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REITs and Bonds Were Havens During Last Week’s Market Losses

US real estate and fixed-securities provided diversification benefits during last week’s widespread selling that weighed on most other markets around the world, based on a set of ETFs through Friday’s close (Dec. 17). Vanguard US Real Estate (VNQ)…

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US real estate and fixed-securities provided diversification benefits during last week’s widespread selling that weighed on most other markets around the world, based on a set of ETFs through Friday’s close (Dec. 17).

Vanguard US Real Estate (VNQ) – a proxy for US-listed real estate investment trusts (REITs) — posted the leading performance last week for the major asset classes. The fund rallied for a second week, gaining 0.9%. The increase lifted the ETF to just below a record high at the end of the trading week.

A broad measure of US bonds also rose last week. Vanguard Total Bond Market (BND) ticked up 0.4%. Despite the increase, BND continues to trade in range as the market digests the conflicting signals for monetary policy and the economic outlook — factors that are key inputs for bonds.

The Federal Reserve last week signaled that it is pivoting away from the strong monetary stimulus bias it has maintained during the pandemic and shifting, on the margins for now, to a more hawkish outlook to fight elevated inflation. The central bank’s evolving focus comes amid rising uncertainty for the US economy. Although next month’s fourth-quarter GDP report is expected to post a strong rebound from Q3’s weak gain, the bounce is expected to fade in the first half of 2022.

In addition to the potential for stronger economic headwinds due to the spread of the Omicron variant of the coronavirus, new uncertainty over the fate of  President Biden’s Build Back Better (BBB) legislation adds another risk to the macro calculus for 2022. Factoring in lower odds that the bill will become law, Goldman Sachs on Sunday cut its forecast for US economic growth in the new year. “A failure to pass BBB has negative growth implications,” the investment bank advises in a report after Sen. Joe Manchin announced he wouldn’t support the bill, which effectively kills the legislation in a closely divided Senate.

Most markets lost ground last week. The biggest loser: stocks in emerging markets. Vanguard FTSE Emerging (VWO) tumbled 2.5%, leaving the ETF at its lowest close since August.

Widespread market losses weighted on the Global Market Index (GMI.F) — an unmanaged benchmark (maintained by CapitalSpectator.com) that holds all the major asset classes (except cash) in market-value weights via ETF proxies. GMI.F dropped 1.3% last week. This benchmark has fallen in five of the past six weeks.

US REITs continue to lead for the one-year window by a wide margin. Vanguard US Real Estate (VNQ) is ahead by a strong 33.5% vs. the year-ago level (after factoring in distributions). US stocks are in second place, but VTI’s 23.0% one-year gain remains well behind VNQ’s gain.

Half of the major asset classes are under water for the one-year window. The biggest loser: government bonds in emerging markets via EMLC, which has lost 11.2% over the past 12 months.

GMI.F, by contrast, is up a strong 12.2% for the trailing one-year period.

Most of the major asset classes are posting moderate drawdowns as of Friday’s close, ranging from a trivial 0.3% peak-to-trough decline for US REITs (VNQ) to a bit more than a 9% drawdown for government bonds in developed markets ex-US (BWX).

The three downside outliers: emerging markets stocks (VWO), emerging markets bonds (EMLC) and commodities (GCC), which are currently posting drawdowns in excess of 10% declines.

GMI.F’s current drawdown is -2.9%.


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International

Pandas wants to give Latin American businesses buying power in Asia

Pandas connects Latin America’s small businesses directly with Asian manufacturers to reduce logistical problems and high fees often imposed by importers…

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Access to global supply chains can be difficult for small businesses in Latin America, but companies like Meru, which raised funding in March to source and import goods between Mexico and China, and now more recently Pandas, are tapping into overseas relationships and technology to make this easier.

In Pandas’ case, the company is doing something similar to Meru, but starting in Colombia, connecting small businesses directly with Asian manufacturers, so that they can reduce the high fees often imposed by half a dozen importers and intermediaries as well as logistical problems that all businesses are facing right now where inventory is now taking many more months to arrive than during pre-pandemic times.

Co-founders Rio Xin and Marcos Esterli started Pandas just three months ago to provide Asian-origin inventory to micro-businesses in Latin America. Their collective background includes careers at McKinsey and Treinta for Esterli, and McKinsey, with more than seven years spent in China, for Xin, where he told TechCrunch he developed a strong network in the region.

“The main issue that we’ve seen is people who don’t understand the Chinese language or how Chinese manufacturers work and then you add in the logistical problems,” Xin added. “We are able to bridge the breach, while at the same time having our team in China to overcome all these logistics problems.”

Pandas B2B marketplace. Image Credits: Pandas

Here’s how it works: Businesses order products via the Pandas marketplace, touting lower pricing, in which the business can make purchases in a few clicks. Pandas takes it from there, offering one-day-delivery and customer support.

Esterli explained that people in Latin America have been using smartphones for their personal finances and other tasks, but that has not translated as quickly to the business side.

“A lot of customers told us Alibaba was something they wanted to use, but that it was very complicated to figure out,” he added. “We wanted to build an easy solution that was super intuitive because business owners don’t have that time to spend.”

Initially providing basic electronics products — think headphones, accessories and cables — and with a new round of funding, $5.8 million pre-seed, Pandas will move into categories like textiles and home accessories. The company touts the pre-seed investment as “the largest pre-seed financial in Spanish-speaking LatAm to date.”

Third Kind Venture Capital led the round and was joined by Acequia Capital, Picus Capital, Tekton Ventures, Partech, Liquid2 Ventures, Clocktower Technology Ventures, Gaingels and a host of individual investors, including Tul’s Juan Carlos Narvaez, Jose Jair Bonilla from Chiper, Treinta’s Man Hei and Lluís Cañadell, Pablo Viguera from Belvo, Nowports’ Alfonso de los Rios, Sujay Tyle from Merama and Ironhack’s Gonzalo Manrique.

So far in its young journey, the company is growing 100% month over month and has amassed a supplier network of about 300 out of 5,000 in China, Xin said.

In addition to moving into those new inventory categories, the new capital will enable Pandas to scale its operations, technology and product development and make new hires.

Xin expects to be in most of the main markets across Latin America in the next three years. In the meantime, new features coming down the pipeline in the next 12 months include a suite of fintech and analytics tools like financing.

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Monkeypox cases are rising. Should we be worried?

The World Health Organization has said the current outbreak of monkeypox is the largest ever recorded outside sub-Saharan
The post Monkeypox cases are…

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The World Health Organization has said the current outbreak of monkeypox is the largest ever recorded outside sub-Saharan Africa, with cases rising above the 100-mark a few days ago and the UK top of the table with 56 as of yesterday.

Top of the list of concerns is how the virus – which does not spread easily between humans and requires skin-to-skin contact – is spreading so quickly in so many countries in Europe, the Americas and Australia where the disease is not endemic.

There is speculation that monkeypox may be being spread between sexual partners, even though it is not normally considered a sexually-transmitted infection. Thankfully, there have been no deaths reported so far, although the WHO notes monkeypox has a fatality rate of between 3% and 6%.

While health authorities are on alert, the WHO said it thinks the outbreak can be contained and that the overall risk to the population remains low. It also stressed there is no evidence that a viral mutation is responsible for the unusual pattern of infections.

Monkeypox is considered less likely to mutate quickly because it is a DNA virus rather than an RNA virus like influenza or COVID-19.

Several countries including Belgium and the UK are already advising a three-week quarantine period for anyone who contracts the virus and their close contacts.

The increasing case numbers in the current monkeypox outbreak are certainly concerning,” commented Dr Charlotte Hammer, an expert in emerging infectious diseases based at the University of Cambridge in the UK.

“It is very unusual to see community transmission in Europe – previous monkeypox cases have been in returning travellers with limited ongoing spread. However, based on the number of cases that were already discovered across Europe and the UK in the previous days, it is not unexpected that additional cases are now being and will be found, especially with the contact tracing that is now happening.”

Vaccines and drugs are available

Meanwhile, attention is now being turned to other measures to control the outbreak, including the use of vaccines against smallpox – a related virus – in a ‘ring vaccination’ approach designed to control the spread among contacts.

Vaccines used during the smallpox eradication programme can provide around 85% protection against monkeypox, according to the WHO, which notes that one newer vaccine – Bavarian Nordic’s Jyneos – has been approved by the FDA for prevention against both viruses.

There’s also a licensed antiviral drug for monkeypox. SIGA Technologies’ oral drug Tpoxx (tecovirimat) is approved for smallpox, monkeypox and cowpox in Europe, and in the US and Canada for smallpox, although it can be used off-label for the other disease. The US FDA also approved a new intravenous form of the drug last week.

The WHO says there is no need for widespread vaccination, as other control measures like isolation of patients should be enough to curb the spread and in any case supplies of vaccines are limited.

Monkeypox causes symptoms similar to but milder than smallpox, typically beginning with fever, headache, muscle aches and exhaustion. It is transmitted to people from various wild animals, such as rodents and primates, and is usually a self-limited disease with symptoms lasting from two to four weeks.

In 2003, the US experienced an outbreak of monkeypox, which was the first time human monkeypox was reported outside of Africa. The Centers for Disease Control and Prevention (CDC) is making some Jyneos vaccine reserves available for close contact inoculations, including healthcare workers tending to patients.

The UK Health Security Agency (UKHSA) said yesterday it had identified 36 additional cases of monkeypox in England, and that vaccination of high-risk contacts of cases is already underway.

“A notable proportion of recent cases in the UK and Europe have been found in gay and bisexual men so we are particularly encouraging these men to be alert to the symptoms,” said the agency’s chief medical advisor Dr Susan Hopkins.

“Because the virus spreads through close contact, we are urging everyone to be aware of any unusual rashes or lesions and to contact a sexual health service if they have any symptoms.”

The post Monkeypox cases are rising. Should we be worried? appeared first on .

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UK’s Johnson Urges Talks As Unions Threaten “Biggest Rail Strike In Modern History”

UK’s Johnson Urges Talks As Unions Threaten "Biggest Rail Strike In Modern History"

Authored by Alexander Zhang via The Epoch Times,

British…

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UK's Johnson Urges Talks As Unions Threaten "Biggest Rail Strike In Modern History"

Authored by Alexander Zhang via The Epoch Times,

British Prime Minister Boris Johnson has urged rail unions to talk to the government before causing “irreparable damage” with strike action.

The National Union of Rail, Maritime, and Transport Workers (RMT) is holding a ballot of its 40,000 members on plans to strike over jobs, pay, and conditions. The ballot is set to close on Tuesday, and the union has claimed that a yes vote could lead to “the biggest rail strike in modern history.”

Another union, the Transport Salaried Staffs’ Association (TSSA), has also warned of a “summer of discontent” with similar action on the way unless pay disputes are resolved.

The prime minister’s official spokesman said on Monday:

“Railways are going through difficult times with passenger numbers down. We need to make sure they’re fit for the future.”

He said the government wants “a fair deal for staff, for passengers, and taxpayers” so that “money isn’t taken away from other essential services” such as the National Health Service.

“The prime minister is firmly of the view that unions should talk to the government before causing irreparable damage to our railways—strikes should be the last resort not the first,” he added.

Transport Secretary Grant Shapps told The Sunday Telegraph that ministers are looking at drawing up laws which would make industrial action illegal unless a certain number of staff are working.

Shapps said the government hopes the unions will “wake up and smell the coffee” and suggested that strikes could put more people off rail travel.

He also accused unions of going straight to industrial action rather than using it as a last resort, adding that railways were already on “financial life support” because of the CCP (Chinese Communist Party) virus pandemic.

Referring to a pledge in the Conservative Party’s 2019 election manifesto, which promised minimum services during rail strikes, he said:

“We had a pledge in there about minimum service levels. If they really got to that point then minimum service levels would be a way to work towards protecting those freight routes and those sorts of things.”

Unions have reacted to the threat with anger.

RMT General Secretary Mick Lynch said, “Any attempt by Grant Shapps to make effective strike action illegal on the railways will be met with the fiercest resistance from RMT and the wider trade union movement.”

He said the government needs to “focus all their efforts on finding a just settlement” to the rail dispute rather than “attack the democratic rights of working people.”

Tyler Durden Tue, 05/24/2022 - 02:00

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