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Tabula highlights dual threats of illiquid bond markets and inflation uncertainty

Fixed income ETF specialist Tabula Investment Management has issued a warning to investors over the dual threats of lower year-end liquidity in bond markets and rising US inflation.
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Fixed income ETF specialist Tabula Investment Management has issued a warning to investors over the dual threats of lower year-end liquidity in bond markets and rising US inflation.

MJ Lytle, Chief Executive, Tabula Investment Management

Michael John Lytle, CEO of Tabula Investment Management.

Liquidity drought

Tabula warns that bond markets often see lower liquidity as the year closes out with the sell-side preparing to slim balance sheets and the buy-side closing its books; however, current uncertainty means liquidity could prove worse than previous years.

Michael John Lytle, CEO of Tabula, said, “The current slew of negative factors means markets may experience more than just a seasonal liquidity slump this year. As European lockdowns ease there is a risk of a third wave of cases in the middle of winter. President Trump’s resistance to the election result also remains a wildcard and expectations of worsening economic data is beginning to grow. All of these have the potential to temper the recent vaccine-led relief rally.”

Tabula offers up its Tabula iTraxx IG Bond UCITS ETF as a potential solution for investors who share these concerns. The ETF is based on the iBoxx iTraxx Europe Bond Index and has a strong focus on liquidity.

The index provides European corporate bond exposure that closely reflects the geographic and sector exposures of the iTraxx Europe, a widely followed benchmark measuring the performance of a long credit position in credit default swaps on 125 high-quality European issuers.

The index selects up to three bonds for each issuer in the current iTraxx Europe series that have a minimum outstanding amount of EUR 500 million and remaining time to maturity of 3-7 years (extended to 1-10 years if an issuer has no bonds in the 3-7 year range).

The index is constructed with fixed sector weight bands. The base weights are autos & industrials (24%), consumers (20%), energy (16%), TMT (16%), and financials (24%) – these are supersector categories composed of multiple conventional sectors and industries. With the exception of the financials sector, which is fixed, the sector weights are allowed to deviate by a maximum of 20% on either side of their base weight.

The index assigns an equal notional weighting to each issuer and targets an average maturity of approximately 5 years. The index is reviewed in March and September in line with iTraxx Europe.

To be eligible for the iTraxx Europe – effectively the selection pool for the index – a bond must have a fixed coupon, be denominated in euros and issued by a European-domiciled entity, and command an investment-grade rating.

The ETF is tradeable in euros on the London Stock Exchange (TTRX LN), Xetra (TABX GY), and Borsa Italiana (TTRX IM). It comes with an expense ratio of 0.29% and has accumulated €110 million in assets under management.

Inflation concerns

On inflation, Tabula notes that fiscal stimulus under the incoming Biden administration is expected to further increase upwards pressure on prices, while the Federal Reserve has committed to a new regime that will allow inflation to run ahead of its historic 2% target.

According to Tabula, President-elect Biden will likely be supportive of the Fed’s accommodative policy with his pick for Treasury Secretary, ex-Fed chair Janet Yellen, suggesting a close tie-up between fiscal and monetary authorities.

Tabula warns these factors, combined with the demand/supply fallout from Covid-19, indicates that inflation is once again firmly on the agenda and is likely to be an escalating concern among institutional investors.

Lytle said, “This year, we have witnessed extraordinary monetary stimulus, which when combined with loose monetary policy, introduces impetus for future inflation. The Federal Reserve Board balance sheet has doubled in six months, and global narrow & broad money supply are up 22% and 14% respectively this year – annual growth rates last seen in 1993 and 2008 respectively.

“Changing Central Bank mandates and new fiscal policies are also putting pressure on inflation. The incoming Biden administration is committed to further Covid-19-related stimulus including more direct payments to households. This, combined with what the Fed does next, could significantly affect the outlook for US inflation.”

Tabula’s most-recent listing, which launched last month, may offer a compelling solution to manage this inflationary environment. The Tabula US Enhanced Inflation UCITS ETF provides exposure to both realized and expected inflation by tracking the Bloomberg Barclays US Enhanced Inflation Index, a new index developed by Bloomberg in partnership with Tabula.

The index measures the performance of a diversified portfolio of US Treasury Inflation-Protected Securities (TIPS) combined with exposure to medium-term US inflation expectations. The two sleeves are weighted at 100%.

The TIPS portfolio is composed of securities with at least $500m face value outstanding and at least one year remaining until maturity. TIPS differ from regular Treasury bonds in that the principal amount of a TIPS issue is adjusted over time to reflect changes in the underlying Consumer Price Index, a measure of inflation. The yield on TIPS thus reflects a real interest rate where the effect of inflation has largely been stripped out.

The index’s exposure to inflation expectations is represented by a long position in 7-10 year TIPS and a short position in regular 7-10 year Treasuries to hedge out duration risk. An increase in 7-10 year inflation expectations will lead to a net appreciation in value as increasing inflation expectations cause the yields on regular Treasures to rise and their prices to fall, thus delivering positive performance for the short component of the trade. The short position is adjusted in order to offset the duration exposures of the two indices, thereby establishing a purer play on inflation expectations.

The ETF comes with an expense ratio of 0.29% for an unhedged USD share class on LSE (TINF LN) and 0.34% for GBP-hedged (TING LN) and EUR-hedged (TINE IM) share classes on LSE and Borsa Italiana respectively.

The post Tabula highlights dual threats of illiquid bond markets and inflation uncertainty first appeared on ETF Strategy.

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University of Kentucky researchers develop online portal to show how biases in RNA sequences affect gene expression

LEXINGTON, Ky. (June 29, 2022) — A recent publication from researchers at the University of Kentucky explains the importance of identifying and understanding…

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LEXINGTON, Ky. (June 29, 2022) — A recent publication from researchers at the University of Kentucky explains the importance of identifying and understanding how differences between tissues and cells alter gene expression without changing the underlying genetic code.

Credit: Pete Comparoni | University of Kentucky Photo

LEXINGTON, Ky. (June 29, 2022) — A recent publication from researchers at the University of Kentucky explains the importance of identifying and understanding how differences between tissues and cells alter gene expression without changing the underlying genetic code.

Introductory biology classes teach that DNA is transcribed into RNA, which is then translated into proteins. However, many cellular processes affect how quickly transcription and translation occur. Gene expression looks at the differences in RNA concentrations within a cell, and it can help scientists know which genes are active within that tissue or cell.

“Changes in gene expression can significantly affect various diseases and disease trajectories,” said Justin Miller, Ph.D., assistant professor in the UK College of Medicine’s Department of Pathology and Laboratory Medicine.

Miller, who is also affiliated with the Sanders-Brown Center on Aging and Biomedical Informatics, says he and his colleagues previously developed the first algorithm to identify ramp sequences from a single gene sequence. Through their recent work, Miller and fellow UK co-authors Mark Ebbert, Ph.D., and Matthew Hodgman created an online version of that algorithm and showed that ramp sequences change between tissues and cells without changing the RNA sequence.

A ramp sequence is part of the RNA sequence that slows translation at the beginning of the gene by using codons (sequences of three DNA or RNA nucleotides) that are not easily translated. Ramp sequences counterintuitively increase overall gene expression by evenly spacing the translational machinery and preventing collisions later in translation.

In their recent publication in NAR Genomics and Bioinformatics, the researchers present the first comprehensive analysis of tissue- and cell type-specific ramp sequences and report more than 3,000 genes with ramp sequences that change between tissues and cell types, which correspond with increased gene expression within those tissues and cells.

“This research is the first time that variable ramp sequences have been described. Our comprehensive web interface allows other researchers to creatively explore ramp sequences and gene expression,” said Miller.

The research team says this work is important because while there are multiple ways for our RNA to encode the same proteins, the specific RNA sequence is important to regulate protein and RNA levels.

“Essentially, a ramp sequence works like an on-ramp to a freeway so that ribosomes do not crash into each other, but the length and speed limit of that onramp can change depending on the cell and the available resources within that cell,” Miller explained.

He says he enjoyed working on this project not only with his colleagues at UK but as well as his former colleagues at Brigham Young University and his brother, Kyle Miller, at Utah Valley University. Together, the group created a web interface for people to see how ramp sequences correspond with human and COVID-19 gene expression in different tissues and cells.

Miller says he believes this work will eventually impact patient care. “We created an online interface for researchers to query all human genes and see if a specific gene has a ramp sequence in a given tissue and how that gene is expressed within that tissue,” said Miller. “We also show that various COVID-19 genes and human entry factors for COVID-19 have ramp sequences that change between different tissues. Ramp sequences are much more likely to occur in tissues where the virus is known to proliferate.”

So, the researchers believe that COVID-19 genes have genetic biases (ramp sequences) that allow them to use the available cellular machinery to increase their expression. “Our research may help us better predict which tissues and cells new viruses will infect and also provides a potential therapeutic target to regulate tissue-specific gene expression without changing the translated protein,” said Miller.

Research reported in this publication was supported by the National Institute on Aging of the National Institutes of Health under Award Numbers P30AG072946 and R01AG068331, and the National Institute of General Medical Sciences of the National Institutes of Health under Award Number R35GM138636. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health.

This work was also funded by the BrightFocus Foundation, under awards A2020118F and A2020161S, and the Alzheimer’s Association, under award 2019-AARG-644082.

The University of Kentucky is increasingly the first choice for students, faculty and staff to pursue their passions and their professional goals. In the last two years, Forbes has named UK among the best employers for diversity, and INSIGHT into Diversity recognized us as a Diversity Champion four years running. UK is ranked among the top 30 campuses in the nation for LGBTQ* inclusion and safety. UK has been judged a “Great College to Work for” three years in a row, and UK is among only 22 universities in the country on Forbes’ list of “America’s Best Employers.”  We are ranked among the top 10 percent of public institutions for research expenditures — a tangible symbol of our breadth and depth as a university focused on discovery that changes lives and communities. And our patients know and appreciate the fact that UK HealthCare has been named the state’s top hospital for five straight years. Accolades and honors are great. But they are more important for what they represent: the idea that creating a community of belonging and commitment to excellence is how we honor our mission to be not simply the University of Kentucky, but the University for Kentucky.


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White House Is Quietly Modeling For $200 Oil “Shock”

White House Is Quietly Modeling For $200 Oil "Shock"

While the Biden administration is hoping and praying that someone – anyone – will watch…

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White House Is Quietly Modeling For $200 Oil "Shock"

While the Biden administration is hoping and praying that someone - anyone - will watch the comical "Jan 6" kangaroo hearsay court taking place in Congress and meant to somehow block Trump from running for president in 2024 while also making hundreds of millions of Americans forget that the current administration could very well be the worst in US history, it is quietly preparing for the worst.

As none other than pro-Biden propaganda spinmaster CNN reports, when it comes to what really matters (at least according to Gallup), namely the economy, and specifically galloping gasoline prices, the White House is in a historic shambles.

For an administration that ended last year forecasting a leveling off of 40-year high inflation and eager to tout a historically rapid recovery from the pandemic-driven economic crisis, there is a level of frustration that comes with an acutely perilous moment. Asked by CNN about progress on a seemingly intractable challenge, another senior White House official responded flatly: "Which one?"

The suspects behind the historic implosion are well known: "soaring prices, teetering poll numbers and congressional majorities that appear to be on the brink have created no shortage of reasons for unease. Gas prices are hovering at or around $5 per gallon, plastered on signs and billboards across the country as a symbolic daily reminder of the reality -- one in which White House officials are extremely aware -- that the country's view of the economy is growing darker and taking Biden's political future with it."

"You don't have to be a very sophisticated person to know how lines of presidential approval and gas prices go historically in the United States," a senior White House official told CNN.

A CNN Poll of Polls average of ratings for Biden's handling of the presidency finds that 39% of Americans approve of the job he's doing. His numbers on the economy, gas prices and inflation specifically are even worse in recent polls. What CNN won't tell you is that Biden is now polling well below Trump at this time in his tenure.

The CNN article then goes into a lengthy analysis of what is behind the current gasoline crisis (those with lots of time to kill can read it here) and also tries to explains, without actually saying it, that the only thing that can fix the problem is more supply, but - as we first explained - this can't and won't happen because green fanatics and socialist environmentalists will never agree to boosting output.

Which brings us to the punchline: as CNN's Phil Mattingly writes, "instead of managing an economy in the midst of a natural rotation away from recovery and into a stable period of growth, economic officials are analyzing and modeling worst-case scenarios like what the shock of gas prices hitting $200 per barrel may mean for the economy."

Well, in an article titled "Give us a plan or give us someone to blame", this seems like both a plan, and someone to blame.

But unfortunately for Biden - and CNN which is hoping to reset expectations - it's only going to get worse, because as we noted moments ago, while nobody was paying attention, Cushing inventories dropped to just 1 million away from operational bottoms at roughly 20MM barrels. This means that the US is officially looking at tank bottoms.

But wait, there's more... or rather, it's even worse, because as even Bloomberg's chief energy guru Javier Blas notes, over the last 2 weeks, the US gov has drained 13.7 million barrels from the SPR, "and yet, commercial oil stockpiles still fell 3 million barrels over the period."

Just imagine, Blas asks rhetorically, "if the SPR wasn't there. Or what would happen post-Oct when sales end."

And here is the punchline: at the current record pace of SPR drainage, one way or another the Biden admin will have to end its artificial attempts to keep the price of oil lower some time in October (or risk entering a war with China over Taiwan with virtually no oil reserve). This means that unless Putin ends his war some time in the next 5 months, there is a non-trivial chance that oil will hit a record price around $200 - precisely the price the White House is bracing for - a few days before the midterms. While translates into $10+ gasoline.

And while one can speculate how much longer Democrats can continue the "Jan 6" dog and pony show as the entire economy implodes around them, how America will vote in November when gas is double digits should not be a mystery to anyone.

Tyler Durden Wed, 06/29/2022 - 13:05

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European Commission says it doesn’t have texts between president Ursula von der Leyen and Pfizer CEO Albert Bourla

Under fire from the European ombudsman, the Commission said on Wednesday that it hasn’t found any text messages between president Ursula von der Leyen…

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Under fire from the European ombudsman, the Commission said on Wednesday that it hasn’t found any text messages between president Ursula von der Leyen and Pfizer chief Albert Bourla regarding the purchase of Covid-19 vaccines.

The messages became of interest last April, when the New York Times reported that a series of texts and calls between von der Leyen and Bourla led to Pfizer’s largest vaccine deal — 900 million doses of the current vaccine and a vaccine adapted to variants, with the option to purchase an additional 900 million doses through 2023.

Emily O’Reilly

Upon a public access request made by a journalist, the EC responded that it had no record of them. However, it was later revealed by ombudsman Emily O’Reilly, the EU’s internal watchdog, that the EC never explicitly asked the cabinet to look for the texts.

Instead, the EC requested other documents that fall under its internal criteria for recording, which doesn’t include text messages.

O’Reilly accused the Commission of “maladministration,” and urged the administration to conduct a more thorough search.

“When it comes to the right of public access to EU documents, it is the content of the document that matters and not the device or form,” she said in a statement back in January. “If text messages concern EU policies and decisions, they should be treated as EU documents.”

On Wednesday, the EC claimed to side with O’Reilly: “The Commission and the Ombudsman agree that what matters is the content of a document,” a spokesperson said in an email to Endpoints News. 

However, the Commission maintained that the texts were not registered as documents “due to their short-lived and ephemeral nature.”

“Text and instant messages in general do not contain important information relating to policies, activities and decisions of the Commission, nor are they in the possession of the institution,” the EC shared in a letter.

The administration added that it intends to issue further guidance on the use of “modern communication tools” such as text and instant messages to clear up any confusion.

“The Ombudsman could equally be invited to participate in those discussions, if she wishes to do so,” the statement said.

Pfizer declined to comment on the content of the text messages.

Stella Kyriakides

The EC struck its third vaccine deal with Pfizer and BioNTech last May, after its other major supplier AstraZeneca ran into production issues and announced it would significantly reduce deliveries.

The contract, which called for up to 1.8 billion doses through 2023, also reserved the EU right to resell or donate doses to countries in need.

“We need to be one step ahead of the virus. This means having access to adapted vaccines to protect us against the threat of variants, booster vaccines to prolong immunity, as well as protecting our younger population,” commissioner for health and food safety Stella Kyriakides said at the time.

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