Dollar Down, Focus Now on Central Bank Policy Decisions

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Migrant families wary as El Salvador becomes first to adopt bitcoin

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Key Reasons why Weak August NFP Wasn’t a Surprise. EURUSD Weekly Setup

The odds of a September Fed shift in policy retreated further after release of August NFP report last Friday. The payrolls gain was a big miss as it was three times less than consensus of 725K. Judging by the greenback’s price action on Friday and Monday, there was no serious change in expectations: investors continue to expect that the Fed will taper QE this year, however expectations of the announcement completely shifted to November or December.The US economy created 235K thousand jobs in August, against the forecast of 750K. If it had happened a month ago, traders would probably have crossed out the Fed's tightening from the list of expectations, but August was not easy for the economy due to the action of an exogenous factor - the delta strain of the coronavirus. Consumer mobility declined in early August, and the service sector in some states faced restrictions again. The peak of impact was just in the reporting week for the NFP. Therefore, with regard to the service sector, it is probably correct to say that job growth did not slow down, but was restrained.Other aspects of the report also point to a temporary slowdown in job growth. For example, the growth of jobs over the previous month was revised up to 1.053 million, and wages rose surprisingly in both monthly and annual terms. For example, in August, the average hourly wages increased by 0.6% against the forecast of 0.3%: It is unlikely that we would have seen such a dynamic if thedemand for labor was weak. Also released on Friday, ISM's US service sectoractivity index exceeded forecast, with the hiring component only slightlychanged from the previous month (53.7 vs. 53.8 points in July):Again, weak labor demand would send the index below 50 points, which as we can see didn’t happen despite the fact that hiring slowed down.The dollar index tested the level of 92 after release of the NFP. Despite the attempt to break through, the price failed to gain a foothold below despite the large downbeat surprise in the data. Today buyers are developing an upward rebound amid weak trading activity. The rise will most likely fizzle out in the area of 92.40:The main risk event this week will be the ECB meeting. Last week, some of the ECB's monetary policymakers said publicly that they are ready to discuss cutting asset purchases. Considering EURUSD, it is clear that the main events on the side of the dollar have been priced in, therefore, for some time the pair may be influenced by events related, among other things, to the position of the ECB.This week, a meeting of the European regulator will take place on Thursday, and if Lagarde speaks about the possibility that in the near future it is worth starting to discuss cuts in anti-crisis measures, the euro will receive additional support amid expectations of an increase in European bond rates due to a decrease in ECB activity in the debt market.In my opinion, the risks for EURUSD are skewed towards more upside this week due to the upcoming ECB meeting, targets above 1.19 remain relevant, especially if the European Central Bank offers hawkish surprise this week.

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State pensioners probably aren’t going to get an 8% pay rise next year

Governments globally have spent a great deal of money to contain the worst economic fallout from Covid-19. Now they’re wondering how to keep the public finances under control. 

The last thing the UK government needs right now is a massive increase in one of its biggest bills – the state pension. 

So it’s little wonder that there’s a lot of talk this week of chancellor Rishi Sunak putting a halt to the “triple-lock” on the state pension – even if it means breaking a manifesto pledge.  

So what is the “triple lock” and will it be scrapped for 2022?

What is the triple lock and why was it introduced?

The triple lock pension is the formula by which state pensions are set each year. Currently, state pensions rise in line with either the cost of living (as measured by the annual change in the consumer prices index – CPI); the change in average earnings; or 2.5% – whichever is highest. 

These three factors are known as the triple lock. It was introduced by the Conservative/Liberal Democrat coalition in 2010 and was intended to act as a guarantee that pensioners’ purchasing power never gets eroded by higher living costs. 

Given the relatively low levels of inflation since then, pensioners have enjoyed significant “real” terms increases in their pensions – which is one factor that has helped to drastically reduce the number of pensioner households living beneath the poverty line. 

How has Covid-19 made the triple lock controversial?

Maintaining the triple lock until at least 2024 has long been a key Conservative manifesto promise. But while the Conservatives have wanted to honour that pledge, statistical oddities related to the Covid-19 shutdown and recovery make that rather difficult.

Covid-19 resulted in millions of workers being put on furlough – reducing their wages while being able to keep their jobs. Then, when the economy started to reopen, many of those who were furloughed returned to their old jobs or sought new ones. 

One result of this is that the rise in wages for this year has been artificially inflated. 

The most recent reading for average earnings growth from the Office for National Statistics (ONS) found that headline wages were growing by more than 8% a year. However, in most cases, earnings haven’t increased by anything like that much – the number is simply being inflated by people coming back to work. The ONS reckons that actual wage growth is more in the range of 3.5% to 4.9%. 

How likely is it for the triple lock to change? 

If it is up to Sunak then there is a high chance the triple lock may be lifted, as the chancellor has clearly signalled he is willing to break the manifesto promise, due to numbers being grossly inflated because of the pandemic. 

There is certainly nothing to stop him. Politically, it could prove unpopular – although at the same time, given the unusual circumstances and the fact that we’ve racked up a lot of debt during the pandemic, it shouldn’t be difficult to explain why boosting the state pension by 8% based on faulty statistics is probably not the best use of public money.

As Julian Jessop, economic adviser to the Institute of Economic Affairs think tank, points out, each percentage point increase will mark a £900m rise in annual spending on state pensions. 

Forecasts by the Office for Budget Responsibility indicate that upholding the triple lock promise for next year would increase state pension spending in 2024-2025 by £6bn more than if it rose at the pace of inflation. 

What’s next? 

It looks as though the government will announce its decision later this week, alongside its ideas on paying for social care – we’ll cover both topics when the news is confirmed, but it looks as though the state pension is most likely to rise by inflation or 2.5%, rather than the artificially inflated earnings figure.

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The Dollar Story ahead of ECB!

The US and Canadian markets are closed today for Labor Day hence ıt will be a quiet start to a week that is busy with central bank decisions and a lot of Fed speakers. It will give one more day to ruminate over the August jobs report and whether the very disappointing 235k increase in August or the strength in June and July with respective gains of 962k and 1,053k was the aberration.

That fact alone should keep the Fed on hold for now, especially with the downside risks from the impacts of the spike in Covid/Delta infections and supply chain disruptions.  

The reactions in the markets to the much weaker than expected August headline job miss were unusual and atypical and added to the growing concerns over a measurable slowing in US and global growth. However, there were some offsetting factors to take some of the sting out of the report, including big upward revisions to June and July employment, a drop in the unemployment rate to 5.2% which is a post-pandemic low, and a 0.6% jump in wages.

The numbers were seen as delaying a QE taper announcement, not taking it off the table entirely. Wall Street so far today has posted broad gains, while in Europe if futures are anything to go by bonds won’t manage to recoup much of Friday’s losses, as markets still seem to waiting for the ECB to announce a slight tapering in monthly asset purchase levels this week. Lagarde will play down the importance though and is likely to once again stress the forcefully dovish guidance on the rate outlook and highlight the fact that asset purchases at levels seen in the first quarter would still mean sizeable support.

The key question however remains on whether Friday’s data will prevail and strengthen the US Dollar’s 12-day decline or whether the Greenback could find some footing as markets might wait for further clues on whether the US economy is indeed under threat.

So far in the longterm the value of speculators’ net long US Dollar positions has grown to its largest since March 2020, reaching nearly $11 billion in the week ended Aug. 31, according to calculations by Reuters and US Commodity Futures Trading Commission data released on Friday. This implies there is a wide expectation in the markets for a tapering by the end of the year.

In the near term meanwhile, even though the Fed has not provided a timeline, and given its Chairman’s remarks, a tapering in September is way too soon. After all, it was Chair Powell who recently stated there is still “significant slack” in the labor market, and Friday’s report will only support those concerns. A more hawkish stance has taken hold recently, but the weakness in the US jobs report and the deceleration in global growth is likely to restrain action in the near term. Hence as tapering remains the focal point in the near term (but not for September) and the key driver for the US Dollar, the upcoming Fed speeches and central bank’s decisions will be paramount this week.

Attention now turns to the ECB, RBA, and BoC meetings this week and the question is whether the spike in Covid/Delta infections, increased restrictions, and slowing in global growth will cause policymakers to hold off and maintain their current stance until recent uncertainties abate. As the BOC has already begun tapering, while the RBA is eyeing starting tapering this month another key question is raised on how the ECB  will respond and  how this week’s announcments from all these three major banks could impact the US Dollar. So far the BoC and RBA have managed to add further pressure on US Dollar with their tapering actions and remarks. Is the ECB next?

After the minutes to the last ECB meeting indicated that one of the arguments in favour of strengthening the dovish signal on rates was that this could reduce the need for the other instruments, there have been a number of Executive Board members flagging the possibility of an announcement of a slight tapering. The final decision on PEPP won’t be taken before December though, and President Lagarde is anticipated to play down the slight reduction in monthly asset purchase levels and focus on the very dovish guidance on rates and the fact that the ECB remains willing and ready to step up support again if needed. The updated set of forecasts meanwhile is likely to bring yet another upward revision to growth projections, with the economy now expected to reach pre-crisis levels by the end of the year.

EURUSD has more than reversed Friday’s spike as markets are reassessing Friday’s dollar-selling reaction to the August US jobs report. The pair has pegged a pullback at 1.1855 so far, having reversed out of Friday’s 48-day high at 1.1908. Taking a step back, it becomes clear that the pair is lacking overall directional bias, having for some months now been in an orbit of the 1.1900 level. This has been a debate of receding risk aversion, the Eurozone’s much lower interest rate and the ECB’s forcefully dovish guidance on the rate outlook, which continue to promote the EUR as a funding currency and keep a lid on the single currency, and on the other side the Fed’s success in keeping policy tapering expectations at bay being relevant here.

Hence the markets are focusing on any changes in the ECB’s stance before starting to factor which of the two economies performs better. As and when Fed tapering does start being factored, which we anticipate later in the year, this should impart a strong downside bias to EURUSD, with the ECB policy outlook likely to proceed with an announcement of a slight QE tapering following this Thursday’s policy review, though President Lagarde can be expected to downplay down the importance while stressing the central bank’s newly adopted “forcefully dovish” guidance on the rate outlook.

Overall, the longer-term risks remains to the downside for EURUSD, given the favourable expected US growth rate and the associated larger fiscal stimulus levels compared to the Eurozone.

Click here to access our Economic Calendar

Andria Pichidi 

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Market Spotlight: EURJPY Target Hit

First Target HitThe falling wedge breakout trade in EURJPY has now hit its initial target at 130.69 after triggering long on the break of 129.59. With USD seeing some buying across the European morning today, EUR has been a little weaker. However, with North America offline today for the Labour day holiday in the US, there is room for EUR to gather momentum again, supported by MACD and RSI both being bullish here. While price holds above the 129.59 level, bulls can look for a continuation higher towards the 132.02 region next.Key Data to WatchNot too much on the slate this week for EUR or JPY. Japanese trade balance data on Thursday will be watched, as will the final Eurozone CPI print on Friday. However, the bigger focus will likely be on key US data over the week – CPI and retail sales. Any USD weakness on the back of these readings is likely to benefit EUR in the near term, lifting EURJPY. Any surprise upside in those readings, however, will likely weigh on EURJPY.

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Should investors be worried about stagflation?

One of the least pleasant economic environments for investors is that of “stagflation”.

Growth remains weak, so it’s hard for companies to earn money. But inflationary pressures stay high, so margins are squeezed and monetary policy stays tight.

The latest US jobs data has some commentators already reaching for the “s” word.

Are they right to be worried?

The US jobs data springs a nasty surprise

The latest jobs data in the US showed its economy added 235,000 jobs in August.

That was a big disappointment. In normal times, that’d be a huge number, but we’re not in normal times. We’re meant to be recovering from a big economic shutdown and we’re hearing about labour shortages across the board. So markets had expected the figure to come in at more like 730,000.

Needless to say, that’s a big miss.

We shouldn’t necessarily jump to conclusions. There are lots of reasons why this might have happened.

Most obviously, the last 18 months have been really weird. You can’t expect statistical series – even long-running ones – to be as reliable as usual at times like these. This data is full of estimates, guesstimates and assumptions.

Even at the best of times, the non-farm payrolls data is very prone to revision. I’ve commented here before on how ridiculous it is that the market takes it so seriously. A big miss or a big gain can drive big swings in the market – and then a month later, the figure can be revised to show the exact opposite.

Indeed, the gains for July were revised up to 1.05 million from an already very strong number.

However, if the data is relatively accurate, then what does it suggest? Most analysts reckon that the big issue is the Delta variant of the coronavirus.

As Paul Ashworth of Capital Economics points out, Delta may not just be scaring off customers, it may be putting people off returning to the labour force as well. “Close to three million [potential workers] are still missing compared with the pre-pandemic level.”

Yet at the same time, wage inflation remained strong. Despite the weak reading for actual job numbers, wages rose more strongly than expected, up by 0.6% month-on-month, and 4.3% year-on-year (accelerating from 4.1% previously).

As Ashworth adds, this puts the Federal Reserve – the US central bank – “in an uncomfortable position – with the slump in the real economy and employment growth accompanied by signs of ever more upward pressure on wages and prices.”  

From an investor’s point of view, there are two things that matter here. One is that every weak piece of data gives the Federal Reserve another excuse to delay normalising monetary policy. At the Jackson Hole conference the other week, Fed chairman Jerome Powell stuck with the story that the US central bank will start to “taper” by the end of this year, perhaps announcing it as soon as this month.

However he also emphasised the importance of the Fed’s employment target. So if the data implies that we’re further away from “full employment”, then the Fed is not going to be keen to rock the boat by being overly aggressive on tightening. I suspect that the wage data won’t matter as much to Powell and colleagues as overall employment levels.

You can see this thinking in the initial reaction to the weak data. The US dollar was a little weaker, gold was a bit stronger, and stocks ambled about a bit before deciding they weren’t too bothered.

Are we heading for stagflation again?

The second thing to keep an eye on is what this says about the economic recovery. We’re already starting to see “stagflation” headlines cropping up all over the place. This disappointing jobs report has only added to that concern.

Stagflation is a toxic mix of weak growth and high inflation – similar to what we saw in the 1970s. That’s not a decade that any investor particularly wants to repeat.

It’s understandable why this is a concern. The “misery index” – which just involves adding the unemployment rate to the inflation rate – is extremely high relative to recent decades, what with unemployment remaining above pre-pandemic levels and inflation picking up sharply.

In my view, it’s probably a little early to worry about stagflation. I am quite sure that inflation is going to become a longer-term issue and won’t be “transitory”. What I’m less concerned about right now is growth.

Delta has knocked back progress on lots of fronts, and supply chains are a particular issue right now. But there’s still a lot of demand out there (otherwise wages wouldn’t be going up). And you would hope that, as a result, unemployment will fall – there’s certainly plenty of demand for labour out there.

So I wouldn’t be worrying about stagflation quite yet. But it’s certainly worth keeping an open mind.

We’ll be discussing the topic in more detail in a forthcoming issue of MoneyWeek magazine. Get your first six issues free here if you haven’t already subscribed.

Until tomorrow,

John Stepek

Executive editor, MoneyWeek

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Precious Metals Monday 06-09-2021

GoldThe yellow metal has started the week on a softer footing following the rally seen on Friday in response to the US labour reports. The Dollar traded lower on the back of Friday’s release which saw the headline NFP number coming in at a wildly disappointing 230k, well below the 750k estimated and the 930k seen over the prior month. While average hourly earnings were sharply higher, and the unemployment rate seen falling back to 5.2%, the miss on the headline data was enough to send USD further lower, extending a week of losses.On the back of Fed’s Powell’s dovish comments a week prior at the Jackson Hole symposium, last week’s data has done little to offer any near term hope for USD bulls. While the greenback is seeing a mild bid today, with the US off for the labour day holiday, the move is likely to fizzle out. Looking ahead this week, the focus will be on US CPI and retail sales. Given the disappointment with the August labour reports, both indicators would need to see a firm beat to inspire any reversal higher in the Dollar with the greater risk being that if data underperforms, the Dollar rout will deepen.SilverSilver prices have tracked the moves higher in gold over the last week with the market now finally beginning to break out of the base of consolidation which has framed price action since mid-August. With a weaker US Dollar and higher equities prices supporting, the near-term outlook remains positive for silver though, as with gold, this week’s US data holds the potential to create volatility.Technical ViewsGoldThe recent rally in gold has seen the market breaking out above the bear channel top from YTD highs with price now testing the 1826.71 level. With both MACD and RSI turned bullish here, the focus is on further upside with the 1871.04 level the next target for bulls.SilverThe rally in silver prices has seen the market breaking above the recent bear channel and above the 24.0073 level. With indicators both turned bullish here, while 24.0073 holds, the next challenge will be the 25.1018 – 25.5384 region, a break of which will put the focus on the 26.5711 level next.

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Get the better of your biases when you trade stocks

Trading is one of the most brutal pursuits on the planet. There is little risk of physical harm such as a broken appendage or being punched in the face, but psychologically it can be difficult and at times, even stressful. I’ve heard of traders who’ve put their entire house deposit into the market and lost it; some have squandered their life savings betting on a single stock. 

Trading can be profitable, but it can also be cruel. Sometimes you can do everything right and still lose money. You can have an edge, but nothing is guaranteed. Still, there are many things that we can do to increase our chances of success. We can control our entries, our exits, our position-sizing, risk management, how well we actively manage and monitor the trade – and also our mindset and psychology.

The best traders are able to master themselves. Many people believe that brokers, market makers and other market participants are their competition. But it’s you who will break your own rules, lack discipline and succumb to the fear of missing out (Fomo). In this article, we look at eight of the most common trading biases and learn how to combat them. 

Loss aversion

Aversion to loss is potentially the most threatening cognitive bias. Loss aversion is the theory that we feel the pain of loss twice as much as we feel the pleasure of a gain. The theory was the result of work done by Daniel Kahneman and Amos Tversky, who are considered the fathers of behavioural economics (their work is well worth reading for anyone involved in financial markets). 

Loss aversion comes into play because we don’t want to sell losing trades or positions lest we feel the pain of a loss. But here’s the rub: if the market has marked your merchandise down, you’ve already lost. A famous trading dictum posits that “it’s only a loss if you sell”. This is a fantasy. If it affects your net worth, it’s a real loss. 

One way to beat loss aversion is by knowing your maximum risk before you place the trade and knowing when you’ll sell if the trade goes the wrong way (set a stop-loss). When the time comes, you simply follow your plan and get out. Another way to combat loss aversion is to take small positions. Bigger positions exaggerate our emotions, so the bigger the position, the more likely you are to be seduced by loss aversion and move your stop-loss further down. Before you know it, you can end up losing a lot more. Don’t take positions without knowing your downside and having a plan.

Gambler’s fallacy

Gambler’s fallacy is another common bias in new traders and investors. It occurs when a person believes that after a string of losing trades they are more likely to achieve success because they’re “due a winner”. Unfortunately, all trades are independent of each other. Just because you’ve lost ten trades in a row doesn’t mean you can’t lose another ten. In the same way, the odds of a coin landing on tails after hitting ten heads in a row is still 50%. 

Gambler’s fallacy can often tempt people into sizing up in order to chase back losses because they feel they must now win. Never be tempted to size up when losing – this only increases your risk and raises the odds of making mistakes.

Attribution bias 

Attribution bias describes a scenario in which traders ascribe success to themselves, but blame others when things go wrong. For example, after a losing trade a trader who has a heavy attribution bias may decide to blame their broker, the market, or their keyboard, even if they broke all their trading rules and it’s clearly their own fault.

Nobody likes to blame themselves, but this is a core tenet that characterises successful traders. Taking responsibility for your own decisions – even if the fault genuinely was not yours – is an excellent way to grow as a trader. Don’t fall into the trap of blaming others. Instead, consider what you could have done better.

Endowment bias

The endowment effect is when we believe that something we own is worth more purely by virtue of us owning it. Everyone believes their house is the nicest on the street. Whenever we buy a stock, we value it more highly than we would if we didn’t own it. That means we’re at our most objective when we don’t have a position. Therefore we should do our research and plan our trading before we take a position. Once we press buy, we lose our objectivity. 

Bandwagon bias

The bandwagon effect makes it hard for us to go against the crowd. Warren Buffett once said in order to get rich you need to “sell when everyone is greedy and buy when everyone is fearful”. This is easier said than done. Everyone wants to buy the dip until there is a dip. Everyone wants to be a contrarian, but nobody wants to risk losses. Contrarians can look silly for long periods of time until they’re proved right – if they ever are. 

In February 2020 when China shut down, I thought it was only a matter of time before Covid-19 reached other countries. Yet when Italy started going into lockdown the markets remained at all-time highs. It was as if the market had completely discounted the fact that we were heading straight into a global pandemic. I thought going short the indices and waiting for the market to react would be an excellent trade. If I was wrong, I could close the trade easily. 

But I didn’t take the plunge. Why? Because the markets were at record highs. I thought that if the smartest minds in the world were dismissing the virus as nothing then they must be right. Everyone was bullish and I talked myself out of heavily shorting the market right before global stocks collapsed. It’s a lesson I cherish and one I’ll always remember. Sometimes you must stray from the crowd in order to outperform.

Recency bias

The recency bias is a cognitive bias whereby we put more weight on information and experiences that are more recent. For example, a chief financial officer leaving a company may cause some investors to sell. They believe it’s a red flag, but if you look at most companies this is merely noise over the longer term. Recency bias sees investors place more emphasis on the recent news, which ultimately has scant impact. 

Traders can also fall victim to this bias. A trader with five losing trades in a row may decide that their strategy doesn’t work because it hasn’t worked the last five times. But this is simply variance. Traders can overcome this bias by tracking their results and maintaining belief in their edge: their tactical or strategic approach that they believe tips the odds in their favour over the long run. If you know your edge and have the discipline to follow it, then this should give you the confidence to keep going and avoid recency bias.

Confirmation bias

Confirmation bias is a classic bias. Everyone likes to be right and nobody likes to be wrong. But confirmation bias is dangerous to those who are unaware of it because we actively seek out information that tells us we’re right rather instead of looking at the opposing view. Those who are heavily influenced by confirmation bias can attack others who have a different opinion. This is because they are so emotionally invested that their opinion becomes a part of their identity. Bulletin boards are loaded with confirmation bias, with everyone singing from the same hymn sheet. Anyone asking about the downside or posting a negative view will be attacked and reported.

When I was a new trader, I was in a Twitter group full of shareholders in Cloudtag, a personal fitness-monitoring device maker. The product had been delayed twice and I started asking questions – only to be removed from the chat. I then realised this was a full-on bubble and sold my stock into strength, but sadly many shareholders are still holding shares that have been delisted from brokerage accounts even today. 

Confirmation bias is dangerous because it can cloud your judgement. Even those who are aware of the bias aren’t immune to it. The best traders actively seek out the downside and what can go wrong on the trade because they know that they alone are responsible for their results . Next time you find yourself in a trade, ask yourself: “What is the person on the other side of my trade thinking?” Because there will be someone on the other side of your trade, and they might just be right.

Blind-spot bias

Blind-spot bias reflects the ease with which we can point out others’ mistakes and biases, but not see our own. This is because we’re detached from the situation and not bogged down in so many details. That allows us to assess how they’re going wrong. The problem with this is that we’re unable to spot these same mistakes in ourselves and therefore we leave ourselves wide open. 

One way we can tackle this is to team up with another trader and swap ideas, notes and trades. Your trading journal should also give you enough quantitative and qualitative data to allow you to discern commonalities in where you’re going wrong. Most traders don’t keep a trading journal – but most traders don’t make money either.

Understanding and tackling these eight biases will greatly improve your trading. However, there are many biases and the onus is on you to keep improving your knowledge and manage your emotions effectively. For more information on biases, I’d recommend Thinking, Fast and Slow by Daniel Kahneman. 

Michael’s monthly stock-trading newsletter Buy the Breakout is free from his website: shiftingshares.com/newsletter 

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Cybersecurity is crucial for small businesses

Small and medium-sized businesses (SMEs) are under-protected from cybersecurity risk, while the pandemic has increased their vulnerability to attacks. The European Union Agency for Cybersecurity (ENISA) says a third of SMEs have experienced a cyber incident over the past five years. Half believe that a serious incident could completely sink their company.

Despite this level of risk, most SMEs have only basic protections in place. The majority of smaller firms have taken steps such as installing firewalls and anti-virus software, but only a minority routinely train staff on cybersecurity issues or use more sophisticated protection tools.

ENISA’s data suggests that the five most common threats to SMEs are: phishing attacks; web-based raids; general malware; malicious insiders; and denial-of-service strikes. What’s more, measures introduced by many SMEs during the pandemic, including remote-working practices and contactless-payment options, have given cyberattackers new opportunities.

The big challenge, says ENISA, is that managers are not sufficiently focused on the potentially existential threat that cyberattacks pose. As a result, their efforts to counter the threat often fall short of what is required. They don’t invest enough money in cybersecurity, they fail to recruit the right type of cybersecurity expertise, and they favour seemingly quick fixes such as anti-virus software, rather than building a culture of cybersecurity awareness.

Shocking statistics

Such complacency leaves smaller firms exposed. Research published by Vodafone in early 2021 found that 41% of UK SMEs had suffered cyberattacks over the previous 12-month period, with 20% experiencing multiple attacks. It warned that as many as 1.3 million UK SMEs could collapse completely after falling victim to a cyber-attack.

ENISA’s most important recommendation is that SMEs should focus on how to build stronger cultures of cybersecurity, with management working harder to build employees’ awareness. The agency suggests practical steps such as regular cybersecurity audits, training for staff, the development of cybersecurity policies, and work on incident response plans.

More technical steps will also help. Too few SMEs are taking steps to secure their devices, such as installing all software patches and upgrades, encrypting data and focusing on how to manage mobile devices. Network security also needs to be reviewed, particularly as more staff work remotely. Third parties such as suppliers may also be introducing new vulnerabilities.

However, the starting point for many smaller businesses will be to recognise that they represent an attractive target. SMEs are less likely to have robust defences in place than their larger counterparts.

Even simple steps can prove hugely valuable. For example, SMEs that routinely back up their systems and data will be much less vulnerable to ransomware attacks. Firms that introduce multi-factor authentication on remote devices decrease their chances of attackers getting in this way.

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Three stocks that are improving their carbon footprints

We believe that steering companies with more questionable records, or in more polluting industries, towards sustainable practices should help to manage investment risks over the long term, improve returns and benefit the planet. Here are three stocks that are proving themselves and working towards reducing their carbon footprint. 

An eco-conscious cement maker

HeidelbergCement (Frankfurt: HEI) is a global leader in aggregates, cement and ready-mixed concrete production. The main component of cement is clinker, a by-product of sintering limestone (heating it so that the minerals fuse together). Its production is carbon-emission intensive. 

HeidelbergCement has been increasingly focused on growing its share of the market’s sustainable low-carbon products, designing factories that operate with alternative raw materials and fuels. Currently, the company allocates about 80% of its research and development (R&D) spend on reducing energy consumption in its
manufacturing process. 

In June 2021, the firm announced plans to build the world’s first carbon-neutral cement plant in Sweden. This is expected to start operations in 2030. In 2019, it became the first cement company to announce an emissions-reduction target that is in line with the Paris Agreement on climate change, which aims to prevent a rise in the Earth’s temperature over 2°C by 2050.

Playing a part in renewable energy

Steelmaker ArcelorMittal (Amsterdam: MT) is committed to achieving net-zero carbon emissions by 2050 and has a broad and flexible transition strategy in place. The company has identified three distinct pathways that have the potential to deliver a significant reduction in carbon emissions: clean-power steelmaking, using hydrogen and electrolysis; circular-carbon steelmaking, which uses circular-carbon energy sources that remove carbon dioxide from the atmosphere – such as waste biomass – to replace fossil fuels; and fossil-fuel carbon capture and storage, where the current method of steel production is maintained but the carbon is then captured and stored or reused, rather than emitted into the atmosphere. 

The company is also making new steel products that help their customers’ transition to a low-carbon future, such as materials for wind turbine construction. As the second-largest steelmaker in the world, it is well positioned to develop the required technology and capture the potential competitive advantage.

Carbon footprint improvement 

BP (LSE: BP) aims to get to net zero across its operations by 2050 or sooner. It is also aiming for a 50% cut in the carbon intensity of products it sells by 2050 or sooner. The firm plans to install methane measurement at all major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50%. It also intends to increase the proportion of investment into non-oil and gas businesses over time.

We believe the oil and gas sector as a whole faces a profound challenge in adapting to the energy transition. But we think BP is better placed than others to manage the transition effectively due to the greater operational flexibility it has developed in the years since the Deepwater Horizon oil spill, caused by the explosion of an oil rig off the coast of Louisiana.

from Moneyweek RSS Feed https://moneyweek.com/investments/stocks-and-shares/share-tips/603774/three-stocks-that-are-improving-their-carbon
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XAUUSD Weekly Review 06-10 September 2021

XAUUSD, H4

This week is a very important week, as several Central Banks (RBA, BOC & ECB) will provide clues on the direction of the global economy amid the development of the virus and the impact of lockdowns in several countries. Gold prices jumped 1% higher to close last week. XAUUSD’s rise to test the August high on Friday over $1832.00 was also following  Fed Chair Jerome Powell giving the green light to start easing its QE program in late 2021. Two weeks ago in remarks given at the Jackson Hole symposium, Powell also said that the inflation spike would fade over time, dimming expectations. previous increase from the cycle of rising interest rates.

Markets were expecting an early start. The Greenback lost ground soon after the speech, and last week again the not-so-good US jobs data put the USD under further pressure and the higher Eurozone inflation data allowed XAUUSD to equalize on the 8 week high price average in the range of $1834.00.

XAUUSD,H4

The intraday bias remains on the north side, although it was blocked by the resistance at the 61.8% retracement level. A break of this level would target the 76.8% retracement level in the price range of 1863. The price remains on the upward path, supported by the 200 exponential moving average, but overbought is seen from the overbought level on the RSI which could send gold into a price correction. Attempts to develop the price decline and test the support level near the 1801 area are possible as long as the average resistance holds in the near term. However, further movement below 1801 will imply a correction towards 1776 and 1749.

Click here to access the Economic Calendar

Ady Phangestu

Market Analyst

Disclaimer: This material is provided as a general marketing communication for informational purposes only and not as independent investment research. This communication does not contain investment advice or recommendations or requests with a view to the purchase or sale of any financial instrument. All information presented comes from trusted, reputable sources. Any information containing indications of past performance is not a guarantee or reliable indicator of future performance. Users should be aware that any investment in Leverage Products carries a certain degree of uncertainty and that any such investment involves a high level of risk for which the user’s liability and responsibility is solely borne. We are not responsible for any losses arising from any investment made based on the information provided in this communication. Reproduction or further distribution of this communication is prohibited without our prior written permission.

from HF Analysis /268323/
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Investment Bank Outlook 06-09-2021

Credit AgricoleAsia overnight: The downside surprise in the US non-farm payrolls data led to investors pricing in a delay to the Fed’s tapering of its asset purchases, which was supportive of sentiment. Japan’s equities also continue to rally after the resignation of PM Yoshihide Suga and helped drag Asian bourses higher, the majority of which were trading in the green at the time of writing. S&P 500 futures were trading slightly in the red at the time of writing. The USD was the strongest performer in G10 FX in the Asian session closely followed by the EUR and JPY. The AUD and NZD were the weakest performers.USD: The August NFP disappointed and thus left the Fed side-lined, still looking for further improvement of the US labour market conditions before embarking on policy normalisation. The fact that earnings data surprised to the upside likely added urgency to any decision to taper QE, although we doubt that the decision would come at the September policy meeting. Indeed, we may have to wait for the October NFP print and hope that it would offer conclusive evidence that sufficient progress has been made towards the Fed’s full employment goal. In the meantime, the USD may languish as investors reassess the prospect of taper in the near term. This week, FX investors will further focus on second-tier US data and Fed speakers as well as the near-term evolution of the pandemic situation to determine the timing of policy normalisation.CitiUSD ticked higher this morning to reverse some NFP miss induced losses on Friday which our Econ team see as likely enough to delay the Fed taper announcement to November. Equities mainly in the green with Japan indices leading after PM Suga’s resignation announcement. FX Flows relatively quieter with US out for labour day holiday; USDTHB outperforming EM Asia and we saw some selling interest amidst poor liquidity as Thailand’s PM survived the 3rd vote of no confidence over the handling of Covid. Looking ahead, focus turns to RBA, BoC and ECB this week. For the RBA meeting, our Strats base case is a potential delay of LSAP tapering whilst mild tapering could be likely for the ECB.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/investment-bank-outlook-06-09-2021"
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BTCUSD potential short bullish burst | 6th Sep 2021

Price is moving within the ascending channel. In the short term, we are expecting price to move up towards the channel resistance as price is seen to hold above the 50period MA signifying a bullish momentum. Price is expected to rally up towards the 1st Resistance in line with 127.2% Fibonacci extension. Our short term bullish bias is further supported by the RSI indicator abiding the ascending trendline.Alternatively, price could push down to the 1st support in line with the channel support and 76.4% Fibonacci retracement level.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/btcusd-potential-short-bullish-burst-or-6th-sep-2021"
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