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Reopening Trump’s Trade: Gold Is On The Move

Reopening Trump’s Trade: Gold Is On The Move

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As expected, US Retail Sales and Factory Output data on Friday plunged to record lows. That wasn’t enough to topple the reopening trade though, with asset markets eyes firmly focused on the future and not the here and now. Equities and energy both managed to chisel out more gains to end the week.

 

Much the same theme is dominating the start of the Asian week, although the Trump administration continues to rachet up pressure on China vis-a-vis trade. Huawei is facing yet more restrictions on the use of US technology with the as expected threats of Chinese retaliation. China, meanwhile, is facing uncomfortably raising pressure to be more “open” about the origins of the COVID-19 virus from around the world. The Trump administrations rhetoric has continued, with another US official accusing China of deliberately exporting COVID-19 across the globe. As the world’s largest exporter, I am slightly lost as to why China would want to send the rest of the world into a depression. I look forward to more clarity over their motives from Washington DC.

 

If Washington DC’s intent to escalate trade issues has markets nervous, it is being trumped by the increasing pace of lockdown reopening’s around the world, and the expected follow-on uptick in economic activity. The peak virus recovery trade remains in the ascendant. China, for its part, is helping the process along with comments from officials at the long-delayed People’s Congress meeting that started yesterday. The PBOC head stated that it would implement a “flexible and powerful monetary policy.” For its part, the Finance Minister said that the government would increase the fiscal deficit and issue special Treasury bonds. After being relatively quiet as the world melt-ed down, China appears to be launching a two-pronged monetary and fiscal approach to support growth and jobs, and this should be supportive of the Asian market this morning.

 

China’s announcements have also trumped statements from the Fed Chairman Jerome Powell, in a television interview today. Mr Powell saw a recovery lasting until the end of 2021. He expressed concern that secondary COVID-19 outbreaks could adversely affect asset prices. Therein lies the rub; the recovery trade is predicated on the hope that the world dodges a bullet on secondary waves of COVID-19 infections, that double-dip deep-sixes the global economy. The jury is out on that one though, and until we see actual evidence of it occurring, the peak virus buy everything trade will likely remain the path of least resistance.

 

Data this morning from Asia has been mixed. Japan GDP fell once again, tipping the country into an official technical recession. Officials are considering a further supplementary budget to support the economy. Singapore Non-Oil Exports rose by 9.70% in April YoY, although they fell by 5.80% on a Mom basis. The numbers, while welcome, flatter to deceive. Outsized gains in the medical sector are boosting exports. Thailand’s GDP is released at 1030SGT and is expected to have fallen by 4.50%, although Bangkok’s emergence from lockdown should limit the damage. That concludes Asia’s major data points, and internationally, it is a tranquil day from a data perspective.

 

Much attention will be focused on gold today. Despite other asset markets rallying strongly as well, gold has continued to grind out gains over the past week. This morning, gold has finally broken to the topside of its one-month range, rising through the $1750.00 an ounce resistance, to $1756.00 an ounce. I will deal with the technical aspects below, but what is fascinating, is that gold is rising along with other asset markets. I have long suspected that inflation potentially can return from its 20-year exile post-COVID-19. A bit like the Eagles, maybe it just took a vacation. Gold’s rally I believe is based on inflation prospects, and not haven buying. If the rally is sustained, exciting times lie ahead for both gold and silver.

 

China’s increased clarity on fiscal and monetary stimulus will dovetail nicely into the peak virus recovery rally. That should trump Trump’s trade narrative and other more salutary warnings from officials around the globe. The net result should be that Asia, and Europe to follow, are set for a positive session.

 

Equities open stronger on China stimulus and peak virus.

 

Regional stock markets have enjoyed a positive start after Wall Street managed to shrug off bad data on Friday, and still close in the green. China’s announcement of two-pronged monetary and fiscal stimulus measures to boost the economy have given an extra tailwind to Asian markets this morning. Chipmakers though, are underperforming following the United States’ new measures to restrict Huawei from access to technology over the weekend.

 

The Nikkei 225 and Kospi are 0.30% higher, with the Shanghai Composite, CSI 300 and Hang Seng all 0.10% higher. Singapore’s Straits Times has climbed 0.60% after the Non -Oil Exports data with Kuala Lumpur up 0.25% and the Jakarta JCI unchanged.

 

Trade-centric Australia and New Zealand are the star performers as lockdowns ease, and China prepares more stimulus. The ASX 200 and ALL Ordinaries are 1.45% higher, with the NZX 50 rising by 0.70%.

 

Trade tensions are tempering Asian technology stocks today, which is in turn muting, what is, a generally positive start for Asia. With the momentum clearly still with the peak-virus trade though, Asia looks set to enjoy a positive start to the week.

 

The US Dollar eases slightly as investors price in economic recovery.

 

The dollar index contract versus major currencies has eased by 0.11% this morning as traders price in further global gains as lockdowns are eased across the world. USD/JPY has risen 0.30% to 107.10 today though, as the haven Yen also weakens. A rally above 108.00 heralds more gains to the 100.00 level.

 

Elsewhere though, the Dollar has generally eased against the major currencies with both the AUD/USD and NZD/USD outperforming today, rising 0.50% to 0.6445 and 0.5950 respectively. Having borne the brunt of trade-war concerns last week, both Antipodeans have potentially generous recovery potentials this week if the peak-virus momentum continues.

 

The British Pound continues to be concerning, however, as officials at the Bank of England (BOE) continue to sound alarms over the actual state of both the British and global economy. The BOE Chief Economist said over the weekend that the Bank continues to look at negative rates. GBP/USD fell sharply on Friday by 1.05% to 1.2100. Given the weekend comments, it is somewhat surprising that it remains unchanged today. The technical picture remains strongly negative for GBP/USD. Having broken support at 1.2160, GBP/USD looks poised for further falls to the 1.1800 regions. A confused reopening message from the government, and the prospect of difficult Brexit negotiations ahead, are not helping matters.

 

Oil’s rally continues as the global recovery story, and June shorts are squeezed.

 

Oil continued to power higher on Friday as global production curbs, and global recovery expectations continued to underpin the impressive rally. The Baker Hughes Total Oil Rig count fell again on Friday, dropping 9.40% to 339, another multi-year low, further supporting prices. Brent crude rose 5.0% to $32.70 a barrel and WTI had another outstanding day, rising 6.60% to $29.70 a barrel.

 

Both contracts continue to outperform this morning as China stimulus measures, decreasing supply and peak virus hopes see Brent crude climbing 3.80% to $33.70 a barrel, and WTI rising 4.40% to $30.70 a barrel.

 

Most of the market’s attention will be on the June WTI futures expiry tomorrow. Perversely, compared to last month, the pressure is to the upside, with the intra-month rolls skewed in favour of the bulls. Although open interest in the June contract has plummeted, CME data still shows an open interest of 55,605 contracts in the June futures. That is a fall of nearly 20,000 contracts from Thursday, but still leaves some 56 million barrels of oil open for the expiry tomorrow.

 

Obviously, some of that number is underlying commercial interest and not speculative interest. Nor did the back months contract open interest spike markedly on Friday, implying that shorts were being closed, and not rolled. With oil bid anyway, that leaves a lot of potential shorts still to be rolled, or closed out, in the next two days. The set-up of the June WTI expiry should ensure that WTI in particular, remains supported on any dip, and maybe vulnerable to short squeezes in the near term.

 

Gold prices jump again in Asia as technical resistance fails.

 

I have said previously, that I would not take my feet off the desk until gold broke through either %1650.00 an ounce, or $1750.00 an ounce. Much to Mrs Halley’s pleasure, my feet are officially of the table this morning as gold posts a sharp rally of 1.05% in Asian trading.

 

Gold has risen $18.00 today to $1761.00 an ounce as I write. A look back over the past three sessions, including today though, reveals some powerful price action by the yellow metal. The last three days have seen 1.0% rises, characterised by gold finishing at its highest, and then moving directly higher during the new trading day. That implies that the gold rally has some strong underlying momentum to it, that cannot be ignored.

 

As I have stated above, we are perhaps seeing the beginnings of the long-awaited inflation hedge occurring, as opposed to the safe-haven trade. The amount of monetary policy easing, conventional and unconventional, cannot be ignored and unlike the GFC, in a post-COVID-19 nationalised supply chain world, has the potential to generate inflation that has been missing in action for the past 20 years., Unless you are trying to buy a house, stocks, save for your retirement as a young person; or are looking for a pay rise. In which case, you have seen the inequality effect of quantitative easings secret inflation in all its glory.

 

Gold is at its highest in eight years this morning, but we require a daily close above $1750.00 to confirm a break of the one-month range. Undoubtedly, there has been stop-loss and model buying today once $1750.00 an ounce gave way, but gold has teased and broken my heart before. Gold now faces formidable multi-month resistance at $1800.00 an ounce before a retest of the post-GFC highs above $1900.00 can be considered. The initial picture today though, suggests that gold is now well and truly on the move to higher levels, as its fundamentals have been screaming for quite some time.

 

 

 

 

 

 

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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,…

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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.”


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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…

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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

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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…

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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 .

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