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Canada Shrugs Off Loss of Morneau and Gold Reclaims $2000 Threshold

Canada Shrugs Off Loss of Morneau and Gold Reclaims $2000 Threshold

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4 years ago

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Overview:   The NASDAQ rallied 1% yesterday to record highs as the Dow Industrials struggled, and the S&P 500 was able to eke out a small gain.  The coattails were short, and the strength of the yen may have contributed to a 0.2% loss of the Nikkei.  Still, its 6.2% advance this month is the best among the G10.  Chinese equities posted small gains, but amid rising infections and anticipating new lockdown measures, South Korea's Kospi took it on the chin, falling nearly 2.5%.  New US actions against Huawei took a toll on Taiwanese chip makers and weighed on the broader index.  India's 1% gain led the region.  European shares are flattish, and the Dow Jones Stoxx 600 remains within the range set before the weekend.  US shares are also little changed.  Benchmark 10-year yields are mostly 1-2 bp softer, which puts the US 10-year yield near 67 bp.  The dollar is under modest pressure, falling against nearly all the currencies today.  Among the majors, sterling, the yen, and the Canadian dollar are up just shy of 0.5% to lead.  Russia, Mexico, and South Africa lead the emerging market currencies higher.  Turkey stands out as a notable exception.  Gold has re-taken the $2000 level.  The next technical target is near $2025.  Oil is firm but flat within its recent ranges.  The $43.50 capped the rally earlier this month in the September WTI contract.  

Asia Pacific

The US tightened its attempt to isolate Huawei.  It extended its sanctions to cover 38 more affiliates in 21 countries.  The goal is to cut its access to semiconductor chips.  This hit Taiwanese chip producers.  Separately, and contrary to the assessment of many private economists, US trade adviser Navarro said in an interview yesterday that China is "absolutely" keeping its word on purchases of US goods.   President Trump has also praised Chinese agriculture purchases. Separately, reports suggest some 14 mln barrels of oil in seven super-class tankers are on their way to China now.  

The minutes from the recent meeting of the Reserve Bank of Australia confirmed it did not see the need for additional measures.  However, there were two mitigating factors.  First, officials were concerned that cheap funding was not leading to new credit expansion, though it was not clear on whether it was a supply or demand challenge.  Second, the latest outbreak and lockdown in Victoria will push up unemployment and weigh on economic activity.  

The dollar stalled just above JPY107 last week and is retracing the gains scored in the first half of August.  It has traded at an eight-day low near JPY105.40 today, just above the (61.8%) retracement of the bounce off the JPY104 level seen on July 31.  Resistance is seen around JPY105.80, and there is an option for about $480 mln at JPY106 that expires today.   The Australian dollar is firm and approached the month's high set on August 8, near $0.7245. A move above $0.7255 targets $0.7300.  Note that the Aussie continues to march higher against the New Zealand dollar.  With today's gains, the 11-day streak seems to match record moves of 1985 and 1991.  The RBNZ seems more aggressive than the RBA, and this appears to be the main driver.  The PBOC set the dollar's reference rate at CNY6.9325, in line with bank model projections.  The greenback traded down to almost CNY6.92, a fresh five-month low.  

Europe

Rising new virus cases in Europe have begun to have an economic impact according to some high-frequency data.  In the first two weeks of August, activity slowed in France, Italy, and Spain.  Germany, which is reporting the most cases in four months, and Sweden and Norway are seeing more sluggish results.  There is risk that these developments are picked up on the preliminary August PMI releases at the end of the week.  If reflected, the service PMI appears more vulnerable than the manufacturing PMI.  

The top UK and EU negotiators (Frost and Barnier) have dinner tonight to kick-off the week of staff negotiations.  Frost and Barnier will meet again at the end of the week.  To ensure that the treaty can be ratified, it is generally understood that it needs to be concluded by the end of September or early October at the latest.  Often in such circumstances, officials bring in the goalposts, as it were, and reduce their ambitions and could settle for a smaller and narrower deal to secure an agreement.  

In addition to UK trade talks, the EU is being challenged on two other fronts.  The first is Belarus and the risk that Russia provides military/police support.  The second is Turkey, which appears to be set to begin drilling for oil off the southwest coast of Cyprus and says it will continue to do so for the next month (September 15).  

Nevertheless, euro has resurfaced the $1.1900 area and reached $1.1915 in early European turnover, just shy of the August 6 high, which is also a two-year high.  Above there, the $1.20 area offers psychological resistance, and as we have pointed out previously, it is the euro's average since its launch.  Initial support is around $1.1880 and then $1.1860.  Sterling is also firmer and knocking against this month's high (~$1.3185).  It has seen $1.3200 in March before collapsing, and the high for the year is closer to $1.3280.  We have noted that 50 and 200-day moving averages (Golden Cross) for the major currencies have crossed.  Sterling is the last, and it is happening today.  

America

In and of itself, the Empire State manufacturing survey means little.  However, the disappointment was palpable.  Economists had expected a decline, but the deterioration of sentiment was notable and worrisome if it is representative.  Roughly a third saw conditions improving, and almost a third saw deterioration.  New orders contracted, and the six-month outlook eased.   The Philadelphia Fed survey will be released on Thursday at the same time was weekly jobless claims. The results will be compared.   Ahead of it, though, the US reports July housing starts today (another month of solid gains are expected), and the FOMC minutes from the July meeting will be released (tomorrow).  Those, like ourselves, who expect fresh policy move next month, would hope to seem some groundwork being laid in the minutes.  There are also expectations that at the September FOMC meeting, a formal recognition that the inflation target is symmetrical, meaning that the undershoot will allow it to encourage an overshoot. 

Canada's Finance Minister Morneau resigned.  There are a couple of flashpoints, including Prime Minister Trudeau's fiscal response to the pandemic and desire to get more directly involved.  Also, both Morneau and Trudeau have been caught up in a scandal involving a favoring a charity to which both had ties.  Former Bank of Canada and Bank of England Governor Carney has been consulting with Trudeau, and some see him as a likely successor to Morneau.  Deputy Prime Minister Freeland is also seen as a candidate.  

The political developments in Canada have done no harm to the Canadian dollar, which has continued to march higher.  The US dollar has slipped below CAD1.3160 in the European morning to trade at fresh seven-month lows.  The intraday technicals are stretched.  A bounce toward CAD1.3180-CAD1.3200 would likely be seen as a new opportunity to sell the greenback.  The next chart support is seen a little above CAD1.3100. The US dollar low for the year was set in January near CAD1.2960.  The greenback is also offered against the Mexican peso as it yields yesterday's gains.  Support is seen in the MXN21.85-MXN21.95 area, as the broad dollar weakness and Mexico's attractive rates blunt concerns about its domestic economy.   The Brazilian real will be in focus today.  It was the weakest currency in the world yesterday, and the dollar settled above BRL5.50 for the first time since the end of June.  Concerns about fiscal policy plans with low real rates provided a weak backdrop for concerns over the futures of the market-friendly finance minister (Guedes).  




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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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19 mins ago

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March 12, 2024

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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March 12, 2024

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Typhoid Conjugate Vaccine Introduction in Madagascar vaccination

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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March 12, 2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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