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Week Ahead – Fed and earnings in focus

Investors in need of a lift Earnings season is off to a rocky start and not only are investors not comforted by what they’re seeing, but it’s also contributing to the unease in the markets. The next week will be huge after an awful start to the year…

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Investors in need of a lift

Earnings season is off to a rocky start and not only are investors not comforted by what they’re seeing, but it’s also contributing to the unease in the markets. The next week will be huge after an awful start to the year that’s brought inflation and interest rate anxiety, earnings disappointment, and increased geopolitical risk.

The Federal Reserve will have an opportunity to ease the growing concerns in the markets that four rate hikes and balance sheet reduction won’t be enough to get inflation under control. The last week has seen plenty of speculation around the possibility of the first 50 basis point increase in more than 20 years and up to seven hikes next year which isn’t helping to calm the nerves.

The Nasdaq has been hit hard by the combination of higher yields and risk aversion which will make the big tech earnings next week all the more important. Netflix got things off to a disappointing start and paid the price. Can the other big tech names turn things around?

Will the Fed ease investor fears?

Pressure growing on Boris Johnson

SARB expected to raise rates again

US

This is building up to be a huge week on Wall Street after investors have been rattled by a rough start to earnings season and now face a critical FOMC meeting that should pave the way for a March liftoff.  The main event is the Fed policy meeting and press conference, but a close second will be the next round of earnings.  The Fed is worried about inflation and will be delivering a series of interest rate hikes in the first half of the year.  This week’s meeting is all about preparing markets for how they will normalize policy this year with rate hikes and balance sheet reduction. 

With the Nasdaq falling into correction territory, stock traders will look to see if Microsoft, Intel, and Apple earnings can help form a bottom.  Investors are growing cautious over the outlook as margin pressures continue to get hit over surging wage and transportation costs.    

Geopolitics is also becoming a key focal point for investors, with US and Russian talks over Ukraine potentially having a huge impact on energy prices. US policy over North Korea may become more aggressive as the country seems poised to resume nuclear missile tests.  

EU 

Plenty of economic data to come from the euro area next week which will no doubt draw a lot of attention, starting with the flash PMIs on Monday.

With markets once again getting ahead of the curve and pricing in a small rate hike in October, despite President Christine Lagarde pushing back against it, there will be a lot of focus on the releases and what they tell us about inflation.

Italian lawmakers will start voting next week for the country’s next President, with Prime Minister Mario Draghi the favorite.

UK

A relatively quiet week as far as the UK is concerned. From a data standpoint, the week basically starts and finishes on Monday with the flash PMIs. With four rate hikes priced in this year, the focus remains on the inflation outlook and whether more may be needed.

Of course, the political arena is far more in the headlines right now. Boris Johnson is hanging on by a thread as we await the outcome from Sue Gray’s investigation into Downing Street parties during lockdown. Pressure has become almost unbearable on the Prime Minister but he came out fighting during PMQ’s and if Gray returns a favorable report, he could well live to see another day. 

Russia

A quiet week on the economic side, with industrial output on Tuesday and PPI on Wednesday the only notable releases.

As far as Russia is concerned, the focus is on the geopolitics and whether the country is, as the US warns, about to invade Ukraine. The market impact could be very negative in that case and the currency is already coming under some pressure, despite higher oil prices, as the odds increase.

South Africa

Inflation rose faster than expected last month, reaching 5.9%, up from 5.5% in November, which is right at the upper end of the central bank target range of 3-6%. The jump has made a second consecutive 25 basis point hike very likely which will take the repo rate to 4%.

Turkey

A rare moment of refrain from the CBRT this week saw the repo rate remain at 14%. That brought an end to a run of four consecutive rate cuts that saw the repo rate slashed by 5% and inflation soar to 36%.

The move left the lira quite stable for another week after an extraordinarily volatile couple of months. Governor Sahap Kavcioglu’s briefing on the quarterly inflation report on Thursday will be all the more interesting after the decision to hold rates. 

The CBRT said this week that a comprehensive review of the policy framework is being conducted and the lira will be prioritized. Perhaps we’ll learn more about what that means next week and whether more volatility is coming.

China

China Industrial Profits for December, which will be released on Thursday, is a key gauge of the strength of the business sector. The consensus stands at 10%, up from the November gain of 9.0%.

China has responded to recent Covid-19 outbreaks by enacting a zero-tolerance policy. There are more than 20 million people are in lockdown, but the economy has held up.

India

The Indian state of Maharashtra announced that it will reopen schools this week. Although the state had the highest number of Omicron cases in the country, new cases have fallen sharply. This raises hopes that Omicron has peaked and the economy can reopen. India has been devastated by Covid, recording almost 500,000 deaths from the pandemic.

No major data next week but traders continue to look for clues around a possible rate hike in February in response to rising global yields and higher oil prices.

Bank Holiday on Wednesday.

Australia 

Australia releases CPI for Q4 on Tuesday. The consensus stands at 0.8% QoQ, unchanged from the third quarter. Price rises have been driven by an increase in energy, food, and new home construction costs. The energy component may ease in the coming months and wage growth remains weak, which means that inflationary pressures should be contained.

PMIs will be released early in the week which could dictate early trading.

Australia Day bank holiday on Wednesday.

New Zealand

New Zealand will publish CPI for Q4 on Thursday. Higher energy continues to fuel an upswing in inflation, with the headline reading expected to rise above 5.0% YoY. On a quarterly basis, CPI is expected to have climbed 0.8%, after a sharp rise of 2.2% in Q3. Gasoline and food costs are the primary drivers of inflation. 

Japan

After decades of deflation, Japan is seeing a rise in inflationary pressures.  On Tuesday, we’ll get a look at BoJ Core CPI, the central bank’s preferred inflation indicator. This will be followed on Thursday by Tokyo Core CPI for January. The consensus is a 0.2% gain, down from 0.5% prior. 

Inflation has been boosted by rising energy and food costs, which will likely continue to boost inflation. At the same time, the Omicron wave is a downside risk.


Economic Calendar

Monday, Jan. 24

Evergrande next dollar bond interest payments are due

German Chancellor Scholz discusses Covid pandemic strategy

Lawmaker ballot starts for Italy’s presidency

COP27 climate summit

European Union foreign ministers meet in Brussels

European Commission VP Sefcovic and UK Foreign Secretary Truss meet for Brexit talks

Economic Data/Events

Australia CPI

Singapore CPI

Eurozone PMI

Germany PMI

UK PMI

Australia PMI

Japan Bank PMI

Taiwan industrial production, money supply

South Korea retail sales, department store sales

Switzerland sight deposits

Tuesday, Jan. 25

US FOMC begins a two-day meeting

IMF launches the World Economic Outlook update

Economic Data/Events

Germany IFO business climate

Mexico international reserves

New Zealand performance services index

Australia consumer confidence, CPI

Hungary Rate decision

US Conference Board consumer confidence

UK public finances, public sector net borrowing

Japan department store sales

Vietnam industrial production, retail sales, trade, CPI

Turkey real sector confidence

Spain PPI

Wednesday, Jan. 26

Economic Data/Events

FOMC Rate Decision: The Fed may stop bond purchases and set up a March liftoff

US new home sales, wholesale inventories

BOC Rate decisions: May raise rates 25 bps to 0.50%

Poland GDP

China industrial profits

New Zealand trade, credit card spending

Philippines agricultural output

Japan PPI services, leading index

Thailand capacity utilization, manufacturing production index

Singapore industrial production

Poland unemployment

Russia CPI, PPI

Switzerland Credit Suisse survey expectations

Spain mortgages

EIA Crude Oil Inventory Report

Thursday, Jan. 27

Economic Data/Events

US Q4 Advance GDP Annualized Q/Q: 5.8%e v 2.3% prior

US initial jobless claims, durable goods

European Central Bank’s Edward Scicluna speaks at a European Savings and Retail Banking Group event

Norway’s sovereign wealth fund releases key figures for 2021

Turkish central bank releases its quarterly inflation report

Hungary Rate Decision: Expected to raise interest rates by 30 basis points to 2.70%

Hong Kong Trade

Mexico Trade

Switzerland Trade

New Zealand CPI

Spain Unemployment

Singapore Unemployment

South Africa rate decision: Expected to raise rates by 25 basis points to 4.00%

South Africa PPI

China industrial profits

Japan machine tool orders

Australia Westpac leading index, Bloomberg economic survey, import-export price index

Russia gold and foreign reserves

Germany consumer confidence

Friday, Jan. 28

Economic Data/Events

US consumer income, University of Michigan consumer sentiment

German GDP

France GDP

Sweden GDP

Eurozone economic confidence, consumer confidence

Singapore Unemployment

Sweden Unemployment

Norway Unemployment

France PPI

Australia PPI

New Zealand consumer confidence

Japan CPI: Japan (Tokyo)

Thailand forward contracts, foreign reserves

Turkey economic confidence

South Africa monthly budget balance

Italy economic, manufacturing, and consumer confidence

Sovereign Rating Updates

  • Hungary (Fitch) 
  • Ireland (Fitch)
  • Finland (Moody’s)
  • Austria (DBRS)

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International

How Crowded Are Royal Caribbean, Carnival Cruise Ships Right Now?

Both cruise lines have raised capacities slowly. When will Royal Caribbean and Carnival hit normal?

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Both cruise lines have raised capacities slowly. When will Royal Caribbean and Carnival hit normal?

When Freedom of the Seas sailed from Miami on July 2, 2021, it marked Royal Caribbean International's (RCL) - Get Royal Caribbean Group Report return to North American sailing after being shut down since March 2020. 

That sailing has less than 1,000 people on it, mostly loyal cruisers eager to get back to sea no matter what the rules were (as well as a fair amount of company executives.

That ship can hold 4,375 passengers at full capacity, according to Ship Technology and on that July sailing, it felt empty and crew seemed to outnumber passengers. 

At night, in the British Pub, the crowd was essentially me, two other journalists, and the occasional person who wandered by. 

That made it, perhaps, too easy to get a drink, and while it was a wonderful experience, that sailing only felt normal when everyone onboard took to the upper decks to cheer sail away and celebrate the Fourth of July,

I sailed on Freedom on that July sailing, then again in September, October, November, December, and then again in May.

I sailed Odyssey of the Seas and Wonder of the Seas in between January and May. 

The crowds got progressively bigger through the fall, but even the December sailing (a three-day weekend, which in pre-pandemic times would be at or near capacity) still had a limited capacity.

Royal Caribbean steadily increased the number of people on its ships, with some slight pauses in that as new covid variants popped up and Carnival Cruise Lines (CCL) - Get Carnival Corporation Report has followed roughly the same model.   

Dukas/Universal Images Group via Getty Images

Cruise Lines Capacity Is Coming Back

How crowded will my cruise be? 

This has been a question seemingly every experienced cruiser has asked. In the summer and fall, that answer was "not at all," and later "not as much as usual," but the numbers of passengers onboard has slowly moved back to normal, even reaching it on some sailings.

Cruise lines generally don't offer a lot of comment on why they might be limiting capacity when technically they no longer have. 

Crew concerns, including not being able to onboard new crew members to allow for full sailings due to slow visa processing times and keeping rooms open fr potential covid quarantines have kept some ships below their full complement of passengers.

Demand, of course, factors in as well. Royal Caribbean CFO Naftali Holtz commented on where his company stands now during its first-quarter earnings call.

"I'd like to comment on capacity and load factor expectations over the upcoming period. We plan to restart operations on all remaining ships by the end of June. 

"We plan to operate about 10.3 million APCDs [available passenger cruise days] during the second quarter, and we expect load factors of approximately 75% to 80%," he said. 

"Our load factor expectations reflect the higher occupancy we are seeing in the Caribbean and lower expectations for repositioning voyages and early season Europe sailings."

It's clear that demand is a factor when it comes to why certain sailings are sailing with fewer passengers than others. 

Carnival has had to limit the cabins it has been selling on its United Kingdom-based Cunard line due to staffing issues.

“As you may have seen in the news, the wider impact of Covid-19 is affecting hospitality and is disrupting airlines and as such this is impacting the number of crew members we are able to get to our ships,” said the company in a statement.

“We naturally want to ensure that all guests across the fleet experience the high standards of service on board that they would expect from Cunard and which we are committed to delivering,” the company added. 

“We are therefore limiting the number of guests sailing as we build crew numbers back up."

Normal Cruise Crowds Are Coming

Once staffing issues return to normal — something that is slowly happening — the biggest concern may be whether the economy slows demand. 

Carnival CEO Arnold Donald said he expects his company to get close to normal over the summer during the cruise line's first-quarter earnings call.

"We're well on our way back to full cruise operations, with three-quarters of our capacity having resumed guest operations and a plan to return the balance of the fleet for the summer season. And while the conversation around covid-19 is greatly reduced, we still have to and are successfully actively managing," he said.

And while neither Carnival's nor Royal Caribbean's CEO said it directly, passengers sailing this summer will likely experience passenger counts in line with tradition. 

That does not mean some sailings won't have limited capacities, or sell poorly, but many will not as long as demand remains within historical norms.

 

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Spread & Containment

Lab, crab and robotic rehab

I was in Berkeley a couple of months back, helping TechCrunch get its proverbial ducks in a row before our first big climate event (coming in a few weeks,…

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I got previews of a number of projects I hope to share with you in the newsletter soon, but one that really caught my eye was FogROS, which was just announced as part of the latest ROS (robot operating system) rollout. Beyond a punny name that is simultaneously a reference to the cloud element (fog/cloud — not to mention the fact that the new department has killer views of San Francisco and frequent visitor, Karl) and problematic French cuisine, there’s some really compelling potential here.

I’ve been thinking about the potential impact of cloud-based processing quite a bit the last several years, independent of my writing about robots. Specifically, a number of companies (Microsoft, Amazon, Google) have been betting big on cloud gaming. What do you do when you’ve seemingly pushed a piece of hardware to its limit? If you’ve got low enough latency, you can harness remote servers to do the heavy lifting. It’s something that’s been tried for at least a decade, to varying effect.

Image Credits: ROS

Latency is, of course, a major factor in gaming, where being off by a millisecond can dramatically impact the experience. I’m not fully convinced that experience is where it ought to be quite yet, but it does seem the tech has graduated to a point where off-board processing makes practical sense for robotics. You can currently play a console game on a smartphone with one of those services, so surely we can produce smaller, lighter-weight and lower-cost robots that rely on a remote server to complete resource-intensive tasks like SLAM processing.

The initial application will focus on AWS, with plans to reach additional services like Google Cloud and Microsoft Azure. Watch this space. There are many reasons to be excited. Honestly, there’s a lot to be excited about in robotics generally right now. This was one of the more fun weeks in recent memory.

V Bionic's exoskeleton glove shown without its covering.

Image Credits: V Bionic

Let’s start with the ExoHeal robotic rehabilitation gloves. The device, created by Saudi Arabian V Bionic, nabbed this year’s Microsoft Imagine Cup. The early-stage team is part of a proud tradition of healthcare exoskeletons. In this case, it’s an attempt to rehab the hand following muscle and tendon injuries. Team leader Zain Samdani told TechCrunch:

Flexor linkage-driven movement gives us the flexibility to individually actuate different parts of each finger (phalanges) whilst keeping the device portable. We’re currently developing our production-ready prototype that utilizes a modular design to fit the hand sizes of different patients.

Image Credits: Walmart

This is the third week in a row Walmart gets a mention here. First it was funding for GreyOrange, which it partnered with in Canada. Last week we noted a big expansion of the retail giant’s deal with warehouse automation firm, Symbotic. Now it’s another big expansion of an existing deal — this time dealing with the company’s delivery ambitions.

Like Walmart’s work with robotics, drone delivery success has been…spotty, at best. Still, it’s apparently ready to put its money where its mouth is on this one, with a deal that brings DroneUp delivery to 34 sites across six U.S. states. Quoting myself here:

The retailer announced an investment in the 6-year-old startup late last year, following trial deliveries of COVID-19 testing kits. Early trials were conducted in Bentonville, Arkansas. This year, Arizona, Florida, Texas and DroneUp’s native Virginia are being added to the list. Once online, customers will be able to choose from tens of thousands of products, from Tylenol to hot dog buns, between the hours of 8 a.m. and 8 p.m.

Freigegeben für die Berichterstattung über das Unternehemn Wingcopter bis zum 25.01.2026. Mit Bitte um Urhebervermerk v.l.: Jonathan Hesselbarth, Tom Plümmer und Ansgar Kadura von Wingcopter GmbH. Image Credits: © Jonas Wresch / KfW

There are still more question marks around this stuff than anything, and I’ve long contended that drone delivery makes the most sense in remote and otherwise hard to reach areas. That’s why something like this Wingcopter deal is interesting. Over the next five years, the company plans to bring 12,000 of its fixed-wing UAVs to 49 countries across Sub-Saharan Africa. It will cover spots that have traditionally struggled with infrastructural issues that have made it difficult to deliver food and medical supplies through more traditional means.

“With the looming food crisis on the African continent triggered by the war in Ukraine, we see great potential and strong social impact that drone-delivery networks can bring to people in all the countries in Sub-Saharan Africa by getting food to where it is needed most,” CEO Tom Plümmer told TechCrunch. “Especially in remote areas with weak infrastructure and those areas that are additionally affected by droughts and other plagues, Wingcopter’s delivery drones will build an air bridge and provide food from the sky on a winch to exactly where it is needed.”

Legitimately exciting stuff, that.

Image Credits: Dyson

In more cautiously optimistic news, Dyson dropped some interesting news this week, announcing that it has been (and will continue) pumping a lot of money into robotic research. Part of the rollout includes refitting an aircraft hangar at Hullavington Airfield, a former RAF station in Chippenham, Wiltshire, England that the company purchased back in 2016.

Some numbers from the company:

Dyson is halfway through the largest engineering recruitment drive in its history. Two thousand people have joined the tech company this year, of which 50% are engineers, scientists, and coders. Dyson is supercharging its robotics ambitions, recruiting 250 robotics engineers across disciplines including computer vision, machine learning, sensors and mechatronics, and expects to hire 700 more in the robotics field over the next five years. The master plan: to create the UK’s largest, most advanced, robotics center at Hullavington Airfield and to bring the technology into our homes by the end of the decade.

The primary project highlighted is a robot arm with a number of attachments, including a vacuum and a human-like robot hand, which are designed to perform various household tasks. Dyson has some experience building robots, primarily through its vacuums, which rely on things like computer vision to autonomously navigate. Still, I say “cautiously optimistic,” because I’ve seen plenty of non-robotics companies showcase the technology as more of a vanity project. But I’m more than happy to have Dyson change my mind.

Image Credits: Hyundai

Hyundai, of course, has been quite aggressive in its own robotics dreams, including its 2020 acquisition of Boston Dynamics. The carmaker this week announced that part of its massive new $10 billion investment plans will include robotics, with a focus of actually bringing some of its far-out concepts to market.

Another week, another big round for logistics/fulfillment robotics, as Polish firm Nomagic raised $22 million to expand its offerings. The company’s primary offering is a pick and place arm that can move and sort small goods. Khosla Ventures and Almaz Capital led the round, which also featured European Investment Bank, Hoxton Ventures, Capnamic Ventures, DN Capital and Manta Ray.

Amazon Astro with periscope camera

The periscope camera pops out and extends telescopically, enabling Astro to look over obstacles and on counter tops. A very elegant design choice. Image Credits: Haje Kamps for TechCrunch

We finally got around to reviewing Amazon’s limited-edition home robot, Astro, and Haje’s feelings were…mixed:

It’s been fun to have Astro wandering about my apartment for a few days, and most of the time I seemed to use it as a roving boom box that also has Alexa capabilities. That’s cute, and all, but $1,000 would buy Alexa devices for every thinkable surface in my room and leave me with enough cash left over to cover the house in cameras. I simply continue to struggle with why Astro makes sense. But then, that’s true for any product that is trying to carve out a brand new product category.

A tiny robot crab scuttles across the frame. Image Credits: Northwestern University

And finally, a tiny robot crab from Northwestern University. The little guy can be controlled remotely using lasers and is small enough to sit on the side of a penny. “Our technology enables a variety of controlled motion modalities and can walk with an average speed of half its body length per second,” says lead researcher, Yonggang Huang. “This is very challenging to achieve at such small scales for terrestrial robots.”

Image Credits: Bryce Durbin/TechCrunch

Scuttle, don’t walk to subscribe to Actuator.

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Spread & Containment

Asymptomatic SARS-CoV-2 infections responsible for spreading of COVID-19 less than symptomatic infections

Based on studies published through July 2021, most SARS-CoV-2 infections were not persistently asymptomatic, and asymptomatic infections were less infectious…

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Based on studies published through July 2021, most SARS-CoV-2 infections were not persistently asymptomatic, and asymptomatic infections were less infectious than symptomatic infections. These are the conclusions of an update of a systematic review and meta-analysis publishing May 26th in the open access journal PLOS Medicine by Diana Buitrago-Garcia of the University of Bern, Switzerland, and colleagues.

Credit: Monstera, Pexels (CC0, https://creativecommons.org/publicdomain/zero/1.0/)

Based on studies published through July 2021, most SARS-CoV-2 infections were not persistently asymptomatic, and asymptomatic infections were less infectious than symptomatic infections. These are the conclusions of an update of a systematic review and meta-analysis publishing May 26th in the open access journal PLOS Medicine by Diana Buitrago-Garcia of the University of Bern, Switzerland, and colleagues.

Debate about the level and risks of asymptomatic SARS-CoV-2 infections continues, with much ongoing research. Studies that assess people at just one time point can overestimate the proportion of true asymptomatic infections because those who go on to later develop symptoms are incorrectly classified as asymptomatic rather than presymptomatic. However, other studies can underestimate asymptomatic infections with research designs that are more likely to include symptomatic participants.

The new paper was an update of a living (as in, regularly updated) systematic review first published in April 2020, which includes additional, more recent studies through July 2021. 130 studies were included, with data on 28,426 people with SARS-CoV-2 across 42 countries, including 11,923 people defined as having asymptomatic infection. Because of extreme variability between included studies, the meta-analysis did not calculate a single estimate for asymptomatic infection rate, but it did estimate the inter-quartile range to be that 14–50% of infections were asymptomatic. Additionally, the researchers found that the secondary attack rate—a measure of the risk of transmission of SARS-CoV-2 — was about two-thirds lower from people without symptoms than from those with symptoms (risk ratio 0.32, 95%CI 0.16–0.64).

“If both the proportion and transmissibility of asymptomatic infection are relatively low, people with asymptomatic SARS-CoV-2 infection should account for a smaller proportion of overall transmission than presymptomatic individuals,” the authors say, while also pointing out that “when SARS-CoV-2 community transmission levels are high, physical distancing measures and mask-wearing need to be sustained to prevent transmission from close contact with people with asymptomatic and presymptomatic infection.”

Coauthor Nicola Low adds, “The true proportion of asymptomatic SARS-CoV-2 infection is still not known, and it would be misleading to rely on a single number because the 130 studies that we reviewed were so different. People with truly asymptomatic infection are, however, less infectious than those with symptomatic infection.”

#####

In your coverage, please use this URL to provide access to the freely available paper in PLOS Medicine:

http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1003987  

Citation: Buitrago-Garcia D, Ipekci AM, Heron L, Imeri H, Araujo-Chaveron L, Arevalo-Rodriguez I, et al. (2022) Occurrence and transmission potential of asymptomatic and presymptomatic SARS-CoV-2 infections: Update of a living systematic review and meta-analysis. PLoS Med 19(5): e1003987. https://doi.org/10.1371/journal.pmed.1003987

Author Countries: Switzerland, France, Spain, Argentina, United Kingdom, Sweden, United States, Colombia

Funding: This study was funded by the Swiss National Science Foundation http://www.snf.ch/en (NL: 320030_176233); the European Union Horizon 2020 research and innovation programme https://ec.europa.eu/programmes/horizon2020/en (NL: 101003688); the Swiss government excellence scholarship https://www.sbfi.admin.ch/sbfi/en/home/education/scholarships-and-grants/swiss-government-excellence-scholarships.html (DBG: 2019.0774) and the Swiss School of Public Health Global P3HS stipend https://ssphplus.ch/en/ (DBG). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.


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