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Greenback’s Slide Continues

Greenback’s Slide Continues

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4 years ago

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Overview: Liquidity trumps everything else.  US equities shrugged off the national guard being called into action in nearly a third of US states, and the S&P 500 closed yesterday at nearly three-month highs. Asia Pacific markets followed suit.  Most markets in the region rose by more than 1%. The notable exceptions were Australia and China, where benchmarks rose by 0.2%-0.3%. The Dow Jones Stoxx 600 is up more than 1% in the European morning. It has gained about 2.5% this week already after advancing 3% or more in each of the past two weeks. US shares are extending yesterday's gains. Bond yields are mixed, Asia Pacific yields were mostly higher, while European rates are softer, and premiums over Germany are narrowing. The US dollar remains out of favor, with the exception of the Japanese yen. The high beta currencies, like the Australian and Canadian dollars, and the Norwegian krone are leading the move, and recently sterling has joined this camp. Most emerging market currencies are also gaining against the greenback. The JP Morgan Emerging Market Currency Index is rising for the fourth consecutive session today, and for the 10th session in the past 12. Gold is consolidating at slightly lower levels as the three-day rally is checked. Oil is moving higher amid hopes of an extension of OPEC+ cuts, with the July WTI contract at new three-month highs near $36.25.  

Asia Pacific

Forward points for the Hong Kong dollar continue to pare recent gains, and the three-month points briefly dipped below 100 to return to the upper end of the previous range.  The 12-month points also eased by 400 bp are still nearly twice the pre-crisis level.  Meanwhile, the PBOC set the dollar's reference rate at CNY7.1167, weaker than the bank models implied (~CNY7.1203). The yuan strengthened for the fourth consecutive session, and the dollar slipped through CNY7.10 to unwind most of its recent rise.  

Moody's cut India's credit rating to Baa3, the lowest investment-grade rating. It cited policy risks and slower growth. The rating now matches S&P and Fitch's assessment. Moody's kept a negative outlook. Nevertheless, India's 10-year benchmark eased 3 bp to 5.78%, a new multi-year low. The rupee is strengthening against the dollar for the third session.

The Australian dollar is moving higher for the eighth week of the past ten.  The recent advance is even more impressive in the face of tensions with China, as many observers often emphasize the linkages.  As widely expected, the central bank left the cash, and three-month target rates unchanged at 25 bp.  Separately, Australia reported a larger than expected Q1 current account surplus (~A$8.4 bln vs. median forecast for A$6.1 bln and the Q4 surplus was revised to A$1.7 bln from A$1.0 bln).  

The dollar is confined to a narrow third of a yen range above JPY107.50, where a $1.1 bln option is struck that expires tomorrow.  Since May 18, the dollar has not traded below JPY107.00 or above JPY108.10.  The Australian dollar is poking above $0.6850 in the European morning.  It settled last week almost two cents lower.  It is at its best level since late January.  The year's high set at the very start was near $0.7020.  

Europe

Newswires reported that some ECB members are pushing back against the expansion of the central bank's Pandemic Emergency Purchase Program (750 bln euros). When such inside stories surface, it often makes sense to ask who is helped or hurt by the "leak." Often we find that it is those that are losing or lost the debate try to get a wider hearing for their side. After all, the winners have little reason to do so. The ECB meets Thursday. The PEPP program has plenty of firepower for the next several months. In fact, even the more aggressive estimates do not see it the program's funds exhausted until late Q3. However,  it may get a bigger effect to announce its commitment before being backed into a corner. If the ECB does not expand its purchases by at least 500 bln euros, we suspect investors will be disappointed, and that disappointment could be expressed as undoing some of the narrowing of the German premium seen recently.  

Germany is debating additional fiscal stimulus that could be worth 100 bln euros.  A variety of programs are under consideration, including debt relief for cities and cash for consumers.  There is some push for subsidies for car purchases.   Meanwhile, the French government has revised this year's GDP forecast to -11% from -8%.  This may offer a hint at the ECB's staff forecasts that will be updated at the central bank meeting.  

The euro has taken out the late March high near $1.1165 to approach the $1.12 area in the European morning.  The old high corresponded to a (61.8%) retracement of the swoon in March that took the single currency from almost $1.15 to about $1.0635.  Above $1.12, an initial resistance is seen near $1.1240, but the next important level is near $1.13. Sterling is also advancing on the back of a weaker US dollar. Its 1.2% surge yesterday, the most since late March, carried it above $1.25 and it reached $1.2570 in Europe today. The $1.2640 area held it back in April (twice), and the 200-day moving average is near $1.2670, which offers an important technical test.  

America

Although we tend to put more weight on US auto sales, which are often a proxy for discretionary household spending, than many, today's report may attract more attention than usual. After a lowly 8.6 mln vehicles sold in April at a seasonally-adjusted annual rate, the key question is whether the survey data that mostly improved in May reflected an increase in real activity. The median forecast is for vehicle sales to rise to around 11.1 mln. Last May, 17.3. mln vehicles (SAAR) were sold. It is the first hard data outside of the weekly jobless claims for May.  

Oil prices have been lifted by hopes that Russia's declared willingness to continue to cooperate with OPEC will lead to an extension of the maximum output cuts, though Moscow has not confirmed it.  Due to extra cuts by Saudi Arabia, Kuwait, and the UAE, the lack of compliance by Iraq and Nigeria have been easily absorbed. Also, US output has fallen for 11 weeks, though shipments from Saudi Arabia appear to have lifted inventories recently. In one telling sign that higher prices may bring back US shale producers, Bloomberg reported that the shut-in oil in North Dakota's Bakken fields has fallen hunting at an increase in output. 

The US dollar continues to drop against its NAFTA partners.  The greenback finished April near CAD1.3950 and settled last month near CAD1.3780. Today, it dipped below CAD1.35 for the first time since March 9.  The CAD1.3440-CAD1.3460 is the next important technical area, corresponding to an old and unfilled gap and the 200-day moving average.  Resistance is now seen CAD1.3550 and then CAD1.3600. The Bank of Canada meets tomorrow and is not expected to alter policy. The Mexican peso was the strongest currency in the world last month, gaining 9% against the US dollar.  The global liquidity story and calmer markets underscore the attractiveness of Mexico's high real and nominal rates.  Its one-month bills (cetes) pay almost 5.4%.  The greenback is falling through MXN22.00, which supported it last week.  The next key technical target is near MXN21.30.  Initial resistance is seen in the MXN22.20 area.   



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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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4 hours ago

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March 12, 2024

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com. 

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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March 12, 2024

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int

Journal

The Lancet Global Health

Method of Research

Observational study

Subject of Research

People

Article Title

Incidence of typhoid fever in Burkina Faso, Democratic Republic of the Congo, Ethiopia, Ghana, Madagascar, and Nigeria (the Severe Typhoid in Africa programme): a population-based study

Article Publication Date

12-Mar-2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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6 hours ago

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March 12, 2024

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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