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Futures Surge On Even More “Optimism” Ahead Of Payrolls

Futures Surge On Even More "Optimism" Ahead Of Payrolls



Futures Surge On Even More "Optimism" Ahead Of Payrolls Tyler Durden Thu, 07/02/2020 - 07:57

After sliding to 2,983.5 in early Sunday trading on fears of a second wave of covid infections, futures have completely forgotten what they were concerned about at the start of the week, and have since levitated in largely linear fashion some 150 points higher, rising to 3,130.75 overnight, on even more hope and optimism, this time for a reassuring job report coupled with yesterday's hopes for positive vaccine developments. The dollar slipped and 10Y yields rose.

At 7:20 a.m. ET, Dow e-minis were up 275 points, or just over 1%, S&P 500 e-minis were up 25 points to 3,128, and Nasdaq 100 e-minis were up 52 points to 10320. Travel-related stocks were among the biggest gainers in premarket trade, with cruise line operators Carnival, Royal Caribbean Cruises and Norwegian Cruise Line Holdings rising between 3% and 4%, while economically-sensitive stocks including Morgan Stanley, Goldman Sachs, Citigroup, JPMorgan Chase and Bank of America up between 1% and 3%. Tesla was up another $100 overnight, rising to a new record high above 1,200.

Indeed, as Reuters writes this morning, "optimism about a post-pandemic rebound in business activity, aggressive U.S. stimulus and hopes of a COVID-19 vaccine" have fueled a Wall Street rally since April, with the tech-heavy Nasdaq notching up its sixth record closing high since early June on Wednesday.

After the latest ISM data showed U.S. manufacturing unexpectedly hit its highest level in June in more than a year, the Labor Department’s jobs report due later in the day is expected to show record job growth last month, signaling that a COVID-19-driven recession was probably over, at least until its returns next month when government stimulus checks run out. Meanwhile, with several states scaling back or pausing reopenings to tackle a recent surge in coronavirus infections, analysts have warned of another selloff in financial markets if the damage to Corporate America mounts.

Third-quarter earnings for S&P 500 companies are now expected to tumble 25%, compared with a forecast of a 2.7% drop on April 1, according to Refinitiv. In the second quarter, earnings are forecast to have plunged 43%.

Europe's Stoxx 600 Index extended its initial gains on advances in banks and automakers with the Eurostoxx 50 rallying as much as 1.9% to fresh highs for the week; IBEX outperforms, gaining over 2.5%. Europe's Stoxx 600 Travel & Leisure index rose as much as 3.6%, the most since June 16, led by airlines and gaming stocks. IAG was up as much as 7.4% and EasyJet advances 6.6%; the U.K. is planning to lift quarantine rules for 75 countries, according to a report in the Telegraph. Gaming stocks including GVC (+3.1%) and Flutter (+2.9%) also higher after brushing off a U.K. House of Lords report calling for the introduction of new rules to reduce gambling-related harm.

Asian stocks also gained, led by communications and energy, after ending flat in the last session. Hong Kong shares outperformed after traders returned from a holiday, despite the recent tensions over China’s new national security law over the city. The Shanghai Composite turned positive for the year to date, with Zhangjiagang Freetrade Science & Technology Group and Xinjiang Tianye posting the biggest advances. Stocks in Australia, China, Japan and South Korea also rose. The Topix gained 0.3%, with Retail Partners and GungHo Online rising the most. Trading volume for MSCI Asia Pacific Index members was 62% above the monthly average for this time of the day.

"The rally for equities could survive even if the U.S. jobs data disappoint, after the Fed’s signal of sustained low rates,” said Stephen Gallo, a foreign-exchange strategist at the Bank of Montreal. “Bad numbers could extend that outlook for cheap money." Translation: a good jobs number will be good, a bad jobs number will be better.

In rates, Treasuries were little changed on light volume in futures ahead of the June jobs report and the early close in the bond market (Sifma-recommended 2pm ET close before U.S. holiday Friday). Narrow yield ranges have prevailed so far with risk-takers sidelined before the pandemic-inflected data. Yields slightly cheaper across long-end of the curve, still within ~1bp of Wednesday’s close; 10-year ~0.68%, cheaper by 0.5bp, while bunds, gilts outperform by 2bp and 1.5bp. Core European bonds were aided by French debt rally after the oversubscription rate for sale of 10-year bonds rose to highest since May 2019.

In FX, the dollar dropped as haven bids waned after the abovementioned optimism bolstered bets for a global economic recovery, with market focus shifting to an upcoming U.S. jobs report. The euro touched a one-week high versus the greenback, with options pointing to more upside for the common currency. Three-month EUR/USD risk reversals are the most bullish since mid- March, while the six-month measure rose above parity for the first time since the pandemic panic four month ago. Norway’s krone saw the biggest gains against the dollar among Group-of-10 peers, partly boosted by the climb in oil prices. 

In commodities, oil futures climbed for a second session, helped by a strong drawdown in crude stockpiles, while gold rebounded to session highs, silver was trading back over $18/oz.

Market Snapshot

  • S&P 500 futures up 0.8% to 3,126.75
  • STOXX Europe 600 up 1.3% to 365.79
  • MXAP up 1.5% to 160.15
  • MXAPJ up 1.9% to 525.40
  • Nikkei up 0.1% to 22,145.96
  • Topix up 0.3% to 1,542.76
  • Hang Seng Index up 2.9% to 25,124.19
  • Shanghai Composite up 2.1% to 3,090.57
  • Sensex up 1.7% to 36,008.91
  • Australia S&P/ASX 200 up 1.7% to 6,032.71
  • Kospi up 1.4% to 2,135.37
  • German 10Y yield fell 0.4 bps to -0.399%
  • Euro up 0.4% to $1.1294
  • Brent Futures up 0.9% to $42.42/bbl
  • Italian 10Y yield rose 1.2 bps to 1.143%
  • Spanish 10Y yield fell 2.5 bps to 0.477%
  • Brent Futures up 0.9% to $42.42/bbl
  • Gold spot up 0.06% to $1,771.08
  • U.S. Dollar Index down 0.3% to 96.86

Top Overnight News from Bloomberg

  • Russian President Vladimir Putin won a resounding endorsement of his bid to extend his two-decade-long rule potentially to 2036, even as some polls show his approval ratings near historic lows
  • U.S. daily coronavirus cases topped 50,000 for the first time. Oxford’s vaccine project is currently ahead of others, but the world needs more than one type of shot to tackle the new coronavirus, said U.S. infectious-disease expert Anthony Fauci
  • Sovereign borrowers including Germany, Ireland, Italy, Spain and the U.K. helped the SSA sector to lead a record setting second quarter as marketwide sales reached EU607.92b, according to data analyzed by Bloomberg
  • Ukraine canceled a $1.75 billion Eurobond sale after the head of its central bank unexpectedly stepped down citing sustained political pressure against him and his colleagues
  • China warned of strong countermeasures if the U.S., Australia and the U.K. continued taking actions in response to Beijing’s tough national security law in Hong Kong, saying foreign pressure would “never succeed”
  • Yuan trading is the calmest since January as investors evaluate the virus pandemic and China-U.S. tensions

Asian equity markets traded positively after the region took advantage of the mild tailwinds from Wall St where stocks finished mostly higher on vaccine hopes and equity inflows as Q3 trading got underway, although gains were mild in the absence of any improvement to the increasing COVID-19 infections narrative stateside, where new cases surpassed 50k for the first time. ASX 200 (+1.7%) was lifted by strength in tech with the sector inspired following the recent outperformance of the Nasdaq which posted a record close in the preceding session, while Nikkei 225 (+0.1%) shrugged off the early choppy price action which had been at the whim of an indecisive currency. Hang Seng (+2.9%) and Shanghai Comp. (+2.1%) were also upbeat as the constructive tone seen across the continent helped participants overlook another PBoC liquidity drain, as well as the continued US-China tensions after the China Foreign Ministry announced fresh actions against US media and the US House passed China sanctions in response to the HK national security law. Finally, 10yr JGBs were subdued amid gains in stocks and with yields extending to the upside as observed in the 30yr yield which rose to its highest since January last year, while a bout of strength seen on return from the Tokyo lunch break was short-lived due to the mixed results from the 10yr JGB auction.

Top Asian News

  • U.S. Readies ‘Harsh’ Sanctions on China Over Abuses in Xinjiang
  • China-Sanctions Bill on Hong Kong Law Passed by U.S. House
  • South Indian Bank Proposes Former ICICI Banker as Next CEO
  • Landslide in Myanmar’s Jade Mining Hub Leaves 113 People Dead

European equities continue to march higher as the second trading session in H2 is underway (Euro Stoxx 50 +1.5%) following on from a similarly stellar APAC performance – with gains in stocks attributed to COVID-19 vaccine optimism coupled with Q3 inflows. The fundamental landscape has not shifted much but the narrative of rising case counts has not subsided, with US cases topping 50k additions for the first time whilst a record increase was also reported in Indonesia. Furthermore, the Hong National Security Law keeps tensions riled up between China and G10 nations, with US House passing the China sanctions bill in response to the HK national security law through unanimous consent. Nonetheless, Europe extends on gains seen at the open with Spain’s IBEX (+2%) outperforming as the index is propped up by outperformance in Banks and Travel & Leisure. Meanwhile, Autos, construction and insurance sectors also reside near the top of the pile whilst Healthcare and consumer staples trade on the other side of the spectrum. Cyclicals clearly outpace defensives.  In terms of individual movers, Wirecard (-27%) shares are on the backfoot amid reports Softbank is to end its partnership with the Co. Meanwhile, Associated British Foods (+5.3%) holds onto a bulk of its gains after reporting that almost all of its Primark stores have reopened and the group continues to expect strong progress in aggregate adjusted operating profit in sugar, grocery, agriculture and ingredients businesses.

Top European News

  • Ukraine Cancels Eurobond Sale After Central Bank Chief Quits
  • China Strongly Condemns U.K. Offer to Hong Kong Citizens
  • Novartis to Pay $678m to Settle Fraud Lawsuit, U.S. DOJ says
  • Blast at Glencore Oil Refinery in Cape Town Leaves Three Dead

In FX, the Dollar continues to depreciate amidst rather contradictory or juxtaposed impulses via more signs that the US and global economy has turned the corner from initial coronavirus-related shutdowns vs concerns about the impact of re-opening and a 2nd wave. Hence, a double whammy for the Buck as fresh COVID-19 outbreaks spread to more states that have lifted restrictions, but the overall risk environment remains positive and the DXY loses grip of the 97.000 handle ahead of NFP, the more timely weekly jobless claims update, trade data and factory orders, all truncated due to Friday’s market closure for Independence Day.

  • NZD/EUR/GBP/AUD/CHF - The Kiwi is back above 0.6500, thanks in part to general Greenback weakness, but also deriving momentum from closer to home as the Aussie lags in wake of weaker than forecast trade data overnight. In response, Aud/Nzd has retreated from circa 1.0675 to sub-1.0640 and Aud/Usd has not been able to revisit 0.6950 against the backdrop of heavy option expiry interest at 0.6895 (1.8 bn) and in the Aud/Jpy cross close to current levels, at 74.50 (1 bn). Similarly, the Euro and Pound are both making more headway against the Dollar, with Eur/Usd probing above 1.1300 and Cable now over 1.2500 as Eur/Gbp eyes 0.9000 to the downside on reports of real money Sterling buyers. Note, the single currency may also be capped by significant expiries at 1.1300 (2 bn), but should glean support from slightly bigger options rolling off at 1.1250 (2.2 bn). Elsewhere, the Franc has extended gains vs the Buck towards 0.9425 in contrast to marginal underperformance against the Euro around 1.0650 following slightly softer than expected Swiss CPI metrics.
  • JPY/CAD - Both narrowly mixed vs the Usd, as the Yen weighs up bullish risk sentiment alongside latest Greenback declines and treads a fine line between 107.55-35 with a decent 107.50 expiry (1 bn) also in contention for the NY cut pending reaction to US data. Conversely, the Loonie has reversed further from recent highs to pivot 1.3600 in advance of Canadian trade and manufacturing PMI, as underlying traction from crude stalls somewhat.
  • SCANDI/EM - Broad strength on the ongoing risk-friendly start to July, Q3 and H2, and with the Zar also benefiting from another upside SA data surprise in the form of a Q1 current account surplus, while the Rub is underpinned by reduced political uncertainty on the domestic front after more than ¾ of the country voted in favour of Russia’s new constitution. However, the Try remains hampered due to renewed geopolitical jitters, albeit still stemming losses with the aid of Turkish bank intervention.

In commodities, WTI and Brent front-month futures hold onto earlier gains, albeit have drifted off highs in recent trade with little by way of fresh fundamental drivers as the oil complex piggybacks on risk sentiment. On the OPEC front, interesting reports overnight from delegates noted that Saudi Arabia threatened to re-ignited an oil price war in past weeks if other OPEC countries do not adhere to their quotas. The headline, however, gained little traction as OPEC laggards have, at face value, been taking steps to improve compliance in line with the OPEC+ pact. Meanwhile, Russian Energy Minister Novak hopes the global oil market reaches a balance/shortage in July but noted a second wave of COVID-19 could impact on oil demand. WTI trades on either side of USD 40/bbl (39.50-40.40/bbl range) whilst Brent Sep holds its head above USD 42/bbl (41.73-42.66/bbl).Price action today will likely be dictated by pandemic-related headlines alongside the US labour market report, whilst the Baker Hughes Rig Count will be released today on account of tomorrow’s Independence Day market holiday. Elsewhere, spot gold remains contained around recent ranges on either side of USD 1770/oz as the yellow metal bides its time ahead of NFP. Copper prices meanwhile are experiencing a day of correction after its recent supply-led gains.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 1.35m, prior 1.48m; Continuing Claims, est. 19m, prior 19.5m
  • 8:30am: Change in Nonfarm Payrolls, est. 3.06m, prior 2.51m
    • Change in Private Payrolls, est. 3m, prior 3.09m
    • Change in Manufact. Payrolls, est. 437,500, prior 225,000
    • Unemployment Rate, est. 12.5%, prior 13.3%
    • Underemployment Rate, prior 21.2%
    • Labor Force Participation Rate, est. 61.2%, prior 60.8%
    • Average Weekly Hours All Employees, est. 34.5, prior 34.7;
    • Average Hourly Earnings MoM, est. -0.7%, prior -1.0%; Average Hourly Earnings YoY, est. 5.3%, prior 6.7%
  • 8:30am: Trade Balance, est. $53.2b deficit, prior $49.4b deficit
  • 9:45am: Bloomberg Consumer Comfort, prior 41.4
  • 10am: Factory Orders, est. 8.65%, prior -13.0%; Factory Orders Ex Trans, est. 6.5%, prior -8.5%
  • 10am: Durable Goods Orders, est. 15.8%, prior 15.8%; Durables Ex Transportation, est. 4.0%, prior 4.0%
  • 10am: Cap Goods Orders Nondef Ex Air, est. 2.3%, prior 2.3%; Cap Goods Ship Nondef Ex Air, prior 1.8%

DB's Jim Reid concludes the overnight wrap

After the market’s batteries were fully charged after an incredibly strong Q2, the second half started off on a mixed note yesterday, but positivity again won out in the end. After a soft start in Europe, risk assets were boosted early in the US session by some promising developments in a vaccine trial. However we gave back all of the early US session gains as Arizona saw a record rise in new cases late morning US time. The US regained its poise into the close though with the S&P 500 ending +0.50%.

The vaccine specific news came through from Pfizer (+3.18%) and BioNTech (-3.90%, though opened +18.9%), who announced that those patients who’d received two doses of their vaccine candidate had “significantly elevated” antibodies, raising hopes among investors that we could see a vaccine later this year if further tests prove successful. Both stocks saw late losses though, possibly on a Bloomberg report that the Food and Drug Administration’s new standards on Covid-19 vaccine development may mean a longer roll out than anticipated. The standard, published on Tuesday, said that any potential vaccine would need to prove itself at least 50% more effective than a placebo to earn an approval. Merely showing immune response data would not be enough to be administered.

In terms of the virus, Arizona reported a record daily increase in cases of 4,865 (6.2% vs the 7-day average of 4.5%). Arizona has had some reporting issues over the last few days so single day data is dangerous to over analyse. Their fatality number hit a new high of 80, above the 7-day average of 36 and exceeding the previous high of 71 last Wednesday. However our back of the envelope calculations suggest that with the 7-day lag between cases and fatalities we saw globally in the first wave, the 7 day run rate of Arizona deaths would now be in the 130 (using Germany) to 160 (using New York) range if the pattern and case fatality rates had stayed the same. In 7 days’ time it should be in the 250 to 300 range, given current case increases. So one to watch and whilst fatalities will of course go up they are still not yet seeing the pickup consistent with first wave trends.

The US overall has now seen over 41,000 new cases on average over the last week, well above the 32,000 peak seen in April. Florida saw numbers rise by 4.3% vs 5.7% over the past 7 days, while the positive test rate grew to a high of 15%, indicating that the real case count in the state is likely much higher. California saw another record with over 9740 new infections, the 5.0% rise compared to a 2.8% average rise over the last week. See the latest from around the world and the four troubled US states in the pdf today.

The recent rise in California cases has caused Governor Newsom to shutdown indoor businesses including restaurants, bars, museums and movie theaters in 19 counties. Citing a small pickup in cases within Pennsylvania (5th largest US state) and the caseload of the country overall, Governor Wolf mandated that masks be worn at all times when leaving the house. Elsewhere yesterday saw New York City Mayor de Blasio announce that the planned reopening of indoor dining next week would be postponed, given the rising numbers of cases in the US. New York State overall is now opening testing to all residents, as capacity has increased sufficiently. Overnight, Bloomberg has reported that McDonald’s is pausing the resumption of all dine-in services in its US restaurants with the halt likely to last 21 days.

Staying with lockdowns, we have also published the latest Exit Strategy Tracker (Link here) which compares exits across the world. In this edition we preview holiday season by assessing which countries seem the most sensible places to have break in this summer given various criteria. We’re not quite branching out into travel guides yet but it will give you a guide to openness.

Back to markets and thanks to the initial vaccine developments, global equity markets recovered from their early declines, with the STOXX 600 paring back its intraday low of -1.02% to close +0.24% higher. In the US, the market was boosted by a +11.72% gain for FedEx after the company announced much stronger than expected earnings, while tech stocks outperformed with the NASDAQ up +0.95%. The other big company news yesterday was that Tesla overtook Toyota to become the world’s most valuable automaker, following more than a five-fold increase in the company’s share price over the last 12 months. At the end of last May the stock was trading at just under 180 while yesterday it closed at 1119.6. In that time the stock gained +412%, and then lost over -60% during the pandemic selloff in March before soaring (+210%) off the pandemic lows.

Overnight, Asian markets have tracked gains on Wall Street with the Nikkei (+0.49%), Hang Seng (+1.49%), Shanghai Comp (+1.16%), Kospi (+0.83%) and ASX (+1.35%) all advancing. Futures on the S&P 500 are also up +0.11%.

Today, market attention will turn to the US jobs report for June, which is out on a Thursday this month because of the Independence Day holiday. In terms of what to expect, our US economists are looking for a gain in nonfarm payrolls of another +2.5m, following last month’s +2.509m reading, along with a reduction in the unemployment rate to 12.5%. However given the persistent misclassification issues, the U-6 rate (19.4% vs. 20.2%) will provide a more-accurate picture with respect to the underlying state of the labour market. In addition it’s worth remembering that given the US shed over 22m jobs in March and April, even another 2.5m boost would still mean that less than a quarter of the total jobs have been recovered, so there’s still a long way to go before the labour market gets back to something approaching normality. Also bear in mind that this data is backward-looking, so any positive developments won’t necessarily be sustained if a further worsening of the pandemic leads more states to roll back reopening measures.

While we’re on the data theme, another factor that helped to boost markets yesterday was the continued recovery of both the ISM manufacturing reading along with the PMIs from their April lows. Starting with the ISM, that came in at 52.6 (vs. 49.8 expected), above the crucial 50-mark that separates expansion from contraction, and its highest level since April 2019. The positive news extended to Europe too, where the final Euro Area manufacturing PMI was revised up half a point from the flash reading to 47.4, while the French (52.3) and the German (45.2) numbers also saw upward revisions. However, the recovery we’ve seen in activity shouldn’t be overstated, and to some extent this is pent-up demand. The big question as the virus accelerates in many countries again is whether this new found recovery can be sustained.

Fed minutes from the June meeting were released last night, with the biggest point of interest seeing how officials responded to discussions around yield-curve control. The transcript revealed that the FOMC is clearly leaning toward forward guidance over committing to YCC, saying that “many participants remarked that, as long as the committee’s forward guidance remained credible on its own, it was not clear that there would be a need for the committee to reinforce its forward guidance with the adoption of a YCT policy.” On the topic of inflation a “number” of officials favoured the idea of making future policy moves conditional on inflation. This could mean waiting for “a modest temporary overshooting of the committee’s longer-run inflation goal” of 2%.

Elsewhere in markets, sovereign bonds sold off in line with the broader move away from havens into risk assets, and yields on 10yr bunds rose by +5.9bps in their largest daily move upwards in over a month. Yields on US Treasuries (+2.0bps) and gilts (+3.9bps) similarly rose, though peripheral spreads in Europe tightened, with the gap between 10yr BTPs over bunds falling by -4.6bps to its narrowest in over 3 months. Gold came off its 7-year high with a -0.61% move lower, and oil rallied with Brent crude up +2.14%.

Wrapping up with yesterday’s other data, and in advance of today’s US jobs report, the ADP’s report of private payrolls showed a +2.369m increase in June (vs. 2.9m expected) though the previous month’s reading was revised up by +5.8m! In Germany however, unemployment jumped to 2.943m, its highest level in six-and-a-half years. Also in Germany, data showed retail sales in May rebounded by 13.9%, well above expectations for a 3.5% rise and a significant rebound from last month’s -5.3 drop.

To the day ahead now, and the highlight is likely to be the aforementioned jobs report for June from the US. Otherwise, we’ll also get the weekly initial jobless claims reading, along with data on factory orders and the trade balance for May. Otherwise, we’ll get the Euro Area unemployment rate for May and the manufacturing PMI for Canada. There’ll also be remarks from the ECB’s Mersch and Schnabel.




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Spread & Containment

Tim Cook and Apple Make a Move That Could Annoy China

iPhone maker wants to diversify its supply chain and expand in a crucial market.



iPhone maker wants to diversify its supply chain and expand in a crucial market.

Apple  (AAPL) - Get Apple Inc. Report no longer wants to be surprised. 

Like the rest of the multinationals, the iPhone maker has been impacted by the covid-19 pandemic which has exacerbated the disruptions in supply chains. 

The restrictive measures and lockdowns imposed in China to limit the spread of the virus have particularly affected the local suppliers of many Western companies. The zero-covid policy in China has been a nightmare for suppliers, forced again to temporarily close some of their factories or to have their employees work under exceptional conditions such as living on the production sites.

This dependence on China has raised many questions that companies have been trying to answer since the pandemic emerged. The most urgent is the diversification of the supply chain or trying to have suppliers both locally and in different regions of the world.


The iPhone 14 Will Also Be Produced in India

Apple has just answered it. The Cupertino, Calif.-based group will now produce some units of the new iPhone, the iPhone 14, in India, which is a big first.

"The new iPhone 14 lineup introduces groundbreaking new technologies and important safety capabilities. We’re excited to be manufacturing iPhone 14 in India,” the company said in a statement on Sept. 26, confirming speculation.

The iPhone 14 will be assembled in the country by Foxconn, Apple's historic supplier, which has a factory on the outskirts of Chennai. These phones will be sold locally in the next few days, but they will also be exported to other markets. 

Apple's decision also comes amid heightened tensions between Washington and Beijing over Taiwan. The Biden administration has banned chipmaker Nvidia  (NVDA) - Get NVIDIA Corporation Report from selling some of its chips to Chinese companies, for example. Beijing, for its part, has taken steps to develop its technology sector.

If Apple had been assembling iPhones in India since 2017, it was always old versions and not brand new ones. The iPhone 14 is the first newly launched smartphone Apple will assemble outside of China. It therefore marks a change in strategy on the part of CEO Tim Cook's group.

This decision allows Apple to accomplish two important things. 

The tech giant will diversify its supply chain even though the majority of iPhone production is still in China.

India, the New Eldorado

The decision also allows Apple to truly establish itself in a growing market where its market share is still very low. Indeed, Apple has only a market share of 3.8% in the second smartphone market in the world, according to a Counterpunch Research study on smartphone shipments in the second quarter of 2022.

The Indian smartphone market is dominated by China's Xiaomi  (XIACY)  with a 19% market share, followed by South Korea's Samsung  (SSNLF) with a 19% market share as well. India smartphone shipments reached 37 million units between April and June, according to Counterpunch, an increase of 9% year-over-year. 

But the market is down 5% quarter-on-quarter.

Apple "remained the top-selling brand in the ultra-premium segment," which are phones costing at least $650 or 45,000 rupees, the report said. "Increasing ‘Make in India’ capabilities for both local consumption as well as exports, offline push through multiple promotions and consumers’ brand preference (...) helped Apple retain its edge in the premium segment."

It added that: "The opening of its own e-store, iPhone SE 2022 and offers on other models will further drive Apple’s shipments in the coming quarters."

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Apple unveiled the iPhone 14 early September, and it has a base price of 79,900 rupees in India, the equivalent of $980.

By producing its new products locally, Apple will be able to attract customers looking for the latest innovations and the group will also be able to benefit from local aid at a time when the Indian authorities are seeking to boost the tech sector by all means.

In a recent study released Sept. 21, JPMorgan analysts said that they expect Apple to move 25% of its entire iPhone production line to India by 2025 as it looks to diversify its supply chain. They added that by late 2022, 5% of ‌iPhone 14‌ production will be moved to India, with a significant decision taking place three years later. 

In addition to moving 25% of ‌iPhone‌ production to India by 2025, JPMorgan analysts said the company could also move 25% of other product lines to the country, including AirPods, Mac, Apple Watch, and iPad.

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Export Slowdown Could Bring More Bad News For Yuan

Export Slowdown Could Bring More Bad News For Yuan

By George Lei, Bloomberg markets live reporter and analyst

Chinese exports are poised…



Export Slowdown Could Bring More Bad News For Yuan

By George Lei, Bloomberg markets live reporter and analyst

Chinese exports are poised to slow further in the remainder of 2022, with various high-frequency datasets pointing to cooling global demand. Exports, a key growth engine that has lifted the Chinese economy since the pandemic, are sputtering. That could bring more bad news for the yuan.

South Korean data in September through the 20th suggest exports to China fell 14% year-over-year versus a 1% decline in exports to the US. This may be an ominous sign that global demand for consumer goods made in China -- to which Korea provides inputs earlier in the supply chain -- is softening, Neil Shearing, group chief economist at Capital Economics, wrote on Monday. Hong Kong’s exports also sank 14.3% in August, the most since the pandemic first began in early 2020.

Plunging freight rates also point to cooling exports: A 40-foot container from Shanghai to Los Angeles fetched $3,779 last week, below $4,000 for the first time since September 2020 and half what it was three months ago, Bloomberg reported. More declines are expected in the coming weeks, according to Drewry Supply Chain Advisors.

The news couldn’t come at a worse time, with the offshore Chinese yuan now trading at the weakest since May 2020 -- just a stone’s throw away from its record low -- and economists rushing to cut China’s 2023 economic-growth forecasts. Dollar-yuan may need to go a lot higher to boost China’s exports meaningfully; the Chinese currency has advanced versus most of Beijing’s trade partners, outside of the US and Hong Kong, for much of 2022.

Chinese exporters already are holding foreign currencies more tightly. The conversion ratio -- which measures the share of export revenues converted into yuan -- fell from 57% in the first eight months of 2021 to 36% this year through August, according to Macquarie economists Larry Hu and Yuxiao Zhang. If that ratio holds steady, an extra $118 billion could have been sold by exporters into yuan, Macquarie estimates.

Falling Chinese export volumes and expectations of a weaker yuan will only make exporters more reluctant to sell their dollars. The yuan’s downtrend isn’t likely to reverse unless that negative feedback loop is broken.

Tyler Durden Mon, 09/26/2022 - 21:15

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Enemy turned ally: Ancient viral genes protect the brain against new infections

From the common cold to COVID-19, viruses have a massive impact on our day-to-day lives, but infections that occurred millions of years ago have shaped…



From the common cold to COVID-19, viruses have a massive impact on our day-to-day lives, but infections that occurred millions of years ago have shaped our evolution. This is because viral genes have been incorporated into the DNA of the infected host and then passed down the generations, often developing different functions over time. Now, in a study published in Development, Dr Fumitoshi Ishino, Professor of Molecular Biology at Tokyo Medical and Dental University, Japan, and Dr Tomoko Kaneko-Ishino, Professor of Molecular Biology at the Tokai University, in Kanagawa, Japan, have discovered that two mouse genes, left behind by a viral infection millions of years ago, have evolved to help defend the brain against new infections.

Credit: Image courtesy of Tomoko Kaneko-Ishino

From the common cold to COVID-19, viruses have a massive impact on our day-to-day lives, but infections that occurred millions of years ago have shaped our evolution. This is because viral genes have been incorporated into the DNA of the infected host and then passed down the generations, often developing different functions over time. Now, in a study published in Development, Dr Fumitoshi Ishino, Professor of Molecular Biology at Tokyo Medical and Dental University, Japan, and Dr Tomoko Kaneko-Ishino, Professor of Molecular Biology at the Tokai University, in Kanagawa, Japan, have discovered that two mouse genes, left behind by a viral infection millions of years ago, have evolved to help defend the brain against new infections.

The genes in question, known as ‘retrotransposon Gag-like’ 5 and 6 (Rtl5/Rtl6), are carried by almost all mammals, and are similar to genes found in retroviruses, such as HIV. The researchers were convinced that the genes must be doing something important, as despite coming from viruses, these inherited viral genes have been preserved in the mammalian genome for at least the last 120 million years. To work out what these genes are doing the scientists needed to know where they are active, so they looked for RTL5/6 proteins, which are only produced when genes are switched on. They discovered that Rtl5 and Rtl6 are switched on in the brain in cells called microglia, which act as the ‘first responders’ to infection. Dr Kaneko-Ishino said, “we never expected that Rtl6 and Rtl5 would function in microglia when we started this work 15 years ago, and even when we knew that Rtl6 was a microglial gene we didn’t understand its significance. Our ‘eureka moment’ came during a dissection when Dr Ishino was carefully removing a mouse brain. We realised that if instead we damaged the brain, we could activate RTL6”.

The team set up fake infections in mice brains to test how the microglia producing RTL5 or RTL6 would respond to either bacteria or viruses. They found that microglia containing RTL6 protein responded to the bacteria-like mimic, whereas the microglia with RTL5 reacted to the simulated viral infection. In addition, when the researchers removed the Rtl6 gene, they found that the mice could not eliminate the fake bacterial infections, while the mice without Rtl5 could not clear the viral mimics, meaning that together Rtl5 and Rtl6 protect the brain against two of the most common types of infection.   

These results provide the first example of viral-derived genes that have been re-purposed to protect mammalian brains against infection. The idea that viruses have had such a positive impact on our lives may be surprising, but examples like Rtl5 and Rtl6 demonstrate that viral invaders can, in the long run, benefit their host. According to Dr Ishino, “virus-acquired genes are essential parts of our genome, playing various – but essential – roles in mammalian and human development. We think it is possible to extend this idea to primate- and human-specific acquired genes from retroviruses to help us understand human evolution”.

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