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For Japan’s Sake, Drink

For Japan’s Sake, Drink

By Stefan Koopman of Rabobank

For Japan’s Sake

Some remarkable news from Japan caught our attention yesterday. Where…



For Japan's Sake, Drink

By Stefan Koopman of Rabobank

For Japan's Sake

Some remarkable news from Japan caught our attention yesterday. Where governments usually raise excise duties and spend millions on campaigns to turn people away from alcohol, Japan is going the opposite way and now encourages its use, especially among young adults (and potential life-long consumers..?). Alcohol consumption has been in a downward trend since the 1990s, as the population ages and has become more conscious of its adverse effects, while sales in the izakayas are under additional pressure due to the pandemic. In this summer’s campaign – dubbed Sake Viva! – the government calls on its citizens to come up with ideas to revitalize the liquor industry and to get consumption going again. It doesn't matter whether it’s sake, shochu, whisky, beer or wine, as long as its Japanese, raises taxes and helps to get yens circulating in the domestic economy. So, here’s my idea, at least for when tourism gets going again: “For Japan’s sake, drink!

Let’s switch to a country that doesn’t need as much encouragement. This morning, the UK’s GfK consumer confidence fell to a new record low of -44 in August, with all sub-categories falling. Readings of -30 or lower generally portend a recession. Consumers are still slightly less pessimistic about their own finances than about the general economic outlook, which would suggest that actual spending holds up a bit better than feared, but at these depths this distinction seems to be a little academical. Retail sales were up +0.3% m/m in July, but -1.2% on a rolling 3m/3m basis and on a steady downward trend since the summer of last year. Sales volumes are up just 0.4% compared to three years ago and likely to move lower than higher as record inflation erodes buying power, a consequence of events that are far beyond the control of ordinary people. Unfortunately, for some, that is more than enough reason for a drink or two...

The new prime minister will face a distressed electorate, which senses a decline in institutional trust, sees a sluggish response to the cost of living crisis, and knows of the structural prospect of a trade war with the EU. The government could have been more clear on what support will be in place before energy bills skyrocket in October, could have acknowledged that now is not the time to engage in trade conflicts with Europe, and should have sought ways in how to restore the social contract between the government and its citizens. None of that is happening.

Yes, Liz Truss says she will slash taxes and consider targeted cost-of-living payments if she becomes Prime Minister, but the ugly combination of stagnating economic growth and high inflation will significantly reduce the GBP 30bn worth of fiscal headroom she still claims to have. She could of course always opt for an emergency budget, which would effectively side-line the Office for Budget Responsibility and allow her to rely on a set of economic forecasts that are six months out of date rather than an updated one, but that is a brazen move that would further erode the institutional framework responsible for the UK economy.

If demand stimulus in the face of sky-high inflation is indeed her immediate answer to a crisis, i.e., if she really wants to channel her inner Erdoganomist, why not urge the Bank of England to cut rates too? After all, that’s what Turkey’s central bank did yesterday: doubling down on a strategy that has failed over and over again. Despite inflation nearing a reported 80%, which is 16 times the ostensible target, the central bank still decided to reduce the policy rate by 100 bps to 13%. Once again, investors were reminded that a core plank of Erdonomics is that by making borrowing cheaper and by giving less money to bond holders via lower interest payments, inflation will slow down rather than push higher and higher.

To be fair, in macro and in markets, cause and effect are always convoluted and change direction more often than economists are willing to accept, but the CBRT clearly sets itself apart as the central bank that believes bringing inflation back towards a somewhat acceptable rate is no longer the policy target, let alone less than a year before the general election. It’s also again daring to blow away its remaining FX reserves in order to defend the value of the currency, something that is eventually bound to fail, as the UK itself knows all too well. In five-sixths of all daily observations since 1990, the lira was weaker against the dollar than it was in the year prior (... and, logically, stronger than it was next year). The pair currently trades at 18.1, up 0.8% from yesterday and up 112.4% from this time last year. Where will it be next year?

The dollar itself got a boost yesterday following some goldilocks data from the US and is again nearing parity with the euro. The Philly Fed jumped to 6.2 from -12.3. This is the highest in four months. It contrasts sharply with Monday’s miserable Empire Fed, reporting a rise in employment and a less pronounced weakening in new orders. Delivery times improved too, adding to a rapidly expanding list of evidence that supply chain constraints are easing relative to the current state of demand. Jobless claims were at 250k lower than expected too, defying fears of a too rapid cooling in the labor market. The Fed’s Kashkari, Bullard, George and Daly had speaking engagements yesterday: there wasn’t a single sign of any backing away from further rate hikes ahead.

On the other hand, US existing home sales fell to a two-year low of 4.81 million. With house prices still at or near their peak and mortgage rates having just spiked, housing affordability is under stress in most if not all Western economies. Fewer and fewer first time buyers qualify for the mortgage required for an averagely priced home, while other buyers have an incentive to wait for a correction. This is already leading to a rise in inventories of homes on the market, which suggests there is deceleration in price increases ahead of us. As such, housing markets continue to be weak spots, being the most responsive and vulnerable to this year’s tightening in financial conditions. House values are a key determinant of household balance sheets and do influence a broad set of discretionary spending decisions, even among households who don’t directly borrow against home equity to finance spending on reconstruction, remodelling or other big tickets. There are many good reasons to believe that housing cycles leads the business cycle, a continued spate of weak data on this front is a warning signal that requires close attention.

Tyler Durden Fri, 08/19/2022 - 15:30

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Stock Market Today: Stocks turn lower as Treasury yield rise mutes earnings gains

A mixed set of big tech earnings, alongside modestly higher Treasury yields, has stocks moving lower into the start of the Wednesday session.



Updated at 10:07 am EDT U.S. turned lower Wednesday, while Treasury yields crept higher and the dollar building gains against its global peers as investors reacted to the first wave of mega-cap tech earnings while continuing to track movements in the bond market. Microsoft  (MSFT) - Get Free Report and Google parent Alphabet  (GOOGL) - Get Free Report kicked-off this week's run of earnings from the so-called 'magnificent seven' late Tuesday with a mixed set of September quarter results, reflecting both the power for AI technologies to boost near-term profits and the impact of surging interest rates on corporate spending. Microsoft's revenue growth in cloud computing, driven in part by its early investments in AI, lifted shares in the tech giant firmly higher in pre-market trading as it looks to add around 85 points to the Dow Jones Industrial Average at the opening bell. Google, meanwhile, slumped 6.6% following a mixed set of third quarter earnings that showed slowing cloud computing growth overshadowing record ad revenues of $59.65 billion. Facebook and Instagram owner Meta Platforms  (META) - Get Free Report posts its third quarter earnings after the bell later today, with magnificent seven stalwart Amazon  (AMZN) - Get Free Report following on Thursday. In the bond market, a muted auction of $51 billion in 2-year notes yesterday, which drew softer demand from both foreign and domestic investors, drew a line under the recent Treasury market rally, which was also tested by a faster-than-expected reading for business activity by S&P Global over the month of October. Benchmark 10-year notes yields were last marked 5 basis points higher in the early New York trading at 4.901% while 2-year notes were pegged at 5.091%, 3 basis points higher than yesterday's auction levels, ahead of a $52 billion sale of 5-year notes later in the session. The U.S. dollar index, meanwhile, was marked 0.14% higher against a basket of six global currency peers and trading at 106.41 heading into the morning session. In other markets, global oil prices drifted modestly higher in early New York trading ahead of Energy Department data on domestic stockpiles and international exports later this morning. Brent crude contracts for December delivery were marked 23 cents higher at $88.31 per barrel while WTI contracts for the same month edged 13 cents higher to $83.87 per barrel. On Wall Street, the S&P 500 was marked 42 points lower, or 0.99%, in the opening hour of trading while the Dow was down 133 points despite the impact of Microsoft's advance. The tech-focused Nasdaq, meanwhile, was down 186 points, or 1.43%, as the slump in Google shares offset a smaller gain for Microsoft. In overseas markets, Europe's Stoxx 600 was marked 0.28% higher in late-day Frankfurt trading amid another busy earnings session while Britain's FTSE 100 edged 0.02% lower in London. Overnight in Asia, reports of a new trillion-yuan bond sale from the Chinese government, worth around $137 billion in U.S. dollar terms and aimed at adding further stimulus to the moribund economy, boosted sentiment and helped regional stocks eek out a modest 0.09% gain heading into the close of trading.
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People in Europe ate seaweed for thousands of years before it largely disappeared from their diets – we wonder why?

The decline of seaweed as part of the staple diet in Europe remains a mystery.

Seaweed isn’t something that generally features today in European recipe books, even though it is widely eaten in Asia. But our team has discovered molecular evidence that shows this wasn’t always the case. People in Europe ate seaweed and freshwater aquatic plants from the Stone Age right up until the Middle Ages before it disappeared from our plates. Our evidence came from skeletal remains, namely the calculus (hardened dental plaque) that built up around the teeth of these people when they were alive. Many centuries later, this calculus still contains molecules that record the food that people ingested. We analysed the calculus from 74 skeletal remains from 28 archaeological sites across Europe. The sites span a period of several thousand years starting in the Mesolithic, when people hunted and gathered their food, through to the earliest farming societies (a stage called the Neolithic) all the way up to the Middle Ages. Our results suggest that seaweed was a habitual part of the diet for the time periods we studied, and became a marginal food only relatively recently. Unsurprisingly, most of the sites where we detected the consumption of seaweed are coastal. But we also found evidence from inland sites that people were ingesting freshwater aquatic plants, including lilies and pondweed. We also found an example of people consuming sea kale.

How are we sure people ate seaweed?

We identified several types of molecules in the dental calculus that collectively are characteristic of seaweed. We refer to these as “biomarkers”. They include a set of chemical compounds called alkylpyrroles. When we detect these compounds together in calculus, we can be fairly sure where they came from. The same goes for other compounds characteristic of seaweed and freshwater plants. To have become embedded in dental calculus, the seaweed and freshwater plants had to have been in the mouth and most probably chewed. Biomarkers do not survive in all our samples, but where they do, they’re found consistently across many individuals we analysed from different places. This suggests seaweed was probably a routine part of the diet.

Perceptions of seaweed

Today, seaweed is often seen as the scourge of beaches. It accumulates at the high-water mark where it can create a slippery and sometimes smelly barrier to the sea. But it is a wondrous world of its own. There are over 10,000 species of seaweed worldwide living in the intertidal zone (where the ocean meets the land between high and low tides) and the subtidal zone (a region below the intertidal zone that is continuously covered by water). Around 145 of these species are eaten today and in parts of Asia it is commonplace. Seaweed is edible, nutritious, sometimes medicinal, abundant and local. Although overconsumption can cause iodine toxicity, there are no poisonous intertidal species in Europe. It is also available all year round, which would have been particularly useful in the past, when food supplies were less reliable.

Reconstructing ancient diets

Reconstructing ancient diets is challenging and is generally more difficult as you go back in time. This helps explain why we’ve only just realised how much seaweed was being eaten by ancient Europeans. In archaeology, evidence for ancient diets often comes from physical remains: animal bones, fish bones and the hard parts of shellfish. Evidence for plants as part of the diet before farming, however, is rare. Techniques to study molecules from archaeological remains have been around for some time. A key method is known as carbon/nitrogen (C and N) stable isotope analysis. This is widely used to reconstruct ancient human and animal diets based on the relative proportions of these elements in bone collagen. But the presence of plants has been difficult to identify, due to their low nitrogen content. Their presence is masked by an overwhelming signal for animals and fish.

Hiding in plain sight

The evidence for seaweed had been present all along, but unrecognised. Our discovery provides a perfect example of how perceptions of what we regard as food influence interpretations of ancient practices. Seaweed was detected in chunks that had been chewed (and presumably spat out) at the 12,000-year-old site of Monte Verde, Chile. But when it is found at archaeological sites, it is more commonly interpreted as having been used for things other than food, such as fuel and food wrappings. In European archaeology, there is a longstanding perception that Mesolithic hunter-gatherers ate lots of seafood, but that when people started farming, they focused on food sourced from land, such as their livestock. Our findings hammer another nail into the coffin of this theory. Today, only a few traditional recipes remain, such as laverbread made from the seaweed species Porphyra umbilicalis in Wales. It’s still not clear why seaweed declined as a staple source of food in Europe after the Middle Ages.

What are the implications?

Our unexpected discovery changes the way we understand past people. It also alters our perceptions of how they understood the landscape and how they exploited local resources. It suggests, not for the first time, that we vastly underestimate ancient people. They had a knowledge, particularly about the natural world, that is difficult for us to imagine today. The finding also reminds us that archaeological remains are minute windows into the past, reinforcing the care required when developing theories based on limited evidence. The consumption of plants, upon which our world depends, has been habitually left out of dietary theories from our pre-agrarian past. Rigid theories have sometimes forgotten that humans were behind these archaeological cultures – and that they were probably similar to us in their curiosity and needs. Today seaweed sits, largely unused as food, on our doorstep. Making the edible species a bigger component of our diets could even contribute to making our food supplies more sustainable. The Conversation

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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EUR/AUD bearish breakdown supported by additional China fiscal stimulus and AU inflation

Weak PMI readings from the Eurozone, an increase in China’s budget deficit ratio, and renewed inflationary pressures in Australia may trigger a persistent…



  • Weak PMI readings from the Eurozone, an increase in China’s budget deficit ratio, and renewed inflationary pressures in Australia may trigger a persistent bearish sentiment loop in EUR/AUD.
  • Watch the key short-term resistance at 1.6700 for EUR/AUD.
  • A break below 1.6250 key medium-term support on the EUR/AUD may trigger a multi-week bearish impulsive down move.

The Euro (EUR) tumbled overnight throughout the US session as it erased its prior gains against the US dollar recorded on Monday, 23 October; the EUR/USD shed -104 pips from yesterday’s intraday high of 1.0695 to close the US session at 1.0591, its weakest performance in the past seven sessions.

Yesterday’s resurgence of the USD dollar strength has been attributed to a robust set of October flash manufacturing and services PMI data from the US in contrast with weak readings seen in the UK and Eurozone that represented stagflation risks.

Interestingly, the Aussie dollar (AUD) has outperformed the US dollar where the AUD/USD managed to squeeze out a minor daily gain of 21 pips by the close of yesterday’s US session. The resilient movement of the AUD/USD has been impacted by positive news flow out from China, Australia’s key trading partner.

China’s national legislature has just approved a budgetary plan to raise the fiscal deficit ratio for 2023 to around 3.8% of its GDP which was above the initial 3% set in March and set to issue additional sovereign debt worth 1 trillion yuan in Q4. This latest round of additional fiscal stimulus suggests that China’s top policymakers are expanding their initial targeted measures to address the ongoing severe liquidity crunch in the domestic property market as well as to reverse the persistent weak sentiment inherent in the stock market.

In addition, the latest set of Australia’s inflation data surpassed expectations has also reinforced another layer of positive feedback loop in the Aussie dollar which in turn may put Australia’s central bank, RBA on a “hawkish guard” against cutting its policy cash rate too soon.

The less lagging monthly CPI Indicator has risen to an annualized rate of 5.6% in September, above consensus estimates of 5.4%, and surpassed August’s reading of 5.2% which has translated into a second consecutive month of uptick in inflationary growth.

In the lens of technical analysis, a potential bearish configuration setup has emerged in the EUR/AUD cross pair from a short to medium-term perspective.

Major uptrend phase of EUR/AUD is weakening


Fig 1: EUR/AUD medium-term trend as of 25 Oct 2023 (Source: TradingView, click to enlarge chart)

Even though the price actions of the EUR/AUD have been oscillating within a major ascending channel since its 25 August 2023 low of 1.4285 and traded above the key 200-day moving average so far, the momentum of this up movement is showing signs of bullish exhaustion.

Yesterday (24 October) price action ended with a daily bearish reversal “Marubozu” candlestick coupled with the daily RSI momentum indicator that retreated right at a significant parallel resistance in place since March 2023 at the 65 level which suggests a revival of medium-term bearish momentum.

EUR/AUD bears are now attacking the minor ascending support

Fig 2: EUR/AUD minor short-term trend as of 25 Oct 2023 (Source: TradingView, click to enlarge chart)

The EUR/AUD has now staged a bearish price action follow-through via the breakdown of its minor ascending support from its 29 September 2023 low after a momentum bearish breakdown that was flashed earlier yesterday (24 October) during the European session as seen from the 4-hour RSI momentum indicator.

Watch the 1.6700 key short-term pivotal resistance (also the 50-day moving average) for a further potential slide toward the intermediate supports of 1.6460 and 1.6320 in the first step.

On the other hand, a clearance above 1.6700 invalidates the bearish tone to see the next intermediate resistance coming in at 1.6890.

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