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Week Ahead – US jobs report up next

Country US The upcoming jobs report will be pivotal for the Fed in deciding whether the economy is headed toward hitting their substantial progress goal.  Now that the Fed has finally had their first deep dive into discussing tapering asset purchases,…

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The upcoming jobs report will be pivotal for the Fed in deciding whether the economy is headed toward hitting their substantial progress goal.  Now that the Fed has finally had their first deep dive into discussing tapering asset purchases, Wall Street will closely focus on labor market progress in the coming meetings.  The July jobs report is expected to show 925,000 jobs were created, an improvement from the prior month gain of 850,000. 

Tapering at earliest seems like it could be in September, but that still means interest rate hikes are a long way off.  Unless risk aversion becomes the dominant theme, the dollar could remain vulnerable in the short-term. 

Financial markets will also pay close attention to debt ceiling drama.  The Treasury still has around $450 billion in cash, so Congress can afford to delay tackling this issue until October.  While the Treasury will use extraordinary measures to prevent the US from defaulting, Republicans will start to posture for spending reforms in order for President Biden to move forward with his next round of stimulus.  

EU 

The data this week is unlikely to have done much to change the ECBs view on what is needed to achieve its new, more aggressive, inflation target. Hawks at the central bank may make a little more noise going forward, with German inflation now running above 3%. But I don’t expect this will change much at this stage. 

The key releases next week will be PMIs on Monday and Wednesday, with German factory orders on Thursday also noteworthy.

UK

The Bank of England meeting next week is the standout event, although the meeting almost certainly comes to early to make any significant judgement on paring back monetary support. While the recent surge in the delta variant has eased, the risk of cases rising again is still significant. What’s more, the MPC will want more evidence on how the economy is responding to restrictions being lifted fully, not to mention the impact that the furlough scheme ending in September will have. 

Of course, the growth and inflation data may make some members of the MPC a little nervous and stimulate debate on the risks of it, but with the widespread view being that both are temporary, it’s unlikely that the majority policy makers will consider removing support any time soon. 

Emerging Markets

Russia

Unemployment fell to 4.8% this week, slightly behind expectations, while retail sales rose 10.9% on an annual basis, ahead of forecasts.

Next week we get the quarterly monetary policy report on Monday. This comes a couple of weeks after the central bank raised interest rates to 6.5%. They did warn of more to come after the meeting and the report may hold clues as to what we can expect going forward.

South Africa

PMI the most notable economic release next week. The central bank previously left interest rates unchanged and signaled a hike may be considered later in the year. 

Asia Pacific

China

Market sentiment has been dominated by the China government’s crackdown on the tech sector and now the  education sector with Mainland and Hong Kong exchanges, as well as US-listed China companies taking a bath this week. Concerns are also rising in the corporate credit sector with Chinese corporate dollar-denominated debt falling heavily this week.

Despite assurances from China that its moves were “targeted” and not part of a broader agenda, financial markets are taking this with a grain of salt and sentiment will start next week walking a tightrope. China equities will continue to underperform until the regulatory discount reaches equilibrium with lower prices.

China releases official Manufacturing and Non-Manufacturing PMIs over the weekend, along with Caixin Manufacturing PMI on Monday morning. A set of poor data could spark fireworks in the early part of the week and send Mainland and Hong Kong equities sharply lower once again in an already nervous environment.

Pan-Asia PMIs are also released Monday. Weak readings will increase nervousness already complicated by Asia’s delta-variant situation, and could be another headwind for both China and regional stocks, as well as ASEAN currencies which have not benefited from US Dollar weakness this past week.

India

The Indian Rupee has recovered over the past week due to lower oil importer buying, with Covid-indced demand still weak. Additionally INR has seen inflows from international investors who have been fleeing China markets and rotating into India and ASEAN markets. With its large universe of IPO’d tech unicorns, India is well positioned to benefit from a China rotation. Both the Sensex and the INR should outperform ASEAN markets on that basis in the coming week.

The back end of the week will be dominated by the latest Reserve Bank of India rate decision. Inflation remains above the RBI’s upper 6.0% limit, but the ongoing Covid-19 situation, although improving, should stay the central bank’s hand. It would be a huge surprise if the RBI hiked on Friday and if they did, India equities would fall sharply and the INR would rally sharply.

Australia & New Zealand

Australian stock markets are trading sideways over the past week with delta-variant cases increasing in Sydney resulting in a harsher lockdown and a 4-week extension. The week is dominated by the RBA rate decision on Tuesday, with no change expected. The threat to growth and employment from the NSW Covid situation will ensure the RBA remains very dovish. Other data incluses PMIs, Home Loans, Retail Sales and the Trade Balance, but global risk sentiment and the RBA will dominate.

Both the AUD and NZD continue to bounce around on swings in global risk sentiment. Both have traced out technical recovery formations this week, but have yet to break convincingly higher. That will very much depend on the Sydney Covid-19 situation stabilising, and China stock markets finding a floor next week. 

New Zealand’s Employment Change and Labour Costs data on Wednesday could send NZD/USD sharply higher if it comes in above expectations. The RBNZ has an itchy trigger finger and has said as much. Higher prints will make an RBNZ hike almost certain at its next meeting and be very supportive of the currency.

Japan

Japanese stocks continued gyrating on swings in risk sentiment internationally, reflecting the heavy presence of retail fast money inthe Japan market. We expect this volatility to continue as the only major data releases are Tokyo CPI and Household Spending. 

Japan expanded its Covid-19 states of emergencies to more prefectures on Friday, and that appears to be weighing on the Nikkei. An escalation of the Covid situation, especially if it threatens the Olympics, could be a strong headwind for Japan stocks next week.

USD/JPY has dissolved into a purely US/Japan interest rate differential play. The flattening US yield curve has seen USD/JPY fall to 109.50 and if yields in the US track lower next week, Friday’s US Non-Farm Payroll will ironically, be the biggest market-moving event risk for USD/JPY next week. 


Key Economic Events

Saturday, July 31

– US debt limit returns on August 1st as lawmakers debate over increasing or suspending the ceiling in the months ahead. 

Economic Data/Events

China July Manufacturing PMI: 50.8e v 50.9 prior; non-Manufacturing PMI: 53.3e 53.5 prior

Hong Kong budget balance

Sunday, Aug. 1

– UK Government lowers its contribution for furloughed workers to 60%, with the employer burden increased to 20% of pre-pandemic pay.

Monday, Aug. 2

– US ban begins over investing in 59 Chinese firms with ties to China’s military or surveillance industries.

– Director of NIAID Fauci speaks at the Center for Strategic and International Studies (CSIS) 

– The Toronto Stock Exchange will be closed.

Economic Data/Events

US July ISM Manufacturing PMI: 60.7e v 60.6 prior; July Final Markit Manufacturing PMI: 63.1e v 63.1 prelim; construction spending

Australia CoreLogic house prices, Melbourne Institute inflation, ANZ job advertisements

Eurozone Manufacturing PMI

Germany Manufacturing PMI, retail sales

India Manufacturing PMI

UK Manufacturing PMI

Australia Manufacturing PMI

Thailand Manufacturing PMI, business sentiment index

Russia Manufacturing PMI

South Africa Manufacturing PMI

Hungary Manufacturing PMI

Poland Manufacturing PMI

Turkey Manufacturing PMI

Czech Republic Manufacturing PMI

Sweden Manufacturing PMI

Switzerland Manufacturing PMI

China Caixin manufacturing PMI

Singapore PMI, electronics sector index

Japan vehicle sales, consumer confidence index, manufacturing PMI

Switzerland CPI

Bank of Russia quarterly monetary report

Tuesday, Aug. 3

– Eurogroup President Donohoe, Scotland PM Sturgeon, Singapore PM Lee Hsien Loong, and SEC Chairman Gensler to speak at 3-day annual Aspen Security Forum

Economic Data/Events

Australia rate decision: No changes expected to Cash Rate Target, likely to defer bond taper

Australia building approvals

US factory orders, durable goods

New Zealand CoreLogic house prices

Japan Tokyo CPI, monetary base

Turkey CPI, PPI 

Mexico international reserves

New Zealand Unemployment

Eurozone PPI

Denmark currency reserves

Wednesday, Aug. 4

Economic Data/Events

US ADP employment change

Thailand (BOT) rate decision: Expected to keep Benchmark Interest Rate unchanged at 0.50%

Eurozone PMIs, Retail sales

Hungary Retail sales

Australia Retail sales

Singapore PMIs

India PMIs

China Services PMIs

Japan PMIs

South Africa PMIs

Russia PMIs

Sweden PMIs

Germany PMIs

UK PMIs

Thailand consumer confidence

France budget balance

EIA crude oil inventory report

Thursday, Aug. 5

– The Group of 20 digital economy ministers meet in Trieste, Italy.

– Inauguration day for Iran’s Ebrahim Raisi

Economic Data/Events

BOE Rate decision: to keep its benchmark interest rate and its bond-buying target unchanged

Czech Republic rate decision: To raise interest rates 25 basis points to 0.75%

US initial jobless claims, trade balance

France industrial production

Germany factory orders

Indonesia GDP

Australia Trade

Russia CPI

Thailand CPI

Eurozone ECB publishes Economic Bulletin

Russia gold and forex reserves

UK new car registrations

Ireland unemployment

Friday, Aug. 6

– RBA Governor Lowe gives testimony to a Parliament committee.

Economic Data/Events

US July Change in nonfarm payrolls: 925Ke v 850K prior; unemployment rate:5.6%e v 5.9% prior, wholesale inventories

Germany Industrial production

Italy Industrial production

Spain Industrial production

Hungary Industrial production

India Rate decision: Expected to keep Repurchase Rate unchanged at 4.00%

Canada unemployment

Australia Reserve Bank of Australia statement on monetary policy

Japan household spending, leading index

Switzerland Foreign reserves

China BoP current account balance

France Trade

Hungary Trade

South Africa gross and net reserves

Sovereign Rating Updates

– Norway (Fitch)

– ESM (S&P), 

– Czech Republic (Moody’s)

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China Syndrome? Is Evergrande A Symptom Of Deeper Malaise

China Syndrome? Is Evergrande A Symptom Of Deeper Malaise

Authored by Bill Blain via MorningPorridge.com,

“If that’s true, we are very close to the China Syndrome ”

Evergrande’s imminent default is rocking markets – but few believe…

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China Syndrome? Is Evergrande A Symptom Of Deeper Malaise

Authored by Bill Blain via MorningPorridge.com,

“If that’s true, we are very close to the China Syndrome ”

Evergrande’s imminent default is rocking markets – but few believe the collapse of a Chinese property developer could trigger a global financial crisis. What if Evergrande is just a symptom of a deeper malaise within the Chinese economy and its political/business structures? Maybe there is more at stake than we realise? What if Emperor Xi decides he needs a distraction?

Amid this week's market turbulence, and the overnight headlines, Evergrande dominates thinking this morning. The early headlines say the risk is “easing”. Don’t be fooled. S&P are on the wires saying it’s on the brink of default and is unlikely to get govt support. It’s Asia’s largest junk-bond issuer. Anyone for the last few choc-ices then?

The market view on the coming Evergrande “event” is mixed. Some analysts are dismissing it as an internal “China event”, others reckon there may be some systemic risk but one Government can easily address. There is some speculation about “lessons” to be learnt… There are even China supporters who reckon its proof of robust China capitalism – the right to fail is a positive!

I’ve got a darker perspective.

The massive shifts we’ve seen in China’s political/business public persona over the past few years have been variously ascribed: a reaction to Trump’s protectionism, China taking its place as a leading nation, Xi flexing his military muscle, and now a clampdown on divisive wealthy businesses to promote common prosperity.

What if Evergrande is just a symptom of something much deeper?

That that last 30-years of runaway Chinese growth has resulted in a deepening internal crisis, one that we barely perceive in the west? What if the excesses that have spawned Evergrande and the illusion every Chinese can afford luxury flats and a western standard of living is about to implode? Crashing oriental minor chords!

The looming Chinese property debacle will be fascinating, but it many respects will be similar and yet very different to the multiple market unwinds we’ve seen in the west. How it plays out will have all kinds of implications for growth, speculation and how global investors perceive China in the future. Folk are variously describing it as China’s Lehman Brothers, or the next “Minsky Moment” when speculation ends with a sharp jab of reality to the kidneys.

I’m thinking back to a story I read a few years ago about the Shanghai Auto-fair pre-pandemic. Evergrande New Electric Vehicles had the largest stand and was showing off 11 different EVs. Not one of these were actually available to buy – they were all models of as-yet unproduced cars. The company was valued at billions and yet never sold a single vehicle. This morning, it’s just another worthless business Evergrande is trying to flog. (See this story on Bloomberg TV: China’s Zombie EV Makers.)

The market is asking itself a host of questions about Evergrande’s collapse: How bad will its tsunami of Chinese contagion deluge global markets? When it’s going to happen? What knock-on effects will cascade through markets?

Perhaps the most important question is: Who will be exposed “swimming naked” when the Evergrande tide goes out? Who will be left with the biggest losses? As the company is definitely bust, these losses rather depend on just how China’s authorities respond.

Step back and think about it a moment – try putting these in context:

  • Fundamentally all business is about identifying a consumer need and filling it.

  • Fundamentally, greedy businessmen tend to get carried away because the political-financial system enables them.

  • Fundamentally, it’s just another burst bubble and who cleans up the mess.

  • In Evergrande’s case a thousand flowers of capitalism with Chinese characteristics grew into an unsustainable business – fundamentally no different from debt-fuelled sub-prime mortgages, or CDOs cubed, in the West.

The big difference this time is its China! China has done things… differently. The path China pursued in its recovery and growth since 1980 has not been without… consequences.

Thus far we’ve praised China for its spectacular growth and the creation of valuable companies under the red banner of Chinese capitalism. It is going to be “interesting” to see how the subsequent mess is cleared out. Questions about Moral Hazard are going to be shockingly simple – Government has made it abundantly clear that any wrongdoing by company executives will be punished in the harshest possible way.

More importantly, Chinese politics and business works on a very different playing field to the west. Forget the rule of law or the T&C’s of Evergrande bonds. It easy to dismiss and characterise the way Chinese business works as institutionalised systemic corruption – but it’s a system Ancient Roman Emperors would recognise as a patron/client relationship. Emperor Xi’s clients and his princelings will continue to benefit from his patronage in return for their support at his court, and will be protected in a meltdown. The system Xi presides over will have little motivation to intervene to protect western investors who find themselves caught in the Evergrande fiasco.

Where Xi will have to take notice is outside the rich, wealthy princeling cadre which increasingly owns and runs China. There will be massive implications for wealth/inequality among the Chinese people from a property collapse. With a third of Chinese GDP dependent on the property sector, (and about 4 million jobs at Evergrande), the collapse of one of the biggest players, and the likelihood others will follow is much more than just a systemic risk.

Property is a key metric in the aspirations to wealth of the rising Chinese middle classes. The same smaller Chinese investors and savers will likely prove the largest losers from the property investment schemes they were sucked into. These real losses will rise if hidden bank exposures trigger a domestic banking crisis – which apparently isn’t likely (meaning it is..). There are reports of investor protests in key China cities – putting pressure on the govt to act to mitigate personal losses.

Xi’s clampdown on big tech is painted as the Party’s programme to engineer a more socially-equal economy. He has pinned the blame for rising inequality on “corrupt” business practices and has his cadre’s waving books on Xi thought, mouthing slogans about “common prosperity” and “frugality”. These are going to look increasingly hollow if the middle classes bear the coming Evergrande pain, and the Party Princelings continue to prosper.

The really big risk in China is not that Evergrande is going to default – it’s much bigger. If the Party is seen to fail in its promise to deliver wealth, jobs and prosperity for the masses – then that is very serious. China’s host of failed EV companies, an economy still reliant on exporting other nations tech, and a massively overvalued property sector (that the masses still equate with prosperity) all suggest a much less solid economy than the Party promotes.

If the illusion of a strong economy is unravelling – who knows what happens next, but in Ancient Rome the answer would be simple… Blame someone else, and invade..

This could get very “interesting…” and not in a good way.

Tyler Durden Wed, 09/22/2021 - 08:45

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White House Reporters Have Launched ‘Formal Objection’ About Biden Refusing To Answer Questions

White House Reporters Have Launched ‘Formal Objection’ About Biden Refusing To Answer Questions

Authored by Steve Watson via Summit News,

CBS News reported Tuesday that the press pool of White House reporters have launched a formal objection

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White House Reporters Have Launched 'Formal Objection' About Biden Refusing To Answer Questions

Authored by Steve Watson via Summit News,

CBS News reported Tuesday that the press pool of White House reporters have launched a formal objection over the fact that Joe Biden refuses to answer any questions, with reporters routinely being yelled down and physically pushed away by Biden’s handlers.

The revelation came after an embarrassing scene in the Oval Office with British Prime Minister Boris Johnson answering questions, but Biden not being allowed to by aides.

Watch:

Johnson took the three questions from British reporters

CBS reporter Ed O’Keefe said that “Johnson took 3 questions. White House aides shouted down U.S. attempts to ask questions. I asked Biden about southern border and we couldn’t decipher what he said.”

CBS radio correspondent Steve Portnoy later reported that “The entire editorial component of the US pool went immediately into Jen Psaki’s office to register a formal complaint that no American reporters were recognized for questions in the president’s Oval Office.”

Portnoy, also president of the White House Correspondents Association, added that the complaint also extended to the fact “that wranglers loudly shouted over the president as he seemed to give an answer to Ed O’Keefe’s question about the situation at the Southern Border. Biden’s answer could not be heard over the shouting.”

“Psaki was unaware that the incident has occurred and suggested that she was not  in a position to offer an immediate solution,” Portnoy continued, adding “Your pooler requested a press conference. Psaki suggested the president takes questions several times a week.”

In addition, National Review notes that after Biden’s UN speech yesterday, French reporter Kethevane Gorjestani “was asked by a very startled Australian reporter whether WH wranglers were always so strict about ushering the pool out without questions.”

The pathetic display is a continuation of the way Biden’s handlers have been acting since even before he took office, shooing away reporters, giving Biden strict instructions on who he can take questions from, and even muting his mic when he goes off script.

A week ago, Republican Senator James Risch demanded to know who is in charge of controlling when the President is allowed to be heard, noting during a Senate hearing that “This is a puppeteer act, if you would, and we need to know who’s in charge and who is making the decisions.”

“Somebody in the White House has authority to press the button and stop the president, cut off the president’s speaking ability and sound. Who is that person?” Risch asked.

Tweeting out the video, leftists insisted the claims were ‘bizarre,’ ‘ridiculous’ and ‘absurd’:

*  *  *

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Tyler Durden Wed, 09/22/2021 - 10:15

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Addressing the HIV epidemic in Eastern Europe and Central Asia

Working in partnership will be key, says Alex Kalomparis, vice president, public affairs, international at Gilead Sciences. 2021
The post Addressing the HIV epidemic in Eastern Europe and Central Asia appeared first on .

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Working in partnership will be key, says Alex Kalomparis, vice president, public affairs, international at Gilead Sciences.

2021 marks 40 years since the first cases of HIV were reported. In that time, over 79 million people have been diagnosed with HIV, with more than 36 million dying from AIDS-related illnesses, more than any other infectious disease.

While there has been incredible progress in the HIV response, nearly 38 million people are living with HIV, with more than a million new cases every year, jeopardising the goal to end AIDS as a public health threat by 2030.

HIV places enormous burdens on the communities it affects most, straining health systems and government budgets. In the era of the global COVID-19 pandemic, where health systems are already stretched to breaking, it is tempting to cut costs in other areas, including HIV. If commitment to the HIV response wanes, the progress we have made is at risk, leading to increases in new infections in regions that can least afford to tackle them.

“An epidemic somewhere is an epidemic everywhere”

Throughout the COVID-19 pandemic, we have seen the temptation to focus on one’s own backyard, isolate oneself from the rest of the world, and believe one is safe and protected. We know now that this protection is an illusion. Regardless of the protections we erect in our own countries, allowing public health crises to persist in other parts of the world threatens our own progress and safety.

The message is clear: an epidemic somewhere is an epidemic everywhere. To find our way out of a pandemic, we must broaden our ideas of how to respond, and address the problems and inequities that allow diseases to thrive in other parts of the world. To be effective, our response must be global.

The same is true for HIV. HIV has persisted for 40 years, and is still here because root problems continue to drive the epidemic: stigma and discrimination, poverty, lack of access to services and treatments, lack of access to education, and the marginalisation of the people and communities most at risk of HIV. These are not issues that can be addressed by any one government, group, or company. They can be addressed only in partnership with one another, and by engaging those key marginalised communities in our effort to end the HIV epidemic.

Whilst the global community has the tools it needs to meaningfully address new HIV infections, HIV is on the rise in Eastern Europe and Central Asia (EECA). Unlike other regions in the world, rates of HIV in EECA have increased, with infections up by 72 per cent, and AIDS-related deaths up by 24 per cent since 2010.

Working with the Elton John AIDS Foundation

However, across EECA, a range of community partners are making significant contributions in the fight against HIV, such as the first wave of the RADIAN ‘Unmet Need’ fund and Model City grantees, previously announced in 2020. In the first nine months of the programme, these partners have already reached more than 12,000 people from vulnerable communities directly with services, initiating life-saving care in over 2,000 people living with HIV.

RADIAN, a ground-breaking partnership between Gilead Sciences and the Elton John AIDS Foundation, works with local experts to target new HIV infections and deaths from AIDS-related illnesses in EECA in the communities most vulnerable to HIV.

Focusing on the groups most affected by HIV in EECA (eg men who have sex with men, transgender people, sex workers, and people who use drugs), RADIAN engages with groups led by these communities and are sensitive to the difficulties unique to the region.

“We all have one common goal: ending HIV”

Anne Aslett, CEO of the Elton John AIDS Foundation, is clear that for the partnership to reach its goals, it’s crucial to listen to and amplify the voices of people for whom HIV is a tangible, daily reality.

“They understand better than anyone the challenges associated with the virus, and what works to stop it. No matter where we are in the world, we must partner with them, and follow their leadership. We are proud of our RADIAN partnership with Gilead, to champion the vital work of communities to bring an end to the AIDS epidemic in Eastern Europe and Central Asia.”

Companies like Gilead Sciences provide industry leading expertise, while Governments bring an understanding of health systems and funding, developing an infrastructure that enables access.

However, these efforts need community leadership because they know best how to ensure people can access those systems to get tested, and adhere to medication. They understand the fears and sensitivities, the strengths and stigma within those communities, the nuances that make the difference in linking their members to the care they need. No two regions of the world experience the ‘same’ HIV epidemic. People living with HIV are critical to the success of any HIV response.

This autumn, RADIAN will launch a campaign telling the inspirational stories of ordinary, yet remarkable, community members who are taking action to turn the tide of the HIV epidemic in EECA.

We all have one common goal: ending HIV. It is crucial that we all understand the role we can play to achieve this. Our access to global networks of public health expertise, government funding, and innovative HIV treatments are meaningless unless they are used in service of people living with, and at risk of, HIV. They are the core of any successful response, regardless of country or region. Working in partnership with them is the key to ending HIV. By respecting them as leaders and giving them the seat at the head of the table, we make our work more effective and responsive to local needs, bringing us closer to the end of the HIV epidemic globally.

About the author 

Alex Kalomparis is vice president, public affairs, international at Gilead Sciences. He joined the company in January 2017 and is responsible for all communications and patient advocacy activities across Africa, Asia, Australia, Canada, Europe, Latin America and the Middle East. Prior to that Alex held senior communication roles with a number of consumer and pharmaceutical companies, including Unilever, Rolls Royce, Novartis, Roche, AstraZeneca and GlaxoSmithKline.

The post Addressing the HIV epidemic in Eastern Europe and Central Asia appeared first on .

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