Spain’s IBEX 35 (ES35) increased by 0.97%, and the British FTSE 100 (UK100) closed by 0.61% on Wednesday.

The euro weakness may lead to a further rise in consumer prices at the expense of imports, said German Deputy Finance Minister Florian Toncar. Toncar’s remarks contrast with recent comments from other European leaders, who stressed the risk of recession and suggested that the cost of borrowing in the eurozone should not increase too sharply.

The European Central Bank will raise interest rates again today and likely provide a subsidy to commercial banks, taking another important step in tightening policy (QT) to combat a historic spike in inflation. The ECB will almost certainly raise its deposit rate by 75 basis points to 2% and make clear that the size of the next steps remains open for discussion. The central bank is also likely to take the first steps to reduce its balance sheet of €8.8 trillion. Signaling that future steps will be more difficult, ECB President Christine Lagarde is likely to give only vague guidance, arguing that additional increases are needed, but incoming data and new economic forecasts in December will be the key.

According to the World Bank, a sharp slowdown in global growth and restrictions imposed because of the coronavirus pandemic in China are key downside risks to oil consumption. But with OPEC+ countries limiting oil production starting in November, the medium-term outlook for oil remains upward.

Shell company on Thursday reported third-quarter earnings of $9.45 billion, down from the previous quarter. But the company announced plans to increase its dividend by 15% by the end of the year. Shell also expanded its stock buyback program, announcing plans to buy $4 billion worth of stock over the next three months.

Asian markets closed in positive territory yesterday. Japan’s Nikkei 225 (JP225) jumped by 0.67%, Hong Kong’s Hang Seng (HK50) ended the day up by 1.00%, and Australia’s S&P/ASX 200 (AU200) increased by 0.18%.

Solid wage growth is likely to be the trigger that will push the Bank of Japan away from ultra-low interest rates. With Japan’s economy still weak, the Bank of Japan is not expected to raise interest rates soon, even if it means increasing downward pressure on the yen, which has fallen to a 32-year low against the dollar. Analysts say that Governor Haruhiko Kuroda’s second five-year term ends in April, opening the prospect of a gradual withdrawal of his radical economic stimulus program.

S&P 500 (F) (US500) 3,830.60 −28.51 (−0.74%)

Dow Jones (US30) 31,839.11 +2.37 (+0.01%)

DAX (DE40) 13,195.81 +142.85 (+1.09%)

FTSE 100 (UK100)  7,056.07 −0.51 (+0.61%)

USD Index 109.71 −1.24 (−1.14%)

Important events for today:
  • – Eurozone Monetary Policy Statement at 15:15 (GMT+3);
  • – Eurozone Interest Rate Decision at 15:15 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US GDP (q/q) at 15:30 (GMT+3);
  • – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
  • – Eurozone ECB Press Conference at 15:45 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

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.

Kenya has lifted its ban on genetically modified crops: the risks and opportunities

By Benard Odhiambo Oloo, Egerton University 

Kenya recently lifted a ban on the cultivation and importation of genetically modified crops amid the worst drought in 40 years and soaring food prices. This includes white maize, the country’s main staple. The decision was welcomed by scientists who see GM crops as the answer for food security. But it is opposed by a spirited lobby who are concerned about potential risks to health and the environment. Benard Odhiambo Oloo, who is a food safety and quality expert, provides insights into the debate.

What are GMOs?

Genetically modified organisms (GMOs) refer to plants, microbes or animals that have had their genetic make-up altered through the introduction of a select gene from another unrelated species. For crops this is usually for the purpose of conferring a desired characteristic such as increased yield, insect tolerance or drought resistance among others.

Genetic engineering refers to the science involved in the selection of desired genes responsible for specific traits from a species and transferring them into the genes of another organism, thus modifying the second species’ genetic makeup.

Humans have been improving the quality of domesticated crops for thousands of years. But this has mostly been through conventional breeding, where important traits are encouraged, selected and passed down from one generation to the next.

Conventional breeding would typically take 10-15 years. The turnaround for genetic engineering is usually less than five years. But, due to the strict regulations on commercialisation, most GM crops have been in the pipeline for decades especially in Africa.

How prevalent is their cultivation in Africa?

The approval and cultivation of GMOs in Africa has been slow. Only a few countries have allowed their commercialisation. South Africa has been a leader in adoption of GMO crops in Africa and has had experience spanning over a decade. The number of countries in Africa where GM crops are cultivated has grown from three in 2016 to 10 by 2022. These 10 countries have commercialised different types of GMO crops.

Apart from South Africa, Egypt, Sudan, Ethiopia, Burkina Faso, Malawi, Nigeria, Ghana and eSwatini have allowed the planting of GMO seeds. A number of other countries are at different stages of development and commercialisation of a number of GMOs.

The leading GMO crops under consideration across different countries (Kenya, Malawi, Uganda, Nigeria, Ghana and others) are GM cotton (tolerant to African bollworm), GM cassava (resistant to cassava brown streak disease) and GM maize (resistant to stem borer) among many more.

This year Ghana approved the release of pod borer resistant cowpea, thus joining the growing list of African countries to commercialise GM crops. This is the first genetically modified crop to be approved in the country.

In December 2019 the Kenyan government gave the nod for the commercialisation of GMO cotton. After more than two seasons of growing GM cotton, Kenyan farmers have expressed satisfaction with the good yield from Bt cotton in spite of the drought conditions in the last few seasons.

Elsewhere in Africa, farmers have also reported significant reduction in the cost of production through reduced spraying for control of insect pests and diseases. Controlling African bollworm, for example, was costly and the pest caused losses in cotton farming.

This list is expected to keep growing even though in most African countries the cultivation of GMOs has experienced protracted delays through regulatory, political and social blockades.

Why did Kenya ban GMOs? What has changed?

Kenya banned GM crops in 2012. The ministerial statement on the ban was largely informed by a 2012 a scientific report dubbed the Séralini study that associated GMOs with cancer in rats.

Anti-GMO activists have often referred to that report and in addition presented the unknown impact of the modifications as the main reason for pushing for bans. The other issues range from fears about the effect of GMO, the mixed signals from EU about health and safety of GM foods, and the potential risk of GMOs to the environment and biodiversity.

The activists also cite the fear of possible effects of GMOs on non-target organisms and potential development of resistance to insect-pests by the GM crops. Lastly, food safety fears of GMOs remain pertinent in some parts of the continent.

The Kenyan government’s change of stance was underpinned by a number of developments. First of which was the report by a task force on genetically modified foods that resulted in proper scientific regulation and presence of a strong regulatory framework.

Another factor is the lingering drought in which over 4 million Kenyans currently face food insecurity. This may have led the government to consider more radical solutions despite opposition.

The government has decided to review each application for introduction of GMOs on a case-by-case basis.

What could go wrong? And what mitigation plans are there?

There are three main concerns about what could go wrong with GMOs. These are unintended harmful effects, food safety, environmental safety and social attitudes, including fears that GMOs are a case of “man playing God”.

There is also the concern of unintended harmful effects of GMOs on the environment. In anticipation of these risks, scientists working in the field of GMO have created a raft of regulations. These regulations aim to evaluate whether GMOs are just as safe to humans and the environment as their conventional counterparts before they can be accepted for commercialisation.

Food safety: Food safety studies including tests of allergenicity (the ability of an antigen to induce an abnormal immune response) are a mandatory requirement for commercialisation of GMOs. Countries have also instituted biosafety authorities with a mandate to regulate the development and commercialisation of GMOs.

Environmental safety: An international agreement provides a framework for handling, transport and use of GMOs. It provides a clear road-map for evaluation of the impact of GMOs on the environment. It has instituted the practice of post release monitoring and evaluation for 10 years or more after the release of a GM crop.

The potential development of weeds that can resist one or more specific herbicides – so-called super weeds – is a case in point. Herbicide tolerance has helped farmers to control weeds and significantly reduce cost of GM crop production. This is because crops can be genetically modified to confer resistance to common herbicides, such as glyphosate. There is a chance however that farmers can over-rely on this technique of weed control to the detriment of the weeds developing resistance.

The potential for such resistance must be closely monitored. In Kenya, it would fall upon county governments through the extension officers to report any early cases – and to take action – if there are any potential signs of resistance. The aim should be to use multiple approaches to weeds and pest control also referred to as integrated pest managanent systems.

Socio-cultural aspects: The government must make every effort to address people’s concerns about GMOs. This includes pointing out that humans have modified crops for thousands of years. GM foods have now been grown and consumed for over 20 years in different countries. There is so far no scientific evidence to confirm any of the fears. GM crops have been evaluated to be just as safe for human consumption and to the environment as conventional crops.The Conversation

About the Author:

Benard Odhiambo Oloo, Lecturer of Food Science and Technology, Department of Dairy and Food Science and Technology., Egerton University

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

Europe’s Energy Sector: “The Lehman Moment Just Arrived”

This company’s stock price “broke a support shelf that dates back 14 years”

By Elliott Wave International

Back in October 2021, two months before Germany’s DAX hit an all-time high, our Global Market Perspective showed a big jump in references to “Lehman” in Bloomberg News.

Of course, the use of “Lehman” in a news article has become synonymous with the collapse of the then financial giant during the depths of the 2007-2009 financial crisis.

The October 2021 Global Market Perspective, an Elliott Wave International monthly publication which covers 50-plus worldwide financial markets, said:

The Lehman moment will come later, after investor optimism has receded and stock prices are well off their highs.

That was a year ago, and since then, Europe’s key stock indexes have been in a downward trend. In other words, investor optimism across the Continent has indeed receded.

The October 2022 Global Market Perspective noted:

Right on schedule, the Lehman moment just arrived at one of the Continent’s most critical sectors: “Europe’s Lehman Warning on Energy Prompts Flurry of Cash Aid” — Bloomberg, 9/6/22.

The October Global Market Perspective continued with these charts and commentary:

The chart shows stock prices at two of Europe’s utility behemoths. Centrica, the largest supplier of gas to domestic customers in the UK, trades at levels last seen in the 1990s, while Fortum Oyj, Finland’s largest company by revenue, dropped 68% over the past nine months and broke a support shelf that dates back 14 years.

… The Finnish government stepped in with a €2.4 billion bridge loan to Fortum, while Centrica is seeking billions of pounds of financing amidst soaring demands for collateral.

Then there is this chart of Uniper, the European gas giant sitting at the epicenter of the energy earthquake. On September 20, the German government forked over 8 billion “to nationalize the gas giant and stave off a collapse of the country’s energy sector.” (Bloomberg, 9/20/22)

Stave off a collapse? The chart shows that Uniper has already collapsed despite every effort.

Some of Europe’s energy sector firms face the same kind of liquidity problem which wrecked established investment banks a decade ago. Uniper was reportedly losing €100 million per day in early September, and Fortum’s collateral requirement jumped by €1 billion over one single week.

Getting back to the downtrend in major European stock indexes, the Elliott wave method for analyzing financial markets can help you determine if the decline in prices is nearly over or if there’s much more to go.

If you need to brush up on your Elliott wave knowledge, or are entirely new to the subject, an ideal resource is Frost & Prechter’s Wall Street classic book, Elliott Wave Principle: Key to Market Behavior. Here’s a quote:

[R.N.] Elliott himself never speculated on why the market’s essential form is five waves to progress and three waves to regress. He simply noted that that was what was happening. Does the essential form have to be five waves and three waves? Think about it and you will realize that this is the minimum requirement for, and therefore the most efficient method of, achieving both fluctuation and progress in linear movement. One wave does not allow fluctuation. The fewest subdivisions to create fluctuation is three waves. Three waves (of unqualified size) in both directions would not allow progress. To progress in one direction despite periods of regress, movements in that direction must be at least five waves, simply to cover more ground than the intervening three waves. While there could be more waves than that, the most efficient form of punctuated progress is 5-3, and nature typically follows the most efficient path.

If you’d like to read the entire online version of the book, you may do so for free once you become a member of Club EWI, the world’s largest Elliott wave educational community (about 500,000 worldwide members and growing rapidly).

A Club EWI membership is also free and allows you complimentary access to a wealth of Elliott wave resources. All the while, you are under no obligation.

Get started by following this link: Elliott Wave Principle: Key to Market Behaviorfree and instant access.

This article was syndicated by Elliott Wave International and was originally published under the headline Europe’s Energy Sector: “The Lehman Moment Just Arrived”. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.