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Watch: ECB’s Lagarde Threads Needle Of Rate-Hikes Amid EU Defragmentation & Stagflation Forecast

Watch: ECB’s Lagarde Threads Needle Of Rate-Hikes Amid EU Defragmentation & Stagflation Forecast

Following The ECB’s statement, traders…

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Watch: ECB's Lagarde Threads Needle Of Rate-Hikes Amid EU Defragmentation & Stagflation Forecast

Following The ECB's statement, traders have moved rate-hike expectations up to around 150bps by December 2022...

All eyes will now be on what Lagarde says at the press conference as she tries to thread a needle of a fragmenting European bond market, ending bond-buying, and hiking rates into her own stagflationary forecast (lower growth and higher inflation). As Bloomberg Economics' Geoff King points out:

“The most closely scrutinized part of the press conference will be any comments made by Lagarde on the likelihood of a 50 bp interest rate increase instead of a 25 bp move. She has published a roadmap for her preferred course of action and it’s consistent with 25 bp increases in July and September. We don’t expect her message to differ, but she’s changed tack before after inflation surpassed expectations.”

Markets were pricing in the 25 bp increase in July (and about a 40% chance of a 50bp move), and pricing in 25bps hikes for September and December as well as one each quarter thereafter until the main refinancing rate hits 1.5% (the estimate of neutral).

Watch live here (due to start at 0830ET)

*  *  *

Amid increasingly fragmented European bond markets, The ECB - as expected and well telegraphed for months - officially ended its bond-purchasing scheme and signaled lift-off on its interest rates, after eight years of NIRP (currently at -50bps).

European sovereign bond spreads are breaking out as the post-QE era begins...

Source: Bloomberg

Interestingly, given the surge in Italian yields/spreads, speaking just hours before the decision today, Lagarde’s predecessor Mario Draghi sounded a note of caution on tightening too fast.

Europe's 'inflation problem' - which began long before Putin invaded Ukraine - have forced Lagarde into this corner, despite drastically slowing growth (as stagflationary threats leave central planners in a box).

Source: Bloomberg

The statement confirms that the ECB's net buying under its asset-purchase program will conclude this month. That paves the way for Lagarde to hike rates next month, in effect keeping its long-standing promise that an end to its asset purchases will precede an increase in the benchmark deposit rate.

QE Ends July 1:

 The Governing Council decided to end net asset purchases under its asset purchase programme (APP) as of 1 July 2022. The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance.

No hint at QT:

"The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time"

Forward Guidance of a 25bps hike in July:

Accordingly, and in line with the Governing Council’s policy sequencing, the Governing Council intends to raise the key ECB interest rates by 25 basis points at its July monetary policy meeting. In the meantime, the Governing Council decided to leave the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively.

On Fragmentation (via Bloomberg):

There’s no substantive change to the part of the statement relating to what the ECB could do to counter an unwarranted widening of spreads as it pares back stimulus. It amounts to a repeat of the point that “under stressed conditions, flexibility will remain an element of monetary policy.” The key question is whether an anti-fragmentation tool – which Bloomberg reported the ECB has worked on – should be explicit or implicit. It will be interesting to see how Lagarde responds to questions on this.

Additionally The ECB revised its inflation forecast notably higher and growth forecasts significantly lower (via Newsquawk)

Eurosystem staff have revised their baseline inflation projections up significantly.

These projections indicate that inflation will remain undesirably elevated for some time.

However, moderating energy costs, the easing of supply disruptions related to the pandemic and the normalisation of monetary policy are expected to lead to a decline in inflation.

The new staff projections foresee annual inflation at 6.8% in 2022. before it is projected to decline to 3.5% in 2023 and 2.1% in 2024 - higher than in the March projections.

This means that headline inflation at the end of the projection horizon is projected to be slightly above the Governing Council's target.

Inflation excluding energy and food is projected to average 3.3% in 2022. 2.8% in 2023 and 2 3% in 2024 - also above the March projections.

ECB cuts its 2022 growth forecast to 2.8% from 3.7% and 2023 to 2.1% from 2.8%. For 2024, it’s an upward revision to 2.1% from 1.6%.

The euro spiked ahead of the ECB decision then tumbled after only to immediately bounce back...

Read the full ECB Statement below:

High inflation is a major challenge for all of us. The Governing Council will make sure that inflation returns to its 2% target over the medium term.

In May inflation again rose significantly, mainly because of surging energy and food prices, including due to the impact of the war. But inflation pressures have broadened and intensified, with prices for many goods and services increasing strongly. Eurosystem staff have revised their baseline inflation projections up significantly. These projections indicate that inflation will remain undesirably elevated for some time. However, moderating energy costs, the easing of supply disruptions related to the pandemic and the normalisation of monetary policy are expected to lead to a decline in inflation. The new staff projections foresee annual inflation at 6.8% in 2022, before it is projected to decline to 3.5% in 2023 and 2.1% in 2024 – higher than in the March projections. This means that headline inflation at the end of the projection horizon is projected to be slightly above the Governing Council’s target. Inflation excluding energy and food is projected to average 3.3% in 2022, 2.8% in 2023 and 2.3% in 2024 – also above the March projections.

Russia’s unjustified aggression towards Ukraine continues to weigh on the economy in Europe and beyond. It is disrupting trade, is leading to shortages of materials, and is contributing to high energy and commodity prices. These factors will continue to weigh on confidence and dampen growth, especially in the near term. However, the conditions are in place for the economy to continue to grow on account of the ongoing reopening of the economy, a strong labour market, fiscal support and savings built up during the pandemic. Once current headwinds abate, economic activity is expected to pick up again. This outlook is broadly reflected in the Eurosystem staff projections, which foresee annual real GDP growth at 2.8% in 2022, 2.1% in 2023 and 2.1% in 2024. Compared with the March projections, the outlook has been revised down significantly for 2022 and 2023, while for 2024 it has been revised up.

On the basis of its updated assessment, the Governing Council decided to take further steps in normalising its monetary policy. Throughout this process, the Governing Council will maintain optionality, data-dependence, gradualism and flexibility in the conduct of monetary policy.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The Governing Council decided to end net asset purchases under its asset purchase programme (APP) as of 1 July 2022. The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance.

As concerns the pandemic emergency purchase programme (PEPP), the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.

In the event of renewed market fragmentation related to the pandemic, PEPP reinvestments can be adjusted flexibly across time, asset classes and jurisdictions at any time. This could include purchasing bonds issued by the Hellenic Republic over and above rollovers of redemptions in order to avoid an interruption of purchases in that jurisdiction, which could impair the transmission of monetary policy to the Greek economy while it is still recovering from the fallout from the pandemic. Net purchases under the PEPP could also be resumed, if necessary, to counter negative shocks related to the pandemic.

Key ECB interest rates

The Governing Council undertook a careful review of the conditions which, according to its forward guidance, should be satisfied before it starts raising the key ECB interest rates. As a result of this assessment, the Governing Council concluded that those conditions have been satisfied.

Accordingly, and in line with the Governing Council’s policy sequencing, the Governing Council intends to raise the key ECB interest rates by 25 basis points at its July monetary policy meeting. In the meantime, the Governing Council decided to leave the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.50% respectively.

Looking further ahead, the Governing Council expects to raise the key ECB interest rates again in September. The calibration of this rate increase will depend on the updated medium-term inflation outlook. If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting.

Beyond September, based on its current assessment, the Governing Council anticipates that a gradual but sustained path of further increases in interest rates will be appropriate. In line with the Governing Council’s commitment to its 2% medium-term target, the pace at which the Governing Council adjusts its monetary policy will depend on the incoming data and how it assesses inflation to develop in the medium term.

Refinancing operations

The Governing Council will continue to monitor bank funding conditions and ensure that the maturing of operations under the third series of targeted longer-term refinancing operations (TLTRO III) does not hamper the smooth transmission of its monetary policy. The Governing Council will also regularly assess how targeted lending operations are contributing to its monetary policy stance. As announced previously, the special conditions applicable under TLTRO III will end on 23 June 2022.

***

The Governing Council stands ready to adjust all of its instruments, incorporating flexibility if warranted, to ensure that inflation stabilises at its 2% target over the medium term. The pandemic has shown that, under stressed conditions, flexibility in the design and conduct of asset purchases has helped to counter the impaired transmission of monetary policy and made the Governing Council’s efforts to achieve its goal more effective. Within the ECB’s mandate, under stressed conditions, flexibility will remain an element of monetary policy whenever threats to monetary policy transmission jeopardise the attainment of price stability.

And here is the Redline...

Tyler Durden Thu, 06/09/2022 - 08:23

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Las Vegas Strip Gets a Brand New Technology

It’s not just Caesars and MGM innovating on the Strip. A number of other companies are trying big idea.

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It's not just Caesars and MGM innovating on the Strip. A number of other companies are trying big idea.

Las Vegas has quietly become a hotbed for innovation. Some of that has been driven by the major casino operators -- Caesars Entertainment (CZR) - Get Caesars Entertainment Inc. Report, MGM Resorts International (MGM) - Get MGM Resorts International Report, Resorts World Las Vegas, and Wynn Resorts (WYNN) - Get Wynn Resorts Limited Report -- trying to outdo each other to win over customers.

Some innovations are ostentatious and hard to miss, like the MSG (MSGE) - Get Madison Square Garden Entertainment Corp. Class A Report Sphere being built at the Venetian. That first-of-its-kind concert venue looks as if it dropped to Earth from a technologically advanced civilization, and it has raised the bar for performance venues.

Many innovations, however, aren't as obvious. Caesars, for example, uses an artificial intelligence text-based concierge that's surprisingly effective. "Ivy," as it goes by, can answer questions, help with mundane tasks like getting clean towels delivered, or advance your issue to a human where needed.

Innovations big and small are happening up, down, and under the Las Vegas Strip. Elon Musk's Boring Co. has been building a network of tunnels under the city that will eventually use driverless Tesla  (TSLA) - Get Tesla Inc. Report electric vehicles to ferry people all over the city. 

That's a revolutionary idea -- but now a rival has emerged.  

Image source: Daniel Kline/TheStreet

Musk Goes Low, Lyft Goes High?

Musk's Boring Co. has a bold plan for more than 50 stations connecting the Las Vegas Strip to the airport, the Convention Center, Allegiant Stadium, and Fremont Street using driverless Teslas. 

Currently, only a small portion of that network has been built -- a section connecting the two halves of the Las Vegas Convention Center (and one connecting Resorts World Las Vegas to that same location.

For Musk and Boring Co., it's all about taking traffic off the city's busy streets and bringing it underground.

"During typical peak hours, driving from the Las Vegas Convention Center to Mandalay Bay, for example, can take up to 30 minutes. The same trip on Vegas Loop will take approximately 3 minutes," the company says on its website.

If Musk's plan is fully built, it'll effectively give Las Vegas a modern subway, helping alleviate road congestion. It will not, however, stop tourists from using ride-share and taxi cabs.

Now, ride-share company Lyft  (LYFT) - Get Lyft Inc. Report has brought a solution to Sin City that may ultimately help it solve another problem: a shortage of taxi and ride-share drivers. 

Lyft Brings Driverless Cars (Sort of) to Las Vegas

Labor in Las Vegas has been in short supply since the pandemic hit. Some people left the city and others found work outside the service-industry jobs that fuel the Las Vegas economy. At times, that has made the wait for a cab, or a ride-share from Uber (UBER) - Get Uber Technologies Inc. Report and Lyft, longer than usual.

Lyft plans to fix that by partnering with Motional to bring Motional's "Ioniq-5-based robotaxi, an autonomous vehicle designed for fully driverless ride-hail operation, to the Lyft network in Las Vegas," the ride-share company shared in a news release.

The Ioniq 5 is Hyundai's  (HYMTF)  prominent EV. Motional is the Boston joint venture between Hyundai and automotive-technology specialist Aptiv.  (APTV) - Get Aptiv PLC Report

"Launching Motional’s all-electric Ioniq 5 on Lyft’s network in Las Vegas represents tremendous progress in our vision to make an electric, autonomous, and shared future a reality for people everywhere," said  Lyft CEO Logan Green.

It's Self-Driving Lyfts, But...

There is, however, a pretty big catch.

"Each vehicle arrives with not one but two backup drivers standing by to take control of the car should anything go wrong" Casino.org's Corey Levitan reported.

Lyft has promised a truly driverless system at some point in 2023, but current laws and the state of driverless technology make the backups necessary.

Motional and Lyft have quietly been testing driverless vehicles in Las Vegas since 2018. In the news release, Lyft explained how the system works.

"This means riders are able to easily control their ride without assistance from a driver. The enhanced experience includes unlocking the doors through the Lyft app and starting the ride or contacting customer support from the new in-car Lyft AV app, an intuitive in-ride display tailored to autonomous ride-sharing," the company said.

Lyft and Boring Co. are not working together. But if Musk's plan takes vehicles off Las Vegas's streets, the new program makes the experience better for any that remain. 

Ride sharing and taxis will continue to cost significantly more than using Boring Co's subway-like system, so it's easy to see how the two options will work well together.   .

 

  

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Elon Musk’s Las Vegas Strip Plan Has Some Competition

It’s not just Caesars and MGM innovating on the Strip. Elon Musk has been tunneling under Las Vegas to solve a big problem, and now he has a rival.

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It's not just Caesars and MGM innovating on the Strip. Elon Musk has been tunneling under Las Vegas to solve a big problem, and now he has a rival.

Las Vegas has quietly become a hotbed for innovation. Some of that has been driven by the major casino operators -- Caesars Entertainment (CZR) - Get Caesars Entertainment Inc. Report, MGM Resorts International (MGM) - Get MGM Resorts International Report, Resorts World Las Vegas, and Wynn Resorts (WYNN) - Get Wynn Resorts Limited Report -- trying to outdo each other to win over customers.

Some innovations are ostentatious and hard to miss, like the MSG (MSGE) - Get Madison Square Garden Entertainment Corp. Class A Report Sphere being built at the Venetian. That first-of-its-kind concert venue looks as if it dropped to Earth from a technologically advanced civilization, and it has raised the bar for performance venues.

Many innovations, however, aren't as obvious. Caesars, for example, uses an artificial intelligence text-based concierge that's surprisingly effective. "Ivy," as it goes by, can answer questions, help with mundane tasks like getting clean towels delivered, or advance your issue to a human where needed.

Innovations big and small are happening up, down, and under the Las Vegas Strip. Elon Musk's Boring Co. has been building a network of tunnels under the city that will eventually use driverless Tesla  (TSLA) - Get Tesla Inc. Report electric vehicles to ferry people all over the city. 

That's a revolutionary idea -- but now a rival has emerged.  

Image source: Daniel Kline/TheStreet

Musk Goes Low, Lyft Goes High?

Musk's Boring Co. has a bold plan for more than 50 stations connecting the Las Vegas Strip to the airport, the Convention Center, Allegiant Stadium, and Fremont Street using driverless Teslas. 

Currently, only a small portion of that network has been built -- a section connecting the two halves of the Las Vegas Convention Center (and one connecting Resorts World Las Vegas to that same location.

For Musk and Boring Co., it's all about taking traffic off the city's busy streets and bringing it underground.

"During typical peak hours, driving from the Las Vegas Convention Center to Mandalay Bay, for example, can take up to 30 minutes. The same trip on Vegas Loop will take approximately 3 minutes," the company says on its website.

If Musk's plan is fully built, it'll effectively give Las Vegas a modern subway, helping alleviate road congestion. It will not, however, stop tourists from using ride-share and taxi cabs.

Now, ride-share company Lyft  (LYFT) - Get Lyft Inc. Report has brought a solution to Sin City that may ultimately help it solve another problem: a shortage of taxi and ride-share drivers. 

Lyft Brings Driverless Cars (Sort of) to Las Vegas

Labor in Las Vegas has been in short supply since the pandemic hit. Some people left the city and others found work outside the service-industry jobs that fuel the Las Vegas economy. At times, that has made the wait for a cab, or a ride-share from Uber (UBER) - Get Uber Technologies Inc. Report and Lyft, longer than usual.

Lyft plans to fix that by partnering with Motional to bring Motional's "Ioniq-5-based robotaxi, an autonomous vehicle designed for fully driverless ride-hail operation, to the Lyft network in Las Vegas," the ride-share company shared in a news release.

The Ioniq 5 is Hyundai's  (HYMTF)  prominent EV. Motional is the Boston joint venture between Hyundai and automotive-technology specialist Aptiv.  (APTV) - Get Aptiv PLC Report

"Launching Motional’s all-electric Ioniq 5 on Lyft’s network in Las Vegas represents tremendous progress in our vision to make an electric, autonomous, and shared future a reality for people everywhere," said  Lyft CEO Logan Green.

An Important Caveat

There is, however, a pretty big catch.

"Each vehicle arrives with not one but two backup drivers standing by to take control of the car should anything go wrong" Casino.org's Corey Levitan reported.

Lyft has promised a truly driverless system at some point in 2023, but current laws and the state of driverless technology make the backups necessary.

Motional and Lyft have quietly been testing driverless vehicles in Las Vegas since 2018. In the news release, Lyft explained how the system works.

"This means riders are able to easily control their ride without assistance from a driver. The enhanced experience includes unlocking the doors through the Lyft app and starting the ride or contacting customer support from the new in-car Lyft AV app, an intuitive in-ride display tailored to autonomous ride-sharing," the company said.

Lyft and Boring Co. are not working together. But if Musk's plan takes vehicles off Las Vegas's streets, the new program makes the experience better for any that remain. 

Ride sharing and taxis will continue to cost significantly more than using Boring Co's subway-like system, so it's easy to see how the two options will work well together.   .

 

  

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Exosomes Could Improve Inhaled Therapeutics

Instead of disguising vaccines in synthetic lipid nanoparticles, researchers used exosomes as their drug delivery vehicles to the lung. The exosomes are…

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For respiratory diseases, from asthma to COVID-19, inhaled treatments can quickly deliver a drug to the desired target, the lungs. Global health depends on such treatments. As Kristen Popowski, a PhD candidate in comparative biomedical sciences at the North Carolina State University’s College of Veterinary Medicine in Raleigh, and her colleagues wrote: “Respiratory diseases are among the leading causes of morbidity and mortality worldwide, with coronavirus disease 2019 (COVID-19) remaining prevalent in the ongoing pandemic.”

Kristen Popowski [North Carolina State University]
Although lipid nanoparticles offer one delivery vehicle for such treatments, nature creates an obstacle. “The lung has natural defense mechanisms against inhaled particulates, and traditional lipid-nanoparticle vaccines present challenges in cytotoxicity and respiratory clearance,” says Popowski. “A nanoparticle formulation that can withstand these defense mechanisms remains a critical challenge.” So, Popowski and her colleagues explored an alternative approach.

“Instead of disguising vaccines in synthetic lipid nanoparticles, we utilize cell-secreted nanoparticles called exosomes as our drug delivery vehicles to the lung,” Popowski explains. “Our exosomes are secreted from native lung cells and are recognizable by the lung.”

Consequently, she says, “We can minimize pulmonary toxicity and clearance to better deliver and retain vaccines.” In addition, the exosome-based treatments developed by Popowski and her colleagues can be formulated as a dry powder that requires no refrigeration and can have a shelf life of 28 days.

Despite the incentives to take an exosome-based approach to inhaled treatments for respiratory diseases, turning that into a part of bioprocessing requires more research.

“Although commercial manufacturing of exosomes has recently shown extensive improvement, optimization of mRNA loading into exosomes remains a challenge,” Popowski says. “Endogenous mRNA expression through exosome engineering would likely be necessary for large-scale production.”

The post Exosomes Could Improve Inhaled Therapeutics appeared first on GEN - Genetic Engineering and Biotechnology News.

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