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Futures Soars Above 3,400 To All Time High On Covid Plasma Treatment Approval

Futures Soars Above 3,400 To All Time High On Covid Plasma Treatment Approval

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Futures Soars Above 3,400 To All Time High On Covid Plasma Treatment Approval Tyler Durden Mon, 08/24/2020 - 07:58

You knew it was coming when Trump scheduled his news conference to announce the FDA's emergency authorization for convalescent plasma as a treatment for Covid-19 at 530pm on Sunday afternoon, half an hour before futures opened, and sure enough shortly after futures levitated to all time highs, hitting a record 3,422 moments ago, with European stocks rallying to a one-week high.

The FDA's decision to use plasma from recovered patients was hailed by President Donald Trump and came a day after he accused it of impeding the rollout of treatments for political reasons. Further aiding market sentiment, was a report that the Trump administration is considering fast-tracking an experimental COVID-19 vaccine being developed by AstraZeneca for use in the United States before election. The news came on the eve of the Republican National Convention in which Trump will be nominated to lead his party for four more years, kicking off the final sprint to Nov. 3 Election Day.

US travel stocks, including American Airlines, United Airlines and Carnival all rose in pre-market trading. Meanwhile, the next phase of coronavirus government aid remained elusive as top Democrats and Republicans continued to blame each other for stalled talks on the legislation.

European equities extended opening gains, following US futures, and driven by the progress of various potential coronavirus treatments. Euro Stoxx 50 saw a broad base for 2.3% gain, with oil & gas, chemical and tech names outperforming. Telecom carrier BT Group jumped after Sky News reported that the board is on alert for takeover approaches.

Asian stocks also gained, led by communications and materials, getting a boost after a report that White House officials have reassured American businesses that a ban on its WeChat app won’t be as broad as feared. WeChat owner Tencent Holdings jumped the most in a month, gaining $37 billion. The Topix gained 0.2%, with TEMONA and St-Care HD rising the most. The Shanghai Composite Index rose 0.1%, with Suzhou Harmontronics and Shenyang Jinshan Energy posting the biggest advances. China's ChiNext index reverses early drop to jump as much as 2.4% following sizzling tech IPOs and a trading-rule revamp to double daily price limits to 20%.

In commodities, Gold shrugged off its earlier losses to climb with copper and oil, while the dollar weakened. Crude was modestly higher with storms Marco and Laura are rolling toward the U.S. Gulf Coast, where they’ll come ashore as hurricanes as soon as Monday. Almost 58% of crude output in the U.S. Gulf of Mexico production has been shut down as the threat prompted evacuations of off-shore energy platforms and set residents and officials on edge from Texas to Florida.

In FX, the dollar fell as much as 0.3% with Goldman saying the case for USD depreciation remaining intact citing factors including USD being overvalued and US real interest rates to remain negative for several years, while it further cited a steady recovery of the economy from the pandemic. However, it also noted factors for consolidation to persist which includes pandemic uncertainty, Fed outlook and US politics.

Scandinavian currencies and the Aussie dollar led G-10 gains. The New Zealand dollar fell against most G-10 peers as a lockdown in the country’s largest city was extended. The country’s benchmark 10-year bond yield fell to hit a record mid- year low, after the central bank QE buying operation fell short of target. The euro held above $1.18 as investors showed interest to buy the common currency on any dips. One-week bullish sentiment in the euro slipped to its lowest in almost two months earlier on, as the dollar’s major peers enter correction mode in the cash market.

A key event this week would be the address by Fed Chair Jerome Powell at the Kansas City Fed Jackson Hole symposium, where he will talk on Thursday about the Fed’s long-awaited monetary policy framework review, which has focused on a new inflation strategy.

“We’re hoping to get some sort of hints as to where their fundamental view is going and there’s a lot of expectations around that,” said Marvin Barth, global head of foreign exchange and emerging markets macro strategy at Barclays Plc.

Also this week we get earnings from companies including, ICBC, PetroChina, HP Inc., Royal Bank of Canada, Best Buy and Dollar General. The U.S. Republican National Convention takes place, with Trump speaking the final day, Aug. 27. On today's calendar we get the Chicago Fed National Activity Index, while Palo Alto Networks is reporting earnings.

Market Snapshot

  • S&P 500 futures up 0.7% to 3,417.50
  • STOXX Europe 600 up 1.5% to 370.38
  • MXAP up 0.8% to 172.09
  • MXAPJ up 1.1% to 569.42
  • Nikkei up 0.3% to 22,985.51
  • Topix up 0.2% to 1,607.13
  • Hang Seng Index up 1.7% to 25,551.58
  • Shanghai Composite up 0.2% to 3,385.64
  • Sensex up 1% to 38,834.70
  • Australia S&P/ASX 200 up 0.3% to 6,129.57
  • Kospi up 1.1% to 2,329.83
  • German 10Y yield rose 1.8 bps to -0.489%
  • Euro up 0.1% to $1.1813
  • Italian 10Y yield rose 3.0 bps to 0.819%
  • Spanish 10Y yield rose 2.0 bps to 0.318%
  • Brent futures up 0.7% to $44.65/bbl
  • Gold spot up 0.3% to $1,947.09
  • U.S. Dollar Index down 0.2% to 93.03

Top Overnight News from Bloomberg

  • U.S. President Donald Trump said a treatment based on blood plasma donated by people who’ve recovered from Covid-19 will be expanded, even before researchers fully understand how well it works. Infections in the U.S. eased, while Europe is seeing a resurgence of cases
  • The Trump administration is privately seeking to reassure U.S. companies including Apple Inc. that they can still do business with the WeChat messaging app in China, according to several people familiar with the matter, two weeks after President Donald Trump ordered a U.S. ban on the Chinese- owned service
  • Two hurricanes are expected to hit the U.S. gulf coast as soon as Monday. Offshore energy platforms were evacuated as the storms approached

Asian equity markets traded mostly positive and E-mini S&P topped the 3,400 mark following Friday’s tech-fuelled gains on Wall St and the recent emergency use authorization of convalescent plasma for treatment of COVID-19 which was suggested to reduce mortality by 35%, but with gains capped by US-China decoupling concerns following comments by US President Trump. ASX 200 (+0.3%) and Nikkei 225 (+0.3%) were initially indecisive before outperformance in tech then proved to be the deciding factor to keep stocks afloat in Australia and with earnings results the main catalyst for the biggest stock movers, while the Japanese benchmark was also higher as it made another attempt at the 23,000 focal point. Hang Seng (+1.7%) and Shanghai Comp. (+0.2%) were underpinned by another firm liquidity effort by the PBoC, although gains in the mainland were tempered by the ongoing US-China tensions after President Trump raised the prospect of decoupling from China and suggested the US does not have to do business with China. In addition, the People’s Liberation Army are to conduct military drills across 3 major Chinese sea regions in the approaching days which is aimed at deterring Taiwan secessionists and the US, while increased IPO activity also attracts funds from the broader market with 18 firms listing in the ChiNext today as part of reforms in the tech board aimed at fast-tracking IPOs and which saw some of the newly-listed names surge as much as 500%. Finally, 10yr JGBs were positive despite the mild gains in stocks as prices tracked recent upside in T-notes and with the BoJ also present in the market for a total of JPY 450bln of JGBs predominantly concentrated in 3yr-5yr maturities.

Top Asian News

  • Japan’s Abe Visits Hospital Again Amid Speculation About Health
  • AMP Chair Murray Quits, Pahari Demoted After Investor Revolt
  • Delivery Giant Meituan Soars Most Since March After Sales Beat
  • Tourist Hotspot Bali to Stay Closed to Foreign Visitors All Year

European equities kick the week off on a firm footing (Euro Stoxx 50 +1.8%) as the region picked up the baton from a similarly positive APAC session. Some attribute upside in stocks, and generally firmer sentiment, to the US FDA authorising the emergency use of convalescent plasma as a treatment for hospitalised COVID-19 patients, but the FDA indicated that more trials are needed to prove its effectiveness. It is also worth keeping in mind that against the backdrop of global monetary and fiscal stimulus, a lack of “bad news” can be sufficient to support equity sentiment, particularly during thinned holiday trading. Furthermore, the US and the EU have signed a “mini-deal” in which the EU agreed to eliminate tariffs on US lobsters in exchange for the US halving import taxes on around USD 160mln worth of European goods. Although, the size seems relatively small, the deal signals a shift in sentiment between the two nations, which provides scope for further potential agreements between the two sides. A slight dichotomy is seen between the European and US index futures, with the former outperforming the state-side contracts, potentially due to (to some degree) tail risks heading into Fed’s Jackson Hole Symposium, US GDP and PCE releases this week, alongside stalled fiscal stimulus talks. Sectors are all higher but provide little by way of a bias, with Oil & Gas the marked outperformer amid recent gains in the complex, whilst IT follows a close second a continuation of the sector’s rally on Wall Street on Friday. Travel & Leisure names lag as some APAC countries/states/cities mull extending lockdown orders, including South Korea, Australia’s Victoria state and New Zealand’s Auckland. In terms of individual movers: BT (+5.7%) tops the Stoxx 600 board on the back of reports that the Co. is gearing up to defend itself for takeover approaches by Private Equity firms. The Co. is yet to receive a formal bid, but PE firms are reportedly looking into such a move. Meanwhile, AstraZeneca (+3.1%) is supported by reports that the Trump Admin is reportedly considering fast-tracking the Co’s COVID-19 vaccine candidate to have it in use ahead of the November election. Finally, Wirecard (-2.5%) holds its position as a laggard after being formally dropped out of the DAX 30 and replaced by Delivery Hero (+1.3%).

Top European News

  • EU Trade Chief Fights to Keep His Job After Pandemic Stumble
  • Johnson Pleads With U.K. Parents to Send Children to School
  • Italy Lockdown Success Challenged by New Europe Virus Surge
  • Italy’s Unloved Banks Move Closer to Credit-Market Redemption

In FX, the Aussie is benefiting from broad risk appetite and ongoing weakness in the Kiwi on NZ’s COVID-19 related problems and disappointing data in the form of Q2 retail sales. Hence, Aud/Usd is holding relatively firm in the high 0.7100 area, while Aud/Nzd retests 1.1000 and Nzd/Usd languishes below 0.6550 ahead of NZ trade for the first month of the current quarter on Tuesday evening. Back to the cross, a very large 1.4 bn option expiry at the 1.1000 strike may cap the upside ahead of the NY cut.

  • USD/EUR - Not quite role reversal, but a marked change of fortunes as the Dollar loses post-US PMI momentum and the DXY struggles to maintain 93.000+ status within a 93.016-266 range. Accordingly, the Euro has pared losses and is back above 1.1800, albeit tentatively as 2nd waves of the coronavirus spread across the Eurozone.
  • CAD/CHF/GBP/JPY - All narrowly mixed against the Greenback, with the Loonie towards the base of a 1.3186-52 band and deriving some traction from crude prices that are mildly bid on weather induced production cuts and site evacuations. Elsewhere, the Franc is hovering around 0.9100 and 1.0750 vs the Euro after less pronounced increases in Swiss bank sight deposits, Sterling has unwound more UK PMI gains amidst the ongoing Brexit trade stalemate, with Cable under 1.3100 and Eur/Gbp above 0.9000, while the Yen is caught between 105.94-70 parameters and 50/100 HMAs that sit at 105.84 and 105.70 respectively.
  • SCANDI/EM - Bullish risk sentiment and the aforementioned upturn in oil are keeping the Sek and Nok underpinned, while the Cnh has extended advances from a stronger PBoC Cny fix overnight through 6.9050, but the Try is lagging sub-7.3500 in wake of Fitch downgrading Turkey’s sovereign ratings outlook to negative from stable. Elsewhere, the Rub, Zar and Mxn all gleaning degrees of support from underlying commodities, while the Brl awaits Brazilian consumer confidence.

In commodities, WTI and Brent front month futures continue to eke mild gains in early European hours, with prices supported by the overall constructive tone across the market coupled by supply woes as the Gulf of Mexico is poised for a double whammy from Tropical Storms Marco and Laura – with the former set to make landfall later today and the latter on Wednesday. Reports noted that as of Sunday, around 58% of the Gulf of Mexico production has been shuttered, according to the Bureau of Safety and Environmental Enforcement – equating to around 1mln BPD. Desks also point to the fragility of refining activity amidst floods. “Although given the large amount of refined product stocks at the moment, the market would likely be able to handle any disruptions to refined product supply better this time around” analysts at ING conclude. WTI Oct meanders just north of USD 42.50/bbl (vs. low 42.23/bbl) whilst its Brent counterpart similarly resides above USD 44.50/bbl (vs. low 44.29/bbl) – with the WTI/Brent arb tightening on the aforementioned Gulf of Mexico developments. Elsewhere, spot gold and silver have recovered from overnight lows in tandem with losses in the Dollar. The yellow metal eyes USD 1950/oz vs. low 1930.30/oz) to the upside whilst spot silver nurses overnight losses to reclaim a firmer footing above USD 26.50/oz (vs. low 26.25/oz). Turning to base metals, Dalian iron ore futures closed lower by almost 2% with traders citing dampening demand for steel products amid seasonal effects and floods. Conversely, LME copper rises amid the gains in stocks, softer Dollar and with inventories falling to a 13-year low.

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, est. 3.7, prior 4.1

DB's Henry Allen concludes the overnight wrap

Happy Monday to our readers and hope you all had a good weekend. With Jim having been off the last two weeks and Craig’s wife almost due to give birth, I’ve been super-subbed off the bench to write your favourite email this morning. While I appreciate Jim may be twice the man that I am, or at least twice my age, I just hope you’ll think of me as the rising star of the team rather than the third choice.

The main focus over the weekend continued to be the covid-19 pandemic, as the number of confirmed global deaths surpassed 800,000. In spite of its relative success in suppressing the first wave of the virus, it’s Europe that’s begun to re-emerge as a source of concern in recent days given the latest rises in case numbers, a trend that continued through the weekend. In fact, Sunday saw France report 4,897 cases, the most since mid-April, while Italy reported 1,210, which was the most since mid-May, so investors are likely to be on the lookout for any further increases and what that might mean for the likelihood of further lockdowns or re-imposing restrictions.

Against this backdrop, President Trump announced last night that the FDA had issued an emergency use authorisation for convalescent plasma to treat hospitalised patients, which involves using blood plasma from those who’ve recovered from the virus. There were also some reports about possible vaccine developments, with the FT saying that the Trump administration were considering bypassing normal regulatory standards when it came for the Oxford/AstraZeneca vaccine, possibly with another emergency use authorisation.

In terms of the latest overnight, it was announced by New Zealand Prime Ardern that the lockdown in Auckland would be extended to midnight on August 30, having been until August 26 previously. Meanwhile in South Korea, which reported a further 266 cases in the last 24 hours, there’s concern that the country could move up to Level 3 social distancing, the highest level the country has, that would involve closing schools and recommending employees work from home. It follows a senior health official saying yesterday that the country would review the possibility. In spite of the possibility of further restrictions however, equity markets in Asia are trading higher this morning, with the Hang Seng (+1.47%) leading the way. Other indices are also up, including the Nikkei (+0.17%), Shanghai Comp (+0.18%) and the Kospi (+0.81%). And finally we could see another record high for the S&P 500 today, with futures this morning up +0.26%.

Looking to the week ahead now, the highlight is likely to be the Jackson Hole gathering on Thursday and Friday, where central bankers will be meeting (virtually this year) for the annual economic symposium. This theme on this occasion is “Navigating the Decade Ahead: Implications for Monetary Policy”, and one of the key highlights will be Fed Chair Powell’s speech on Thursday on the topic of the monetary policy review. According to our US economists, while it’s possible that the policy review results will be released along with Powell’s appearance, they think it’s more likely that he summarises the key findings and outlines the likely implications for the Fed moving forward. They think instead the review results won’t be released until the next meeting in mid-September. In addition to Powell, central bank watchers will have plenty of other speakers to look out for at the gathering, including Bank of England Governor Bailey, ECB chief economist Lane, and Bank of Canada Governor Macklem.

Turning to politics, attention will also be on the Republican National Convention taking place this week from Monday to Thursday, even if there aren’t likely to be as many market-moving headlines compared to Jackson Hole. Nevertheless, a CNN report said that President Trump would be appearing on every night of the convention, according to a Republican familiar with the convention planning, on top of his own speech planned for the Thursday night. So that could generate some news depending on the nature of any remarks. There are just over 10 weeks to go now until election day on November 3rd, and according to the polling averages, President Trump continues to lag behind Biden, with FiveThirtyEight’s average giving Biden a 9.2pt lead over Trump.

On the data side, we don’t have many top-tier releases with the US jobs report not until the following week. However, tomorrow will see both the Ifo’s business climate indicator from Germany, as well as the Conference Board’s consumer confidence from the US. On the latter, our economists think that the recent breakdown in fiscal negotiations in Congress could weigh on consumer attitudes, and see the number falling to 92.0 (vs. 92.6 in July).

Looking back to last week now, and US equity markets rose for a fourth straight week on the back of improving economic data and a further subsiding of coronavirus cases. The S&P 500 rose 0.72% (+0.34% Friday) on the week as it rose to a record high, while the tech-focused Nasdaq saw an even stronger performance over the week – up +2.65% (+0.42% Friday) – as the mega-cap growth stocks continue to pull US equities higher. In Europe, the Stoxx 600 ended the week -0.81% lower (-0.15% Friday) as economic data showed some signs of the recovery losing momentum. Other major European bourses similarly moved lower on the week as coronavirus cases continue to rise once again on the continent, with the DAX (-1.06%), CAC (-1.34%), FTSE 100 (-1.45%) and FTSE MIB (-1.66%) all losing ground.

Core sovereign bond yields fell over the course of the week after rising sharply during the week before. 10yr Treasury yields fell -8.1bps (-2.3bps Friday) to finish at 0.628%, while 10yr Bund yields declined -8.6bps (-1.1bps Friday) to -0.51%. Meanwhile the dollar rose marginally (+0.16%) as it recovered from the 2-year low it had set earlier in the week.

Against this backdrop, Friday also saw the latest round of negotiations between the UK and the EU conclude with no further progress on the key outstanding issues. The UK’s chief negotiator Frost blamed the EU’s insistence on the UK accepting continuity with EU state aid and fisheries policy before work could be done on other areas. And the EU’s chief negotiator, Michel Barnier, said that an agreement “seems unlikely” at this stage, and reiterated their existing demand that “The need for a Level Playing field is not going to go away.” The next round of talks takes place from September 7th. We saw a similar stalemate in the US with regards to fiscal stimulus talks. Republican senator Kennedy of Louisiana said late Friday that nothing’s changed on the talks, which could mean that both sides are unlikely to reach a deal even on a skinny deal before lawmakers return from recess in September.

Finally on the data front, the flash Euro Area PMIs lost momentum in August, which confounded expectations for largely unchanged readings. The composite Euro Area PMI fell to 51.6 in August, having been at 54.9 in July, while the French (-5.6pts to 51.7) and German (-1.6pts to 53.7) also saw significant declines. DB’s Peter Sidorov put out a note on Friday about this (link here), where he points out that the market shouldn’t have been that surprised, considering the signals from the recent mobility data. The UK saw a stronger move (+3.3pts to 60.3) but this simply reflects the UK climbing out of a more protracted trough rather than a higher level of activity. Elsewhere, US existing home sales rose to 5.86m (vs. 5.41m expected) from 4.72m in June. This was the strongest pace since 2006 and the highest one month percentage increase on record as low mortgage rates continue to support the real estate market.

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Government

Head Of The Lancet’s COVID-19 Investigation Is “Convinced” It Came Out Of A Lab

Head Of The Lancet’s COVID-19 Investigation Is "Convinced" It Came Out Of A Lab

Authored by Steve Watson via Summit News,

The head of the…

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Head Of The Lancet's COVID-19 Investigation Is "Convinced" It Came Out Of A Lab

Authored by Steve Watson via Summit News,

The head of the preeminent scientific journal The Lancet’s COVID-19 origins Commission is ‘convinced’ that the virus came out of a lab and says that a real investigation is being blocked.

Professor Jeffrey Sachs told Current Affairs that he is “pretty convinced [COVID-19] came out of US lab biotechnology” and has warned that ongoing research could lead to another pandemic outbreak.

Sachs notes that scientists who dismissed the lab leak theory did so “before they had done any research at all,” adding “they’re creating a narrative. And they’re denying the alternative hypothesis without looking closely at it.”

Sachs points to the ‘gain of function’ research and the genetic markers found in the SARS-Cov-2 coronavirus that indicate it was manipulated to be more deadly.

“What’s interesting, and concerning if I may say so, is that the research that was underway very actively and being promoted, was to insert furin cleavage sites into SARS-like viruses to see what would happen. Oops!” Sachs states.

“They’re not looking,” Sachs says of scientists who dismiss the lab leak, adding “They just keep telling us, ‘Look at the market, look at the market, look at the market!’ But they don’t address this alternative. They don’t even look at the data. They don’t even ask questions. And the truth is from the beginning, they haven’t asked the real questions.”

Sachs further labels the efforts to distract from the lab research as “misdirection” and “sleight of hand”.

“There is a huge amount of reason to believe that that research was underway. Because there are published papers on this. There are interviews on this. There are research proposals. But NIH isn’t talking. It’s not asking. And these scientists have never asked either,” Sachs further asserts.

He continues, “From the very first day, they have kept hidden from view the alternative. And when they discuss the alternative, they don’t discuss the research program. They discuss complete straw men about the lab, not the actual kind of research that was underway, which was to stick furin cleavage sites into SARS-like viruses in a way that could have created SARS-Cov-2.”

“What I’m calling for is not the conclusion. I’m calling for the investigation,” Sachs urges, adding “Finally, after two and a half years of this, it’s time to fess up that it might have come out of a lab and here’s the data that we need to know to find out whether it did.”

Sachs also addresses EcoHealth Alliance and Peter Daszak, noting that he originally personally appointed Daszak to chair the task force of the Lancet’s pandemic commission.

Sachs says “I realized he [Daszak] was not telling me the truth. And it took me some months, but the more I saw it, the more I resented it. And so I told him, ‘Look, you have to leave.'”

Sachs adds that once he fired Daszak, other scientists began attacking him.

“I asked them: “What are your connections with all of this?” They didn’t tell me. Then when the Freedom of Information Act released some of these documents that NIH had been hiding from the public, I saw that people that were attacking me were also part of this thing. So I disbanded that whole task force,” Sachs notes.

“So my own experience was to witness close up how they’re not talking. And they’re trying to keep our eyes on something else. And away from even asking the questions that we’re talking about,” Sachs further warns.

Sachs concludes that he “Doesn’t trust” the governments and scientists who are dismissing the lab leak theory, adding “I want to know. Because even what we know of the dangerous research is enough to raise a lot of questions of responsibility for the future. And to pose the question: ‘Hey, what other viruses are you guys working on? What should we know?'”

“I want to know what’s being done. I want to know what other governments are doing, too, not just ours. I want some global control over this stuff,” Sachs further urges.

The professor finally calls for “a bipartisan congressional oversight investigation that has subpoena power,” urging “Give us your lab records, your notebooks, your data files of virus strains, and so forth.”

As we have highlighted, this is what Senator Rand Paul is pursuing relentlessly.

Following an initial hearing last week before the Senate Homeland Security and Governmental Affairs subcommittee, Paul revealed that there is a committee that is supposed to oversee experimentation with potentially lethal viruses, but that it is above the oversight of Congress.

“We don’t know the names. We don’t know that they ever meet, and we don’t have any records of their meetings,” the Senator noted, adding “It’s top-secret. Congress is not allowed to know. So whether the committee actually exists, we’re uncertain.”

*  *  *

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Tyler Durden Wed, 08/10/2022 - 06:30

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Spread & Containment

$265 Billion In Added Value To Evaporate From Germany Economy Amid Energy Crisis, Study Warns

$265 Billion In Added Value To Evaporate From Germany Economy Amid Energy Crisis, Study Warns

A new report published by the Employment Research…

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$265 Billion In Added Value To Evaporate From Germany Economy Amid Energy Crisis, Study Warns

A new report published by the Employment Research (IAB) on Tuesday outlines how Germany's economy will lose a whopping 260 billion euros ($265 billion) in added value by the end of the decade due to high energy prices sparked by Russia's invasion of Ukraine which will have severe ramifications on the labor market, according to Reuters

IAB said Germany's price-adjusted GDP could be 1.7% lower in 2023, with approximately 240,000 job losses, adding labor market turmoil could last through 2026. It expects the labor market will begin rehealing by 2030 with 60,000 job additions.

The report pointed out the hospitality industry will be one of the biggest losers in the coming downturn that the coronavirus pandemic has already hit. Consumers who have seen their purchasing power collapse due to negative real wage growth as the highest inflation in decades runs rampant through the economy will reduce spending. 

IAB said energy-intensive industries, such as chemical and metal industries, will be significantly affected by soaring power prices. 

In one scenario, IAB said if energy prices, already up 160%, were to double again, Germany's economic output would crater by nearly 4% than it would have without energy supply disruptions from Russia. Under this assumption, 660,000 fewer people would be employed after three years and still 60,000 fewer in 2030. 

This week alone, German power prices hit record highs as a heat wave increased demand, putting pressure on energy supplies ahead of winter. 

Rising power costs are putting German households in economic misery as economic sentiment across the euro-area economy tumbled to a new record low. What happens in Germany tends to spread to the rest of the EU. 

There are concerns that a sharp weakening of growth in Germany could trigger stagflation as German inflation unexpectedly re-accelerated in July, with EU-Harmonized CPI rising 8.5% YoY. 

Germany is facing an unprecedented energy crisis as Russian natural gas cuts via the Nord Stream 1 pipeline will reverse the prosperity many have been accustomed to as the largest economy in Europe. 

"We are facing the biggest crisis the country has ever had. We have to be honest and say: First of all, we will lose the prosperity that we have had for years," Rainer Dulger, head of the Confederation of German Employers' Associations, warned last month. 

Besides Dulger, Economy Minister Robert Habeck warned of a "catastrophic winter" ahead over Russian NatGas cut fears.

Other officials and experts forecast bankruptcies, inflation, and energy rationing this winter that could unleash a tsunami of shockwaves across the German economy.  

Yasmin Fahimi, the head of the German Federation of Trade Unions, warned last month:

"Because of the NatGas bottlenecks, entire industries are in danger of permanently collapsing: aluminum, glass, the chemical industry." 

IAB's report appears to be on point as the German economy seems to be diving head first into an economic crisis. Much of this could've been prevented, but Europe and the US have been so adamant about slapping Russia with sanctions that have embarrassingly backfired. 

Tyler Durden Wed, 08/10/2022 - 04:15

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International

“Anything But A Cashless Society”: Physical Money Makes Comeback As UK Households Battle Inflation

"Anything But A Cashless Society": Physical Money Makes Comeback As UK Households Battle Inflation

The World Economic Forum (WEF) has been…

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"Anything But A Cashless Society": Physical Money Makes Comeback As UK Households Battle Inflation

The World Economic Forum (WEF) has been pushing hard for a 'cashless society' in a post-pandemic world, though physical money has made a comeback in at least one European country as consumers increasingly use notes and coins to help them balance household budgets amid an inflationary storm

Britain's Post Office released a report Monday that revealed even though the recent accelerated use of cards and digital payments on smartphones, demand for cash surged this summer, according to The Guardian. It said branches handled £801mln in personal cash withdrawals in July, an increase of 8% over June. The yearly change on last month's figures was up 20% versus the July 2021 figure of £665mln.

Across the Post Office's 11,500 branches, £3.31bln in cash was deposited and withdrawn in July -- a record high for any month dating back over three centuries of operations. 

The report pointed out that increasing physical cash demand was primarily due to more people managing their budgets via notes and coins on a "day-by-day basis." It said some withdrawals were from vacationers needing cash for "staycations" in the UK. About 600,000 cash payouts totaling £90mln were from people who received power bill support from the government, the Post Office noted. 

Britain is "anything but a cashless society," according to the Post Office's banking director Martin Kearsley.

"We're seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget. Whether that's for a staycation in the UK or if it's to help prepare for financial pressures expected in the autumn, cash access in every community is critical," Kearsley said.

We noted in February 2021, UK's largest ATM network saw plummeting demand as consumers reduced cash usage. At the time, we asked this question: "How long will the desire for good old-fashioned bank notes last?

... and the answer is not long per the Post Office's new report as The Guardian explains: "inflation going up and many bills expected to rise further – has led a growing numbers of people to turn once again to cash to help them plan their spending." 

So much for WEF, central banks, and major corporations pushing for cashless societies worldwide, more importantly, trying to usher in a hyper-centralized CBDC dystopia. With physical cash back in style in the UK, the move towards a cashless society could be a much more challenging task for elites than previously thought. 

Tyler Durden Wed, 08/10/2022 - 02:45

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