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Week Ahead – Sino-US Tech War Heats Up

Week Ahead – Sino-US Tech War Heats Up

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Key Economic Events

Monday 10th August

UK Time Country Relevance Indicator Name Period
02:30 China (Mainland) High PPI YY Jul
02:30 China (Mainland) High CPI YY Jul
03:00 China (Mainland) High Total Social Financing Jul
07:00 Norway High Consumer Price Index MM Jul
07:00 Norway High Consumer Price Index YY Jul
07:00 Denmark High CPI YY Jul

Tuesday 11th August

00:50 Japan High Current Account NSA JPY Jun
01:00 Singapore High GDP Final YY Q2
09:30 United Kingdom High Claimant Count Unem Chng Jul
09:30 United Kingdom High ILO Unemployment Rate Jun
10:00 Germany High ZEW Economic Sentiment Aug
10:00 Germany High ZEW Current Conditions Aug
13:00 India High Industrial Output YY Jun
13:15 Canada High House Starts, Annualized Jul
Russia High GDP YY Quarterly Prelim Q2

Wednesday 12th August 

02:30 Australia High Wage Price Index QQ Q2
02:30 Australia High Wage Price Index YY Q2
03:00 New Zealand High Cash Rate 12 Aug
07:00 United Kingdom High GDP Est 3M/3M Jun
07:00 United Kingdom High GDP Estimate MM Jun
07:00 United Kingdom High GDP Estimate YY Jun
07:00 United Kingdom High Manufacturing Output MM Jun
07:00 United Kingdom High GDP Prelim QQ Q2
07:00 United Kingdom High GDP Prelim YY Q2
08:30 Sweden High CPI MM Jul
08:30 Sweden High CPI YY Jul
10:00 Italy High CPI (EU Norm) Final MM Jul
10:00 Italy High CPI (EU Norm) Final YY Jul
13:30 United States High CPI MM, SA Jul

Thursday 13th August

00:50 Japan High Corp Goods Price MM Jul
00:50 Japan High Corp Goods Price YY Jul
01:30 Australia High Employment Jul
01:30 Australia High Unemployment Rate Jul
07:00 Germany High HICP Final YY Jul
08:00 Czech Republic High CPI YY Jul
13:30 United States High Initial Jobless Clm 3 Aug, w/e
19:00 Mexico High Interest Rate Aug

Friday 14th August

03:00 China (Mainland) High Urban Investment (YTD)YY Jul
03:00 China (Mainland) High Industrial Output YY Jul
03:00 China (Mainland) High Retail Sales YY Jul
07:30 India High WPI Inflation YY Jul
07:45 France High CPI (EU Norm) Final MM Jul
07:45 France High CPI (EU Norm) Final YY Jul
08:00 Turkey High Current Account Balance Jun
10:00 Euro Zone High GDP Flash Estimate QQ Q2
10:00 Euro Zone High GDP Flash Estimate YY Q2
13:30 United States High Retail Sales MM Jul
14:15 United States High Industrial Production MM Jul
15:00 United States High U Mich Sentiment Prelim Aug

Country

US

Further evidence could show that coronavirus is getting under control in the US.  New cases and hospitalizations have been declining, however testing slowed down drastically in the east coast due to Hurricane Isaias.  On Wednesday, inflation data is expected to come back down to earth.  Headline inflation should drop from 0.6% to 0.3%, erasing much of last month’s biggest gain in eight years.  Core inflation is expected to remain steady 0.2%. The US economy should still expect depressed price levels until the country has the virus under control.  

The main event of the week is US retail sales, which could show the American shopper remains strong despite so many issues in the economy.  Retail sales has steadily increased over the past two months and that should continue albeit at a slower pace.  The July advance retail sales monthly reading is expected to increase 1.7%, which would be down from the 7.5% seen in June and the 18.2% rise in May.  

US Politics

Lawmakers have botched the latest COVID-19 relief bill and it seems President Trump might need to use his executive powers to provide some immediate aid.

Former-VP Biden will make his decision on his running mate.  Biden has signaled four African American women and Senator Elizabeth Warren are under consideration as his running mate.  Biden will turn 78 a few weeks after the election, so his VP selection will be critical for many voters.  

Mexico 

Mexico’s central bank should deliver a rate cut despite a temporary pickup with inflation.  The Banxico still has room for a few more rate cuts before the year is over and right now the economy needs it.  Mexico is still battling the coronavirus and fears are high the number of cases and the death toll are undercounted. Mexico’s economy is slowing recovering and easing lockdown measures is nowhere near being justified.  

EU

Much like everywhere else, the EU is seeing some surges in Covid cases but broadly speaking the second waves have been fairly limited. Not enough to stop the UK adding Belgium, among others to their quarantine list which also includes Spain, much to Madrid’s annoyance. The PMIs this week were encouraging, particularly on the manufacturing side. Next week is looking a little light on the data side.

UK

The UK will see next week just how hard a hit the economy took in the second quarter, with the average forecast coming in around a 20% contraction, much more severe than many of its peers. On a more positive note, the Bank of England sees the UK bouncing back faster that it previously anticipated, with the economy shrinking only 9.5% this year compared with 14% previously. Unemployment is also expected to stabilize around 7.5% which is far below what was previously the consensus forecast. The downside here is that the rebound after this year is expected to be weaker so a mixed news week for the UK.

Turkey

The lira fell around 7% in a few days against the dollar before paring losses on Friday. Turkey has long had a variety of problems that make investors nervous and they have very much come to the fore, culminating in soaring borrowing costs earlier this week. The lira has fallen to a record low and is now looking very vulnerable. This is a currency that has already had restrictions imposed in recent months and a country that has been burning through reserves to support it. With the central bank reluctant to hike rates and a leader that believes doing so stokes inflation – contrary to popular belief – and a record for sacking central bank heads that disagree, it’s hard to see where the country turns next to step further declines. 

China

Geopolitics will be the centre of attention with the US banning US companies from dealing with ByteDance and Tencent. Proposing banning Chinese listing in US for non-compliance with US accounting standards. The extent of China retaliation could adversely impact equity markets internationally and the CNY/CNH.

Industrial Production next Friday week’s data highlight.

Hong Kong

Covid-19 spread increases restrictions in Hong Kong. Hong Kong CEO postpones election one year due to Covid-19. Hong Kong equities lower, especially Tencent, after US bans today. Weekend retaliation from China could see Asian stock sold heavily on Monday.

India

Covid-19 cases continue skyrocketing. India is now in top four for infections. INR remains under pressure as stress on the government budget and banking sector continue. A weaker US Dollar appears merely a stay of execution.  Very real possibility that India will repeat Indonesia’s recent playbook, and get the central bank to directly purchase new government bond issues. Negative for currency and stocks.

Highest risk economy in Asia from an economic and Covid-19 perspective.

Australia

Australian Dollar grinds higher but momentum slows as domestic issues weigh heavily.

Restrictions increased in Melbourne as Covid-19 cases jumped to 700+ a day. Borders closed with NSW and Queensland. Community infections increase in Sydney. The return of movement restrictions in Sydney a potential negative game-changer.

RBA rate unchanged but uber-dovish guidance. AUD has not rallied high enough to bring comments yet. No market moving data this week.

Japan

USD/JPYhas recovery reduces selling pressure on Japan equities. Strong retaliation by China against US companies will see Japan equities under pressure from Tuesday, as Monday is a holiday.

Covid-19 cases continue spiking higher in Tokyo. Local government is close to finally declaring a state of emergency. Negative for Japan equities and Yen.

No significant data.

Markets

Oil

Oil’s midweek breakout was no gamechanger but it continues to trade towards the upper end of its two month range. The rally carried little momentum, further suggesting we’re at the latter end of an exhausted move but that, in itself, doesn’t mean we’re going to see a broad correction. It may just mean traders aren’t ready to jump fully back on the crude train yet, with Covid setbacks happening every week around the globe, the outlook remains uncertain. There’s a long and bumpy road ahead for the global recovery, we’ll have to learn to be extremely patient.

Gold

Gold could be the one to watch today as efforts to determine its risk role continue. Today we’re seeing some risk aversion ahead of the jobs report and the dollar is once again being favoured, seeing gold pulling off its highs. As it stands, it’s still looking pretty healthy though and it may take a pretty horrible report to test $2,000 again. It’s come a long way. 

There are a growing list of risk factors in these markets which should keep things interesting for weeks to come. US Covid cases and deaths are showing slight improvements this week, albeit from high levels, but we’ll need a lot more improving data to calm the nerves. Geopolitics isn’t improving any time soon so gold will remain volatile.

 

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.

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They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to Investing.com

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…

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There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

 

The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.

 

There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.

 

“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”

 

In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.

 

There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.

 

Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.

 

Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”

 

As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.

 

###

 

About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit https://www.ivi.int.

 

CONTACT

Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 | aerie.em@ivi.int


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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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