In Xiangcheng, a district in the eastern city of Suzhou, the government will start paying civil servants half of their transport subsidy in the digital currency next month as part of the city’s test run, according to a government worker with direct knowledge of the matter.

Government workers were told to begin installing an app on their smartphones this month into which the digital currency would be transferred, the worker said.

Civil servants were told that the new currency could be transferred into their existing bank accounts, or used directly for transactions at some designated merchants, the person said.

China is ahead of many other countries in preparing the launch of an official digital currency. In recent years, the use of traditional paper bills and cash has declined sharply, and smartphone payments have become so ubiquitous that many Chinese people, particularly younger urban dwellers, no longer carry their wallets or cash for shopping. Instead, they use Tencent Holdings Ltd. ’s WeChat Pay and Alipay, operated by Ant Financial Services Group, an affiliate of Alibaba Group Holding Ltd.

Parallel currencies are an oddity which highlight a government’s desire to fully control the ability of consumers to spend their own cash. The ultimate aim of these kinds of moves is to separate the use case for money so different units can be used for different purposes. The façade of wishing to curtail money laundering or terror financing is ubiquitous to all governments and this is a trend which has global appeal for heavily indebted countries.

Facebook's investment of $5.7 billion in India's top telecom operator Reliance Jio highlights a broader bet on India’s online growth beyond ads. Jio has more than 388 million subscribers with reach in content, payments and ecommerce, all of which Facebook can scale up via its 380 million WhatsApp, Facebook or Instagram users in India. Plans to integrate Jio’s small businesses to enable shopping on WhatsApp shows an acceleration in e-commerce.

THESIS: Facebook will be the hardest-hit internet company in 2020 from the virus fallout as a sharp ads decline and small and medium business exposure can take growth down to low-single digits, while surging usage hits profit harder. Yet we believe exiting this uncertainty with a higher user base and new habits means diversification into new businesses and a 2021 ad rebound will make its growth emerge the strongest among peers. More than 60% of Facebook's sales are in the U.S., the U.K., Germany, Japan, France and Italy. Small and medium business make up the majority of Facebook's 7 million advertisers. Earnings in 1Q will likely reset growth expectations, creating room for longer-term sales outperformance as Facebook pushes into diversifying its business post-virus.

Where are the largest tech companies going to find the next billion users? There are only three potential options. China, Africa and India. They have been cut out of China as it champions its domestic firms. Africa is a continent rather than a country, and on aggregate is further down on the per capita income scale. That leaves India with a massive young population, large number of English- speaking consumers, an independent judiciary, financial market norms familiar to westerners and a democracy intent on raising living standards.

The U.K. will begin human trials of a coronavirus vaccine Thursday, Health Secretary Matt Hancock said, as he argued that the government’s strategy for fighting the disease had succeeded.

“In the long run, the best way to defeat coronavirus is through a vaccine,” Hancock told the government’s daily news conference. “The U.K. is at the front of the global effort. We have put more money than any other country into a global search for a vaccine and, for all the efforts around the world, two of the leading vaccine developments are taking place here at home.”

The trials will be of a drug developed at Oxford University. Hancock said the government would give 20 million pounds ($25 million) to support the research. “In normal times, reaching this stage would take years,” he said. Another 20.5 million pounds will go to a separate project at London’s Imperial College.

There are 70 different teams working on vaccines around the world which highlights how urgent the need for a barrier of safety from COVID-19 is. Not only do competition, money and a willingness to break-down barriers to entry increase the scope for a breakthrough but this kind of news is positive for consumer sentiment amid lockdowns.

The halving decreases the amount of new bitcoins generated per block. This means the supply of new bitcoins is lower.

In normal markets, lower supply with steady demand usually leads to higher prices. Since the halving reduces the supply of new bitcoins, and demand usually remains steady, the halving has usually preceded some of Bitcoin's largest runs.

In the image below, the vertical green lines indicate the previous two halvings (2012-11-28 and 2016-7-9). Note how the price has jumped significantly after each halving.

The bitcoin halvening is estimated for May 10th. In a market where supply inelasticity has been making headlines in a number of asset classes, the doubling of the work load to produce one bitcoin represents a noteworthy event.

Eoin, you are an optimist. I hope you will be proven right! for another point of view read the article from today's New York Times: "The Coronavirus in America: The year Ahead". One factoid: the record time for producing a vaccine is 4 years, for mumps.

Thank you for this email and I agree the New York Times article certainly paints a gloomy picture of potential success rates with developing vaccines. I thought the most useful portion of the article was to highlight just how patchy information relating to the COVID-19 virus really is.

Early peek at data on Gilead coronavirus drug suggests patients are responding to treatment - This article by Adam Feuerstein for statnews.com may be of interest to subscribers. Here is a section:

A Chicago hospital treating severe Covid-19 patients with Gilead Sciences’ antiviral medicine remdesivir in a closely watched clinical trial is seeing rapid recoveries in fever and respiratory symptoms, with nearly all patients discharged in less than a week, STAT has learned.

Remdesivir was one of the first medicines identified as having the potential to impact SARS-CoV-2, the novel coronavirus that causes Covid-19, in lab tests. The entire world has been waiting for results from Gilead’s clinical trials, and positive results would likely lead to fast approvals by the Food and Drug Administration and other regulatory agencies. If safe and effective, it could become the first approved treatment against the disease.

The University of Chicago Medicine recruited 125 people with Covid-19 into Gilead’s two Phase 3 clinical trials. Of those people, 113 had severe disease. All the patients have been treated with daily infusions of remdesivir. 

“The best news is that most of our patients have already been discharged, which is great. We’ve only had two patients perish,” said Kathleen Mullane, the University of Chicago infectious disease specialist overseeing the remdesivir studies for the hospital.

One of the biggest challenges with COVID-19 is hospitals had no treatment for it so they were flying blind with how they manage patients with severe symptoms. That has resulted in prolonged stays in hospital which has gummed up the medical systems of a significant number of countries.

In 2019, about 3 million pickups were sold out of 17 million vehicles. Nobody knows the size of the EV pickup market initially, or how badly EV range suffers under a heavy load (Tesla owners have known range tanks when a Model S or Model X tows a trailer), or if buyers are willing to pay extra to get the large batteries that allow 300 t0 400 miles of range on pickups.

As for the market for all plug-in vehicles – battery electric vehicles and plug-in hybrids – the final 2019 US sales numbers for light vehicles amount to combustion-engine-only cars, 98.1 percent of the market, BEVs and PHEVs 1.9 percent.

There is some hope – among environmentalists, at least – that Americans, in the wake of the coronavirus slowdown, will appreciate the cleaner skies in major cities and adopt plug-in vehicles to keep the air clear and clean. GM’s battery R&D is for its worldwide markets, not just the US, and it may find more traction outside the US. Depending on how many people and businesses have money to spend on new cars in the next year.

At the Ultium rollout, GM cited forecasters who called for EV volumes to double between 2025 and 2030 to 3 million units annually – one in six vehicles sold – and added its belief the numbers could be “materially higher.”

The point in the above piece, that the global market influences the kind of cars US companies produce is an understatement. The most profitable market for conventional US automakers is the pick-up truck, which is a predominately North American vehicle. All other markets are heavily influenced by whatever China demands.

A link to the full report is posted in the Subscriber's Area.

The virus scare has highlighted how susceptible China is to the export market. They have worked extremely hard to get factories back to full capacity but, having succeeded in that objective, they now find there are no orders.

A link to the full report is posted in the Subscriber's Area. 

Let’s set aside for the moment questions of timing and think about what changes we can expect to be durable from the virus-induced recession.

The first thing that springs to mind is a loss of income which will take a while to recover. For some that will be quite soon, for others who need to find a new job it will take longer. As we go from full employment in many countries to something less that necessarily represents lower growth overall and by extension lower corporate earnings.

Facebook’s deal with Plessey illustrates how tech giants are racing to secure the building blocks needed for AR headwear—technology experts believe could be as transformational as the introduction of PCs and smartphones. Facebook CEO Mark Zuckerberg recently predicted that “we will get breakthrough AR glasses that will redefine our relationship with technology” in the 2020s. 

To create such a device, Facebook has teams building its own operating system, apps, silicon chips, and tech capable of deciphering human thoughts. It also continues to invest in VR headset maker Oculus, which it acquired for roughly $2 billion in 2014.  

In a statement, Facebook said it wants to build “a glasses form factor that lets devices melt away so we can be more present with our friends, families, and surroundings.” 

“This will take years, so across AR/VR we’re continuing to invest in extensive research on this deep tech stack and components such as small-scale displays,” the company said.

The AR devices that have been released so far from the likes of Magic Leap and Microsoft are clunky, expensive headsets with extremely limited graphics capabilities that haven’t sold well. 

Mark Zuckerberg was an early advocate of virtual reality as the next big social medium. Having tried out the Oculus Quest over the last few weeks I think he is onto something.

The list is long, and probably doesn't come close to capturing the total job loss. In the last few weeks, there have been reported cuts at WeWork (250), Bird Rides Inc. (more than 400), ZipRecruiter Inc. (400 layoffs and furloughs) and direct-to-consumer clothing company Everlane (200 cuts and furloughs).

For now, the layoffs are affecting largely companies with a high cash-burn rate—like Bird—or companies that haven’t raised money in the last year or two—like ZipRecuiter—and thus lack a big cash cushion, or both. But many industry watchers expect the job cuts to spread as the lockdown continues. 

“This coronavirus pandemic is affecting very qualified people,” Lee said. His site also includes an option to add a documents so that laid-off employees and human resources departments can enter names and contact details, providing leads to anyone who wants use the list to make some hires. Lee added:

“It’s something that I thought might be a good service to tech.” The list may also be of service to Lee. His company Human Interest, which he co-founded with Paul Sawaya five years ago, announced on March 11 that it had raised $40 million in a round led by family office Oberndorf Enterprises LLC, bringing its total capital raised to $75 million. Now, the company is hiring, mostly engineers, Lee said. That makes it one of a rarified group of companies currently in a position to pick up talent, rather than shed workers. 

Some startups likely can put off layoffs for some time, given that venture capitalists invested $137 billion into startups last year, according to the National Venture Capital Association. But not all will want to.

Many firms, including Sequoia Capital, are urging their portfolio companies to conserve cash, and salaries are often among the biggest expenditures at startups.

 

Having a cash reserve is a nice-to-have during the good times. It’s essential during a crisis when burn rates need to be slowed in order to deal with the realisation earnings and profits are further away than ever.

A link to the full report is posted in the Subscriber's Area.

Corporate defaults are inevitable considering the leverage in the system and the sudden disappearance of revenue for many companies. Where companies had borrowed heavily to fund acquisitions or buybacks, they now have to make debt payments with no, or much reduced, incoming revenue. That is an obvious problem particularly affecting some of the most indebted tourist, auto and aeronautics companies. The biggest challenge for banks will be in how exposed they are to small companies on a local level because many are now in dire financial straits.

It is the latest blow to SoftBank founder Masayoshi Son, who last week unveiled a plan to raise $41 billion to buy back shares and slash debt. The announcement sent the shares soaring more than 50% in just a few days. The rally was interrupted when Moody’s Corp. cut its debt rating by two notches, saying the Japanese investment firm’s plan to sell off assets during a market downturn threatened its total value. SoftBank’s shares traded 6.7% lower on Monday morning in Tokyo.

Son had often pointed to OneWeb as one of the cornerstones of an investment portfolio that ranges from ride sharing, co-working and robotics to agriculture, cancer detection and autonomous driving. The startup was working on providing affordable high-speed access anywhere in the world and targeting 1 billion subscribers by 2025. Son has painted a picture of a future where satellite networks cover every inch of the Earth and a trillion devices connected to the internet disgorge data into the cloud where it is analyzed by artificial intelligence.

OneWeb listed liabilities and assets of more than $1 billion each in its Chapter 11 petition in U.S. Bankruptcy Court in White Plains, New York. The company had been in advanced discussions earlier in the year for a fresh investment, it said in a statement. But the discussions fell apart after the coronavirus pandemic sent markets into a tailspin, it said.

The unlisted unicorn sector is difficult to monitor because they have no obligation to report earnings and depend almost entirely on the private markets for funding. It is reasonable to expect many loss-making companies are going to experience significant challenges from the economic shut down, while others will likely have benefitted from the abrupt move to cloud and delivery utilisation.

With some US$111 million in investment from major companies, including LG, Samsung, Mitsubishi, Renault and Nissan, Enevate now says its cells are ready for the big time. In an interview with Charged EVs, Park said Enevate is designing packs for the 2024 and 2025 model years to get its cells into consumer products with major manufacturers. There are no announcements around who or what exactly they're making packs for, but the list of companies above may be instructive.

As far as we're aware, though, the infrastructure to support blast-charging at the kinds of rates we're talking about here simply doesn't yet exist. Tesla's V3 superchargers are currently capable of blast-charging a Model 3 at 250 kilowatts, which would give you around 133 km (83 mi) of range in five minutes.

These batteries would charge three times faster, at around 0.75 megawatts, which is a huge power draw. An alternative method might involve trickle-charging massive supercapacitors all day at slower rates so they've got enough energy to supply the cars super-quickly when they need it, but we're yet to see anything like that in action, and the size of those supercapacitors might end up being prohibitive.

It is almost as if I see a new story about advancements in battery technology every day. They all come with caveats but the one thing we can be sure of is the quantity of capital now devoted to solving the issue of energy density and range anxiety is growing persistently. Producing a doubling of energy density with a low charging time is the hold grail of the sector today and it is reasonable there will be a solution in the market within five years. 

At a time when Valve Corp.’s Steam online gaming service is breaking records and global gaming publishers are registering increased demand due to millions of people stuck at home, the systems designed to build those companies’ future success are faltering.

One game project that Upfall Studios was doing work for has been put on hold because its developers weren’t able to demo it at GDC and haven’t yet managed to pitch it remotely. Two other developers Amador has collaborated with are also struggling to secure remote calls with publishers.

Before the coronavirus grew into a global pandemic, it was already interrupting the supply chain for game art and assets, as many big publishers rely on outsourcing to art studios in China, which was first to suffer the effects.

Super Smash Bros. creator Masahiro Sakurai wrote in industry magazine “Famitsu” last week that the release of additional content for his blockbuster series would be delayed due to the coronavirus. Private Division, a unit of Take-Two Interactive Software Inc., said last month that its Outer Worlds action role-playing game would also be late arriving on Nintendo Co.’s Switch due to the pandemic.

We bought an Oculus Quest (untethered virtual reality headset) as a surprise for my daughter’s birthday last week. We did not realise at the time how limited supply was. It was sold out for months up till early March and sold out again within two weeks.

It is the most innovative piece of gaming technology I have seen since the Nintendo Wii came out 14 years ago. The immersive environment and visceral experience of reality lend a degree of fun and playability I was not prepared for. I boxed competitively at university and the Apollo Creed game is the closest thing anyone is likely to come to being in the ring in real life.

The comment suggested his distaste for the practice predates the coronavirus outbreak and echoed criticism from Democratic presidential candidates who have long viewed buybacks as a waste and social ill.

“When we did a big tax cut and when they took the money and did buybacks, that’s not building a hangar, that’s not buying aircraft, that’s not doing the kind of things that I want them to do,” Trump said on Friday. “We didn’t think we would have had to restrict it because we thought they would have known better. But they didn’t know better, in some cases.”

Trump said he would support a prohibition on buybacks for companies that receive government aid. The five biggest U.S. airlines -- prime targets for bailout funds -- spent 96% of their free cash flow on repurchases over the last decade, money that could have been used to build rainy-day funds. Overall
buybacks started to slow in the first couple of months of the year in the U.S., when they were $122 billion in January and February, down 46% from a year earlier in the slowest start to the year since 2009.

While some viewed share repurchases as one of the driving forces behind the bull market, the practice was constantly criticized, particularly in populist circles. Companies were simply inflating their stock prices inorganically, using cheap money in the process, so the argument went, exacerbating wealth inequality as the ultra-rich cashed out.

Buybacks have been the primary source of demand supporting the market, particularly during pullbacks, over the last decade. The problem with relying on buybacks as a rationale for being bullish is they are inherently procyclical. The majority of companies are not in a position to buy back shares following big declines. Additionally, since debt loads have increased, at least in part to fund buybacks, they are overleveraged at peaks and debt obligations come before equity during a downturn.  

The Coronavirus crisis, the most serious event since the Global Financial Crisis (“GFC”) of 2008/2009, has set in motion a series of governmental policies whose unfortunate effect is to choke both demand and supply in the global economy.  These policies - prudential measures taken by governments united in their desire to appear to be “doing something”- are likely to be worse, economically speaking, than the disease itself.  Relief comes only with the passing of time or the finding of an anti-viral remedy, the latter a distant prospect at this stage.

Earnings news, monetary news, fiscal news and pandemic news are all following the disheartening course that we feared.  An emergency Fed meeting last Sunday, slashing rates to near zero, failed to reassure.  The next day, Wall Street produced the second of 2 record points drops in a week, falling -13%.  Equity markets have fallen by an average of about -30% from their January highs.

Equity markets are now oversold and distorted by panic.  The market finds it hard, if not impossible, to “price” risk when an end to the crisis is undefined and earnings unknown. And what discount rate should one use in a global panic when rates are near zero?  Many stocks trade under “fair value” on “normalized” earnings.  But the risks being taken by governments are such that there may be worse to come: bankruptcies in directly affected sectors like leisure, hospitality, airlines, hotels and “bricks and mortar” retail.  There may even be nationalizations in troubled sectors.  On the other hand, other sectors, also hit hard by the same waves of panic selling, may emerge as new long-term leaders in a changing world where personal safety, health fears, depersonalizing technology and e-commerce may enjoy further and more widespread adoption.

Millions of people just lost their jobs in the retail and restaurants sector. Weekly jobless figures are reported with a two-week lag, so today’s 281,000 increase is reflective of the week ending March 7th. Most cities in lock down made the decision over last weekend so next week’s figure will be higher but the release on April 2nd is likely to take jobless figures to new highs. The only limiting factor is the ability of people to sign on for benefits given the system’s capacity restraints.

The downbeat assessments come amid a meltdown in financial markets not seen since the height of the global financial crisis in 2008. It marks a grim start to the week for European Central Bank policy makers, who meet in Frankfurt and may be forced to lower interest rates and step up bond purchases. The U.S. Federal Reserve has already acted, with an unexpected easing last week.

“I want a strong, massive, coordinated response,” Le Maire said on France Inter Radio as the central bank slashed the outlook for the country’s economic expansion this quarter to 0.1% from 0.3%.

“We should work on a stimulus plan with fiscal and budgetary measures, and tax cuts, so that when the epidemic crisis is over we can relaunch the economic machine,” he said. The virus is another blow to the euro area’s second-largest economy, after disruption from strikes caused output to shrink at the end of 2019.

“This slowdown is potentially severe but temporary,” Bank of France Governor Francois Villeroy de Galhau said in a rare statement accompanying the report.

The markets tend to test new central bankers and Christine Lagarde’s honeymoon period is definitely over. The ECB will be expected to lay out what kind of assistance it is willing to provide. While room for interest rate cuts is limited because they are already so low, there is plenty they have do to ensure ample liquidity in the system.

A link to the full report is posted in the Subscriber's Area. 

The Credit Suisse team do an excellent job of highlighting where the risks are and provide a handy list of instruments to monitor to get an idea of how liquidity flows are functioning.

The repo market illiquidity in September was a signal to everyone that the tightening program had gone too far. There was nowhere near enough available capital in the system to allow the global money market to function. The Fed stepped in with a large swift injection of liquidity; inflating its balance sheet by $400 billion in four months.

Over the last five years, Baric, working closely with Vanderbilt University infectious-disease specialist Mark Denison, tested almost 200,000 drugs against SARS, MERS and other bat coronavirus strains.  He found at least two dozen that appeared to hinder the virus.

Among the most promising was Gilead’s remdesivir, a drug that fared poorly when used against a recent Ebola outbreak in Africa. In the lab, it worked against numerous coronavirus strains, including SARS and other bat coronaviruses that are similar to the new strain. Every coronavirus it was tested on, “it had high potency and efficacy,” Denison says.

That work was fortuitous. In early January, Baric got an urgent call from an infectious-disease colleague to send his unpublished data on remdesivir to colleagues in China who were dealing with a then-mysterious outbreak. Baric says he “was shocked” to see how fast the coronavirus was spreading.

Since then, work at his lab has been virtually nonstop. Each scientist puts in from one to six hours inside two different clean rooms equipped to handle the virus. The lab’s workday begins at 6 a.m. and often goes until 11 p.m. Individual sessions are short for safety and practical reasons — researchers aren’t permitted to eat, drink or visit the bathroom once inside the lab. Everyone has to pass an FBI background check and undergo months of safety training.

The WHO has stated remdesivir is their best bet for a suitable treatment for coronaviruses. It’s another question whether Gilead will make money form that evolving market since it will be under extreme pressure to provide an affordable range of treatments ahead of a vaccine being developed over the next year. 

In politics, you have to win to win. And in the crucial Super Tuesday primaries in 14 U.S. states, Biden did just that, and Democratic voters singularly obsessed with defeating Trump finally began coalescing around their candidate.

There’s still a long road ahead for the former vice president. His chief rival, Bernie Sanders, won California -- the biggest prize of the entire nominating race -- where a runaway victory could give the Vermont senator enough delegates to blunt Biden’s gains on Tuesday. And the former vice president’s turnaround was made all the more remarkable because of his plunge from front-runner status, bruised and battered by a meandering campaign, lackluster fundraising and trademark gaffes.

Still, the whirlwind three days following Biden’s convincing win in South Carolina -- which propelled top rivals like Pete Buttigieg and Amy Klobuchar back the former vice president -- underscored the extent to which Democrats were ready to unite behind anyone perceived as ready to take on Trump.

“Just a few days ago the press and the pundits had declared the campaign dead,” Biden told supporters in Los Angeles. “I’m here to report, we are very much alive.”

The rise of Bernie Sanders to front runner status about ten days ago was a significant catalyst for profit taking in the wider stock market and was potentially the motivating factor behind the pricing in coronavirus fears.  
 

Though the Fed met Wall Street’s hopes for aggressive action with its half-point reduction, Chairman Jerome Powell seemed to unnerve markets by saying it’s unclear how long the virus’s impact will last. Traders were already pricing in another rate cut later this month, with more to come in June.

“The market is trading right now on a lot of fear and uncertainty,” said Gary Pollack, head of fixed income at DWS Investment Management. “The Fed certainly didn’t bring calm, and the virus continues. The Fed’s relatively large move also made people wonder what they know that we don’t.”

The central bank’s decision came a few hours after Group-of-Seven finance chiefs issued a coordinated statement saying they were ready to act to shield their economies from the virus. Policy makers faced pressure to act after the OECD warned the world economy faces its “greatest danger” since the 2008 financial crisis.

The market is pricing in the assumption the US economy is going to lock up in exactly the same fashion as the Italian or Chinese economies did as coronavirus concern/paranoia spreads. There is no doubt the virus is dangerous for at-risk groups, but the bigger question is whether its effects will persist beyond the first quarter or perhaps second quarter, not least because warmer weather will likely curtail its spread as temperatures rise.

A more urgent consideration is today is Super Tuesday. The biggest issue investors are worried about is the potential Bernie Sanders is going to be the next President of the USA. The range of proposals he has tabled include breaking up the banks, financial services taxes, capping interest rates, breaking up internet and cable companies, Medicare negotiations for drug pricing, importing foreign drugs, capping prices, end health insurance, banning fracking, insist on 100% renewable utilities and railroads, cars and manufacturing. It’s very unlikely any of these will become law without the Democrats retaining the control of the House and also winning the Senate. However, President Trump has demonstrated just how much power the executive branch has and therefore there are grounds for worry.

After a week characterised by selling across the board, a great deal of profit taking has taken place and many overextensions relative to the trend mean have been unwound. The question I believe many people will be concerned with is whether the coronavirus is going to be the catalyst for an economic contraction? I thought it would therefore be worth monitoring the kinds of instruments that offer a lead indicator for that kind of concern.

A 61-year-old Brazilian man who lives in Sao Paulo was infected during a recent trip to Northern Italy and tested positive upon returning to the country, Health Minister Luiz Henrique Mandetta said Wednesday at a news conference in Brasilia. The patient, who traveled via France on the way back to Brazil, is doing well and is at home, a Sao Paulo state official said.

“We’ll have to see how the virus reacts in a tropical country in the middle of summer,” Mandetta said. “We still can’t say how lethal this virus will be.”

Maybe they should ask how Singapore has successfully contained the spread of the virus? The stock market lost now time pricing in the fear of a wider spread with the iBovespa dropped nearly 8% to test the region of the trend mean and the four-year sequence of higher reaction lows.

Remdesivir is the “one drug right now that we think may have efficacy,” Bruce Aylward, an assistant director-general at the World Health Organization, said at a briefing in Beijing. WHO officials and international scientists are in the country assessing the outbreak.

The spread of the coronavirus accelerated internationally over the weekend with exponential growth in South Korea and Italy. Right now, there are no cures for the ailment and therefore any whiff of a successful treatment is likely to be rewarded with investor interest.

Masahiro Kami, an infectious diseases expert, said he was skeptical that the suspension of some public events would have a significant impact on the spread of the virus. “Commuting on a packed train, for instance, is way worse than taking part in the Tokyo marathon,” he said.

Dr. Kami, who heads a nonprofit organization called the Medical Governance Research Institute, said a media focus on the few cases of serious illness from coronavirus infection in Japan had created a panic over the need to cancel events.

While Japan initially had a handful of cases involving people who had come from Wuhan, the center of the epidemic in China, or had direct contact with someone from Wuhan, a surge of cases in the past week included many whose path of infection wasn’t clear. The cases span from Hokkaido in the north to Okinawa in the far south.

More than 1,000 people disembarked from the Diamond Princess cruise ship between Wednesday and Friday, and they entered Japan without restrictions on their movements. All of those passengers tested negative for the virus, but in some cases people have tested positive after a negative test—including two cases reported Friday in Australia, which sent a flight to Japan to repatriate citizens who had been on the ship.

The coronavirus popping up in unrelated areas in Japan is not exactly good news. Additionally, the lax quarantine imposed on the passengers of the Diamond Princess cruise liner greatly increases the potential for the virus to spread even further. At a minimum the potential is for much tighter measures to contain the spread across Japan and other countries. This is also going to create a headache for Abe’s government.

“What do you do with your cash?” said Luke Hickmore, investment director at Aberdeen Standard Investments in Edinburgh, where he helps run a number of bond funds. “Leaving it standing there makes no sense and the experience over the last 10 years is that there is no pain in buying bonds. Learnt behavior is that it is safe. Inflation is nowhere and central banks start buying every time yields go higher.”

Heavy demand for tax-exempt income drove yields on even the riskiest municipal bonds to 3.58% on Friday, the lowest since Bloomberg’s records began in 2003. The influx has compressed spreads across the country and caused some debt in high-tax states like California and New York to yield less than top-rated benchmark securities. Municipal mutual funds have reported inflows for the 58th straight week on Feb. 13.

With 30-year debt yielding 1.92% in the USA, 1.59% in Australia, 1.42% in Canada, 1.05% in the UK. 0.36% in Japan and 0.04% in Germany bond investors, and particularly pension funds, are at a loss for where to invest to generate the returns necessary to meet their future liabilities.

Tesla (TSLA) - Get Report was roundly criticized when it debuted the Cybertruck back in November thanks to the pickup truck's unconventional design and a failed durability test that left the demonstration vehicle with a cracked window.

But three months later, the company’s gamble on the vehicle could be paying off as the unofficial Cybertrucks Owners Club released numbers suggesting the vehicle has received 522,764 preorders in just three months.

The group also compared Cybertruck preorders to Model 3 preorders, saying the Model 3 only received around 518,000 total reservations between its unveiling in April 2016 and August 2017.

This is probably an accurate representation of interest in the cybertruck not least because the deposit required was a $100 versus $1000 for the Model 3. That allowed a lot more people the opportunity to express interest with a relatively modest sum but it is a much bigger question whether they will translate into sales in the same way the Model 3 did.

Kraft Heinz Co. was downgraded to junk status by Fitch Ratings, which predicted the company’s leverage will remain high for an extended period as the maker of Jell-O and Classico pasta sauce works to stabilize declining sales.

The food company was cut to BB+ from BBB- by the credit-ratings company, with a stable outlook. Fitch said the company may need to divest a sizable portion of its business in order to reduce its debt.

The downgrade follows Thursday’s earnings report, in which Kraft Heinz reported a drop in fourth-quarter sales that sent its bonds and stock tumbling. It was the latest sign that the company’s turnaround plan still has a long way to go.

Kraft Heinz said Thursday it would release a more detailed turnaround plan around the time of its next earnings report in early May, though many investors and analysts had been looking for it sooner.
 

Kraft Heinz’ dividend was 62.5¢ in 2018, 40¢ in 2019 and is expected to be 20¢ in 2020. The decline in the share price has supported the yield, which is currently 5.98% but the outlook for additional dividend cuts puts that under question. The company is likely to be a case study in how intangible values cannot be used to underpin a credit rating during a time of technological and social upheaval.

Maybe 18 months ago you were looking at Rare Earths outside China. One you mentioned in Australia - Alkane Resources - has recently perked up considerably on gold exploration but also on the likely demerger of its Rare Earths project at Dubbo. I'm a shareholder so noticed(!) You might like to re-visit some time as it is a happy graph for holders

Congratulations on taking the opportunity in Alkane Resources. The company found new gold in September, which was the reason for the initial break higher. Meanwhile the strength over the last couple of days is based on the appointment of a new managing director to the Dubbo project which is a step closer to developing the mine into a commercial reality.

You will have plenty to read on this subject. But this does scare me:

Chinese financial shock gathers steam as world holds its breath on coronavirus

A major slowdown in China could trigger recession and defaults in other parts of the world

By Ambrose Evans-Pritchard

https://www.telegraph.co.uk/business/2020/02/07/china-contract-europe-near-recession-world-holds-breath-coronavirus/

Thank you for this article which highlights the acute risk to market, particularly in Europe, which rely on Chinese demand. That is as true of the automotive sector as it is of luxury goods. Here is a section:

The disturbing feature is that the European Central Bank’s emergency rate cut and renewed quantitative easing in September have gained so little traction. While it was not literally the ECB’s ‘last throw of the dice’ there is precious little left to play with.

There must now be a serious risk that China’s coronavirus crisis - if prolonged - will push Germany, Italy, and perhaps France into a technical recession, and in so doing expose both the ECB’s credible limits and the eurozone inability to launch meaningful fiscal stimulus under its deflationary ideology and spending laws.

Markets have not yet looked so many moves ahead on the global financial chess board but they might do so within two or three weeks if the corona fever is not broken, and traders tend to shoot first and ask questions later once fear takes hold.

Everything depends on the spread rate and the doubling rate, 2.68 per case and 6.4 days respectively, according to a Lancet study last week. If these figures improve markedly (and can be believed), the storm should blow over. If they do not materially change, the global recessionary dynamic may become unstoppable within weeks.

“We sense the digital yuan is a challenge to the existing global reserve currency system and currency hegemony,” said Nakayama, a top member of the ruling party group that drafted the proposals. “Without the U.S., we cannot counter China’s efforts to challenge the existing reserve currency and international settlement system.”

The comments indicate the heightened concern among policy makers in Japan over the likely impact of a digitized yuan expected for later this year. China’s plan and Facebook’s efforts to launch its own Libra currency have sparked central banks around the world to get up to speed on how digital currencies would function and what their impact could be.

“There are 1.4 billion people in China, so within the one belt, one road digital economic framework, the digital yuan has a high likelihood of becoming the standard within that digital economy,” 

There is no telling just yet how serious China is about setting up a digital currency system but the security and supply elasticity in how it is set up, together with how much it is used on the mainland will be determining factors is whether it is ultimately a success.

The coronavirus outbreak in China is already threatening to undermine the global economy. It may soon create a similar shake-up in the drug industry.

I’m not talking about pharmaceutical companies’ attempts to develop a vaccine, but about intellectual property. Chinese researchers have applied for a patent on an antiviral drug candidate called remdesevir owned by Gilead Sciences Inc. The drug is being tested in clinical trials in short order, but the company could eventually be cut out. 

If the patent is granted, it will confirm long-standing drugmaker fears about China’s commitment to IP protection, raising concern about the industry’s future in a crucial market. It also could further erode the already weak incentives for pharma to invest in drugs to combat emerging infectious diseases. The risks of seizing the patent may outweigh any benefit.

The world is racing to help find a cure for the Wuhan virus with both pharmaceutical companies and philanthropists committing significant resources to finding a cure. That’s as much about helping China as it is about helping to contain the infection and creating the potential to be compensated for coming up with a solution.

Structural layers are the foundations of new technologies so 5G which is being rolled out everywhere this year is a major event. In the just the same way that 4G delivered instant connectivity, social media, app-based banking, travel, gaming etc, 5G will build on top of that layer to deliver edge computing. That means data centre access to massive computing power at the touch of a finger.

Chinese officials took issue with U.S. comments about the country’s response to the coronavirus outbreak, and promised they would bring the infection under control.

“U.S. comments are inconsistent with the facts and inappropriate.” Chinese Ministry of Foreign Affairs Spokeswoman Hua Chunying said in statement posted online Friday. The World Health Organization “called on countries to avoid adopting travel bans. Yet shortly afterward, the U.S. went in the opposite direction, and started a very bad turn. It is so unkind.”

U.S. officials said this week that they had difficulty getting specialists from the Centers for Disease Control and Prevention to the front lines of the outbreak in China, and late Thursday the State Department advised Americans traveling in China to come home. Commerce Secretary Wilbur Ross on Thursday also said the outbreak may help bring jobs back to the U.S.

China’s ambassador to the United Nations, Chen Xu, said during a press conference in Geneva that the country had been transparent about the disease.

“We have conducted our business in an open and transparent manner with the outside world,” he said.

Xu said that China would work with the World Health Organization to bring the disease under control, following a declaration by the WHO that the outbreak was an international emergency. The declaration will “not only coordinate global prevention control measures but enables us to mobilize international resources to respond to the epidemic,” he said.

“Official” figures are just below 10,000. This Lancet article suggests 76000 infections. The death toll is reported at around 200 but if that is the case why are crematoria running 24/7? The biggest challenge the Chinese administration has is their claims of full disclosure are being met with doubt because they have such a poor record of reporting accurate facts about any part of the economy. Little wonder that other countries are taking more forceful measures to isolate the country until the infection rate peaks and begins to decline.  

Morgan Stanley (equal-weight, PT 2,270p) says 4Q results should trigger “a negative response,” as both earnings and cash flow were lower than consensus expectations and gearing increased on a quarterly basis

Analysts Martijn Rats and Sasikanth Chilukuru say that while integrated gas was largely hit by lower trading profits, margins within chemicals appear to have been hit more than expected by the weaker macro

Oil products and upstream seen benefiting from strong marketing results and higher production volumes, respectively

RBC (sector perform, PT 2,600p) says the decision to reduce the quarterly run rate for its buyback to $1b from $2.75b into 2020 was largely factored into the stock’s recent performance and the new rate “looks well covered,”

Given gearing is 29%, analyst Biraj Borkhataria says that “Shell is right to be more cautious”

Royal Dutch Shell took a big bet on natural gas and has succeeded in getting the product to market from its massive Australian offshore facility. The challenge is there is no intense competition in the LNG market as major producers vie for market share. Meanwhile Shell is also looking at lower oil prices and increasingly aggressive emissions regulations all over the world.

5. Electronic money (E-MONEY) and cryptocurrencies (C-MONEY) vs. central bank money (CB-MONEY): the death knell for paper money? Credit cards or electronic money in general are being used for an increasing number of ever smaller payments due to better, quicker, easier and more widespread infrastructure. The dissemination of electronic payments, and of cryptocurrencies to a lesser extent has reduced the use of notes and coins, i.e. central bank money. Central banks accompany this trend, by removing high-denomination notes from circulation and / or by taking steps to limit payments in cash. With new forms of E-MONEY and C-MONEY, it is evident that payments are currently seeing another period of rapid innovation and transformation. The use of e-payments is booming, while technology companies and financial institutions are investing heavily to be the payment providers of tomorrow. However, despite the continuing digitalisation of the financial system, cash in circulation is not dropping for most countries. The demand for cash still increase in several advanced economies since the Great Financial Crisis, driven by store-of-value motives. Negative rates represent another factor for accumulation of cash. The total elimination of paper money is nevertheless being seriously discussed, for at least two reasons: • The rapid expansion of e-payments, it would help fight the black market and organised crime, • It would free central banks from any constraints on how deeply they can cut interest.

A link to the full report is posted in the Subscriber's Area.

The war on cash is a well understood theme. Governments have a clear incentive to ensure all transactions are recorded on a digital ledger so they can be taxed and the wealth of individuals monitored.

The motivation for that level of oversight is only exacerbated by the need to pay for all of the unfunded liabilities built up over decades of social democratic crowd-pleasing budgets. Meanwhile the ease of doing business online and the competitive advantage online retail has over physical stores.

Two aspects of the current outbreak I find especially concerning, speaking as a retired veterinarian of some fifty years’ experience. I understand the symptoms can vary from barely perceptible with no fever to severe and fatal Some. people with the virus may be unaware they have it but may be very infectious to others, acting as symptomless carriers. My experience with animals which are subject to lockdown on account of infectious disease is that they tend to become very stressed and anxious, this in turn tends to make them more liable to spread infection on account of diminished resistance. I would suggest bottling up millions of Chinese in these cities has its own hazards regarding virus spread.

Thank you for this insight which I believe will be of interest to other subscribers. The reaction of the Chinese administration to the speed of the outbreak has been panicky. The long gestation period where no symptoms are evident but where transmission is possible represents a significant challenge to containment. That was the reason for the quarantine but it is impossible to corral that many people. On top of that 5 million left the city before the quarantine and very little comment has been made on how migrant workers are counted.

“We don’t expect Novavax will run human trials without non-dilutive government funding,” Ladenburg Thalmann’s Michael Higgens wrote in a note. “The timing for such support in our view depends on how severe and uncontrolled the 2019-nCoV becomes.”

Moderna Inc. MRNA, -0.95%  said it is working with the National Institutes of Health on a potential vaccine response, saying its “vaccine technology could serve as a rapid and flexible platform that may be useful in responding to newly emerging viral threats.” Moderna’s stock was up 10%.

NanoViricides Inc. NNVC, +75.32%  said it has raised $7.5 million in an offering of 2.5 million shares at a price of $3 per share. Its stock was down 55% in morning trading, after gaining 153% on Monday.

The company had also worked on treatments for MERS and the Ebola virus. NanoViricides president Anil Diwan said in an email that the company believes that the drugs “we had previously developed are worth testing against the Wuhan virus and are likely to work against it.”

There isn’t a lot of money in cures because you don’t get repeat customers. The whole point of the business is to ensure you run out of customers. That’s not a great business model which is why conventional pharmaceutical companies generally eschew developed vaccines. The small companies that do concentrate on this field generally rely on fear of a global pandemic to generate the investment capital to continue working on their research. That was certainly the case with Ebola and this week saw a significant uptick in share issuance.

The biggest risks and tradable opportunities discussed by the panel members focus on the fixed income markets but it did get me to thinking where I see the biggest risks and where are the biggest opportunities right now.

Netflix Inc.’s latest earnings report spurred mixed feelings across Wall Street as growth overseas was offset by a slowdown in the U.S. amid rising competition from Walt Disney Co., Apple Inc. and more forthcoming launches. Needham Co. believes the spike in streaming rivals will increase Netflix’s churn and customer acquisition costs, most likely lowering the lifetime value per subscriber as growth overseas isn’t equivalent to that domestically. Netflix would need to “add four $3-per-month subscriptions in India to offset each U.S. subscriber lost,” Laura Martin, TMT analyst at Needham, wrote in a note.

The clear conclusion from Netflix’s earnings is it is still growing where it has little to no streaming competition. Where it has competition, it is losing market share. The big question then is how quickly its competitors are going to expand abroad or how long will it take alternative streaming services to arise in Europe and India. Either would be a significant challenge as it continues to pump out mediocre content.

The one point that jumps out to me is how eager the majority of participants are to point out the potential problems in the market. Even allowing for the fact that DoubleLine is a bond house, and therefore more predisposed to the bearish case because of the benefit that provides to bonds, the extent of the bearishness is interesting.

Fiat Chrysler and Foxconn plan Chinese electric vehicle joint venture - This article from Reuters may be of interest to subscribers. Here is a section:

FCA last month reached a binding agreement for a $50 billion tie-up with France’s PSA (PEUP.PA) that will create the world’s No. 4 carmaker. FCA said that the proposed cooperation was initially focused on the Chinese market.

It “would enable the parties to bring together the capabilities of two established global leaders across the spectrum of automobile design, engineering and manufacturing and mobile software technology to focus on the growing battery electric vehicle market,” it said.

FCA said it was in the process of signing a preliminary agreement with Hon Hai, aiming to reach final binding agreements in the next few months.

However, it added there was no assurance that final binding agreements would be reached or would be completed in that timeframe.

Foxconn has been investing heavily in a variety of future transport ventures for several years, including Didi Chuxing, the Chinese ride services giant, and Chinese electric vehicle start-ups Byton and Xpeng.

Foxconn also has invested in Chinese battery giant CATL and a variety of other mostly Chinese transportation tech start-ups.

This is an example of the most profound change batteries are bringing to the automotive sector. They are rapidly commoditizing the car. The difference between an Apple, Samsung or Google phone is less about what is on the inside than familiarity with the brand, ease of operation. software, the app ecosystem and the camera. Other than that, they all have pretty much the same internal composition with some minor differences in the design of the chips while manufacturing is outsourced to a third party.  

By the time Boeing decided to cobble together the 737 Max, its engineering culture was completely broken. Here’s how Aboulafia described it to Useem in the Atlantic:

It was the ability to comfortably interact with an engineer who in turn feels comfortable telling you their reservations, versus calling a manager [more than] 1,500 miles away who you know has a reputation for wanting to take your pension away. It’s a very different dynamic. As a recipe for disempowering engineers in particular, you couldn’t come up with a better format.

You can see that disempowerment — and its consequences — in the recently released emails. Instead of bringing their fears and complaints to superiors, the engineers grouse to themselves about the problems they see with the plane. They are bitter about management’s unwillingness to slow things down, to build the plane properly, to take the care that’s required to prevent tragedy from striking.

There is one email in particular from an unidentified Boeing engineer that I can’t get out of my head. It was written in June 2018, about a year after the company had begun shipping the 737 Max to customers:

Everyone has it in their head that meeting schedule is most important because that’s what Leadership pressures and messages. All the messages are about meeting schedule, not delivering
quality…

We put ourselves in this position by picking the lowest cost supplier and signing up to impossible schedules. Why did the lowest ranking and most unproven supplier receive the contract? Solely based on bottom dollar…. Supplier management drives all these decisions — yet we can’t even keep one person doing the same job in SM for more than 6 months to a year. They don’t know this business and those that do don’t have the appropriate level of input… .

I don’t know how to fix these things … it’s systemic. It’s culture. It’s the fact that we have a senior leadership team that understand very little about the business and yet are driving us to certain objectives. It’s lots of individual groups that aren’t working closely and being accountable …. Sometimes
you have to let things fail big so that everyone can identify a problem … maybe that’s what needs to happen instead of continuing to just scrape by.

Of course that’s exactly what happened: the 737 Max failed big — at a cost of 346 lives. Shareholder value has caused much harm in the three decades since it became the core value of American capitalism: diabetics who can’t afford insulin; students ripped off by for-profit universities; patients gouged by hospital chains; and so much else. But none worse than this.
 

General Electric basically invented financial engineering and built a massive business based on moving money around while its industrial core withered. That resulted in unique exposure, for an industrial company, to the credit crisis. The erasing of goodwill, forced sell-off of prime income producing assets and failure to reinvent a business model, resulted in the complete collapse of the share down to the low in late 2018.

The U.S. and China signed what they’re billing as the first phase of a broader trade pact on Wednesday amid persistent questions over whether President Donald Trump’s efforts to rewrite the economic relationship with Beijing will ever go any further.

The deal commits China to do more to crack down on the theft of American technology and corporate secrets by its companies and state entities, while outlining a $200 billion spending spree to try to close its trade imbalance with the U.S. It also binds Beijing to avoiding currency manipulation to gain an advantage and includes an enforcement system to ensure promises are kept.

The most important point about the trade deal is the stock market did not sell off immediately following the signing. Considering the rally that has been underway for the last three and half months there is clear risk of some consolidation on a buy the rumour to sell the news, but no evidence it has started just yet.

1. Deep Learning — From Vision to Language
2. Streaming Media — The Primary Technology Behind Content Distribution
3. Electric Vehicles — Faster Adoption Than Most Think
4. Automation — Increased Productivity and More Jobs
5. 3D Printing — An Underestimated Technology
6. Autonomous Ridehailing — The Future of Transportation
7. Aerial Drones — A Cost Saver and Potential Life Saver
8. Next Generation DNA Sequencing — The Transformation of Oncology
9. Biotech R&D Efficiency — The Convergence of Technologies in Healthcare
10.Digital Wallets — The Transformation of Banking
11.Bitcoin — An Evolution of Monetary Systems

A link to the full report is posted in the Subscriber's Area.

Technology and the accelerating pace of innovation has been the driving theme behind the bull market for more than a decade. The first commercial reality of the secular trend has been the monetisation of social media, the introduction of 4G, streaming, the adoption of subscription business models, control of the cloud and a for a brief period a cryptocurrency mania.

Semiconductor shipments, South Korea’s biggest source of income, rose 12% in the first 10 days of January from a year earlier, data from the Customs Service showed Monday. That’s the first time the preliminary figure posted growth since October 2018.

While the expansion benefits from a base effect of poor performance last year, it suggests global tech demand is improving after being battered by the U.S.-China trade war. The two countries entering a phase-one trade deal later this week should further support demand.

“It’s definitely a positive signal,” said Lim Hye-youn, an economist at KTB Investment & Securities, referring to the chip shipment in South Korea’s preliminary trade data. “But it’s still difficult to see the growth big enough to be leading Korea’s strong economic recovery. The base effect played a large role.”

The global semiconductor sector is a lead indicator for corporate spending and tends to suffer when expectations for future economic potential are weak. All we hear right now is about the negative expectations for future growth among CEOs. If that were the full story then chips sales would not be turning higher.

A link to the full report is posted in the Subscriber's Area.

The 10 biggest companies in the world by market cap are Saudi Aramco, Apple, Microsoft, Alphabet, Amazon, Facebook, Alibaba, Berkshire Hathaway, Tencent and JPMorgan. To be part of the list a minimum market cap of $426 billion is required.

Gilead Sciences Inc. has so far been silent on plans to diversify its pipeline as investors clamor for a repeat of last year’s biotech deal boom.

The drug developer leads a group of biopharmaceutical companies that Wall Street expects to join in the sector’s acquisition spree. Earlier on Friday, Eli Lilly & Co. snatched up Dermira Inc. and its skin disorder drug for $1.1 billion.

That news comes as investors and management flock to San Francisco for the JPMorgan Healthcare Conference, which kicks off on Monday. The meeting is viewed as the crown jewel of sell-side events and is a hotbed for companies to announce deals and provide product updates.
 

The biotech sector is busy commercialising a range of novel therapies to treat cancers and chronic conditions like diabetes, Alzheimer’s and arthritis. The road to full approval and the scope for failure along the way means it is a high-risk strategy to invest in start-ups. Therefore, the bigger companies wait for some verifiable proof a nascent product works and then investigate buying it. 

Chief Executive Officer Elon Musk announced in November that Tesla planned to build a plant outside Berlin. The facility is expected to produce Model 3 sedans and Model Y crossovers starting in 2021.

Fiat Chrysler is going to launch a new version of its Fiat 500 battery-powered vehicle in Europe this year, along with plug-in hybrid versions of its Jeep Compass, Renegade and Wrangler models. That, combined with the Tesla credits, should make the company compliant with Europe’s emissions rules, CEO Mike Manley told analysts in July.

While Fiat Chrysler would otherwise struggle to meet new carbon-dioxide emissions standards in Europe, the so-called open-pool option available in the European Union allows automakers to group their fleets together to meet targets.

Compliance has gotten harder for automakers as consumers have shifted toward gasoline cars, which emit comparatively more CO2, following Volkswagen AG’s diesel-emissions scandal that first erupted in 2015.

Getting your competitors to pay for a factory, which you will then use to produce cars aimed at putting them out of business is a narrative that is so farfetched it would be unlikely to ever pass muster as a movie script. Yet, it is reality in the growth killing market designed by the bureaucrats ruling the EU. Is it any wonder the UK voted to leave?

Tech giant Sony shocked attendees at this year’s CES by unveiling a new electric car.

The Japanese company, which is best known for its PlayStation games consoles and high-end televisions, revealed the Vision S concept saloon.

The prototype boasts 33 sensors to monitor inside and outside of the car, as well as an ultra-wide monitor which will be used for entertainment and information purposes.

Sony chief executive Kenichiro Yoshida said that cars will be redefined as a “new entertainment space”.

“To deepen our understanding of cars in terms of their design and technologies we gave a shape to our vision,” Mr Yoshida told the tech conference in Las Vegas.

“This prototype embodies our commitment to the future of mobility and contains an array of Sony technologies.”

The new concept car also features “360 reality audio”, which Mr Yoshida says will give users an “immersive experience”.

The Consumer Electronics Show is where companies go to showcase their most aspirational vision of what they hope to bring to market in coming years. Electric cars started popping up a few years ago but this year electric vehicles dominated the product line. Sony, Mercedes Benz and Fisker debuted electric vehicles, with the latter production ready.

Tesla plans to increase local sourcing to 100% in Shanghai by the end of the year, from about 30% now, Song said. That should help lower costs as Tesla and other ambitious EV makers face a challenging market in China, where auto sales have been slowing.

Last month, people familiar with the matter said localization would help Tesla cut prices by 20% or more in 2020. The company has been exempted from a 10% purchase tax for its locally built sedans, posing more of a threat to the likes of NIO, Xpeng and BYD Co.

Tesla’s primary success has been in creating electric vehicles consumers aspire to own. The defining characteristic in how well the company survives the challenges of achieving the scale of a major manufacturer will be in how well they keep costs under control. A 20% decline in costs through local sourcing is a major step in the right direction and provides the company the leeway to compete on price with China’s myriad domestic companies.

“This is an unprecedented situation in which we see that Russia is technologically ahead of the U.S. and the Pentagon is playing catch-up,” said Nikolai Sokov, a senior fellow at the Vienna Center for Disarmament and Nonproliferation. “The U.S. only woke up this year to this technology and has started to throw money at it.”

Russia successfully tested Avangard in December last year, firing it from a military base in the southern Urals 6,000 kilometers (3,700 miles) to the Kamchatka peninsula. After a ballistic launch, the Avangard glides toward its target with a high degree of manoeuvrability.

The difference between the hypersonic weapon and a traditional ballistic missile is that it “disappears and we don’t see it until the effect is delivered,” Hyten said in testimony before the Senate Armed Services Committee.

Claims the Avangard can evade any defenses are overblown since it can be shot down in the early ballistic phase of its trajectory, said Golts, the defense analyst. The real breakthrough will come when Russia implements the same technology in another weapon class, like cruise missiles, according to Sokov, the disarmament expert.

Abandoning New START at this juncture would be a major mistake, Democratic Senator Jeff Merkley warned this month. There’s bipartisan support in the U.S. Congress for extending the agreement, which “has successfully kept the U.S. and Russia out of a modern-day nuclear arms race,” he said on Twitter. “We cannot risk unleashing a new Cold War.”

Hypersonic weapons are first strike options that represent a clear escalation of the risk from deteriorating international relationships. The bigger picture is hypersonic vehicles are not exactly new since the Blackbird SR-71 flew in the 1950s. However, the technology has progressed enough that companies like Boeing and SpaceX are investing in bringing extremely quick transportation to commercial reality

The mishap jeopardizes U.S. plans for human flights as soon as next year by Boeing, which was hired to ferry astronauts to the ISS as part of NASA‘s commercial crew program along with Elon Musk’s Space Exploration Technologies Corp. Boeing’s failure also deepens the sense of crisis around the aerospace giant as it tries to persuade regulators to end a flying ban on its 737 Max after two deadly crashes.

Boeing fell 1% to $330.04 at 10:40 a.m. in New York. The stock rose 3.4% this year through Thursday while the S&P 500 advanced 28%. NASA and Boeing officials said they were still trying to understand the cause of the timer failure. It’s too soon to assess the impact on subsequent Boeing space flights, they said. About 50 minutes after liftoff, the Starliner was out of position to begin its orbital insertion burn, the last boost into an orbit so the vehicle could dock at the space station. Had astronauts been on board, they might have been able to correct the problem, Bridenstine said.

Planes falling out of the sky and a space craft missing its rendezvous is not exactly confidence inspiring. Boeing is a major defense contractor so it is not going out of business but the catalogue of errors keeps growing and it is only a matter of time before activists starting calling for scalps.

A link to the full report is posted in the Subscriber's Area. 

While the semiconductors sector has been a major outperformer over the last 18 months, the performance of the network infrastructure companies has lagged. There is some tentative evidence that decline is ending following the announcement of the trade war hiatus but it is still early days.

Chainalysis estimates that PlusToken conspirators have sold about 25,000 Bitcoins and another 20,000 Bitcoins are spread out across more than 8,700 anonymous crypto addresses. Additional coins such as Ether were also used to bilk investors.

“That’s certainly something to consider when you are thinking about where the price is going, at least in the short term,” Kim Grauer, senior economist at Chainalysis said in a phone interview. “It could be, according to our research, continued downward pressure.”
 

Bitcoin and the other cryptocurrencies do best when there is a clear supply inelasticity argument. The liquidation of the Mt. Gox bankruptcy hoard was a significant contributing factor in the decline posted in 2018 and the unwinding of the PlusToken stash may be a factor in the current downtrend.

These new statistics suggest that the spread of AI will not just amount to “more of the same,” and that the onset of AI will introduce new riddles into speculation about the future of work.

Given their difference from previous analyses purporting to discuss AI, Michael Webb’s novel procedures demonstrate that we have a lot to learn about artificial intelligence, and that these are extremely early days in our inquiries. What’s coming may not resemble what we have been experiencing or expect to experience.

Webb’s machine learning statistics suggest AI could bring new patterns of impact across the labor market—ones fundamentally different from those brought by previous technologies.

It’s clear that past automation analyses—including our own, with its amalgamation of robotics, software, and artificial intelligence—have likely obscured AI’s distinctive impact. Based on expert familiarity, previous analyses have almost certainly been dominated by the ways robotics and software have been able to take over numerous routine, highly structured, and repetitive tasks.13

These analyses have tended to suggest that automation’s main effects will be to displace work across the middle of the skill and wage spectrum (such as factory workers and office clerks) while leaving the status quo more or less intact for both high-pay and low-pay interpersonal or nonroutine work (such as chemical engineers and home health aides, respectively).

However, the more refined empirical research presented here suggests that AI’s ability to employ statistics and learning to carry out nonroutine work means that these technologies are set to affect very different parts of the WHAT JOBS ARE AFFECTED BY AI? 23 workforce than previous automation. Most strikingly, it now looks as if whole new classes of well-paid, white-collar workers (who have been less touched by earlier waves of automation) will be the ones most affected by AI.

Many better paying jobs rely less on expertise than on workplace protections. It is still mandatory to speak with an insurance agent in the USA when buying insurance. Many European countries dispensed with agents years ago. That single workplace rule which necessitates little more than a box ticking exercise with an agent, and the commissions that agent derives from the policy for every year it is active subsequently represent a massive cost to consumers.

The technology, which is also being developed in the United States and elsewhere, is in the early stages of development and can produce rough pictures good enough only to narrow a manhunt or perhaps eliminate suspects. But given the crackdown in Xinjiang, experts on ethics in science worry that China is building a tool that could be used to justify and intensify racial profiling and other state discrimination against Uighurs.

In the long term, experts say, it may even be possible for the Communist government to feed images produced from a DNA sample into the mass surveillance and facial recognition systems that it is building, tightening its grip on society by improving its ability to track dissidents and protesters as well as criminals.

Some of this research is taking place in labs run by China’s Ministry of Public Security, and at least two Chinese scientists working with the ministry on the technology have received funding from respected institutions in Europe. International scientific journals have published their findings without examining the origin of the DNA used in the studies or vetting the ethical questions raised by collecting such samples in Xinjiang.

This article from the Wall Street Journal details how the capturing facial recognition data is now mandatory when purchasing a new phone. Here is a section:

The new regulation gives the Chinese state, which backs the country’s three main telecom providers, the ability to better track people based on ethnicity and other factors, said Ben Cavender, Shanghai-based managing director at China Market Research Group.

The EU plan, set to be approved as the high-profile United Nations summit in Madrid winds up, would put the bloc ahead of other major emitters. Countries including China, India and Japan have yet to translate voluntary pledges under the 2015 Paris climate accord into binding national measures. U.S. President Donald Trump has said he’ll pull the U.S. out of the Paris agreement.

In a pitch of her Green Deal to member states and the European Parliament on Dec. 11, von der Leyen is set to promise a set of measures to reach the net-zero emissions target, affecting sectors from agriculture to energy production. It will include a thorough analysis on how to toughen the current 40% goal to reduce emissions by 2030 to 50% or even 55%, according to an EU document obtained by Bloomberg News.

Make It Irreversible
In the next step, the commission will propose an EU law in March that would “make the transition to climate neutrality irreversible,” von der Leyen told the UN meeting. She said the measure will include “a farm-to-fork strategy and a biodiversity strategy” and will extend the scope of emissions trading.

The EU’s political elite view the climate argument as a voter winner, a source of revenue for their constrained social services and an additional control on the economy that would be impossible under normal circumstances. It is also a response to the fact the region is a major energy consumer and has long had to deal with regimes it is politically at odds with because of its dependence on imports of energy commodities.

THESIS: A strong position in 5G chips, coupled with expanded royalties, may position Qualcomm for sales and EPS growth in fiscal 2020. Higher-priced 5G handsets aid its royalty business, while increased use of its advanced 5G chips will drive up chip content and average prices. This content is further enhanced by a wider portfolio of radio-frequency chip offerings. The company is set up to gain from a richer 5G handset mix and pricing, as well as a higher-end chip mix and content expansion of its own portfolio. Royalty mix aids margin, expanding EPS faster than sales. A softer, slower global 5G ramp up, especially outside China, is the key risk.

Speed and lag are two of the biggest obstacles to moving more of the global economy online. 5G is up to 100 times faster than 4G and removes lag from the equation. China switched on a national 5G network earlier this month and the majority of major economies plan to move to full roll out in 2020. Samsung and some Chinese companies are producing 5G phones but the number of models on offer will also significantly increase in 2020.

Monday’s news continues a trend of large-cap drugmakers snapping up smaller developers in an attempt to refill their depleted pipelines. Even before the Medicines Co. announcement, Basel, Switzerland-based Novartis had announced close to $16 billion of acquisitions since Vas Narasimhan took over as CEO in February 2018, according to data compiled by Bloomberg.

Alnylam Pharmaceuticals Inc., which receives milestone payments tied to Medicines Co.’s heart drug inclisiran as well as royalties on drug sales, jumped 7.6% pre-market Monday. That’s on top of last week’s 16% gain after it won FDA approval for a second drug.

Jefferies’ Yee highlighted that the $9.7 billion price tag implied a higher multiple on potential peak sales of inclisiran than historically has been seen in other biotech deals. On a deal value to peak sales comparison, he said the valuation is similar to Bristol-Myers Squibb Co.’s acquisition of Celgene Corp., which closed last week.

Large pharmaceuticals companies have effectively outsourced research and development to the speculative biotechnology sector and are prepared to pay up for those that approach commercialisation.

The halving occurs every 210,000 blocks and reduces the block mining reward by half—now 12.5 Bitcoin per block. Each of the adjustments is designed to continually manage inflation on the network.

The consequence of each halvening is a massive profit slash among miners, with just half the current block reward as revenue. This leads to a massive reduction in miners, with the weak hands being forced out.

However, as miners are no longer able to continue, the total hashrate on the network drops dramatically. This leads to a subsequent reduction in difficulty for each block mined, reducing costs for miners who make it through. In the end, the genius of Nakamoto shines.

The halvening has historically been a time which attracts bulls to bitcoin because it results in the halving of the reward for minting new blocks. That highlights the limited supply argument and automatically makes the bitcoin already in existence more valuable. At least that is how the logic has played out over the last few occasions. It is also worth remembering that cryptocurrencies are a little more than a decade old so drawing long-term conclusions is still something of a spotty endeavour.

“While the data are early, we are quite excited about what we are seeing,” he said in a telephone interview. “This is a pretty significant milestone, not just for us as a company but for the entire field. This could be an important landmark in medicine, when we saw the first promise for providing cures for a number of diseases using a gene editing approach.”

The early findings may benefit rival companies also studying medicines based on Crispr technology, as they are the first results from publicly traded companies using the platform. Editas Medicine Inc.’s lead drug will be given to its first patient at the start of next year as a treatment for a form of blindness, while Intellia Therapeutics Inc. is on track to file for its first human trial by mid-year.

Gene editing deals in cures rather than treatments. That’s a major challenge for the traditional pharmaceuticals business. Chronic conditions which requite ongoing treatment but have no cure have been massive money spinner for the pharmaceuticals business for decades. Right now, the cost of cures is extraordinarily high because a one-shot solution has to load all of the revenue from a treatment into one bill rather than spacing it out with a chronic condition. However, as the sector moves out of the orphan disease sector and into the mainstream over the next decade the potential for costs to come down is quite compelling.

The Mach-E will make a profit “on vehicle one,” he said in a Bloomberg TV interview. “That’s surprising a lot of people because electrics have not had a history of making money. This will.”

Hackett said it will turn a profit because the vehicle “creates the passion that follows with Mustang” and prices start in the mid-$30,000 when U.S. subsides on electric cars are factored in. “So it’s attractive to customers.”

Ford is building it in Mexico because it had an open factory there and it needed to be overhauled to build an electric vehicle, Hackett said. “As we start to adopt more electric vehicles — we had capacity down there, we had no capacity in the United States — we’re going to have electric capacity here in the United States. They’ll be building other electric platforms.”

Still, it’s a high-risk gambit. The Mustang is Ford’s signature sports car, having sold more than 10 million units since it debuted in 1964 with simultaneous cover stories in Time and Newsweek. When Ford decided to abandon the traditional passenger-car business last year, it spared only one model: The Mustang.

Sports cars, pickups and SUVs represent the high margin portions of the auto industry. Many traditional manufacturers are racing to get electric SUVs and sedans into the market to compete with Tesla. Today’s Ford announcement is obviously aimed at competing with the Model 3, while Tesla’s debut for its pick-up, on Thursday, is aimed at competing with the F-150. The disruption in the auto sector is forcing massive investment in new manufacturing capacity and not all will survive. From listening to what Jim Hackett had to say about profitability, it sounds there is some creative accounting in making the claim the electric Mustang will be profitable on car one.

What is CECL?: CECL is a new accounting standard that modifies how companies estimate loan and lease losses, and affects all periods starting after December 15, 2019 (i.e., begins 1Q20). In the midst of the financial crisis in 2008, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) established the Financial Crisis Advisory Group (FCAG). FCAG believes it has identified a “weakness in current GAAP being the delayed recognition of credit losses that results in the potential overstatements of assets,” which ultimately led to its recommendation for this new standard. The new standard requires financial institutions to use a combination of historical information, current conditions and reasonable forecasts to estimate the expected losses over the life of a loan. This is a significant shift from the current methodology, which relies on incurred losses. We note on day one of implementation, there will be a balance sheet adjustment, creating additional general reserves for expected credit losses and negatively impacting capital levels, but implying limited income statement impacts.

Conclusion: We walked away with more questions than answers, and anticipate a significant amount of variability in disclosures amongst the banks given the latitude FASB has provided in the standards. While many questions remain, FASB officials, consultants and management teams alike continue to work through the issues and are refining models as overall understanding of the standards improves. Fortunately, we anticipate regulatory capital relief for the banks as necessary, since capital levels remain elevated and the intent of the new standards was not to increase capital levels at the banks. However, we believe there could be some unintended consequences and potential ripple effects that will create further disruption in the space, potentially shifting assets out of the banking space and into the non-bank space, which has continued to gain share. Ultimately, we remain concerned with the uncertainty around CECL, anticipated volatility around disclosures and capital impacts, as well as potential negative implications on industry demand will serve to provide one more reason for investors to not own the space.

The Current Expected Credit Loss (CECL) regime is another piece of regulation imposed on the banking sector which serves to ensure the overleverage and inappropriate risk management that characterised the industry ahead of the financial crisis is not repeated. One of the primary results of successive waves of regulation has been to pile compliance costs onto the banks but it has also reduced their ability to leverage their balance sheets which has unintended consequences.

This vision is designed with the time span of 300 years. The next 3 decades is merely the first step

This report contains a number of truly inspiring ideas. Everything from universal happiness, to the power of computers to far exceed the computing power of the human brain, to tripling longevity, to creating a management structure capable of surviving all of this radical change. Some of these promises are still in the realm of the science fiction, some are a lot closer to reality than we might realise.

Part of that question was answered Thursday after a panel of experts convened by the Food and Drug Administration reviewed Amarin's data. They voted 16 to 0 that Vascepa was safe and cuts cardiovascular events. The vote doesn’t bind the FDA, but the agency often follows panel recommendations, so it would be a surprise now if the drug isn’t made available to more Americans. That’s big news for Amarin — and for many patients. 

We still don't know exactly how good the news is, however, and won’t until the FDA makes a final decision by the end of the year. There was consensus on the drug’s overall effectiveness. Still, the panelists disagreed about how far that impact extends. Access for millions of additional patients and billions of potential sales are still up the air, which means there’s more volatility ahead for Amarin investors. The market seems focused on the positives for now: Amarin shares surged 7% in early trading Friday after rising more than 20% on Tuesday, when the FDA released briefing documents ahead of the panel that were seen as relatively supportive for the drug.

Mrs. Treacy is genetically predisposed to pancreatitis during pregnancy and has had a couple of episodes in between pregnancies which have required hospitalisation. The cardiologist who implemented a treatment plan to contain her hypolipidemia during her last pregnancy prescribed a massive daily dose of fish oil and it worked. Every time since then she has found fish oil acts as a salve to pancreatic pain which has ensured she has not been hospitalised in six years.  

“We’re exploring how we can partner with banks and credit unions in the U.S. to offer smart checking accounts through Google Pay, helping their customers benefit from useful insights and budgeting tools,” Google said in an emailed statement, adding that the accounts will carry federally guaranteed insurance.

The move is the latest sign of Silicon Valley’s determination to muscle in on financial firms’ territory, looking to expand their hold on customers and accumulate data on their finances. At the same time, it shows banks are more willing to pair up with technology companies in their quest to avoid getting shut out of the relationship entirely. In the Google arrangement, the financial institutions will handle most of the compliance requirements.

Google has spent years building out its payments capabilities, offering consumers the ability to send money to friends and check out both online and in stores through Google Pay. With the checking accounts, consumers will be able to receive their paychecks and transact solely inside the Google ecosystem.

Apple has teamed up with Goldman Sachs to branch into consumer credit while Amazon, Berkshire Hathaway and JPMorgan are planning on tackling the health care market. Google is partnering with Citigroup on consumer credit but Ascension on patient data. These stories highlight how eager tech companies are to branch into these data-rich sectors, where legacy players are ill-equipped to monetise the value, they have access to.

It’s difficult to know how representative this data is of Teslas overall, given that Tesloop’s fleet is small, but it likely includes a large share of the highest-mileage Teslas on the road—several are nearing 500,000 miles. Finding conventional vehicles to compare is virtually impossible since most fleet cars are typically sold off after 100,000 miles.

But the implications could be huge. Every year, corporations and rental car companies add more than 12 million vehicles in Europe and North America to their fleets (pdf). Adding EVs to the mix could see those cars lasting five times longer—costing a fraction of conventional cars over the same period—while feeding a massive new stream of used electric cars into the marketplace. Whether the future of fleets is really electric, however, depends on the data. And that’s still in short supply.  

The promise of EVs
Most commercial vehicle fleets still run on gasoline and diesel, David Hayward, a fleet expert with Deloitte consulting, said. But EVs are top of mind. “Everyone is excited about it and everyone wants it,” he told Quartz. “But there’s trepidation.” The potential savings are huge. Fleet owners’ biggest expenses after depreciation (44%) are fuel (22%) and maintenance and repairs (11%), according to Deloitte.  EVs could slash those by more than half.

The original electric vehicles that entered service about ten years ago have some of the lowest resale values and steepest depreciations of any car. Meanwhile the Tesla Model 3 was the car with the least depreciation of any vehicle this year. That is a function of both supply and built up demand but the success in limiting the erosion of the battery’s charge potential has reversed the economics of the electric vehicle market. If a car can comfortably drive 500,000 miles with little to no maintenance, other than tyres, the only limitation is range. Right now, a Model 3 has about a 300 miles range which more than enough for most people. My SUV will do around 480 miles on the highway to a tank but probably closer to 200 in the stop/go of the city so the range issue is less of an issue today.

In another scenario, you might ask Alexa through your communal home Echo to send you a notification if your flight is delayed. When it’s time to do so, perhaps you are already driving. Alexa needs to realize (by identifying your voice in your initial request) that you, not a roommate or family member, need the notification—and, based on the last Echo-enabled device you interacted with, that you are now in your car. Therefore, the notification should go to your car rather than your home.

This level of prediction and reasoning will also need to account for video data as more and more Alexa-compatible products include cameras. Let’s say you’re not home, Prasad muses, and a Girl Scout knocks on your door selling cookies. The Alexa on your Amazon Ring, a camera-equipped doorbell, should register (through video and audio input) who is at your door and why, know that you are not home, send you a note on a nearby Alexa device asking how many cookies you want, and order them on your behalf.

To make this possible, Prasad’s team is now testing a new software architecture for processing user commands. It involves filtering audio and visual information through many more layers. First Alexa needs to register which skill the user is trying to access among the roughly 100,000 available. Next it will have to understand the command in the context of who the user is, what device that person is using, and where. Finally it will need to refine the response on the basis of the user’s previously expressed preferences.

“This is what I believe the next few years will be about: reasoning and making it more personal, with more context,” says Prasad. “It’s like bringing everything together to make these massive decisions.”

A year ago Google gave a sample of what its artificial intelligence was capable of when it made a restaurant booking for some users by phoning a restaurant and impersonating a person. The company received a great deal of backlash from the liberal media about how much data it had to collect from a person to make that kind of service available and whether the company could be trusted with the information.

According to Piper Jaffray, “the most concerning trend” in the quarter was “the reduced efficiency of SEO,” or search engine optimization. Google, part of Alphabet Inc., is favoring its own “Hotel Finder” platform, along with paid links for search results, and this trend could require higher marketing costs.

D.A. Davidson noted that Expedia is exploring alternatives to mitigate its “reliance on search/Google,” but wrote that it sees “no alternatives that will be able to efficiently ‘move the needle’ from a volume perspective anytime soon.” Morgan Stanley wrote that Alphabet is now the “best way to invest in travel.”

TripAdvisor’s adjusted earnings and revenue both missed the lowest analyst estimates. The results “more than disappointed,” Jefferies wrote, reiterating its underperform rating. Analyst Brent Thill added that TripAdvisor’s preliminary 2020 outlook “is not encouraging,” in part because of “continued SEO pressure from Google.”

Third party vendors learned a long time ago that the biggest threat from selling on Amazon is being too successful. When sales move the needle enough to pique the attention of some quant, the risk of Amazon deciding to sell the same product, but cheaper, increases exponentially. The rise of the Amazon Basics line of products is a perfect example.

Dozens of gene therapies for a range of devastating illnesses are on their way. These single-dose drugs, tailored to each patient, can potentially deliver a lifetime of benefits.

But that’s reflected in their prices, which are likely to increase pressure on already stretched budgets. To make it easier for government payers to digest Zynteglo, Bluebird plans to spread out the cost over five years, with payments contingent on its success.

As a one-time therapy, Zynteglo could save governments money in the long run by cutting the need for expensive ongoing care. Treating one beta thalassemia patient today can cost as much as €60,000 a year, says Aurelio Maggio, a blood-disease specialist at the Palermo center. That’s €3 million over five decades. With multiple wonder drugs for other conditions set to reach the market soon, the upfront bill could take a heavy toll on Italy’s finances. The price tag for the therapy is twice the $900,000 that SVB Leerink analyst Mani Foroohar expected. Given the large number of patients in the country with the ailment, “the stakes are much higher,” he says.
 

One-shot therapies to genetic conditions represent incredibly exciting solutions to many previously untreatable diseases. The reason we are seeing the kinds of therapies appear for relatively unknown ailments is because they can get accelerated approvals from the FDA because they are treating orphan diseases. The bigger prize is to treat diseases which represent some of the biggest chronic conditions in the market today.

Certain Chinese industrial companies have automated away 40% of their human workforce over the past 3 years. This could be due in part to China’s annual robot install-base growing 500% since 2012 (vs. 112% in Europe). However, it’s unclear to what extent AI software runs these installed robots or has contributed to their proliferation.

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The drive to automate manufacturing is one of the most challenging for any company but is also a major consideration in which countries benefit from manufacturing as a large, relatively well-paying employer. Many low-tech businesses have already migrated away from China while higher value-added businesses are under increasingly pressure to increase productivity by adopting technological solutions.

Federal Reserve officials reduced interest rates by a quarter-percentage point for the third time this year and hinted they may be done loosening monetary policy, at least for one meeting.

The Federal Open Market Committee altered language in its statement following the two-day meeting Wednesday, dropping its pledge to “act as appropriate to sustain the expansion,” while adding a promise to monitor data as it “assesses the appropriate path of the target range for the federal funds rate.”

As with the September statement, the FOMC cited the implications of global developments in deciding to lower the target range for the central bank’s benchmark rate to 1.5% to 1.75%.

Treasuries weakened on the Fed’s announcement, pushing the 10-year yield up briefly to 1.81% from 1.80%. Stocks were little changed and the U.S. dollar gained. Traders also pared wagers on a fourth consecutive rate cut in December.

The Fed has been of the opinion we are in the midst of a mid-cycle slowdown. I think we can think of that as a best-case scenario which is why there is so much uncertainty about the outlook for rates amid the surge in bond prices. Let’s see what the charts tell us.

Virgin Galactic is one of a trio of billionaire-backed space startups, each tapping different technologies. Branson is using an aircraft to carry a spaceship to high altitudes, where it blasts away. Blue Origin, controlled by Amazon.com Inc. founder Bezos, relies on more-conventional rockets. Musk’s Space Exploration Technologies Corp. deploys reusable launchers.

While transporting satellites has been a focus for SpaceX, Branson is chasing the tourism market, planning a first commercial flight next year. Blue Origin plans to take payloads and tourists to the edge of space on an 11-minute flight, while Musk has pledged to send passengers to the moon, Mars and beyond.

Branson said last week that Virgin Galactic also is interested in developing hypersonic airline flights after Boeing Co.’s future-technologies arm pledged $20 million for a minority stake. That could mean linking U.S. cities in a matter of minutes and, ultimately, the U.S. and U.K. with Australia in just a few hours.

Launch costs are trending lower and that is allowing room for a range of competing business cases to exploit the opportunity represented by the final frontier. If Elon Musk is to believe the jump to space is but a gateway to a myriad of possibilities on the moon and Mars. The only we can be sure of is the confluence of technological innovation and access to abundant cheap credit has made possible ventures that were mere fantasy a decade ago.

Several weeks ago, I had the same feeling as you on Japan. For investment purposes I decided to concentrate on Japanese 5G related companies. Ignoring the major telecom co's, I then came up with the following list of companies involved in parts related to the 5G area:

Thank you for this insightful email. One of the factors I believe that is attracting investors to Japan is the fact it has a such a deep pool of companies that provide invaluable components for the growth of the wider global technology sector. The fact they have been underappreciated for so long is justification for investor interest, particularly if global growth is primed for recovery.

Growth in commercial bookings highlight “an impressive start” to the year. The results also featured a strong second-quarter earnings outlook, operating margins that “significantly outperformed,” and “solid” growth with Azure. “Microsoft remains the best positioned name in tech for the emerging Hybrid Cloud architecture, with improving margins sustaining a durable mid-teens total return profile.” Overweight rating, price target raised to $157 from $155.

Bernstein, Mark Moerdler
The company “beat virtually every metric driven by strength in Cloud, Sever & Tools, and Windows Pro.” Outperform rating, price target raised to $167 from $162. The analysts “remain positive & like buying” the stock.

RBC Capital Markets, Alex Zukin
This was “a strong start” to the year, “with bookings strength across the board” and “no macro weakness.” The revenue outlook “was lower than expected but with stronger margins, as gaming is expected to be weak.” Outperform rating, price target raised to $163 from $160.

Microsoft has transformed itself from a software maker to a software as a service company (SaaS). In the process it has transformed its lumpy cyclical cashflows into a steady revenue stream which is much more easily modellable. That allows analysts a much higher degree of comfort with the balance sheet and that generally commands a higher multiple. This subscription business model affords Microsoft and other companies growth rate and margins of a tech company but with the cashflows of a consumer staples company.

This Phase 2 trial is small, involving only 34 patients, but it offers the first evidence of efficacy in human subjects. The prospective treatment involves two intravenous administrations of the nanoparticles, one week apart. Seven days after the second treatment the subjects were challenged with 12 grams (0.4 oz) of gluten per day for three days, and then six grams (0.2 oz) of gluten each day for the next 11 days. The majority of the subjects tolerated the gluten challenge following the nanoparticle treatment, showing an impressive 90 percent reduction in inflammatory markers compared to an untreated control group.

The evolving understanding of the microbiome and its role in both regulating and affecting everything from digestion to immune responses to brain activity and mood is a massive growth field. From an investment perspective it holds the potential to tap into markets that are completely unserved by medicine today.

Alphabet Inc.’s Google said it’s built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years.

The results of Google’s tests, which were conducted using a quantum chip it developed in-house, were published Wednesday in the scientific journal Nature.

“This achievement is the result of years of research and the dedication of many people,” Google engineering director Hartmut Neven said in a blogpost. “It’s also the beginning of a new journey: figuring out how to put this technology to work. We’re working with the research community and have open-sourced tools to enable others to work alongside us to identify new applications.”

The question is not whether Google has achieved quantum supremacy or whether IBM will get there first. Rather the point is quantum mechanics has gone from philosophy to practicality in less than a century. Consider that the Greeks hypothesised the existence of the atom thousands of years ago but the nuclear age did not start until about 75 years ago. This is a clear example of the exponential pace of technological innovation.

But about 95% of gas stations with convenience stores are independently owned, which includes mom-and-pops that license brand names. Some consumers will pay more for brand-name gas as they will for Prada purses or Starbucks lattes. As gas prices rise, consumers may also burn more money than they save driving in search of the cheapest stations.

Notably, the commission ignores that retail margins include labor costs, utilities, rent and taxes. In 2012 the state increased taxes on high earners, which hit many small businesses. California’s minimum wage has increased by 50% since 2013. According to the Bureau of Labor Statistics, worker wages at California gas stations over the last five years have increased 50% more than nationwide.

Mr. Newsom has threatened legal action against oil companies to “protect the public.” But liberals have long wanted higher gas prices so folks will ditch gas-powered cars. The Governor last month ordered revenue to be redirected from the last gas tax hike, which was supposed to fund highway construction, to projects that “reverse the trend of increased fuel consumption and reduce greenhouse gas emissions.”

So Californians in the future can look forward to paying more to drive on deteriorating roads as they head to homes without electricity due to blackouts. How long will it take California voters to figure out that these are problems made in Sacramento by politicians?

Spikes in crude oil prices are associated with recessions because they represent a tax on consumption. It’s not coincidence that one of the reasons Europe’s economies have subpar growth is because they tax economic output through regulation and carbon trading with the express aim of increasing costs. California is well on the way to achieving the same outcomes.

“The biggest thing behind this is that volumes have been very very low,” said Josh Lim, head of trading strategy at Galaxy Digital in New York. “On the sentiment side of things, the fact that the Libra coalition has faced some major challenges and the Telegram launch was halted by the SEC, it really curtailed investor appetite for crypto broadly.”

Potentially adding to concern is the news that Alphabet Inc.’s Google has built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years. Skeptics of cryptocurrencies have noted that advances in computing could make the slower proof of work system used by Bitcoin and other tokens obsolete.

The launch of bitcoin settled futures on the same day that the first whiff of Google’s quantum supremacy news broke in September was responsible for the dynamic break below $10,000. The Congressional debate about Facebook’s Libra project and confirmation of the quantum supremacy story were catalysts for selling pressure today.

The more that markets internalize this shifting monetary policy sentiment inside central banks, the more that they will unwind the policy expectations that fueled several forces acting to invert the U.S. yield curve, including indirect ones such as the enormous pressure on foreign investors to flee negative yields in Europe and Japan and go into longer-dated U.S. bonds. Look for this phenomenon to also maintain the yield spread between German and U.S. bonds at its current lower range despite what will continue to be relative economic outperformance by the U.S.

Just as I argued in March that it was unwise to react to the inversion of the Treasury yield curve with extreme anxiety about a U.S. recession, it would be premature to celebrate the recent partial reversion as an indicator of significant strengthening of U.S. economic prospects. Instead, both are reminders of the extent to which traditional economic signals have been distorted by a prolonged period of extraordinary central bank policies. And they should also been seen as just one of the unusual consequences of a monetary stance that, imposed for several years on central banks by the lack of proper policy action elsewhere, will now see the hoped-for benefits give way to a broadening and deepening recognition of the unintended consequences and collateral risks.  

An inverted yield curve has been one of the most readily available lead indicators for a US recession for decades. There is always an argument that this time is different and that it only works for the USA’s economy. It is also worth remembering that no US recession has occurred without an inverted yield curve first but is a very small number of false positives. When considering the history of the measure anyone who is willing to buck the historical trend is betting on the signal giving a false positive.

The U.S. and China reached a partial agreement Friday that would broker a truce in the trade war and lay the groundwork for a broader deal that Presidents Donald Trump and Xi Jinping could sign later this year, according to people familiar with the matter.

As part of the deal, China would agree to some agricultural concessions and the U.S. would provide some tariff relief. The pact is tentative and subject to change as Trump prepares to sit down with China’s Vice Premier Liu He later Friday.

Stocks jumped Friday after the news. Equities had advanced globally earlier in the day amid growing conviction that the U.S. and China would negotiate a trade truce. Trump tweeted earlier Friday that “good things” were happening in the meetings -- and that if the countries did reach an agreement, he would be able to sign it without a lengthy congressional approval process.

On Thursday and earlier Friday, Liu and U.S. Trade Representative Robert Lighthizer held the first senior-level discussions between Washington and Beijing since a previous agreement fell apart in May and tariffs were raised in the months after. The world’s two biggest economies have been trying for the past year and a half to settle their trade dispute.

The words from Bill Clinton’s early ‘90s election campaign must be ringing in President Trump’s ears, “It’s the economy, stupid”. There is a clear rationale for pressuring China on trade but is it worth losing the election for? The hardest hit parts of the US economy just about all voted for President Trump in the last election and have been specifically targeted by Chinese tariffs. Little wonder then that agricultural imports are front and centre in whatever deal is to be announced. With the election less than 13 months away it’s time to at least put the trade war on hold and let animal spirits loose. 

I have to admit I don’t look at the internals of the market all that often because it is the trend rather than the day to day moves which lend some insight into the health of the market. I thought it might be useful to look at some of the most common measures to discern if any clues to market direction are evident.

The Total Number of New 52 Week Highs on the NYSE Index is coming back down towards the lows December 2018 and towards the end of 2015. The significant spike on the upside in late 2017 was an anomaly suggesting a period of underperformance ahead, but generally lows are better predictors of market bottoms than spikes are of tops.

High pork prices in the northeastern province of Jilin is prompting farmers to raise pigs to reach an average weight of 175 kilograms to 200 kilograms, higher than the normal weight of 125 kilograms. They want to raise them “as big as possible,” said Zhao Hailin, a hog farmer in the region.

The trend isn’t limited to small farms either. Major protein producers in China, including Wens Foodstuffs Group Co, the country’s top pig breeder, Cofco Meat Holdings Ltd. And Beijing Dabeinong Technology Group Co. say they are trying to increase the average weight of their pigs. Big farms are focusing on boosting the heft by at least 14%, said Lin Guofa, a senior analyst with consulting firm Bric Agriculture Group.

The average weight of pigs at slaughter at some large-scale farms has climbed to as much as 140 kilograms, compared with about 110 kilograms normally, Lin said. That could boost profits by more than 30%, he said.

The large swine are being bred during a desperate time for China. With African swine fever decimating the nation’s hog herd -- in half, by some estimates -- prices of pork have soared to record levels, leading the government to urge farmers to boost production to temper inflation. Wholesale pork prices in China have surged more than 70% this year.

There is no cure of African Swine Flu and it is almost always fatal for pigs that contract the disease. That spread of the disease in China has put upward pressure on the price of pork and rebuilding the national herd is going to take at least a few years. That is assuming the necessary sanitation measures are taken to insulate the supply chain from cross contamination, which represents a significant additional cost.

“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.

The Nasdaq-100 posted a small upside key reversal yesterday from the region of the trend mean and followed through on the upside today. The primary Wall Street indices have been ranging between their trend means and their all-time peaks for much of the last four months and despite a great deal of negativity the potential for a breakout to new highs remains the base case.

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.

The companies that dominate the internet have almost all adopted some form of the subscription business model. Their success in capturing the attention of hundreds of millions of consumers and the ad revenue and spending power that goes with it represent powerful cashflows. Their success also encourages competition and the evolution of new streaming services is a challenge to the early hegemony of some companies.

The government considers it’s still not clear whether Germany will plunge into a full-blown recession and, as a result, the full array of remedies may not need to be deployed.

Germany’s five leading research institutes slashed their forecasts for economic growth this year and next, citing trade tensions and Brexit weighing on German industry. GDP is to grow 1.1% in 2020 from a previous forecast of 1.8%, and 0.5% this year from an earlier prediction of 0.8%.

Traditionally, Germany shifts to high alert whenever the global economy looks to be slowing -- the country’s dependence on exports means that it tends to head south with the rest of the world. But with the domestic market still relatively robust and the ECB renewing monetary stimulus, Merkel’s economic team judges that this time the path toward recession is less certain.

On the down side, a prolonged trade war could eventually lead to a much bigger fallout than expected, according to another scenario being considered. That spurred the government to gradually increase investments and bolster the labor market as a preemptive and precautionary measure.

Finance Minister Scholz told ARD TV on Wednesday that economic forecasts are pointing toward a recovery and that there is currently no need for a stimulus program.

“We are well prepared because we have good financial resources and can react, should it really come to an economic crisis but so far it’s just slower growth,” Scholz said.

The bond market has been signallng for a while that all is not well in the global economy. The fact that just about all of Germany’s sovereign debt is trading with a negative yield is as much about the outlook for global growth as it is about the ECB’s negative interest rate policy. The Eurozone has been relying on the strength of the export sector to pull growth higher but the slowdown is exposing the absence of a clear domestic demand story to offset the slowdown in demand.

While clear signalling for the end of the austerity program remains unlikely, there is evidence of fiscal laxity creeping in all over the continent. Italy, France and Spain are already engaged in fiscal stimulus and it is only a matter of time before Germany deploys its balance sheet to support the economy.

Just 18% of U.S. households had enough liquid assets to cover the cost of a new car, according to a Wall Street Journal analysis of 2016 data from the Fed’s triennial Survey of Consumer Finances, a proportion that hasn’t changed much in recent years.

Even a conservative car loan often won’t do it. The median-income U.S. household with a four-year loan, 20% down and a payment under 10% of gross income—a standard budget—could afford a car worth $18,390, excluding taxes, according to an analysis by personal-finance website Bankrate.com.

Tesla is likely to introduce a car with a battery capable of lasting for one million miles of driving. Having a car for long enough to come close to even a fraction of that distance could justify taking out a seven-year loan to fund the purchase but that misses the point. The aim is for those batteries to go into autonomous vehicles.

When asked about the factors driving Micron's hiking of its calendar 2019 outlook for NAND demand growth -- Micron now expects industry-wide NAND bit demand to grow by a low-to-mid 40s percentage, up from prior guidance for mid-30s growth -- Zinser was quick to note the impact of rising smartphone storage capacities in the wake of healthy price declines.

And in line with earnings call comments made by CEO Sanjay Mehrotra, Zinser noted that lower NAND prices are lifting solid-state drive capacities and (in what's a negative for hard drive suppliers) attach rates. He indicated the data center is an area where price elasticity is especially boosting NAND demand.

In addition to hiking its NAND demand guidance, Micron cut its NAND industry supply (output) guidance amid ongoing capital spending cuts, forecasting NAND bit supply will only grow by about 30% this year. For 2020, Micron is guiding for NAND bit demand to grow by a high-20s to low-30s percentage, and for supply growth to be "somewhat below" demand growth.

The disappointing guidance Micron gave at its earnings call resulted in a sharp retracement of its overextension relative to the trend mean. However, that decline is occurring against the background of underperformance this year which has seen the share recoup less than half of last year’s decline.

That terminology is important. "Unidentified Aerial Phenomena" provides "the basic descriptor for the sightings/observations of unauthorized/unidentified aircraft/objects that have been observed entering/operating in the airspace of various military-controlled training ranges," Gradisher told The Black Vault.

In other words, the Pentagon says the aerial objects in the videos are simply unidentified, and for now, unexplained. The Navy is pointedly not saying the objects are flying saucers or otherwise controlled by aliens.

Earlier this year, the Department of Defense told The Black Vault that the videos were unclassified, but never cleared for public release, and that there had been no review process within the Pentagon for releasing them.

This is either a big piece of technological news or one of the best pieces of counter intelligence in recent times.

Peloton Interactive Inc. fell as much as 9.5% Thursday after raising $1.16 billion in its U.S. initial public offering, becoming the latest unprofitable startup to fail to win over investors in its trading debut.

Peloton’s shares opened at $27 and were down 7.2% to $26.90 at 12:38 p.m. in New York trading, giving the company a value $7.5 billion. The fitness startup sold 40 million shares for $29 each on Wednesday, after marketing them for $26 to $29.

It marks the third-worst trading debut in 10 years in the U.S. for companies that have raised at least $1 billion, according to data compiled by Bloomberg. The IPO also comes as investors have been rattled by the sudden disintegration of WeWork’s plan to go public in September.

Peloton Chief Executive Officer John Foley said in an interview with Bloomberg Television that he had “some disappointment” about the reception but was confident in his company’s prospects.

The one point that seemed to get very little commentary in the lead up to this IPO was just how fad-prone the fitness industry is. Soul Cycle and spinning are all the rage at the moment. I personally go to at least two, if not three, hybrid cycling and toning classes a week. After 18 months of these classes I am starting to find them monotonous and that is a big challenge for a company that is trying to sell a range of workouts via phone or its enormously overpriced pieces of equipment. I just can’t see why someone would pay $40 to Peloton for online classes when they can pay the same or less at an LAFitness without the capital expense and space requirement of the exercise equipment.

“This is really very good,” Holger Kantz, a chaos theorist at the Max Planck Institute for the Physics of Complex Systems in Dresden, Germany, said of the eight-Lyapunov-time prediction. “The machine-learning technique is almost as good as knowing the truth, so to say.”

The algorithm knows nothing about the Kuramoto-Sivashinsky equation itself; it only sees data recorded about the evolving solution to the equation. This makes the machine-learning approach powerful; in many cases, the equations describing a chaotic system aren’t known, crippling dynamicists’ efforts to model and predict them. Ott and company’s results suggest you don’t need the equations — only data. “This paper suggests that one day we might be able perhaps to predict weather by machine-learning algorithms and not by sophisticated models of the atmosphere,” Kantz said.

Besides weather forecasting, experts say the machine-learning technique could help with monitoring cardiac arrhythmias for signs of impending heart attacks and monitoring neuronal firing patterns in the brain for signs of neuron spikes. More speculatively, it might also help with predicting rogue waves, which endanger ships, and possibly even earthquakes.

The trajectory of human development has largely been focused on the occasional appearance of a particularly gifted individual. Someone theorises what will be achievable in future and develops a mathematical formula which will take time to prove with physical experiments. The intervening period between the theory and reality has often been counted in centuries.

The advent of machine learning and artificial intelligence greatly accelerated that intellectual evolution. It represents a wonderful example of an enabling technology which will create productivity gains and new technology sectors out of nowhere.   

One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change. I'll change the title to the date of publication of new details so you will know when the information was provided. 

According to PitchBook Data, 66 companies valued at $1 billion or more have done initial public offerings from 2011 through mid-September 2019. A third of those IPOs came at prices below the value set in the companies’ last round of private funding. Bloom Energy Corp. , Cloudera Inc., Domo Inc., Reata Pharmaceuticals Inc., and Zynga Inc. all launched IPOs priced at least 40% lower than the valuation in their final private-funding round, according to PitchBook.

Perhaps that’s because conventional valuation methods may overstate what private funds’ venture holdings are worth. Often, several share classes are valued equally even though they aren’t all entitled to the same payoffs.

Or perhaps the brilliance of the private market is overstated. Consider a recent survey of nearly 900 venture capitalists.

Asked whether they “often make a gut decision to invest” in a fledgling company rather than relying on analysis, 44% of venture-fund executives said yes.

Which financial metrics do they use to analyze investments? “None,” admitted 9% of respondents. Only 11% quantitatively analyze past investment performance. A similar survey of private-equity executives found that they “do not frequently use” the methods that are standard among public investors for discounting the future cash their holdings might generate.

The “vision thing” as Bill Clinton was wont to say is not a topic that submits readily to discounted cashflows. That is particularly true of angel investing where one is taking bets on companies with no earnings not to mind profits. However, an investor that is investing in a company with billions in earnings and still running billion-dollar losses has to know they are not in the same game as an angel investor. After the first or second round of funding, the only rationale for investing is the wish to sell to a bigger fool later unless one is luck enough to latch onto a lottery scale winner.

One would be forgiven for concluding that algorithms have been programed with round numbers in mind. Roundophobia has been a topic of conversation at The Chart Seminar for decades but it is particularly relevant now because so many instruments have paused in the region of big round numbers. I’m greatly looking forward to the next event which will be in London on October 3rd and 4th.

But as the saying goes, this time may be different. Altcoins are bouncing from long-term support, and the rallies are showing exceptional strength, and are even continuing to rally while Bitcoin struggles with overhead resistance – something not seen for much of 2019.

Ethereum has been leading the charge, with as much as 20% growth. XRP , one of the worst-performing crypto assets of 2019, has also gained around 20% even as sentiment surrounding the altcoin hits an all-time low.  EOS and Dash are also up by a similar margin.

Litecoin, Cardano, Tron, Tezos and IOTA, and others from the top 20 crypto assets by market cap are also up by about 10% or more. Stellar, which has plummeted further and further throughout the bear market spiked by 40%.

The boom in altcoins is due to extremely oversold conditions, and a breakdown in Bitcoin dominance – a metric that weights the king of crypto against the rest of the market. But depending on the type of formation that BTC dominance is in, it could spike back up, wiping out any gains altcoins have seen during this rally.

Historically, when silver rallied it was a good lead indicator for what one might expect from gold. That did not prove the case on this occasion not least because there was such widespread disillusionment with the precious metals sector. Gold rallied first and silver played catchup. In the cryptocurrency markets bitcoin has tended to be the go-to market. When it rallies impressively, speculation on which alt-coin will play catchup tends to stoke demand for the smaller markets. The opposite appears to be happening on this occasion.

You wouldn’t know it from benchmarks, but beneath a tranquil surface violent swings are lashing traders along obscure fault lines. Companies like real-estate firms that rose the most in 2019 are plunging, and some that have trailed are being pushed out front. It’s been a mild reckoning for hedge funds and others who have bet on the status quo persisting.

Amid all the churn has been a renewed focus on a quantitative concept known as factor investing, which groups companies not by industry but traits such as how fast their prices move or profits rise. A question gaining currency in the past few days is whether these categories are just handy descriptions of twists in the market -- or are at some level guiding them.

“It seems very mechanical right now,” said John Swarr, investment specialist at Penn Mutual Asset Management, which has $27 billion under management. “If you look within some of these stocks that are being hit the hardest, some are in much better shape than others and yet they’re all being affected similarly,” he said. “It does feel like it’s a rules-based rotation.”

The total of negative yields bonds was at $17 trillion for a brief time at the end of August and has since contracted to $14.3 trillion. That’s a big more in a little less than two weeks.

The failure of the German government to sell a full allocation of bonds and failed auctions at the US Treasury in August were probably the catalysts for sapping investor demand for bonds globally. The unwinding of leveraged long positions now has the scope for meaningfully move bond yields higher with clear upward dynamics evident across multiple markets.

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.

The threat of antibiotic resistant bacteria is a growing relentlessly which makes the drive to come up with effective treatments all the more urgent. Strides are being made in understanding how to combat the threat but everyone knows of someone who has contracted an infection in hospital at this stage. The problem is likely to get worse before it gets better.

Stocks in Hong Kong leaped the most since 2018 after embattled leader Carrie Lam said she formally withdrew legislation to allow extraditions to China, the detonator for three months of often-violent protests. In the U.K., the pound surged after Parliament took a crucial first step to block a no-deal Brexit. The euro advanced after purchasing managers indexes for the region beat expectations, while the onshore Chinese yuan gained following another stronger-than-forecast currency fixing.

“The main news is geopolitical, with less risk in Hong Kong, and Italy and the U.K. Investors are reacting positively to the lower geopolitical risks even though there’s still concerns over trade tensions as well as slower economic growth,” said Kate Warne, an investment strategist at Edward Jones. “Overall, it’s a positive day. It’s about offsetting the worries of yesterday which really focused, I think, on geopolitical risks.”

Italy has a new government, at least for a while, the Hong Kong protestors got what they originally asked for but their demands have swollen considerably since then, the UK may be heading for an election, but could still end up with a hung parliament and factory figures are not quite as disastrous as many people were worried about. I think it is safe to say that these are modest improvements. Perhaps it would be better to look elsewhere for the reason behind the bounce in equities today.