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Futures, Oil Rise As China Reopens

Futures, Oil Rise As China Reopens

US futures reopened from the extended Christmas break, rising as high as 3900 and following European and…

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Futures, Oil Rise As China Reopens

US futures reopened from the extended Christmas break, rising as high as 3900 and following European and Asian stocks higher as China's reopening buoyed sentiment in the final trading week of the year. At 745am ET, S&P futures were up 0.5% at 3,890 while Nasdaq futures rose 0.2% even as Tesla tumbled again in premarket trading. Asian stocks extended gains for a second day after China moved to end quarantine for inbound visitors, effectively ending its zero-Covid regime.  Futures are advancing after the underlying benchmarks slid over the last three weeks. Treasury yields were higher, 5Y-30Y at highest levels since November, with the curve steepening. The dollar declined versus most of its G-10 peers. Gold was in the green. Oil in New York traded for $80 a barrel, buoyed not only by China's reopening but as freezing weather shut more than a third of Texas Gulf Coast refining capacity over the past few days. Trading remains thin with many markets including Australia, New Zealand, the UK and Hong Kong closed for holidays

In premarket trading, TSLA shares extended their recent losses, sliding another 3% after Reuters reported the EV carmaker would run reduced production at its Shanghai factory, shutting down output from Jan 20 to Jan 31 for the Chinese New Year. US-listed Chinese stocks rose in premarket trading on Tuesday, boosted by China’s decision to reopen its borders and set the country on track to emerge from three years of isolation under its Covid Zero policy: Alibaba and Pinduoduo rose +2.3%, JD.com was up +2.6%, and Bilibili jumped 3.8%. Here are some other notable premarket movers:

  • AMC Entertainment Holdings Inc. (AMC) is down 8% in premarket trading, putting the movie theater operator on course to extend its rout from last week.
  • KalVista (KALV) shares are up 12% in premarket trading after the company announced the registered direct offering. The company also sold 182k pre-funded warrants, bringing total gross proceeds to $58m.
  • Nio (NIO) depositary receipts decline 6.7% after the Chinese electric-vehicle maker cut its 4Q delivery outlook to 38,500-39,500 vehicles from previously released estimates of 43,000 to 48,000 vehicles.
  • Southwest Airlines (LUV) falls 4% after saying it expects the flight chaos caused by the massive winter storm that battered the US to continue for at least another few days as the government questioned whether the airline is complying with its customer service plan.
  • Oil stocks are in focus after crude rose amid China’s moves to unwind its Covid Zero policy, and freezing weather across the US that prompted refinery closures in the vital Texas Gulf Coast area. Keep an eye on shares including Exxon Mobil, Chevron, Conoco.

Despite Tuesday’s modest bounce, the Nasdaq 100 and S&P 500 are on track to post the worst annual decline since the global financial crisis. Stocks were roiled this year as the Federal Reserve aggressively tightened monetary policy to tame soaring inflation. Investors are concerned that higher rates will impact company earnings and lead to a recession. The S&P 500 is down almost 20%, while Asian and global stocks still remain down by a similar amount in the worst annual drop since 2008. The 10-year Treasury yield is near 3.75%, up from 1.5% at the start of the year as the Federal Reserve embarked on an aggressive battle against inflatoin. Bitcoin held below $17,000 after starting 2022 at more than $47,000.

    Investors are hoping for year-end rally to help mitigate what has otherwise been a brutal run for risk assets, and putting their faith in China's reopening, even thought a credit-led boost by China likely means even more inflation will be exported soon.

    “China has clearly indicated that the country is willing to take the big leap forward in terms of reopening, which the global economy desperately needs,” said Kunal Sawhney, chief executive officer of Kalkine Group. Still, “it may be a little far-fetched to hope for too much from equities in the near to medium term, maybe until mid 2023.”

    European bourses were green across the continent with the STOXX Europe 600 Index up 0.5%. Consumer discretionary and energy stocks outperformed in Europe. European oil stocks outperformed on Tuesday as the price of crude received a boost from China further easing pandemic curbs and US refinery closures due to freezing weather. Stoxx Energy sub-index rose 0.8% as of 10:33 am in Paris, while the broader European equity benchmark gained 0.3%. Among majors, TotalEnergies and Eni advanced 1.2%, while London-listed shares of BP and Shell didn’t trade. European luxury stocks were also among the biggest gainers on Tuesday after China said it will no longer subject inbound travelers to quarantine from Jan. 8, putting the country on track to emerge from three years of self-imposed global isolation. Here are the most notable European movers:

    • European luxury stocks are among the biggest gainers after China said it will no longer subject inbound travelers to quarantine from Jan. 8 to end three years of self-imposed isolation
    • European oil stocks outperformed on Tuesday as the price of crude received a boost from China further easing pandemic curbs and US refinery closures due to freezing weather
    • Lotus Bakeries shares fell as much as 5.3% after the Belgian firm was cut to reduce by Degroof Petercam on caution over whether it can match very high sales and growth expectations
    • Leonteq falls as much as 6.5% after the company warned it’s less optimistic about 2022 earnings, and after saying a settlement has been reached on UK civil proceedings
    • Richter shares plunge as much as 6.8%, the largest intraday drop for the Hungarian pharmaceutical company since March, after the country’s government introduced a windfall tax
    • SBB falls as much as 11% on trading ex shares in Neobo Fastigheter, previously known as Amasten, after an EGM last week opted to distribute all of the company’s shares in the subsidiary

    Asian stocks gained as China’s move to end quarantine for inbound visitors boosted sentiment across the region.  The MSCI Asia Pacific Index climbed as much as 0.6%, led higher by MUFJ and Shiseido. Ten out of 11 sectors were in the green with the financials sector giving the biggest boost to the benchmark.  Shares of cosmetics firms, travel and duty free store operators jumped in Japan and in South Korea after Chinese health authorities said inbound travelers will no longer be subject to quarantine from Jan. 8, scrapping the current requirement of eight days isolation. 

    Japanese stocks rose for a second day, as China’s plan to stop subjecting inbound travelers to quarantine bolstered sentiment.  The Topix Index rose 0.4% to 1,910.15 as of the market close in Tokyo, while the Nikkei 225 advanced 0.2% to 26,447.87. Mitsubishi UFJ Financial Group contributed the most to the Topix’s gain, increasing 1.9%. Out of 2,162 stocks in the index, 1,510 rose and 540 fell, while 112 were unchanged. “China is trying to get its economy back on track quickly,” said Hideyuki Ishiguro, a senior strategist at Nomura Asset Management. “Inbound demand in Japan is likely to expand further due to the removal of restrictions on the movement of people in and out of foreign countries.” China Reopens Borders to World In Removing Last Covid Zero Curbs Shares of Japanese department-store and tourism-related companies gained as investors expected these sectors to benefit from Beijing ending its quarantine for travelers

    “Now market participants will focus on how much Chinese consumers will actually spend following the reopening,” Han Jiyoung, an analyst at Kiwoom Securities in Seoul, wrote in a note.  Equities in mainland China, Vietnam, Indonesia and Thailand also climbed. Trading volume remained thin, down nearly 90% from the 100-day average as markets in Hong Kong, Australia and New Zealand remained closed for holidays. After a 15% surge in November driven by China’s shift away from its strict Covid policy, the main Asian stock benchmark has halted its rally in December and still is poised for its worst year since 2008. With a few trading days left, the gauge is little changed so far this month

    In FX, the US dollar and Japanese yen weakened as China’s reopening curbed demand for haven assets. The two currencies dropped against all of their Group-of-10 peers after Beijing also downgraded the management of Covid from its highest level, effectively removing the legal justification for aggressive restrictions. The Bloomberg dollar index slipped as much as 0.4% as trading resumes after Christmas break. Australia’s dollar led gains in commodity currencies amid optimism the unwinding of China’s Covid rules will help speed its economic recovery.

    In rates, Treasury yields higher, 5Y-30Y at highest levels since November, amid a global government bond selloff sparked by China’s decision to relax Covid curbs. US 10-year, higher by ~3bp at 3.775%, is highest since Nov. 30 but still below 50-DMA level; most euro-zone 10-year yields are at least 10bp higher on the day. Treasury curve spreads are little changed with yields across the maturity spectrum higher by ~3bp. Final coupon auction cycle of the year begins with $42BN 2-year note sale at 1pm New York time; The WI 2Y yield 4.315% is below last two auction stops; November’s 4.505% result was highest since 2007

    In commodities, the outlook for demand from China as the economy reopens boosted the price of oil on Tuesday, along with freezing weather across the US, which prompted refinery closures. West Texas Intermediate crude rose 1% to $80.38 a barrel. Spot gold rose 0.6% to $1,808.46 an ounce.

    Market Snapshot

    • S&P 500 futures up 0.5% to 3,890
    • STOXX Europe 600 up 0.4% to 429.08
    • MXAP up 0.4% to 156.28
    • MXAPJ up 0.6% to 507.66
    • Nikkei up 0.2% to 26,447.87
    • Topix up 0.4% to 1,910.15
    • Hang Seng Index down 0.4% to 19,593.06
    • Shanghai Composite up 1.0% to 3,095.57
    • Sensex up 0.6% to 60,916.90
    • Australia S&P/ASX 200 down 0.6% to 7,107.69
    • Kospi up 0.7% to 2,332.79
    • German 10Y yield up 8 bps to 2.48%
    • Euro up 0.2% to $1.0653
    • Brent futures up 0.5% to $84.38/bbl
    • Gold spot up 0.6% to $1,809.12
    • U.S. Dollar Index down 0.28% to 104.03

    Top Overnight News from Bloomberg

    • Equities climbed Tuesday while the dollar declined amid positive sentiment from China’s rollback of Covid isolation measures and the cooling of a key inflation gauge in the US
    • European luxury stocks are among the biggest gainers on Tuesday after China said it will no longer subject inbound travelers to quarantine from Jan. 8, putting the country on track to emerge from three years of self-imposed global isolation
    • Lower-rated won corporate notes have lagged the rebound in high-grade peers after South Korea’s credit rout, a trend that may continue on concerns about an economic slowdown
    • Top executives at Japan’s biggest banks are expecting negative interest rates to linger and see little immediate earnings boost after a surprise move by the nation’s central bank pushed lenders’ shares up by 13% last week
    • Profits at industrial firms in China declined in the first 11 months of the year, as production slowed and factory-gate prices fell amid Covid disruptions

    US Event Calendar

    • 08:30: Nov. Wholesale Inventories MoM, est. 0.3%, prior 0.5%
    • 08:30: Nov. Retail Inventories MoM, est. -0.1%, prior -0.2%
    • 08:30: Nov. Advance Goods Trade Balance, est. -$96.3b, prior -$99b
    • 09:00: Oct. FHFA House Price Index MoM, est. -0.8%, prior 0.1%
    • 09:00: Oct. Case Shiller 20 City MoM SA, est. -1.20%, prior -1.24%
    • 09:00: Oct. Case Shiller Composite-20 YoY, est. 8.00%, prior 10.43%
    • 10:30: Dec. Dallas Fed Manf. Activity, est. -15.0, prior -14.4
    Tyler Durden Tue, 12/27/2022 - 08:17

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    Simple blood test could predict risk of long-term COVID-19 lung problems

    UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to…

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    UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to suffer “long-haul” lung problems. That finding could help doctors better personalize treatments for individual patients.

    Credit: UVA Health

    UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to suffer “long-haul” lung problems. That finding could help doctors better personalize treatments for individual patients.

    UVA’s new research also alleviates concerns that severe COVID-19 could trigger relentless, ongoing lung scarring akin to the chronic lung disease known as idiopathic pulmonary fibrosis, the researchers report. That type of continuing lung damage would mean that patients’ ability to breathe would continue to worsen over time.

    “We are excited to find that people with long-haul COVID have an immune system that is totally different from people who have lung scarring that doesn’t stop,” said researcher Catherine A. Bonham, MD, a pulmonary and critical care expert who serves as scientific director of UVA Health’s Interstitial Lung Disease Program. “This offers hope that even patients with the worst COVID do not have progressive scarring of the lung that leads to death.”

    Long-Haul COVID-19

    Up to 30% of patients hospitalized with severe COVID-19 continue to suffer persistent symptoms months after recovering from the virus. Many of these patients develop lung scarring – some early on in their hospitalization, and others within six months of their initial illness, prior research has found. Bonham and her collaborators wanted to better understand why this scarring occurs, to determine if it is similar to progressive pulmonary fibrosis and to see if there is a way to identify patients at risk.

    To do this, the researchers followed 16 UVA Health patients who had survived severe COVID-19. Fourteen had been hospitalized and placed on a ventilator. All continued to have trouble breathing and suffered fatigue and abnormal lung function at their first outpatient checkup.

    After six months, the researchers found that the patients could be divided into two groups: One group’s lung health improved, prompting the researchers to label them “early resolvers,” while the other group, dubbed “late resolvers,” continued to suffer lung problems and pulmonary fibrosis. 

    Looking at blood samples taken before the patients’ recovery began to diverge, the UVA team found that the late resolvers had significantly fewer immune cells known as monocytes circulating in their blood. These white blood cells play a critical role in our ability to fend off disease, and the cells were abnormally depleted in patients who continued to suffer lung problems compared both to those who recovered and healthy control subjects. 

    Further, the decrease in monocytes correlated with the severity of the patients’ ongoing symptoms. That suggests that doctors may be able to use a simple blood test to identify patients likely to become long-haulers — and to improve their care.

    “About half of the patients we examined still had lingering, bothersome symptoms and abnormal tests after six months,” Bonham said. “We were able to detect differences in their blood from the first visit, with fewer blood monocytes mapping to lower lung function.”

    The researchers also wanted to determine if severe COVID-19 could cause progressive lung scarring as in idiopathic pulmonary fibrosis. They found that the two conditions had very different effects on immune cells, suggesting that even when the symptoms were similar, the underlying causes were very different. This held true even in patients with the most persistent long-haul COVID-19 symptoms. “Idiopathic pulmonary fibrosis is progressive and kills patients within three to five years,” Bonham said. “It was a relief to see that all our COVID patients, even those with long-haul symptoms, were not similar.”

    Because of the small numbers of participants in UVA’s study, and because they were mostly male (for easier comparison with IPF, a disease that strikes mostly men), the researchers say larger, multi-center studies are needed to bear out the findings. But they are hopeful that their new discovery will provide doctors a useful tool to identify COVID-19 patients at risk for long-haul lung problems and help guide them to recovery.

    “We are only beginning to understand the biology of how the immune system impacts pulmonary fibrosis,” Bonham said. “My team and I were humbled and grateful to work with the outstanding patients who made this study possible.” 

    Findings Published

    The researchers have published their findings in the scientific journal Frontiers in Immunology. The research team consisted of Grace C. Bingham, Lyndsey M. Muehling, Chaofan Li, Yong Huang, Shwu-Fan Ma, Daniel Abebayehu, Imre Noth, Jie Sun, Judith A. Woodfolk, Thomas H. Barker and Bonham. Noth disclosed that he has received personal fees from Boehringer Ingelheim, Genentech and Confo unrelated to the research project. In addition, he has a patent pending related to idiopathic pulmonary fibrosis. Bonham and all other members of the research team had no financial conflicts to disclose.

    The UVA research was supported by the National Institutes of Health, grants R21 AI160334 and U01 AI125056; NIH’s National Heart, Lung and Blood Institute, grants 5K23HL143135-04 and UG3HL145266; UVA’s Engineering in Medicine Seed Fund; the UVA Global Infectious Diseases Institute’s COVID-19 Rapid Response; a UVA Robert R. Wagner Fellowship; and a Sture G. Olsson Fellowship in Engineering.

      

    To keep up with the latest medical research news from UVA, subscribe to the Making of Medicine blog at http://makingofmedicine.virginia.edu.


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    The hostility Black women face in higher education carries dire consequences

    9 Black women who were working on or recently earned their PhDs told a researcher they felt isolated and shut out.

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    Isolation can make opportunities elusive. fotostorm via Getty Images

    Isolated. Abused. Overworked.

    These are the themes that emerged when I invited nine Black women to chronicle their professional experiences and relationships with colleagues as they earned their Ph.D.s at a public university in the Midwest. I featured their writings in the dissertation I wrote to get my Ph.D. in curriculum and instruction.

    The women spoke of being silenced.

    “It’s not just the beating me down that is hard,” one participant told me about constantly having her intelligence questioned. “It is the fact that it feels like I’m villainized and made out to be the problem for trying to advocate for myself.”

    The women told me they did not feel like they belonged. They spoke of routinely being isolated by peers and potential mentors.

    One participant told me she felt that peer community, faculty mentorship and cultural affinity spaces were lacking.

    Because of the isolation, participants often felt that they were missing out on various opportunities, such as funding and opportunities to get their work published.

    Participants also discussed the ways they felt they were duped into taking on more than their fair share of work.

    “I realized I had been tricked into handling a two- to four-person job entirely by myself,” one participant said of her paid graduate position. “This happened just about a month before the pandemic occurred so it very quickly got swept under the rug.”

    Why it matters

    The hostility that Black women face in higher education can be hazardous to their health. The women in my study told me they were struggling with depression, had thought about suicide and felt physically ill when they had to go to campus.

    Other studies have found similar outcomes. For instance, a 2020 study of 220 U.S. Black college women ages 18-48 found that even though being seen as a strong Black woman came with its benefits – such as being thought of as resilient, hardworking, independent and nurturing – it also came at a cost to their mental and physical health.

    These kinds of experiences can take a toll on women’s bodies and can result in poor maternal health, cancer, shorter life expectancy and other symptoms that impair their ability to be well.

    I believe my research takes on greater urgency in light of the recent death of Antoinette “Bonnie” Candia-Bailey, who was vice president of student affairs at Lincoln University. Before she died by suicide, she reportedly wrote that she felt she was suffering abuse and that the university wasn’t taking her mental health concerns seriously.

    What other research is being done

    Several anthologies examine the negative experiences that Black women experience in academia. They include education scholars Venus Evans-Winters and Bettina Love’s edited volume, “Black Feminism in Education,” which examines how Black women navigate what it means to be a scholar in a “white supremacist patriarchal society.” Gender and sexuality studies scholar Stephanie Evans analyzes the barriers that Black women faced in accessing higher education from 1850 to 1954. In “Black Women, Ivory Tower,” African American studies professor Jasmine Harris recounts her own traumatic experiences in the world of higher education.

    What’s next

    In addition to publishing the findings of my research study, I plan to continue exploring the depths of Black women’s experiences in academia, expanding my research to include undergraduate students, as well as faculty and staff.

    I believe this research will strengthen this field of study and enable people who work in higher education to develop and implement more comprehensive solutions.

    The Research Brief is a short take on interesting academic work.

    Ebony Aya received funding from the Black Collective Foundation in 2022 to support the work of the Aya Collective.

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    US Economic Growth Still Expected To Slow In Q1 GDP Report

    A new round of nowcasts continue to estimate that US economic activity will downshift in next month’s release of first-quarter GDP data. Today’s revised…

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    A new round of nowcasts continue to estimate that US economic activity will downshift in next month’s release of first-quarter GDP data. Today’s revised estimate is based on the median for a set of nowcasts compiled by CapitalSpectator.com.

    Output for the January-through-March period is currently projected to soften to a 2.1% increase (seasonally adjusted annual rate). The estimate reflects a substantially softer rise vs. Q4’s strong 3.2% advance, which in turn marks a downshift from Q3’s red-hot 4.9% increase, according to government data.

    Today’s revised Q1 estimate was essentially unchanged from the previous Q1 nowcast (published on Mar. 7). At this late date in the current quarter, the odds are relatively high that the current median estimate is a reasonable guesstimate for the actual GDP data that the Bureau of Economic Analysis will publish in late-April.

    GDP rising at roughly a 2% pace marks another slowdown from recent quarters, but if the current nowcast is correct it suggests that recession risk remains low. The question is whether the slowdown persists into Q2 and beyond. Given the expected deceleration in growth on tap for Q1, the economy may be flirting with a tipping point for recession later in the year. It’s premature to make such a forecast with high confidence, but it’s a scenario that’s increasingly plausible, albeit speculatively so for now.

    Yesterday’s release of retail sales numbers for February aligns with the possibility that even softer growth is coming. Although spending rebounded last month after January’s steep decline, the bounce was lowr than expected.

    “The modest rebound in retail sales in February suggests that consumer spending growth slowed in early 2024,” says Michael Pearce, Oxford Economics deputy chief US economist.

    Reviewing retail spending on a year-over-year basis provides a clearer view of the softer-growth profile. The pace edged up to 1.5% last month vs. the year-earlier level, but that’s close to the slowest increase in the post-pandemic recovery.

    Despite emerging signs of slowing growth, relief for the economy in the form of interest-rate cuts may be further out in time than recently expected, due to the latest round of sticky inflation news this week.

    “When the Fed is contemplating a series of rate cuts and is confronted by suddenly slower economic growth and suddenly brisker inflation, they will respond to the new news on the inflation side every time,” says Chris Low, chief economist at FHN Financial. “After all, this is not the first time in the past couple of years consumers have paused spending for a couple of months to catch their breath.”


    How is recession risk evolving? Monitor the outlook with a subscription to:
    The US Business Cycle Risk Report


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