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China and Hong Kong Stocks Plummet, Yields Soar

Overview: While the World Health Organization debates about downgrading Covid from a pandemic, the rise China and Hong Kong cases is striking.  A lockdown…



Overview: While the World Health Organization debates about downgrading Covid from a pandemic, the rise China and Hong Kong cases is striking.  A lockdown in Shenzhen and restrictions in Shanghai, coupled with a record fine by PBOC officials on Tencent drove local stocks sharply lower.  China's CSI 300 fell 3% and a measure of Chinese stocks that trade in HK plunged more than 7%.  The Hang Seng itself dropped 5%.  Covid in China and Hong Kong adds to the risk of more supply chain disruptions.  Europe's Stoxx 600 is up about 1.6%, led by financials and industrials.  US futures are 0.5%-0.7% better.   Bond markets are sliding.  Yields are 8-10 bp higher in European.  The US 10-year Treasury yield is near 2.10%.  It rose slightly more than 25 bp last week and is up 10 basis points today.  The US 5-year yield is pushing above 2% today for the first time since May 2019.  It is the sixth consecutive advance.  The dollar is sitting at the fulcrum today.  The Scandis and Euro are advancing, while the dollar-bloc and yen are softer.  The greenback pushed above JPY117 at the end of last week and has approached JPY118 today.  Among the emerging market complex, the beleaguered central European currencies are snapping back today.  The Hungarian forint, Czech koruna, and Polish zloty are up more than 1% today.  The JP Morgan Emerging Market Index has a three-week, roughly 6.5% slide in tow.  It is up about 1.1% today.  Gold is heavy near $1960 after peaking last week around $2070.  Support is seen in the $1950-$1958 band.  April WTI is also slipping lower after meeting resistance near $110.  Last week's low was slightly above $103.  US natgas prices are around 2.3% lower after falling 5.8% last week.  Europe's benchmark is off 15% after plummeting more than 34% last week.  Iron ore is off 7%, falling for its fifth consecutive session.  Copper is trading lower as well.  It has fallen in five of the past six sessions.  May wheat is softer.  It fell 8.5% last week. 

Asia Pacific

US National Security Adviser Sullivan is meeting with his Chinese counterpart Yang today.  The last meeting was in October.  The ostensible purpose is to exchange views on global and regional issues.   The media has played up the diplomatic language of the statement that followed last month's meeting between Putin and Xi claiming a "friendship with no limits."   The media wants to take it at face value, yet it knows it to be misconstrued.  Consider, for example, that media reports also reveal that Russia sells weapons to India to help it fight China.  "No limits?"  Sullivan was also clear that thus far there is no evidence that Beijing is trying to circumvent the sanctions.  That said, last week the US warned Chinese chip makers against supplying Russia with products that were subject to export controls.  Affirmation through negation.  Other US officials say that Moscow has reached out to Beijing to secure military equipment, even though part of the logistical problem Russian forces are experiencing appears to be coming from shoddy parts (e.g., tires) made in China.   Reports suggest that since doubling the yuan-rouble band to 10%, there has not been an increase in turnover.  

There seems to be a debate over how much China knew of Putin's intentions.  Some US officials seem to think China may have been aware that Putin was planning something, but may not have known the full extent.  Beijing cannot be happy with what is happening, even the European theater was need new resources that could have otherwise been used to check China in the Asia-Pacific region.  The challenge posed by higher commodities is not inflation so much in China, where the CPI is less than 1% and PPI has fallen for four consecutive months.  The challenge is growth.  The 5.5% target will be more difficult to meet.  From Beijing's vantage point, the unprecedented swift and broad sanctions on Russia strengthens US-European ties.  Xi has been reaching out to European leaders since Russia invaded Ukraine trying to strengthen ties. At the same time, Japan, Singapore, Taiwan, and South Korea (which has a new president whose rhetoric is more confrontational to Beijing) appear on a heightened sensitivity to China's actions in the region.  China sees a web of US relationships that are tantamount to a Pacific NATO:  5-4-3-2...Five Eyes (Australia, New Zealand, Canada, UK, and the US), the Quad (Australia, India, Japan, US), AUKUS (Australia, UK, US), several bilateral security pacts including Japan, South Korea, Philippines.

The headwinds to China's growth (domestic challenges include the property market and the crack down on technology, and the social restrictions associated with Covid) have mounted.  The front page of China's Securities Journal suggests the PBOC could cut rates to support the economy.  There is heightened speculation that a cut could come as early as tomorrow when the 1-year Medium-Term Lending Facility is set.  Many now look for a 10 bp cut to 2.75%.  Recall it was cut 10 bp in January, which was the first cut since the two reductions in the first four months of 2020 (cumulative 30 bp).   China's 10-year yield fell for the third day today and near 2.76%, is the lowest in a month.  The Chinese premium over the US has narrowed to about 72 bp from over 105 bp at the start of last week.  

The dollar reached almost JPY117.90 earlier today as it extends last week's breakout. The JPY118 area offers the nearby cap, but the charts suggest scope may exist toward JPY118.60.  Initial support is seen in the JPY117.40-JPY117.50 band.  The key seems to be rising US yields more than the firmer tone in equities.  The Australian dollar reversed lower last Monday and with today's low near $0.7235 nearly completed a (61.8%) retracement of the gains scored since the Russian invasion (~$0.7225).  The selling pressure may have burnt itself out, the Aussie needs to push above $0.7280-$0.7300 to lift the technical tone.  In a rare occurrence, the US dollar gapped higher against the Chinese yuan.  The gap appears on the weekly charts, which give it added importance. The dollar's pre-weekend high was just shy of CNY6.34 and today's low was slightly above CNY6.3450.   It reached nearly CNY6.3625 before steadying.  The PBOC set the dollar's reference rate at CNY6.3506, well above the CNY6.3356 median projection in Bloomberg's survey.  Last month's high was a little north of CNY6.37 and the year's high was set in early January slightly below CNY6.3850. 


There were some outstanding issues between the US and Iran in resurrecting the 2015 accord, but the talks were suspended. Russia, which plays an important role here (perhaps, as one observer suggested, receiving shipment so enriched uranium from Iran), wants guarantees that US sanctions would not affect Iran's planned economic and commercial ties.  The US refuses.  Iran's uranium enrichment has gone forward.  Iran wants a guarantee too that the US does not leave the pact again.  Europe has been nursing the talks which the US does not participate in directly.  The failure to return to the 2015 pact would force another issue to the fore:  Iran's advancing nuclear program.  

Some suggest that Russia would not have attacked Ukraine if Kyiv has retained the nuclear weapons from the Soviet era.  Maybe.  It is worth thinking about, but nuclear powers have clashed without the resort to weapons of mass destruction (e.g., India-Pakistan, India-China).  Russia has not directly attacked a NATO member.  Russia claims that convoys carrying western military supplies are legitimate targets.  This is one scenario for the broadening of the war.  Russia's bombardment of western Ukraine was approaching the Polish border.  

Russia is threatening to arrest corporate leaders and seize assets of businesses that a critical of the war or suspending activity.  Meanwhile, there is much discussion about the nearly $120 mln in coupon payments due Wednesday.  While the indicative pricing in the credit default swaps market is consistent with an imminent default, there is a grace period that should not be forgotten.  This means that a formal default is not likely this week. 

The euro initially extended its pre-weekend losses and slipped briefly below $1.09, where a 1.8 bln euro option expires today.  It has recovered to almost $1.0970. The intraday momentum indicators are stretched, and nearby resistance is seen in the $1.0980-$1.1000 band.  The pre-weekend high was close to $1.1045.  Sterling's recent losses were extended to almost $1.30 today, but it also stabilized and returned to the $1.3060 area.  While a move above there would target $1.3100, it seems too far away given the extended intraday momentum readings.  Tomorrow the UK reports employment figures but the highlight is the BOE meeting on Thursday that is widely expected to deliver another 25 bp hike.


The focus is of course on the FOMC meeting that concludes at midweek.  However, ahead of it, there are several high-frequency economic reports.  These include the March Empire State manufacturing survey and February PPI tomorrow.  Producer price inflation accelerated, with the headline expected to reach 10%.  The Empire State manufacturing survey is forecast to have improved, but we are concerned that the magnitude of the slowdown in Q1 is still not fully appreciated.  February retail sales will be released before the FOMC meeting concludes on Wednesday.  A small gain is expected after a 3.8% surge was reported in January. 

Canada reported monster jobs data ahead of the weekend. Employment jumped 336.6k, well above the 127.5k median forecast in Bloomberg's survey.  Full-time positions alone surged 121.5k.  The unemployment rate fell one percentage point to 5.5% and the participation rate jumped to 65.4% from 65.0%.  Wages for permanent employees accelerated to 3.3% from 2.4%.  The highlight this week is the February CPI report due in midweeks.  The headline pace likely picked up to 5.5% from 5.1% and the underlying core measures also probably accelerated.  

Brazil's IPCA February IPCA inflation accelerated to 10.54% from 10.38%.  This was a little ahead of expectations.  It likely solidifies expectations for a 100 bp hike a few hours after the FOMC delivers its first hike in the middle of the week.  Mexico has a light economic calendar this week, but Banxico is likely to hike 50-75 bp next week.  

The Canadian dollar is trading quietly within the pre-weekend range (~CAD1.2695-CAD1.2795).  The macro story seems mostly constructive, but the US two-year premium over Canada is a negative development.  The upticks in the US S&P 500, a proxy for risk, do not seem to be offering the Canadian dollar the support that it has in the recent past.  Initial support is seen near CAD1.2720. The greenback is testing support near MXN20.85.  The MXN20.81 area corresponds to the (50%) retracement of the dollar's gains since the war began.  Below there, support is seen in MXN20.63-MXN20.65 band. 


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OraSure Technologies’ CFO Makes Bold Insider Purchase, Reigniting Investor Confidence

Executive Kenneth McGrath’s $500,000 buy read as promising signal about future for diagnostic test developer OraSure Technologies (NASDAQ:OSUR) saw…




Executive Kenneth McGrath’s $500,000 buy read as promising signal about future for diagnostic test developer

OraSure Technologies (NASDAQ:OSUR) saw a stock price re-rate on Thursday, climbing 11% after investors became aware of its CFO Kenneth McGrath buying shares in the diagnostic test developer.  This latest rally in OSUR stock, gives traders and investors hope that the strong momentum from the beginning of 2023 might return.

OSUR shares had mounted an impressive 54% rally for 2023 through to May 10, when the first-quarter results update spooked investors. 

The CFO’s trade was initially spotted on Fintel’s Insider Trading Tracker following the filing with the Securities and Exchange Commission.

Big Holdings Boost

In the Form 4 filing, McGrath, who assumed CFO duties in August 2022, disclosed buying 100,000 shares on May 30 in the approved trading window that was open post results.

McGrath on average paid $4.93 per share, giving the total transaction a value just shy of $500,000 and boosted his total share count ownership to 285,512 shares.

The chart below from the insider trading and analysis report for OSUR shows the share price performance and profit made from company officers in previous transactions:

OraSure Technologies

Prior to joining OraSure, McGrath had an impressive eight-year tenure at Quest Diagnostics (NYSE:DGX), where he rose to the position of VP of Finance before departing. This is the first time that the CFO has bought stock in the company since August 2022. It is also worth noting that the purchase followed strong Q1 financial results, which exceeded Street forecasts.

Revenue Doubles

In its recently published Q1 update, OraSure Technologies told investors that it generated a whopping 129% increase in revenue to $155 million, surpassing analyst expectations of around $123 million. 

Notably, the revenue growth was driven primarily by the success of OraSure’s COVID-19 products, which accounted for $118.4 million in revenue for the quarter and grew 282% over the previous year.

The surge in revenue for this product was largely driven by the federal government’s school testing program, which led to record test volumes. However, it is important to note that demand for InteliSwab is expected to decline in Q2 2023, prompting OraSure to scale down its COVID-19 production operations. As part of its broader strategy to consolidate manufacturing, the company plans to close an overseas production facility.

While the COVID-19 products division has been instrumental in OraSure’s recent success, its core business delivered stable flat sales of $36.6 million during the quarter. 

In terms of net income, OraSure achieved an impressive result of $27.2 million, or $0.37 per share, in Q1, marking a significant improvement compared to the loss of $19.9 million, or a loss of $0.28 per share, in the same period last year. This result exceeded consensus forecasts of $0.16 per share. As of the end of the quarter, the company held $112.4 million in cash and cash equivalents.

Looking ahead to Q2, OraSure has provided revenue guidance in the range of $62 to $67 million, reflecting the lower order activity from the US government with $25 to $30 million expected sales for InteliSwab. The declining Covid related sales have been a core driver of the share price weakness in recent weeks.

While sales are likely to fall in the coming quarters, one positive for the company is its low debt balance during this period of rising cash rates. The chart below from Fintels financial metrics and ratios page for OSUR shows the cash flow performance of the business over the last five years.

OraSure Technologies

Analyst Opinions

Stephen’s analyst Jacob Johnson thinks that outside of Covid, OSUR continues to execute on several cost and partnership initiatives which he believes appears to be bearing fruit. Johnson pointed out that three partnerships were signed during the quarter.

The analyst thinks that the ex-Covid growth story will be the new focus for investors from now on. The brokerage maintained its ‘equal-weight’ recommendation and $6.50 target price on the stock, matching Fintel’s consensus target price, suggesting OSUR stock could rise a further 29% in the next 12 months. 

The post OraSure Technologies’ CFO Makes Bold Insider Purchase, Reigniting Investor Confidence appeared first on Fintel.

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UC Davis C-STEM trains Redlands teachers on bringing computer science into math

Twenty-five teachers from Redlands Unified School District in southern California recently completed training in integrating computer science into math…



Twenty-five teachers from Redlands Unified School District in southern California recently completed training in integrating computer science into math education through a joint program offered by the University of California, Davis, and UC Riverside Extension. The Joint Computer Science Supplementary Teaching Credential Authorization Program has helped Redlands address gaps in student opportunity and achievement, and teachers’ skills.

Credit: Redlands Unified School District

Twenty-five teachers from Redlands Unified School District in southern California recently completed training in integrating computer science into math education through a joint program offered by the University of California, Davis, and UC Riverside Extension. The Joint Computer Science Supplementary Teaching Credential Authorization Program has helped Redlands address gaps in student opportunity and achievement, and teachers’ skills.

“Improving math instruction for student success is the most challenging task in education. Redlands partnered with UC Davis to make math instruction with computer science a reality for many of our students who have historically disconnected from learning math,” said Ken Wagner, assistant superintendent of Redlands Unified School District. “More students are demonstrating resilience and persistence in their math progression than ever before, which to us, is an immeasurable outcome.”

Redlands is the first school district in the nation that has 25 teachers who have gone through four college-level courses needed to earn their credential. This innovative practice is transforming public K-12 math and computer science education.

“C-STEM training and use of the robotics and programming skills that are taught has been the best professional development training of my 28-year career,” said teacher Roland Hosch. “I am very grateful to be a part of it and my classroom is a more efficient and more effective place to learn because of it.”

Transforming math education

The UC Davis Center for Integrated Computing and STEM Education, or C-STEM, program aims to transform K-12 math, computer science and STEAM (science, technology, engineering, arts and mathematics) education through integrated learning. Students learn to solve math and algebra problems through coding and by programming small, modular robots. The C-STEM Math-ICT curriculumprovides up to 13 years of integrated math and computer science teaching from kindergarten through high school. C-STEM courses have UC A-G status, satisfying admissions requirements for the University of California and California State Universities.  

Redlands USD implemented the C-STEM program in 2018 to narrow the achievement gap in math and address the opportunity gap in computing. The district has expanded from two middle school teachers initially to 35 teachers, including all the district’s middle and high schools as well as six elementary schools, in 2022-23. 

Redlands has seen results with the program. From the 2018-19 school year to 2021-22, average scores on the mathematics diagnostic testing project (MDTP) rose by more than 13% in C-STEM classes compared to peers in traditional math classes in the same schools. (Redlands students can choose either a C-STEM math track, plus a computer science class, or a traditional math class.) 

“C-STEM brings joy into the classroom,” said Deepika Srivastava, STEAM coordinator for the Redlands school district. If you give a student a worksheet of math problems and they get 20 or 30% right, it tells the student “You’re bad at this,” she said. 

“But if they are trying to solve a problem by writing a program, they can get it 20 or 30% right, get some feedback, and improve. When you’re solving a math problem by coding, it’s an iterative process, there’s constant feedback,” she said. “It encourages students to keep trying and develops skills in critical thinking, problem solving and perseverance.” 

Further, she said that the C-STEM math classes have become more diverse, with more representation of girls, Black and Latinx students, and students from lower socioeconomic backgrounds. Perhaps most significantly, surveys of students entering and completing the program show a big swing from “I hate math” to “I enjoy math.” 

Addressing the opportunity gap

“Redlands is a good example of a school district working with C-STEM to address the ‘opportunity gap’ in math education,” said Harry Cheng, director of the C-STEM center and professor in the UC Davis Department of Mechanical and Aerospace Engineering. “Schools are working to get students back on track after the pandemic. The students are doing better, closing the achievement gap and teachers are learning new skills, closing the skills gap.”

Srivastava, who visits all the district classrooms using the C-STEM program, said that the program also has positive effects on student behavior. 

“When a kid fails at math, they get the message that they’re not good at math and then they don’t give 100%. But when they’re building a robot, their entire attitude changes. I truly believe this is where the future is.” 

The UC Davis Center for Integrated Computing and STEM Education is a comprehensive program that includes the annual RoboPlay competition in which students compete with other schools to solve challenges with coding and robotics. In addition to K-12 curricula and professional development for teachers, the center also supports schools and districts to organize their afterschool and summer programs, including robotics camps, robotics-math camps, the Girls In Robotics Leadership (GIRL/GIRL+) camps, and Ujima GIRL Project for African American middle and high school girls. 

“Ever since the pandemic, we have been challenged to find new ways to engage our students,” said teacher Noah Rosen. “The investment that Redlands Unified has made in my continued training in C-STEM has provided me with a whole new treasure chest of tools that I can use to elevate the effectiveness of my classroom instruction through computer science.”

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COVID-19 Testing Resumes In Beijing, Shandong, As Reinfection Cases Surge

COVID-19 Testing Resumes In Beijing, Shandong, As Reinfection Cases Surge

Authored by Alex Wu via The Epoch Times,

China has resumed COVID-19…



COVID-19 Testing Resumes In Beijing, Shandong, As Reinfection Cases Surge

Authored by Alex Wu via The Epoch Times,

China has resumed COVID-19 PCR testing in Beijing and Shandong Province amid rising re-infections, while the regime’s top health advisers have warned of a new wave of mass infections.

Since May 29, mainland netizens have posted on Chinese social media platforms that PCR test kiosks in Beijing are quietly back in business.

Mainland media “City Interactive,” a subsidiary of Zhejiang “City Express,” reported on May 30 that one of the PCR testing booths that netizens posted about was in Beijing’s Xicheng District, where the central government and the Beijing municipal government are located.

The staff of that testing kiosk said that the PCR test there has never stopped, reported “City Interactive”, without being clear how long it had been open.

“We have been doing nucleic acid testing in Xicheng District, but I’m not sure about other districts in Beijing,” a staff member said.

The staff member said the laboratory she works for is mainly responsible for nucleic acid testing within Xicheng District. Currently, there are more than ten testing points outdoors, and one person is on duty for each booth from 9:00 am to 5:00 pm.

Residents get swabbed during mass COVID-19 testing in the Chaoyang District in Beijing on June 14, 2022. (Andy Wong/AP Photo)

A testing kiosk in Chaoyang District, Beijing’s central business district, has been operating since March, reported “City Interactive.” The testing booth staff said it is in the health center near Jinsong Middle Street.

Ms. Wang, a Beijing resident, told The Epoch Times on May 28 that some people have taken the PRC test while others have chosen not to.

She said many people around her, including her child, have already re-infected twice.

“This time, the symptoms seem to include a high fever and then sore throat, very painful,” she said.

“Most people are just resting at home now. Seeing a doctor is very expensive, and now many medicines are paid for by ourselves.”

Gao Yu, a former senior media person in Beijing, confirmed what Wang said. She told The Epoch Times that the relatives around her have been re-infected two or three times, and most are just resting it off at home.

Shandong Resumes Testing

PCR testing booths in Qingdao City, Shandong Province, have also reopened.

A “Peninsula Metropolis Daily” report included a screenshot of an online notice posted by the Laoshan District Health Bureau in Qingdao, which announced that from May 29, the district will conduct COVID-19 PCR testing for “all people who are willing.”

It also listed the working hours of the testing sites, from 7:00 am to 4:00 pm, seven days a week.

Another mainland Chinese media, “Xinmin Evening News,” reported on May 31 that the staff in the district bureau confirmed that the testing has resumed and is for free.

Next Wave

Zhong Nanshan, China’s top respiratory disease specialist, predicted on May 22 that a new wave of COVID-19 infections in China will likely peak in late June when weekly cases could reach 65 million. Then, one Omicron-infected patient will be able to infect more than 30 people,  Zhong said, adding that the infection is difficult to prevent.

A security personnel in a protective suit keeps watch as medical workers attend to patients at the fever department of Tongji Hospital, a major facility for COVID-19 patients in Wuhan, Hubei Province, China, Jan. 1, 2023. (Staff/Reuters)

Chinese citizens across the country have said on social media that infections have been swelling since March.

Zhong also said there had been a small peak in infections at the end of April and early May.

Most COVID-19 infections in mainland China are currently caused by the XBB series mutant strains of Omicron. Among the locally transmitted cases, the percentage of XBB series variants increased to 83.6 percent in early May from 0.2 percent in February.

Zhang Wenhong, China’s top virologist and director of China’s National Center for Infectious Diseases, also warned in late April at a conference that COVID-19 infections would reoccur after six months when immunity gained from prior infections has worn out.

Tyler Durden Fri, 06/02/2023 - 11:20

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