Here are 7 of the top chart patterns used by technical analysts to buy stocks
Yahoo! Finance: Top Stories / 2023-12-24 23:03



Technical analysts believe that stock prices often trade in patterns, as the motivating driver behind the movement of stocks is humans, and humans exhibit the same emotions when it comes to their money: fear and greed.

These two predictable emotions help create predictable trading patterns that technical analysts try to capitalize on. 

Here are seven of the top bullish patterns that technical analysts use to buy stocks.

Visit Business Insider's homepage for more stories.

One of the biggest drivers of stock prices is human emotions, particularly fear and greed.

Investors typically exhibit predictable emotions when a stock price moves up and down, and these emotions can lead to trading activity that creates predictable charting patterns.

Technical analysts attempt to take the emotion out of investing by solely relying on the patterns found within charts to trade stocks, potentially giving them an edge over investors who are susceptible to to making trade decisions driven by fear and greed.

While these patterns can be predictable, they aren't bullet-proof. Head fakes, bull traps, and failed breakdowns occur often and tend to shake traders out of their positions right before the big move.

That's why discipline is so important in technical analysis.

Having a plan before entering a position can help traders weather choppy price movements, increasing their chances of riding an uptrend and avoiding a downtrend.

A plan before entering a trade includes defining a "stop loss" level where if the stock falls to a certain price point, you automatically sell, take a small loss, and move on to the next trading opportunity.

A plan would also include a price objective where the trader would look to unload some if not all of the position to take profits.

Here are seven of the top bullish chart patterns that technical analysts use to buy stocks.

Read more: Bank of America says a new bubble may be forming in the stock market — and shares a cheap strategy for protection that is 'significantly' more profitable than during the past 10 years

1. Double Bottom

A double bottom is a bullish reversal pattern that describes the fall, then rebound, then fall, and then second rebound of a stock.

A successful double bottom pattern looks like a W.

The pattern typically marks the end of a downtrend, and the beginning of an uptrend.

It's generally accepted that the first and second bottom should be within a couple percent near each other, if not at the same level.

A double bottom typically takes two to three months to form, and the farther apart the two bottoms, the more likely the pattern will be successful.

2. Ascending Triangle

An ascending triangle is a bullish continuation pattern and one of three triangle patterns used in technical analysis.

The trading setup is usually found in an uptrend, formed when a stock makes higher lows, and meets resistance at the same price level.

Rising support and horizontal resistance ultimately converge at the breakout level.

This pattern creates a well-defined setup for traders. If the stock breaks above horizontal resistance, traders will buy the stock, and set a stop loss order usually just below the prior resistance level.

But if the stock breaks below the rising support level, a short trade signal would be generated.

An ascending triangle is a high probability setup if the breakout occurs on high volume, and is more reliable than a symmetrical triangle pattern.

3. Cup and Handle

A cup and handle is a bullish pattern that resembles a cup, formed by a basing pattern that typically looks like a "U," followed by a handle that is formed by a short-term down trend.

Once a stock breaks out above the handle, a technical analyst would buy the stock.

A trader could generate a measured move price target by measuring the depth of the cup in price, and add that amount to the lid of the cup.

This pattern usually extends an uptrend that is already in place.

A U-shaped cup is a higher probability set up than a V-shaped cup, but both can work.

4. Bull Flag

A bullish flag pattern occurs when a stock is in a strong uptrend, and resembles a flag with two main components: the pole and the flag.

This pattern is a bullish continuation pattern. Typically traders would buy the stock after it breaks above the short-term downtrend, or flag.

A measured-move price target can be obtained by measuring the distance of the pole, and adding it to the top right corner of the flag.

Bullish flags are short-term patterns that ideally last one to four weeks, typically don't last longer than eight weeks, and usually follow an sharp uptrend.

5. Bull Pennant

Similar to a bull flag, a bullish pennant is a continuation pattern that consists of a pole and a symmetrical triangle, usually following an uptrend in price.

Rather than a period of sideways consolidation in the shape of a rectangle, price consolidates in the shape of a symmetrical triangle, making a series of higher lows and lower highs.

The uptrend in the security will likely continue on if the stock breaks out above the pennant.

In the chart example above, an example of a failed breakdown, or a bear trap is shown.

At first, the security breaks below the pennant, signaling a breakdown and potentially lower prices ahead.

But then, it quickly recovers, breaks above the pennant, and the uptrend continues.

A measured move target can be obtained by measuring the distance of the pole and adding it to the apex of the pennant triangle.

6. Bullish Engulfing Candle

A candlestick is a charting style that shows a security's opening price, closing price, intraday high, and intraday low.

The "body" is represented by the opening and closing price of a stock, and the "tails" are represented by the intraday high and low.

A bullish engulfing candlestick occurs when the body of one trading session completely engulfs the previous session.

This happens when the day's open is lower than the previous day, and its close is higher than the previous day.

When the body of a candle stick "engulfs" prior trading sessions, it signals that bulls are starting to take control from the bears, and a reversal in trend is probable.

The more trading sessions that are engulfed by a single candlestick, the stronger the signal.

In the chart above, the bullish engulfing candlestick engulfs the previous five trading sessions, signifying the likelihood that stocks are on track to move higher.

7. Inverse Head & Shoulders

An inverse head-and-shoulders pattern is a bottoming pattern that often signals a reversal in a stock following a bearish trend.

The inverse head and shoulders is related to the bearish head-and-shoulders pattern, which is a topping pattern.

The pattern takes its shape from a series of three bottoms, with the second bottom being the deepest.

A neckline represents resistance and is formed by connecting the three recovery peaks associated with the three bottoms.

When the stock breaks above its neckline, that triggers a buy signal for traders, with a stop loss level being set near the neckline breakout level.

A measured move price target can be obtained by measuring the distance from the head to the neckline, and adding that to the neckline breakout level.

A right shoulder that is higher than the left shoulder is a good sign that an inverse head-and-shoulders pattern will result in a clear breakout and reversal in trend.

Read the original article on Business Insider

Enclosures

7bcdaf4dae8e04102f7d1b0d93b160bf

Enviado do meu Galaxy

Analyzing AstraZeneca In Comparison To Competitors In Pharmaceuticals Industry
Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating AstraZeneca (NASDAQ:AZN) in comparison to its major competitors within the Pharmaceuticals industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in the industry.

AstraZeneca Background
A merger between Astra of Sweden and Zeneca Group of the United Kingdom formed AstraZeneca in 1999. The firm sells branded drugs across several major therapeutic classes, including gastrointestinal, diabetes, cardiovascular, respiratory, cancer, immunology and rare diseases. The majority of sales come from international markets with the United States representing close to one third of its revenue.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
AstraZeneca PLC 33.60 5.29 4.40 3.68% $3.33 $9.4 4.64%
Eli Lilly and Co 105.80 49.41 16.45 -0.52% $0.96 $7.64 36.84%
Novo Nordisk A/S 40.04 32.11 14.07 24.5% $32.76 $49.02 28.89%
Johnson & Johnson 29.09 5.24 4.11 35.56% $7.24 $14.74 6.78%
Merck & Co Inc 57.98 6.41 4.48 11.87% $6.95 $11.7 6.71%
Novartis AG 25.20 5.24 3.79 3.91% $4.88 $8.97 12.14%
Pfizer Inc 15.65 1.67 2.39 -2.43% $-1.1 $3.96 -41.55%
Bristol-Myers Squibb Co 12.97 3.58 2.39 6.32% $4.85 $8.46 -2.25%
Zoetis Inc 38.59 17.13 10.50 12.28% $0.9 $1.51 7.44%
GSK PLC 9.78 4.54 2 11.34% $2.55 $5.88 4.06%
Takeda Pharmaceutical Co Ltd 33.55 0.90 1.55 -0.69% $202.28 $699.51 4.07%
Viatris Inc 6.51 0.57 0.77 1.59% $1.22 $1.69 -3.34%
Dr Reddy's Laboratories Ltd 17.71 3.56 3.38 5.94% $23.28 $40.37 9.11%
Jazz Pharmaceuticals PLC 146.12 2.19 2.23 4.19% $0.33 $0.87 3.35%
Corcept Therapeutics Inc 33.99 6.07 6.84 7.06% $0.03 $0.12 21.5%
Amphastar Pharmaceuticals Inc 22.28 4.59 5 8.31% $0.09 $0.11 50.3%
Average 39.68 9.55 5.33 8.62% $19.15 $56.97 9.6%
By thoroughly analyzing AstraZeneca, we can discern the following trends:

With a Price to Earnings ratio of 33.6, which is 0.85x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

With a Price to Book ratio of 5.29, significantly falling below the industry average by 0.55x, it suggests undervaluation and the possibility of untapped growth prospects.

With a relatively low Price to Sales ratio of 4.4, which is 0.83x the industry average, the stock might be considered undervalued based on sales performance.

With a Return on Equity (ROE) of 3.68% that is 4.94% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.

The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $3.33 Billion is 0.17x below the industry average, suggesting potential lower profitability or financial challenges.

With lower gross profit of $9.4 Billion, which indicates 0.16x below the industry average, the company may experience lower revenue after accounting for production costs.

With a revenue growth of 4.64%, which is much lower than the industry average of 9.6%, the company is experiencing a notable slowdown in sales expansion.

Debt To Equity Ratio


The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When examining AstraZeneca in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:

AstraZeneca has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.77.

This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.

Key Takeaways
AstraZeneca has a low PE ratio, indicating that its stock price is relatively low compared to its earnings. The low PB ratio suggests that the stock is undervalued based on its book value. The low PS ratio indicates that the stock is trading at a low price relative to its sales.

On the other hand, AstraZeneca's low ROE suggests that it is not generating high returns on its shareholders' equity. The low EBITDA indicates that the company's operating profitability is relatively low. The low gross profit suggests that AstraZeneca's cost of goods sold is high compared to its revenue. Lastly, the low revenue growth indicates that the company's sales are not growing at a significant rate.

Overall, AstraZeneca's valuation ratios suggest that the stock may be undervalued based on its earnings, book value, and sales. However, the company's profitability and revenue growth are relatively low compared to its peers in the pharmaceuticals industry.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

Copyright © Benzinga. All rights reserved. Write to editorial@benzinga.com with any questions about this content. Benzinga does not provide investment advice.

© 2023 Benzinga Newswires. Benzinga does not provide investment advice. All rights reserved.

Enviado do meu Galaxy

Struggling mall owner files for Chapter 11 bankruptcy protection
por Daniel Kline

The Street: Stock Market / 2023-12-11 21:1245
With a number of major department store brands struggling and shrinking, malls have suffered. Macy's has closed a number of underperforming stores over the past few years and J.C. Penney only survived a Chapter 11 bankruptcy because two of its landlords, Simon Property Group and Brookfield Asset Management, bought it.

Malls have also largely lost Sears as an anchor tenant since that chain has shrunk to just a handful of stores. This year's big retail bankruptcies of Bed Bath & Beyond, Tuesday Morning, and Christmas Tree Shops largely hurt strip malls rather than indoor shopping centers, but their closures put an awful lot of real estate on the market.

Related: Popular retailer closing hundreds of stores, slashing big brand

In reality, though, not all malls are created equally. Traffic to top-tier malls has stayed relatively flat year-over-year, according to data from Placer.ai. Wealthy customers in general are actually visiting malls more.

"While the wealthiest mall shoppers tend to visit Open-Air Lifestyle Centers, all mall visitors are wealthier than the national median...wealthier areas of the country experienced the greatest YoY visit growth to malls," according to the report.

That's good news for a player like Simon Property Group, which generally owns high-end malls and outdoor outlet malls in wealthy areas. It's not as bright a picture for Pennsylvania Real Estate Investment Trust (PREIT) which has a mix of holdings.

Not all malls are created equal.
Image source: Getty Images

PREIT files for Chapter 11 bankruptcy (again)
PREIT has filed what it known as a "prepackaged' bankruptcy. Basically, it's using the court to enact a plan that it expects will allow the business to emerge in a healthier financial position. 

The plan, which is supported by 100% of PREIT's first and second Lien Lenders, according to a company press release would reduce its debt by roughly $880 million and push some of its loan due dates further out. 

"The company has received commitments for new money debtor-in-possession (DIP) and exit revolver financing in an aggregate amount of approximately $135 million from a diverse group of leading investors, led by Redwood Capital Management, LLC and Nut Tree Capital Management, LP," the company shared.

At the end of the process, if everything goes as planned, PREIT, which is filing Chapter 11 for the second time in three years, would emerge as a privately held company.

PREIT owns and operates 23 retail centers with more than 18.3 million square feet of retail space in eight states across the eastern U.S. 

"We are a Real Estate Investment Trust owning a portfolio of bullseye locations in high barrier-to-entry markets that create the opportunity to reinvent what we deliver to our communities. We use our assets to attract a variety of new businesses to redefine the future of the American mall into mixed-use districts," the company shared on its website.

PREIT will shed some assets
As part of the plan, PREIT could end up surrendering some lower-performing assets to its creditors but continue to run those properties. Banks generally don't have the ability to operate malls, and there are few, if any, buyers for weaker malls. 

Simon, however, could purchase some of PREIT's higher-end malls as the company has made acquisitions of top-tier properties over the past few years. 

"Today's announcement will position a restructured PREIT to execute on strategic initiatives to continue transforming its portfolio for the tenants and communities it serves. We look forward to quickly emerging from this process as a financially stronger company with the resources and support to continue creating diverse, multi-use property experiences throughout our portfolio," said PREIT CEO Joseph F. Coradino.

The company expects to continue to pay all of its bills including both its vendors and workers during the bankruptcy period. 

While the company expects to act on its plans quickly, the filing does require court approval. The company filed its voluntary Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware.

 

 

Enclosures

mall-shoppers-lead-js-090722.jpg

Enviado do meu Galaxy

FA Center: Inflation will have to get a lot worse to justify gold's current price
MarketWatch.com - Top Stories / 2023-12-11 21:2330
Inflation is not nearly high enough to justify gold's recent rise to a new all-time high. That's the conclusion I draw from research conducted by Campbell Harvey, a Duke University finance professor, and Claude Erb, a former commodities portfolio manager at TCW Group. Their study, entitled The Golden Dilemma, was published a decade ago in the Financial Analysts Journal.

The researchers started with the core idea made famous by Roy Jastram in his book "The Golden Constant" — that gold GC00, -0.84% over long periods of time maintains its purchasing power. That is, its real price over the long term will be constant. Therefore, when gold's real (inflation-adjusted) price surges over shorter time periods, odds are good that it will eventually come back down. Likewise, when gold's real price declines significantly it eventually will rise again.

Harvey and Erb developed these insights into a model based on the average ratio of gold's price to the U.S. Consumer Price Index. In their model, it is this ratio that exerts a gravitational pull on gold's real price: When the ratio is well below that average, gold is undervalued and expected to rise in real terms. And when the ratio is well above that average, as it is today, gold is overvalued and expected to decline.

Since 1975, the average ratio of gold's price to the Consumer Price Index is 3.9 to 1, Erb said in an email. That is far lower than the current ratio of 6.5-to-1. Instead of its current price of around $2,000, bullion would be trading at $1,190 an ounce if gold were trading at its average gold-to-CPI ratio.


The chart above plots gold's historical price along with similar calculations of gold's fair value for each month since 1975. Here are the three past occasions in which gold was more overvalued relative to inflation than it is today:

The early 1980s
2011
Late 2020 and 2021
Harvey and Erb's study began circulating in academic circles in 2012, soon after the second of these three occasions. Over the subsequent three years, gold's real price fell by nearly half.

The implication of this research is that, at a minimum, gold investors should at least prepare for the possibility that gold's fate in coming years will be similar.

Other ways to value gold
You may disagree with the assumption that gold's price is a function of inflation. But none of the other models that Harvey and Erb analyzed fared any better than their gold/CPI model, and many performed far worse. Readers are directed to their study for a more extensive analysis of those other models; below is a list of those they analyzed:

Gold is a hedge against currency devaluation
Gold is an attractive alternate to assets with low real (inflation-adjusted) returns
Gold is a safe haven during periods of geopolitical stress
Gold should be held because the world is moving towards a gold standard
Gold is "underowned" and will appreciate as more investors decide to allocate some of their portfolios to gold
You shouldn't be surprised that gold has become so overvalued relative to inflation. All assets, not just gold, experience wide swings between periods of over- and undervaluation. Now just happens to be one of those times in which gold is overvalued.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

More: Gold just hit a record high. Is it too late for investors to add it to portfolios?

Also read: Betting grows that S&P 500 will hit record high, with Oppenheimer joining Wall Street's bullish calls for 2024

Enviado do meu Galaxy

Australian November Manufacturing PMI 47.7 (prior 48.2)
por Eamonn Sheridan

Forexlive RSS Breaking news feed / 2023-11-30 22:06

Judo Bank / S&P Global November Manufacturing PMI comes in at 47.7, in line with the preliminary (flash) result.

Last week we had the flash reading:

Australian preliminary PMI for November: Manufacturing 47.7 (prior 48.2)
Key points made in the report:

Sharpest fall in new orders since May 2020
Marginal decline in staffing levels
Slower rates in inflation signalled
On that point about inflation, this from Warren Hogan, Chief Economic Advisor at Judo Bank in the report:

"The good news is that the inflation indicators are continuing to improve with both the input and output price indexes down in November.
"Input prices, essentially an indicator of cost pressures, are showing a gradual easing in recent months after jumping up through the middle of the year. Input prices remain elevated and well above the average levels seen prior to the pandemic.
"Output prices have all but normalised for Australian manufacturers which while good news for the broader inflation picture, is bad news for manufacturers margins and profits as cost pressure remain elevated.
"There is strong evidence in the November survey that manufacturers capacity to pass on cost pressures has been compromised by the broader economic slowdown. This is pressuring profitability and business activity and will work to reinforce the slowdown in economic activity already underway.
"For the RBA these results should be welcome news. The Judo Bank Manufacturing PMI confirms that the economy is responding to higher interest rates with weaker activity and easing inflation pressures.
"While the steep decline in new orders since September is concerning, the overall picture painted by the latest Australian manufacturing PMI is of a soft landing for the economy with a meaningful easing in inflation pressures."
---

Speaking of the RBA, the Reserve Bank Board meets next Tuesday, December 5. The Bank raised the cash rate again in November after a months-long pause. The Bank is widely expected to be on hold next week.

This article was written by Eamonn Sheridan at www.forexlive.com.

Enviado do meu Galaxy

Newsquawk Week Ahead: US retail sales, China activity data, PBoC, NZ, UK and Canada CPI
por Newsquawk Analysis

Forexlive RSS Breaking news feed / 2023-10-14 21:01

Week Ahead 16-20th October

Sat: New Zealand General Election
Mon: New Zealand CPI (Q3), PBoC MLF
Tue: RBA Minutes, German ZEW Survey (Oct), US Retail Sales (Sep), Canadian CPI (Sep)
Wed: Chinese GDP (Q3), Chinese Industrial Output (Sep) and Retail Sales (Sep), UK Inflation (Sep), EZ Final HICP (Sep)
Thu: BoK Announcement, Bank of Indonesia Announcement, Japanese Trade Balance (Sep), Australian Jobs Report (Sep), US Philly Fed (Oct), Canadian PPI (Sep)
Fri: EU-US High-level Meeting; PBoC LPR, Japanese CPI (Sep), UK Retail Sales (Sep), Canadian Retail Sales (Aug)
NOTE: Previews are listed in day order

New Zealand General Election (Sat): New Zealand will hold its general election on Saturday 14th October 2023 and polls suggest a change of government with voters electing 120 members to the House of Representatives under New Zealand's mixed-member proportional voting system whereby 72 members will be elected from single-member electorates and 48 from closed party lists, while 61 seats are needed for an outright majority. The two main parties vying for control of the 54th Parliament and form the next government include the incumbent Labour Party led by PM Hipkins which currently has 62 seats and won an outright majority in the House at the last election in 2020 under former PM Ardern and was the first time a party achieved a majority under the MMP system since its introduction in 1996. The main opposition is the National Party, led by Christopher Luxon and currently has 34 seats, but are clearly leading across opinion polls. Nonetheless, neither of the main parties are expected to achieve a majority, so the next government will likely be formed through a coalition involving the smaller parties, with the Green Party and Te Pāti Māori which currently hold 9 and 2 seats, respectively, traditionally supportive of Labour, while right-wing ACT currently has 10 seats and is seen to be on track with the National Party to win 59 seats as part of a right coalition. This likely puts the next government in the hands of the New Zealand First Party which is projected to return to parliament after it was ousted in the 2020 election due to a failure to achieve the minimum 5% needed for parliamentary representation, while party leader and effective 'kingmaker' Winston Peters, is all too familiar with this responsibility after having supported both the Labour Party and National Party in past governments.

New Zealand CPI (Mon): YY CPI for Q3 is seen cooling a touch to 5.9% from 6.0%, while the QQ metric is expected to tick higher to 2.0% from 1.1%. The RBNZ, via forecasts released in August, see the Q3 YY rate at 6.0% and the QQ at 2.1%. "The September quarter saw a sharp rise in fuel prices and other transport costs, as well as a large increase in local body rates and the annual increase in tobacco taxes. That's only partially offset by the softening in food prices in recent months", suggest the analysts at Westpac, as the bank pencils in a QQ metric of 1.9% and a YY forecast of 5.8%. The desk acknowledges that its forecasts are softer than the RBNZ's projections, as it reflects "a lower forecast for tradable prices. Even so, core inflation and non-tradable inflation are expected to remain red hot."

PBoC MLF (Mon)/LPR (Fri): The PBoC is likely to maintain its 1-Year MLF rate and benchmark Loan Prime Rates next week with the 1-Year MLF Rate at 2.50%, 1-Year LPR at 3.45% and 5-Year LPR at 4.20%. As a reminder, the PBoC kept its MLF and benchmark lending rates unchanged last month, which was as expected after having just cut its key short-term rates in August by between 10bps-15bps, although it did announce a cut in the RRR last month which was seen to release over CNY 500bln of liquidity and help stabilise the Yuan. Furthermore, the PBoC said it will maintain the basic stability of the exchange rate, firmly support the sustainability of the real economy and promote the economy to achieve effective qualitative improvement and reasonable quantitative growth. The latest data releases have pointed to a lack of urgency for an immediate policy tweak as Industrial Profits returned to growth and PMI figures were mixed in which the official Manufacturing and Non-Manufacturing PMIs topped forecasts, but Caixin PMIs disappointed, while inflation data was softer-than-expected and trade figures mixed with exports remaining in contraction territory.

RBA Minutes (Tue): The RBA will release the minutes from the October 3rd meeting when the central bank kept the Cash Rate Target at 4.10%, as widely expected, while it also stuck to its familiar rhetoric in which it reiterated that some further tightening of monetary policy may be required and that the Board remains resolute in its determination to return inflation to target. Furthermore, it stated that returning inflation to target within a reasonable timeframe remains the Board's priority and recent data is consistent with inflation returning to the desired 2–3% range over the forecast period, while it also stated that inflation in Australia has passed its peak, but is still too high and will remain so for some time yet, as well as noting significant uncertainties around the outlook. This was new Governor Bullock's inaugural meeting at the helm, while the language from the central bank was pretty much a carbon copy of the comments during Lowe's leadership and further bolstered the view of policy continuity.

US Retail Sales (Tue): US retail sales are expected to rise 0.2% M/M in September, cooling from the 0.6% pace in August; the core measure is seen rising 0.1% M/M, and also slowing from 0.6% previously. In its monthly consumer checkpoint analysis, Bank of America's analysts note that consumer spending has been fairly flat over the last two months. Its data shows total card spending +0.2% M/M, reversing the 0.2% decline in card spending reported in August. It said that total card spending per household was +0.7% Y/Y in September (vs +0.4% in August), according to its internal data. "The labour market is key for the consumer," it wrote, "while there has been a relative deterioration in labour conditions at the higher end of the market, most of that underperformance may now be in the past." But BofA adds that wages and salaries of higher-income households are still growing at slower rates than other income cohorts. Analysts will monitor the data to see how consumer trends are holding up in the face of a slowing economy. Ahead, Adobe's online shopping forecast for the holiday season (period that runs from November 1st through the end of this year) predicts that US online holiday sales will rise 4.8% Y/Y and hit USD 221.8bln. It said mobile shopping is set to overtake desktop for the first time, as consumers get increasingly comfortable transacting on smaller screens, and discounts were expected to hit record highs, while 'Buy Now, Pay Later' usage is set to drive a record USD 17bln in online spending as consumers look for flexible ways to manage their budgets.

Canadian CPI (Tue): In the minutes from the September policy meeting, BoC officials were concerned about ongoing and broad-based inflation pressures, with some components rising well above pre-pandemic averages. They noted that shelter costs and high oil prices were contributing to inflation. The minutes said that the outlook for inflation suggests that it will rise in the short-term, due to higher oil and gasoline prices, but gradually ease afterward. The BoC will closely monitor whether momentum in underlying inflation is decreasing, particularly focusing on core inflation, which has remained sticky, and will also consider the balance between economic supply and demand in determining future inflation. Canadian bank RBC says its base-case does not assume further interest rate hikes from the BoC this year, noting that there is still another monthly inflation report and the closely watched Business Outlook Survey to be released before the central bank's next confab, though adds that the BoC has been clear that it won't hesitate to respond with more hikes if necessary to cool labour markets and bring inflation down.

Chinese GDP (Wed) / Industrial Output and Retail Sales (Wed): Analysts expect Chinese Q3 GDP to print at 4.4% YY (prev. 6.3% in Q2) and with the QQ rate forecast at 1.0% (prev. 0.8%). The Retail Sales metric for September is seen at 4.5% (prev. 4.6% in August) and Industrial Output at 4.3% (prev 4.5% in August), according to Reuters. A recent piece by the CCP's mouthpiece, Securities Daily (citing industry experts), suggested the YY metric may be above 4% whilst recently announced stimuli make their way through the economy, "the economy 'opened low but moved high' in the third quarter", Securities Times said. "Judging from high-frequency indicators in September, the current positive factors for economic recovery are increasing, and economic growth is expected to remain steady throughout the quarter." On the rest of the activity data, the piece says "Industrial production is expected to continue to accelerate month-on-month in September. However, due to the higher base in the same period last year, the year-on-year growth rate is expected to rebound slightly to around 4.7%." On the retail sales front, Securities Daily says "continued rapid rebound in service consumption this year, and this trend continued in the third quarter." Looking ahead to Q4, the CCP mouthpiece says Q4 economic growth is expected to improve across the board – "with consumption recovery momentum continuing to strengthen, investment growth rising from a decline, and the dragging effect of external demand on economic growth also easing. In addition, as measures to stabilize the property market continue to be stepped up, the real estate market is expected to stabilize and rebound in the fourth quarter, and its impact on consumption and investment confidence will be weakened."

UK Inflation (Wed): Expectations are for headline Y/Y CPI in September to fall to 6.5% from 6.7%, with no consensus available for the other metrics at the time of writing. The prior report acted as a decisive factor in the MPC's decision to stand pat on rates in September after the release saw declines in headline, core and services CPI, with the latter coming in at 6.8% and well below-the BoE forecast of 7.2%; note, the majority of the fall in services CPI was attributed to airfares and package holidays. For the upcoming release, analysts at Investec are of the view that "despite the push higher in fuel prices over the month, we still expect that inflation continued its downward trend in September". The desk adds that upside pressures could come from education and transport, however, it expects that "these were outweighed by easing price pressures in other areas, such as cooling food price inflation as well as clothing prices". From a policy perspective, similar to the labour market report, it is hard to see the data having much bearing on pricing for the November meeting which points towards the BoE standing pat on rates once again. That said, if the release is particularly out of line, it could have some impact on expectations for rate cuts in 2024, however, given the difficulties in near-term forecasting throughout the current hiking cycle, it is unlikely that market participants will have too much conviction in cementing calls for next year.

BoK Announcement (Thu): The Bank of Korea is likely to maintain its 7-Day Repo Rate at the current level of 3.50% where it has been since January this year and with the central bank expected to refrain from any rate changes for the rest of the year. As a reminder, the BoK was unanimous in its decision to keep rates unchanged at the last meeting in August, although six out of the seven Board members wanted to keep the door open for one more rate hike, while the BoK said it would maintain a restrictive policy stance for a considerable period of time and Governor Rhee stated it is too early to talk about a rate cut, but did not want to rule out the possibility of an ease this year and acknowledged that interest rates are at the upper end of the neutral range, or higher. Furthermore, the central bank noted high uncertainties, including Chinese economic growth and US monetary policy, while it was stated that the increase in household debt over the last couple of months was faster than expected and they may consider macro policy to tackle the issue, but not for now. Since that meeting, there hasn't been anything to suggest a change in the status quo and the central bank's senior Deputy Governor recently stated that there is no need to tighten monetary policy further for now, while inflation data accelerated in September with CPI YY at 3.7% vs. Exp. 3.4% (Prev. 3.4%), although this is unlikely to force the BoK to act as it had anticipated an increase before stabilising from October onwards towards 3% by year-end.

Japanese Trade Balance (Thu): The Trade Balance for September is expected to show a narrower deficit of JPY 425mln vs the August deficit of JPY 938mln. Exports are seen growing 3.1% YY (prev. -0.8%), while imports are seen contracting 12.9% YY (prev. -17.8%). Analysts at CapEco believe the deficit will continue to flatline around JPY 600bln. The desk, citing trading partners alongside prelim figures, posits that imports fell at a slower pace in September. "Given that import prices increased by less on the month, we suspect import volumes also rose slightly", say CapEco.

Australian Jobs Report (Thu): There are currently no forecasts for the Aussie jobs report. Analysts at Westpac see the employment change at 20k (prev. 64.9k), while the desk sees the unemployment rate steady at 3.7%. The analysts suggest "The choppy profile over the last two months again looks to be partly a reflection of shifting seasonalities around school holidays." The desk also posits that " Businesses have demonstrated a remarkable ability to absorb the migration-driven surge in labour supply, although this dynamic will be tested as the broader economy continues to slow... The labour market has moved past its tightest point but is not yet slackening to a material degree." Westpac anticipates that the labour market will remain tight into the end of the year "before a more material degree of slackening emerges in 2024."

EU-US Summit (Fri): European Commission President von der Leyen and European Council President Michel will meet President Biden on October 20th at the White House. Topics on the agenda, according to the joint statement, include Russia-Ukraine, clean energy, digital infrastructure, AI, and the leaders will "review joint activities to strengthen economic resilience and to address related challenges." Away from the official release, sources suggested one area of focus will be the steel sector. A senior EU official cited by newswires suggested steel tariffs are among the issues to resolve, with Bloomberg later reporting the two sides are seeking an interim deal on steel to avoid the return of Trump-era tariffs. Furthermore, from a geopolitical angle, the EU is reportedly planning an anti-subsidy probe into Chinese steelmakers at a summit with the US on October 20th, according to the FT citing sources. An EU official clarified to Reuters that the probe was not limited to China. "A joint statement due at the end of the summit is expected to say the European Union will use its trade defence instruments to assess the market situation for steel, but not mention China. This would lead to investigations by the European Commission", according to the diplomat. Aside from the steel issue, desks also suggest keeping an eye on commentary surrounding Europe's opposition to the US Inflation Reduction Act.

Japanese CPI (Fri): The Core YY rate is seen cooling to 2.7% from 3.1%. There is no forecast for the headline YY or super-core YY, which were previously 3.2% and 4.3% respectively. Using the Tokyo CPI (released a couple of weeks ago) as a proxy, the metric ticked down to 2.8% from 2.9% in the month following a sharp decline in August, led by declines in utility tariffs and manufactured goods inflation. Analysts at CapEco forecast a similar cooling in the coming release. The desk also highlights that the pickup in services inflation reversed in the last month, however, inflation is moderating less quickly than the Bank of Japan anticipated, which will lead to the need to revise inflation forecasts in their meeting later this month (30th-31st). In fitting with that view, Kyodo sources from October 10th suggested the BoJ is reportedly mulling raising its FY23/24 core CPI forecast to near 3% from 2.5% forecast in July. CapEco sees the YY headline at 3.1%, core at 2.8% and supercore at 4.1%.

UK Retail Sales (Fri): In terms of recent consumption indicators, BRC Y/Y retail sales rose 2.8% in September (prev. 4.3%), with the consultancy noting "Sales growth in September slowed as the high cost of living continues to bear down on households. Big ticket items such as furniture and electricals performed poorly as consumers limited spending in the face of higher housing, rental and fuel costs". Elsewhere, the Barclaycard consumer spending release noted "It was nice to see consumers return to the high-street and make the most of the warm weather in early September. However, with the festive period approaching, consumers are balancing their budgets to prepare for this expensive period". For the upcoming release, Oxford Economics notes "…we think there was a further pickup in sales in September. Food sales have been particularly soft of late and look ripe for further catch-up, while there's scope for recoveries in non-store and fuel sales after chunky m/m falls in August".

This article originally appeared on Newsquawk.

This article was written by Newsquawk Analysis at www.forexlive.com.

Enviado do meu Galaxy

Hezbollah fires on Israel after four members killed in shelling
Reuters / 2023-10-09 20:2975
2023-10-09T19:17:06Z
A view shows an Israeli tank and military vehicles near Israel's border with Lebanon in northern Israel, October 9. REUTERS/Ammar Awad
Lebanese armed group Hezbollah fired a salvo of rockets onto northern Israel on Monday in response to at least four of its members being killed in Israeli shelling on Lebanon, two security sources told Reuters.

The exchange of fire marks a significant expansion of the conflict between Israel and Palestinian militants to the Israeli-Lebanese border further north. Iran-backed Hezbollah and Israel fought a brutal month-long war in 2006.

Hezbollah in a statement on Monday said it had fired rockets and mortars on two Israeli military posts in the Galilee. The Israeli military said it identified a number of "launches" from Lebanon into Israel, without any injuries. It said it was responding with artillery fire onto Lebanon.

Hezbollah said in consecutive online statements that at least four of its members had been killed in Israel's "aggression" on southern Lebanon on Monday afternoon.

Israel shelled southern Lebanon on Monday after a cross-border raid claimed by the Palestinian Islamic Jihad group, which has been fighting alongside Hamas since it launched its surprise attack on Israel on Saturday.

The Israeli army said soldiers backed by helicopters killed at least two gunmen who crossed the frontier. A Hezbollah official said had earlier denied the group was involved in the cross-border raid.

Two sources, both close to Hezbollah, had said Israel's deadly shelling of the Hezbollah observation post in southern Lebanon would draw a response from the group.

Hezbollah and Israel have traded sporadic fire over the border since 2006 while avoiding a major conflict. They exchanged artillery and rocket fire on Sunday.

Some residents of southern Lebanon said they were leaving homes along the border with Israel on Monday amid heavy shelling that had so far pounded the outskirts of towns and villages.

The state news agency reported heavy traffic on main roads due to people fleeing the border area and schools in the area will remain closed on Tuesday.

A series of incidents over the past months had already elevated the risk of escalation along the Lebanon-Israel border before the fighting erupted in Israel and Gaza.

In a statement, the Israeli military said its soldiers "killed a number of armed suspects that infiltrated into Israeli territory from Lebanese territory". It did not elaborate on the number.

Military helicopters "are currently striking in the area," the statement added.

A security source in Lebanon and a source in Lebanon's border area said a group of men had approached the border, with one firing at an Israeli observation post.

Israel's Army Radio gave the location as being near Adamit, across from the Lebanese border towns of Aalma El Chaeb and Zahajra.

A spokesperson for the U.N.'s peacekeeping mission said its head Major General Lazaro was "in contact with the involved parties, urging them to exercise maximum restraint."

Lebanon's army confirmed shelling had taken place in border areas and asked people to be cautious in their movements.

Gabi Hage, a father of three with a house near the border described heavy shelling close to him.

"Our house is really close to the border, so we're leaving and going down to the village. All my neighbours are doing the same," he said.

The French consulate in Lebanon told its nationals to postpone any travel to southern Lebanon. Britain also said tensions were high and that the situation could escalate.

Enviado do meu Galaxy

Wall Street is racing to manage your wealth. That is a good thing
The Economist: Leaders / 2023-09-07 10:59165
Listen to this story. Enjoy more audio and podcasts on iOS or Android.
Your browser does not support the <audio> element.

"Where are the customers' yachts?" asks a wide-eyed visitor to Manhattan, after his host points out the bankers' and brokers' boats, bobbing by the pier. The scene, from a book published in 1940, reflects a healthy scepticism of the advice peddled by financiers. Somehow they always seemed to get rich, regardless of how their clients fared.

In the decades that followed, ordinary investors evened the score. They poured money into low-cost index funds, which passively track a market benchmark, and shunned the fee-charging stockpicker. BlackRock and Vanguard, two index-fund providers, oversee $8trn-9trn in assets apiece. In 2019 the volume of passively managed assets in America eclipsed those overseen by active funds for the first time. Today, however, another shift is under way. The hottest thing on Wall Street is wealth management, which helps clients allocate assets, minimise tax bills and plan for retirement—typically for an annual fee of 1% of invested assets. Firms are piling into the business, spurred by the prospect of profits that will only become juicier as the world gets richer. Could it be good for clients, too?

The wealth industry has long been highly fragmented. The über-rich often sought advice from the big banks, typically the Swiss ones—UBS claims to bank every second billionaire—or the elite American firms, like JPMorgan Chase and Morgan Stanley. In America and Europe many of the comfortably well-off long relied on defined-benefit pension funds. Others were often served by retail outfits that sold them expensive mutual funds on commission or picked stocks through brokerage accounts. Across Asia and Latin America, domestic banks often managed local millionaires' wealth.

Several of these firms are now being knitted together. That is in large part because the prize has become more tantalising. For the past 20 years global wealth has grown faster than economic output. Much of that has been fuelled by younger customers and those in Asia. According to a survey by ubs, there were 849,000 dollar millionaires in India last year, for instance, nearly 23 times as many as in 2000. The number of millionaires in Africa has risen more than tenfold. Worldwide, the amount of liquid assets for advisers to salivate over is expected to rise to $230trn by 2030, from $130trn today.

The emergence of slick platforms for managing wealth and the automation of basic advice have also expanded the pool of potential clients. By lowering the cost of managing wealth, technology has enabled advisers who once served only the über-rich to help the merely affluent, too. At the same time, regulatory requirements for banks to hold vast capital buffers in order to make loans or trade securities have reduced the appeal of the activities that commercial and investment banks once prized. The steady, low-capital business of offering wealth advice, meanwhile, has become more attractive.

The consequence of all this has been a frenetic rush into wealth management. Morgan Stanley, which snapped up the wealth arm of Citigroup during the global financial crisis, has since acquired E*TRADE, a brokerage platform, through which it now offers the masses access to its advisers. Citi, in a bid to rebuild what it sold, is poaching talent from rival firms. Consolidation is only hastening the trend. After its shotgun marriage to Credit Suisse, the new-look UBS is now head and shoulders above its rivals in Asia. Executives at JPMorgan Chase have said that their acquisition in May of the crisis-stricken First Republic, a bank that targeted the wealthy, will accelerate plans to expand their wealth-management arm.

For the firms and their shareholders, the future looks exhilarating. If revenues keep pace and margins in wealth management remain in the region of 25-30%, the industry would generate $75bn of profits a year. The total market capitalisation of global banks is around $8trn, and has barely budged for a decade; capturing the enormous opportunity in wealth would add around a seventh to their value. The biggest winners are likely to be those that have already achieved scale, such as Morgan Stanley and ubs.

Regulators, for their part, may see the shift into wealth as a relief. Bolting a steady growth business on to the boom-and-bust cycles of lending and capital-markets intermediation should help stabilise banks—even if it is a little disquieting that the most appealing business in finance is managing wealth that has already been amassed, not assisting the creation of fresh riches through loan-making or issuing equity.

That leaves a nagging question. Does the bonanza for financiers, and a safer financial system, come at the expense of clients' returns? The fees associated with wealth management might make you think that Wall Street is set to make a fortune while clients are ripped off once again. Yet there is an important distinction between a wealth adviser and an active manager.

The allure of stockpickers rests on their promise to beat the market, something that the vast majority simply cannot do on a sustained basis. Wealth managers, by contrast, act as "fiduciaries"—caretakers who are supposed to act in your best interest when offering financial advice. They make suggestions about asset allocation, but are also responsible for making sure their clients are using tax-advantaged funds and that they get into and out of investments in the most cost-effective way. Whereas returns from active investing, after fees, cannot beat passive returns on average, using a wealth manager does not appear to dent returns. Even Vanguard, that giant of index investing, thinks that fiduciaries could add a little to the total lifetime return of an average investor, after fees are paid.

Rich pickings
The investing experience is strewn with pitfalls, even aside from the vagaries of the markets. When left entirely to their own devices people tend to hold too much cash, and to be too hasty to sell up when markets dip. Barely anyone has the time or inclination to work their way through the mind-boggling complexities of a tax code. This is what makes advice useful to the clients who want to preserve and grow their hard-earned fortunes. Some day, customers' yachts may bob by the pier, too. ■

For subscribers only: to see how we design each week's cover, sign up to our weekly Cover Story newsletter.

Enviado do meu Galaxy

Peter Thiel paid staff an extra $1,000 a month if they lived close to the office so they were more likely to work late, book says
Yahoo! Finance: Top Stories / 2023-07-30 20:402

Peter Thiel liked workers to live close to the office, a book says.Marco Bello/Getty Images
Peter Thiel paid staff an extra $1,000 a month if they lived near the office, a former worker said.

The billionaire investor offered it so staff "were more likely to stay late," Michael Gibson wrote.

Gibson made the claim in his book "Paper Belt on Fire: The Fight for Progress in an Age of Ashes."

Peter Thiel offered his staff a monthly bonus of $1,000 if they lived close to the office, according to a former employee of the billionaire investor.

Michael Gibson, a VC investor who worked for Thiel for five years, said in his book "Paper Belt on Fire: The Fight for Progress in an Age of Ashes" that Thiel "lived about 400 yards from the office" in San Francisco and encouraged his employees to live locally too.

Thiel gave workers the bonus so "they were more likely to stay late" and could be around for "a surprise meeting on the weekends," Gibson wrote.

"Employees were granted an extra $1,000 per month in rent if they lived within a half-mile radius of the office," per the title, published by Encounter Books last year.

"It had the added effect that we would all show up to the same watering holes after work to knock off a few drinks and gossip, tell war stories, argue over the jukebox, and have a few laughs. As far as employee benefits go, I always thought this was a wise one."

Gibson co-founded the venture capital fund 1517, which aims to back college dropouts and those who did not study at university.

Similar subsidy schemes were in place at the software company Palantir Technologies, which Thiel co-founded, as well as at Salesforce subsidiary SalesforceIQ, according to reporting by The Guardian.

Thiel is in 217th place on the Bloomberg Billionaires Index with a net worth of $10 billion.

Meta also had deep pockets when it came to offering workers incentives to live near its office. It historically paid "at least $10,000" to Facebook staff if they lived within 10 miles of its headquarters in Menlo Park, Silicon Valley, per The Guardian. It also offered employees with families a one-off payment of at least $15,000 for housing.

While some companies are bringing back such relocation benefits schemes in a bid to get workers to return to the office after the pandemic, others are taking a different approach .

Law firm Davis Polk & Wardwell told its employees that their bonuses could be cut if they're not in the office three days a week, The Wall Street Journal reported.

Recent data from ZipRecruiter showed there were 3.8 million job listings that refer to relocation assistance, up from 2 million posts that mentioned the term in 2020, the Journal reported in April.

ARC Relocation, a firm that helps companies relocate workers, told Insider's Aaron Mok that it's seen a "significant rise" in business since companies started to enforce return-to-office policies.

Thiel and Meta didn't immediately respond to requests for comment from Insider, made outside normal working hours.

Read the original article on Business Insider

Enclosures

decc52134bd56ab727c7942bd4a0a5ae

Enviado do meu Galaxy

Believe it or not, consumer sentiment is improving
Yahoo! Finance: Top Stories / 2023-07-30 20:402


A version of this post first appeared on TKer.co

Stocks climbed last week with the S&P 500 rising 1.0% to close at 4,582.23. The index is now up 19.3% year to date, up 28.1% from its October 12 closing low of 3,577.03, and down 4.5% from its January 3, 2022 record closing high of 4,796.56.

The market rallied as we were reminded not to underestimate the American consumer.

On Friday, the BEA reported that personal consumption expenditures growth accelerated in June, rising to a record annualized rate of $18.4 trillion.

This matters because consumer spending is the dominant driver of the U.S. economy, with personal consumption expenditures accounting for 68% of GDP.

However, consumer behavior can be complex and nuanced.

For most of the past two years, measures of consumer sentiment have been in the dumps — largely due to inflation manifesting clearly in the rising prices of goods and services.

Yet consumer spending growth has persisted.

The explanation: Consumer finances have been in remarkably good shape thanks to a combination of excess savings and relatively low debt levels. Meanwhile, more consumers have been getting jobs, which means more consumers have been making money. If people have money, they'll spend it.

But no economic or market narrative goes unchanged forever. The consumer tailwinds mentioned above have been showing signs of fading.

The consumer narrative is shifting in a fascinating way
In recent months, we've been watching excess savings shrink, consumer debt levels begin to normalize (i.e, rise from unusually low levels), and job growth cool.

These are developments that might not lead you to assume that consumer sentiment would be improving.

But believe it or not, consumer sentiment is improving.

On Friday, we learned the University of Michigan's Index of Consumer Sentiment in July rose to its highest levels since October 2021.

On Tuesday, we learned the Conference Board's Consumer Confidence Index in July jumped to its highest level since July 2021.

Notably, the Conference Board's survey also found more consumers are saying their financial situation is good and fewer are saying it's bad.

Fortunately, what we're witnessing isn't total madness among consumers.

While some key metrics of financial health have deteriorated in recent months, others have been improving.

Incomes are outpacing inflation
As Renaissance Macro's Neil Dutta has been highlighting for months, real income growth has been positive (i.e., consumers' wage growth is outpacing inflation).

According to BEA data released Friday, real personal income excluding transfer receipts (e.g. Social Security benefits, unemployment insurance benefits, and welfare payments) rose to a record high in June and has been trending higher since December.

This has as much to do with wages rising as it does with inflation cooling.

Earlier this month, we learned the consumer price index in July was up just 3% from a year ago, the lowest print since March 2021.

Among the biggest forces bringing down inflation were energy prices, which were down 16.7% from year-ago levels. Gasoline prices are way down after a brutal 2022.

While policymakers tend to focus on "core" measures of inflation (which exclude volatile components like food and energy prices), headline measures of inflation can have a huge impact on sentiment as they include the prices of goods consumers confront very regularly.

"It is a good thing headline inflation has gone down a bit," Federal Reserve Chair Jerome Powell said on Wednesday (h/t Myles Udland). "I would say that having headline inflation move down that much... will strengthen the broad sense that the public has that inflation is coming down, which will, in turn, we hope, help inflation continue to move down."

And even though job growth has been cooling, there continue to be a lot of signs that the demand for labor remains robust.

This was recently confirmed in The Conference Board's July survey, which showed that "46.9% of consumers said jobs were 'plentiful,' up from 45.4%. 9.7% of consumers said jobs were 'hard to get,' much lower than 12.6% last month."

"Overall, the sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labor markets," University of Michigan's Joanne Hsu said.

The Conference Board noted: "Despite rising interest rates, consumers are more upbeat, likely reflecting lower inflation and a tight labor market."

On the matter of rising interest rates, it's worth remembering that the share of household debt with an adjustable interest rate is low by historical standards.

What to watch
Metrics like excess savings, consumer debt, and debt delinquencies have moved unfavorably in recent months. But none of these developments are signaling that a recession is around the corner. The metrics have only eased from their hottest levels.

But will spending hold up? This will be the key dynamic to watch in the coming months.

It's great that consumer sentiment is on the mend. And it's even better that real incomes are on the rise.

And generally speaking, consumer finances remain very healthy. As Federal Reserve data shows, household debt service payments remain historically low relative to disposable income.

In addition to resilient measures of consumer spending at the aggregate level, anecdotes suggest discretionary spending remains very strong: Royal Caribbean says cruise bookings are surging, Bank of America says Barbie and Oppenheimer have people out and about, and even the Federal Reserve says Taylor Swift concerts are fueling local tourism.

And like consumer behavior, the dynamics of the economy are complex and nuanced. Just because some key metrics are deteriorating doesn't mean the economy is going down. There may be other metrics offsetting these headwinds. You just have to be vigilant and open to the possibility that big narratives can change.

Reviewing the macro crosscurrents
There were a few notable data points and macroeconomic developments from last week to consider:

The Fed hikes rates. On Wednesday, the Federal Reserve tightened monetary policy further by raising its target for the federal funds rate by 25 basis points to a range of 5.25% to 5.5%

From the Fed's monetary policy statement: "In determining the extent of additional policy firming that may be appropriate to return inflation to 2% over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2% objective."

"I would say what our eyes are telling us is policy has not been restrictive enough for long enough to have its full desired effects," Fed Chair Jerome Powell said in a press conference.

In other words, while inflation rates have cooled significantly in recent months, they remain above target levels. And so the Fed will keep monetary policy tight for a little while.

Inflation is cooling. The personal consumption expenditures (PCE) price index in June was up 3.0% from a year ago, down from the 3.8% increase in May. The core PCE price index — the Federal Reserve's preferred measure of inflation — was up 4.1% during the month after coming in at 4.6% higher in the prior month.

On a month over month basis, the core PCE price index was up 0.2%. If you annualized the rolling three-month and six-month figures, the core PCE price index was up 3.4% and 4.1%, respectively.

The bottom line is that while inflation rates have been trending lower, they continue to be above the Federal Reserve's target rate of 2%.

Labor costs are cooling. The employment cost index in the second quarter was up 4.5% from the prior year, down from 4.9% in the first quarter. On a quarter-over-quarter basis, it was up 1.0% in the second quarter, a deceleration from the 1.2% gain in the first quarter.

From Wells Fargo: "The details of the ECI report are consistent with a labor market that is still tight but is gradually cooling from the scorching heat experienced last year. Compensation growth appears to have turned a corner as labor supply and demand come into better balance."

Unemployment claims tick down. Initial claims for unemployment benefits fell to 221,000 during the week ending July 22, down from 228,000 the week prior. While this is up from the September low of 182,000, it continues to trend at levels associated with economic growth.

The U.S. economy grew. U.S. GDP grew at a healthy 2.4% rate in Q2, according to the BEA's advance estimate (via Notes). During the period, personal consumption increased at a 1.6% clip.

Near-term GDP growth estimates remain positive. The Atlanta Fed's GDPNow model sees real GDP growth climbing at a 3.5% rate in Q3.

Most U.S. states are still growing. From the Philly Fed's State Coincident Indexes report: "Over the past three months, the indexes increased in 49 states and decreased in one, for a three-month diffusion index of 96. Additionally, in the past month, the indexes increased in 43 states, decreased in two states, and remained stable in five, for a one-month diffusion index of 82."

They're building a lot of factories. From Bloomberg: "Business investment in manufacturing facilities surged to the highest level in records that go back to the late 1950s, according to data published Thursday by the Bureau of Economic Analysis. Spending on factory construction has almost doubled in the past year, after the Biden administration passed laws that provide hundreds of billions of dollars in subsidies and other support for industries like clean energy and semiconductors."

Business survey signals cooling. From S&P Global's July Flash U.S. PMI (via Notes): "July is seeing an unwelcome combination of slower economic growth, weaker job creation, gloomier business confidence and sticky inflation. The overall rate of output growth, measured across manufacturing and services, is consistent with GDP expanding at an annualized quarterly rate of approximately 1.5% at the start of the third quarter. That's down from a 2% pace signaled by the survey in the second quarter."

Keep in mind that during times of stress, soft data tends to be more exaggerated than actual hard data.

New home sales jump. Sales of newly built homes (via Notes) fell 2.5% in June to an annualized rate of 697,000 units.

Home prices rise. According to the S&P CoreLogic Case-Shiller index (via Notes), home prices rose 1.2% month-over-month in May. From SPDJI's Craig Lazzara: "Home prices in the U.S. began to fall after June 2022, and May's data bolster the case that the final month of the decline was January 2023. Granted, the last four months' price gains could be truncated by increases in mortgage rates or by general economic weakness. But the breadth and strength of May's report are consistent with an optimistic view of future months."

Consumer confidence is up. From The Conference Board's July Consumer Confidence report (via Notes): "Consumer confidence rose in July 2023 to its highest level since July 2021, reflecting pops in both current conditions and expectations… Headline confidence appears to have broken out of the sideways trend that prevailed for much of the last year. Greater confidence was evident across all age groups, and among both consumers earning incomes less than $50,000 and those making more than $100,000."

Labor market confidence improves. From The Conference Board: "46.9% of consumers said jobs were 'plentiful,' up from 45.4%. 9.7% of consumers said jobs were 'hard to get,' much lower than 12.6% last month."

From The Conference Board's Dana Peterson: "Assessments of the present situation rose in July on brighter views of employment conditions, where the spread between consumers saying jobs are 'plentiful' versus 'hard to get' widened further. This likely reflects upbeat feelings about a labor market that continues to outperform."

Consumer spending rises. According to BEA data (via Notes), personal consumption expenditures increased 0.5% month over month in June to a record annual rate of $18.4 trillion.

Card spending growth is positive. From JPMorgan Chase: "As of 23 Jul 2023, our Chase Consumer Card spending data (unadjusted) was 2.9% above the same day last year. Based on the Chase Consumer Card data through 23 Jul 2023, our estimate of the US Census July control measure of retail sales m/m is 0.46%."

Putting it all together
We continue to get evidence that we could see a bullish "Goldilocks" soft landing scenario where inflation cools to manageable levels without the economy having to sink into recession.

The Federal Reserve recently adopted a less hawkish tone, acknowledging on February 1 that "for the first time that the disinflationary process has started." At its June 14 policy meeting, the Fed kept rates unchanged, ending a streak of 10 consecutive rate hikes. While the central bank lifted rates again on July 26, most economists agree that the final rate hike is near.

In any case, inflation still has to come down more before the Fed is comfortable with price levels. So we should expect the central bank to keep monetary policy tight, which means we should be prepared for tight financial conditions (e.g. higher interest rates, tighter lending standards, and lower stock valuations) to linger.

All of this means monetary policy will be unfriendly to markets for the time being, and the risk the economy sinks into a recession will be relatively elevated.

At the same time, we also know that stocks are discounting mechanisms, meaning that prices will have bottomed before the Fed signals a major dovish turn in monetary policy.

Also, it's important to remember that while recession risks may be elevated, consumers are coming from a very strong financial position. Unemployed people are getting jobs. Those with jobs are getting raises. And many still have excess savings to tap into. Indeed, strong spending data confirms this financial resilience. So it's too early to sound the alarm from a consumption perspective.

At this point, any downturn is unlikely to turn into economic calamity given that the financial health of consumers and businesses remains very strong.

And as always, long-term investors should remember that recessions and bear markets are just part of the deal when you enter the stock market with the aim of generating long-term returns. While markets have had a pretty rough couple of years, the long-run outlook for stocks remains positive.

A version of this post first appeared on TKer.co

Enclosures

90141370-2f09-11ee-b7c8-85dc542feed6

Enviado do meu Galaxy

Eletricidade: anatomia de um desvio colossal - Expresso

☰
Expresso
ASSINAR
EXPRESSO ENERGIA

Eletricidade: anatomia de um desvio colossal


Miguel Prado

Bom dia!


Há mais de uma década, quando Portugal estava no início de uma austera intervenção da troika, correram rios de tinta em torno do "desvio colossal" das contas públicas. Como em 2011 observava o então ministro das Finanças, Vítor Gaspar, estava em causa o trabalho "colossal" com que o Governo se confrontava para cumprir metas orçamentais perante o desvio detetado. Em 2011 não era só na contabilidade do Estado que havia um sinal vermelho. O sistema elétrico suscitava igualmente preocupações, com uma montanha de dívida tarifária pela frente, num setor acusado de viver protegido por rendas excessivas. Uma dúzia de anos depois, o tema da dívida tarifária está praticamente resolvido, mas persistem desafios na gestão do mercado. E um deles é o desvio, também ele colossal, entre as previsões que sustentam as tarifas reguladas de eletricidade e os preços realmente verificados.



É um tema regulatório, eminentemente técnico, mas que, mais cedo ou mais tarde, acaba por nos tocar a todos enquanto consumidores de eletricidade. Uma boa parte da fatura que nos chega a casa todos os meses depende das contas feitas todos os anos pela Entidade Reguladora dos Serviços Energéticos (ERSE), que em outubro apresenta uma proposta tarifária, e em dezembro aprova a sua versão final, para vigorar a partir de janeiro. Para os 950 mil clientes que estão no mercado regulado, a sua fatura é integralmente dependente dos termos aprovados pela ERSE. Para os mais de 5 milhões de famílias que estão no mercado liberalizado, uma parte do que pagam depende do comercializador e da forma como este se aprovisiona de energia, mas outra parcela depende das tarifas de acesso à rede estipuladas pela ERSE.


Há dias, a ERSE anunciou uma invulgar proposta de atualização intercalar das tarifas de acesso, a vigorar a partir de 1 de julho. E a razão, de um modo resumido, é que o ano 2023 está a apresentar uma realidade de preços de energia bem diferente daquela que o regulador assumiu no final de 2022, quando aprovou as tarifas para este ano. É uma diferença de mais de 2 mil milhões de euros (que detalhamos mais abaixo). Mas vale a pena olharmos para o assunto com mais alguma profundidade, para entendermos como são construídos os preços que pagamos pela eletricidade.


Na eletricidade a fatura de cada família tem uma componente fixa (pela potência contratada) e outra variável (pela energia consumida). O que pagamos tem de cobrir o custo da produção de eletricidade, o seu transporte e distribuição até às nossas casas, custos de gestão da rede e as margens de lucro das empresas que atuam nesta cadeia. Se na comercialização as margens são livremente definidas por cada operador (exceto o comercializador de último recurso, como a SU Eletricidade, cuja margem é fixada pela ERSE), no transporte e distribuição os custos são regulados (é a ERSE que define quanto a REN e a E-Redes, em Portugal Continental, têm direito a receber). Na produção é um pouco mais complexo: aí convivem produtores em regime geral, que vendem diariamente a sua energia a preços variáveis em função da oferta e da procura, mas também produtores do regime especial (a maior parte dos quais com a garantia de venda da sua eletricidade a uma tarifa pré-definida, válida por vários anos).


Sucede que todos os anos há uma carteira de clientes regulados (como os da SU Eletricidade) que vai aumentando e diminuindo, da mesma forma que a produção do regime especial também vai oscilando (consoante haja mais ou menos geração renovável coberta por este regime). Cabe à ERSE distribuir alguns destes custos do sistema pelos consumidores de eletricidade nos vários níveis de tensão da rede elétrica (desde os que servem diretamente as indústrias aos que servem as famílias), mas o exercício é complexo. O regulador tem de fazer para o ano seguinte múltiplas projeções: o volume esperado da procura de eletricidade, o volume esperado de produção no regime especial (que inclui parques eólicos, mini-hídricas, algumas centrais solares mais antigas, cogerações, entre outros produtores), e, entre outras variáveis, a evolução esperada do preço grossista da eletricidade.


Um dos elementos cruciais no exercício de preparação das tarifas de eletricidade é este último. A ERSE precisa de projetar um preço de mercado de eletricidade para o ano seguinte, de forma a saber qual o diferencial entre o mercado e o custo da produção do regime especial. E precisa de o fazer porque a regulada SU Eletricidade tem a incumbência de adquirir toda a eletricidade do regime especial e a colocar no mercado ibérico; se o preço médio garantido aos produtores do regime especial for de 100 euros por MWh e o preço de mercado for de 50 euros, a SU incorre num sobrecusto de 50 euros por MWh, que terá de ser recuperado nas tarifas suportadas por todos os consumidores de eletricidade; se o preço de mercado for de 200, a SU obtém um ganho de 100 euros por MWh, que terá de ser devolvido a esses mesmos consumidores.


Desde 2020, com a pandemia, que os mercados de energia entraram numa enorme volatilidade. Primeiro, a queda do consumo fez afundar os preços, dos combustíveis à eletricidade. Em 2021, a recuperação da procura fê-los disparar. Em 2022 a guerra na Ucrânia acentuou a volatilidade. E neste início de 2023 o mundo percebeu que a Europa resolveu bem o desafio de curto prazo que tinha no aprovisionamento de gás: o preço do combustível caiu de forma acentuada, e tem permanecido sem grandes oscilações nos últimos meses. No entanto, o mercado grossista de eletricidade na Península Ibérica continua a ser um carrossel, com uma enorme amplitude de preços da noite para o dia.


É neste cenário que aquilo que já era um quebra-cabeças na vida de um regulador (fazer múltiplas projeções de preços e volumes para o ano seguinte) se transformou numa missão virtualmente impossível (não falhar muito nessas projeções). Vamos aos números.


Na sua proposta de tarifas para 2023 a ERSE havia inicialmente estimado, em outubro de 2022, que ao longo deste ano o preço médio da eletricidade no mercado grossista rondaria os 262 euros por megawatt hora (MWh). Em dezembro, na versão final dos tarifários, o preço de referência já tinha baixado para 223 euros por MWh. Era, ainda assim, um valor histórico: nunca antes a ERSE havia assumido para o ano seguinte um custo tão alto de eletricidade no mercado grossista.


Esta projeção do regulador acarretava riscos e benefícios. O benefício principal era que, havendo um enorme diferencial entre o valor de mercado (estimado) da eletricidade e os preços garantidos ao regime especial, esse fosso criava um substancial ganho tarifário (em lugar do sobrecusto que tradicionalmente existia), que resultaria em valores negativos nas tarifas de acesso à rede (TAR). Ou seja, para 2023, a ERSE aprovou TAR negativas: os comercializadores deveriam, nas suas ofertas comerciais, descontar esse valor negativo das redes aos seus custos com a aquisição da energia no mercado. Mas a projeção de 223 euros de preço de mercado assumida pela ERSE implicava também um risco elevado: se o custo médio da eletricidade no mercado ibérico (Mibel) fosse afinal muito inferior, então as tarifas para 2023 teriam um desvio relevante, que mais tarde teria de ser repercutido nos consumidores. E foi o que aconteceu.


Nos primeiros quatro meses do ano o preço médio no Mibel rondou os 92 euros por MWh, menos de metade do pressuposto usado pela ERSE para 2023. Embora tenham passado apenas quatro meses, o desvio é o maior alguma vez registado entre os pressupostos da ERSE e o preço grossista. O levantamento que fizemos para os últimos anos mostra que sempre houve desvios, mas não da magnitude daquele a que estamos a assistir em 2023.


O mercado de futuros, operado pelo Omip, sugere algum agravamento de preços no resto do ano: junho está nos 100 euros por MWh, o terceiro trimestre está nos 112 euros e o quarto trimestre nos 131 euros. Mesmo que se confirmem estes patamares de preço no mercado ibérico, o ano em curso sairá bem abaixo da projeção considerada pela ERSE. Conclusão: as tarifas de acesso de que os consumidores de eletricidade estão a beneficiar (porque negativas) foram sobreestimadas. E foi isso que levou agora a ERSE a propor a revisão excepcional a vigorar a partir de julho, com tarifas de acesso menos negativas no segundo semestre do que as que foram aplicadas na primeira metade do ano.


O efeito prático desta alteração extraordinária promovida pela ERSE está ainda por determinar (mas poderá fazer subir os preços finais das ofertas no mercado liberalizado). A ERSE indica que os custos de interesse económico geral (CIEG), que resultam, em grande medida, de decisões políticas, deverão este ano ser afinal negativos em 2,5 mil milhões de euros, e não no valor negativo de 4,6 mil milhões assumido nas tarifas para 2023. É uma diferença substancial, superior a 2 mil milhões de euros (o equivalente a mais de 300 euros por cada um dos 6,4 milhões de pontos de consumo de eletricidade do país).


O comunicado do regulador sobre o assunto não revela qual o novo valor proposto para as tarifas de acesso. Essa tarifa é atualmente de -0,0958 euros por kilowatt hora (kWh) na componente de energia em tarifa simples. Numa análise publicada há dias no seu perfil no Twitter, Gonçalo Aguiar, especialista na área de energia, calculou, com base nos poucos dados avançados pela ERSE, que a nova tarifa de acesso poderia assumir um valor de -0,0176 euros por kWh (uma outra fonte ouvida pelo Expresso aponta igualmente para um valor próximo dos 2 cêntimos negativos por kWh). Isso significará uma redução da ordem dos 7 cêntimos por kWh no desconto da tarifa de acesso.


Como a ERSE anunciou que os preços do mercado regulado não irão mexer, esta revisão retirará parte da vantagem dos tarifários do mercado liberalizado, que hoje são destacadamente mais baratos (em especial os indexados ao mercado grossista). Aos preços de mercado atuais, os tarifários indexados deverão permanecer competitivos nos próximos meses, mas será preciso esperar por julho para verificar que atualizações ocorrem nos tarifários fixos do mercado livre, e como se comparam entre si e face aos preços regulados.


As próximas semanas implicarão também um delicado exercício tarifário do lado do maior comercializador de eletricidade do país. Afinal, o presidente executivo da EDP, Miguel Stilwell de Andrade, prometeu uma descida de preços a partir de julho. "Vamos seguramente baixar os preços no segundo semestre", declarou o gestor em entrevista ao Expresso. Para quanto? "Vai depender das tarifas de acesso, de eventuais alterações que haja", respondeu Stilwell na entrevista publicada a 21 de abril, parecendo adivinhar o que a ERSE anunciaria uma semana depois. Com tarifas de acesso menos negativas do que as que até agora existiam, qual será a magnitude da descida prometida pela EDP Comercial?


O "desvio colossal" que baralhou as contas do regulador da energia, passados que estão pouco mais de quatro meses depois da aprovação das tarifas de 2023, não é uma questão de fácil resolução. A estrutura e o desenho do sistema português de eletricidade continuam a obrigar a trabalhar com previsões. E assim continuará a ser enquanto houver comercialização de último recurso (regulada) a conviver com o mercado liberalizado, produção de regime especial em paralelo com geração sem preços garantidos e outros fatores que ao longo de décadas marcaram presença na complexa arquitetura tarifária da eletricidade. Um puzzle que fica ainda mais difícil depois de em 2023 o sistema elétrico ter beneficiado de uma injeção extraordinária de verbas do Estado, sem que saibamos se no ano seguinte tal se repetirá.


A dívida tarifária, que em 2015 chegou a ultrapassar os 5 mil milhões de euros, parece hoje um tema bem resolvido em Portugal. O nosso sistema elétrico foi acumulando excedentes tarifários nos últimos anos, conseguindo abater a maior parte do fardo da dívida que vinha de trás. Só em 2023 estão a ser amortizados 830 milhões de euros de dívida tarifária, e chegaremos ao fim do ano com um stock de dívida de 879 milhões. Era pelo menos essa a projeção da ERSE em dezembro. Se 2024 repetisse o perfil de amortização deste ano, chegaríamos a 2025 praticamente sem dívida tarifária na eletricidade. Mas o desvio do corrente ano e a volatilidade que vimos enfrentando no mercado introduzem um ponto de interrogação sobre o momento real de extinção da dívida tarifária.


A complexidade de desenhar tarifas e preços persiste. Há no setor elétrico diferentes perspetivas sobre o desenho ideal do mercado. Há quem defenda mais contratos de longo prazo (ao criarem cash flows previsíveis diminuem o risco dos projetos e o seu custo de financiamento, ao mesmo tempo que proporcionam preços estáveis para o consumidor). Há quem prefira exposição total ao mercado, ganhando mais dinheiro nuns dias e menos noutros. Não é preciso ir muito longe para o ilustrar: a EDP tem há anos a maior parte da sua produção de eletricidade coberta por contratos de longo prazo; a Galp tem preferido expor as suas centrais solares ao mercado (e tem-se dado bem, porque os preços grossistas nos últimos dois anos alcançaram máximos históricos).


Nos próximos anos novos produtores entrarão em cena. Uns com maior apetite pelo risco, outros com a necessidade de garantir preços fixos. Da energia solar à eólica no mar, a concorrência será elevada. As baterias poderão também entrar no jogo para tirar partido das horas de preços loucos. Esta semana, a comunidade Future Energy Leaders Portugal e a Associação Portuguesa da Energia (APE) promoveram um debate sobre as perspetivas das eólicas offshore em Portugal. No evento, o professor universitário João Peças Lopes indicou que as eólicas flutuantes poderão vir a conseguir um custo nivelado de energia em torno dos 50 euros por MWh quando esse mercado (o das torres flutuantes) alcançar massa crítica, isto é, quando alcançar uma capacidade de 20 a 30 gigawatts (GW) globalmente. Esse seria um preço competitivo (é metade do preço ibérico dos futuros para 2024), mas para lá chegarmos é preciso que os projetos saiam do papel e a indústria se materialize. Mas mesmo aí estamos no domínio de elevada incerteza das projeções. Teremos sempre de viver com elas. E com desvios. Sejam eles colossais ou residuais.

DESCODIFICANDO:


VPP. Uma "Virtual Power Plant" é um conjunto de recursos energéticos descentralizados que possam ser agregados virtualmente, por meio de um sistema de controlo digital, para fornecer serviços à rede elétrica. Assim, uma VPP poderá juntar uma série de pequenas instalações fotovoltaicas em casas e fábricas, fazer a gestão remota de sistemas de aquecimento e arrefecimento, bem como gerir um conjunto de baterias e uma frota de veículos elétricos, usando as respetivas potências e a sua energia para fornecer serviços à rede em momentos críticos, funcionando como uma alternativa flexível às convencionais centrais elétricas. As receitas associadas à prestação desses serviços são depois partilhadas entre os proprietários dos vários ativos descentralizados.



E VALE A PENA LER:


É sobre VPP o mais recente estudo do Brattle Group, encomendado pela Google, e que é intitulado "Real Reliability: the value of virtual power". O trabalho conclui que seria economicamente vantajoso os Estados Unidos da América apostarem nestas centrais virtuais para garantirem o equilíbrio do seu sistema elétrico. Lembrando que na última década os EUA instalaram mais de 100 gigawatts (GW) de nova capacidade firme (na sua maior parte centrais a gás, mas também baterias) com um investimento de 120 mil milhões de dólares, a análise do Brattle Group estima que a eventual instalação de 60 GW de VPP poderá proporcionar poupanças de 15 a 35 mil milhões de dólares ao longo de uma década face aos custos que teria a construção de centrais a gás e baterias para garantir a segurança e flexibilidade da rede elétrica.



A newsletter termina aqui, mas pode continuar a seguir o essencial do mundo da energia no Expresso. A próxima edição chega daqui a duas semanas, a 18 de maio. Até lá, pode enviar-me os seus comentários, reparos, críticas e sugestões para mprado@expresso.impresa.pt. Tenha um excelente final de semana!


Expresso Energia

ENERGIA

Hora H: o hidrogénio já chegou lá?

ECONOMIA

Falemos então de segurança energética

Enviado do meu Galaxy

Will BRICS Implement A Gold Backed Currency In August?
por Tyler Durden

Zero Hedge / 2023-07-18 01:0864
Will BRICS Implement A Gold Backed Currency In August?
By Jan Nieuwenhuijs of Gainesville Coins

Aside from speculation there hasn't been official confirmation by any BRICS nations that they will either issue a new currency backed by gold or peg their currencies to gold anytime soon. Although it's likely discussions are going on among BRICS nations to create a new currency, no agreement has been reached and policy makers are denying the new currency is soon to be launched. Current talk about a new currency—suggesting a gold standard will be implemented in August at the next BRICS summit—should be treated with skepticism.

Image:
Attention for alliances such as the BRICS (Brazil, Russia, India, China, and South Africa) has increased since February 2022, when Russia invaded Ukraine, the West seized Russia's dollar assets, and global tensions reached a crescendo. The BRICS, among other countries, have an interest in de-dollarization and have become more vocal about it, though easier said than done.

No Confirmation for New BRICS Currency
Based on an item by Russian news agency RT, broadcasted July 7, 2023, several gold commentators became confident that the BRICS will announce a gold standard this August at their next summit in South Africa. In my view, there is a lack of proof for this conclusion.

Let us examine on which grounds RT communicated a gold backed currency is to be introduced by the BRICS—widely interpreted as a new gold standard. Unfortunately, there is not one official BRICS website to verify what is being stated on Russian news outlets, financial blogs, and Twitter. For every summit a new website is launched. On the BRICS 2023 site I can't find confirmation of a new currency so we will have to evaluate the source provided by RT.

RT is banned in the West but has several accounts on Twitter. RT India shared a tweet on July 7 that reads: "BRICS Plans to Introduce New Gold-Backed Currency." Primarily this tweet is what caused a stir about a BRICS gold standard.

#BRICS Plans to Introduce New Gold-Backed Currency

The proposed gold-backed currency will contrast with the credit-backed US dollar, with the decision coming a month ahead of the bloc's summit in Johannesburg.

The growing initiative has more and more nations lining up to join… pic.twitter.com/pCF6y9xvGY

— RT_India (@RT_India_news) July 7, 2023
In the video that accompanies the tweet, the source of RT India appears to be a tweet from July 3 by the Russian Embassy in Kenya. From scrolling through all tweets by the Russian Embassy in Kenya one would think this is an account of an activist, not an embassy. Furthermore, the screenshot of the tweet from the Russian Embassy shown by RT India in their video is edited! The actual tweet, which can be seen below, includes a link to an opinion editorial by US economist Joseph Sullivan for the website Foreign Policy, titled: "A BRICS Currency Could Shake the Dollar's Dominance." This article in Foreign Policy is the source of the Russian Embassy's tweet; the source is not the Russian Embassy itself, which RT India wants you to believe.

The BRICS countries are planning to introduce a new trading currency, which will be backed by gold.
More and more counties recently express desire to join BRICS.https://t.co/lMKTd4FlnT

— Russian Embassy in Kenya/Посольство России в Кении (@russembkenya) July 3, 2023
Sullivan provides two hyperlinks to sources regarding Alexander Babakov, deputy chairman of Russia's State Duma. According to Sullivan, Babakov has stated that Russia "is now spearheading the development of a new currency."

The first link from Sullivan brings us to an article on Coin Telegraph, which links to a piece on India TV, reporting on the Russia-India Business Forum 2023 that was held on March 29 and 30. From India TV (March 30):

Babakov stressed that both nations should work to obtain a new medium for payment and added digital payment could be the "most promising" and "most viable" option for both nations. "New Delhi, Moscow should institute a new economic association with a new shared currency, which could be a digital ruble or the Indian rupee," said Babakov.

"Our goal should be focused on writing new rules in the financial sphere in order to enable the use of an already common currency," he stressed.

"It doesn't matter whether it's a digital ruble, a digital rupee, a digital yuan, or some other currency. But this currency must follow the laws of our respective nations," added the top Russian official. 

There is not a word on gold in the article by India TV.

The second link from Sullivan brings us to the India Times that writes (April 4):

According to reports quoting Russian lawmaker Alexander Babakov, the BRICS nations are in the process of creating a new medium for payments—established on a strategy that "does not defend the dollar or euro." 

Babakov, who is the deputy Chairman of Russia's State Duma, reportedly indicated that the new currency would be secured by gold and other commodities such as rare-earth elements.

The India Times states that "reportedly" a new currency will be established secured by gold and other commodities, though there is no source provided. The RT trail ends there. Any news based on the tweet by RT India is overblown.

Other websites, such as Al Mayadeen and TeleSUR, offer more information about what Babakov has said on the Russia-India Business Forum. From Al Mayadeen (March 30):

"The transition to settlements in national currencies is the first step. The next one is to provide the circulation of digital or any other form of a fundamentally new currency in the nearest future. I think that at the BRICS [leaders' summit], the readiness to realize this project will be announced, such works are underway," Babakov said on the sidelines of the Russian-Indian … Forum.

Babakov further did not dismiss the possibility of the formation of a single BRICS currency. According to him, the currency would be secured not just by gold, but also by other groups of products, including rare-earth elements of the soil.

What Babakov said on the sidelines of the forum doesn't sound like the BRICS will implement a gold standard at the next summit in August. The first step is to trade in national currencies, then a new currency could be created, for which the "readiness to realize [it] … will be announced" at the next summit, Babakov thinks.

Implementing this currency could be years away. One, thinking of announcing to start cooperating doesn't mean much. Second, how Babakov describes the currency is vague and no other BRICS nation has supported his idea publicly. Babakov's currency backed by gold and other commodities is impractical and will need readjustments. Third, a BRICS initiative for "strengthening … economic partnership" "to reduce dependence on the US dollar" was already discussed in 2012 and developments take time.

Russian news agencies RIA Novosti and TASS also reported on Babakov's remarks at the forum on March 30, 2023. From Ria Novosti (Google Translate):

The BRICS countries are working on a new form of currency and can present ideas for its development at the summit of leaders of the association this year in South Africa, said Deputy Chairman of the State Duma Alexander Babakov.

Presenting ideas is not the same as implementing a gold standard. Besides, we don't know how much of this is propaganda. We need official sources from other BRICS members to jump conclusions.

Conclusion
Logically, the Russians advocate any alternative to the dollar as they are restricted from using the Western based international financial infrastructure. On the website of the Kremlin there is a statement from President Putin from June 22, 2022:

We are exploring the possibility of creating an international reserve currency based on the basket of BRICS currencies.

Russia's Finance Minister Anton Siluanov said in May 2023:

The idea of creating a common currency … is floating around and is being discussed. We also have proposals about using digital financial assets supported by real assets, for example gold – stablecoins.

But what's it going to be? A currency backed by commodities, a gold stable coin, or a reserve currency based on a basket of BRICS currencies? According to a video shared by the Hindustan Times, India's External Affairs Minister Subrahmanyam Jaishankar said, on July 3, 2023, none of the above:

There is no idea for a BRICS currency. … Currencies to my mind will remain very much a national issue for a long time to come.

Bloomberg reported on July 5:

The New Development Bank, a financial institution created by the BRICS bloc of emerging markets, doesn't have any immediate plans for the group to create a common currency, its vice president and chief financial officer said. 

"The development of anything alternative is more a medium to long term ambition," he said. "There is no suggestion right now to creates a BRICS currency."

I think it should be clear that neither the Russians nor the BRICS as a whole has a plan worked out for a new currency soon to be introduced, as opposed to what's hyped in the media. Mr. Market didn't believe the RT India item as the gold price didn't budge when it was broadcasted.

As per CFO of the New Development Bank, the BRICS are discussing a common currency for the long term, but I will believe it when its design is finished.

The central banks of Brazil, South Africa, Russia, and India declined to comment on a common BRICS currency over email.

Tyler Durden Mon, 07/17/2023 - 17:40

Enviado do meu Galaxy