David Fuller and Eoin Treacy's Comment of the Day
Category - General

    China Says Growth Is Fine. Private Data Show a Sharper Slowdown

    This article by Mike Bird and Lucy Craymer for the Wall Street Journal may be of interest to subscribers. Here is a section:

    SpaceKnow tracks about 6,000 industrial locations in China and analyzes data on night-light luminosity and infrared bands—indicators of heat produced by electricity or factories—from about half those sites roughly every two weeks. It produces a proprietary index that has become a leading Chinese PMI indicator used by hedge funds, central banks and policy makers, said CEO Jeremy Fand.

    “You can see factories suddenly go quiet, giant subdivisions, huge construction projects just get halted,” said Mr. Fand. In August, SpaceKnow’s index pointed to a slight expansion, coming close to official figures that analysts said reflected a pickup in production before more U.S. tariffs came into effect.

    Mr. Fand said the company is also working on a project for a U.S. government agency that is trying to analyze the impact of U.S. tariffs on China’s economy and certain industries.

    Last December, U.S. exchange operator Nasdaq Inc. bought an alternative-data business called Quandl Inc. Bill Dague, a data scientist leading alternative research at Quandl, has traveled to China in recent months to hunt for new data sets for clients.

    “Because it is so hard to get data out of China, demand has surpassed supply,” he said, adding that escalating U.S.-China tensions have made domestic data vendors less willing to share information with U.S. companies.

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    A Wide Range of Testing Results on an Excellent Lithium-Ion Cell Chemistry to be used as Benchmarks for New Battery Technologies

    Thanks to a subscriber for this report which may be of interest to subscribers. Here is a section from the introduction:

    We present a wide range of testing results on an excellent moderate-energy-density lithium-ion pouch cell chemistry to serve as benchmarks for academics and companies developing advanced lithium-ion and other “beyond lithium-ion” cell chemistries to (hopefully)exceed. These results are far superior to those that have been used by researchers modelling cell failure mechanisms and as such, these results are more representative of modern Li-ion cells and should be adopted by modellers. Up to three years of testing has been completed for some of the tests. Tests include long-term charge-discharge cycling at 20,40 and 55°C, long-term storage at 20,40 and 55°C, and high precision coulometry at 40°C.Several different electrolytes are considered in this LiNi0.5Mn0.3Co0.2O2/graphite chemistry, including those that can promote fast charging. The reasons for cell performance degradation and impedance growth are examined using several methods. We conclude that cells of this type should be able to power an electric vehicle for over 1.6 million kilometers (1 million miles) and last at least two decades in grid energy storage. The authors acknowledge that other cell format-dependent loss, if any, (e.g. cylindrical vs. pouch) may not be captured in these experiments.

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    ECB Needs a Bazooka to Validate Richness of Bund Valuations

    This note by Tanvir Sandhu for Bloomberg may be of interest to subscribers.

    Concerns about ECB underdelivering keeps the pressure on bunds. A wide range of possible outcomes from Thursday’s meeting slants towards near-term profit taking of very rich valuations.

    ECB speakers have been trying to dial back the extreme easing expectations priced by markets to give Draghi some room to surprise, but the hurdle still remains high

    Policy makers will need to be aggressive on rates and keep the future path suppressed otherwise a modest depo rate cut risks seeing EUR rates continue to sell off in the near-term given the impact of the lower bound on the curve

    From a macro valuation perspective there is room to sell off (with fair value of -0.43%)

    Setting the path to go deeply negative on rates and lifting the buying limits on any QE announcement to make it scalable is key to seeing bunds extend the rally in the short term; however, positioning for a disappointment via options is still worth looking at given the difficulty for Draghi to engineer a dovish surprise

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    U.S. Stocks Rise After Jobs Report, Before Powell: Markets Wrap

    This article by Randall Jensen and Vildana Hajric for Bloomberg may be of interest to subscribers. Here is a section:

    U.S. stocks edged higher, and Treasuries inched lower after a mixed jobs report fueled bets the Federal Reserve will cut rates in two weeks. The dollar declined.

    The S&P 500 headed for its second weekly gain as investors keyed on underlying strength in the report that signaled a solid labor market that isn’t too strong to deter further central bank easing. Megacap technology stocks weighed on benchmarks after New York opened an antitrust probe into Facebook Inc.

    The 10-year Treasury yield erased most of its earlier gains, while the dollar headed for its fourth straight fall following the payroll numbers. Chairman Jerome Powell is set to make public remarks Friday. Crude sank toward $55 a barrel in New York.

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    The Diversity of real Assets: Portfolio construction for Institutional Investors

    Thanks to a subscriber for this report from PGIM which may be of interest. Here is a section on gold:

    We treat gold as a separate real asset type due to its well-accepted role as a store of value. Gold enjoyed more than a 10-fold price increase from the 1970s through its peak reflecting a period of rapid inflation. During periods of inflation uncertainty, investors seek gold as an inflation hedge.41 Similarly, gold may be a good recession hedge. In 2007-2008, while the S&P 500 was down -18.5% gold was up 16.6%, and in 2001-2002, while the S&P 500 was down -17.2% gold was up 12.1%. Investors can invest in physical gold but that incurs storage and insurance costs. Investors can also invest in COMEX gold futures (which trades the gold equivalent of 27m ounces per day). The roll yield on gold futures has been only slightly negative (-0.2% from 1996 to 2017). Investors may also invest in gold mining stocks and can enter into gold royalty agreements. Although gold is an under-owned institutional asset, some institutional investors such as government pension funds have target allocations to gold-related assets (including derivatives).

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    Samsung's take on the world of 2069

    This article from NewAtlas may be of interest to subscribers. Here is a section:

    Despite this, such exercises can be both entertaining and useful for looking at how to meet the challenges of tomorrow, so they're anything but a waste of time. For the Samsung KX50 report, which was released to coincide with the opening of the new Samsung KX exhibition at Coal Drops Yard, London, the company called on President of techUK, Jacqueline de Rojas; Director of Engineering and Education at the Royal Academy of Engineering, Rhys Morgan; food futurologist, Morgaine Gale; digital health futurist, Maneesh Juneja; Specialist Advisor to Innovation Design Engineering at the Royal College of Art, Dale Russel; and leading futurist, Matthew Griffin to pen essays on their take on the world 50 years from today.

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    Killer Superbugs Show No Mercy for Cancer Victims

    This article by Jason Gale for Bloomberg may be of interest to subscribers. Here is a section:

    Doctors in India are sounding the alarm over a threat to cancer patients that’s proving deadlier than tumors: untreatable infections from superbugs impervious to existing medications.

    Patients undergoing chemotherapy in the country are at the front line of the worldwide spread of bacteria that the most potent antibiotics can’t fight. Bloodstream infections caused by these superbugs have become the leading cause of illness and death in leukemia patients, doctors from India’s top-ranked medical college reported last year.

    That frightening reality has forced patients to weigh fighting their deadly malignancies with treatments against the probability of dying sooner from an incurable infection. In India, some 1.7 million receive a cancer diagnosis every year, often leading to chemotherapy that makes them especially vulnerable. Worldwide, at least 700,000 people die annually from drug-resistant infections. That number will balloon to 10 million a year by 2050 and will cost more than $100 trillion in lost economic output without corrective actions, according to a U.K. government study, which estimates that by midcentury more people will die from superbug infections than from cancer and diabetes combined.

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