Category: ΝΕΑ ΕΞΩΤΕΡΙΚΟΥ

(Bloomberg) — Negotiators reached agreement on the climate section of the Group of 20 summit’s final conclusions, giving leaders something to take onto the COP26 summit in Glasgow this week.

The language largely mirrors prior pledges made in the 2015 Paris climate accord, however.

Leaders said they “remain committed to the Paris Agreement goal to hold the global average temperature increase well below 2 degrees Celsius and to pursue efforts to limit it to 1.5 degrees Celsius above pre-industrial levels.”

As expected, the communique agrees to phasing out investment in new offshore coal power plants, something China already said it would do. “We will put an end to the provision of international public finance for new unabated coal power generation abroad by the end of 2021.”

In terms of domestic coal, the statement only contains a general pledge to supporting those countries that commit to “phasing out investment in new unabated coal power generation capacity to do so as soon as possible.”

(Bloomberg) — Euro-area inflation accelerated more than expected to breach 4% for only the second time ever, adding to the European Central Bank’s challenge in battling increasingly aggressive market bets for interest-rate hikes.

Consumer prices rose 4.1% in October, compared with the median of economist estimates at 3.7%, according to figures released by Eurostat on Friday. A measure stripping out volatile components such as food and energy climbed to 2.1%, a rate not seen in nearly two decades. 

On the eve of the data, ECB President Christine Lagarde attempted to pushed back on investor bets that her institution will have to raise interest rates next year, declaring such pricing at odds with its own analysis and policy guidance. 

That left investors unimpressed. On Friday, they started to price in 20-basis points of rate hikes by October 2022, even sooner than before Lagarde tried to convince them that their expectations are off the mark. 

“Without a doubt, investors have a different take on inflation to the ECB,” said Rishi Mishra, an analyst at Futures First.
Lagarde acknowledged that faster price increases will stick around for longer than the ECB previously anticipated, but also stuck to the view that it will ease through 2022. 

Her attempt to counter investor speculation stopped short of saying markets are wrong to bet on rate hikes next year. That reflected an agreement among Governing Council members that such a move could backfire, officials familiar with the matter said.

Based on market pricing, investors are expecting the ECB to raise borrowing costs for the first time in more than a decade to bring the deposit rate to minus 0.3% within a year.

Global Shift

The shift in markets comes amid a global inflation surge that’s seen some central banks — including the Bank of England and the Bank of Canada — shift tack already. 

Businesses are struggling to deal with the fraying of global supply chains, which has caused the costs of parts, raw materials and shipping to soar. Energy prices in the euro area, meanwhile, rose 23.5% in October, up from 17.6% a month earlier, amid a natural-gas crunch. 
Anticipation of higher borrowing costs is also being felt in European bond markets. The 10-year yields on Italian and Greek debt — often regarded as the riskiest in the region — jumped 22 basis points and 11 basis points, respectively, to 1.29% and 1.17%. That’s pushed Italy’s benchmark borrowing costs to the highest since July last year.
Professional forecasters polled by the ECB also ramped up their inflation outlook for the period through 2023, though they continue to see a sharp slowdown in 2022 from the current level, according to report on Friday. The respondents expect price growth of 1.9% in 2022 and 1.7% in 2023, below the ECB’s 2% target.

By Jason Gale

(Bloomberg)– A quiet revolution has permeated global health circles. Authorities have come to accept what many researchers have argued for over a year: The coronavirus can spread through the air.

That new acceptance, by the World Health Organization and the U.S. Centers for Disease Control and Prevention, comes with concrete implications: Scientists are calling for ventilation systems to be overhauled like public water supplies were in the 1800s after fetid pipes were found to harbor cholera.

Cleaner indoor air won’t just fight the pandemic, it will minimize the risk of catching flu and other respiratory infections that cost the U.S. more than $50 billion a year, researchers said in a study in the journal Science on Friday. Avoiding these germs and their associated sickness and productivity losses would, therefore, offset the cost of upgrading ventilation and filtration in buildings.

“We are used to the fact that we have clean water coming from our taps,” said Lidia Morawska, a distinguished professor in the school of earth and atmospheric sciences at the Queensland University of Technology in Brisbane, Australia, who led the study. Likewise, “we should expect clean, pollutant- and pathogen-free air” from indoor spaces, she said over Zoom.

The study’s authors, comprising 39 scientists from 14 countries, are demanding universal recognition that infections can be prevented by improving indoor ventilation systems. They want the WHO to extend its indoor air quality guidelines to cover airborne pathogens, and for building ventilation standards to include higher airflow, filtration and disinfection rates, and monitors that enable the public to gauge the quality of the air they’re breathing.

A “paradigm shift is needed on the scale that occurred when Chadwick’s Sanitary Report in 1842 led the British government to encourage cities to organize clean water supplies and centralized sewage systems,” they wrote.

“No one takes responsibility for the air,” Morawska said. “It’s kind of accepted that the air could be of whatever quality — containing viruses and pathogens.”

Speaking, Singing

SARS-CoV-2 multiplies in the respiratory tract, enabling it to spread in particles of varying sizes emitted from an infected person’s nose and throat during breathing, speaking, singing, coughing and sneezing.

The biggest particles, including visible spatters of spittle, fall fast, settling on the ground or nearby surfaces, whereas the tiniest — aerosols invisible to the naked eye — can be carried farther and stay aloft longer, depending on humidity, temperature and airflow.
It’s these aerosol particles, which can linger for hours and travel indoors, that have have stoked controversy.

Although airborne infections, like tuberculosis, measles and chickenpox are harder to trace than pathogens transmitted in tainted food and water, research over the past 16 months supports the role aerosols play in spreading the pandemic virus.

That’s led to official recommendations for public mask-wearing and other infection-control strategies. But, even those came after aerosol scientists lobbied for more-stringent measures to minimize risk.

Morawska and a colleague published an open letter backed by 239 scientists last July requesting authorities endorse additional precautions, such as increasing ventilation and avoiding recirculating potentially virus-laden air in buildings.

WHO guidance has been amended at least twice since, though the Geneva-based organization maintains that the coronavirus spreads “mainly between people who are in close contact with each other, typically within 1 meter,” or about 3 feet.

‘Nothing Magic’

Morawska, who heads a WHO collaborating center on air quality and health, says that’s an oversimplification. “There’s nothing magic about this 1 meter,” Morawska said. The closer to an infected person, the higher the concentration of infectious particles and the shorter the exposure time needed for infection to occur. “As you are moving away, the concentration decreases,” she said.

Infectious aerosols remain concentrated in the air longer in poorly ventilated, confined indoor spaces, according to Morawska.

Although a high density of people in such settings increases the number of people potentially exposed to an airborne infection, enclosed indoor areas that aren’t crowded may also be hazardous — a distinction Morawska says the WHO should make clearer.

“The WHO, step by step, is modifying the language,” she said.

Morawska, a Polish-born physicist who was previously a fellow of the International Atomic Energy Agency, can take credit  for the WHO’s changing stance, said Raina MacIntyre, professor of global biosecurity at the University of New South Wales in Sydney.

“Professor Morawska’s contribution, on the background of world-leading expertise in aerosol science, made a real impact by forcing WHO’s hand,” MacIntyre said in an email.

‘Hygiene Theater’

The role of airborne transmission “has been denied for so long, partly because expert groups that advise government have not included engineers, aerosol scientists, occupational hygienists and multidisciplinary environmental health experts,” MacIntyre wrote in The Conversation last week.

“A false narrative dominated public discussion for over a year,” she said. “This resulted in hygiene theater — scrubbing of hands and surfaces for little gain — while the pandemic wreaked mass destruction on the world.”

Some people working in infection prevention and control and related fields have stuck rigidly to beliefs that minimized aerosol transmission, despite evidence challenging their views because “they do not want to lose face,” said Julian Tang, a clinical virologist and honorary associate professor in the department of respiratory sciences at England’s University of Leicester.

“We all have to adapt and progress as new data become available,” Tang said. That’s especially true in public health, where official policies and guidance based on “outdated and unsupported thinking and attitudes can cost lives,” he said.

Morawska said she hopes the attention that the pandemic has drawn to face masks and the risks associated with inhaling someone else’s exhaled breath will be a catalyst for cleaner indoor air.

“If we don’t do the things we are saying now, next time a pandemic comes, especially one caused by a respiratory pathogen, it will be the same,” she said.

(Bloomberg) — Finland’s financial watchdog is trying to figure out how to respond after a lender it oversees explicitly disregarded the European Central Bank’s guidelines on shareholder rewards.

The decision by Alandsbanken Abp, announced on Jan. 1, to pay almost four times the dividend cap set by the ECB is “unfortunate,” Jyri Helenius, head of banking supervision at the Finnish Financial Supervisory Authority, said in an interview. The lender acted without its watchdog’s permission, but Helenius acknowledged there’s not much he can do about it.

“We expect banks to comply with the recommendation, even though we aren’t able to make it legally binding,” Helenius said. “It’s unfortunate that a Finnish bank is slipping from the common European front on this.”

Last month, the ECB lifted a de facto ban on dividends but urged banks to limit such shareholder payouts to less than 15% of profit for 2019 and 2020, or 0.2% of their key capital ratio, whichever is lower. Alandsbanken says it plans to pay out 59% of 2019’s earnings, citing record profits that year.

The cap on bank dividends in the euro zone is stricter than in the U.K. and Switzerland and has prompted criticism from some corners of the financial industry. ​

Nordea Bank Abp, Finland’s biggest bank, has said it will follow the recommendation but that it will contact the ECB to “discuss the intended level of distribution,” noting that it is “one of the best capitalized banks in Europe.”

Alandsbanken, which is too small to come under direct ECB supervision, said the latest guidelines fail to take into account the comparative strength of some banks in the euro zone.

Long-Term Risks

Alandsbanken said holding back on dividends could alienate the very investors it relies on to grow. “The long-term risks to the bank may be larger” if shareholders don’t get a substantial portion of profits, it said. That’s why it’s “choosing not to follow” the guidance of the Finnish FSA and, by extension, the ECB, it said.

The Finnish FSA will “engage” with lenders that ignore the ECB’s guidance, Helenius said. “It’s very exceptional that a bank would disregard our recommendation,” he said.

Helenius is now urging the financial industry to be patient. Once the ECB repeals its recommendation, set to be in place through September, “at least in Finland it will be possible then for banks that have enough capital to pay dividends for both 2019 and 2020,” he said.

The ECB directly oversees the biggest euro-zone lenders while national regulators in the bloc supervise smaller banks, some of which have been allowed to pay dividends. German regulator BaFin has said it will permit payouts if financial firms have sufficient financial strength.

(Bloomberg) — A small Finnish bank is explicitly disregarding European regulatory guidelines on dividends with the justification that ignoring its shareholders would be more risky in the long run.

Alandsbanken Abp said on Friday that it is “choosing not to follow” the recommendations of the Finnish Financial Supervisory Authority and, by extension, the European Central Bank.

The ECB has urged lenders to show restraint with dividends and share buybacks in light of the ongoing pandemic, and the threat it poses to the economy. But Alandsbanken says it won’t heed that guidance because its profits in 2019 “were the highest in the bank’s 100-year history.”

The regulatory recommendations “do not distinguish between the strongest and the weakest bank in Europe,” Alandsbanken said in a statement. Its board “believes that the long-term risks to the bank may be larger if — based on our current level of earnings and risks — we choose to follow the regulatory recommendation than if we also begin to take the bank’s other important stakeholder groups into account.”

Last month, the ECB lifted a de facto ban on dividends but urged banks to limit such shareholder payouts to less than 15% of profit for 2019 and 2020, or 0.2% of their key capital ratio, whichever is lower. That makes the ECB more hawkish than watchdogs such as the Bank of England.

Alandsbanken, which said it doesn’t expect to receive government aid in this or future crises, is proposing a total dividend of 1 euro ($1.22) per share for 2019. That’s equivalent to 59% of its earnings per share, almost four times the ECB’s guideline.

The ECB directly oversees the biggest euro-zone lenders while national regulators supervise smaller banks. Some smaller banks in the bloc have been allowed to pay dividends, with German regulator BaFin saying it will permit payouts if banks have sufficient financial strength.

By Bloomberg Opinion

Sam Fazeli, a Bloomberg Opinion contributor who covers the pharmaceutical industry for Bloomberg Intelligence, answered questions about the approval in the U.K. Wednesday of a Covid-19 vaccine developed by AstraZeneca Plc and the University of Oxford. It follows the shot developed by Pfizer Inc. and BioNTech SE, which was cleared earlier this month and has already been rolled out in the U.K., U.S. and Europe. Moderna Inc.’s vaccine also gained emergency authorization in the U.S. The conversation has been edited and condensed.

The Astra vaccine is the third to be approved by either the U.K., U.S. or EU, but it’s different from the first two. How so?

All vaccines aim to deliver pieces of a live virus or a whole inactive (killed) virus to the body so that the immune system has an opportunity to raise a response to it and form a memory. That way, when the actual pathogen arrives, it is ready to rapidly deploy antibodies and immune cells (T-cells) to kill the virus and infected cells, respectively. The Pfizer-BioNTech and Moderna vaccines deliver the genetic material in the form of “messenger RNA,” which instructs cells to create a modified version of a key coronavirus protein. This, in turn, prompts an immune response that can fend off the real virus. AstraZeneca-Oxford’s vaccine, AZD1222, uses a “viral vector” – a tool for delivering the same genetic material – which it derived from an engineered chimp adenovirus, similar to the virus that causes the common cold. (Johnson & Johnson uses a similar approach, but its vaccine uses a human adenovirus to deliver the genetic material.) One of the other key differences between the Astra vaccine and those of Pfizer-BioNTech and Moderna is that it doesn’t require super-cold storage and can be transported and kept at normal refrigerator temperatures. This makes it much easier to use and distribute, especially in more rural areas and countries where cold-chain logistics are problematic.

How well does the Astra vaccine work compared with those other two?

In preclinical tests and early trials in humans, the vaccine did O.K. It was not as protective against viral infection in the nose and throat of nonhuman primates, though it did prevent severe disease. In the early stages of human trials, the vaccine did not induce as strong an immune response, measured by looking at antibody levels, as that seen with Pfizer-BioNTech and Moderna’s shots. This may explain the lower efficacy seen so far in its later-stage U.K. and Brazil trials and may have to do with the way the vaccine delivers its genetic material. There are also subtle differences in the actual protein structure Astra uses in its vaccine compared with the other two shots. While all of the shots target what’s called the “spike” protein — the rod-like structures that protrude from the virus and help in binding to cells and infecting them — Astra’s is the only one to use an original form of that protein, which has been shown to be less immunogenic in some experimental settings.

Wasn’t there a problem with the Astra trials? The dosage was given out incorrectly, and the data was confusing?

Yes. The Astra-Oxford team reported late-stage preliminary results from its U.K. and Brazil trials that contained data from about 12,000 subjects vaccinated with AZD1222 and a similar number on placebo. Not only were the trials smaller than the Pfizer-BioNtech and Moderna trials, the efficacy of the vaccine was also lower at 70%, compared with the more than 90% seen with the other two vaccines. And the Astra data was complicated by the fact that 1,367 subjects in the U.K. trial, out of a total of 3,744 who received the vaccine, got only half of the required dose on their first jab because of a manufacturing issue. If you ignore those subjects, the efficacy was about 62% when combining the U.K. and Brazil data. The other issue is that there were only 718 participants 55 or older, who are at higher risk of hospitalization and death, and that’s not enough to judge the potential of the vaccine for that important cohort. There was also a problem with the time interval between the first and the second dose as the trials started looking at the vaccine as a single dose, only later converting to a two-dose regime. All of this raised questions and caused some confusion, which is unfortunate given the generally positive results.

Are you comfortable with the data now? Did the U.K. make the right decision?

The vaccine clearly works. We just don’t know how well. In a normal world, the Astra data we’ve seen so far would be the kind that would generate hypotheses requiring further trials to prove things like efficacy, the required dose level, the best dosing interval and its effect in the older population. The U.K.’s Medicines & Healthcare products Regulatory Agency, which cleared the shot, has for sure seen more data than has been published; that data, whenever it is revealed, will be crucial in helping us understand what the approval was based on. The MHRA’s analysis suggests that the vaccine’s efficacy was 73% up to 12 weeks after one dose of the vaccine. But this is what is called an exploratory analysis and was not based on predefined criteria, again making it hypothesis-generating and needing a future trial. It’s also possible that the trial has some data on the new variant of the virus that has been discovered in the U.K., and how sensitive it is to the vaccine.

Speaking of that variant, it appears to be more transmissible than the original forms of the virus . Despite the lockdowns and restrictions it triggered in the U.K., it has since spread elsewhere including the U.S. The good news is that vaccines may work just as well against this variant, but given that viruses are always mutating, there’s a risk of other variations cropping up that could be more resistant to shots. How adaptable is the Astra vaccine?

The Astra, J&J, Pfizer-BioNTech and Moderna shots are all amenable to rapid reengineering with any new variant. All four vaccine developers can make new candidates within a few weeks. That is one of their strengths compared with other technologies.

The U.K. has approved a dose schedule that seems different from other vaccines. What was this based on?

The approval is for a first dose, followed by a second dose up to 12 weeks later. This is much longer than that for Pfizer-BioNTech’s vaccine (21 days) and Moderna (28 days). In the published data on Astra’s trials, there was a reference to the fact that the median time interval for subjects who received two standard doses of the vaccine in the U.K. trial was 69 days, with a range of 50 days to 86 days. So the 12-week interval is at the very top end of that range. I don’t believe there is likely to be enough data to judge which dose interval is best until the MHRA publishes its approval letter and shows the data that was used to back its decision. What I am worried about is that if the first shot does not provide a strong enough immunity to suppress viral replication in people, it may lead to the virus amassing even more mutations and developing the ability to evade the vaccine. This could affect the efficacy of other shots, too. We just don’t know.

What about U.S. approval? Is that close to happening?

U.S. approval will need data from the much larger and simpler trial that Astra is conducting there. That data should come out in the first quarter. Astra is testing two standard doses of the vaccine four weeks apart in as many as 20,000 individuals. The question is what happens if the efficacy comes out at the same 60% to 64% level seen in the U.K. and Brazil trials. Even though this meets regulatory guidelines for approval, which require efficacy of 50% or more, will the U.S. approve it given the much higher efficacy of the Pfizer-BioNTech and Moderna vaccines? And if it does not, what will that mean for the U.K. approval? Will U.K. subjects, and those of other countries that approve Astra’s vaccine, be deemed as vaccinated when it comes to U.S. travel? This remains to be seen.

(Bloomberg Economics) – – With the Covid-19 recession rendering many traditional indicators outdated before they are published, Bloomberg Economics is using a set of high-frequency, alternative data to build daily activity indicators. Here’s what the latest data show:

• As expected, economic activity in several of the world’s largest advanced economies plummeted over the Christmas holidays.
• An increase in Covid-19 infections and stricter containment measures in November and early December, led activity to drop sharply in the third week of December. A decline in mobility and other alternative data indicators is not unusual over the Christmas and New Year holidays. But in some countries, such as Germany and Italy, very strict containment measures imposed shortly before Christmas added to the weakness.
• Japan is the only bright spot among advanced economies. Activity held steady at more than 90% of its pre-virus level both because of a large measure of success in controlling the virus and the lack of the seasonal factor of Christmas.
• Our indicators provide a high-frequency guide to the pace of recovery across countries, and attempt to improve the signal-to-noise ratio in alternative data. They are not a substitute for the detailed country view.

The activity indexes are estimated using a dynamic factor model. This methodology extracts an unobservable latent common factor of the underlying high-frequency data in the spirit of Stock and Watson. The model is estimated with daily figures from Jan. 1, 2020 to Dec. 29, 2020.

The high-frequency statistics we use have some obvious advantages — providing a more timely read than traditional data series. They also come with some caveats attached:

• The high weight of travel and mobility indicators may lead to overweighting this type of activity in the index.
• The index is not fully comparable across countries as we partly use different indicators for different countries, and the relationship between mobility and output likely varies between countries. A complete set of sources is shown in the table below.
• We don’t have a long enough time series to map the relationship between the activity indicators and GDP.
• In a dynamic factor model, component weights adjust as new data become available. Future updates of the index will likely result in small backward revisions to historical readings.
• Our model nowcasts missing data points. That can mean backward revisions of past readings as new data become available.

High-Frequency Indicators Included in Factor Model