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Futures Tumble, European Stocks, Oil Plummet As Europe Imposes Partial Lockdowns

Futures Tumble, European Stocks, Oil Plummet As Europe Imposes Partial Lockdowns

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Futures Tumble, European Stocks, Oil Plummet As Europe Imposes Partial Lockdowns Tyler Durden Wed, 10/28/2020 - 07:56

U.S. futures continued their slump, hitting a three-week low as shares in Europe and crude oil tumbled after tighter covid restrictions in Germany and France sparked fear of even broader lockdowns. European stocks dropped to a 5 month low with  all 20 sectors were in the red, while safe havens such as the dollar and Treasuries rose. Oil and gold slipped, while Bitcoin surged to the highest since January 2018. The VIX Index climbed to the highest level since June, rising as high as 37 overnight.

With hopes for a new fiscal stimulus deal before the election dead and buried and all attention shifting to covid, Wynn Resorts and United Airlines Holdings, companies sensitive to restrictions, dropped more than 1% in premarket trading. Energy firms such as Occidental Petroleum Corp fell 2.8% on concerns over fuel demand. Microsoft’s quarterly results smashed analysts targets, benefiting from a pandemic-driven shift to working from home and online learning. However, its shares fell 2% after rising 35% so far this year after its sales forecasts in key units missed estimates, overshadowing a revenue beat on cloud demand. The other Big Tech companies - Apple, Alphabet, Amazon and Facebook - which are due to report results on Thursday, fell between 0.9% and 1.6%. GE jumped in early trading after posting a surprise profit and positive industrial free cash flow.

Spiraling pandemic, elevated unemployment levels and U.S. lawmakers failing to strike a deal on fresh fiscal stimulus before the Nov. 3 election sent the S&P 500 and tech-heavy Nasdaq to their lowest close in three weeks on Tuesday.

"We’ve been warning investors over the last few days in particular to maybe pare back a little bit of their strong risk position,” Laura Fitzsimmons, JPMorgan Australia’s executive director of macro sales, said on Bloomberg TV. "As you see the odds start to wane a little bit more for Biden, maybe that continues a bit more. We all remember four years ago when markets were very much surprised.”

Meanwhile, surging new cases and hospitalizations set records in the U.S. Midwest, while in Europe, concerns over a national lockdown in France hammered risk appetite. Overnight Germany proposed closing bars and restaurants for a month, while France reportedly favors a one-month lockdown from midnight tomorrow. Turkey barred doctors and nurses from taking leave, resigning or retiring.

Europe's Stoxx 600 Index fell as much as 2.7%, before trimming its decline to 2%. Earlier in the session, Asian stocks fared better. The MSCI Asia Pacific Index was almost flat on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators tracked by Bloomberg showed the recovery continued to display mixed signals while remaining broadly steady in October.

On the political front, Trump plans 11 rallies across 10 states in the final 48 hours of campaign travel, CBS reported. The president is also considering issuing an executive order requiring an economic analysis of fracking as he tries to woo Pennsylvania and Ohio.

China’s yuan depreciated as local banks abandoned inclusion of a key factor used to calculate the currency’s fixing. The offshore yuan weakened 0.1% to 6.7211 per dollar.

As reported yesterday, some banks stopped using the counter-cyclical factor in their formulas for the fixing recently, according to an official statement released Tuesday. The removal of the factor, which was first introduced in 2017 to rein in depreciation, suggests Beijing hopes to slow a rapid advance in the currency since May. “The change could increase renminbi volatility ahead,” Citigroup Inc. strategists led by Sun Lu wrote in a note, using the yuan’s official name. “We think the risk-reward for bullish offshore yuan exposure may start to look attractive again” when the currency edges close to 6.75-6.80.

In rates, Treasuries extended this week’s gains with yields as much as 1.5bp richer across 5- to 30-year sectors as S&P futures touch fresh three-week lows. Treasury 10-year yields around 0.753%, lagging bunds by ~1bp as risk-off backdrop supports European fixed income; gilts also slightly outperform. Bunds outperform with euro-area stocks plunging almost 3% amid rising coronavirus infections and toughening lockdowns. Auctions resume Wednesday with $55b 5-year note sale.

In FX, the dollar rose with the yen and Treasuries, amid broad based risk aversion. The Bloomberg Dollar Spot Index rose to its highest level in more than one week and the Treasury curve bull-flattened as a continued rise in coronavirus infections and an approaching U.S. election boosted demand for havens. The euro slipped to a session low of $1.1743, and was set for its steepest three-day decline versus the dollar in five weeks, as Europe’s governments prepared to tighten restrictions due to the rising virus count, which may aslo fuel more dovish rhetoric from the European Central Bank at Thursday’s review. The yen advanced to a five-week high, and was the only Group-of-10 currency to rise versus the dollar while Sweden’s krona and Norway’s krone led losses among peers. The Australian dollar gave up an Asia-session gain which followed a rebound in the nation’s quarterly consumer prices.

Elsewhere, oil retreated back below $38 a barrel in New york after an industry report pointed to a bigger-than-expected increase in U.S. crude stockpiles. Brent plunged 4%, dropping below $40 for the first time in a month on slowing global demand concerns.

Economic data include mortgage applications, wholesale inventories. Visa, Mastercard and Amgen are among the highlights of a busy earnings day. Earnings season continues, with Visa, Mastercard, United Parcel Service, Amgen, Boeing, GlaxoSmithKline, Ford Motor Company, General Electric and Nomura all reporting.

Market Snapshot

  • S&P 500 futures down 1.5% to 3,333.75
  • MXAP down 0.2% to 175.60
  • MXAPJ down 0.2% to 583.26
  • Nikkei down 0.3% to 23,418.51
  • Topix down 0.3% to 1,612.55
  • Hang Seng Index down 0.3% to 24,708.80
  • Shanghai Composite up 0.5% to 3,269.24
  • Sensex down 1.8% to 39,790.97
  • Australia S&P/ASX 200 up 0.1% to 6,057.74
  • Kospi up 0.6% to 2,345.26
  • STOXX Europe 600 down 2.6% to 343.47
  • German 10Y yield fell 2.1 bps to -0.636%
  • Euro down 0.4% to $1.1753
  • Brent Futures down 3.1% to $39.91/bbl
  • Italian 10Y yield fell 3.8 bps to 0.498%
  • Spanish 10Y yield rose 2.3 bps to 0.181%
  • Brent Futures down 3.1% to $39.91/bbl
  • Gold spot down 0.2% to $1,903.48
  • U.S. Dollar Index up 0.4% to 93.32

Top Overnight News from Bloomberg

  • German Chancellor Angela Merkel proposed closing bars and restaurants for a month and French President Emmanuel Macron prepared to announce tougher restrictions that may include a lockdown as hospitals fill up across Europe
  • As the European Union seeks to disburse funds from its 750 billion-euro ($888 billion) recovery program as soon as next year, some of the countries hardest hit by the pandemic are struggling to work out how to best keep their finances in check once they take on billions of euros of new loans
  • Data due Thursday are forecast to show U.S. gross domestic product surged an annualized 32% in the third quarter, almost double the previous high. That figure will reflect activity switching back on across the country after Covid-19 fears and government stay-at-home orders ground the economy to a halt in April
  • China’s economic recovery displayed mixed signals while remaining broadly steady in October, with small businesses turning more cautious and the property market weakening even as car sales soar. The aggregate index combining eight early indicators tracked by Bloomberg was unchanged from the previous month

A quick look at global markets courtesy of NewsSquawk

Asian equity markets lacked firm direction following the mixed performance of stateside peers as earnings season and the upcoming election provided a cautious setting, while US stock index futures were further pressured after-hours on European shutdown concerns after reports stated that France and Germany were both mulling nationwide lockdowns. ASX 200 (+0.1%) was indecisive with initial declines due to underperformance in the energy sector amid weaker oil prices and with financials also subdued after ANZ Bank flagged a AUD 528mln hit to earnings, although the losses in the index were eventually pared by ongoing tech resilience. Nikkei 225 (-0.3%) and KOSPI (+0.6%) were varied as participants reflected on quarterly results and with the BoJ kickstarting its 2-day policy meeting where no major fireworks are expected. Hang Seng (-0.3%) and Shanghai Comp. (+0.5%) conformed to the choppy price action amid earnings and with Hong Kong resuming the underperformance against the mainland, despite the continued rally in tech heavyweight Tencent which extended on record highs and flirted with the HKD 600 level after it having recently averted a US WeChat ban. Finally, 10yr JGBs mildly extended above the psychological 152.00 level as prices benefitted from the cautious risk tone in Japan and following recent upside in T-notes, but with gains capped as the BoJ began its 2-day policy meeting where the central bank is widely expected to hold off from any policy tweaks.

Top Asian News

  • The Pessimist’s Guide to Jack Ma’s Record-Breaking Ant IPO
  • Bharti Airtel Jumps After 14 Million New Users Boost Sales
  • Korea Consumer Confidence Jumps Most Since 2009 as Virus Eases
  • Nomura’s Overhaul Pays Off With Help From Traders, Dealmakers

European equities (Eurostoxx 50 -2.5%) trade with heavy losses as the prospect of further lockdown restrictions in the Europe triggers investor concern over the region’s recovery prospects. In Germany, the DAX (-2.7%) is enduring significant downside amid reports that German Chancellor Merkel is pushing for tougher restrictions which would see the closure of restaurants and bars and limit people’s movements until the end of November. Losses for the index have also been exacerbated by Beiersdorf (-6.2%) and BASF (-4.0%) post-earnings with the former unable to reassure investors despite posting an encouraging performance in Q3. Delivery Hero (+4.4%) are the only gainer in the DAX after Q3 orders reached a new record, with the Co. also likely to benefit from any restrictions that limit seated restaurant bookings. CAC 40 (-2.7%) is also lagging its peers amid reports that the French government may impose a month-long national lockdown to combat the COVID pandemic which could take effect from midnight on Thursday. From a sectoral standpoint, losses are hitting some of the more cyclically exposed sectors hardest with laggards comprising of autos, banking and oil & gas names. Of note for the banking sector, Deutsche Bank (+1.9%) have seen shallower losses than peers after posting a Q3 profit of EUR 128mln (vs. a prior Y/Y loss of EUR 942mln) amid strong performance in its investment banking division with the Co. also upgrading its FY20 revenue outlook. Elsewhere for the industry, Danske Bank (-1.1%) raised its FY20 net profit outlook alongside Q3 earnings with the Co. citing more favourable market conditions. In what has been a particularly downbeat session thus far, bucking the trend are the likes of Next (+4.4%), Carlsberg (+1.6%) and Morphosys (+0.8%) post-earnings.

Top European News

  • Aston Martin Soars After Securing Mercedes’s Help Out of Crisis
  • Novachuk, Kim Agree to Buy KAZ Minerals for 640 Pence/Share
  • European Stocks Dive Again With More Lockdowns Piling Up
  • Johnson’s Unhappy Tories Fight Each Other Over U.K. Virus Plans

In FX, the Buck has reclaimed its safe-haven mantle and is firmer vs all G10 peers, bar the Yen amidst a severe downturn in risk sentiment on heightened concerns about the exponential 2nd coming of COVID-19 that is threatening to shutdown several European economies, while forcing others to reimpose stricter measures to combat the pandemic. The index has duly rebounded above 93.000 after an agonisingly close test of Monday’s low yesterday, and has registered a fresh w-t-d peak at 93.401 to expose half round number resistance at 93.500 that is arguably only being protected by the fact that Usd/Jpy has retreated further from recent highs and further towards 104.00.

  • AUD - Aside from the generally deteriorating tone, fractionally firmer than forecast q/q inflation in Q3 has partly countered more dovish overtones from the RBA to keep the Aussie afloat on the 0.7100 handle, albeit some distance from 0.7150+ highs due to headwinds from weaker PBoC midpoint Cny fix without the counter-cyclical quotient (6.7195 vs 6.6989 previously).
  • GBP/NZD/CAD/EUR/CHF - Sterling has finally succumbed to what seemed like the inevitable as clearly substantial support and bids around the 1.3000 mark in Cable has yielded to a breach of DMAs sitting on top of 1.2990 stops that have now been triggered to a circa 1.2964 trough. Similarly, the Kiwi has relinquished 0.6700+ status vs its US counterpart, while running into offers in Aud/Nzd ahead of 1.0600 and the Loonie has lost underlying support from crude prices as the clock ticks down to the BoC, as Usd/Cad rebounds from around 1.3178 to 1.3240. Elsewhere, the Euro is sub-1.1750 as the coronavirus cases mount, but could yet be drawn back to decent option expiry interest between 1.1750-60 (1 bn) and the Franc has fallen beneath 0.9100 following a near miss on Tuesday.
  • SCANDI/EM – No shock that the Nok is also tracking the reversal in oil and unwinding outperformance vs the Eur from 10.8000+ at best this week so far to under 10.9000 again, but the Sek has gleaned some encouragement from relatively upbeat Swedish retail sales, in contrast to Norway’s much weaker than expected consumption, plus improvements in consumer and industrial sentiment, with Eur/Sek holding below 10.3500 and well away from very large expiries at 10.4000 (2.2 bn). Conversely, not even a rise in Turkish economic confidence to compliment an upturn in consumer morale or the CBRT flagging a V-shaped GDP rebound in Q3 have rescued the Try from more pronounced depreciation as President Erdogan sticks to a tough line on defending its border with Syria. Hence, the Lira continues to sink and is now eyeing 8.3000 vs 8.2920 at worst, so far.

In commodities, WTI and Brent front-month futures succumbed to the early pressure in sentiment around the European equity cash open (see equity section); fresh fundamental drivers were lacking but the move was seemingly driven by intensifying COVID-19 concerns with various areas considering/to implement lockdowns. Alongside having a broad sentiment effect such newsflow would have directly impacted crude prices given the demand-side implications that further lockdowns would likely entail. At present, WTI and Brent Dec’20 & Jan’21 respectively are posting losses in excess of 3% and are in proximity to session lows with Hurricane Zeta unable to offset the decline via its supply-side implications; particularly as a number of rigs have indicated they will continue operations through the storm. The most recent BSEE update showed just shy of 50% of oil production shut-in for the Gulf of Mexico, with the survey encapsulating a much more representative 38 companies compared to the 7 in the initial report for Hurricane/Strom Zeta. Data wise, the private inventories showed a build of 4.58mln last night and expectations for today’s EIA’s are for a slightly more modest build of 1.23mln. Moving to metals, spot gold is subdued this morning in-spite of the risk tone as the metal succumbs to pressure from the DXY which has continued to print highs throughout the morning; at present, spot gold is in proximity to the USD 1900/oz mark.

US Event Calendar

  • 8:30am: Advance Goods Trade Balance, est. $84.5b deficit, prior $82.9b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.4%
  • 8:30am: Retail Inventories MoM, est. 0.5%, prior 0.8%

DB's Jim Reid concludes the overnight wrap

The pandemic has interfered with my once in every five year trip to the theatre. We were going to see Hamilton this past weekend but of course it was cancelled some time ago. However after buying a subscription to Disney+ for the children we stumbled across their exclusive film recording of the show over the last two nights (too long for one sitting). I must admit for someone who doesn’t really like musicals I was seriously impressed.

Given the mounting covid restrictions our family may be getting good value out of our Disney+ subscription over the coming weeks. France and Germany look set to move towards some form of “lockdown lite” over the next 24-48 hours with more info likely today and tomorrow. For France it was reported that this could be based around a new one-month lockdown starting midnight on Thursday, though it will be more flexible than the initial one from last Spring. We’ll find out more tonight from President Macron’s address to the nation. Meanwhile, German Chancellor Merkel, according to reports out of Germany, is aiming for tough restrictions of her own that will be released to Germany’s 16 state premiers at a meeting tomorrow. While schools and daycares will remain open, restaurants will be shuttered and all major events would be cancelled as of tomorrow if reports on Bloomberg are correct. Germany's Bild newspaper has confirmed this theme this morning adding that Merkel wants to close fitness studios, casinos, bars and cinemas with restaurants only offering take-outs.

So the virus news doesn’t get much better and I suppose the problem with the second wave is that although we are far better prepared than we were for the first wave the reality is that the first wave occurred late in the traditional flu/cold/virus season. The second wave still hasn’t even hit November or December yet and we’re still seeing cases soar in many places.

More on the virus later but in terms of markets, US equities moved between gains and losses most of yesterday before the S&P 500 settled down -0.30%. Technology stocks gained as chipmaker Advanced Micro Devices announced a $35bn stock deal for competitor Xilinx. The massive deal boosted sentiment across the industry and saw tech (+0.52%) help lead the S&P, though the overall index was not able to overcome losses in the Energy (-1.38%) and Industrials (-2.18%) sectors. With the tech outperformance the Nasdaq rose +0.64%, rebounding after Monday’s large losses. The VIX rose just under one point to 33.25, its highest level since September 3rd.

Asian markets are mixed this morning with the Shanghai Comp (+0.36%) and Kospi (+0.30%) up while the Nikkei (-0.45%) and Hang Seng (-0.18%) are down. Futures on the S&P 500 are also down -0.56%. In FX, the US dollar index is up +0.18%. Elsewhere, WTI crude oil prices are down -2.20% and Microsoft was down -1.74% in after hours trading as forecast for revenue in some divisions fell short of the highest analysts’ projections.

Earlier European equities gave ground for the second straight day as worries over rising case numbers and the ensuing restrictions continued to take hold. The STOXX 600 closed down -0.95% to its lowest level since 29 May. The overall negative sentiment bled through markets and pulled down European Banks (-3.27%), even as HSBC rose +5% initially (+3.37% at the close) after signaling it could resume dividends, while Spain’s Santander initially rose +3.8% (-1.46% at the close) after beating earnings expectations. Other bourses saw deeper loses with the IBEX (-2.14%), CAC 40 (-1.77%), FTSE 100 (-1.09%), and FTSE MIB (-1.53%) falling further.

The fading risk sentiment globally saw sovereign yields decline once more. US 10yr Treasury yields came in -3.3bps while 10yr gilt yields were down -4.3bps and bund yields down -3.5bps. There was a slight amount of widening in peripheral spreads to bunds, except for Italy where the possible passage of a €5bn fiscal stimulus bill may have helped the spread of 10yr BTPs to bunds to tighten (-0.4bps) slightly. Other havens were mixed, as the dollar ticked slightly lower (-0.11%) and gold rallied +0.31% to $1908/oz.

With regards to the election this time next week we will be waking up to the morning after the night before. It is not yet clear that we will have a winner at this time as many State Secretaries and voting commissions are hedging their bets that they will indeed be able to project the winner by next Wednesday morning. We are likely to have some states counted though, particularly from those who are able to process and count mail in ballots ahead of November 3. Former Vice President Biden remains +9.1pts and +7.4pts ahead in the fivethirtyeight and realclearpolitics polling averages respectively, while the former’s model gives him an 88% chance of winning – the highest yet - even if the poll lead has fallen from the recent peaks. Florida is likely one state to pay close attention to next Tuesday night as the state has experience with large numbers of mail ballots, polls close fairly early in the night, and without that state President Trump’s paths to victory dwindle precipitously. Realclearpolitics has the race effectively tied in the state now, with Mr Trump technically edging ahead for the first time by +0.4pp, though fivethirtyeight, which weights polls on quality, has Mr Biden up by +2.0pps.

Rising covid-19 cases continue to be in focus. Russia, which is seeing record highs in newly confirmed cases and deaths in recent days, is not expected to reintroduce new mobility restrictions. However, as of today, mask-wearing will be mandatory in some public places and the country may look to limit restaurant hours. Much of Eastern Europe which largely missed the first wave is currently seeing record numbers of weekly cases per 10k including the Czech Republic (81.3), Romania (15.2), Hungary (14.1) and Bulgaria (13.7). While testing has been a clear differentiator, the latter three still trail the sharp rise seen in parts of Western Europe that are seeing the virus for the second time including Belgium (89.2), France (41.1), Netherlands (39.4), Switzerland (47.2) and the UK (22.9). Meanwhile, France reported 530 fatalities yesterday, the largest one day jump since April 22.

In the US, Covid-19 hospitisations are up at least 10% in the last week in 32 states as the current case spike is translating into hospital visits. Illinois, which has been a hot spot in recent weeks announced that indoor dining will be suspended in Chicago starting Friday, as hospital admissions have doubled in the last month. Similarly positivity rates for tests have doubled since early October there. Denver, Colorado also expanded restrictions by limiting business capacity to 25% as of yesterday, with stay-at-home orders being considered.

We got some vaccine news as Novavax announced they would need to delay their late-stage study of its Covid-19 vaccine until late November. Competitor Pfizer indicated that its late-stage trial had not yet conducted an interim efficacy analysis as fewer than 32 cases of Covid-19 have occurred among the trial’s participants. Once that level is reached, in a trial that currently has over 42,000 patients, the first of four efficacy analysis can be conducted. This pushes back the vaccine timeline slightly as there were hopes we would have their efficacy data this week. There was some talk about it being delayed to avoid it being politicised this close to the election although this was only speculation. The company remains “cautiously optimistic” that the vaccine will work though based on the robust immune response from early trials. Overnight, Pfizer’s CEO has reiterated that the company may know by the end of October whether its vaccine is effective.

There was a slew of US data yesterday that showed that the recovery still had momentum, with most data points beating estimates. The preliminary September durable goods orders outperformed (1.9% vs 0.5% expected) while nondefence capital goods orders ex-air came in above expectation as well (1.0% vs 0.5). It was a good sign for manufacturers who have seen steady recent demand. August’s FHFA house price index was +1.5%, well above the +0.7% expected and July’s +1.0% reading. The Richmond Fed manufacturing index was up to 29 (vs 18 expected), the largest reading for the index since September 2018. Lastly, October’s Conference Board consumer confidence reading just missed at 100.9 (vs 102.0 expected) and down a touch from last month’s 101.3 reading.

Data today will include France’s October consumer confidence as well as the US’s weekly MBA mortgage applications and preliminary September wholesale inventories. From global central banks there will be monetary policy decisions from the Bank of Canada and the Central Bank of Brazil. Earnings season continues, with Visa, Mastercard, United Parcel Service, Amgen, Boeing, GlaxoSmithKline, Ford Motor Company, General Electric and Nomura all reporting.

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Government

Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

In response to the virus pandemic and nationwide…

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Glimpse Of Sanity: Dartmouth Returns Standardized Testing For Admission After Failed Experiment

In response to the virus pandemic and nationwide Black Lives Matter riots in the summer of 2020, some elite colleges and universities shredded testing requirements for admission. Several years later, the test-optional admission has yet to produce the promising results for racial and class-based equity that many woke academic institutions wished.

The failure of test-optional admission policies has forced Dartmouth College to reinstate standardized test scores for admission starting next year. This should never have been eliminated, as merit will always prevail. 

"Nearly four years later, having studied the role of testing in our admissions process as well as its value as a predictor of student success at Dartmouth, we are removing the extended pause and reactivating the standardized testing requirement for undergraduate admission, effective with the Class of 2029," Dartmouth wrote in a press release Monday morning. 

"For Dartmouth, the evidence supporting our reactivation of a required testing policy is clear. Our bottom line is simple: we believe a standardized testing requirement will improve—not detract from—our ability to bring the most promising and diverse students to our campus," the elite college said. 

Who would've thought eliminating standardized tests for admission because a fringe minority said they were instruments of racism and a biased system was ever a good idea? 

Also, it doesn't take a rocket scientist to figure this out. More from Dartmouth, who commissioned the research: 

They also found that test scores represent an especially valuable tool to identify high-achieving applicants from low and middle-income backgrounds; who are first-generation college-bound; as well as students from urban and rural backgrounds.

All the colleges and universities that quickly adopted test-optional admissions in 2020 experienced a surge in applications. Perhaps the push for test-optional was under the guise of woke equality but was nothing more than protecting the bottom line for these institutions. 

A glimpse of sanity returns to woke schools: Admit qualified kids. Next up is corporate America and all tiers of the US government. 

Tyler Durden Mon, 02/05/2024 - 17:20

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From Colombia to Laos: protecting crops through nanotechnology

In a recent breakthrough, DNA sequencing technology has uncovered the culprit behind cassava witches’ broom disease: the fungus genus Ceratobasidium….

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In a recent breakthrough, DNA sequencing technology has uncovered the culprit behind cassava witches’ broom disease: the fungus genus Ceratobasidium.

Credit: Alliance of Bioversity and CIAT / A. Galeon

In a recent breakthrough, DNA sequencing technology has uncovered the culprit behind cassava witches’ broom disease: the fungus genus Ceratobasidium.

The cutting-edge nanopore technology used for this discovery was first developed to track the COVID-19 virus in Colombia, but is equally suited to identifying and reducing the spread of plant viruses. The findings, published in Scientific Reports, will help plant pathologists in Laos, Cambodia, Vietnam and Thailand protect farmers’ valued cassava harvest.

“In Southeast Asia, most smallholder farmers rely on cassava: its starch-rich roots form the basis of an industry that supports millions of producers. In the past decade, however, Cassava Witches’ Broom disease has stunted plants, reducing harvests to levels that barely permit affected farmers to make a living,” said Wilmer Cuellar, Senior Scientist at the Alliance of Bioversity and CIAT.

Since 2017, researchers at the Alliance of Bioversity International and CIAT have incorporated nanotechnology into their research, specifically through the Oxford Nanopore DNA/RNA sequencing technology. This advanced tool provides insight into the deeper mysteries of plant life, accurately identifying pathogens such as viruses, bacteria and fungi that affect crops.

“When you find out which pathogen is present in a crop, you can implement an appropriate diagnostic method, search for resistant varieties and integrate that diagnosis into variety selection processes,” said Ana Maria Leiva, Senior Researcher at the Alliance.

Nanotechnology, in essence, is the bridge between what we see and what we can barely imagine. This innovation opens a window into the microscopic world of plant life and pathogens, redefining the way we understand and combat diseases that affect crops.

For an in-depth look at the technology being used in Laos and Colombia, please explore this link.


About the Alliance of Bioversity International and CIAT

The Alliance of Bioversity International and the International Center for Tropical Agriculture (CIAT) delivers research-based solutions that harness agricultural biodiversity and sustainably transform food systems to improve people’s lives. Alliance solutions address the global crises of malnutrition, climate change, biodiversity loss, and environmental degradation.

With novel partnerships, the Alliance generates evidence and mainstreams innovations to transform food systems and landscapes so that they sustain the planet, drive prosperity, and nourish people in a climate crisis.

The Alliance is part of CGIAR, a global research partnership for a food-secure future. www.alliancebioversityciat.org


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Public Health from the People

There are many ways to privately improve public health. Such responses make use of local knowledge, entrepreneurship, and civil society and pursue standard…

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There are many ways to privately improve public health. Such responses make use of local knowledge, entrepreneurship, and civil society and pursue standard goals of public health like controlling the spread of infectious diseases. Moreover, private responses improve overall welfare by lowering the total costs of a disease and limiting externalities. If private responses can produce similar outcomes as standard, governmental public health programs—and more—perhaps we should reconsider when and where we call upon governments to improve public health.

Two Kinds of Private Responses

Following Vernon Smith and his distinction between constructivist and ecological rationality, private actors can engage in two general kinds of public health improvements. They can engage in concerted efforts to improve public health, and they can engage in emergent responses through myriad interactions.1 Three stories below—about William Walsh, Martha Claghorn, and Edwin Gould—indicate concerted efforts to improve public health.

Walsh, a Catholic priest and President of the Father Matthew Society in Memphis, Tennessee, used the society to organize a refugee camp outside of the city and helped hundreds of people avoid yellow fever during the 1878 epidemic—one of the worst yellow fever epidemics in the country.2 Shortly after learning mosquitos carried diseases prior to 1901, Claghorn chaired the Civics committee of the Twentieth Century Club in the Richmond Hill area of Long Island and led a community-wide anti-mosquito campaign, which rid the area of potentially infectious mosquitos.3 After realizing that many of his employees were sick with malaria, Gould—president of the St. Louis Southwestern Railway—used his wealth and business firm to finance and develop an anti-mosquito campaign throughout Texas.4

These stories show how individuals recognize a public health problem given their circumstances and use their knowledge and available resources to resolve the problem. More recently, we might all be familiar with private, constructivist responses to Covid-19. We all made plans to avoid others and produce our desired amount of exposure. Many people made facemasks from old clothes or purchased them from facemask producers. Businesses, retailers, restaurants, and many others adapted in various ways to limit exposure for their workers and customers. My favorite example, albeit not relevant for most, is the so-called bubble that was implemented by the NBA, which housed teams, encouraged play, and limited infection. The NBA finished their season and crowned a 2020 champion only because of the privately designed and implemented bubble solution. The key is that the bubble pursued all of those objectives, not just one of them. All of these responses indicate how private interactions among people can minimize their exposure, through negotiation, discussion, and mutually beneficial means.

In addition to privately designed solutions, emergent public health responses are also important, perhaps even more so. Long-term migration and settlement patterns away from infectious diseases, consumption to improve nutrition, hygiene, sanitation, and the development of social norms to encourage preventative behavior are all different kinds of emergent public health responses. Each of these responses—developed through the actions of no one person—are substantial ways to improve public health.

First, consider how common migration operates as a means of lowering prevalence rates. As soon as people realized that living near stagnant bodies of water increased the probability of acquiring diseases like malaria, they were more likely to leave those areas and subsequently avoid them. Places with such features became known as places to avoid; people also developed myths to dissuade visitors and inhabitants.5 Such myths and associations left places like the Roman Campagna desolate for centuries. These kinds of cultural associations are also widespread; for example, many people in North and South Carolina moved to areas with higher elevation and took summer vacations to avoid diseases like malaria. East End and West End, in London, also developed because of the opportunities people had to migrate away from (and towards) several diseases.6

While these migration patterns might develop over decades, movement and migration also help in more acute public health crises. During the 1878 yellow fever epidemic throughout the southern United States, for example, thousands of people fled their cities to avoid infection. They took any means of transportation they could find. While some fled to other, more northern cities, many acquired temporary housing in suburbs, and many formed campsites and refugee camps outside of their city. The refugee camps outside of Memphis—like the one formed by William Walsh—helped hundreds and thousands of people avoid infection throughout the Fall of 1878.

Second, more mundane public health improvements—like improvements in nutrition, hygiene, and sanitation—are also emergent. These improvements arise from the actions of individuals and entrepreneurs, often closely associated with voluntary consumption and markets. According to renowned medical scientist Thomas McKeown, that is, rising incomes encouraged voluntary changes in consumption, which helped improve nutrition, sanitation, and lowered mortality rates.7 These effects were especially pertinent for women and mothers as they often selected more nutritious food and altered household sanitation practices. With advancing ideas about germs, moreover, historian Nancy Tomes argues that private interests advanced the campaign to improve house-hold sanitation and nutrition—full of advice and advertisements in newspapers, magazines, manuals, and books.8 Following Tomes, economic historians Rebecca Stein and Joel Mokyr substantiate these ideas and show that people changed their hygiene, sanitation, house-hold cleaning habits, and diets as they learned more about germs.9 Such developments helped people to provide their desired exposure to germs according to their values.

Obviously, there were concerted public health improvements during this time that also explain falling mortality rates. For example, waterworks were conscious efforts to improve public health and were provided publicly and privately, with similar, positive effects on health.10 The point is that while we might be quick to connect the health improvements associated with a public water system, we should also recognize emergent responses like gradual changes in voluntary consumption.

Finally, social norms or rules that encourage preventative behavior might also be relevant kinds of emergent public health responses. Such rules identify behavior that should or should not be allowed, they are enforced in a decentralized way, and if they follow from the values of individuals in a community.11 If such rules pertain to public health, they can raise the cost of infectious behavior or the benefits of preventative behavior. Covering one’s mouth when sneezing is not only beneficial from a public health perspective, it also helps avoid earning disapproval.

The condom code during the height of the HIV/AIDS epidemic is another example of an emergent public health rule that reduced infectiousness by encouraging safer behavior.12 People who adopted safer sexual practices were seen to be doing the right thing—akin to taking care of a brother. People who refrained from adopting safer sexual practices were admonished. No single person or entity announced the rule; rather, it emerged from the actions and interactions of individuals within various communities to pursue their goals regarding maintaining sexual activity and limiting the spread of disease. Indeed, such norms were more effective in communities where people used their social capital resources to determine which behaviors should be changed and where they can more easily monitor and enforce infractions. This seems like a relevant factor where many gay men and men who have sex with men live in dense urban areas like New York and Los Angeles that foster LGBTQ communities.

Covid-19 provides additional examples where social norms encouraged the use of seemingly appropriate behavior, e.g., social distancing, the use of facemasks, and vaccination. Regardless of any formal rule in place, many people adapted their behavior because of social norms that encouraged social distancing, the use of facemasks, and vaccination. In communities that valued such behaviors, people that wore face masks and vaccinated were praised and were seen as doing the right thing; people that did not were viewed with scorn. Indeed, states and cities that have higher levels of social capital and higher values for public health tend to have higher Covid-19 vaccine uptakes.13

Improving Public Health and More

“Private approaches tend to lower the total costs of diseases and they limit externalities.”

While these private approaches can improve public health, can they do more than typical public health approaches cannot? Private approaches tend to lower the total costs of diseases and they limit externalities. Each aspect of private responses requires additional explanation.

Responding to infectious diseases and disease prevention is doubly challenging because not only do we have to worry about being sick, we also have to consider the costs imposed by our preventative behaviors and the rules we might impose. Thus, the total costs of an infectious disease include 1) the costs related to the disease—the pain and suffering of a disease and the opportunity costs of being sick—and 2) the costs associated with preventative and avoidance behavior. While disease costs are mostly self-explanatory, the costs of avoiding infection warrant more explanation. Self-isolation when you have a cold, for example, entails the loss of potentially valuable social activities; and wearing condoms to prevent sexually transmitted diseases forfeits the pleasures of unprotected sexual activity. Diseases for which vaccines and other medicines are available are less worrisome, perhaps, because these are diseases with lower prevention costs than diseases where those pharmaceutical interventions are not available. Governmental means of prevention also add relevant costs. Many readers might be familiar with the costs imposed by our private and public responses to Covid—from isolation to learning loss, and from sharp decreases in economic activity to increased rates of depression and spousal abuse.14 Long before Covid, moreover, people bemoaned wearing masks during the Great Flu,15 balked at quarantine against yellow fever,16 and protested bathhouse closings with the onset of HIV.17

Figure 1 shows the overall problem: diseases are harmful but our responses to those diseases might also be harmful.

Figure 1. The Excess Burden of Infectious Diseases

This figure follows Bhattacharya, Hyde, and Tu (2013) and Philipson (2000), who refer to the difference between total costs and disease costs as the excess burden of a disease. That is, excess burden depends on how severely we respond to a disease in private and in public. The excess burden associated with the common cold tends to be negligible as we bear the minor inconvenience of a fever, a sore throat perhaps, or a couple days off work; moreover, most people don’t go out of their way to avoid catching a cold. The excess burden of plague, however, is more complicated; not only are the symptoms much worse—and include death—people have more severe reactions. Note too that disease costs rise with prevalence and with worsening symptoms but eventually decline as more severe diseases tend to be less prevalent. Still, no one wants to be infected with a major disease, and severe precautions are likely. We might shun all social interactions, and we might use government to impose strict quarantine measures. As disease severity rises along the horizontal axis, it might be the case that the cure is worse than the disease.

The private responses indicated above all help to lower the total costs of a disease because people choose their responses and they use their local knowledge and available resources to select cheaper methods of prevention. Claghorn used her neighborhood connections and the social capital of her civics association to encourage homeowners to rid their yards of pools of water; as such she lowered the costs of producing mosquito control. Similarly, Gould used the organizational structure of his firm to hire experts in mosquito control and build a sanitation department. These are cheap methods to limit exposure to mosquitos.

Emergent responses also help to lower the total costs of a disease because such responses indicate the variety of choices people face and their ability to select cheaper options. People facing diseases like malaria might be able to move away and, for some, it is cheaper than alternative means of prevention. Many people now are able to limit their exposure to mosquitos with screens, improved dwellings, and air conditioning.18 Consider the variety of ways people can limit their exposure to sexually transmitted diseases like HIV. If some people would rather use condoms to limit HIV transmission, they are better off doing so than if they were to refrain from sexual activity altogether. Similarly, some people would be better off having relatively risky sexual activity if they were in monogamous relationships or if they knew about their partner’s sexual history. That people can choose their own preventative measures indicates lower total costs compared with blunt, one-rule-for-all, governmental public health responses.

Negative and positive externalities of spreadable diseases indicate too much infectious behavior and too little preventative behavior, respectively. Hosting a party is fun, but it also incurs the internal costs of the drinks and appetizers and, more importantly, perhaps the external costs of raising the probability that people get sick. Attending a local cafe can be relaxing, but you have to pay for a cup of coffee and you might also transmit a disease to other coffee drinkers. The same could be said for many other public and social activities that might spread diseases like attending a class or a basketball game, transporting goods and people, and sexual behaviors. Our preventative behaviors from taking a vaccine to covering your mouth and from isolation to engaging in safer sexual practices emits positive externalities. If left unchecked, negative and positive externalities lead to higher rates of infection.

Overall, we should continue to think more critically about delineating how private and public actors can improve public health and overall welfare. More importantly, we should recognize that private actors are more capable than we often realize, especially in light of conscious efforts to improve public health and those efforts that emerge from people’s actions and interactions. These private efforts might be better at advancing some public health goals than public actors do. Individuals, for example, have more access to local knowledge and can discover novel solutions that serve multiple ends—often ends they value—rather than the ends of distant officials. Such cases and possibilities indicate cheaper ways to improve public health.


Footnotes

[1] Smith (2009), Rationality in Economics: Constructivist and Ecological Forms, Cambridge University Press.

[2] For more on Walsh, see Carson (forthcoming), “Prevention Externalities: Private and Public Responses to the 1878 Yellow Fever Epidemic,” Public Choice.

[3] For more on Claghorn, see Carson (2020), “Privately Preventing Malaria in the United States, 1900-1925,” Essays in Economics and Business History.

[4] For more on Gould, see Carson (2016), “Firm-led Malaria Prevention in the United States, 1910-1920,” American Journal of Law and Medicine.

[5] On the connection between malarial diseases, dragons, and dragon-slaying saints, see Horden (1992), “Disease, Dragons, and Saints: the management of epidemics in the dark ages,” in Epidemics and Ideas by Ranger and Slack.

[6] For more on migration and prevalence rates, see Mesnard and Seabright (2016), “Migration and the equilibrium prevalence of infectious disease,” Journal of Demographic Economics.

[7] The American Journal of Public Health published several commentaries on McKeown in 2002: https://www.ncbi.nlm.nih.gov/pmc/issues/130602/

[8] Tomes (1990), “The Private Side of Public Health: Sanitary Science, Domestic Hygiene, and the Germ Theory, 1870-1990,” Bulletin of the History of Medicine.

[9] Mokyr and Stein (1996), “Science, Health, and Household Technology: The Effect of the Pasteur Revolution on Consumer Demand,” in The Economics of New Goods, NBER.

[10] See Werner Troesken’s work on public and private waterworks in the U.S. around the turn of the 20th century. See Galiani, Gertler, and Shargrodsky (2005), “Water for Life,” Journal of Political Economy.

[11] Brennan et al., (2013), Explaining Norms, Oxford University Press.

[12] For more on the condom code, see Carson (2017), “The Informal Norms of HIV Prevention: The emergence and erosion of the condom code,” Journal of Law, Medicine and Ethics.

[13] Carilli, Carson, and Isaacs (2022), “Jabbing Together? The complementarity between social capital, formal public health rules, and covid-19 vaccine rates in the U.S.,” Vaccine.

[14] Leslie and Wilson, “Sheltering in Place and Domestic Violence: Evidence from Calls for Service During Covid-19.” Journal of Public Economics 189, 104241. Mulligan, “Deaths of Despair and the Incidence of Excess Mortality in 2020,” NBER, https://www.nber.org/papers/w28303. Betthauser, Bach-Mortensen, and Engzell, “A systematic review and meta-analysis of the evidence on learning during the Covid-19 Pandemic,” Nature Human Behavior, https://www.nature.com/articles/s41562-022-01506-4

[15] On the great influenza epidemic, see CBS News, “During the 1918 Flu pandemic, masks were controversial for ‘many of the same reasons they are today’.” Oct. 30, 2020. https://www.cbsnews.com/news/mask-1918-flu-pandemic-controversial/

[16] On yellow fever quarantine in Mississippi, see Deanne Nuwer (2009), Plague Among the Magnolias: The 1878 Yellow Fever Epidemic in Mississippi.

[17] On these closures, see Trout (2021), “The Bathhouse Battle of 1984.” https://www.sfaf.org/collections/beta/the-bathhouse-battle-of-1984/

[18] Tusting et al. (2017), “Housing Improvement and Malaria Risk in Sub-Saharan Africa: a multi-country analysis of survey data.” PLOS Medicine.


*Byron Carson is an Associate Professor of Economics and Business at Hampden-Sydney College in Virginia, where he teaches courses on introductory economics, money and banking, health economics, and urban economics. Byron earned his Ph.D. in Economics from George Mason University in 2017, and his research interests include economic epidemiology, public choice, and Austrian economics.


This article was edited by Features Editor Ed Lopez.


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