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Week Ahead: Bank of Canada to reduce purchases; Global Economic Recovery to pickup

The global economic recovery is gaining momentum as the world’s two largest economies continue to deliver robust economic readings.  China’s economy grew 18.3% in the first quarter, a record rate that sets the example of what we can expect as the…

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The global economic recovery is gaining momentum as the world’s two largest economies continue to deliver robust economic readings.  China’s economy grew 18.3% in the first quarter, a record rate that sets the example of what we can expect as the rest of the world recovers from COVID-19.  The US saw weekly jobless fall to a pandemic low and retail sales explode after Americans put their $1,400 stimulus checks to work.  US stocks are steadily making fresh record highs and that could continue if Treasury yields take their time in recapturing the highs made at the end of March.

The taper tantrum might seem to be far away for the US, but it is already here for Canada.  The Bank of Canada is positioned to reduce weekly bond purchases at the April 21st policy decision.  The economic situation is much more optimistic than it was in the January meeting and Wall Street is now expecting the first BOC rate increase in the second half of 2022, with five total hikes through the end of 2023.

It is a busy week, with rate decisions, flash PMIs , and a wrath of CPI releases that could tilt some central banks into tightening a lot sooner.  Financial markets will continue to track developments over the J&J vaccine as that will have an impact on the short-term outlook with vaccine distributions across Europe and emerging markets.  The ECB will try not to commit to anything and maintain a wait-and-see approach regarding inflation rates and bond yields.  ECB President Lagarde will likely focus on the risks and uncertainty over vaccine rollouts and reopenings.  The June 10th meeting will be key for them.

BOC expected to reduce weekly asset purchases.

ECB to provide minor hints over how the pace of asset purchases will change in the summer.

Russian Central Bank to raise interest rates.

Country

US

The dollar fell to a fresh four-week low as bond market volatility took the 10-year Treasury yield below the 1.60% level, a key level that had a lot of options tied to it.  The slide in Treasury yields surprised many traders and if sustained could keep the pressure on the greenback despite a steady wave of better-than expected data.

The economic boom for the US is here after jobless claims fell to a pandemic low, retail sales surged and all regional surveys all confirmed a robust outlook.  Wall Street also got its first dose of inflation as the economy strengthened and energy prices climbed higher.  The inflation debate will go on for months, but for now it seems the Fed’s call for it to be transitory will hold.

The upcoming week could show weekly jobless claims increase by 62,000 to 638K and existing home sales soften slightly to 6.20 million in March.  On Friday, the flash Markit PMI readings should see strong gains in both manufacturing and service sectors with new home sales rebounding from 775,000 to 875,000.

Canada

Canada will release its first budget in two years. Prime Minister Justin Trudeau’s government is expected to pledge tens of billions of dollars in spending to boost the economic recovery. Trudeau has a minority government and has hinted at a federal election later this year.

The Bank of Canada meets on Wednesday and is expected to start tightening policy by announcing that it will taper its purchase of government bonds. This would make the BoC the first of the G-7 central banks to tighten policy since the Covid-19 pandemic. The BoC is expected to make this move in response to the economy’s recovery, which has been more robust than anticipated.

EU

The ECB holds its policy meeting on Thursday. The central bank is expected to maintain current policy and hold the Main Refinancing Rate at 0.00%. The bank will likely confirm that its asset purchases under its pandemic programme (PEPP) will run at a faster pace until June. ECB President Christine Lagarde has committed to continue the asset purchases until March 2022.

In Germany, the manufacturing sector remains a bright spot with strong growth, but services has been lagging due to the repeated lockdowns which has reduced business activity. German Manufacturing and Services PMIs will be released on Friday, with a forecast of 65.7 and 51.4, respectively. The 50-level separates contraction from expansion.

UK

The upcoming week will be heavy on UK data, which could mean an eventful week for the British pound. On Tuesday, the UK releases key employment numbers (March Jobless Claims Change and Claimant Count Rate), with the ILO unemployment (rolling three months) for February projected to rise to 5.1%, up from 5.0%. This will be followed on Wednesday with the inflation report. March CPI (YoY) is expected to jump from 0.9%, up from the current 0.4%. Friday wraps up with an expected softer retail sales report for March and improving flash PMI data for the April. The Manufacturing and Services PMIs estimates both stand at 59.0, pointing to strong growth.

Emerging Markets

Turkey

The Turkish Central Bank kept interest rates on hold last week, at 19%. The rate decision was the first for the new central bank governor, Sahap Kavcioglu. The governor bowed to market conditions, in particular inflation of 16.2% in March, and did not cut rates. However, the bank removed its tightening bias and scrapped the end-2021 inflation target, which was a dovish move. There is strong political pressure on the bank to lower rates, and this could mean a rate cut in the third quarter or earlier.

The Turkish lira has plunged about 11% since Naci Agbal was fired as the central bank governor in March. This means that inflation is likely to rise further in the coming months.

Russia

Russia’s central bank meets on Friday. The bank is expected to hike rates by 0.25%, which would bring the key rate to 4.75%. The bank raised rates by 0.25% in March, commencing its tightening cycle in response to rising inflation.

U.S. financial institutions will be barred from entry to Russia’s primary market for new, ruble-denominated sovereign debt, beginning June 14.

Ruble volatility could ease if investors continue to believe that Russian sanctions will have a limited impact.

China

China equity markets were dealt a blow after the PBOC tightened liquidity and after a mixed round of key economic data.  China’s record growth of 18.3% in the first quarter will be the peak and now start to trend lower.  The domestic outlook is improving following a better-than-expected retail sales reading, but the Huarong debt issues and tighter liquidity could remain a drag for Chinese stocks.

The Yuan has slowly appreciated against the dollar on the break of the 6.5500 level.  The bond market rally could continue and that should support some further yuan strength.

The big release of the week will be China’s loan prime rates, which are expected to stay anchored.  The 1-year and 5-year loan prime rates should stay at 3.85% and 4.65% respectively.

India

India’s outlook continues to deteriorate as Covid-19 cases continue a chaotic surge.  India’s two largest cities shut down after new virus cases jumped over 200,000.  The rupee is Asia’s worst performing currency and that could remain the case until the current COVID wave eases.

The focus for India will primarily be on the COVID situation, with some traders eyeing the upcoming bills auction. Indian sovereign bond yields jumped higher after the RBI’s first QE debt purchases.  If anemic demand hits these next rounds of auctions, yields could continue to rise.

No economic releases are expected next week.

Australia & New Zealand

The New Zealand dollar has been strengthening after the RBNZ policy mostly went as expected with no changes with interest rates or its large-scale asset purchases. The bank is prepared to lower the benchmark interest rate if required, but the risks to the economic outlook remain balanced.  Stop loss buying sent the kiwi higher, but that could continue if Treasury yields remain depressed.

A wrath of Australian economic data should show the economic recovery is improving.  On Wednesday, the March retail sales reading is expected to improve on a monthly basis from -0.8% to +1.0%.  A close eye will be kept on the flash PMI readings, which should see manufacturing and services remain in expansionary territory.  The minutes of the April policy meeting will provide more clarity over concerns over the frothy housing market and low wages.

Japan

Japan’s trade data is expected to swing back from a deficit to a surplus.  Exports should continue to improve given the strong recoveries from the world’s two largest economies.  The domestic situation is still depressed, and imports should lag the gains seen in the prior month.   It seems the latest virus spread will trigger another round of restrictions that should continue to be a headwind for equities.

On Friday, Japan’s national CPI readings should show deflationary pressures remain.

USD/JPY has declined for two consecutive weeks following the recent weakness with Treasury yields.  BOJ could start to decrease purchases and that should thwart some yen strength.  The 108.00 level should remain massive support for dollar-yen as long as Treasury yields start to stabilize.

Markets

Oil

Crude prices are rallying on an improved demand outlook now that the pace of vaccinations is improving dramatically across Western Europe.  Concerns over both the J&J and AstraZeneca COVID vaccines are waning as Pfizer, Moderna, Sputnik, and other vaccines ramp up supplies.  If the UK reopening of non-essential retail and outdoor hospitality is successful, crude demand forecasts could get massively upgraded on hopes that the rest of Europe will just be a couple months behind them.

Global stockpiles are continuing to decline and that should also support the bullish case for oil prices.  The dollar outlook has shifted quickly and if further weakness continues, the super commodity cycle could provide an additional level of underlying support for crude prices.

Gold

Gold bulls are rejoicing a strong trading week as weaker bond yields are keeping the dollar vulnerable to further losses.  Gold’s primary driver is real yields and now that the 10-year real yield is back at the March lows, investors had to reset their expectations over the path of bond yields.  Treasury yields will end the year significantly higher, but the short-term likely supports an extended consolidation that could see further downward pressure for Treasury yields.

Gold’s bullish streak could see further momentum now that China has given banks permission to import bullion.  Gold has massive support at the $1750 level and tentative resistance at the $1800 region, followed by the $1858 level.

Bitcoin

Coinbase, the largest US crypto exchange successfully went public and triggered a new wave of retail and institutional interest for cryptocurrencies.  Bitcoin surged but that came to a tentative end on accelerated profit-taking after news hit that Turkey bans crypto payments.

The biggest fear for many crypto traders has always been that big governments might impose harsh restrictions on cryptocurrencies.  The situation Turkey is rather unique given the government is doing everything in their power to stabilize their currency.  Many on Wall Street believe that the lira is poised to fall over 10% in the short-term and that is forcing Turkey to impose capital controls and now also prevent lira’s going into Bitcoin.

Bitcoin volatility will remain elevated and the recent Dogecoin bubble could trigger a massive risk-off environment for all cryptocurrencies.

Key Economic Events

Monday, April 19

– Canadian Prime Minister Trudeau’s government releases its first budget in two years.

– U.K. Fintech Week starts with a keynote speech by Chancellor of the Exchequer Sunak.

– Riksbank Deputy Governor Breman gives speaks on the economic risks of climate change.

Economic Data/Events:

  • Japan industrial production, trade, capacity utilization
  • UK Rightmove house prices

Tuesday, April 20

Economic Data/Events:

  • Japan tertiary industry index, machine tool orders
  • UK Unemployment
  • Russia unemployment, retail sales, real wages
  • Australia RBA minutes of April policy meeting
  • Germany PPI
  • Czech PPI
  • Apple’s Spring Loaded Event (new iPad Pro line, AirTags, and a new iMac are expected
  • Netflix reports after the close

Wednesday, April 21

– Russian President Putin delivers his annual address to the nation.

– BOE Governor Bailey speaks on “Diversity and Market Intelligence”

– BOE Deputy Governor Ramsden gives Wednesday’s keynote speech at U.K. Fintech Week.

Economic Data/Events:

  • Bank of Canada (BOC) Interest Rate Decision: Expected to taper its weekly bond purchases
  • BOC Gov Macklem press conference
  • Australia retail sales, Westpac leading index
  • Japan supermarket sales
  • South Korea PPI
  • Canada CPI
  • South Africa CPI
  • New Zealand CPI
  • Russia CPI
  • UK CPI, retail price index
  • Poland average wages, employment, PPI
  • EIA crude oil inventory report

Thursday, April 22

– Earth Day 2021. The theme this year is “Restore Our Earth.”

– President Biden Invites 40 World Leaders to Leaders Summit on Climate

Economic Data/Events:

  • European Central Bank rate decision: Expected to keep policy unchanged, affirming that asset purchases will run at a faster clip until June.
  • ECB rate decisions presser with President Christine Lagarde
  • US initial jobless claims, leading index, existing home sales Mar: 6.21M estimate v 6.22 prior
  • Eurozone Apr Advance consumer confidence: -11.5 estimate v -10.8 prior
  • Thailand trade
  • Australia NAB business confidence
  • Mexico Unemployment
  • France manufacturing confidence
  • Poland retail sales
  • Russia gold and forex reserves
  • Netherlands unemployment, consumer spending
  • Switzerland imports/exports
  • Ireland PPI

Friday, April 23

Economic Data/Events:

  • US Apr Prelim Markit manufacturing PMI: 60.0 estimate v 59.1 prior, new home sales
  • Eurozone Apr Prelim Manufacturing PMI: 62.2 estimate v 62.5 prior
  • Germany Apr Prelim Manufacturing PMI: 65.7 estimate v 66.6 prior
  • UK Manufacturing PMI
  • Australia Manufacturing PMI
  • Russian Central Bank (CBR) Interest rate decision: expected to raise Key Rate 25bps to 4.75%
  • Russian rate decision press conference with Governor Nabiullina
  • Japan CPI
  • Singapore CPI
  • Japan manufacturing PMI, department store sales
  • Taiwan industrial production
  • Thailand foreign reserves
  • Mexico retail sales
  • UK retail sales, GfK consumer confidence, public sector net borrowing
  • Baker Hughes rig count

Sovereign Rating Updates

– Finland (Fitch)

– Netherlands (Fitch)

– EFSF (S&P)

– Greece (S&P)

– Italy (S&P)

– U.K. (S&P)

– Finland (DBRS)

 

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Net Zero, The Digital Panopticon, & The Future Of Food

Net Zero, The Digital Panopticon, & The Future Of Food

Authored by Colin Todhunter via Off-Guardian.org,

The food transition, the energy…

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Net Zero, The Digital Panopticon, & The Future Of Food

Authored by Colin Todhunter via Off-Guardian.org,

The food transition, the energy transition, net-zero ideology, programmable central bank digital currencies, the censorship of free speech and clampdowns on protest. What’s it all about? To understand these processes, we need to first locate what is essentially a social and economic reset within the context of a collapsing financial system.

Writer Ted Reece notes that the general rate of profit has trended downwards from an estimated 43% in the 1870s to 17% in the 2000s. By late 2019, many companies could not generate enough profit. Falling turnover, squeezed margins, limited cashflows and highly leveraged balance sheets were prevalent.

Professor Fabio Vighi of Cardiff University has described how closing down the global economy in early 2020 under the guise of fighting a supposedly new and novel pathogen allowed the US Federal Reserve to flood collapsing financial markets (COVID relief) with freshly printed money without causing hyperinflation. Lockdowns curtailed economic activity, thereby removing demand for the newly printed money (credit) in the physical economy and preventing ‘contagion’.

According to investigative journalist Michael Byrant, €1.5 trillion was needed to deal with the crisis in Europe alone. The financial collapse staring European central bankers in the face came to a head in 2019. The appearance of a ‘novel virus’ provided a convenient cover story.

The European Central Bank agreed to a €1.31 trillion bailout of banks followed by the EU agreeing to a €750 billion recovery fund for European states and corporations. This package of long-term, ultra-cheap credit to hundreds of banks was sold to the public as a necessary programme to cushion the impact of the pandemic on businesses and workers.

In response to a collapsing neoliberalism, we are now seeing the rollout of an authoritarian great reset — an agenda that intends to reshape the economy and change how we live.

SHIFT TO AUTHORITARIANISM

The new economy is to be dominated by a handful of tech giants, global conglomerates and e-commerce platforms, and new markets will also be created through the financialisation of nature, which is to be colonised, commodified and traded under the notion of protecting the environment.

In recent years, we have witnessed an overaccumulation of capital, and the creation of such markets will provide fresh investment opportunities (including dodgy carbon offsetting Ponzi schemes)  for the super-rich to park their wealth and prosper.

This great reset envisages a transformation of Western societies, resulting in permanent restrictions on fundamental liberties and mass surveillance. Being rolled out under the benign term of a ‘Fourth Industrial Revolution’, the World Economic Forum (WEF) says the public will eventually ‘rent’ everything they require (remember the WEF video ‘you will own nothing and be happy’?): stripping the right of ownership under the guise of a ‘green economy’ and underpinned by the rhetoric of ‘sustainable consumption’ and ‘climate emergency’.

Climate alarmism and the mantra of sustainability are about promoting money-making schemes. But they also serve another purpose: social control.

Neoliberalism has run its course, resulting in the impoverishment of large sections of the population. But to dampen dissent and lower expectations, the levels of personal freedom we have been used to will not be tolerated. This means that the wider population will be subjected to the discipline of an emerging surveillance state.

To push back against any dissent, ordinary people are being told that they must sacrifice personal liberty in order to protect public health, societal security (those terrible Russians, Islamic extremists or that Sunak-designated bogeyman George Galloway) or the climate. Unlike in the old normal of neoliberalism, an ideological shift is occurring whereby personal freedoms are increasingly depicted as being dangerous because they run counter to the collective good.

The real reason for this ideological shift is to ensure that the masses get used to lower living standards and accept them. Consider, for instance, the Bank of England’s chief economist Huw Pill saying that people should ‘accept’ being poorer. And then there is Rob Kapito of the world’s biggest asset management firm BlackRock, who says that a “very entitled” generation must deal with scarcity for the first time in their lives.

At the same time, to muddy the waters, the message is that lower living standards are the result of the conflict in Ukraine and supply shocks that both the war and ‘the virus’ have caused.

The net-zero carbon emissions agenda will help legitimise lower living standards (reducing your carbon footprint) while reinforcing the notion that our rights must be sacrificed for the greater good. You will own nothing, not because the rich and their neoliberal agenda made you poor but because you will be instructed to stop being irresponsible and must act to protect the planet.

NET-ZERO AGENDA

But what of this shift towards net-zero greenhouse gas emissions and the plan to slash our carbon footprints? Is it even feasible or necessary?

Gordon Hughes, a former World Bank economist and current professor of economics at the University of Edinburgh, says in a new report that current UK and European net-zero policies will likely lead to further economic ruin.

Apparently, the only viable way to raise the cash for sufficient new capital expenditure (on wind and solar infrastructure) would be a two decades-long reduction in private consumption of up to 10 per cent. Such a shock has never occurred in the last century outside war; even then, never for more than a decade.

But this agenda will also cause serious environmental degradation. So says Andrew Nikiforuk in the article The Rising Chorus of Renewable Energy Skeptics, which outlines how the green techno-dream is vastly destructive.

He lists the devastating environmental impacts of an even more mineral-intensive system based on renewables and warns:

“The whole process of replacing a declining system with a more complex mining-based enterprise is now supposed to take place with a fragile banking system, dysfunctional democracies, broken supply chains, critical mineral shortages and hostile geopolitics.”

All of this assumes that global warming is real and anthropogenic. Not everyone agrees. In the article Global warming and the confrontation between the West and the rest of the world, journalist Thierry Meyssan argues that net zero is based on political ideology rather than science. But to state such things has become heresy in the Western countries and shouted down with accusations of ‘climate science denial’.

Regardless of such concerns, the march towards net zero continues, and key to this is the United Nations Agenda 2030 for Sustainable Development Goals.

Today, almost every business or corporate report, website or brochure includes a multitude of references to ‘carbon footprints’, ‘sustainability’, ‘net zero’ or ‘climate neutrality’ and how a company or organisation intends to achieve its sustainability targets. Green profiling, green bonds and green investments go hand in hand with displaying ‘green’ credentials and ambitions wherever and whenever possible.

It seems anyone and everyone in business is planting their corporate flag on the summit of sustainability. Take Sainsbury’s, for instance. It is one of the ‘big six’ food retail supermarkets in the UK and has a vision for the future of food that it published in 2019.

Here’s a quote from it:

“Personalised Optimisation is a trend that could see people chipped and connected like never before. A significant step on from wearable tech used today, the advent of personal microchips and neural laces has the potential to see all of our genetic, health and situational data recorded, stored and analysed by algorithms which could work out exactly what we need to support us at a particular time in our life. Retailers, such as Sainsbury’s could play a critical role to support this, arranging delivery of the needed food within thirty minutes — perhaps by drone.”

Tracked, traced and chipped — for your own benefit. Corporations accessing all of our personal data, right down to our DNA. The report is littered with references to sustainability and the climate or environment, and it is difficult not to get the impression that it is written so as to leave the reader awestruck by the technological possibilities.

However, the promotion of a brave new world of technological innovation that has nothing to say about power — who determines policies that have led to massive inequalities, poverty, malnutrition, food insecurity and hunger and who is responsible for the degradation of the environment in the first place — is nothing new.

The essence of power is conveniently glossed over, not least because those behind the prevailing food regime are also shaping the techno-utopian fairytale where everyone lives happily ever after eating bugs and synthetic food while living in a digital panopticon.

FAKE GREEN

The type of ‘green’ agenda being pushed is a multi-trillion market opportunity for lining the pockets of rich investors and subsidy-sucking green infrastructure firms and also part of a strategy required to secure compliance required for the ‘new normal’.

It is, furthermore, a type of green that plans to cover much of the countryside with wind farms and solar panels with most farmers no longer farming. A recipe for food insecurity.

Those investing in the ‘green’ agenda care first and foremost about profit. The supremely influential BlackRock invests in the current food system that is responsible for polluted waterways, degraded soils, the displacement of smallholder farmers, a spiralling public health crisis, malnutrition and much more.

It also invests in healthcare — an industry that thrives on the illnesses and conditions created by eating the substandard food that the current system produces. Did Larry Fink, the top man at BlackRock, suddenly develop a conscience and become an environmentalist who cares about the planet and ordinary people? Of course not.

Any serious deliberations on the future of food would surely consider issues like food sovereignty, the role of agroecology and the strengthening of family farms — the backbone of current global food production.

The aforementioned article by Andrew Nikiforuk concludes that, if we are really serious about our impacts on the environment, we must scale back our needs and simplify society.

In terms of food, the solution rests on a low-input approach that strengthens rural communities and local markets and prioritises smallholder farms and small independent enterprises and retailers, localised democratic food systems and a concept of food sovereignty based on self-sufficiency, agroecological principles and regenerative agriculture.

It would involve facilitating the right to culturally appropriate food that is nutritionally dense due to diverse cropping patterns and free from toxic chemicals while ensuring local ownership and stewardship of common resources like land, water, soil and seeds.

That’s where genuine environmentalism and the future of food begins.

Tyler Durden Thu, 03/14/2024 - 02:00

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Five Aerospace Investments to Buy as Wars Worsen Copy

Five aerospace investments to buy as wars worsen give investors a chance to acquire shares of companies focused on fortifying national defense. The five…

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Five aerospace investments to buy as wars worsen give investors a chance to acquire shares of companies focused on fortifying national defense.

The five aerospace investments to buy provide military products to help protect freedom amid Russia’s ongoing onslaught against Ukraine that began in February 2022, as well as supply arms in the Middle East used after Hamas militants attacked and murdered civilians in Israel on Oct. 7. Even though the S&P 500 recently reached all-time highs, these five aerospace investments have remained reasonably priced and rated as recommendations by seasoned analysts and a pension fund chairman.

State television broadcasts in Russia show the country’s soldiers advancing further into Ukrainian territory, but protests have occurred involving family members of those serving in perilous conditions in the invasion of their neighboring nation to be brought home. Even though hundreds of thousands of Russians also have fled to other countries to avoid compulsory military service, the aggressor’s President Vladimir Putin has vowed to continue to send additional soldiers into the fierce fighting.

While Russia’s land-grab of Crimea and other parts of Ukraine show no end in sight, Israel’s war with Hamas likely will last for at least additional months, according to the latest reports. United Nations’ leaders expressed alarm on Dec. 26 about intensifying Israeli attacks that killed more than 100 Palestinians over two days in part of the Gaza Strip, when 15 members of the Israel Defense Force (IDF) also lost their lives.

Five Aerospace Investments to Buy as Wars Worsen: General Dynamics

One of the five aerospace investments to buy as wars worsen is General Dynamics (NYSE: GD), a Reston, Virginia-based aerospace company with more than 100,000 employees in 70-plus countries. A key business unit of General Dynamics is Gulfstream Aerospace Corporation, a manufacturer of business aircraft. Other segments of General Dynamics focus on making military products such as Abrams tanks, Stryker fighting vehicles, ASCOD fighting vehicles like the Spanish PIZARRO and British AJAX, LAV-25 Light Armored Vehicles and Flyer-60 lightweight tactical vehicles.

For the U.S. Navy and other allied armed forces, General Dynamics builds Virginia-class attack submarines, Columbia-class ballistic missile submarines, Arleigh Burke-class guided missile destroyers, Expeditionary Sea Base ships, fleet logistics ships, commercial cargo ships, aircraft and naval gun systems, Hydra-70 rockets, military radios and command and control systems. In addition, the company provides radio and optical telescopes, secure mobile phones, PIRANHA and PANDUR wheeled armored vehicles and mobile bridge systems.

Chicago-based investment firm William Blair & Co. is among those recommending General Dynamics. The Chicago firm gave an “outperform” rating to General Dynamics in a Dec. 21 research note.

Gulfstream is seeking G700 FAA certification by the end of 2023, suggesting potentially positive news in the next 10 days, William Blair wrote in its recent research note. The investment firm projected that General Dynamics would trade upward upward upon the G700’s certification.

“General Dynamics’ 2023 aircraft delivery guidance of approximately 134 planes assumes that 19 G700s are delivered in the fourth quarter,” wrote William Blair’s aerospace and defense analyst Louie DiPalma. “Even if deliveries fall short of this target, we believe investors will take a glass-half-full approach upon receipt of the certification.”

Chart courtesy of www.stockcharts.com.

Five Aerospace Investments to Buy as Wars Worsen: GD Outlook

The G700 is a major focus area for investors because it is Gulfstream’s most significant aircraft introduction since the iconic G650 in 2012, DiPalma wrote. Gulfstream has the highest market share in the long-range jet segment of the private aircraft market, the highest profit margin of aircraft peers and the most premium business aviation brand, he added.

“The aircraft remains immensely popular today with corporations and high-net-worth individuals,” Di Palma wrote. “Elon Musk has reportedly placed an order for a G700 to go along with his existing G650. Qatar Airways announced at the Paris Air Show that 10 G700 aircraft will become part of its fleet.”

G700 deliveries and subsequent G800 deliveries are expected to be the cornerstone of Gulfstream’s growth and margin expansion for the next decade, DiPalma wrote. This should lead to a rebound in the stock price as the margins for the G700 and G800 are very attractive, he added.

Management’s guidance is for the aerospace operating margin to increase from about 13.2% in 2022 to roughly 14.0% in 2023 and 15.8% in 2024. Longer term, a high-teens profit margin appears within reach, DiPalma projected.

In other General Dynamics business segments, William Blair expects several yet-unannounced large contract awards for General Dynamics IT, to go along with C$1.7 billion, or US$1.29 billion, in General Dynamics Mission Systems contracts announced on Dec. 20 for the Canadian Army. General Dynamics shares are poised to have a strong 2024, William Blair wrote.

Five Aerospace Investments to Buy as Wars Worsen: VSE Corporation

Alexandria, Virginia-based VSE Corporation’s (NASDAQ: VSEC) price-to-earnings (P/E) valuation multiple of 22 received support when AAR Corp. (NYSE: AIR), a Wood Dale, Illinois, provider of aviation services, announced on Dec. 21 that it would acquire the product support business of Triumph Group (NYSE: TGI), a Berwyn, Pennsylvania, supplier of aerospace services, structures and systems. AAR’s purchase price of $725 million reflects confidence in a continued post-pandemic aerospace rebound.

VSE, a provider of aftermarket distribution and repair services for land, sea and air transportation assets used by government and commercial markets, is rated “outperform” by William Blair. The company’s core services include maintenance, repair and operations (MRO), parts distribution, supply chain management and logistics, engineering support, as well as consulting and training for global commercial, federal, military and defense customers.

“Robust consumer travel demand and aging aircraft fleets have driven elevated maintenance visits,” William Blair’s DiPalma wrote in a Dec. 21 research note. “The AAR–Triumph deal is valued at a premium 13-times 2024 EBITDA multiple, which was in line with the valuation multiple that Heico (NYSE: HEI) paid for Wencor over the summer.”

VSE currently trades at a discounted 9.5 times consensus 2024 earnings before interest, taxes, depreciation and amortization (EBITDA) estimates, as well as 11.6 times consensus 2023 EBITDA.

Five Aerospace Investments to Buy as Wars Worsen: VSE Undervalued?

“We expect that VSE shares will trend higher as investors process this deal,” DiPalma wrote. “VSE shares trade at 9.5 times consensus 2024 adjusted EBITDA, compared with peers and M&A comps in the 10-to-14-times range. We think that VSE’s multiple will expand as it closes the divestiture of its federal and defense business and makes strategic acquisitions. We see consistent 15% annual upside for shares as VSE continues to take share in the $110 billion aviation aftermarket industry.”

William Blair reaffirmed its “outperform” rating for VSE on Dec. 21. The main risk to VSE shares is lumpiness associated with its aviation services margins, Di Palma wrote. However, he raised 2024 estimates to further reflect commentary from VSE’s analysts’ day in November.

Chart courtesy of www.stockcharts.com.

Five Aerospace Investments to Buy as Wars Worsen: HEICO Corporation

HEICO Corporation (NYSEL: HEI), is a Hollywood, Florida-based technology-driven aerospace, industrial, defense and electronics company that also is ranked as an “outperform” investment by William Blair’s DiPalma. The aerospace aftermarket parts provider recently reported fourth-quarter financials above consensus analysts’ estimates, driven by 20% organic growth in HEICO’s flight support group.

HEICO’s management indicated that the performance of recently acquired Wencor is exceeding expectations. However, HEICO leaders offered color on 2024 organic growth and margin expectations that forecast reduced gains. Even though consensus estimates already assumed slowing growth, it is still not a positive for HEICO, DiPalma wrote.

William Blair forecasts 15% annual upside to HEICO’s shares, based on EBITDA growth. HEICO’s management cited a host of reasons for its quarterly outperformance, highlighted by the continued commercial air travel recovery. The company also referenced new product introductions and efficiency initiatives.

HEICO’s defense product sales increased by 26% sequentially, marking the third consecutive sequential increase in defense product revenue. The company’s leaders conveyed that defense in general is moving in the right direction to enhance financial performance.

Chart courtesy of www.stockcharts.com.

Five Dividend-paying Defense and Aerospace Investments to Purchase: XAR

A fourth way to obtain exposure to defense and aerospace investments is through SPDR S&P Aerospace and Defense ETF (XAR). That exchange-traded fund  tracks the S&P Aerospace & Defense Select Industry Index. The fund is overweight in industrials and underweight in technology and consumer cyclicals, said Bob Carlson, a pension fund chairman who heads the Retirement Watch investment newsletter.

Bob Carlson, who heads Retirement Watch, answers questions from Paul Dykewicz.

XAR has 34 securities, and 44.2% of the fund is in the 10 largest positions. The fund is up 25.82% in the last 12 months, 22.03% in the past three months and 7.92% for the last month. Its dividend yield recently measured 0.38%.

The largest positions in the fund recently were Axon Enterprise (NASDAQ: AXON), Boeing (NYSE: BA), L3Harris Technologies (NYSE: LHX), Spirit Aerosystems (NYSE: SPR) and Virgin Galactic (NYSE: SPCE).

Chart courtesy of www.stockcharts.com

Five Dividend-paying Defense and Aerospace Investments to Purchase: PPA

The second fund recommended by Carlson is Invesco Aerospace & Defense ETF (PPA), which tracks the SPADE Defense Index. It has the same underweighting and overweighting as XAR, he said.

PPA recently held 52 securities and 53.2% of the fund was in its 10 largest positions. With so many holdings, the fund offers much reduced risk compared to buying individual stocks. The largest positions in the fund recently were Boeing (NYSE: BA), RTX Corp. (NYSE: RTX), Lockheed Martin (NYSE: LMT), Northrop Grumman (NYSE: NOC) and General Electric (NYSE:GE).

The fund is up 19.07% for the past year, 50.34% in the last three months and 5.30% during the past month. The dividend yield recently touched 0.69%.

Chart courtesy of www.stockcharts.com

Other Fans of Aerospace

Two fans of aerospace stocks are Mark Skousen, PhD, and seasoned stock picker Jim Woods. The pair team up to head the Fast Money Alert advisory service They already are profitable in their recent recommendation of Lockheed Martin (NYSE: LMT) in Fast Money Alert.

Mark Skousen, a scion of Ben Franklin, meets with Paul Dykewicz.


Jim Woods, a former U.S. Army paratrooper, co-heads Fast Money Alert.

Bryan Perry, who heads the Cash Machine investment newsletter and the Micro-Cap Stock Trader advisory service, recommends satellite services provider Globalstar (NYSE American: GSAT), of Covington, Louisiana, that has jumped 50.00% since he advised buying it two months ago. Perry is averaging a dividend yield of 11.14% in his Cash Machine newsletter but is breaking out with the red-hot recommendation of Globalstar in his Micro-Cap Stock Trader advisory service.


Bryan Perry heads Cash Machine, averaging an 11.14% dividend yield.

Military Equipment Demand Soars amid Multiple Wars

The U.S. military faces an acute need to adopt innovation, to expedite implementation of technological gains, to tap into the talents of people in various industries and to step-up collaboration with private industry and international partners to enhance effectiveness, U.S. Joint Chiefs of Staff Gen. Charles Q. Brown Jr. told attendees on Nov 16 at a national security conference. Prime examples of the need are showed by multiple raging wars, including the Middle East and Ukraine. A cold war involves China and its increasingly strained relationships with Taiwan and other Asian nations.

The shocking Oct. 7 attack by Hamas on Israel touched off an ongoing war in the Middle East, coupled with Russia’s February 2022 invasion and continuing assault of neighboring Ukraine. Those brutal military conflicts show the fragility of peace when determined aggressors are willing to use any means necessary to achieve their goals. To fend off such attacks, rapid and effective response is required.

“The Department of Defense is doing more than ever before to deter, defend, and, if necessary, defeat aggression,” Gen. Brown said at the National Security Innovation Forum at the Johns Hopkins University Bloomberg Center in Washington, D.C.

One of Russia’s war ships, the 360-foot-long Novocherkassk, was damaged on Dec. 26 by a Ukrainian attack on the Black Sea port of Feodosia in Crimea. This video of an explosion at the port that reportedly shows a section of the ship hit by aircraft-guided missiles.


Chairman Joint Chiefs of Staff Gen. Charles Q. Brown, Jr.
Photo By: Benjamin Applebaum

National security threats can compel immediate action, Gen. Brown said he quickly learned since taking his post on Oct. 1.

 

“We may not have much warning when the next fight begins,” Gen. Brown said. “We need to be ready.”

 

In a pre-recorded speech at the national security conference, Michael R. Bloomberg, founder of Bloomberg LP, told the John Hopkins national security conference attendees about the critical need for collaboration between government and industry.

 

“Building enduring technological advances for the U.S. military will help our service members and allies defend freedom across the globe,” Bloomberg said.

 

The “horrific terrorist attacks” against Israel and civilians living there on Oct. 7 underscore the importance of that mission, Bloomberg added.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, Guru Focus and other publications and websites. Attention Holiday Gift Buyers! Consider purchasing Paul’s inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is great gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many othersCall 202-677-4457 for special pricing on multiple-book purchases or autographed copies! Follow Paul on Twitter @PaulDykewicz. He is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper, after writing for the Baltimore Business Journal and Crain Communications.

The post Five Aerospace Investments to Buy as Wars Worsen Copy appeared first on Stock Investor.

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Health Officials: Man Dies From Bubonic Plague In New Mexico

Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in…

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Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in New Mexico confirmed that a resident died from the plague in the United States’ first fatal case in several years.

A bubonic plague smear, prepared from a lymph removed from an adenopathic lymph node, or bubo, of a plague patient, demonstrates the presence of the Yersinia pestis bacteria that causes the plague in this undated photo. (Centers for Disease Control and Prevention/Getty Images)

The New Mexico Department of Health, in a statement, said that a man in Lincoln County “succumbed to the plague.” The man, who was not identified, was hospitalized before his death, officials said.

They further noted that it is the first human case of plague in New Mexico since 2021 and also the first death since 2020, according to the statement. No other details were provided, including how the disease spread to the man.

The agency is now doing outreach in Lincoln County, while “an environmental assessment will also be conducted in the community to look for ongoing risk,” the statement continued.

This tragic incident serves as a clear reminder of the threat posed by this ancient disease and emphasizes the need for heightened community awareness and proactive measures to prevent its spread,” the agency said.

A bacterial disease that spreads via rodents, it is generally spread to people through the bites of infected fleas. The plague, known as the black death or the bubonic plague, can spread by contact with infected animals such as rodents, pets, or wildlife.

The New Mexico Health Department statement said that pets such as dogs and cats that roam and hunt can bring infected fleas back into homes and put residents at risk.

Officials warned people in the area to “avoid sick or dead rodents and rabbits, and their nests and burrows” and to “prevent pets from roaming and hunting.”

“Talk to your veterinarian about using an appropriate flea control product on your pets as not all products are safe for cats, dogs or your children” and “have sick pets examined promptly by a veterinarian,” it added.

“See your doctor about any unexplained illness involving a sudden and severe fever, the statement continued, adding that locals should clean areas around their home that could house rodents like wood piles, junk piles, old vehicles, and brush piles.

The plague, which is spread by the bacteria Yersinia pestis, famously caused the deaths of an estimated hundreds of millions of Europeans in the 14th and 15th centuries following the Mongol invasions. In that pandemic, the bacteria spread via fleas on black rats, which historians say was not known by the people at the time.

Other outbreaks of the plague, such as the Plague of Justinian in the 6th century, are also believed to have killed about one-fifth of the population of the Byzantine Empire, according to historical records and accounts. In 2013, researchers said the Justinian plague was also caused by the Yersinia pestis bacteria.

But in the United States, it is considered a rare disease and usually occurs only in several countries worldwide. Generally, according to the Mayo Clinic, the bacteria affects only a few people in U.S. rural areas in Western states.

Recent cases have occurred mainly in Africa, Asia, and Latin America. Countries with frequent plague cases include Madagascar, the Democratic Republic of Congo, and Peru, the clinic says. There were multiple cases of plague reported in Inner Mongolia, China, in recent years, too.

Symptoms

Symptoms of a bubonic plague infection include headache, chills, fever, and weakness. Health officials say it can usually cause a painful swelling of lymph nodes in the groin, armpit, or neck areas. The swelling usually occurs within about two to eight days.

The disease can generally be treated with antibiotics, but it is usually deadly when not treated, the Mayo Clinic website says.

“Plague is considered a potential bioweapon. The U.S. government has plans and treatments in place if the disease is used as a weapon,” the website also says.

According to data from the U.S. Centers for Disease Control and Prevention, the last time that plague deaths were reported in the United States was in 2020 when two people died.

Tyler Durden Wed, 03/13/2024 - 21:40

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