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

    Stocks Rally on Fed Bets as Jobs Calm Growth Fears: Markets Wrap

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

    “This one comes in pretty close to neutral in terms of the slowdown. It’s not encouraging, it doesn’t look like a re-acceleration in growth, but it also probably puts at bay some of the fears that have come in around the ISM manufacturing and ISM services numbers,” said Luke Tilley, chief economist at money manager Wilmington Trust Corp. in Delaware. “This should make people and investors comfortable that we still have enough job growth to keep consumer spending on the positive side.”

    Today’s job numbers followed a string of disappointing economic data this week that had fueled concerns a slowdown in manufacturing could spread to the consumer, and in turn ratcheted up bets that the Fed will reduce rates this month. The burst of rate-cut optimism helped snap a two-day losing streak that reached 3% in the S&P 500 Index Thursday.

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    Rare Earths Review Erbium: The Secret Sauce in 5G Networks?

    Thanks to a subscriber for this report from Hallgarten & Company which may be of interest. Here is a section from the conclusion:

    We sense that China’s Rare Earth advantage has been made vulnerable due to massive overexploitation over the last 30 years and the ONLY remedy is to cut back exports and start stockpiling material before the country becomes as dependent upon fickle outside forces in REEs as it is in Cobalt. This potentially sets the scene for a supply crunch outside China and no amount of WTO whining and appeals will stop the Chinese halting exports if it is deemed to be in the national interest.

    We have previously called the Great Dysprosium Crisis of 2020, and now we add the Great Erbium Dilemma of 2021-24. These linked supply crunches will come as a “surprise” to the powers that be, both in China and outside. And yet the warning signs are there for everyone to see. The Adamas report on Dysprosium was a red flag, and now the more sotto voce alarm bells of Erbium are largely going unheeded as well. For those countries wanting to be players, or at least control their destiny, in 5G the hunt for Erbium must now be powered up.

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    The Global Internet Phenomena Report

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

    Google (Alphabet): YouTube, Google Cloud, Google Play, Google Search, Google Docs, Google Drive, DoubleClick, Gmail, and Crashlytics
    Netflix: Netflix Video
    Facebook: Facebook, Instagram, Facebook Video, WhatsApp, Facebook Messenger, Oculus Rift Microsoft: Xbox Live, Windows Update, Skype, Outlook 365, Office 365, SharePoint, OneDrive, Windows Store, LinkedIn
    Apple: iTunes, iCloud, Apple Software Update, FaceTime, Apple Music, Apple.com, iCloud Photo Stream, Mac App Store

    The brands with video traffic have a significant advantage on the downstream. Google (YouTube), Netflix, Facebook, and Amazon (Amazon Prime) have strong video offerings. Apple soon will, and Microsoft’s entry into gaming streaming (Mixer) will likely move them up this list if they can continue to recruit high profile gamers.

    As shown in the chart, Google is #1 overall and on the upstream. The combination of YouTube, Google Search, and Google Cloud are the biggest contributors to the upstream traffic, as they are an integral part of any Android device’s experience.

    Netflix is the #1 on the downstream and #2 overall as the only pure play in the bunch. As we mentioned last year, if Netflix was not the most efficient streamer at every resolution, their total could easily be twice what it is today, and they continue to excel in video codec work and efficiency in resolution downshifts and upshifts.

    Google is also #1 on connections. This is a much more collaborative effort among Google apps. YouTube, Google Cloud Messaging, Google Search, Crashlytics, DoubleClick, and even Nest are the biggest contributors to Google connections per device.

    Amazon: Amazon Prime, Twitch, Amazon.com, Alexa, Amazon Glacier, Amazon Music

    When combined, these brands took up over 43% of all traffic volume on the internet: The details are interesting. Overall, Google edged out Netflix as the top consumer of bandwidth on the internet (as well as upstream) and dominated in the percentage of connections. Unsurprisingly, Netflix was the single largest consumer of traffic downstream, but Google was not far behind. This is confirmation that brands can build synergies, expand their business, and succeed. The obvious outlier in this case is Netflix, which does one thing and does it exceedingly well, albeit at very high volume. With new streaming services coming out from Facebook and Apple, with 4K and live streaming taking hold, these numbers might climb even higher next year.

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    At Least 70 Countries Have Had Disinformation Campaigns, Study Finds

    This article from the New York Times may be of interest to subscribers. Here is a section:

    “The danger is the proliferation” of the techniques, he said. “Anybody who wants to influence the 2020 election may be tempted to copy what the Russian operation did in 2016.”

    China’s emergence as a powerful force in global disinformation is one of the most significant developments of the past year, researchers said. The country has long used propaganda domestically, but the protests this year in Hong Kong brought evidence that it was expanding its efforts. In August, Facebook, Twitter and YouTube suspended accounts linked to Beijing that were spreading disinformation about the protests.

    Philip N. Howard, director of the Oxford Internet Institute and one of the authors of the report, said that such online disinformation campaigns can no longer be understood to be the work of “lone hackers, or individual activists, or teenagers in the basement doing things for clickbait.”

    There is a new professionalism to the activity, with formal organizations that use hiring plans, performance bonuses and receptionists, he said.

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    Pound Gets Boost From Thaw in Parliament Tensions

    This note by Charlotte Ryan for Bloomberg may be of interest to subscribers. Here it is in full:

    The pound rose to its highest level in over a week, with the currency getting a boost as Boris Johnson appeared to win the backing of Conservatives on both sides of the Brexit debate, according to strategists.

    Sterling gains as much as 0.7% to $1.2388, after earlier dropping as much as 0.3%

    “Sterling is as happy as Parliament seems calm today,” said CIBC head of G-10 currency strategy Jeremy Stretch. “On the basis of the talk in Parliament if the EU were to agree to the latest proposals that of course is more than a big if, then it would appear that Parliament would vote in favor”

    Speaking with market participants, it seems “they sense the red lines are shifting,” said Neil Jones, head of currency sales for financial institutions at Mizuho Bank. “It’s a more upbeat tone from Boris Johnson and the EU added to some reference the ERG may agree whatever Johnson comes back with,” he added, referring to the group of Conservative euroskeptics

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    Stocks Tumble, Bonds Climb as Slowdown Fears Mount

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

    The hiring numbers pushed the 10-year Treasury yield lower for a fifth straight day as it pushed below 1.6%. The yen rose versus the dollar and gold spiked above $1,500. The equity rout spread to Europe, where the Stoxx 600 saw its biggest slide in 10 months and the FTSE 100 dropped the most since 2016. Oil fell below $53 a barrel after a report showed U.S. crude inventories increased.

    The disappointing data out of the U.S. and Europe, as well as weak earnings reports from automakers this week, is forcing investors to reconsider their strategies. The most recent economic numbers are driving concerns that a slowdown, which had been mostly confined to manufacturing, may be spreading to the consumer amid the U.S.-China trade war. Those fears also increased bets that the Federal Reserve will cut rates this month. Focus now turns to services PMI data on Thursday and the nonfarm payrolls data on Friday.

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