Connect with us

Spread & Containment

LNG Stocks Are in a Stealth Bull Market

The stock market has undergone a reality check over these past two weeks, with the majority of market sectors enduring selling pressure as investors reprice…

Published

on

The stock market has undergone a reality check over these past two weeks, with the majority of market sectors enduring selling pressure as investors reprice risk-on assets against a landscape of acceptance that inflation, rising rates, elevated commodity prices, supply chain constraints and the Ukraine war are going to last longer than first perceived.

These negative forces took a broad toll on all but the utilities, consumer staples, real estate investment trusts (REITs), health care and fertilizer sectors. Even energy stocks came under modest pressure out of concerns regarding future demand destruction given the high prices of crude oil.

Investor sentiment is downshifting due to the presence of a domestic economy that risks falling into a recession after the 2/10 Treasury spread in the yield curve briefly inverted. When short-term rates (two-year) yield more than long-term rates (10-year), it implies a hard landing for the economy. This due to the fact that the Fed is aggressively trying to rein in inflation by raising the federal funds rate and shrinking its balance sheet — better known as quantitative tightening (QT), the opposite of the quantitative easing (QE) that has supported asset inflation since 2008. To say the ground has shifted is an understatement.

Now that the Fed has pulled the punch bowl of financial stimulus and turned decidedly hawkish, the stock market has to stand on its own. It’s every stock for itself. As we enter first-quarter earnings season this week, the large banks will have a lot to say about business conditions from their client bases, which covers everything from the demand for credit to funding inventories, expanding businesses and acquiring real estate. Rates have spiked around the globe this past month and that has raised some red flags.

With the yield on the 10-year at 2.76%, the bond market is already adjusting to levels that expect the Fed to hike rates by 50 basis points at the next three Federal Open Market Committee meetings over the next three months. This comes at a time when the Russian and Ukrainian economies are in a depression, Europe’s economy is in a recession and China’s economy is slowing. The degree to which this is true, however, is not clear, as the data are roundly manipulated by financial elements of the Chinese Communist Party.

What is a well-known fact is that rising interest rates are a huge drag on debt service following years of QE and bloated government spending well before, during and after the COVID-19 pandemic took hold of the global economy — topping $226 trillion at the end of 2020. Global gross domestic product (GDP) is about $80 trillion.

One analyst said, “Global debt, according to a recent report by the Institute for International Finance, amounted to nearly $300 trillion in 2021, equal to 356 percent of global GDP. This extraordinarily high debt level represents a 30 percentage-point rise in the global debt-to-GDP ratio in the past five years.” (Source: www.carnegieendowment.org)

Central banks can ill afford to allow short-term interest rates to rise much over 3%, or they will face stressing debt-to-GDP ratios that are already excessive. A 1% increase in short-term Treasury notes adds $300 billion in interest costs to service the U.S. federal debt. That is a steep finance charge and is why the Fed has abruptly done an about-face on its gross underestimation of inflation. Currently, inflation is running at a 40-year high of 7.9%. The big question facing the stock market is whether inflation is peaking. If so, then there is a good chance that the lows for the S&P 500 are in. More forthcoming data will spell this out.

The LNG train has left the station for sure.

The widespread sanctions that are being applied to Russia will have a lasting impact on a number of industries, both positive and negative. One of the larger secular themes that is playing out is the rising global demand for liquified natural gas (LNG) to replace coal and to replace Russian imported LNG to Europe. In 2021, 40% of natural gas consumed in the European Union came from Russia. This is a staggering statistic.

On a global basis, the U.S. is exporting record amounts of LNG as nations rapidly covert to gas burning utilities from coal-fired plants. According to the U.S. Energy Information Agency, “U.S. exports of liquefied natural gas (LNG) set a record high in 2021, averaging 9.7 billion cubic feet per day (Bcf/d), according to our most recent issue of Natural Gas Monthly.

U.S. LNG exports increased by 50% from 2020. The increase in U.S. LNG exports was driven by increased demand in both Europe and Asia (particularly China) and by expanding U.S. liquefaction capacity. In 2021, liquefaction at the six U.S. LNG export terminals averaged 102% of nameplate (or nominal) capacity and 89% of peak capacity, according to our estimates.”

On March 25, the U.S. pledged to dramatically increase LNG shipments to Europe to displace its dependence on Russia. The Biden administration is proposing to send up to 15 billion cubic meters (BCM) to Europe, which is only about 10% of the 150 bcm Europe used in all of 2021. With the LNG production in the U.S. at near capacity, it will keep prices elevated as the supply/demand equation heavily favors producers and shippers of LNG to foreign buyers.

Since there are no pure LNG exchange-traded funds (ETFs) to buy into, investors need to cobble together their own LNG terminal, natural gas E&P, gas pipeline, LNG shipping and LNG gasification portfolio. These stocks are not hard to find if one simply searches top LNG and natural gas stocks. LNG bridges the several gap years during the transition of fossil fuels to renewable energy. The LNG sector is in its own stealth bull market — and that’s what matters.

Despite all the volatility, uncertainty and opaqueness that is going on within the markets, this secular trend has growing bullish visibility that, in my view, will have a profoundly positive impact on investors’ portfolios for those that boldly lean into this investment proposition. By definition, it’s shaping up as a generational trade.

The post LNG Stocks Are in a Stealth Bull Market appeared first on Stock Investor.

Read More

Continue Reading

Spread & Containment

CUNY Graduate Center wins National Science Foundation award to give graduate students a head start in bio-inspired nanotechnology

From photosynthesis to the collective behavior of ants, natural phenomena inspire both discovery and innovation. Now, thanks to breakthroughs in computing,…

Published

on

From photosynthesis to the collective behavior of ants, natural phenomena inspire both discovery and innovation. Now, thanks to breakthroughs in computing, engineering, molecular biology, biochemistry, and complexity science, scientists are finding new ways to mimic and adapt nature, creating nanoscale materials and devices that bring powerful, sustainable solutions that advance health care, renewable energy, and space exploration.

Credit: Shanté Booker

From photosynthesis to the collective behavior of ants, natural phenomena inspire both discovery and innovation. Now, thanks to breakthroughs in computing, engineering, molecular biology, biochemistry, and complexity science, scientists are finding new ways to mimic and adapt nature, creating nanoscale materials and devices that bring powerful, sustainable solutions that advance health care, renewable energy, and space exploration.

With a new $3 million National Science Foundation (NSF) Research Training grant, faculty at the CUNY Graduate Center and its Advanced Science Research Center (CUNY ASRC) are launching Nanoscience Connected to Life to train diverse Ph.D. students for careers that integrate aspects of life sciences with nanoscience. This comprehensive program, which is connected to Understanding the Rules of Life (one of 10 NSF “big ideas”), will provide Graduate Center students who are in Biochemistry, Chemistry, and Physics Ph.D. programs and conducting bio-nanotechnology research with funding, research training, mentorship, and professional-development internships at industry and government labs.

“In combining training in world-class, cross-disciplinary nanoscience research with an equally valuable emphasis on career engagement, this needed program will prepare CUNY’s diverse graduate students to lay the groundwork for rewarding careers in high-demand industries,” said Chancellor Félix V. Matos Rodríguez. “The program’s great promise to drive innovation while expanding the participation of students from traditionally underrepresented groups in CUNY’s Ph.D. programs and diversifying the STEM fields, leverages the unparalleled strengths of the Graduate Center and of CUNY itself. We thank the NSF for its substantial investment.”

“This NSF Research Training program will strengthen the Graduate Center as a powerhouse of interdisciplinary science, particularly nanoscience and its applications,” said Robin L. Garrell, president of the Graduate Center. “Faculty at the Advanced Science Research Center and throughout our STEM doctoral and master’s programs are working across disciplines to find new ways to generate energy, diagnose and treat diseases, and address climate change. By engaging students of all backgrounds in cutting-edge, team-based research, we are preparing the next generation of scientists to lead innovation in academia and industry.” ​

“The nanoscale is the size range where biology’s functionality plays out at its most basic level,” said Professor Rein V. Ulijn, the principal investigator of the NSF grant, the founding director of the Nanoscience Initiative at the CUNY ASRC, and the Einstein Professor of Chemistry at Hunter College. “By bringing together knowledge from various disciplines, we can develop an understanding of the engineering approaches of biological systems. We can then apply this knowledge broadly to create new green technology that rivals the versatility of the structures of the living world. This is an area of much promise and growth, and now is the perfect time to significantly expand our research in it.”

The field of nanotechnology continues to grow and find applications in technologies that impact our everyday lives. Students who are trained through this program will be prepared to lead research and innovation in a variety of fields, including the growing area of green manufacture, where products such as clothing and cosmetics are increasingly bio-derived and fully biodegradable. Nanoscience also merges with the life sciences to enable the development of vaccines, medical devices, and diagnostic testing kits. The lipid nanoparticles used for delivering mRNA COVID-19 vaccines to human cells are one example of these nature-inspired nanoscale solutions.

The Nanoscience Connected to Life training program will expand research in bio-nanotechnology by providing direct funding to 25 Ph.D. students and by involving an additional 125 Biochemistry, Chemistry, and Physics students in its events and opportunities. The trainees will benefit from dissertation research mentoring by faculty from multiple disciplines, helping students gain experience in interdisciplinary and team-based research. Cross-disciplinary teams will collaborate to address urgent societal challenges related to environmental instabilities and health crises. Career development and networking activities are embedded throughout the programming, and are designed to prepare students for mentorship, leadership, and entrepreneurship in industry, startups, academia, government, and nonprofit organizations. An overarching goal is to prepare diverse students — future leaders — by creating a learning community of systems thinkers who can exchange knowledge and communicate across disciplines. 

The training program has a strong focus on diversifying STEM and will leverage its position within CUNY, the nation’s largest and most diverse urban public university system. The program aims to attract diverse students to Graduate Center science Ph.D. programs. Program faculty will work closely with admissions to recruit underrepresented minorities, women, and members of the LGBTQ community from within CUNY and from historically Black colleges and universities (HBCUs).

“Diversity enhances science,” said Joshua Brumberg, dean for the sciences at the Graduate Center and interim executive director of the CUNY ASRC. “By drawing more diverse students into our Ph.D. programs, we are fulfilling the mission of CUNY to serve the whole people, and we are bringing needed new perspectives and ideas into some of the most exciting areas of science and technology. We all stand to benefit from this inspired initiative.”


Read More

Continue Reading

Government

China Shortens Travel Quarantine In COVID Zero Shift

China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one…

Published

on

China Shortens Travel Quarantine In COVID Zero Shift

China unexpectedly slashed quarantine times for international travelers, to just one week, which suggests Beijing is easing COVID zero policies. The nationwide relaxation of pandemic restrictions led investors to buy Chinese stocks.

Inbound travelers will only quarantine for ten days, down from three weeks, which shows local authorities are easing draconian curbs on travel and economic activity as they worry about slumping economic growth sparked by restrictive COVID zero policies earlier this year that locked down Beijing and Shanghai for months (Shanghai finally lifted its lockdown measures on May 31). 

"This relaxation sends the signal that the economy comes first ... It is a sign of importance of the economy at this point," Li Changmin, Managing Director at Snowball Wealth in Guangzhou, told Bloomberg

At the peak of the COVID outbreak, many residents in China's largest city, Shanghai, were quarantined in their homes for two months, while international travelers were under "hard quarantines" for three weeks. The strict curbs appear to have suppressed the outbreak, but the tradeoff came at the cost of faltering economic growth. 

The announcement of the shorter quarantine period suggests a potentially more optimistic outlook for the Chinese economy. Bullish price action lifted CSI 300 Index by 1%, led by tourism-related stocks (LVMH shares rose as much as 2.5%, Richemont +3.1%, Kering +3%, Moncler +3%). 

"The reduction of travel restrictions will be positive for the luxury sector, and may boost consumer sentiment and confidence following months of lockdowns in China's biggest cities," Barclays analysts Carole Madjo wrote in a note. 

CSI 300 is up 19% from April's low, nearing bull market territory. 

Jane Foley, a strategist at Rabobank in London, commented that "this news suggests that perhaps the authorities will not be as stringent with Covid controls as has been expected." 

"The news also coincides with reports that the PBOC is pledging to keep monetary policy supportive," Foley pointed out, referring to Governor Yi Gang's latest comment. 

She said, "this suggests a potentially more optimistic outlook for the Chinese economy, which is good news generally for commodity exporters such as Australia and all of China's trading partners." 

Even though the move is the right step in the right direction, Joerg Wuttke, head of the European Chamber of Commerce in China, said, "the country cannot open its borders completely due to relatively low vaccination rates ... This, in conjunction with a slow introduction of mRNA vaccines, means that China may have to maintain a restricted immigration policy beyond the summer of 2023." 

Alvin Tan, head of Asia currency strategy in Singapore for RBC Markets, also said shortening quarantine time for inbound visitors shouldn't be a gamechanger, and "there's nothing to say that it won't be raised tomorrow." 

Tyler Durden Tue, 06/28/2022 - 07:38

Read More

Continue Reading

Spread & Containment

Preventing the next pandemic: Learning the lessons

In the first of a three part series, Ben Hargreaves looks at what the odds are of another
The post Preventing the next pandemic: Learning the lessons appeared…

Published

on

In the first of a three part series, Ben Hargreaves looks at what the odds are of another pandemic arising in our lifetimes and what can be done to lower the risk of this happening again.

The current pandemic is still very much underway. The question is, as one study was recently entitled, whether the current phase brings the world closer to the end of the pandemic or just to the end of the first phase? What is clear is that due to vaccines and therapeutics, the critical early phase of the pandemic is over. As the article suggests, what could lie ahead is a process of learning how to live with a persistent circulation of the virus and, with this, consistent spikes of cases, likely occurring periodically and more often in the winter months.

With the current pandemic refusing to dissipate, the discussions around future pandemics become more difficult to countenance. As identified very early into the current pandemic by the WHO, there is the risk of fatigue arising over long-term global health crisis response, which becomes an issue when acknowledging that the current times we’re living through could happen again. Research has suggested that in any given year there is a 2.5 to 3.3% chance of a pandemic on the scale of COVID-19 occurring. Not only this, the expectation is that such events are becoming more likely, with estimations that the probability of outbreaks such as the current pandemic will likely grow three-fold in the next few decades.

Pharma invested

The acceptance that there will potentially be another pandemic within many people’s lifetimes underlines the importance of using the emergence of COVID-19 to better protect ourselves against the next threat. Although it’s come at a high cost, the world is now in a strong position to prepare itself, with the lessons from the current pandemic still fresh in mind.

One clear benefit is that the pharmaceutical industry has proven that it is able to develop and safely deliver vaccines in a much shorter timeframe than usual. A typical vaccine development timeline takes between five and 10 years; the vaccines approved for COVID-19 emerged much more quickly.

Though the next pandemic could prove to be a more complicated target to vaccinate against, the success of the vaccines and the financial gains that were achieved would see companies eager to engage in development. Already, the industry is seeing greater research and funding being diverted back into vaccine development, with mRNA vaccines holding particular interest. This should see a pipeline of vaccine candidates better stocked than on the emergence of COVID-19, if this can be sustained into the future.

Global governance

However, the work required to prevent the next pandemic is far broader than vaccines and therapeutics, which are essentially the last defence. In the future, the entire global health system will need to change to become more resilient, which requires many individual changes but can be broken down it smaller, logical actions that have outsized outcomes. One such action is simply coordination at the highest levels.

There were warning signs prior to COVID-19 that a pandemic could be possible, with the outbreaks of Zika and Ebola viruses, both of which have occurred intermittently for years but had attained wider notoriety after bigger outbreaks in the last decade. Despite this, coordinated efforts on the response to the current pandemic lacked cohesion – many countries adopted different methods of combatting the spread of the virus and containment. Once vaccines were on the market, countries competed against one another for access, thereby denying them to the countries without the economic firepower to match.

A recent report for the G20 group of nations, on preventing the next pandemic, concluded: “It requires establishing a global governance and financing mechanism, fitted to the scale and complexity of the challenge, besides bolstering the existing individual institutions, including the

WHO as the lead organisation. A primary one is training and hiring adequate levels of health workers.”

The report broke down four major gaps that need to be addressed, on a global and national level, to be able to respond more quickly, equitably and effectively when further pandemics occur:

  • Globally networked surveillance and research: To prevent and detect emerging infectious diseases
  • Resilient national systems: To strengthen a critical foundation for global pandemic preparedness and response
  • Supply of medical countermeasures and tools: To radically shorten the response time to a pandemic and deliver equitable global access
  • Global governance: To ensure the system is tightly coordinated, properly funded and with clear accountability for outcomes

Spending money to save money

The hiring of additional healthcare workers, the build-out of surveillance systems, support provided for R&D into infectious diseases, and the creation of a stockpile of medical countermeasures all require funds. This is a major question of the report for world leaders: Whether there is the appetite for further funding into pandemic preparation? The global economy has taken and continues to feel the financial blow of COVID-19.

However, the report calls for more public funding to be put into health in the coming years, with the authors stating that approximately 1% of GDP must be committed by low- and middle-income countries. In terms of funding for international efforts for preventing the next pandemic, the figure is estimated at $15 billion per year, sustained for the coming years. Compared to the sums spent on vaccines and therapeutics during the current pandemic, the investment is far lower and will help boost what the report calls, “a dangerously underfunded system.”

Beyond all action is a tactic for mitigating pandemics that is known as primary prevention. Fundamentally, this means going before all of the previously discussed methods to tackle the virus at the root cause.

Research has called for greater emphasis to be put on elements that prevent virus spillover, where a virus jumps species. The authors identify three areas where a difference can be made: reduced deforestation, better management of the wildlife trade and hunting, and better surveillance of zoonotic pathogens before any human is infected. The authors suggest that even a 1% reduction in risk of viral zoonotic disease emergence would make any efforts in this direction cost-effective. They end their study, stating, “Monothetic ‘magic bullets,’ including diagnostic tests, treatments, and vaccines, failed to control COVID-19 as it spread around the globe and exacted the largest health and economic toll of any pathogen in recent history. This makes plain that we cannot solely rely upon post-spillover strategies to prevent a similar fate in the future.”

The post Preventing the next pandemic: Learning the lessons appeared first on .

Read More

Continue Reading

Trending