Authored by Simon White, Bloomberg macro strategist,

Financial conditions are loosening significantly, further fueling a global upswing that began last year.

Longer-term yields and yield curves in the US and around the world are set to remain in an upward trend.

We’re said to now live in a post-truth world. Markets, however, have always existed in a pre-truth one. None of the major developed-market central banks has cut rates yet, but conditions around the world have already de facto eased considerably. That has been charging a global and US cyclical upswing – discussed here last October – which is gaining momentum. Yields and yield curves need to re-rate higher to reflect stronger nominal growth and a resurgence in global inflation.

Pictures are worth a thousand words, which is why I’ll use plenty of charts in today’s commentary (even more than usual!) to quickly and succinctly show the extent of the loosening in conditions and the rise in global growth it is catalyzing.

To see the full breadth of loosening, we can combine the Fed’s policy rate with rate cuts priced and the easing in financial conditions. This measure has collapsed, representing a significant loosening, well before the Fed’s rate has itself been cut.

In fact, the central-bank policy rate is typically the last to move when the direction of interest rates is changing. Further, on its own it doesn’t capture how restrictive actual lending conditions are.

Including forward rates – lower now due to the market expecting multiple rate cuts – and financial conditions, which have eased significantly, provides the totality of the policy rate’s impact. (Goldman’s Financial Conditions Index, part of the Effective Fed Rate in the above chart, is designed so that the change in US financial conditions is made equivalent to a change in the Fed’s rate.)

It’s not just a US phenomenon. Global central banks reached their peak rate restrictiveness last summer. First, banks in the aggregate stopped hiking, then some started cutting. The Global Financial Tightness Indicator (GFTI) shown below — essentially a diffusion of central-bank rate hikes — captures this and is now clearly easing. That points to a continued rise in the US manufacturing ISM, itself a highly reliable indicator of a cyclical upswing in the global economy.

There’s more to come. The easing captured by the GFTI should continue for the time being, given that the Advanced GFTI — based on rate cuts anticipated by futures prices — leads the GFTI by about four months and is also heading higher. These are all highly reliable ex ante indicators of the nascent rise in global growth we see today.

Looser conditions can also be seen in the recent disinversion of the global yield curve. Globally, shorter-term yields are no longer higher than long-term yields. Yield curves are likely to maintain their steepening trend.

The widespread easing in financial conditions is fueling a growth upturn in the US and around the world. The US leading indicator highlighted in October pointed to a fledgling upswing in growth. The indicator has started to turn lower, but from a relatively high level, signifying the growth upturn should persist for another few months.

In Europe, Sweden, as a small and open economy, is a good leading indicator for the region. Swedish PMIs are turning higher, indicating sluggish growth in the euro-zone should also soon pick up.

And it’s not just the US and Europe. Globally, we can see evidence of an upswing in play, with both services and manufacturing PMIs rising.

Indicators of growth momentum can also be seen in the rising exports of small and open Asian economies, such as South Korea and Taiwan, with the latter pointing to accelerating expansion in global EPS.

Rising global growth and a likely re-acceleration in inflation means nominal GDP should rise, acting as a ineluctable pull higher on global bond yields, especially while the risk of an imminent US recession remains low.

An inflation revival later in the year is also likely to catch central banks – who have turned prematurely dovish – off-guard, leaving yield curves more prone to bear steepening.

The Fed, ECB et al are at risk of cutting rates right around the time inflation rears its head again. Fear of flip-flopping will make them less likely to reverse direction and hike rates aggressively, increasing the chance policy rates lag inflation-sensing longer-term yields.

Higher yields, as exemplified by the outlook for the US, are anticipated by only a small proportion of professional investors.

Source: Goldman Sachs

There remain exogenous (e.g. geo-political) and endogenous (e.g. banking and CRE, credit) risks that could quickly uproot this broad-based cyclical bounce in growth.

Nonetheless, the global economy has clear momentum and, as per Newton’s First Law, it should continue moving in a straight line unless acted upon by an external force.

Lawmakers at the Senate Banking, Housing, and Urban Affairs Committee are set to grill Treasury Secretary Janet Yellen on Thursday morning regarding alleged privacy violations committed by her department on gun owners. 

Ahead of Yellen’s testimony, Gun Owners of America (GOA) published a letter outlining tough questions committee lawmakers need to press the secretary after recent revelations found that the feds asked financial institutions to search and filter customer transactions for firearms-related terms.

Aidan Johnston, director of Federal Affairs for GOA, told Fox News:

“Congress cannot allow the federal government to continue establishing and expanding databases on guns and gun owners.

“Whether it is the misuse of gun store records and financial data by the Department of Justice or firearm transaction data by the Department of the Treasury, data collection on guns and their lawful owners must be stopped.”

Watch Live (hearing begins at 0900 ET):

“If banks and the Treasury are playing the same domestic spy game that Twitter and Facebook have been playing with the FBI, tales like the frozen finances of protesting Canadian truckers won’t be novelties for long,” Taibbi of Racket News wrote in a report earlier this week. 

GOA’s letter and their commentary on today’s upcoming hearing are provided below. 

  *   *  * 

Submitted by Gun Owners of America,

Treasury Secretary Janet Yellen is scheduled to testify before the Senate Banking, Housing and Urban Affairs Committee.

Gun Owners of America just sent a letter to our allies in the Senate, demanding that they question Yellen on a recent revelation by the Select Subcommittee on the Weaponization of the Federal Government. The findings indicated that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) violated the privacy rights of gun owners by instructing banks to track purchases related to the firearms industry.

FinCEN indiscriminately targeted and labeled gun owners as “potential active shooters,” “domestic terrorists,” and “homegrown violent extremists” for simply shopping at retailers like Bass Pro Shops and Cabella’s.

Congress cannot allow the federal government to continue establishing and expanding databases on guns and gun owners. This is why our letter demands Congress ask Secretary Yellen these four questions:

1. Does Secretary Yellen believe that all those who shop at gun stores like Cabella’s are “potential active shooters” as the document distributed by FinCEN suggests?

2. Does Secretary Yellen believe that buying something from Bass Pro Shops mean that the customer might be a “Domestic Terrorist” or a “Homegrown Violent Extremist” as the document distributed by FinCEN suggests?

3. Does Secretary Yellen believe the Treasury Department should be mass accumulating American citizens’ potential firearm transactions?

4. What Protections, if any, does the Department of Treasury have in place to ensure the privacy of law-abiding Americans Second Amendment rights?

While the findings from the Treasury Department are unfortunate, they are indicative of a sinister pattern at federal agencies. The Weaponization Committee also caught the FBI misusing firearm transaction data by asking Bank of America for records if a customer had made “ANY historical purchase” of a firearm.

Gun Owners of America has also caught the ATF in violation of the Firearm Owners Protection Act’s prohibition on a gun registry. The ATF currently has around a billion digital records of firearm transactions in a searchable database.

The fact that the Treasury Department is teaching financial institutions how to search financial data to find gun owners by flagging firearms transactions is concerning.

That’s precisely why Gun Owners of America stands vigilant against the anti-gun bureaucrats in Washington. We’re working with our allies in the Senate to end this tyrannical overreach in the Treasury Department, and wherever else it appears.

*   *   *

We’ll hold the line for you in Washington. We are No Compromise. Join the Fight Now.

First things first, here’s what’s been reported – in the real world labor market – in 2024…

1. Twitch: 35% of workforce
2. Roomba: 31% of workforce
3. Hasbro: 20% of workforce
4. LA Times: 20% of workforce
5. Spotify: 17% of workforce
6. Levi’s: 15% of workforce
7. Xerox: 15% of workforce
8. Qualtrics: 14% of workforce
9. Wayfair: 13% of workforce
10. Duolingo: 10% of workforce
11. Washington Post: 10% of workforce
12: Snap: 10% of workforce
13. eBay: 9% of workforce
14. Business Insider: 8% of workforce
15. Paypal: 7% of workforce
16. Charles Schwab: 6% of workforce
17. Docusign: 6% of workforce
18. UPS: 2% of workforce
19. Blackrock: 3% of workforce
20. Citigroup: 20,000 employees
21. Pixar: 1,300 employees

And here’s the government-supplied statistics…

The number of Americans filing for jobless benefits for the first time last week dropped from 227k to 218k (below the 220k exp). On an NSA basis, claims tumbled even more…

Source: Bloomberg

We assume there was some impact in here from the ice storms, but still, Oregon, Ohio, and California saw the biggest declines in claims while Missouri and Texas saw the biggest increase…

Continuing jobless claims also decline (of course, it’s an election year) from 1.894mm to 1.871mm…

Source: Bloomberg

We give the Richmond Fed’s Tom Barkin the last word:

“I am cautious about accuracy of numbers around the turn of the year.”

Cautious is one word…

US equity futures dropped on Thursday after hitting a fresh all time high in the previous session, and bond yields rose as investors analyze a slew of earnings reports and also prepared for the sale of 30Y treassuries. As of 8:00am ET, S&P futures were down 0.2%, but even with the decline the S&P remains within striking distance of the 5,000 level and a small gain of just 5 points would take it there today. The MSCI World Index of developed-market stocks also rose to a record. The Stoxx 600 traded flat on the busiest day of the European earnings season. The dollar gains after the yen tumbled following dovish comments from BOJ Deputy governor Uchida who said the BOJ won’t aggressively hike rates even after ending negative rates (unclear who expected the BOJ to unleash a hiking spree). Commodities are the standout pre-mkt as the energy complex leads the group higher and strength across metals. It’s another busy day for earnings: the lineup in the US today includes Expedia, Philip Morris, ConocoPhillips, S&P Global and cereal maker Kellanova. On the macro side we get jobless claims and wholesale trade and inventories.

In premarket trading, Arm Holdings jumped 25% after a bullish forecast from the chip designer. Disney rose 7% after reporting disappointing revenue and a miss on subscriber growth offset by better-than-expected Q1 earnings, unveiling a new buyback and issuing an upbeat profit outlook for the year, citing cost-cutting benefits and the strong performance of its international theme parks. A.P. Moller-Maersk A/S tumbled after predicting a slowdown in the shipping industry. Here are some other notable premarket movers:

• Apollo Global Management (APO) rises 4% after reporting a profit that beat Wall Street expectations as higher interest rates bolstered the alternative-asset manager’s growing credit and insurance businesses.
• ARM (ARM) jumps 28% after the chip designer gave a surprisingly bullish forecast, showing that its push beyond smartphones is helping fuel growth and profitability.
• Axcelis (ACLS) tumbles 8% after the maker of equipment used to manufacture chips provided a 1Q revenue forecast that disappointed.
• Confluent (CFLT) soars 24% after the application software company gave a full-year revenue forecast that’s ahead of the analyst consensus.
• Digital Turbine (APPS) falls 17% as the company’s sales and EPS forecasts lag estimates.
• GoPro (GPRO) drops 13% after the consumer electronics company posted 4Q revenue that disappointed.
• Monolithic Power (MPWR) gains 6% after the semiconductor device company issued 1Q revenue guidance that beat expectations.
• Oscar Health (OSCR) jumps 21% after the health insurer forecast better-than-expected adjusted Ebitda for 2024.
• PayPal (PYPL) drops 9% after the digital payments firm issued a disappointing 2024 outlook, which Wells Fargo said would “vindicate the perma-bears.”
• Rapid7 (RPD) slips 7% after the software company gave a full-year revenue forecast that was weaker than expected.
• Under Armour (UAA) gains 6% after raising its outlook for full-year earnings, with cost cuts in its turnaround effort making up for a continued decline in revenue.

As DB’s Jim Reid notes, markets put in a solid performance over the last 24 hours, with the S&P 500 (+0.82%) reaching an all-time high and closing just shy of the 5,000 mark at 4995.06. Indeed, at the intraday peak it had been even closer than that, with an intraday high of 4999.89. In the meantime, US Treasury yields saw a modest increase (+2.1bps) but there was strong demand at a 10yr auction that was the biggest ever, at $42bn.

Yet despite the decent performance in markets, yesterday also saw continued concerns about regional banks and commercial real estate, which means futures are still pricing a 21% chance that the Fed will cut rates next month. So even as several Fed officials have said they want to see more evidence on the inflation side, it’s clear that markets are still pricing in a risk that they may end up needing to move quicker than that. Meanwhile, markets have continued to shrug off fears around the commercial real estate sector and absorbed a run of warnings from Fed policy makers that a cut isn’t likely until May at the earliest. And so, traders have continued to pile into big tech stocks, helping propel the S&P 500 index to a fresh high on Wednesday — taking it closer to the 5,000 level.

“We think this rally has legs and we think it has room to run,” BlackRock Investment Institute head Jean Boivin, who’s overweight US equities, said in an interview with Bloomberg TV. “This soft landing narrative is pretty powerful and it’s going to take time for it to be challenged.”

Minneapolis Fed President Kashkari said that he thought 2-3 cuts would be appropriate for 2024, and that “We’re not looking for better inflation data, we’re just looking for additional inflation data that is also at around this 2% level”. So he said that if they “see a few more months of that data, I think that will give us a lot of confidence.” Later on, Governor Kugler said that she was “pleased by the progress on inflation, and optimistic it will continue”. And after that, Boston Fed President Collins said that “it will likely become appropriate to begin easing policy restraint later this year.” Finally, Richmond Fed President Barkin said he was “very supportive of being patient to get to where we need to get”.

Elsewhere, while the US Treasury had successful sales of three- and 10-year bonds this week, its latest auction on Thursday of longer-maturity debt could prove a tougher test. “This week’s government bond auctions have generally been well received, with the latest selloff in rates likely helping the case,” said Evelyne Gomez-Liechti, a multi-asset strategist at Mizuho in London.

European stocks gained as investors digest a slew of corporate earnings on the busiest day of the season. The Stoxx 600 rose 0.6%, trading at a fresh 23 year high. Unilever and British American Tobacco both rally after their respective updates. AstraZeneca falls on a disappointing outlook. Some 37 companies in the Stoxx 600 are due to release results today, according to data compiled by Bloomberg.

In Asia, stocks were mixed as mainland Chinese equities fluctuated on the final trading day before the Lunar New Year holidays. China’s CSI 300 Index swung between gains and losses after the nation replaced the head of its securities regulator Wednesday, a surprise move that may foreshadow more forceful steps to support the stock market. We also heard from Bank of Japan Deputy Governor Uchida, who said that even if they ended negative interest rates “ it is hard to imagine a path in which it would then keep raising the interest rate rapidly”. So that indicated a fairly dovish path, even if rates were hiked, which has helped the Nikkei (+2.18%) see a significant outperformance this morning. Yields on 10yr Japanese government bonds are also down -1.2bps.

• Hang Seng and Shanghai Comp were mixed with the former dragged lower by weakness in tech after Alibaba shares slumped on disappointing earnings, while the mainland gained despite the soft inflation data with sentiment upbeat heading into the Lunar New Year holidays and after the PBoC injected liquidity. China also recently replaced CSRC Chairman Yi Huiman with Wu Qing who is nicknamed the “Broker Butcher” for his crackdown on traders.
• Nikkei 225 outperformed and approached closer to the 37,000 level as earnings drove price action and with SoftBank among the biggest gainers after shares in unit Arm Holdings surged by around 20% post-earnings.
• ASX 200 benefitted from strength in tech and property, while the utilities sector outperformed amid a surge in AGL Energy after it reported a four-fold increase in its core net and returned to a statutory profit for H1.
• Nifty eventually weakened in the aftermath of the RBI rate decision where the central bank maintained its rates as expected and although there was a change in the vote split with MPC external member Varma the lone dissenter favouring a 25bps cut, the language from Governor Das remained hawkish in which he stated that monetary policy must be disinflationary and the MPC is to remain resolute in bringing inflation down to 4%.

In FX, the Bloomberg Dollar Spot Index rose 0.1%. The yen is the weakest of the G-10 currencies, falling 0.5% versus the greenback after BOJ Deputy Governor Uchida said it’s hard to see the bank raising its policy rate continuously.

In rates, treasuries are slightly cheaper on the day across long-end of the curve, holding a steepening move ahead of a $25BN 30-year bond sale at 1pm New York. US yields are higher on the day by up to 3bp across long-end of the curve with front and belly little change on the day, steepening 5s30s spread by 2bp vs. Wednesday close; 10-year yields around 4.135% with bunds and gilts slightly lagging Treasuries. Core European rates lag, led by weakness in gilts while JGB’s outperformed in Asia after BOJ Deputy Governor Uchida said it’s hard to see the bank raising its policy rate continuously. Treasury auctions conclude with $25b 30-year at 1pm, follows strong 3- and 10-year sales so far this week. Dollar issuance slate empty so far; Eli Lilly headlined a seven-deal, $13b calendar Wednesday, pushing weekly volume through $41b, above $25b to $30b expectations.

In commodities, oil prices advance, with WTI rising 0.7% to trade near $74.40 and near highs into early US session. Spot gold adds 0.1%.

Looking to the day ahead now, and data releases include the US weekly initial jobless claims. Otherwise from central banks, the ECB will publish their Economic Bulletin, and we’ll hear from the ECB’s Vujcic, Wunsch and Lane, the Fed’s Barkin, and the BoE’s Mann.

Market Snapshot

• S&P 500 futures little changed at 5,012.00
• STOXX Europe 600 up 0.2% to 486.78
• MXAP down 0.1% to 167.87
• MXAPJ down 0.4% to 512.66
• Nikkei up 2.1% to 36,863.28
• Topix up 0.5% to 2,562.63
• Hang Seng Index down 1.3% to 15,878.07
• Shanghai Composite up 1.3% to 2,865.90
• Sensex down 1.1% to 71,390.93
• Australia S&P/ASX 200 up 0.3% to 7,639.25
• Kospi up 0.4% to 2,620.32
• German 10Y yield down 1 bp at 2.31%
• Euro little changed at $1.0781
• Brent Futures down 0.1% to $79.11/bbl
• Gold spot down 0.2% to $2,030.84
• US Dollar Index little changed at 104.05

Top Overnight News

• China’s CPI deflation worsens in Jan (-0.8% vs. the Street -0.5% and vs. -0.3% in Dec) while the PPI remains deeply in deflationary territory (-2.5% vs. the Street -2.6% and vs. -2.7% in Dec). RTRS
• Beijing’s ousting of the country’s main securities regulator sent “shockwaves” throughout the industry and the CSRC as there hadn’t been any forewarning of such a dramatic step, a sign of the growing unease among Xi and senior leaders of the market slump. BBG
• BOJ official signals negative rates will soon end, but the overall pace of tightening will be extremely gradual (“Even if the BOJ were to end our negative interest rate policy, it’s hard to imagine a path in which it would then keep raising the interest rate rapidly”). RTRS  
• Novo Nordisk is getting calls from food makers as they face up to the potential threat from its appetite-suppressing drugs. CEO Lars Fruergaard Jorgensen said “scared” food bosses want to know how the treatments work and how fast they’ll roll out. BBG
• UK chip designer Arm said it was seeing higher royalty and licensing revenue amid strong AI demand as it lifted its outlook for the year, sending shares rocketing more than 20 per cent higher in after-hours trading on Wednesday. FT
• The United States bought more goods from Mexico than China in 2023 for the first time in 20 years, evidence of how much global trade patterns have shifted. NYT
• The USDA may cut its forecasts for global stockpiles of corn and soybeans in today’s WASDE report. The outlook for Brazil’s soy crop may be lowered by 3.3 million tons, or more than 2%. BBG
• US drone strike killed top commander of Iran-backed militia group blamed for attacks on US forces in Iraq and Syria. WaPo
• Congress in chaos as border/Ukraine bill fails with a path forward on legislation pertaining just to national security (Ukraine, Israel, Taiwan) not in sight. WaPo

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed after the fresh record levels on Wall St where the S&P 500 touched just shy of the 5k level, while participants digested recent earnings releases and Chinese inflation data ahead of the Lunar New Year holidays. ASX 200 benefitted from strength in tech and property, while the utilities sector outperformed amid a surge in AGL Energy  after it reported a four-fold increase in its core net and returned to a statutory profit for H1. Nikkei 225 outperformed and approached closer to the 37,000 level as earnings drove price action and with SoftBank among the biggest gainers after shares in unit Arm Holdings surged by around 20% post-earnings. Hang Seng and Shanghai Comp were mixed with the former dragged lower by weakness in tech after Alibaba shares slumped on disappointing earnings, while the mainland gained despite the soft inflation data with sentiment upbeat heading into the Lunar New Year holidays and after the PBoC injected liquidity. China also recently replaced CSRC Chairman Yi Huiman with Wu Qing who is nicknamed the “Broker Butcher” for his crackdown on traders. Nifty eventually weakened in the aftermath of the RBI rate decision where the central bank maintained its rates as expected and although there was a change in the vote split with MPC external member Varma the lone dissenter favouring a 25bps cut, the language from Governor Das remained hawkish in which he stated that monetary policy must be disinflationary and the MPC is to remain resolute in bringing inflation down to 4%.

Top Asian News

• China Auto Industry Body official says battery vehicle sales were -37% in Jan M/M; far below market expectations, which is a main source of pressure on auto market growth.
• US President Biden is poised to limit Americans’ personal data going to China with the administration planning to issue an order as soon as next week, according to Bloomberg.
• BoJ Deputy Governor Uchida said the BoJ won’t aggressively hike rates even after ending negative rates and noted that Japan’s real interest rate is in deeply negative territory and monetary conditions are very accommodative which is not expected to change in a big way. Furthermore, Uchida said uncertainty over the outlook remains high, but the likelihood of sustainably achieving our price target is gradually heightening and it is hard to imagine a path of continuous rate hikes.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained its stance of remaining focused on the withdrawal of accommodation in which 5 out of 6 members voted in favour of the rate decision and policy stance, with MPC external member Varma the lone dissenter who voted for a 25bps cut and for a change in stance to neutral. RBI Governor Das stated that growth in India is accelerating and inflation is on a downward trajectory in India, while he added that transmission of policy rate hikes is still underway and monetary policy must be disinflationary. Furthermore, Governor Das said inflation needs to align at 4% on a durable basis and the MPC is to remain resolute in bringing inflation down to 4%, as well as noted that monetary policy has to remain vigilant and that the last mile of disinflation is always the most challenging.
• Chinese President Xi says China should enhance positive economic recovery and China is going to comprehensively deepen reforms, via Xinhua.
• PBoC releases Q4 monetary policy report: vows to keep monetary policy prudent. Prudent policy will be flexible, precise and effective; will fend off risks in key areas

European bourses, Stoxx600 (+0.4%), began the session on a firmer footing and have extended modesty thereafter. The AEX is the European outperformer, led by post-earnings strength in Unilever (+2.9%), ArcelorMittal (+2.6%) and Adyen (+16%). European sectors are mixed; Food Beverage & Tobacco is lifted by strength in British American Tobacco (+7.5%) post-earning. Healthcare is hampered by losses in AstraZeneca (-2.3%). US equity futures (ES U/C, NQ U/C, RTY -0.3%) are mixed; the ES and NQ are within contained levels and meandering around the unchanged mark, whilst the RTY is softer, as the index continues the prior day’s underperformance. Disney (+6%) reported a mixed set of results though did boost its cash dividend by 50%.

Top European News

• ECB Economic Bulletin Issue 1, 2024: Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
• Riksbank’s Jansson says inflationary pressures have continued to ease, makes it possible to cut earlier than thought in November.

Earnings

• Walt Disney Co (DIS) – Q1 2024 (USD): Adj. EPS 1.22 (exp. 0.99), Revenue 23.55bln (exp. 23.64bln). Disney boosts cash dividend by 50% and targets USD 3bln buyback in FY24. Disney+ subscribers 149.6mln (exp. 151.2mln). Entertainment revenue USD 9.98bln (exp. 10.52bln). Sports revenue USD 4.84bln (exp. 4.62bln). Experiences revenue USD 9.13bln (exp. 9.04bln). Sees FY Adj. EPS about USD 4.60 (exp. 4.27). CEO Iger said parks and resorts continue to do extremely well. Co. is to invest USD 1.5bln in Fortnite maker Epic Games. (Newswires) Shares +6.7% in pre-market trade
• PayPal Holdings Inc (PYPL) – Q4 2023 (USD): EPS 1.48 (exp. 1.36), Revenue 8.02bln (exp. 7.87bln). Total payment volume USD 409.83bln (exp. 403.6bln). Transaction revenue USD 7.28bln (exp. 7.1bln). Active customer accounts 426mln (exp. 427.98mln). Payment transactions 6.80bln (exp. 6.60bln). Sees FY24 Adj. EPS USD 5.10 (exp. 5.49). Sees FY24 share repurchase of at least USD 5bln. (Newswires) Shares -8.9% in pre-market trade
• AstraZeneca (AZN LN) – FY (USD): Revenue 45.8bln (exp. 45.7bln), Core EPS 7.26 (exp. 7.27), Dividend 2.90/shr (exp. 3.00/shr). Q4: Core EPS 1.45 (exp. 1.51), Revenue 12.02bln (exp. 11.94bln). (Newswires) Shares -2.7% in European trade
• British American Tobacco (BATS LN) – FY23 (GBP): Revenue 27.28bln (exp. 27.6bln, prev. 28.1bln Y/Y), EPS 375.6p (exp. 376.1p); takes a non-cash impairment charge of GBP 27.3bln, mainly related acquisition of US combustibles brands. (Newswires) Shares +7.5% in European trade
• Siemens (SIE GY) – Q4 (EUR): Net Income 2.5bln (exp. 1.7bln). Industrial Business Profit 2.72bln (exp. 2.67bln). Revenue 18.4bln (exp. 18.8bln); Free cash flow rose sharply to EUR 1.0bln (prev. 86mln) driven by Industrial Business. Reaffirms FY24 outlook. (Siemens). Index Weightings: DAX 40: 8.8% (Second largest); Euro Stoxx 50: 3.4%; Stoxx 600: 1.1%. Shares +0.6% in European trade
• Kering (KER FP) – FY (EUR): Revenue 19.56bln (exp. 19.59bln), Net 2.98bln (exp. 3.16bln), EBITDA 6.6bln (exp. 6.4bln), EPS 24.38 (exp. 25.60), Gucci Revenue 9.87bln (exp. 10.48bln), Yves St Laurent Revenue 3.18bln (prev. 3.3bln), Dividend 14/shr (exp. 12.89/shr). CFO: end-year trends were, overall, like the rest of the year but saw an improvement in Europe & US. Will continue to invest in brands in the long term, margins could be impacted more this year. FY24 Guidance: Recurring Operating Income to decline Y/Y, particularly within H1. (Newswires) Shares +3.7% in European trade
• ArcelorMittal (MT NA) – Q4 (USD): Revenue 14.6bln (exp. 15.7bln). EBITDA 1.27bln (exp. 1.23bln). Net Income -2.97bln (exp. -1.82bln). Co. says Chinese economic growth “is expected to weaken”. Co. remains positive on the medium/long-term steel demand outlook. OUTLOOK “As anticipated, apparent demand conditions are now showing signs of improvement as the destocking phase reaches maturity.” “Despite continued headwinds to real demand, World ex-China apparent steel consumption (“ASC”) in 2024 is expected to grow by +3.0% to +4.0% as compared to 2023.” Shares +2.6% in European trade
• Maersk (MAERSKB DC) – Q4 (USD): Revenue 11.7bln (exp. 11.46bln), EBITDA 0.839bln (exp. 1.13bln), EBIT -537mln (exp. -407mln), EPS -27 (exp. -42), Dividend 5.15/shr. Suspends buyback. High uncertainty remains around the duration & degree of Red Sea disruption, duration from one-quarter to FY reflected via the FY guidance ranges.. Shares -17% in European trade.

FX

• Contained trade for the USD thus far within tight 103.95-104.16 parameters which near enough matches yesterday’s range; 100DMA provides resistance at 104.18.
• The EUR is steady vs. the USD with recent hawkish comments from Schnabel providing support after Tuesday’s 1.0722 YTD trough. Upside resistance comes via 100DMA at 1.0785 ahead of the round 1.08 mark.
• JPY the slight underperformer across the majors following dovish BoJ commentary overnight. USD/JPY topped out around the YTD peak of 148.89. CPI revisions tomorrow or CPI next week could provide the next inflection point.
• Antipodeans are both out of favour vs. the USD with AUD marginally more so. (Relatively) hawkish RBA unable to reverse downtrend for AUD/USD absent an economic recovery in China; currently holding above its YTD trough at 0.6486.
• PBoC set USD/CNY mid-point at 7.1063 vs exp. 7.1911 (prev. 7.1049).
• CBRT Inflation Report: year-end 2024 forecast 36% (prev. 36%), 2025 14% (prev. 14%), 2026 9%

Fixed Income

• USTs are trading heavy into the 30yr auction which has historically had a softer reception than the shorter-dated peers sold already this week, with clear and relatively pronounced steepening in play; holds above session trough at 111-00+.
• Bunds are pressured given the above with specifics a touch light as newsflow has been dominated by earnings. Ahead, numerous ECB speakers but Chief Economist Lane will take centre stage where we are attentive for any fresh remarks around waiting for Q1 wage data; trade has been in a narrow 133.88-134.19 range.
• Gilt action has been in-fitting with European/US peers. Specifics light with no reaction to the latest RICS survey which remains pressured but to a lesser extent than forecast; 10yr yield has probed 4.00% to the upside, but is once again yet to convincingly breach with January’s 4.07% peak still elusive.

Commodities

• Crude is modestly firmer in what has largely been a choppy session but within narrow parameters thus far. News flow has remained quiet in early European hours with participants on the lookout for geopolitical headline; Brent Apr sits above USD 79.50/bbl.
• Mixed trade across precious metals with spot gold largely horizontal and spot silver trimming some of yesterday’s losses; XAU back under its 50 DMA (USD 2,034.04/oz).
• Contained trade across base metals with little reaction seen to the mostly soft Chinese inflation report overnight and ahead of the Chinese market closures for the Chinese New Year and Spring Festival.
• Chevron’s 290k BPD El Segundo California refinery reports unplanned flaring
• Iraq sets March Basrah medium crude official selling price to Asia at USD -0.80/bbl to Oman/Dubai average; Europe: USD -5.54/bbl vs dated Brent; North & South America: USD -1/bbl.

US Event Calendar

• 08:30: Feb. Initial Jobless Claims, est. 220,000, prior 224,000
• 08:30: Jan. Continuing Claims, est. 1.88m, prior 1.9m
• 10:00: Dec. Wholesale Trade Sales MoM, est. 0.3%, prior 0%
• 10:00: Dec. Wholesale Inventories MoM, est. 0.4%, prior 0.4%

Central Bank speakers

• 08:30: Fed’s Barkin Speaks on Bloomberg TV
• 12:05: Fed’s Barkin Speaks at Economic Club of New York

DB’s Jim Reid concludes the overnight wrap

Markets put in a solid performance over the last 24 hours, with the S&P 500 (+0.82%) reaching an all-time high and closing just shy of the 5,000 mark at 4995.06. Indeed, at the intraday peak it had been even closer than that, with an intraday high of 4999.89. In the meantime, US Treasury yields saw a modest increase (+2.1bps) but there was strong demand at a 10yr auction that was the biggest ever, at $42bn, and this morning they’ve since come down by -2.5bps, so are back at 4.10%. Yet despite the decent performance in markets, yesterday also saw continued concerns about regional banks and commercial real estate, which means futures are still pricing a 21% chance that the Fed will cut rates next month. So even as several Fed officials have said they want to see more evidence on the inflation side, it’s clear that markets are still pricing in a risk that they may end up needing to move quicker than that.

Starting with the good news, yesterday marked another solid performance for US equities that saw both the S&P 500 (+0.82%) and the Dow Jones (+0.40%) close at an all-time high. That rally was supported by the Magnificent Seven (+1.72%) also posting a new all-time high, whilst the NASDAQ (+0.95%) closed at a two-year high. And unlike some recent sessions, the gains were fairly broad-based, with the equal-weighted S&P 500 up +0.39%, even if it continued to lag the overall index.

In terms of the latest on the regional banks, it was a volatile day, and New York Community Bancorp was initially down by -14.29% at its intraday low, before recovering to close +6.67% higher, so there were some pretty sizeable moves. The initial decline followed the overnight news that Moody’s had downgraded NYCB to Ba2 from Baa3, with the recovery later on boosted by a Bloomberg report that the company was exploring a sale of some of its assets. The broader KBW Regional Banking Index closed -0.14% lower, having traded nearly -2.5% down early on after trading in NYCB was briefly suspended.

Those fears about regional banks and commercial real estate had supported a rally in US Treasuries around the US open. However, that reversed later in the session, with the 10yr yield moderately up on the day (+2.1bps to 4.12%) despite a solid 10yr auction. That came as several Fed officials continued to stick to the general consensus from Chair Powell’s remarks last week. So overall, the message was that some sort of easing was likely to happen this year, but they still wanted more evidence that inflation was back at target before shifting towards rate cuts.

When it came to the details, Minneapolis Fed President Kashkari said that he thought 2-3 cuts would be appropriate for 2024, and that “We’re not looking for better inflation data, we’re just looking for additional inflation data that is also at around this 2% level”. So he said that if they “see a few more months of that data, I think that will give us a lot of confidence.” Later on, Governor Kugler said that she was “pleased by the progress on inflation, and optimistic it will continue”. And after that, Boston Fed President Collins said that “it will likely become appropriate to begin easing policy restraint later this year.” Finally, Richmond Fed President Barkin said he was “very supportive of being patient to get to where we need to get”.

Against that backdrop, neater-term pricing of Fed rate cuts was little changed yesterday. By the close, futures saw a 21% probability of a cut by March and 81% odds of a cut by the May meeting. For May, that pricing was down from nearly 90% early in the US session when fears about regional banks were at their peak, but is still up from its intraday low of 69% on Monday, shortly after the ISM services print came out. By contrast in Europe, investors continued to pare back the chance of imminent rate cuts from the ECB, with the chance of a cut at the next meeting in March down to just 11% this morning, the lowest it’s been since October. In turn, sovereign bonds in Europe saw a moderate selloff, with yields on 10yr bunds (+2.3bps), OATs (+3.0bps) and BTPs (+3.3bps) all moving higher. That echoed a weaker performance for European equities as well, where the STOXX 600 fell -0.23%, with the STOXX Banks Index down -1.44%.

Overnight in Asia there’s been several important headlines driving markets as well. First, there’ve been fresh signs of deflation in China, with consumer prices down -0.8% year-on-year in January (vs. -0.5% expected). That’s their fastest decline since 2009 around the global financial crisis, whilst producer prices were also down -2.5% (vs. -2.6% expected). Nevertheless, there’s been a mixed reaction among Chinese equities ahead of the Lunar New Year holiday, with the Shanghai Comp (+0.71%) advancing, whereas the CSI 300 (+0.02%) has been broadly unchanged. Meanwhile, the Hang Seng has seen larger losses, with the index down -1.22%.

Separately, we also heard from Bank of Japan Deputy Governor Uchida, who said that even if they ended negative interest rates “ it is hard to imagine a path in which it would then keep raising the interest rate rapidly”. So that indicated a fairly dovish path, even if rates were hiked, which has helped the Nikkei (+2.18%) see a significant outperformance this morning. Yields on 10yr Japanese government bonds are also down -1.2bps.

Finally, there wasn’t much data out yesterday, but we did get German industrial production for December, which posted a -1.6% decline (vs. -0.5% expected).

To the day ahead now, and data releases include the US weekly initial jobless claims. Otherwise from central banks, the ECB will publish their Economic Bulletin, and we’ll hear from the ECB’s Vujcic, Wunsch and Lane, the Fed’s Barkin, and the BoE’s Mann.

How do you measure the economic success of a country?

By one classic measure, GDP per capita shows individual economic prosperity. But comparing countries simply by this metric doesn’t tell the whole story. To get a better idea of living standards, it helps to look at how far your money will go along with adjusting for labor productivity.

This graphic, via Visual Capitalist’s Niccolo Conte, shows the world’s richest countries by three different measures, based on data from The Economist and Sondre Solstad. All figures are in U.S. dollars.

World’s Richest Countries, by GDP per Capita

As the table below shows, smaller countries fare much better—of the top 10 richest countries, eight of them have populations under 10 million people.

Luxembourg, whose financial sector makes up 25% of its GDP, is the world’s richest country by GDP per capita.

With a population of just 660,000, the country is also considered a tax haven, incentivizing foreign investment due to its favorable tax policies. Due to the small nation’s considerable wealth, its citizens enjoy free education, healthcare, and transportation.

Bermuda, like Luxembourg, is known as a tax haven. Several multinationals shelter billions in the island nation—including Google, which moved $23 billion in a shell company in 2017 to lower foreign tax costs.

With a GDP per capita of $82,808, Singapore is the richest country in Asia thanks to its role as a global hub for finance, trade, and tourism.

A New Lens: Purchasing Power Parity (PPP)

Another way to compare countries adjusts GDP per capita based on the relative price of goods and services in order to account for differences in the cost of living and local currency strength.

This provides a clearer comparison of living standards across countries since the value of a dollar can buy more goods in different countries. Below, we show how countries perform differently based on this measure, known as GDP per capita adjusted by purchasing power parity (PPP):

As we can see, Singapore significantly jumps up the ranking, when adjusting for PPP.

Looking at the world’s richest countries this way shows that living standards are high in Singapore since their currency can go further than in other countries. Often, richer countries will have higher prices as a result of higher labor productivity, advanced technology, and other factors.

Similarly, the UAE rises into the top 10, outpacing both Switzerland and America. As one of the top oil-producing countries worldwide, it made $100 billion in oil revenues in 2022, equal to about $100,000 per citizen.

World’s Richest Countries, Adjusted for Hours Worked

How do the rankings change when accounting for productivity?

To analyze this, GDP per capita on a PPP basis is adjusted by the estimated hours worked per person. Economies that have high quality, productive workforces with strong standards of living tend to rank well using this measure.

In this case, Norway has the best ranking globally. This strong showing is likely influenced by working fewer hours compared to the American population due to greater holiday allowances, among other factors.

Meanwhile, the U.S. is in 11th place when adjusting for hours worked, with mainly Western European nations ahead in the ranking. Similarly, countries including the Netherlands, Singapore, Hong Kong, and Brunei drop when adjusting for working hours.

Importantly, the world’s richest countries can’t be understood by a single measure. It’s only by looking at a range of metrics that we can see how countries vary in the rankings depending on the measure and criteria chosen.

Authored by Will Jones via DailySceptic.org,

The British countryside is a “racist colonial” white space, a group of wildlife and countryside charities including the RSPCA, WWF and National Trust have claimed.

The Telegraph has the story.

Wildlife and Countryside Link, a charity umbrella group whose members include the RSPCA, WWF and National Trust, made the claim in evidence provided to Parliament on racism and its influence on the natural world.

MPs in an all-party parliamentary group (APPG) were informed that the British countryside has been influenced by “racist colonial legacies” which have created an environment some fear is “dominated by white people”.

The country’s green spaces are governed by “white British cultural values”, the report argues, and the perception that the countryside is a “white space” prevents people from other ethnic backgrounds from enjoying the outdoors.

The Wildlife and Countryside Link report was submitted to MPs on the APPG for Race and Community, which had called for evidence on the links between “systemic racism” and climate change.

The call for evidence comes in the wake of academic “hate studies” experts [sic] launching a 2023 investigation into “rural racism” in the British countryside.

One section of the new Link report seen by the Telegraph argues that there are “structural, experiential, and cultural” barriers preventing ethnic minorities accessing the countryside.

It states: “Cultural barriers reflect that in the U.K., it is White [sic] British cultural values that have been embedded into the design and management of green spaces, and into society’s expectations of how people should be engaging with them.”

It adds that “racist colonial legacies continue to frame nature in the U.K. as a ‘white space’”, and claims that “the perception that green spaces are dominated by white people can prevent people from ethnic minority backgrounds from using green spaces”.

The report suggests that there should be a “rights-based approach” accessing green spaces, suggesting that the Government create a “legally binding target for access to nature”, possibly by ensuring everyone has a green space within a 15-minute walk from their home.

It also makes broader claims about Britain and climate change, stating: “The U.K.’s role in the European colonial project has also driven the current climate and nature crises.”

Worth reading in full.

This is such a classic example of Western self-hatred. Can you imagine Indian charities worrying that the Indian countryside was too Indian, or Chinese charities fussing that the Chinese countryside was too Chinese? Yet here are major British charities effectively declaring the British countryside to be too British.

And what exactly are “white British cultural values” supposed to be? Besides self-loathing, I mean.

If what they really mean is traditional British culture, then last time I checked British culture and values are supposed to be what ethnic minorities are inducted into, the glue that holds the whole multi-ethnic edifice together. The ethnically diverse state is supposed to be unified by a common culture – British culture, for all are, as we are continually reminded, British – the culture of the country that immigrants consent to belong to. This idea that British culture is somehow inherently ‘white’ and therefore problematic for non-whites is, needless to say, hopelessly divisive.

Yet it is this divisive ‘multicultural’ ideology – anathema to social harmony and effective integration – that now rules the roost among our woke public and quasi-public bodies.

The Tories just about manage to resist the maddest of these ideas in their limp-wristed ‘war on woke’.

You wait till Labour is in and watch the crazies run amok.

Africa, the world’s second largest continent, spans over 30 million km2, home to the not only world’s biggest desert but also the second-largest tropical rainforest, and of course, approximately 1.4 billion people.

In this infographic, Visual Capitalist’s Nick Routley and Pallavi Rao map out the continent’s population density patterns. It’s a prime example of how humans congregate near fresh water and around the edges of natural obstacles.

This population density data comes from the Gridded Population of the World dataset created by the Center for International Earth Science Information Network (CIESIN) hosted by NASA’s Socioeconomic Data and Applications Center (SEDAC).

Ranked: Most Populous African Countries

Africa’s second largest economy, Nigeria, is also its most populous: more than 220 million people live in this diverse West African country with 250 ethnic groups, speaking over 500 different languages.

And the nation is only growing. By 2100, it’s estimated that the Nigerian population could be more than three-fold its current size, at nearly 800 million residents, becoming the second-most populous country in the world.

Source: UN Department of Economic and Social Affairs, World Population Prospects. (2022)

Across the continent, along its eastern side, Ethiopia, is the second-most populous country on the continent. Unlike Nigeria—which has nearly 20 cities with at least half a million residents—more than three-quarters of Ethiopia’s 127 million people live in rural communities.

Ranked third, Egypt (112 million) is the only North African country in the top five by population. The Democratic Republic of the Congo (DRC) comes in fourth (102 million), with Tanzania (67 million) rounding out the top five.

Ranked: Fastest Growing African Countries By Population

In the year 1900, Africa accounted for 9% of the world’s population. Currently its share stands close to 18%. By 2025, the International Monetary Fund (IMF) expects one in four people in the world to live in Africa, and says the continent’s demographic transition has the power to “transform the world.”

The most populous African countries (DRC, Tanzania, Ethiopia, Nigeria, and Egypt) will contribute the lion’s share to this growth of course, but within the continent, other countries are also seeing relatively rapid population growth.

Source: CIA World Factbook.

In South Sudan, the world’s newest country, the population is growing at nearly 5% every year. The broader sub-Saharan population meanwhile is growing at half that rate. Aside from a higher fertility rate, the country is also seeing an influx of refugees from conflict areas in neighboring Sudan.

While no other African nation is quite matching South Sudan’s population growth, several of Africa’s poorer economies are also posting an annual population increase of more than 3% including Niger, Burundi, and Chad.

Ranked: Most Populous African Cities

About half of Africa lives in urban areas, which is less than the global average of 57%. The 10 most populous cities on the continent together account for about 115 million people, more than 1.5x the UK’s total population.

Egypt’s capital, Cairo, built along the banks of the Nile, is home to more than 22 million residents, and ranks as Africa’s largest city. This bustling metropolis has stood as an important trade juncture between continents for more than 1,400 years—and is still somehow one of Egypt’s younger cities.

Source: Urban agglomerates (2023) Citypopulation.de.

Down south, across the Sahara desert, and near the shores of the Atlantic, Nigeria’s former capital Lagos has slightly more than 21 million people. The city’s name comes from the numerous surrounding lagoons, and its original name in Yoruba, “Eko”, also means “lake.” Population estimates for the city are often disputed because of several different administrative regions, but also because of how fast Lagos is growing: it’s estimated 2,000 new residents move in every day.

Kinshasa, the capital of the DRC ranks third with about 15 million residents, and is slated to become the fourth largest city in the world, with 35 million people, by 2050.

Johannesburg, South Africa (15 million), and Luanda, Angola (9 million) round out the top five most populous African cities.

Authored by Edward Ring via American Greatness,

Wind and solar energy cannot lift humanity into prosperity.

But as an impressive fleet of private jets has recently migrated from the COP 28 Summit in Dubai to the World Economic Forum in Davos, carrying the hoi polloi of the world from one elitist summit to another, this delusion was the dominant sentiment.

In this three-part analysis, what can accurately be described as a collective, perhaps willful delusion will be exposed in excruciating detail.

It will be dry and tedious reading. And perhaps that’s why journalists, activists, bureaucrats, and politicians have accepted the delusion.

So buckle up. Here’s the other side of the story.

Part One quantified by how much global energy production will need to increase if humanity is to have any hope of achieving universal energy security, much less energy abundance.

Part Two will calculate the infeasible degree to which wind and solar energy production will have to increase in order to hit that minimum target while still fulfilling the goals of COP 28.

Part Three will conclude by examining non-fossil fuel alternatives to wind and solar and, in so doing, demonstrate why global energy security is impossible to achieve without increasing, not decreasing, reliance on coal, oil, and gas.

In the most recent “Conference of the Parties,” otherwise known as the United Nations extravaganza that convenes every few years for world leaders to discuss the climate crisis, several goals were publicly proclaimed. Notable were the goals to triple production of renewable energy by 2030 and triple production of nuclear energy by 2050. Against the backdrop of current global energy production by fuel type, and as quantified in Part One, against a goal of increasing total energy production from 600 exajoules in 2022 to at least 1,000 exajoules by 2050, where does COP 28’s goals put the world’s energy economy? How much will production of renewable energy have to increase?

To answer this question, it is necessary to recognize and account for the fact that most renewable energy takes the form of electricity, generated through wind, solar, or geothermal sources. And when measuring how much the base of renewables installed so far will contribute to the target of 1,000 exajoules of energy production per year in order to realize—best-case scenario—800 exajoules of energy services, the data reported in the Statistical Review of Global Energy is profoundly misleading.

Without understanding how current renewables data as reported in summary charts can mislead an analyst into overstating its current contribution to global energy, it is impossible to accurately assess the true magnitude of the expansion in renewables needed to achieve a goal of 1,000 exajoules of global energy production per year. How the summary charts mislead is buried in the Appendix.

As the authors disclose (ref. page 56, “Methodology”) in the Appendix: “in the Statistical Review of World Energy, the primary energy of non-fossil based electricity (nuclear, hydro, wind, solar, geothermal, biomass in power and other renewables sources) has been calculated on an ‘input-equivalent’ basis – i.e. based on the equivalent amount of fossil fuel input required to generate that amount of electricity in a standard thermal power plant.”

It is difficult to overstate how important it is to not overlook this seemingly innocuous footnote.

In plain English, what they are saying is when they report (ref. page 9 “Primary Energy: Consumption by fuel”) the share of global energy contributed by all non-thermal sources—hydro, nuclear, wind, and solar—they gross up the lower, actual production number and report on the chart an imputed and much larger amount, calculated as if these four sources of energy were operating at the efficiency of thermal power inputs, i.e., at 40 percent efficiency.

Why? We may presume that the energy analysts preparing these charts gross up the contribution of non-thermal energy (Lawrence Livermore also does this, by the way, on their energy flowchart) in order to demonstrate how much fossil fuel production is being offset by using non-thermal sources. That seems innocent enough. But it’s misleading.

If we’re setting a goal of 1,000 exajoules of ultimate world energy production and assuming 80 percent of that 1,000 exajoules of energy input shall be realized as end-user energy services, then we have to examine how much usable energy wind, solar, hydro, and nuclear are actually being generated today. That means we need to know how much electricity they actually generate and send into the grid. An imputed, grossed-up number is not helpful.

Getting to 1,000 Exajoules per Year without Coal, Oil, and Gas

Fortunately, the actual amount of power currently generated by hydro, nuclear, wind, and solar can be found in the inner chapters of the Statistical Review. But it is important to recognize that if energy production shifts from thermal sources to electricity, it will still take at least 1,000 exajoules of power generation to produce 800 exajoules of energy services.

It must be again emphasized that it is an extraordinary assumption to project an 80 percent retention of energy from input into the grid to actual end use. For example, we might assume that from the generating plant, 5 percent was lost in transmission, another 5 percent lost from charging and subsequently discharging the electricity to and from utility-scale storage batteries, another 5 percent in the charge/discharge cycle through an onboard battery in an EV, and another 5 percent converting that electricity into traction from the electric motor. Those are extraordinarily optimistic numbers, using a best-case example. Is a heat pump that efficient, or an air conditioner, or a cooktop, or any number of appliances, farm machinery, industrial equipment, and other vital infrastructure? Definitely not yet, and quite possibly never.

The point here is 1,000 exajoules represents the absolute minimum to which global energy production must grow in the next 25 years if every person on earth is to have access to enough energy to enable prosperity and security. How do we get there? Let’s take the experts at their word and assume that use of coal, oil, and gas will be completely eliminated by 2050.

On the chart below, the assumptions governing the future mix of fuels worldwide adhere to the resolutions just made at the recent Conference of the Parties. That is, nuclear energy will be tripled, and use of oil, natural gas, and coal will be eliminated. To take some of the pressure off of the required expansion of solar and wind energy, for this analysis, the sacrilegious assumption is made to double hydroelectric capacity, double geothermal production, and double biofuel production. It won’t matter much. Here goes:

There’s a lot to chew on in this data, but it’s worth the effort.

Because the facts they present are immutable and carry with them significant implications for global energy policy.

• The first column of data shows how much fuel was burned or generated worldwide in 2022—the raw fuel inputs, which total 604 exajoules.

• The second column of data shows the number of energy services that reached end-users in 2022 in the form of heating, cooling, traction, light, communications, etc. It is clear that for thermal sources of energy, the lower numbers reflect the currently estimated degree of conversion efficiency worldwide, about 40 percent. But for non-thermal sources of energy (appended to the right with “gen,” signifying generated energy), these numbers are based on terawatt-hour reports featured in individual sections of the Statistical Review dedicated to those sources of energy. Converted from terawatt-hours to exajoules, these are the actual amounts of electricity that went into transmission lines around the world to be consumed by end users.

• The third column of data calculates a hypothetical 2050 global fuel mix based on the agreed COP 28 targets. As seen in column 4 “multiple,” nuclear energy is tripled in accordance with COP 28. Also, in accordance with COP 28, use of coal, oil, and gas is eliminated. Not agreed to at COP 28, but to help reach the 1,000 exajoule target, production of geothermal and biofuel energy are both doubled. That leaves the remainder of the needed power to be provided (in this example) equally by wind and solar. It is reasonable to assume, based on everything they’re saying in Dubai and Davos, that this is the model. This is the logical realization of what they’re calling for.

These calculations yield an overwhelming reality check.

Yet what assumption is incorrect?

The target of 1,000 exajoules is almost certainly too low. Nuclear power is tripled, and hydropower and biofuel are both doubled.

None of that is easy; in the case of biofuel, it could be an environmental catastrophe. But even if those other non-thermal sources of energy were to increase two to three times, without coal, oil, and gas, a stupefying expansion of wind and solar would be required. “Tripling” these renewables doesn’t even get us into the ballpark.

To deliver 1,000 exajoules of power to the world by 2050, for every wind turbine we have today, expect to see more than 60 of them. For every field of photovoltaics we have today, expect to see nearly 100 more of them.

Is this feasible?

Because from Dubai to Davos, this is what they’re claiming we’re going to do.

Confronted with these facts, even the most enthusiastic proponents of wind and solar energy may hesitate when considering the magnitude of the task. Eliminating production of fossil fuel entirely by 2050 ought to be seen, for all practical purposes, as impossible. The uptick in mining, the land consumed, the expansion of transmission lines, the necessity for a staggering quantity of electricity storage assets to balance these intermittent sources, the vulnerability of wind and solar farms to weather events including deep freezes, tornadoes, and hail, and the stupefying task of doing it all over again every 20-30 years as the wind turbines, photovoltaic panels, and storage batteries reach the end of their useful lives—all of this suggests procuring 90+ percent of global energy from wind and solar energy is a fool’s errand.

If coal, oil, and gas are phased out and it is unrealistic to expect nearly 1,000 exajoules of power to be delivered by wind and solar-generated electricity, what’s left?

Part three of this series will examine the potential of the remaining energy alternatives – nuclear, hydroelectric, biofuel, geothermal – along with possible innovations that someday may change the rules.

Authored by Denes Albert via ReMix News,

A map recently published by German poll aggregator Wahlkreisprognose shows that in the former East Germany Alternative für Deutschland (AfD) has a clear lead in almost the entire former German Democratic Republic while the western part is overwhelmingly dominated by the conservative CDU and its Bavarian sister party CSU.

In other words, the country is sharply divided along what was once formerly West Germany and East Germany (GDR).

In the map, the Institute has colored Germany’s Bundestag constituencies according to party preference.

The black color represents the center-right Christian Democratic Union (CDU), the blue color the Alternative for Germany (AfD), the red color the Social Democratic Party of Germany (SPD), and the green color the Greens.

The fainter the color, the smaller the lead of the party in the constituency, and the darker the color, the more dominant the party is.

The CDU dominates in western Germany outside the big cities, and the AfD in eastern Germany outside Berlin.

The CDU and AfD are perfectly aligned with the former border between the former German Democratic Republic and the former West Germany.

The exceptions are minimal: In the north of Leipzig, the CDU has a narrow lead, while in the south the new party of Sahra Wagenknecht leads, the Sahra Wagenknecht Alliance (BSW), which has split from the Left Party. The BSW also holds a nose-to-nose lead in the former Karl-Marx-Stadt, now known as Chemnitz.

Overall, the CDU scores 27 percent nationwide in the new poll, while the AfD has 19 percent.

Berlin has perhaps the most complicated political map: In the districts of Steglitz-Zehlendorf, Reinickendorf, Spandau, Tempelhof-Schöneberg, Neukölln and Charlottenburg-Wilmersdorf, the CDU is flying the flag, while Friedrichshain-Kreuzberg, the city center and Pankow are with the Greens.

Treptow-Köpenick is holding its own with the Left Party, and Lichtenberg and Marzahn-Hellersdorf are leaning towards the AfD. The area around Potsdam is the only one to sympathize with the governing SPD. In addition, the whole of former East Germany shows the most popular party is the AfD.

In West Germany, on the other hand, the AfD was able to take a nose-to-nose lead in only two places, and surprisingly, these were in affluent urban districts: Gelsenkirchen in the Ruhr and Mannheim, the second-largest city in Baden-Württemberg.

Read more here…